China Expands Consumption Tax to Include More Ultra-Luxury and New Energy Vehicles

• China expands consumption tax scope for ultra-luxury cars by lowering the price threshold
• New energy vehicles now included in the consumption tax scope
• Effective from 20 July 2025
• Manufacturers face a consumption tax based on engine displacement or a flat rate for commercial vehicles
• Retailers face a 10 percent tax on ultra-luxury cars meeting the price threshold
• Price threshold reduced from RMB 1.3 million to RMB 0.9 million
• Additional fees may be included in the retail price for tax calculation
• Qualifying new energy vehicles subject to 10 percent tax if they meet the price threshold
• Engineless electric vehicles exempt from manufacturer tax obligations
• Used ultra-luxury cars exempt from consumption tax
• Policy shift suggests broader tax coverage for new energy vehicles
• Future plans may transfer tax obligations from manufacturers to retailers
• Businesses should update tax compliance processes and ensure accurate tax handling

Source: taxathand.com

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.

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