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The Ministry of Finance and the State Administration of Taxation of the People's Republic of China promulgated the Announcement on Specific Policies Concerning Vehicle Purchase Tax. The policy will be implemented from July 1, 2019.

The following is the original announcement:

1. Urban rail transit vehicles such as subway and light rail, wheeled special mechanical vehicles such as loaders, graders, excavators and bulldozers, as well as cranes (cranes), forklifts and electric motorcycles, do not belong to taxable vehicles.

2. The total price actually paid by the taxpayer to the seller for purchasing the taxable vehicle for his own use shall be determined according to the price stated in the relevant voucher when the taxpayer purchased the taxable vehicle, excluding VAT tax.

Taxable vehicles imported by taxpayers for their own use refer to taxable vehicles imported by taxpayers directly from abroad or entrusted by agents for their own use, excluding imported vehicles purchased in China.

IV. The taxable price of a taxpayer's self-produced taxable vehicle shall be determined according to the sales price of the taxable vehicle of the same type (i.e. the vehicle with the same serial number), excluding VAT tax; if there is no sales price of the taxable vehicle of the same type, it shall be determined according to the component taxable price. The calculation formula of the component tax price is as follows:

Component taxable value = cost × (1+ cost profit margin)

For taxable vehicles subject to consumption tax, consumption tax shall be added to the taxable price of their components.

The cost-profit ratio in the above formula shall be determined by the tax bureaus of provinces, autonomous regions, municipalities directly under the Central Government and cities under separate state planning of the State Administration of Taxation.

V. Urban public transport enterprises exempted from vehicle purchase tax for public steam and electric vehicles purchased by urban public transport enterprises refer to enterprises recognized by the competent transportation department of the people's government at or above the county level (including county level), which have obtained the urban public transport operation qualification according to law, provide public transport travel services for the public, and are included in the Directory of Urban Public Transport Management Departments and Urban Public Transport Enterprises; Public electric vehicles refer to vehicles, including buses, trolleybuses and trams, designed and manufactured for the transport of passengers, operated according to the prescribed fares for routes and stops, used for public transport services.

6. The tax liability for vehicle purchase tax shall be incurred at the time indicated on the relevant vehicle certificate obtained by the taxpayer for purchasing taxable vehicles.

VII. For vehicles that have gone through tax exemption or tax reduction procedures and are no longer within the scope of tax exemption or tax reduction due to transfer, change of use, etc., taxpayers, time of occurrence of tax obligations and amount of tax payable shall be subject to the following provisions:

(1) If the act of transfer occurs, the transferee shall be the vehicle purchase tax payer; if the act of transfer does not occur, the vehicle owner shall be the vehicle purchase tax taxpayer.

(2) The time of occurrence of the tax liability is the date on which the circumstances such as the transfer or change of use of the vehicle occur.

(3) The formula for calculating the amount of tax payable is as follows:

Taxable amount = taxable value determined at the time of initial tax declaration × (1-service life ×10%) ×10%-amount of tax paid

The amount of tax payable shall not be negative.

The calculation method of useful life is from the date when the taxpayer first handles tax returns to the date when the circumstances no longer fall within the scope of tax exemption or reduction occur. The service life shall be rounded off, and those less than one year shall not be included.

VIII. If the vehicle on which the vehicle purchase tax has been levied is returned to the vehicle production or sales enterprise, and the taxpayer applies for the refund of the vehicle purchase tax, the calculation formula of the tax refund shall be as follows:

Tax payable = Tax paid × (1-Service life ×10%)

The amount of tax payable shall not be negative.

The useful life is calculated from the date the taxpayer pays the tax to the date the refund is applied for.

IX. This Announcement shall come into force as of July 1,2019.

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