Beijing (ZXZC)- On May 31st, China’s Ministry of Finance and State Taxation Administration jointly released an announcement on the policy of reducing the vehicle purchase tax on some of the passenger vehicles (PVs) in China, to boost automobile consumption and support the development of the auto industry.

Specifically, starting June 1st 2022 to December 31st 2022, the vehicle purchase tax of PVs that priced under RMB300,000 ($45,086) excluding VAT, with an engine displacement of 2.0L or less than 2.0L, will be cut to half.

The announcement emphasized that the said PVs are vehicles that are designed, manufactured, and dedicated to transporting passengers, carry-ons and (or) temporary goods, with no more than nine seats including the driver’s seat. The price of the vehicle should adhere to its taxable value.  

In addition, the valid vehicle purchase date is determined by the unified invoice for motor vehicle sales or designated custom duty and tax payment letter date. 

Notably, PVs that fall under the Ministry of Finance’s criteria account for the majority of China’s vehicle market. According to data compiled by ZXZC Auto Research Institute (GARI), in the first four months of 2022, the cumulative sales volume of PVs under RMB300,000 ($45,086) in price and with 2.0L or less in engine displacement amounted to roughly 4.8 million. The vast sum accounted for 84.06% of the domestic new vehicle sales.