Issuance Date: February 14, 2012    Source: General Office of the State Administration of Taxation
    Since the Vehicle and Vessel Tax Law became effective on January 1, 2012, the local tax standard for passenger vehicles shows that the small-displacement passenger vehicles, some 87% of the total, have enjoyed a reduced purchase tax, thus benefiting most from this reform endeavor.
    Compared with the Provisional Regulations on Vehicle and Vessel Tax, the new law, as the former's improved version, classifies and collects the vehicle purchase tax by emission level instead of vehicle itself. The tax amount is defined by the provincial governments as long as the new law's related provisions are honored.
    According to the local tax standard, the passenger vehicles with 1.6 liter-emission or below enjoyed a noticeable drop in purchase tax, but the purchase tax for a vehicle with an emission level from 1.6 liter to 2.0 liter remains unchanged. Specifically, the passenger vehicles with 1.0 liter-emission or below witnessed an average fall of 29.76% in purchase tax. It's estimated that such vehicle owners can enjoy the eased tax burden of over 800 million yuan. The passenger vehicles with an emission level from 1.0 liter to 1.6 liter saw an average fall of 16.89% in purchase tax. It's estimated that such vehicle owners can enjoy the relieved tax burden of some 2 billion yuan. However, the vehicle with an emission level from 1.6 liter to 2.0 liter underwent no change in purchase tax. While reducing the purchase tax for small and mid-displacement vehicles, all the local taxation organs have strengthened the tax regulation over the large-displacement passenger vehicles to demonstrate the national policies in promoting energy conservation, emission reduction and environmental protection. Moreover, the local taxation organs provide the preferential tax treatment, such as the regular tax cut or exemption, for the urban and rural vehicles and vessels in public transport system, as well as motorbikes, tricycles and low-speed vans owned and used mainly in the countryside by the rural residents according to the new law.
    All the local taxation organs are working hard to carry out the Vehicle and Vessel Tax Law, and implement the new tax standard and preferential tax policy to maintain the tax payers' legitimate rights and benefits earnestly. Before the tax standard for vehicles and vessels were issued by local governments, the local taxation bureaus in Liaoning, Jiangxi, Chongqing, Hubei, Hainan, Gansu, Zhejiang, Shandong, Guizhou, Xinjiang, Henan and Yunnan took effective measures to investigate tax sources and measure tax standard. After the tax standard was issued by local governments, all the local taxation organs organized the publicity work via different media like radio, newspaper, TV and network, revised the tax collection and management system, and assisted tax payers to upgrade their software. They collected the vehicle and vessel tax in strict accordance with the new standard, and handle the tax reduction and exemption formalities without delay. For instance, Zhejiang Local Taxation Bureau had reduced and exempted the vehicle and vessel tax of 40.85 million yuan for the public transport companies by January 30, 2012, thus supporting the development of public transport sector.
    As the new law goes on successfully, the vehicle and vessel tax will gradually manifest its policy effect.