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Vehicle/Vessel Tax

21 Vehicle/Vessel Tax

TAXPAYERS

TAX BASE AND SCOPE

TAX PER UNIT

COMPUTATION METHODS

TAX REDUCTIONS AND EXEMPTIONS

TIME LIMIT AND PLACE FOR PAYMENT

This tax (called Vehicle and Vessel Usage Tax in full, or VVUT) is levied on specified types of vehicles and vessels. The Provisional Regulations of the People's Republic of China on Vehicle and Vessel Usage Tax currently in force were promulgated by the State Council on September 15, 1986, and came into effect on October 1 of the same year.

VVUT is administered and collected by the local tax bureaus. The revenue collected belongs to the local governments. In 2003, revenue from VVUT amounted to 16 billion yuan, accounting for only 0.2% of the country's total tax revenue.

TAXPAYERS

General Guidelines

Entities Subject to Tax

Any of the following entities that possess or operate taxable vehicles/vessels within the territory of the People's Republic of China, may be subject to tax:

  • State-owned enterprises (SOEs), collectively owned enterprises, private enterprises, joint-equity enterprises, and other enterprises.
  • Administrative units, non-profit institutions, military units, social organizations, and other units.
  • Individual businesspersons and other individuals.

Entities Taxable Under Other Categories

Enterprises with foreign investment, foreign enterprises, and foreigners shall be liable to Vehicle and Vessel Usage License Plate Tax.

TAX BASE AND SCOPE

General Guidelines

The tax base varies for vehicles and vessels. The two categories are discussed in greater detail later.

What Constitutes a Taxable Vehicle/Vessel

In general, tax is levied on motored vehicles/vessels. At present, tax is not levied on nonmotored vehicles/vessels in most parts of China.

Vehicles

The tax base is calculated in one of two ways.

  • By the number of taxable vehicles.
  • By the net-weight capacity of the taxable vehicles.

Calculating Capacity

Rounding off

Where capacity figures need to be rounded off, the following rules apply:

  • Less than 0.5 ton: Counted as 0.5 ton.
  • More than 0.5 ton: Counted as 1 ton.

Vessels

The tax base is calculated in one of two ways.

  • By the net-weight capacity of the taxable vessels.
  • By the deadweight capacity of the taxable vessels.

Calculating Capacity

Rounding off

Where capacity figures need to be rounded off, the following rules apply:

  • Less than 0.5 ton: Counted as 0.5 ton.
  • More than 0.5 ton: Counted as 1 ton.
Small Vessels

Small vessels whose capacity is less than 1 ton shall be treated as 1-ton vessels.

Special Instances

Towboats

Tax payable is computed by treating each unit of horsepower as 0.5 ton of capacity. Where non-motored vessels are towed by towboats, tax payable is based on deadweight capacity.

TAX PER UNIT

General Guidelines

Tax per unit falls under two categories: vehicles and vessels (Tables 21.1 and 21.2, respectively).

Table 21.1 Vehicles: Tax per year
Type Category Accounting unit for tax purposes Annual tax payment (yuan) Notes
Motored vehicles1. Passenger vehiclesPer vehicle60–320Including trolley buses.
 2. Cargo vehiclesPer ton of net load capacity16–60Based on net tonnage.
 3. MotorcyclesPer vehicle20–60 
 4. Motor-tricyclesPer vehicle32–80 
Non-motored vehicles1. Manually drawnPer vehicle1.2–24Including pedicabs and other manually drawn vehicles.
 2. Animal drawnPer vehicle4–32 
 3. BicyclesPer vehicle2–4 
Table 21.2 Vessels: Tax per year
Type Accounting unit for tax purposes Annual tax payable (yuan/ton) Notes
Motored vesselsUp to 150 tons1.20All assessed on the basis of net-weight capacity.
 151–500 tons1.60 
 501–1,500 tons2.20 
 1,501–3,000 tons3.20 
 3,001–10,000 tons4.20 
 10,001 tons or more5.00 
Non-motored vesselsUp to 10 tons0.60All assessed on the basis of deadweight capacity.
 11–50 tons0.80 
 51–150 tons1.00 
 151–300 tons1.20 
 301 tons or more1.40 

Determining Tax Levels

The specific tax per unit shall be determined by the People's Government at the provincial level for its own jurisdiction, but within the ranges set out in Tables 21.1 and 21.2.

For example, Beijing stipulates the following levels of tax per unit:

  • Passenger vehicles with 10 seats or fewer: 200 yuan per vehicle per year.
  • Passenger vehicles with 11–30 seats: 250 yuan per vehicle per year.
  • Passenger vehicles with 31 seats or more: 300 yuan per vehicle per year.
  • Cargo vehicles: 60 yuan per net tonnage per year.
  • Two-wheel motorcycles: 60 yuan per vehicle per year.
  • Three-wheel motorcycles: 80 yuan per vehicle per year.
  • Non-motored vehicles: No tax is levied.

Special Instances

Vehicles
  • Trailers of motored vehicles: Tax shall be computed at 70% of the tax per unit for motored cargo vehicles.
  • Trailers of tractors used for transportation business: Tax shall be computed at 50% of the tax per unit for motored cargo vehicles.
  • Cargo/passenger vehicles: Tax for the passenger-carrying part of the vehicles shall be computed at 50% of the tax per unit for passenger vehicles; tax for the cargo-carrying part, at the tax per unit for cargo vehicles.

COMPUTATION METHODS

General Guidelines

In general, tax payable is calculated using the following formula:

Tax payable = Tax base × Applicable tax per unit

However, the tax base varies for vehicles and vessels, as well as within each category.

Vehicles

In general, tax payable is calculated using the following formula:

Tax payable = Tax base × Applicable tax per unit

The tax base may be either the number of taxable vehicles or the net-weight capacity of the taxable vehicles.

Example

A taxi company possesses 50 taxi cars and 10 coaches. The local annual tax payable per vehicle is set at 300 yuan and 200 yuan, respectively.

Tax payable = (50 taxi cars × 300 yuan) + (10 coaches × 200 yuan) = 17,000 yuan

Vessels

In general, tax payable is calculated using the following formula:

Tax payable = Tax base × Applicable tax per unit

The tax base may be either the net-weight capacity of the taxable vessels or the deadweight capacity of the taxable vessels.

Example

A marine transportation company possesses 10 vessels with a net-weight capacity of 3,000 tons and 10 vessels with a net-weight capacity of 8,000 tons. The annual tax per unit for each type of vessel is 3.2 yuan/ton and 4.2 yuan/ton, respectively.

Tax payable = (3,000 tons × 4.2 yuan/ton × 10 vessels) + (8,000 tons × 4.2 yuan/ton × 10 vessels) = 432,000 yuan

TAX REDUCTIONS AND EXEMPTIONS

General Guidelines

Exemptions or reductions may be granted under various circumstances as discussed later.

Determining Whether Tax Shall be Levied

The People's Government at the provincial level shall decide whether to levy the tax on the following vehicles:

  • Vehicles specially used for construction, oil geological work, or airport work.
  • Vehicles specially used for farming, forestry, animal husbandry, or fishing.
  • Bicycles possessed and used by individuals.
  • Non-motored vehicles used for non-business purposes.

Difficulties Meeting Payments

Where taxpayers face actual difficulties in paying tax, the People's Government at the provincial level may grant periodic exemptions or reductions.

Tax-Exempt Units

Vehicles for Joint Use

Where vehicles are used jointly by both tax-exempt units and taxpaying units, and where it is possible to distinguish the usage on a proportionate basis, the tax-exempt units need not pay tax, while the taxpaying units shall pay tax in proportion to their usage of the vehicles.

Where no distinction can be made, tax shall be levied on all the units.

Vehicles/Vessels Rented out

Where tax-exempt units rent out vehicles/vessels, or where they offer vehicles/vessels to other units for use, tax shall be levied.

Lost Vehicles

Tax Rebates

Where motored vehicles are lost, and where tax has already been paid on the vehicles, the taxpayers may apply for tax rebates from the tax department.

Upon approval by the tax department, any tax paid during the period starting from the month following the loss of the vehicles till the end of the tax year, shall be rebated.

Vehicles/Vessels Rented out

Where the lost vehicles are recovered, taxpayers should compute and pay tax starting from the month after the documents certifying proof of return are issued by the public security department.

Exemptions

Health Care-Related Usage

Non-Profit Institutions

Where vehicles/vessels are self-used by non-profit medical institutions, disease control institutions, or women/childcare institutions, the vehicles/vessels may be exempt.

Profit-Making Institutions

Where vehicles/vessels are self-used by profit-making medical institutions, and where their profits are used to directly improve medical conditions, the vehicles/vessels may be exempt for 3 years, starting from the business registration date.

Welfare-Related Usage

Institutions Serving the Aged

Where vehicles/vessels are self-used by welfare or non-profit institutions that serve the aged, and where the institutions have investments from government organs, enterprises, institutional units or individuals, the vehicles/vessels may be exempt.

Vehicles for the Handicapped

Where special vehicles designed for the convenience of the handicapped are used, the vehicles may be exempt.

Agriculture-Related Usage

Tractors used in agricultural production may be exempt.

Vessels Taxable Under Other Categories

Where vessels are liable for Vessel Tonnage Tax in accordance with prevailing rules, they may be exempt.

Others

  • Where vehicles/vessels are self-used by government organs, people's organizations, or military units, the vehicles/vessels may be exempt.
  • Where vehicles/vessels are self-used by units that are financed by financial fund allocations, the vehicles/vessels may be exempt.
  • Fishing vessels with a deadweight capacity not exceeding 1 ton may be exempt.
  • Where pontoons or floating docks are used exclusively for passengers, for the loading/unloading of cargo, or for the storage of goods, they may be exempt.
  • Where vehicles are not licensed to run on public roads, and where they are operated by enterprises only within their own premises and not on public roads, the vehicles may be exempt.
  • Other vehicles/vessels may be exempt, as approved by the Ministry of Finance.

Temporary Exemptions

City/Trolley Buses

Where passengers pay low ticket prices for city buses or trolley buses, the buses may be granted temporary exemptions.

TIME LIMIT AND PLACE FOR PAYMENT

Time Limits for Payment

Tax is assessed on an annual basis and paid in instalments.

Places for Payment

In general, tax shall be paid to the relevant local tax authorities.

The specific time limit for payment shall be determined by the People's Government at the provincial level.

Special Instances

Vehicles Not In Use

Where newly bought vehicles are temporarily out of use, the taxpayers need not report to the tax department for payment.

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