May 30, 2013
Translated by Yu Menglu

Reports that China is planning to slap an additional 20 percent luxury tax on high-end imported cars have appeared in the domestic media over the past few days.

On May 28, Securities Daily ran an article that quoted Luo Lei (羅磊), who they identified as the Deputy Secretary of the China Association of Automobile Manufactures (CAAM), as saying that the rumors were true.

The report said that Mr Luo had told media that customers that purchased cars worth more than 1.7 million yuan (not inclusive of value-added tax) would be hit with a 20 percent luxury tax that would be levied along with the purchase tax when the car was registered.

Luo was also reported to have said that although he had not yet received any official notification from the government, he had heard that it might be implemented in June.

The news was picked up online and also appeared in many other Chinese newspapers.

However, Luo Lei later took to his Sina Weibo account on Tuesday to deny that he made these comments. Luo also clarified that he was the deputy secretary of China Automobile Dealers Association (CADA), not the CAAM.

According to Jia Xinguang (賈新光), an auto industy expert quoted in the Securities Daily article, currently imported luxury vehicles are subject to a 40 percent consumption tax, a 25 percent customs tax, a 17 percent value-added tax (VAT) and a 10 percent purchase tax.

The expert also told the paper that "currently most imported cars are worth about $30,000 to $40,000, or about 300,000 yuan. The number of vehicles worth over 1.7 million yuan is limited, with only a few thousand imported each year.

Zhang Yong (張勇), a car marketing expert quoted in a report by the Yangcheng Evening News on Wednesday, said that if we estimate that no more than 5,000 vehicles worth more than 1.7 million yuan are imported into China each year, such a tax could raise about 200 million yuan in taxes each year.

Sales of luxury cars in China grew by over 8 percent in the first three months of 2013 when compared to the same period in 2012, a long way off from the 80 percent annual growth registered in 2010.

Links and Sources
Securities Daily: 專家透露征“奢侈稅”基本屬實 豪華車消費影響有限
Yangcheng Evening News: 中汽協：購豪車征稅政策基本屬實              
Guangzhou Daily: 傳豪車征奢侈稅被否
Economic Observer Online: China\'s Luxury Car Market Slows