Tax on a new bike in China

Does anyone know how the new bike purchase tax works in China? Here is the latest story I have heard:

1) There is an embedded 15% VAT in the list price
2) There is a 10% purchase tax paid by the end consumer, but that is applied to the NET price (list price minus the 15% VAT)

I've been quoted (and paid) tax rates all over the map. I've even been told that taxes are on a sliding scale with bigger bikes having a higher rate (although BMW, Harley & Ducatti have different rates ... go figure).

Or, as was suggested to me by one big-bike dealer, it blends freight, prep, etc, into the list price and then strips these non-taxable items out when calculating end purchase tax.

Anyone out there know how this operates?

the VAT is paid upon bike dealer issue fapiao. how much VAT seems confusing.
Gouzhi tax (official name?) is paid upon getting plates at traffic bureau. 10% of pre VAT price.
plates fee, insure fee. That should be all.

the imported bike has tariff taxes. another 2 types of authority paper.

End of 2010 it was like this (I think it still is):

Imported Bike:
Landed Cost + 10% vehicle import tax + 31% customs + type test fee + dealer margin = Dealer cost

Imported and Domestic Bike:
Dealer cost + 17% VAT = Fapiao price
Fapiao price + 8.9% vehicle purchase fee + registration = Bike on the road price

Used bike:
Sales price + 8.9% vehicle purchase fee (based on government vehicle value estimation) = Fapiao price
Fapiao in your name is issued by the local tax bureau (dealer should provide it). No VAT on used vehicles.
Fapiao price + registration = Bike on the road price

Thanks! This is starting to clear up a huge mystery for me. Very interesting about the import charges.

Andy, do you have the 17% VAT and the 8.9% correct? Shouldn't the VAT be built into the fapiao and the sales tax (8.9%) applied to the fapiao? I really don't know - I am just guessing.

I found this on motorfans:

http://www.motorfans.com.cn/bbs/t_16996298.htm

The thread talks about an 8.3% effective rate on the fapiao (10% applied on the pre-VAT price).

When I bought one new bike earlier this year, the dealer told me 10% tax, but when I questioned why other dealers are charging 8.9%, the dealer quickly offered "OK, 8.9% is fine". WTF? I should've said other dealers were not charging tax!

Then I went home and checked the fapiaos of other new bikes I bought, and it seems that I have not been paying close attention to how much I am paying.

double post

Quote:

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the dealer told me 10% tax, but when I questioned why other dealers are charging 8.9%, the dealer quickly offered "OK, 8.9% is fine". WTF?

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I knew dealers can issue bike's fapiao invoice lessen sale price than you actually paid them.
There should be some concept the dealer had in negotiating the price that you counter-offer. VAT should be the same rate, but the sale price is lower without telling customer -- dealer pay less VAT tax.
LJH, can you upload your fapiao image (blur the sensitive detail of course.), so i can have a look.

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Originally Posted by td_ref

LJH, can you upload your fapiao image (blur the sensitive detail of course.), so i can have a look.

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Thanks for the offer, but I don't have a scanner. I took a closer look at my fapiaos and saw the 17% tax applied. On the fapiao there is the Net Price, the 17% tax, and the total amount.

For example, let's say you negotiate to buy a bike for 10,000 rmb. This is the "price" that has been negotiated/discussed with the dealer. The fapiao will show:

Sale Price: 10,000 rmb
17% tax: 1,453 rmb
Net Price: 8,547 rmb

During discussions with the dealer, the 10,000 rmb is the sales price agreed upon. In the process of preparing the fapiao, the dealer will divide the 10,000 rmb sales price by 1.17 to determine the Net price (e.g., 8,547 rmb), and then use the difference (1,453 rmb) as the 17% tax.

Next, if it is a NEW bike (according to my source), there is an additional 8.9% vehicle purchase tax that is collected during the registration process. A small, dark green book is issued indicating that the tax has been paid, but it doesn't tell you how much. According to my source, this only happens with NEW bikes. There is no vehicle purchase tax on USED bikes. Hmmmm, I am not sure about that - and Andy mentions above that it is indeed applied to used bikes. I've heard about the imputed vehicle value that the authorities do to used bikes, as Andy mentions, so maybe there is indeed a purchase tax on USED vehicles?

So, questions:

1) is the proper rate for NEW bikes 8.9% (purchase tax)?
2) are used bikes subject to this purchase tax?
3) if applied to used bikes, is the rate the same? (i.e., 8.9%)?
4) Whatever the rate (e.g., 8.9%), is it applied to the Final (10,000 rmb) or the Net (8,547 rmb) value?

BTW - for people outside China reading this, a "fapiao" is a sales receipt.

Quote:

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Originally Posted by Lao Jia Hou

Andy, do you have the 17% VAT and the 8.9% correct? Shouldn't the VAT be built into the fapiao and the sales tax (8.9%) applied

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Yeah, I think you are right - rvised the original post now.

Used bike:
When I bought my bike (new), it was first registered to a local (who had a plate). Two days later it was transferred to me, so I was the second owner in the green book. When I exported my bike, customs asked for the Fapiao in my name which I didn't have - I had only the original in the name of the local guy. Then I had to get the Fapiao in my name, which is considered as evidence of transfer of ownership. This Fapiao is issued by the local tax bureau. Usually the seller should provide it and pay the 8.9%. Upon exportation I had to provide this Fapiao to the customs and went to the tax bureau and told them that I had lost it. Luckily I came to a nice guy who issued the Fapiao in my name without hesitation. From this I saw it is 8.9%.
When you buy a used bike the official way, the seller should include this 8.9% in the price and provide the Fapiao to the buyer. From what I experienced there is no VAT on used vehicles.

interesting thread for 2 reasons,
firstly people sell legal second hand bikes :weary:

and secondly, people buy bikes from legit sources :weary:


but on a serious note, thanks for the info, im buying my first brand spanking new bike, didn't quite know what to expect.
this has cleared up a little (including how they plan to charge me 1,300 rmb for a license plate and 1 years insurance and the inspection thing they do and all that... looks like something will probably be a little on the fake side.

Well, I had one of my researchers dig up some answers from the government tax bureau.

It is actually not that complicated. In fact, it pales by comparison to the insane craziness back home in Canada (pre HST where it was a blend of PST/GST, but only on certain items at certain times). But I digress.

So, here is how it works (using rounded numbers) ...

You negotiate the "purchase price" of a new bike for 10,000 rmb.

In my experience buying several new bikes in China, the advertised/negotiated price will be inclusive of the 17% VAT.

Therefore, the NET purchase price will be 10,000 divided by 1.17 = 8,547 rmb

The sales tax on new vehicles (cars or motorcycles) is 10% on the NET price.

Therefore, the sales tax on the net price is 8,547 rmb times 10% = 855 rmb

So, the TOTAL price you pay (before all the other charges) is:

8,547 (NET)
1,453 (17% VAT)
=====
10,000 (negotiated price )
855 (10% sales tax of the NET)
=====
10,855 rmb

So, a dealer could theoretically say that the "tax" is 8.55% ... BUT, there is a wrinkle ...

There seems to be some sliding scale insurance fee (80 rmb for <50cc; 120 rmb for 50cc to 250cc; 400 rmb for >250cc) that the government requires be paid prior to issuing the tax book & chop. Plus, the dealer has to get one of its minions to run around from pillar to post to get the little "tax paid book" with the "official red chop", so the dealer probably also tacks on a "service charge".

Likely, for expedience (especially when dealing with a foreigner), the dealer just lumps it all in as an 8.9% charge. Seems to be the standard.

The fapioa will show the 8,547 NET, the 1,453 VAT and the 10,000 PRICE, but it will not show the 10% sales tax. The little "tax paid book" (it is a dark green, almost black) doesn't show how much tax was paid, only that it was paid.

Neither tax is applied to used motorcycles. That's nice.

double post by mistake

thank you for clarify the all cost. The VAT is 17%:rolleyes1:.

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Originally Posted by Lao Jia Hou

The fapioa will show the 8,547 NET, the 1,453 VAT and the 10,000 PRICE, but it will not show the 10% sales tax. The little "tax paid book" (it is a dark green, almost black) doesn't show how much tax was paid, only that it was paid.

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Because you don't paid dealer for sale tax/gouzhi tax. The 'tax paid book' is paid and issued at traffic bureau.
I don't know the bikes. Car dealer can run that process "tax paid book" for you.