Authorities from the Ministry of Finance, the State Taxation Administration, and the Ministry of Industry and Information Technology have responded to questions regarding the adjustment of vehicle and vessel tax incentives for energy-efficient and new energy vehicles.
Recently, the three ministries jointly issued an "Announcement on Adjusting Vehicle and Vessel Tax Preferential Policies for Energy-Efficient and New Energy Vehicles." Officials from the relevant departments provided clarifications on the policy changes.
Key Policy Changes from 2027
According to the announcement, starting January 1, 2027, the policy of halving the vehicle and vessel tax for energy-efficient vehicles will be cancelled. The policies exempting battery-electric commercial vehicles, plug-in hybrid (including extended-range) vehicles, and fuel cell commercial vehicles from the tax will also be terminated. What is the rationale behind these adjustments?
Vehicle and vessel tax is a property tax levied annually on vehicle and vessel owners or managers. For passenger vehicles (with a seating capacity of 9 or fewer), the tax is tiered based on engine displacement. For instance, vehicles with an engine size between 1.0 and 1.6 liters face a tax ranging from 300 to 540 yuan. Vehicles between 1.6 and 2.0 liters face a tax from 360 to 660 yuan. For commercial vehicles, buses (seating over 9) are taxed per vehicle, with amounts from 480 to 1440 yuan. Trucks are taxed based on their curb weight, at a rate of 16 to 120 yuan per ton. Specific applicable tax rates are determined by provincial governments within these ranges.
The original preferential policies, implemented since 2012, aimed to support the development of the new energy vehicle industry and promote energy conservation. They provided a 50% reduction for qualifying energy-efficient vehicles and a full exemption for qualifying battery-electric commercial vehicles, plug-in hybrids, and fuel cell commercial vehicles. These measures have played a positive role in encouraging consumer purchases and fostering industry growth.
In recent years, China's automotive sector, particularly the new energy vehicle segment, has accelerated its development. In 2025, new energy vehicle sales reached 16.49 million units, accounting for over 50% of domestic new car sales. Vehicles like battery-electric commercial vehicles, plug-in hybrids, fuel cell commercial vehicles, and energy-efficient cars are now significant assets, comparable to traditional fuel vehicles. Data shows that in 2025, the average sales price for a plug-in hybrid passenger car was 218,000 yuan, with some models exceeding one million yuan. Resuming the vehicle and vessel tax on these vehicle types helps promote tax fairness and enhances the tax system's role in income distribution.
Tax Status for Battery-Electric and Fuel Cell Passenger Cars
Are battery-electric passenger cars and fuel cell passenger cars subject to the vehicle and vessel tax? According to the Vehicle and Vessel Tax Law of the People's Republic of China, these vehicle types are not within the scope of the tax and therefore are not levied.
Pre-Announcement Vehicle Eligibility
For the four categories of vehicles (battery-electric commercial vehicles, plug-in hybrids, fuel cell commercial vehicles, and energy-efficient vehicles) acquired before the announcement takes effect, will they continue to enjoy the tax preferences? Per the announcement's provisions, starting January 1, 2027, taxpayers who obtained such vehicles before the implementation date will no longer be eligible for the preferential policies and must pay the vehicle and vessel tax as required.
Calculating the Tax Post-2027
How will the tax be calculated for these four vehicle types after the announcement takes effect? From January 1, 2027, the tax payable for these vehicles must be calculated based on the specific tax rates determined by provincial governments according to the tax schedule attached to the Vehicle and Vessel Tax Law.
Methods for Tax Declaration and Payment
How should owners declare and pay the tax for these vehicles after the policy change? Under current tax administration rules, there are two primary methods for vehicle and vessel tax payment. One is collection and remittance by insurance agencies, where the tax is deducted when the taxpayer purchases compulsory traffic accident liability insurance. The other is self-declaration and payment by the taxpayer, available through both online and offline channels.
The online method involves logging into the local electronic tax bureau website and navigating to the "Consolidated Declaration of Property and Behavior Taxes" module to declare and pay. The offline method requires visiting the tax service hall in the vehicle's registration location to file and pay on-site. Taxpayers can choose their preferred method. It is important to note that the vehicle and vessel tax is declared annually, calculated monthly, and paid in a lump sum. The specific declaration and payment deadline is set by provincial governments. When an insurance agency collects the tax on behalf of the taxpayer, payment is made simultaneously with the purchase of compulsory insurance.
Determining the Tax Payment Location
Where should the tax be paid for these four vehicle types after the announcement? For vehicles legally registered with the vehicle registration department, taxpayers who self-declare should pay the tax at the vehicle's registration location. If an insurance agency collects the tax, payment is made at the location of that agency. Once the tax has been collected and remitted by an insurance agency, the taxpayer is not required to declare or pay it again to the tax authorities. For vehicles that are not required by law to be registered, the tax should be paid at the location of the vehicle's owner or manager.
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