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A Taxing Problem for China’s Most Expensive Cars

Rumors of a luxury tax concern China's affluent buyers


It may be time to buckle up your seat belt if you plan on buying a luxury automobile in China.

According to rumors as reported in Gasgoo, a new tax of 20% on the purchase of luxury cars is being considered by Chinese officials to raise money. The tax would be levied on the those automobiles costing –at a minimum — between $274,000-$290,484 (1.7 million to 1.8 million yuan).

China implemented a similar tax in 2006, and the result was a run on luxury cars prior to the start of the policy, with buyers racing the clock on purchases against the tax. Of course, the market is somewhat limited: according to industry analyst Zhang Zhiyong, total annual sales of automobiles in the “luxury” market run at under 5,000 units a year.

How the tax will effect luxury car producers such as British-based Rolls Royce and Bentley is still an unknown.

As for the timing on the tax, Chinese officials acknowledge they are still studying the issues and the policy. Luxury automobile makers are also trying to get a handle on the issues before they make any marketing or pricing decisions on new models.

Written by Marc Bastow, Assistant Editor at

Article printed from InvestorPlace Media,

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