THE MOTOR INDUSTRY OF JAPAN 2019

45/68

The acquisition tax imposed at the time of new or used vehicle purchase will be abolished effective from October 1, 2019, in tandem with the scheduled rate increase (to 10%) in the consumption tax.● ABOLITION OF THE ACQUISITION TAX● IMPLEMENTATION OF TAXATION ON AUTOMOTIVE ENVIRONMENTAL PERFORMANCE––––From October 1, 2019, an automotive environmental performance-based tax will come into effect as an adjunct provision to the automobile tax and the mini-vehicle tax. It will be imposed at the time of vehicle (passenger car, mini-vehicle, heavy-duty vehicle, etc.) purchase and calculated on the basis of the vehicle’s environmental (i.e., fuel efficiency, emissions) performance and its purchase price.The new tax will apply to both new and used vehicles, with the exception of vehicles purchased for ¥500,000 or less, which are exempted from the tax.The fuel efficiency and other environmental performance criteria on the basis of which the tax’s varying rates (e.g., from 0% to 3% for passenger vehicles and from 0% to 2% for commercial vehicles and mini-vehicles) have been determined are in line with criteria established in Japan’s Energy Conservation Law. Highly fuel-efficient vehicles as well as alternative-energy vehicles are exempted from the tax.For vehicles purchased within 12 months from October 1, 2019, a provisional 1% reduction on this tax will be applied.Provisional Automotive Environmental Performance-Based Tax Reduction (in effect from October 1, 2019 through September 30, 2020)To help balance market demand prior to and following the scheduled increase in the consumption tax in October 2019, a 1% reduction on the automotive environmental performance-based tax will be in effect for private-use passenger vehicles (including mini- and used vehicles) purchased within 12 months from October 1, 2019.Passenger carsMini-vehiclesExempt from taxExempt from tax1% of VPP2% of VPP1% of VPP3%2%2020Fuel Efficiency StandardsOtherAlternative-energy vehicles*+20%+10%Compliant*Electric, fuel cell, plug-in hybrid and natural gas vehicles and clean diesel passenger carsVPP: Vehicle purchase priceNote: Above tax rates will be applied to vehicles registered on or after October 1, 2020, following the expiration of the provisional 1% reduction on these rates.Environmental Performance-Based Tax for Private-Use Passenger Vehicles (including mini- and used vehicles)Current acquisition tax rates (applicable through September 30, 2019)Heavy-duty vehiclesNot compliant1% of VPP2% of VPPExempt from tax3% of VPP2015Fuel Efficiency StandardsAlternative-energy vehicles*Compliant+5%+10%Basic rateExempt1%2%3%ExemptExempt1%2%Reductions for Passenger CarsReduced rate(2019/10 through 2020/9)Basic rateExempt1%2%ExemptExempt1%Reductions for Mini-VehiclesReduced rate(2019/10 through 2020/9)*Electric, fuel cell, plug-in hybrid and natural gas vehiclesVPP: Vehicle purchase priceEnvironmental Performance-Based Tax for Private-Use Heavy-Duty VehiclesPassenger vehicles (for private use)Commercial vehicles, mini-vehiclesAcquisition TaxTo be abolishedon October 1, 20193%2%43