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China to boost auto sales; halve purchase tax for small-engine cars

China to boost auto sales; halve purchase tax for small-engine cars

The tax cut will be applicable for purchases from June 1, 2022 through the end of the year.

China to boost auto sales; halve purchase tax for small-engine cars (Photo: Reuters) China to boost auto sales; halve purchase tax for small-engine cars (Photo: Reuters)

China's Ministry of Finance said on Tuesday that it will halve a purchase tax for small-engine cars to boost auto sales.

The government will cut the tax for cars priced at no more than 300,000 yuan ($45,000) and with 2.0-liter or smaller engines to 5% of the sticker price, it said in a statement.

The tax cut will be applicable for purchases from June 1, 2022 through the end of the year.

The move was among a series of measures China's cabinet unveiled on Tuesday to revive its economy as its stringent zero-COVID policies have disrupted production and dampened demand in recent months.

The government said last week that it planned to relieve car buyers of purchase taxes worth 60 billion yuan after the world's biggest auto market saw sales plunge almost 48% in April from a year earlier.

Nissan's Sylphy 7201.T, Volkswagen's Lavida VOWG.DE and Great Wall Motor's Haval H6 601633.SS are among the best-selling models in the category that will benefit from the tax cut.

($1 = 6.6631 Chinese yuan)

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