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Official Website for Revision of Automobile Taxation Systems Launched

Automobile taxation systems will dramatically change from October 2019

June 7, 2019

There will be dramatic changes to automobile taxation systems from October 2019, targeting only passenger automobiles for private use. Therefore, the Ministry of Economy, Trade and Industry (METI) has launched an official website exclusively to provide easy-to-understand explanations of the details of the revised automobile taxation systems to be enforced from October 2019 so as to further raise public awareness of the details of the revised systems.
 
The website provides a variety of contents, including downloadable posters and flyers, short explanatory video clips, and simulations of the tax reduction amount based on model case examples of automobiles by engine displacement. METI hopes that people will proactively make use of the website.
 
Following on from this effort, METI will strive to advance such awareness raising and calling for attention in collaboration with the public and private sectors.

1. Outline of the website

Upholding the concept titled “Change! Dramatic Revision of the Automobile Taxation Systems,” METI explains the details of the revised automobile taxation systems to be enforced from October 2019 and other information on the following website in an easy-to-understand manner. In addition to the webpage for the details of the revision, the website also provides a variety of contents, including downloadable posters and flyers, short explanatory video clips, and simulations of the tax reduction amount based on model case examples of automobiles by engine displacement.

2. Highlights of the revision enforced from October 2019

From October 2019, dramatic changes in the following two aspects will be made to the current automobile taxation systems, targeting only passenger automobiles for private use.

(1) Annual reduction in automobile tax rates imposed on new automobiles

The automobile tax rates imposed on new automobiles that consumers have bought in or after October 2019 will be reduced every year. The amount of tax for new automobiles will decrease more as the scale of engine displacement becomes smaller to 2,000 cc or less, particularly the tax for compact cars with 2,000 cc or less engine displacement. For example, a consumer who purchases a new compact car with 2,000 cc or smaller engine displacement in or after October 2019 will enjoy a reduction in their annual tax rate by about 10% to 15% from the conventional tax rate up to a maximum annual reduction of 4,500 yen. This dramatic reduction in the automobile tax rates for all scales of engine displacement is the first effort that Japan has made since the inauguration of the automobile taxation systems in 1950.

(2) Abolition of the automobile acquisition tax system introduction of an “environmental performance-based tax break” with the special treatment for an additional tax reduction by 1% for one year

The current automobile acquisition tax system will be abolished in October 2019, when the consumption tax rate will be raised to 10%, and a new automobile tax system, called “environmental performance-based tax break,” will be introduced. Under this new system, taxes will be imposed on automobiles according to their performance in terms of fuel efficiency and other elements, and consumers are required to pay the taxes upon purchasing an automobile. For one year from October 1, 2019, to September 30, 2020, a special treatment for the environmental performance-based tax break will be enforced to additionally cut the regular tax rate under the new system by 1% for both new and used automobiles.

Notes:
1. The details of the revision are in line with the laws and regulations as of April 1, 2019.
2. The tax reduction amount under the revised automobile taxation systems varies depending on the prices of automobiles per se, engine displacements, and the levels of achievements that target automobiles have made in fuel efficiency. For more information on the tax reduction amount for specific types of automobiles, please inquire with automobile retailers and other related stores.

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Automobile Division, Manufacturing Industries Bureau

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