BEIJING, Dec 15 (Reuters) - China’s Ministry of Finance said on Thursday it will extend a tax cut on small-engine vehicles to 2017, keeping the purchase tax below its normal 10 percent.
The purchase tax rate for vehicles with 1.6-litre engines or below was reduced to 5 percent in October 2015 as a way to stimulate demand for cars and kept at the same rate throughout this year.
The Ministry of Finance said in a statement posted on its official website that the rate will go up to 7.5 percent from the beginning of next year but will still be below the normal rate of 10 percent.
The ministry said it plans to levy the normal 10 percent tax on small-engine cars starting on Jan 1, 2018.
Earlier this week an official at the China Association of Automobile Manufacturers (CAAM) told reporters that China’s overall automobile sales could increase 13 percent this year from 2015.
Auto industry officials and experts attribute much of that relatively strong growth to the purchase tax cut on small-engine cars. (Reporting By Norihiko Shirouzu; Editing by Muralikumar Anantharaman)