Hong Kong's Car Tax System: What You Need to Know Before Buying a New Car

🚗 Editor's in-depth analysis | A complete guide to Hong Kong's car tax system

---

1. Basic Concepts of Hong Kong’s Car Tax System

1.1 Hong Kong Motor Vehicle Tax mainly includes:

• First Registration Tax (FRT) : This is the highest tax that must be paid when buying a new car or importing a car for the first time.
• Annual license fee (License Fee, commonly known as "license plate fee") : paid every year when renewing the license.
• Other fees : including vehicle inspection fees, insurance premiums, fuel tax (already included in gasoline), and import tax (already included in FRT).

---

2. Detailed explanation of First Registration Tax (FRT)

2.1 What is First Registration Tax?

• First Registration Tax (FRT) is a tax payable on all new vehicles (including imported new vehicles and unregistered second-hand vehicles) when they are first registered on the Hong Kong Motor Vehicle Register.
• As long as a used car has been registered in Hong Kong, it is no longer subject to FRT.

2.2 How is FRT calculated? (Taking "private car" as an example)

The tax rate is divided into different levels according to the vehicle price (also known as the "taxable value"):

Example calculation:
Suppose you buy a new car with a taxable value of $500,000:

• First $150,000: $150,000 x 40% = $60,000
• $150,000 down ($150,001 - $300,000): $150,000 x 75% = $112,500
• $200,000 down ($300,001 - $500,000): $200,000 x 100% = $200,000
• Total tax: $60,000 + $112,500 + $200,000 = $372,500

Please note: "Taxable value" is not the net price of the vehicle, but includes the vehicle price + freight + insurance + customs duties + other miscellaneous fees.

---

3. What are the differences in the tax system for electric vehicles?

3.1 First Registration Tax Concession for Electric Vehicles

• New arrangements from 2024:
  • One-for-One Scheme: If you trade in your old car for an electric vehicle, you can enjoy additional tax exemptions, up to a maximum of **$287,500**.
  • Non-one-for-one scheme: General electric vehicles are eligible for basic exemption, with a maximum exemption of **$97,500**.

3.2 Electric Vehicle FRT Calculation Example

Scenario 1: Participating in the "One-for-One" program and purchasing a new electric car with a taxable value of $400,000:

• First use the above private car tax rate to calculate the taxable amount
• Then deduct the "one-for-one" exemption (maximum $287,500)
• If the tax amount is less than $287,500, then it is completely tax-free.

Scenario 2: Not participating in the "One-for-One" program:

• Based on the general tax rate, the maximum exemption is $97,500

---

4. Annual license renewal fee (license plate fee)

4.1 How much is the license plate fee?

• Private car (per year) :
  • <= 1,500cc : $4,329
  • 1,501 - 2,500cc : $5,794
  • 2,501 - 3,500cc : $7,529
  • 3,501 - 4,500cc : $9,684
  • 4,501cc and above : $13,029
• Electric cars : $1,529 (super cheap!)

4.2 Other regular expenses

• Compulsory third-party automobile liability insurance (annual premium of approximately $4,000-$8,000, depending on vehicle type, age, and driving record)
• Vehicle inspection fee (depending on vehicle age and vehicle manufacturer)

---

5. Common Misunderstandings and Editor’s Reminders

5.1 Misconception: “New car sticker price = total price you pay”

• Fact: If you factor in the first registration tax, license fees, insurance, and agency fees, the landed price is often 30%-50% higher than the sticker price, and for luxury cars it can even be more than double.

5.2 Misconception: “Electric vehicles are completely tax-free”

• Fact: There is a tax-free cap; any amount above that is subject to tax. A one-for-one trade-in offers a maximum discount of $287,500, but not all models are tax-free.

5.3 Misconception: “Used cars are subject to first registration tax”

• Fact: Used cars registered in Hong Kong are exempt from FRT, but imported used cars will be taxed as new cars.

---

6. Editor’s Tax Saving Tips

1. Take advantage of the "One-for-One Electric Vehicle Replacement" scheme : If you have an old car at home, you can convert the title first and then replace it with an electric car, saving a total of $287,500.
2. Choose a small displacement/low price car : less tax, lower license plate fees, and much more savings in the long run.
3. Take advantage of seasonal offers/agent specials : Sometimes agents will cover some taxes or give you a year's license fee/insurance.
4. The budget should include the "landing price" : ask the agent clearly about all fees (tax + license fee + miscellaneous fees), don't just look at the price tag.
5. Consider a used car : If you have a limited budget, you can choose a high-quality used car, most of which are exempt from the first registration tax.

---

7. Tax Key Points for the Whole New Car Purchase Process (Editor's Checklist)

1. Select a car model → Ask the agent for a quote → Request a detailed "landing price" quote
2. Confirm the amount of first registration tax (the calculation method is required)
3. Check the price of license fees, vehicle inspection and insurance
4. If buying an electric car, check the eligibility and required documents for the "one-for-one" exchange.
5. Calculate total expenses and reserve a buffer for additional miscellaneous expenses
6. Before placing an order, ask clearly about the delivery time, payment process and cancellation terms

---

8. Summary

While Hong Kong's car tax system is complex, by understanding the key points, budgeting clearly, choosing the right model, and taking advantage of government incentives , you can actually be both smart and frugal when buying a car. Remember: Don't just look at the sticker price; the most important thing is to understand the landed price (i.e., the total cost). Plan ahead for taxes, licensing fees, insurance, and more, and you won't be afraid of buying a car with joy and excitement!

If you have a specific car model and want to know the tax amount, or want to find the most tax-saving combination, please leave a message and the editor will help you with the formula and make a spreadsheet!