[Car Tips] How to Calculate the First Registration Tax

🚗 Editor's opening remarks

Buying a car in Hong Kong isn't just about price. The First Registration Tax (FRT) is the single largest factor in the price of a vehicle. Many new, parallel-imported, and even used imported cars end up being significantly more expensive than overseas vehicles due to Hong Kong's aggressive collection of this tax .

The first time I saw a quote myself, I noticed a car that sold for HK$200,000 overseas was worth nearly HK$400,000 once it landed in Hong Kong. The reason was… FRT, insurance, and license fees all stacked up. So how do you calculate this number? Today, let me break it down for you from a more authentic perspective.

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📜 1. What is First Registration Tax (FRT)?

• Official name: First Registration Tax
• Governed by Chapter 3(1) of the Inland Revenue Ordinance and the Motor Vehicles (First Registration Tax) Ordinance
• Levied on vehicles registered in Hong Kong for the first time (including new vehicles and imported vehicles purchased overseas)

Features :

• One-time tax (no need to pay again when renewing the license)
• Calculated based on the vehicle's taxable value
• Different types of vehicles (private cars/electric vehicles/commercial vehicles) have different tax rates

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📊 2. Basic FRT calculation formula

Standard tax rate for private cars (Petrol/Diesel)

⚠️Taxable Value (TV) = Vehicle Price (CIF Price) + Insurance/Freight (if applicable) + Distribution and Warranty Costs

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Electric private cars (current policy)

Hong Kong has some tax exemptions for electric private cars (the policy will remain in effect until 2025, but may be adjusted at any time):

• The basic tax rate is the same as for private cars, but car owners can use the "one-for-one" scheme to reduce the FRT (up to $287,500)
• No car trade-in → Lower tax deduction (most capped at $97,500)

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Commercial vehicles/Public vehicles/Motorcycles

• Trucks, buses, and special vehicles: FRT is basically 0% or very low (policy encourages commercial use)
• motorcycle:
  • First $50,000 → 35%
  • The remaining amount → 60%

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🧮 3. Detailed calculation example (private car)

Suppose you want to buy a car:

• Foreign FOB price: $180,000
• Freight Insurance (C&F): $10,000
• Distribution costs and warranty: $20,000

Taxable Value (TV) =
$180,000 + $10,000 + $20,000 = $210,000

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Tax calculation steps

1. First $150,000 × 46% = $69,000
2. Remaining $60,000 ($150,001 to $210,000) × 86% = $51,600

Total First Registration Tax (FRT) = $69,000 + $51,600 = $120,600

✅Landed price = Taxable value $210,000 + FRT $120,600 + license fee + first year insurance

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🔍 4. Common FRT Myths and Facts

❌ Myth: I don’t pay FRT when I buy a used car

✅ The truth: Only second-hand cars that have been registered in Hong Kong are eligible. If a second-hand car is imported from overseas and landed in Hong Kong, it is considered a "first registration" and FRT must be paid.

❌ Myth: You can save tax by quoting a low car price

✅ The truth: The Transport Department has a set of reference prices (Customs Reference Price). Orders that are far below the market price will be rejected or even subject to surcharges.

❌ Myth: FRT must be paid in full at one time

✅ The truth: It is a one-time tax. If you don’t pay it off, you won’t be able to get a license to drive.

❌ Myth: Placing your own orders is much cheaper than using an agent

✅ The truth: Freight, inspection, vehicle testing, insurance and FRT need to be calculated, and sometimes the total cost is almost the same, and the agency warranty is missing.

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🪤 5. I've seen FRT pitfalls

1. Wrong entry time
   • Some people wait until the tax increase policy is implemented, and then the tax amount skyrocketed by tens of thousands.
2. Excluding the impact of high-emission tax rates
   • For large-displacement luxury cars, the FRT level is as high as 132%, which is a straight rise.
3. Ignore insurance premiums and testing fees
   • The landing costs other than FRT are so high that they scare people, and it’s not just about the tax.
4. Mistakes in electric vehicle tax exemptions
   • The "one for one" exchange was useless, and the result was a loss of hundreds of thousands of dollars.

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📌 6. Editor's Tax Avoidance Tips (Legal Ways)

1. Make good use of "one-for-one"
   • After the old car is reimbursed, you can replace it with a new electric car and use up the maximum exemption limit.
2. Choose the right displacement model
   • Avoid skipping high tax bands (e.g. 2999cc → 3001cc is a big difference)
3. Landing early
   • Successfully registering before the government adds FRT can avoid the impact of tax increases.
4. Be cautious when transferring truck license plates to private cars
   • If the use of the vehicle is changed midway, additional FRT may be required.

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📊 7. Editor's Lazy Table: Private Car FRT Calculation Ladder

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🎯 Editor's Conclusion

FRT is the biggest hidden price surcharge when buying a car in Hong Kong. If you don't calculate it clearly beforehand, you could end up with a budget that's just right, only to end up exceeding your budget when taxes are added at the time of purchase. Remember: every dollar of taxable value affects the tax amount at each subsequent step , so it's best to check the government's calculation formula before buying a car and ask the dealer whether the "landed price" includes FRT.