Eco-Car Tax Break and Subsidies for Vehicles

Country / jurisdiction: Japan · Year: 2009 · Status: In force · Level: National · Type: Voluntary

Eco-Car Tax Break

Clean energy vehicles can enjoy tax reduction / exemption with respect to three vehicles tax, such as motor vehicle tonnage tax, automobile acquisition tax and motor vehicle tax (ownership). Eligible vehicle types depend on high fuel efficiency internal combustion engine vehicles or other technology power trains – such as electric vehicles, fuel-cell powered vehicles, plug-in hybrid vehicles, natural gas vehicles and clean diesel passenger vehicles. Since October 2019, automobile acquisition tax rate will be revised. New automobile acquisition tax rate will depend on fuel efficiency.

The details of tax reduction rate with each vehicle taxies are explained below.

Classification of tax reduction rate

*Those eligible vehicles can enjoy the highest tax rate waiver.

*In case of internal combustion engine vehicles, eligible ones’ fuel efficiency level should be higher than the efficiency standard (under the top-runner program). Incentives for such vehicles are determined according to fuel efficiency level.

*Tax reduction rate are below.

Within 20% to 100% of tax (depending on type of vehicle tax and fuel efficiency level)

Subsidy for new clean energy vehicles (EV, FCV etc)

Japanese government offers subsidy for new clean energy vehicles, such as electric vehicles, fuel-cell powered vehicles, plug-in hybrid vehicles and clean diesel passenger vehicles, in order to reduce fossil fuel and CO2 emissions from the transport sector. Calculations of subsidy are determined up by vehicle type. For example, electric vehicles’ subsidy is determined by vehicle mileage. On the other hand, fixed level of subsidy is provided to plug-in hybrid vehicle. The upper limit of subsidy amount by vehicle type are as follows.

i- electric vehicles and fuel-cell powered vehicles

up to 400 thousand yen

ii- plug-in hybrid vehicles

up to 200 thousand yen

iii- clean diesel passenger vehicles

up to 150 thousand yen

Amount of expenditure

FY2019, 16 billion yen (FY2018, 13 billion yen)

Official source: http://www.mlit.go.jp/jidosha/jidosha_fr1_000028.html