China will impose an extra 10 per cent tax on high-end cars in a bid to rein in lavish spending and to reduce emissions, the ministry of finance has said, a potential headache for luxury car makers.
The new tax rate will affect cars costing 1.3 million yuan ($188,852) and above, the ministry said in a statement late on Wednesday, which could impact high-end luxury brands such as Ferrari, Aston Martin and Rolls-Royce.
China, spearheaded by President Xi Jinping, has been cracking down on ostentatious shows of wealth over the past few years, a drive that has hit domestic luxury sales from premium spirits to handbags.
The latest move, which comes into effect from Thursday, will likely only be a small deterrent to wealthy car buyers already willing to open their wallets, but does signal a tighter stance by Beijing on high-end luxury in the sector.
