IMPLEMENTATION LEVEL

National

AFFECTED FLOW

Inflow

ANNOUNCED AS TEMPORARY

No

NON-TRADE-RELATED RATIONALE

No

ELIGIBLE FIRMS

all

JUMBO

No

TARIFF PEAK

No
← back to the state act
Inception date: 01 Apr 2009 | Removal date: 01 Apr 2010
Still in force

Tax or social insurance relief

Under the 2009 tax reform bill Japan passed by the Diet on March 27, 2009 and made official in the gazette March 31, 2009, a temporary lower taxation burden is placed on automobiles that meet higher environmental standards. Japan will temporarily waive an automobile weight tax for people buying hybrid cars and electric vehicles. The tax measure is also part of the more general Innovation for Green Economy and Society plan which, among others, foresees acceleration of development and deployment of photovoltaic power and next generation vehicles.
Under the existing system purchase of new cars was subject to the automobile acquisition tax, equivalent to ca. 5% of the car's price and three years' worth of the weight tax. In case of a hybrid or electric car, these taxes are waived entirely. Other types of environmentally friendly cars are also subject to 50-75% tax reductions depending on their emissions level.
From the beginning the new measure was expected to boost Japanese auto industry sales - the industry counted on 310,000 additional vehicles in sales in the financial year to March 2010.
In fact, according to information from Nissan Motor Co., orders for eco-friendly cars are up 30 percent in Japan so far in May as compared with the same period last year. Toyota Motor Corp, a market leader, reported overall domestic vehicle orders growth in April of 20 percent (mostly due to pre-sale orders for the new Prius hybrid, the first monthly rise in orders in two years). There is little doubt these sales increases are due to the government tax measures to encourage green investment and purchase of green products.
There are some concerns about the discriminatory nature of this measure. Reuters reported on June 10, 2009 that 'a green tax incentive introduced in April left all foreign car brands neatly outside the fence.'Sales of foreign-branded passenger cars are down by 30% in the year to date (as of June 10, 2009). According to Reuters 'strict mileage rules for a separate scheme that rewards consumers up to 250,000 yen ($2,500) to replace vehicles older than 13 years mean fewer than 40 percent of foreign cars are eligible, versus nearly 90 percent of domestic cars. The policies rankle foreign carmakers because Japan's fuel economy standards are based on an arcane testing method that critics say hardly resembles real-life driving.' 
Foreign producers could adjust their cars to meet the new standards, achieving this is expected to take at least a couple of months and incur significant costs.
Any discriminatory impact of the measure is exacerbated by the fact that Japanese consumers are said to be particularly sensitive to lowering taxes on automobiles and likely to buy a car allowing them to make use of tax waivers on the nine different taxes on Japanese car owners at purchase and during ownership. This complex system makes expensive cars even costlier. Reuters reports that 'automobile-specific taxes run as high as 38 times those of Western countries, according to the Japan Automobile Importers Association.' 

AFFECTED COUNTRIES

MAP
TABLE
EXPORT

AFFECTED SECTORS AND PRODUCTS

389 Other manufactured articles n.e.c.
8715 Baby carriages and parts thereof.
871500 Baby carriages and parts thereof.
414 Copper, nickel, aluminium, alumina, lead, zinc & tin, unwrought
8001 Unwrought tin.
800110 Tin, not alloyed
800120 Tin alloys
435 Lifting & handling equipment & parts
8709 Works trucks, selfpropelled, not fitted with lifting or handling equipment, of the type used in factories, warehouses, dock areas or airports for short distance transport of goods; tractors of the type used on railway station platforms; parts of the fore
870911 Electrical
870919 Other
870990 Parts
441 Agricultural or forestry machinery & parts
8701 Tractors (other than tractors of heading 87.09).
870130 Tracklaying tractors
870190 Other
444 Machinery for mining, quarrying & construction; parts
8704 Motor vehicles for the transport of goods.
870410 Dumpers designed for offhighway use
447 Weapons & ammunition & parts
8710 Tanks and other armoured fighting vehicles, motorised, whether or not fitted with weapons, and parts of such vehicles.
871000 Tanks and other armoured fighting vehicles, motorised, whether or not fitted with weapons, and parts of such vehicles.
491 Motor vehicles, trailers & semi-trailers; parts
8701 Tractors (other than tractors of heading 87.09).
870120 Road tractors for semitrailers
8703 Motor cars and other motor vehicles principally designed for the transport of persons (other than those of heading 87.02), including station wagons and racing cars.
870310 Vehicles specially designed for travelling on snow; golf cars and similar vehicles
870321 Of a cylinder capacity not exceeding 1,000 cc
870322 Of a cylinder capacity exceeding 1,000 cc but not exceeding 1,500 cc
870323 Of a cylinder capacity exceeding 1,500 cc but not exceeding 3,000 cc
870324 Of a cylinder capacity exceeding 3,000 cc
870332 Of a cylinder capacity exceeding 1,500 cc but not exceeding 2,500 cc
870333 Of a cylinder capacity exceeding 2,500 cc
8704 Motor vehicles for the transport of goods.
870421 g.v.w. not exceeding 5 tonnes
870422 g.v.w. exceeding 5 tonnes but not exceeding 20 tonnes
870423 g.v.w. exceeding 20 tonnes
870431 g.v.w. not exceeding 5 tonnes
870490 Other
8705 Special purpose motor vehicles, other than those principally designed for the transport of persons or goods (for example, breakdown lorries, crane lorries, fire fighting vehicles, concrete mixer lorries, road sweeper lorries, spraying lorries, mobile wor
870510 Crane lorries
870530 Fire fighting vehicles
870590 Other
8708 Parts and accessories of the motor vehicles of headings 87.01 to 87.05.
870810 Bumpers and parts thereof
870830 Brakes and servobrakes; parts thereof
870840 Gear boxes and parts thereof
870850 Driveaxles with differential, whether or not provided with other transmission components, and nondriving axles; parts thereof
870870 Road wheels and parts and accessories thereof
870880 Suspension systems and parts thereof (including shock absorbers)
870891 Radiators and parts thereof
870892 Silencers (mufflers) and exhaust pipes; parts thereof
870893 Clutches and parts thereof
870894 Steering wheels, steering columns and steering boxes; parts thereof
870895 Safety airbags with inflater system; parts thereof
870899 Other
492 Motor vehicle bodies; trailers & parts thereof
8707 Bodies (including cabs), for the motor vehicles of headings 87.01 to 87.05.
870710 For the vehicles of heading 87.03
8708 Parts and accessories of the motor vehicles of headings 87.01 to 87.05.
870821 Safety seat belts
870829 Other
8716 Trailers and semitrailers; other vehicles, not mechanically propelled; parts thereof.
871610 Trailers and semitrailers of the caravan type, for housing or camping
871639 Other
871690 Parts
499 Other transport equipment & parts
8711 Motorcycles (including mopeds) and cycles fitted with an auxiliary motor, with or without sidecars; sidecars.
871110 With reciprocating internal combustion piston engine of a cylinder capacity not exceeding 50 cc
871120 With reciprocating internal combustion piston engine of a cylinder capacity exceeding 50 cc but not exceeding 250 cc
871130 With reciprocating internal combustion piston engine of a cylinder capacity exceeding 250 cc but not exceeding 500 cc
871140 With reciprocating internal combustion piston engine of a cylinder capacity exceeding 500 cc but not exceeding 800 cc
871150 With reciprocating internal combustion piston engine of a cylinder capacity exceeding 800 cc
871190 Other
8712 Bicycles and other cycles (including delivery tricycles), not motorised.
871200 Bicycles and other cycles (including delivery tricycles), not motorised.
8713 Carriages for disabled persons, whether or not motorised or otherwise mechanically propelled.
871310 Not mechanically propelled
8714 Parts and accessories of vehicles of headings 87.11 to 87.13.
871410 Of motorcycles (including mopeds)
871420 Of carriages for disabled persons
871491 Frames and forks, and parts thereof
871492 Wheel rims and spokes
871493 Hubs, other than coaster braking hubs and hub brakes, and free wheel sprocketwheels
871494 Brakes, including coaster braking hubs and hub brakes, and parts thereof
871495 Saddles
871496 Pedals and crankgear, and parts thereof
871499 Other
8716 Trailers and semitrailers; other vehicles, not mechanically propelled; parts thereof.
871680 Other vehicles

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