The Chinese government said it plans to amend its sales tax policy to reflect the actual sales price of vehicles, according to local reports citing a government announcement last week.

Effective from July, the 10% sales tax will be based on the actual sales transaction price of the vehicle rather than the listed price – according to the Ministry of Finance and State Taxation Administration

As vehicle prices are generally negotiated lower from the list price, the move is seen as more reflective of reality and is expected to provide a minor stimulus to car buyers.

The news emerged as the China Association of Automobile Manufacturers (CAAM) predicted that the Chinese vehicle market would be flat at 28.1m units in 2019, despite a more than 12% drop to 8,353,500 units in the first four months of the year. The association expects passenger vehicle sales to be largely unchanged at 23.7m units, while new energy vehicles (NEVs – plug-in hybrids and BEVs) are expected to rise by 27% to 1.6m units.