Dealers 'exploit loophole on cars'

PUBLISHED : Monday, 11 March, 1996, 12:00am
UPDATED : Monday, 11 March, 1996, 12:00am
 

SOME car dealers have reduced the level of first registration tax by withdrawing the 12-month free warranty most manufacturers offer new owners.


In doing so, they are exploiting a loophole in a measure that aims to crack down on tax evasion, said the chief executive of the Hong Kong Automobile Association, Kendy Chan Kin-chung.


Under the measure, which took effect in 1994, dealers have to get approval from the Transport Department on the retail price they set for a car, instead of using a 'manufacturing invoice' to prove the value.


Some items, including audio systems, alarms, air-conditioners and warranties have been exempted from the tax.


But some dealers have stopped giving 12-month warranties in order to lower the retail price, and the customers have to pay for any service.


'Although it is optional to customers, nobody wants to buy a new car without a warranty. They are therefore forced to pay for the service, which used to be free,' said Mr Chan.


He said that the measure proposed by the Financial Secretary to set a ceiling value on tax-exempted items would help to plug the loophole.


But he said the end result would be a higher retail price for the customers.


'The dealers would not absorb the extra cost, unless the economy is really bad,' he said.


A Transport Department spokesman said he could not disclose details on how car dealers were evading tax.


Share

Send to a friend

To forward this article using your default email client (e.g. Outlook), click here.

Enter multiple addresses separated by commas(,)

CAPTCHA
This question is for testing whether or not you are a human visitor and to prevent automated spam submissions.
Image CAPTCHA
Enter the characters shown in the image.

Related topics