Qualifying Standards for Environment-friendly Commercial Vehicles
Details of the Tax Concession Scheme
Environment-friendly Commercial Vehicles
b. Environment-friendly commercial vehicles imported by parallel importers or individuals
Validity of "Environment-friendly Commercial Vehicle Certificate"
Profits Tax Deduction for Capital Expenditure on Environment-friendly Vehicles
Tax Incentives Scheme for Environment-friendly Commercial Vehicles
Vehicular emissions are the major source of roadside air pollution in Hong Kong. Reducing emissions from vehicles can improve our roadside air quality. To encourage the use of environment-friendly commercial vehicles, which have lower emissions, starting from 1 April 2008, reduction in the First Registration Tax (FRT) has been offering to buyers of newly registered environment-friendly commercial vehicles. Vehicle owners buying environment-friendly commercial vehicles can enjoy tax concessions and make an effort to protect the environment.
Qualifying Standards for Environment-friendly Commercial Vehicles
The qualifying standards for environment-friendly commercial vehicles taking effect from 1 April 2024 are set out in Table 1 below.
Table 1 Qualifying Standards for Environment-friendly Commercial Vehicles (from 1 April 2024 to 31 March 2025)
|
Vehicle Categories |
Engines* |
Qualifying Standards |
|---|---|---|
|
Heavy Duty Commercial Vehicles (Design weight of more than 3.5 tonnes) (Including Goods Vehicles, Buses, Light Buses, and Special Purpose Vehicles) |
Compression Ignition (Diesel) |
(1) Euro VI On Board Diagnostics (OBD) Phase C and (2) Emit at least 30% less Nitrogen Oxides (NOx) than Euro VI emission limit |
|
Positive Ignition (Petrol or Liquefied Petroleum Gas (LPG)) |
||
|
Light Duty Commercial Vehicles (Design weight of not more than 3.5 tonnes) (Including Goods Vehicles, Light Buses and Special Purpose Vehicles but not Taxis) |
Compression Ignition (Diesel) |
(1) Euro 6c OBD Euro 6-2 and (2) Emit at least 30% less NOx than Euro 6 emission limit |
|
Positive Ignition (Petrol or LPG) |
||
|
Taxis |
Positive Ignition (Petrol and/or LPG) |
(1) Euro 6c OBD Euro 6-2 and (2) Emit at least 80% less NOx than Euro 6 emission limit |
* Only taxis and light buses can be operated on LPG
The Environmental Protection Department (EPD) reviews the qualifying standards annually in the light of vehicle technological advancement, market availability and the prevailing statutory emission standards for newly registered vehicles. The objective is to ensure that tax incentive is available only to vehicles with an outstanding emission performance outstripping the prevailing statutory requirements. If tightened, the new qualifying standards become effective on the following 1 April.
Details of the Tax Concession Scheme
Under this tax concession scheme, "commercial vehicles" include taxis, light/medium/heavy goods vehicles, public/ private light buses, public/ private non-franchised buses and special purposes vehicles.
The rates of reduction of the first registration taxes for different vehicle classes qualified under the scheme are as follows–
(a) 100% for taxis, light buses, non-franchised buses and special purpose vehicles;
(b) 50% for goods vehicles (except van-type goods vehicles up to 1.9 tonnes permitted gross vehicle weight); and
(c) 30% for van-type goods vehicles up to 1.9 tonnes permitted gross vehicle weight.
The tax concessions are subject to vehicle-class-specific caps per vehicle. For details, please see the table below.
Table 2 First Registration Tax Concession Rates and Caps for Environment-friendly Commercial Vehicles
|
Vehicle Classes |
First Registration Tax Rate (% of vehicle taxable value) |
First Registration |
First Registration Tax Concession Cap ($ per vehicle) |
|
Light Goods Vehicles (vans) |
352 |
30 |
8,500 |
|
Light Goods Vehicles (vans) |
17 |
50 |
40,000 |
|
Light Goods Vehicles (non vans) |
15 |
50 |
29,000 |
|
Medium Goods Vehicles (weight more than 5.5 tonnes but not exceeding 24 tonnes) |
15 |
50 |
56,000 |
|
Heavy Goods Vehicles |
15 |
50 |
69,000 |
|
Non-franchised Buses |
3.7 |
100 |
78,000 |
|
Light Buses |
3.7 |
100 |
27,000 |
|
Taxi |
3.7 |
100 |
12,000 |
|
Special Purpose Vehicles |
3.7 |
100 |
63,000 |
1. The "weight" means "permitted gross vehicle weight".
2. The first registration tax rates of van type goods vehicles weighing up to 1.9 tonnes are 35% on the first $150,000 of vehicle taxable value, 65% on the next $150,000 and 85% on the remainder.
3. The tax concessions for newly registered environment-friendly commercial vehicles of the above vehicle classes are subject to vehicle-class-specific caps per vehicle. The FRT payable is based on the following calculation method:
(a) If FRT concession is less than FRT concession cap, FRT payable = [vehicle taxable value x FRT rate x (1-FRT waiver)];
(b) If FRT concession is greater than FRT concession cap, FRT payable = [vehicle taxable value x FRT rate] – FRT concession cap.
Environment-friendly Commercial Vehicles
Environment-friendly commercial vehicles can be imported either by dealers authorized by vehicle manufacturers (i.e. authorized vehicle dealers), parallel importers or individuals. Details are as below:
(a) Environment-friendly commercial vehicles imported by authorized vehicle dealers and type-approved by EPD.
Vehicle manufacturers have provided sufficient information to prove to the satisfaction of EPD the compliance of these vehicle models with the environment-friendly commercial vehicle qualifying standards. EPD has thus issued to each of the vehicle models an "Environment-friendly Commercial Vehicle Certificate" such that vehicles of the same model imported by the relevant vehicle manufacturer via his authorized vehicle dealer are also environment-friendly commercial vehicles (i.e. type-approved to be compliant with the environment-friendly commercial vehicle qualifying standards).
A vehicle buyer in consideration of buying an environment-friendly commercial vehicle should ask the authorized vehicle dealer for the "Environment-friendly Commercial Vehicle Certificate" issued by EPD for the vehicle model.
Below is a list of environment-friendly commercial vehicle models that have been type-approved by EPD.
(b) Environment-friendly commercial vehicles imported by parallel importers or individuals
Vehicles manufactured for different places may be designed to meet different emission standards and have different options for purchase which can affect their emission performance. Thus, vehicles of the same model name can be designed to meet different emission standards. Evidence should be submitted to EPD for each of the vehicles imported by parallel importers or individuals to substantiate their compliance with the environment-friendly commercial vehicle qualifying standards. Since these vehicles are imported on an individual basis, EPD will issue an "Environment-friendly Commercial Vehicle Certificate" to each of them.
A vehicle buyer in consideration of buying such a vehicle should ask for the valid "Environment-friendly Commercial Vehicle Certificate" issued by EPD for the vehicle. The Certificate will bear details of the vehicle including engine number, chassis identification number and vehicle model and the validity period of the certificate.
Note: Any vehicle without a valid "Environment-friendly Commercial Vehicle Certificate" issued by EPD will not be eligible for the FRT reduction for environment-friendly commercial vehicles, irrespective of whether the vehicle is imported by an authorized vehicle dealer, a parallel importer or an individual.
Validity of “Environment-friendly Commercial Vehicle Certificate”
Since EPD will review the environment-friendly commercial vehicle qualifying standards annually for tightening them in the light of vehicle technological advancement, the "Environment-friendly Commercial Vehicle Certificate" has a validity period. Upon its expiry, the vehicle concerned will lose its eligibility for the FRT concession if it cannot comply with the new qualifying standards at that time. Thus, vehicle owners or vehicle vendors should submit the first registration application to the Transport Department (TD) during the validity period of the relevant "Environment-friendly Commercial Vehicle Certificate" to benefit from the FRT concession.
How to apply for the first registration tax concession for an Environment-friendly Commercial Vehicle?
With effect from 1 April 2008, a vehicle owner applies with TD for first registration of his commercial vehicle, which is compliant with the qualifying standards for environment-friendly commercial vehicles and have a valid "Environment-friendly Commercial Vehicle Certificate" at the same time will have the FRT reduction, subject to the vehicle-class-specific cap.
(a) Environment-friendly commercial vehicles imported by authorized vehicle dealers and type-approved by EPD.
An authorized vehicle dealer submit the first registration application for a new vehicle of a specific vehicle model to TD shall produce the valid "Environment-friendly Commercial Vehicle Certificate" for that type-approved vehicle model issued by EPD.
(b) Environment-friendly commercial vehicles imported by parallel importers or individuals
A vehicle owner submit the first registration application for his new vehicle to TD shall produce the original copy of the valid "Environment-friendly Commercial Vehicle Certificate" of that vehicle issued by EPD.
Note: In addition to the above requirements, vehicle dealers or owners shall also complete all the existing procedures for vehicle first registration and produce necessary documents to the departments concerned. Longer processing time would be required to confirm information on vehicles and the level of eligible concession rates.
Profits Tax Deduction for Capital Expenditure on Environment-friendly Vehicles
Starting from 18 June 2010, businesses which have purchased eligible environment-friendly vehicles may deduct the capital expenditure incurred under profits tax.
Profits Tax Deduction for Capital Expenditure on Environment-friendly Vehicles
For enquiries about the environment-friendly commercial vehicle tax concession scheme, please contact the following departments:
EPD (for enquires about environment-friendly commercial vehicle models and details of the scheme)
Tel: 2594 6392
Fax: 2824 9361
Address: Revenue Tower, Wanchai, Hong Kong, Environmental Protection Department Mobile Source Group.
TD (for enquiries about the FRT reduction rates)
Tel: 2804 2600
Address: Hong Kong Licensing Office, Transport Department, 3/F, United Centre, 95 Queensway, Hong Kong.
Webpage: http://www.td.gov.hk/home/index.htm
Inland Revenue Department (for enquires about the profit tax deduction for capital expenditure on environment-friendly vehicles)
Tel: 187 8088
Address: Inland Revenue Centre, 5 Concorde Road, Kai Tak, Kowloon, Hong Kong
Webpage: http://www.ird.gov.hk/eng/faq/efv.htm