Are you familiar with car tax in Japan? When you buy or use a car, you have to pay several taxes.
This article explains the taxes related to cars, including taxes needed when you buy a car, taxes you pay for owning a car, and taxes you indirectly pay when using a car.
Please jump to the relevant area for you from the table of contents.
Table of Contents
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If you are interested in investing in Japan with other common taxes in Japan, you might find this article helpful.
Chapter 1: Key taxes when buying a car
When you buy and own a car, you have to pay four taxes: the automobile tax, the automobile weight tax, the environmental performance tax, and the consumption tax. The table below summarizes the details, payment times, and payment methods for each tax, which will be explained in order.
| Tax Type | Details | When To Pay | How To Pay |
|---|---|---|---|
|
Automobile Tax / Light Vehicle Tax |
Tax for owning a car on April 1st each year |
By the end of May |
Bank counter, internet banking, credit card, convenience store, smartphone app |
|
Automobile Weight Tax |
Tax based on the car’s weight |
At purchase or inspection |
Pay with a stamp |
|
Environmental Performance Tax |
Tax based on the car’s environmental performance |
At purchase |
Pay with a stamp |
|
Consumption Tax |
Tax on the car and all accessories |
At purchase |
At the time of car purchase |
Chapter 2: Automobile Tax / Light Vehicle Tax
The automobile tax and light vehicle tax are called 自動車税・軽自動車税 (jidōsha-zei / kei-jidōsha-zei) in Japan.
The automobile tax and light vehicle tax are required for car owners as of April 1st. You pay in advance for the period from April to the following March.
The automobile tax, also called the automobile tax classification split, varies based on the car type, use, total engine displacement, maximum load capacity, and seating capacity.
If you buy a car in the middle of the year, you pay a prorated amount until the following March. However, there is no prorated calculation for the light vehicle tax, so if you buy a car after April 2nd, you don’t pay the tax for that year.
The amount of the automobile tax depends on whether the car was first registered before or after October 1, 2019. The details are shown in the table below.
Automobile Tax by Engine Displacement
| Total Engine Displacement | First Registered on or After October 1, 2019 | First Registered on or Before September 30, 2019 |
|---|---|---|
|
Electric Vehicle |
¥25,000 |
¥25,000 |
|
1L or less |
¥25,000 |
¥29,500 |
|
Over 1L to 1.5L |
¥30,500 |
¥34,500 |
|
Over 1.5L to 2L |
¥36,000 |
¥39,500 |
|
Over 2L to 2.5L |
¥43,500 |
¥45,000 |
|
Over 2.5L to 3L |
¥50,000 |
¥51,000 |
|
Over 3L to 3.5L |
¥57,000 |
¥58,000 |
|
Over 3.5L to 4L |
¥65,500 |
¥66,500 |
|
Over 4L to 4.5L |
¥75,500 |
¥76,500 |
|
Over 4.5L to 6L |
¥87,000 |
¥88,000 |
|
Over 6L |
¥110,000 |
¥111,000 |
|
Light Vehicle (Kei Car) |
¥10,800 |
¥10,800 |
*Note: Applies when the Green Taxation System for Automobile Tax Classification is not applicable.
Automobile Tax Rates Based on Environmental Impact
To protect the global environment, the automobile tax includes additional charges for vehicles with higher environmental impact and reductions for those with lower impact.
For example:
- Diesel vehicles registered for more than 11 years, gasoline vehicles registered for more than 13 years, and LPG vehicles have a 15% additional tax on the standard amount.
- Light vehicles are also subject to additional tax if they are over 13 years old.
On the other hand, electric vehicles, including fuel cell vehicles, natural gas vehicles, and hybrid vehicles, which have a smaller environmental impact, receive a 50% to 75% reduction on the standard tax amount. However, this reduction only applies for the first year after the initial registration. From the second year, the tax returns to the standard rate.
Chapter 3: Automobile Weight Tax
The automobile weight tax is based on the vehicle’s weight, and is called as 自動車重量税 / jidōsha jūryō-zei in Japan.
The amount of tax varies depending on the number of years since the vehicle’s first registration. For new cars, you pay for the first three years at the time of purchase, and then continue to pay at each vehicle inspection.
Additionally, the tax rate differs between eco-friendly cars and other vehicles. For new cars, the tax is based on the 2020 fuel efficiency standards, and you can receive exemptions or reductions depending on how well the vehicle meets these standards.
Automobile Weight Tax for Private Cars (3-Year Period)
| Eco-Friendly Car | Eco-Friendly Car (Reduction from Standard Rate) | Non-Eco-Friendly Car | ||
|---|---|---|---|---|
|
Vehicle Weight |
2020 Fuel Efficiency Standards +40% Achieved |
50% Reduction (2020 Standards +20% Achieved) |
25% Reduction (2020 Standards Achieved) |
No Reduction |
|
Up to 0.5 tons |
tax exemption |
¥3,700 |
¥5,600 |
¥12,300 |
|
Over 0.5 tons to 1 ton |
¥7,500 |
¥11,200 |
¥24,600 |
|
|
Over 1 ton to 1.5 tons |
¥11,200 |
¥16,800 |
¥36,900 |
|
|
Over 1.5 tons to 2 tons |
¥15,000 |
¥22,500 |
¥49,200 |
|
|
Over 2 tons to 2.5 tons |
¥18,700 |
¥28,100 |
¥61,500 |
|
|
Over 2.5 tons to 3 tons |
¥22,500 |
¥33,700 |
¥73,800 |
|
Additionally, for non-eco-friendly cars, the automobile weight tax increases if the car is 13 years or older from the initial registration, and again at 18 years. These vehicles are subject to additional charges, making the tax higher.
Source: Ministry of Land, Infrastructure, Transport and Tourism, JAF
Chapter 4: Environmental Performance Tax
The Environmental Performance Tax is based on a vehicle’s fuel efficiency and is paid at the time of purchase. It is called as 環境性能割, kankyō seinō-wari. The amount of this tax is calculated by applying a tax rate to the vehicle’s acquisition price. However, no tax is charged if the acquisition price is ¥500,000 or less.
The Environmental Performance Tax is reduced for vehicles meeting certain fuel efficiency standards:
- Electric vehicles, natural gas vehicles, and plug-in hybrid vehicles are exempt (0%).
- Other gasoline vehicles, including hybrids, have a tax rate ranging from 0% to 3%.
- Light vehicles have a tax rate ranging from 0% to 2%.
Chapter5: Consumption Tax
Consumption tax is applied when purchasing goods or receiving services. This also applies to buying a car. A 10% consumption tax is levied on the entire purchase price of the car, including the vehicle itself and any accessories.
Chapter6: Other Car Tax in Japan
Gasoline Tax
Gasoline tax is called as ガソリン税, gasorin-zei. The retail price of gasoline includes various taxes, such as the gasoline tax and the gas oil delivery tax, as well as consumption tax. Specifically, the price at the gas station includes ¥53.8/L for the gasoline tax, ¥2.8/L for the petroleum tax, and consumption tax.
For example, if the retail price of regular gasoline is ¥175 per liter, the breakdown of the taxes and the base price is as follows:
- (Retail Price) ¥175 ÷ 1.1 – (Gasoline Tax) ¥53.8 – (Petroleum Tax) ¥2.8 = (Base Price) ¥102.5
In other words, approximately 40% of the gasoline retail price is tax.
Source: Ministry of Finance Japan
Gas oil delivery tax
The retail price of gas oil, used for diesel vehicles, includes a gas oil delivery tax of ¥32.1/L, a petroleum tax of ¥2.8/L, and consumption tax. Unlike gasoline tax, the gas oil delivery tax does not include consumption tax. In Japanese, it is 軽油引取税, keiyu hiki-tori-zei.
For example, if the retail price of gas oil is ¥155 per liter, the breakdown of the taxes and the base price is as follows:
- (Retail Price ¥155 – Gas Oil Delivery Tax ¥32.1) ÷ 1.1 – (Petroleum Tax ¥2.8) = (Base Price) ¥108.9
Although gas oil is generally perceived to be cheaper than gasoline at the retail level, when comparing base prices excluding taxes, gas oil can actually be more expensive than gasoline in some cases.
*Note: Gasoline tax, petroleum tax, and gas oil delivery tax amounts are as of July 2024.
Chapter7: How to reduce car tax in Japan
Due to rising raw material and labor costs, as well as the weakening yen, car prices continue to increase. As a result, more people are choosing not to own a car to avoid the associated costs.
To keep post-purchase costs as low as possible, focus on reducing taxes and fuel expenses that arise annually or during vehicle inspections. Consider the following tips when choosing a car:
- Choose a Vehicle with a Smaller Engine Displacement
- Opt for Electric Vehicles or Eco-Cars that Meet Specific Fuel Efficiency Standards
- Select Fuel-Efficient Cars, such as Hybrids
Chapter8: Summary of Car tax in Japan
When purchasing a car, you will encounter four types of taxes: automobile tax, automobile weight tax, environmental performance tax, and consumption tax. The automobile tax is paid annually, while the automobile weight tax is paid at each vehicle inspection.
Choosing an eco-friendly car, which has high environmental performance, can reduce all taxes except consumption tax. To minimize ongoing costs, select a vehicle with lower taxes and good fuel efficiency.
We hope this article help you to understand the basics of car tax in Japan.
