China to end auto tax incentive in 2011: Govt

BEIJING: China will end its tax incentives for small cars in 2011, the finance ministry said on Tuesday.

"Effective from January 1, 2011, a sales tax of 10 per cent will be imposed on cars with a 1.6-litre engine or smaller," said the ministry on its website.

Beijing unveiled a raft of stimulus policies for the auto industry in 2009, including tax incentives for cars with engine sizes of 1.6 litres or smaller, a move that helped China surpass the United States as the world's largest auto market that year.

The incentives were scaled back since the beginning of this year to get the market prepared for a phase-out starting from 2011, industry insiders have said.

It did not say whether 3,000 yuan rebates for fuel-efficient cars would remain in place in 2011 along with subsidies for farmers who exchange used vehicles for new ones.