Tax credit

April 25, 2008 – Honda Motor Co., Ltd. (“Honda”) is currently being examined by the Tokyo Regional Taxation Bureau (“Bureau”) on matters related to a transfer pricing*1 issue. In the examination, the Bureau claims that the allocation of the total profit Honda and its Chinese joint venture companies earned from their automobile business in China was not an “arms’ length” allocation but rather that too much of this total profit was realized by the Chinese joint venture companies over the five-year period ended March 31, 2006.

Hybrid Cars and Alternative Motor Vehicles Tax Credit

Last updated Sept. 6, 2007
Vehicles Purchased or Placed in Service

The Energy Policy Act of 2005 replaced the clean-fuel burning deduction with a tax credit. A tax credit is subtracted directly from the total amount of federal tax owed, thus reducing or even eliminating the taxpayer’s tax obligation. The tax credit for hybrid vehicles applies to vehicles purchased or placed in service on or after January 1, 2006.

The credit is only available to the original purchaser of a new, qualifying vehicle. If a qualifying vehicle is leased to a consumer, the leasing company may claim the credit.