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Korea to lower taxes on domestic cars from July

Collected: 2023.06.08

Distributed: 2023.06.09

Source: Go Direct

Hyundai Motor Co.’s Grandeur [Photo provided by Hyundai Motor]

Domestic car buyers in South Korea will be imposed lower taxes from July under a revised specific consumption tax policy, which will bring down the overall price tag of the cars.

The National Tax Service on Wednesday set the standard sales ratio at 18 percent, which will be applied to local automakers starting in July.

Under the revision, the tax authority will deduct 18 percent of the factory prices of vehicles produced by Korean automakers. The revision will take effect on July 1 for 3 years.

Korea has applied different tax bases to local and foreign automakers. It has resulted in higher tax burdens on domestic cars as additional costs, such as distribution expenses and margins, have been added to the standard.

The different bases on tax have been accused of industry discrimination against local automakers.

According to the current tax law, vehicles that come with a factory price of 60 million won ($45,941) are premised on a tax base of 56.3 million won if they are made by local automakers.

The tax base for imported vehicles, however, is set at 40.8 million won, suggesting a lower selling price compared with their local counterparts.

Following the revision, the price of Grandeur, the signature model of Hyundai Motor Co., will be reduced by 540,000 won, and that of Kia Corp.’s Sorento 520,000 won, and KG Mobility or previously SsangYong Motor’s Torres 410,000 won.

By Lim Sung-hyun and Han Yubin

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