SEOUL: South Korea’s Ministry of Strategy and Finance has announced that the temporary cut to individual consumption tax rates on passenger cars, which expired at the end of December 2015, has been restored to the end of June 2016.
The renewed cut, which was originally introduced in August last year, reduces the consumption tax rate on automobile purchases from the normal five percent rate to 3.5 percent, with retroactive effect to January 1, 2016.
The tax reduction has been maintained as part of a package of measures to stimulate consumer consumption and provide an initial boost to the South Korean economy in 2016. Early this year, following the expiry of the tax incentive, car sales had declined significantly.
Until end-2015, the reduced 3.5 percent rate had also been allowed on purchases of consumer durables, such as large air conditioners, televisions, washing machines, and refrigerators, but this incentive has not been renewed by the Ministry.
