“Don’t tell me you’re going to pay taxes”…and end up paying $360,000 more in Granger taxes
The Ministry of Strategy and Finance announced on Monday that it will end a cut in the individual consumption tax that has been in place for the past three years안전놀이터.
This comes just a day after the National Tax Service announced on July 7 that it would lower the tax base (taxable base) for domestic cars starting in July to reduce the burden on consumers.
The government had previously lowered the vehicle tax, which is 5 percent of the ex-factory price of a passenger car, by 70 percent to 1.5 percent from March to June as the economy sharply froze in 2020 amid the coronavirus pandemic. From July of the same year, the cut was adjusted to 30 percent, resulting in a 3.5 percent tax rate, and has been extended five times.
The MOTIE explained the reasoning behind the cut, saying, “Given the recent favorable business conditions in the automobile industry and improving consumption conditions, it is evaluated that the policy objective has been achieved as a measure to stimulate domestic demand in response to COVID-19.”
However, from the second half of the year, the tax base for domestic cars will be reduced by 18% due to the implementation of the ‘Reduced Tax Base for Individual Vehicle Consumption Tax’. This is a measure to eliminate the controversy of reverse discrimination due to the difference in taxation standards between domestic and imported cars.
When a manufacturer sells a vehicle directly to a consumer, the tax base for the initial tax is calculated by subtracting the sales price from the base sales ratio. In this case, the government’s view is that even if the sales tax is reverted to 5%, the reduction in the tax base will not have a significant impact on consumers.
For example, for a Hyundai Grandeur with a factory price of 42 million won, the reduction of the sales tax to 5% will increase the tax burden by 900,000 won, but the reduction of the tax base by 54,000 won will increase the actual purchase cost by 36,000 won.
Special programs such as a 100% reduction in the initial tax for eco-friendly cars such as electric vehicles and hybrids and a reduction in the initial tax for passenger cars purchased by households with three children under the age of 18 will continue to be implemented.
