What Are the Changes in Automobile-Related Regulations in 2021?

[Asia Economy Reporter Suyeon Woo] Next year, the 30% reduction in individual consumption tax will be extended for six months, and electric vehicle subsidies will be reduced by 1 million KRW compared to the previous amount, resulting in many changes in automobile-related policies.

On the 30th, the Korea Automobile Manufacturers Association summarized and announced the changes in automobile-related policies starting from 2021, including taxation, environment, safety, and tariffs. First, in the taxation sector, the 30% reduction in individual consumption tax will be extended until June 30 next year, within the 1 million KRW exemption limit. The individual consumption tax exemption for electric vehicles will be extended for two years until the end of 2022, while the acquisition tax exemption limit for hybrid vehicles will be reduced from the existing 900,000 KRW to 400,000 KRW.

[Image source=Yonhap News]

In the environmental sector, the electric vehicle subsidy will be reduced from a maximum of 8 million KRW per vehicle to 7 million KRW next year, and subsidies for plug-in hybrid vehicles will be abolished. Additionally, the 50% toll discount benefit for electric and hydrogen vehicles will be extended for two years until the end of 2022.

In the safety sector, operation of vehicles with repeated fire accidents will be restricted, and penalties for delayed recalls or concealment or reduction of defect facts by manufacturers have been strengthened by removing the upper limit of fines. Furthermore, a punitive damages system has been introduced, under which manufacturers will be liable to compensate up to five times the amount of damages if they conceal defect facts, make false disclosures, or respond with delayed recalls.

In the tariff sector, under the Korea-Central America Free Trade Agreement (FTA), tariffs on passenger cars exported to Honduras and Nicaragua have been reduced, and tariffs on palladium and rhodium, raw materials for automotive exhaust gas reduction catalysts, have been lowered from the existing 3% to 1%.

This content was produced with the assistance of AI translation services.