Extension of Vehicle Individual Consumption Tax Reduction Until Year-End... Approved by Cabinet Meeting

[Image source=Yonhap News]

[Sejong=Asia Economy Reporter Moon Chaeseok] The government announced on the 22nd that at the 26th Cabinet meeting held on the same day, it approved an amendment to the Individual Consumption Tax Act Enforcement Decree to extend the deadline for the flexible tax rate on individual consumption tax for passenger cars from 5% to 3.5%, from the end of this month to December 31. This follows the announcement made by Deputy Prime Minister and Minister of Strategy and Finance Hong Nam-ki at the 36th Emergency Economic Central Countermeasures Headquarters meeting on the 28th of last month.

Consumers intending to purchase a car can receive a tax reduction benefit of up to 1.43 million KRW. This includes a reduction of 1 million KRW in individual consumption tax, 300,000 KRW in education tax, and 130,000 KRW in value-added tax. For a mid-sized passenger car priced at 35 million KRW, a total tax reduction of 750,000 KRW is provided, including individual consumption tax, education tax, and VAT.

A government official stated, "Through this amendment, passenger car sales are expected to increase significantly, contributing to boosting domestic demand for economic recovery in the second half of the year." The amendment to the Individual Consumption Tax Act Enforcement Decree passed at the Cabinet meeting will be implemented after the President's approval and promulgation procedures.

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