South Korea Eyes Tax Breaks for Electric Cars

By dancurranjr On December 18th, 2010

South Korea is considering tax cuts on purchases of electric cars as part of its efforts to bolster the nation’s green industry, government sources said Thursday.

Discussion is underway to provide purchasers of electric cars with exemptions in consumption, acquisition and registration taxes which are being applied to other types of vehicles, officials at the Ministry of Strategy and Finance said.

“After completing research and an additional internal review during the first half of next year, we plan to prepare the tax support plan for electric cars by September when the government is to revise the nation’s tax code,” a ministry official said on condition of anonymity.

Currently, buyers of eco-friendly hybrid cars are given reductions on consumption tax and other taxes. The government is also planning to offer the same or even higher tax benefits to buyers of electric vehicles, the official added.

The envisioned tax support could reduce the price tag of an electric car by up to 3.3 million won (US$2,837).

The move is part of the government’s efforts to bolster green business as the nation’s next generation growth engine. Such tax cuts are expected to draw customer attention and boost sales of vehicles based on eco-friendly technologies, observers say.

It also coincides with intensifying efforts by other countries to take the lead in the green business sector, they added.

The government, however, is not likely to provide tax benefits any time soon for other types of eco-friendly cars, such as plug-in hybrid and fuel-cell vehicles as it needs more time to analyze feasibility on the fledgling markets, an official said.

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