S.Korea Delays Smog Tax on Vehicle Purchase

September 2, 2014 Taxation in South Korea

Smog Tax KoreaSEOUL – Car buyers in Korea have been granted a welcome reprieve, as the government delays the introduction of a new environmental tax on vehicle purchases.

On September 2nd the Finance Minister of Korea Choi Kyung-hwan confirmed that the government will delay the implementation of the country’s planned smog tax for another 5 years until the end of 2020, although the government will go ahead with current plans to enact a heavy tax on carbon emissions.

Under the original conditions of the smog tax, the sale of a new vehicle may have been liable for an extra tax of up to KRW 4 million (approx. USD 4 700), while environmentally-friendly cars, such as electric or hybrid vehicles, would have eligible for a purchase subsidy.

The Finance Minister also confirmed that despite the delay to the smog tax, the government would still go ahead with the planned implementation of a new emissions trading scheme in late-2015, a move aimed at tackling the country’s significant carbon emissions levels.

According to the Finance Minister, the smog tax was delayed as the combined impact of the carbon tax and the smog tax would have had a too significant negative impact and financial burden on the automotive industry and other sectors with high levels of carbon emissions.

Photo By: Luke Ma