Analysis of Domestic Vehicle Registration Status... Over 80% of Newly Registered Supercars Priced Above 400 Million KRW Are Corporate Cars
Annual Increase in High-End Imported Cars Registered Under Corporate Names... Rising Proportion of High-End V
[Asia Economy Honam Reporting Headquarters Reporter Yoon Jamin] It has been revealed that the proportion of corporate-owned vehicles is higher than that of personally owned vehicles, especially for luxury passenger cars priced over 100 million KRW.
In particular, more than 80% of newly registered supercars priced over 400 million KRW are corporate vehicles. This is analyzed to be due to the ‘illegal luxury behavior’ where some family owners use company funds to purchase expensive cars for private use, evading taxes in the process.
According to the overall passenger car registration status as of May 2020, submitted by the Ministry of Land, Infrastructure and Transport to National Assembly member Lee Hyung-seok, the proportion of corporate vehicles among cars priced under 100 million KRW was only 6.1%.
On the other hand, the proportion of corporate vehicles was 51% for cars priced between 100 million KRW and under 400 million KRW, and 62% for top-tier cars priced over 400 million KRW. This indicates a reversal phenomenon in the proportion of corporate vehicles among high-priced cars.
The problem is that the proportion of corporate vehicles among luxury cars priced over 100 million KRW, as well as supercars priced over 400 million KRW, has been increasing recently.
Looking at the new passenger car registration status from 2016 to 2019, the proportion of corporate vehicles among luxury passenger cars priced between 100 million KRW and under 400 million KRW was in the 70% range.
This is about 20 percentage points higher than the 51% corporate vehicle proportion for the same price range in the overall passenger car registration status as of May this year. For supercars priced over 400 million KRW, the new registration rate of corporate vehicles in 2019 was 87.2%, which is 24.8 percentage points higher than the overall corporate vehicle proportion of 62% in the same price range.
In particular, this pattern is more clearly seen in imported cars than in domestic cars. According to the overall passenger car registration status as of May 2020, the proportions of domestic corporate cars in the price ranges under 100 million KRW, between 100 million KRW and under 400 million KRW, and over 400 million KRW were 4.7%, 48.7%, and 6.9%, respectively.
In contrast, the proportions of imported corporate cars in the same price ranges were 17%, 50.9%, and 66.3%, showing a higher proportion as the price increases.
Moreover, registrations of imported luxury cars priced over 100 million KRW by corporations have been increasing every year. The number of newly registered imported passenger cars by corporations steadily rose from 12,893 units in 2016 to 15,797 units in 2019. Unlike domestic vehicles, this trend was unaffected by economic fluctuations.
The high proportion of corporate vehicles among luxury cars is analyzed to be because corporations can enjoy tax-saving effects by processing the purchase and maintenance costs of work vehicles as company expenses.
They save on corporate taxes while driving expensive cars with company money. In particular, some family owners have abused this by purchasing supercars with company funds for private use and have been caught by the National Tax Service.
In June, a family owner was caught for purchasing six supercars worth approximately 1.6 billion KRW under the company name and using them for private purposes.
Therefore, there have been continuous calls to establish effective management and supervision measures for corporate vehicles, but without any concrete institutional alternatives, the National Tax Service intermittently detects illegal cases through its own investigation methods.
In July, National Assembly member Lee Hyung-seok proposed an amendment to the ‘Corporate Tax Act’ that mandates the submission of related documents such as insurance papers and driving records for corporate work vehicles and allows the National Tax Service to inspect driving conditions if necessary.
Member Lee said, “The illegal luxury behavior of a very small number of wealthy people using supercars is against tax justice and provokes public outrage. The state must not just stand by and watch. We must take this opportunity to resolve the long-criticized issue of ‘nominal company cars’ and realize tax justice.”
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