Starting Next Month, 'Kia Sorento' Individual Consumption Tax Reduced by 520,000 Won

Domestic Car Tax Base Amount Reduced by 18% Through Standard Sales Ratio System

Starting next month, the tax on the Kia Sorento, which has a factory price of 40 million won, will decrease by 520,000 won. From July this year, the tax calculation method for domestic cars has been improved, resulting in lower taxes on domestic cars and consequently lower consumer prices.

On the 7th, the National Tax Service held a Standard Sales Ratio Review Committee meeting and announced that the standard sales ratio to adjust the difference in tax base (taxable standard) between domestic and imported cars was set at 18%.

Until now, passenger cars have been subject to an individual consumption tax of 5% of the tax base (a flexible tax rate of 3.5% applied until June 30 this year), with domestic cars taxed at the time of factory shipment and imported cars taxed at the time of import declaration.

Accordingly, for domestic cars sold directly by manufacturers to consumers, taxes are imposed on prices that include distribution costs and profits after the manufacturing stage, whereas imported cars are taxed on import prices that do not include these costs, raising issues regarding tax fairness. Even at the same price, the tax base for domestic cars was higher, resulting in a greater tax burden.

To address this issue, a special provision for calculating the individual consumption tax base (hereinafter referred to as the tax base reduction system) will be implemented from July this year.

Accordingly, when applying a 5% individual consumption tax based on the factory shipment price, the Hyundai Grandeur (42 million won) will see a price reduction of 540,000 won. ▲Kia Sorento (40 million won) -520,000 won ▲Renault XM3 (23 million won) -300,000 won ▲GM Trailblazer (26 million won) -330,000 won ▲KG Torres (32 million won) -410,000 won, etc.

Meanwhile, the National Tax Service plans to announce the standard sales ratio for domestic cars as well as for household fur products where the manufacturer and seller are the same, in June, and apply it for three years starting from the 1st of next month.