Ministry of the Interior and Safety Begins Reform of Automobile Taxation Standards

Reviewing Improvements to Taxation Standards Based on Vehicle Value and Others

The Ministry of the Interior and Safety announced on the 20th that it will begin restructuring efforts to change the automobile tax criteria for passenger cars, which are currently taxed based on engine displacement.

Currently, for non-commercial passenger cars, the automobile tax is charged at 80 KRW per 1cc for engines up to 1000cc, 140 KRW per 1cc for engines up to 1600cc, and 200 KRW per 1cc for engines exceeding 1600cc. For commercial passenger cars, the tax is 18 KRW per 1cc for engines up to 1600cc, 19 KRW per 1cc for engines up to 2500cc, and 24 KRW per 1cc for engines exceeding 2500cc.

Recently, with the development of engine downsizing technology that reduces engine displacement while maintaining output, high-priced vehicles with large engine displacements have been replaced by low-displacement vehicles, raising the need to revise the automobile tax criteria.

The Ministry of the Interior and Safety, together with the Korea Local Tax Research Institute, has formed the 'Automobile Tax Reform Task Force' and plans to prepare a reform proposal after thoroughly collecting opinions on the direction of the reform from experts and related government departments. The ministry aims to gather feedback from domestic and international stakeholders and industries, hold public hearings, and legislate the reform in the second half of 2024.

Minister of the Interior and Safety, Sang-min Lee, stated, “As many citizens agree on the necessity to revise the automobile tax criteria, we will strive to prepare a reasonable reform plan that meets fair taxation standards through collecting opinions from relevant experts.”