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South Korea To Propose Tax Incentives For Electric Cars

Tuesday, February 23, 2010

As part of its proposed measures on vehicle taxation to contain carbon emissions and encourage green industries, the South Korean government is looking at reducing taxes on electric cars purchased in the country.

If finalized, the proposed tax breaks would be in addition to those provided for the purchase and running of hybrid vehicles. They would also reflect the governmentís planned changes to the incidence of vehicle taxes, which could also be altered to reflect their fuel efficiency or carbon emissions, rather than being based, as at present, on engine size.

According to the Ministry of Strategy and Finance, purchases of electric cars could be given an exemption from the special consumption, acquisition and registration taxes which are payable by other types of vehicles. It has been calculated that purchasers of electric cars could thereby save up to KRW3.5m (USD3,000) per vehicle.

It is expected that, while domestic production of electric cars will start this year, significant production numbers will only be achievable in the second half of next year. The government has previously indicated that the target is to achieve 10% of the global market for such vehicles by 2015.