Park Jin-hai primarily focuses on K-dramas, entertainment shows and actor interviews. Beyond that, she also pens articles covering the broader arts scene, with a particular emphasis on classical music, dance and various aspects of lifestyle. Since joining The Korea Times in 2013, she has made significant contributions in the realms of hallyu (Korean wave), industry news and international affairs.
Civic group calls for revision of law to limit corporate car tax benefits
By Park Jin-hai
The Citizens’ Coalition for Economic Justice (CCEJ) on Wednesday called for revisions to be made to the tax law that allows corporate car owners to have uncapped benefits.
Under the current Korean law, when a corporate owner registers his vehicle for business he can receive unlimited tax benefits for owning and operating the car, because it is all categorized as business expenses and becomes deductable.
When the owner uses it for personal use, the law policing it is toothless.
“The tax benefits for corporate cars have been too much. Those people buy high priced premium cars under corporate names and get tax deductions for the purchase and maintenance of those cars,” said a CCEJ official during a press conference at its headquarters in Seoul.
“It is contributing to the recent jump in sales of luxury imported cars among corporate owners,” he added.
The overall vehicle purchase price can be deductable each year over five years, regardless of the price and size of the car.
The civic watchdog estimates that almost 1 trillion won was deducted in such a way last year.
“Currently, there is no method to verification when people use their corporate cars for non-business uses. This loophole in the tax system is hurting the fairness of tax duty,” said the official.
According to KAIDA and Hyundai Motor Group data, corporate cars comprised 43 percent of all car purchases, or 105,720 vehicles last year.
Among the luxury domestic and imported cars priced at more than 100 million won, 83.2 percent or 12,458 cars out of 14,979 sold last year were corporate cars.
In the case of imported supercars, priced at more than 200 million won, 87.4 percent or 1,183 units were registered under corporate names.
In the case of the Rolls-Royce Phantom, priced at 590 million won, the five that sold last year were all registered as corporate vehicles, as were the six Bentley Mulsanne and 28 Rolls-Royce Ghost saloons.
The CCEJ said Korea should adopt the Canada model that limits up to $30,000 of a corporate vehicle’s price as deductable. It said the car price exceeding the amount should be subject to taxation.
It also said measures should in place so that corporate car owners are forced to give verifying documents that their vehicles are used for business purposes.