S. Korea to extend tax reduction on cars to boost sales

South Korea's finance ministry will extend the 30 percent cut on consumption tax for passenger cars until Dec. 31 this year to boost sales.

The cut reduced consumption tax on passenger cars to 3.5 percent and brought down the car's cost by much as 1.43 million won.

The outbreak diminished vehicle sales in South Korea by 36 percent last month from a year earlier.

South Korea's five carmakers sold a combined 423,416 vehicles in May, down from 665,136 last year.

Hyundai Motor and Kia Motors suspended operations of their major overseas plants until late May. The three other carmakers GM Korea Co., Renault Samsung Motors Corp., and SsangYong Motor Co. reduced production to control inventories.

The government will also temporarily lower value-added tax paid by small merchants by the end of this year to help them recover from the pandemic's impact on their businesses.

Those reporting sales of 40 million won or less from July to December this year would be eligible for the tax benefit.