[VAT]Learn How to Get VAT Deductions for Your Fuel Expenses - Are You Eligible?

You may use your car for visiting clients or commuting. and by running a car, expense such as fuel,engine oil changes and car inspections are unavoidable.
If you are using your car for your business, these expenses are considered business-related costs, which can help reduce your overall business expenses. 

However the situation for VAT is not always same.

As you may know, the price of every purchase includes VAT. and when it comes to your vehicle, you'll pay VAT on things like fuel, engine oil, and car inspections.

VAT deduction means that you can get a refund of the VAT amount paid, which is currently 10% in Korea. This translates to a 10% discount on the price

1.Not all vehicles are eligible for VAT deduction.

It depends on the type of car you have that you can get VAT deduction for expense related to car.

 

VAT-deductible vehicles include 

 

1.Cargo truck, freight truck 

2.Motor cycle with an engine capacity of less than 125cc
3.Vans with a capacity of more than 9 people (sucah as Hyundai Carnival,Starrex)

4.Small cars with an engine capacity of less than 1,000cc (such as KIA Morning, Hyundai Matiz)
5.Vehicles used for special purposes, such as funerals, security, or sales. Car-related expenses for other cars, like sedans and SUVs, are not VAT deductible, even if they are used for business purposes.

 

2.You can also claim a VAT deduction when purchasing a car!

you can also claim a VAT deduction when purchasing a car, but only for vans, small cars, or cars used for special purposes which I expained before.

 

The National Tax Service (NTS) assumes that other cars(Sedan,Suv,) except for those listed, may be used for personal purposes. that's why Korea tax law don't allow get VAT deduction for general cars.

 

If you are planning on buying a car for you business, it's important to keep this in mind and choose a vechicle that qualifies for deduction.

 

 

Thank you for read my article! I hope it helps.

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