The Korean government is to begin implementing a lower tax regime for the country's auto industry in a bid to stop it from sinking any further, it has announced.
The decision was made jointly by the country's Financial Services Commission and the Ministry of Knowledge Economy, and has been based upon similar schemes recently introduced in Europe and Japan.
Under the new scheme, the Ministry of Strategy and Finance has implemented a cut to the rate of special consumption tax on vehicles with an engine capacity of 2 litres and below to 3.5%.
In addition to this, it has also reduced the tax levied on cars with an engine capacity higher than 2 litres to 7%.
Korea's automobile industry has suffered considerably as a consequence of the current economic slowdown, and a 5.6% drop in exports combined with an 8.7% drop in domestic sales has been forecast for 2009 by the country's Automobile Manufacturers Association.
The reduction in tax rates took effect on December 19, and will stay in place until June 30, 2009.
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