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Customers set to sue imported auto brands over tax refunds

All News 10:03 February 29, 2016

SEOUL, Feb. 29 (Yonhap) -- South Korean drivers are expected to file a class-action lawsuit against some foreign auto brands, such as Volkswagen, over their decisions not to offer any tax refunds, industry sources said Monday.

Last week, the automakers, including BMW and Mercedes-Benz, decided not to offer any tax refunds to their customers, claiming that the government's tax cut had already been reflected in their ramped-up sales promotions and automobiles' price tags.

The government ended a 1.5 percentage-point excise tax cut at the end of last year. But once it expired, car sales dropped significantly, which promoted the government in early February to extend the consumption-boosting measure until June.

According to the government, the reduced tax rate should be applied retroactively on cars bought in January. However, the foreign automakers are refusing to pay it.

The foreign auto brands insist that the tax cut has already been reflected in their promotional events, and they have informed customers of such facts. But customers claim that they were not fully aware of it.

"This could be considered false advertising," said Ha Jong-sun, a lawyer of the local law firm Barun.

Customers demand that the country's corporate watchdog and prosecutors launch investigations into the case, and if not, they will file the suit seeking compensation from the foreign auto brands.

The foreign auto brands' moves are in contrast to local carmakers, Hyundai Motor Co. and Kia Motors Corp., which said they are now returning money to customers based on the lowered tax rate.

According to industry data provided by the Korea Automobile Importers and Distributors Association, the foreign brands, which decided not to offer tax refunds, sold about 10,000 vehicles in January alone.


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