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S. Korean-made EVs entitled to tax credit under IRA when used for commercial use: Treasury

All News 04:03 December 30, 2022

By Byun Duk-kun

WASHINGTON, Dec. 29 (Yonhap) -- Buyers of new South Korean-made electric vehicles (EVs) can be entitled to a U.S. government tax credit when the new car is used for commercial use such as leasing, the Department of Treasury said Thursday.

The new guidance on government tax benefits offers some relief to growing concerns over the new U.S. Inflation Reduction Act (IRA) that has become a rare source of tension between the United States and its close allies, including South Korea, Japan and the European Union.

The IRA, signed into law by President Joe Biden in August, offers a tax credit of up to US$7,500 to each buyer of a new electric vehicle, but says the vehicles must be assembled in North America to be eligible for such a benefit.

Many, including U.S. experts, have noted the new law violates World Trade Organization regulation on national treatment, as well as numerous U.S. free trade agreements, including that with South Korea.

The treasury department said new clean vehicles purchased for commercial use can be entitled to tax credits as long as they are produced by a "qualified manufacturer" and are not purchased for resale purposes.

A qualified manufacturer "means any manufacturer which enters into a written agreement with the secretary (of treasury) under which such manufacturer agrees to make periodic written reports to the secretary (at such times and in such manner as the secretary may provide), providing vehicle identification numbers and such other information related to each vehicle manufactured by such manufacturer as the Secretary may require," the department said in a Q&A-style announcement posted on its website.

The department also provided similar guidance on tax credits for non-commercial EVs and said the vehicles must be assembled in North America to be subject to tax credits.


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