16 local governments, including the city of Seoul, said, “The value-added tax exemption for eco-friendly buses must be maintained.”

Seoul City announced on the 5th that it will take joint action with 15 local governments across the country to maintain the special exemption from value-added tax for eco-friendly city and village buses.

There has been a possibility that the value-added tax exemption for eco-friendly buses may end early due to the amendment to the 'Restriction of Special Taxation Act' that is currently being submitted to the National Assembly.

The Seoul Metropolitan Government explained that bus transportation companies and local governments have joined forces to ease the financial burden and steadily promote eco-friendly public transportation conversion policies.

Under the current law, the special exemption from value-added tax for the supply of eco-friendly city and village buses such as electric and hydrogen was scheduled to apply until December 31, 2028, but if this government law amendment is passed, it will end early on December 31 of this year.

Local governments across the country are of the position that this push to reduce tax benefits will threaten to shake up the eco-friendly bus conversion policy.

In particular, there are concerns that an increase in vehicle prices will cause a setback in the introduction of eco-friendly buses, as conversion to eco-friendly buses has become essential due to the cessation of production of CNG (compressed natural gas) buses starting next year.

The city expressed concern, saying, "In particular, transportation companies (private village buses, etc.) with limited financial resources are forced to avoid introducing eco-friendly buses or reduce the replacement volume and extend the operation of old vehicles due to the increased initial cost burden of tens of millions of won."

Accordingly, 16 local governments, including the Seoul Metropolitan Government, agreed that continuous government support is needed to stably promote the eco-friendly bus conversion policy and maintain public transportation services, and decided to jointly urge the central government and the National Assembly to make the following matters.

Yeo Jang-kwon, head of the Seoul Metropolitan Government's transportation department, said, "As the conversion to eco-friendly buses is a core policy directly related to the quality of life of citizens, the central government's continued interest and institutional support are essential. We will respond in unison with local governments to ensure citizens' stable mobility rights and establish a sustainable public transportation system."