The South Korean government has initiated a temporary tax relief program for domestic petrochemical companies as global demand has plummeted amidst the worsening coronavirus pandemic.
The Ministry of Trade, Industry and Energy said Tuesday it will allow 54 petrochemical companies to delay their tax payments on oil imports and sales of petroleum products for 90 days, giving financial room to cope with the effects of the COVID-19 outbreak.
“Tax payments for April, May and June will be postponed to July, August and September, respectively. However, starting July, taxes will be imposed as planned,” the ministry said.
According to Korea Petroleum Association, petroleum firms pay 16 won ($0.01) per liter for imported crude oil or petrochemical products. For the sale of premium gasoline, they pay 36 won per liter.
Last year, the taxation brought an average of 300 billion won per month to the government. Based on this figure, petroleum firms will be given breathing room of 900 billion won for three months to bring their businesses back on track.
On March 31, the Ministry of Economy and Finance had made similar measures, by delaying the payment of customs duties on imports and exports of oil and petroleum products for two months.
Korea currently levies 3 percent customs duties each on imports of crude oil and exports of petroleum products according to KPA. Korea is the only country among non-oil-producing countries that charges tax on imports of crude oil.
Meanwhile, Korea National Oil Corp. introduced its own set of measures to help out small gas stations by extending the deadline of credit repayments.
“From April to September, 400 low-cost gas stations will be given a two-week extension for credit repayments as KNOC will push back the monthly repayment date from 14th to 28th,” a KNOC official said.
By Kim Byung-wook (email@example.com