Companies skirt license plate rule for imported cars with fake invoices

Industry

Published: 08 Apr. 2024, 18:26 Updated: 08 Apr. 2024, 19:08

Companies skirt license plate rule for imported cars with fake invoices

An official organizes green licenses plates, which will be attached on corporate cars acquired for more than 80 million won ($59,086) in January at the license plate manufacturing plant in Suwon, Gyeonggi. [YONHAP]

Companies purchasing luxury cars that want to avoid easily-noticeable green license plates are tricking the authorities by falsely reporting acquisition prices.

A total of 5,762 imported vehicles were affixed with the plates indicating corporate ownership of cars registered with a price exceeding 80 million won ($59,086) between January and February, according to data from the Ministry of Land, Infrastructure and Transport acquired by Democratic Party Rep. Kim Ju-young's office.

The total constitutes a drop of 18 percent compared to the same period last year.

The number of company-owned imports purchased for between 70 million and 80 million won, and thus exempt from the special plate rule, rose to 1,110 from 1,075 during the same period last year.

Of the 1,110, however, the actual market value of 912 exceeded 80 million won.

A total of 12 convertibles and one camping trailer were among the 912 high-priced imported cars.

Among the underreported acquisitions, 628 were worth between 80 million won and 90 million won at the time of sale, 271 between 90 million won and 100 million won, 11 priced over 100 million won but cheaper than 110 million won and two with a value in excess of 120 million won.

The companies behind the purchases declared acquisition values lower than the actual amount paid — which surpassed 80 million won — to the Land Ministry, allowing them to attach white license plates, which are most commonly seen on privately owned cars.

Two public officials hold up a light green license plate to be affixed to a corporate cars with a price tag exceeding 80 million won last November in Sejong. [YONHAP]

The trick has been seen since the beginning of the year, when the government started requiring corporate cars with a price tag of over 80 million won to affix light green license plates instead of the standard white plates in an attempt to curb misappropriations of corporate vehicles for personal use unrelated to business activities. The measure is applicable to both high-priced imports as well as cars from domestic automakers such as Hyundai and Kia.

The deceit involving foreign cars, however, derives from Korea's pricing system for imports, which grants car dealers the authority to set prices for such vehicles.

“Some dealers fabricate receipts and contract terms to make acquisition costs fall below the threshold of 80 million won,” a source told the JoongAng Ilbo on condition of anonymity.

“Discount benefits inserted by the dealer can lower the price printed on the sales document.”

The green license plate policy was one of President Yoon Suk Yeol’s campaign pledges.

The policy aims to prevent the personal and private use of corporate cars. The main idea was to exclude companies owning such luxury cars from corporate tax benefits unless they put the green license plates on their vehicles.

The Land Ministry said it will “strengthen monitoring” to prevent the companies from falsely reporting costs.

At the same time, it said it is difficult to determine how the pricey imports are being used and the actual cost companies paid.

“Local government personnel responsible for the registration of newly acquired vehicles cannot uncover specific details of car sales contracts,” an official from the ministry said.

Industry professionals called for a “definitive rule” that distinguishes the legitimate use of such upscale vehicles in relation to business activities along with a “reinforcement of monitoring.”

“After the light green license plates were introduced, a number of corporations started to refrain from purchasing expensive cars because of the social stigma [of using a vehicle with such an obvious designation],” said Lee Hang-gu, head of the Jeonbuk Institute of Automotive convergence Technology.

The luxury car itself is not a problem.

“A situation where unqualified people such as acquaintances of corporate executives use such vehicles for personal interests is the problem,” Lee said, adding that “straightforward and detailed provisions [governing the use of corporate vehicles] should replace the current ambiguous rule.”

BY KO SUK-HYUN [lee.soojung1@joongang.co.kr]