ARTICLE 78-3 (SPECIAL PROVISIONS FOR NON-DEDUCTION OF EXPENSES RELATED TO BUSINESS-USE PASSENGER VEHICLES)

The "expenses to be determined by Presidential Decree" as referred to in Article 33-2 (1) of the Act shall mean expenses incurred for the acquisition and maintenance of business-use passenger vehicles, including depreciation expenses, rental fees, fuel costs, insurance premiums, repair costs, automobile taxes, toll fees, and interest expenses on financial lease liabilities (hereinafter referred to as "expenses related to business-use passenger vehicles" in this Article).

The "amount of business use to be determined by Presidential Decree" as referred to in Article 33-2 (1) of the Act shall mean the amounts determined according to the following subparagraphs. <Amended on Feb. 28, 2023, Dec. 30, 2025, Feb. 27, 2026> 1. In cases where automobile insurance that covers only driving by the business owner, their employees, or other persons specified by the Minister of Economy and Finance (hereinafter referred to as "business-only automobile insurance") is subscribed for the entire period of the relevant taxation period (for leased passenger vehicles, the period of lease during the relevant taxation period): The amount obtained by multiplying the expenses related to business-use passenger vehicles by the ratio of business use mileage to the total mileage confirmed by driving records, etc., specified by the Minister of Economy and Finance (hereinafter referred to as "operating records, etc." in this Article) (hereinafter referred to as "business use ratio amount" in this Article). 2. In cases where business-only automobile insurance is not subscribed: The amounts set forth in the following items, based on the number of business-use passenger vehicles per taxpayer (in the case of a joint business, it is considered one taxpayer). a. One vehicle: Business use ratio amount. b. Exceeding one vehicle: 0% of the business use ratio amount. Provided, however, for expenses related to business-use passenger vehicles incurred from January 1, 2024, to December 31, 2025, by taxpayers other than those falling under any of the following categories, it shall be 50% of the business use ratio amount. 1) Taxpayers subject to confirmation of diligent reporting under Article 70-2 (1) of the Act (referring to taxpayers subject to confirmation of diligent reporting in the immediately preceding taxation period). 2) Persons engaged in medical services, veterinary services, pharmacy services, and businesses under Article 109 (2) 7 of the Enforcement Decree of the Value-Added Tax Act. 3. In cases where business-only automobile insurance is subscribed for only a portion of the entire period of the relevant taxation period (for leased passenger vehicles, the period of lease during the relevant taxation period): The amounts set forth in the following items. a. One vehicle: Business use ratio amount. b. Exceeding one vehicle: Amounts calculated according to the following classifications. 1) Expenses related to business-use passenger vehicles under item 2.b. proviso: The amount calculated by the following formula: <img src="http://www.law.go.kr/flDownload.do?flSeq=161860001" alt="img161860001" > ┌────────────────────────┐ │ │ │ A + (A × B) │ │──────── │ │ 2 │ │ │ │A: Business use ratio amount │ │B: Number of days actually subscribed to business-only automobile insurance during the relevant taxation period ÷ Number of days obligated to subscribe to business-only automobile insurance under subparagraph 1 for the relevant taxation period │ └────────────────────────┘ </img> 2) Expenses related to business-use passenger vehicles other than those in 1): The amount calculated by the following formula: <img src="http://www.law.go.kr/flDownload.do?flSeq=161844981" alt="img161844981" > ┌──────────────────────┐ │ │ │A × B │ │ │ │A: Business use ratio amount │ │B: Number of days actually subscribed to business-only automobile insurance during the relevant taxation period ÷ Number of days obligated to subscribe to business-only automobile insurance under subparagraph 1 for the relevant taxation period │ └──────────────────────┘ </img>

Taxpayers wishing to apply paragraph 4 shall prepare and keep operating records, etc., for each business-use passenger vehicle, and shall submit them immediately upon request by the tax office in charge of tax administration. <Amended on Feb. 11, 2020>

The "method to be determined by Presidential Decree" in the main sentence of Article 33-2 (2) of the Act shall refer to the carryover of expenses that can be deducted as expenses within the limit of the amount calculated by the methods according to the following classifications. <Amended on Feb. 11, 2020> 1. Carryover of depreciation expenses per business-use passenger vehicle: Deductible as expenses in the taxation period following the relevant taxation period, up to the amount by which depreciation expenses among the business use amount of the business-use passenger vehicle are less than 8 million won. 2. Carryover of the amount equivalent to depreciation expenses among rental fees per business-use passenger vehicle, as specified in subparagraph 9: Deductible as expenses in the taxation period following the relevant taxation period, up to the amount by which the amount equivalent to depreciation expenses among the business use amount of the business-use passenger vehicle is less than 8 million won.

The "method of carryover, etc., to be determined by Presidential Decree" in Article 33-2 (3) of the Act shall refer to the method of deducting 8 million won evenly as expenses in the taxation period following the relevant taxation period, and if the remaining amount is less than 8 million won, deducting the entire remaining balance as expenses. <Amended on Feb. 11, 2020>

When calculating expenses related to business-use passenger vehicles, if the relevant taxation period is less than one year, or if the vehicle is owned or leased for only a portion of the taxation period, the calculation of months shall be made according to the calendar, and days less than one month shall be counted as one month. <Newly added on Feb. 13, 2018, Amended on Feb. 11, 2020>