It said a decision has been made to include emission rights on the surtax exception list, although technically it could be taxed.
The move comes after companies complained they are already hard-pressed to meet greenhouse gas reduction quotas set by Seoul and that paying extra taxes for emission trading would overload their capabilities.
“A revision to the Restriction of Special Taxation Act will be submitted to the National Assembly in February, and if it is approved, it will go into effect immediately,” an official said.
South Korea, which has Asia’s fourth-largest economy and is one of the world’s largest importers of fossil fuels, set quantitative limits early this month on greenhouse gases that can be released by 525 large companies, but made allowances for them to sell surplus amounts of carbon dioxide emissions as well buy more rights if they used up all of their quota. This scheme could help reduce greenhouse gases released into the atmosphere on a national and global level.
The Korea Exchange will handle all emission-related trading starting Jan. 12.
In addition, the finance ministry said companies that received their initial emission trading quotas free from the government will not be taxed for these emission rights. Related rules to exempt taxation for emission quotas will be passed next month.
The ministry said that by reducing the tax burden and getting companies to actively participate in emission trading, more investment could be made in energy storage and carbon capture storage. Such developments could lead to the build-up of these eco-friendly sectors over time that could jump-start a whole new industry.