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Tax Relief for Families and Businesses affected by COVID-19
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2020-03-13
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Tax Relief for Families and Businesses affected by COVID-19

Date: March 13, 2020


I. Introduction

As many business owners are experiencing hardship under the outbreak of COVID-19 the Korean government has unveiled a support package to help those who affected by COVID-19. Here is a summary of the support package to help get through the COVID-19 outbreak.

 

II. The Application of Simplified Tax Rate on General Taxable People

Provides a VAT break for businesses earning KRW 60 million or less a year until the end of 2021.

 

Including the categories of business exempted from the simplified taxation system such as manufacturing business and wholesale business however,some businesses are still excluded. They include rental business operators and certified specialists.

 

How to compute:

Annual sales amount x tax rate by category of business (5~30%) x 10%

About 900,000 people would benefit from the tax break which is worth  KRW 200,000 ~ 800,000 per person.

Provided, That tax break on purchase tax amount would be also applied at a lower rate.

 

 

III. Promotingthe Lowering of Commercial Rents

Provide good landlords who lower commercial rents with a 50 percent income tax break for the discount and incentives.

 

Tenants who are eligible for this benefit shall be the micro enterprise who meets the requirements under the law of ACT ON THE PROTECTION OF AND SUPPORT FOR MICROENTERPRISES

 

Gambling business and adult entertainment businesses are excluded

 

Where a landlord lowers commercial rents voluntarily the landlord’s income or corporate tax will be deducted by 50 percent for the discount in the first half. (Temporary for 2020)

 

Infrastructural improvement willbe provided to 20 traditional markets where buildings owned by landlords who lowered commercial rents are located. The support includes replacing worn out wires with new ones and establishing fire safety facilities including sprinklers.


III. Temporaryincrease in inclusion in deductible expense limit

The government will temporarily allow corporations to have increased limit in deductible expense in entertainment expenses in order to induce corporations to spend more, expecting sales of micro-businesses would boost from it.

 

Amount of revenue

Less than 10 billion

10 ~50 billion

Exceed 50billion

 

Current

0.3%

0.2%

0.03%

Revised

0.35%

0.25%

0.06%

Range increased

+0.05%p

+0.05%p

0.03%p

 

 

 

IV. Temporary Increase in Income Tax Deduction Rates on Credit Card Spending

Double the rate of income tax deduction rates oncredit card spending between March and June. The rate will temporarily increase from 15~40% to 30~80%.

 

Increased deduction rates bycategory

Credit card 15->30%

Debit card & cash receipt30->60%

Traditional market & Publictransportation: 40 ->80%

 

The amount spent by a worker by using credit cards and debit cards and having cash receipts issued is subject to tax deductions when it exceeds 25 percent of the worker’s gross salary.

 

V. Extending the VAT Tax Refund Claim Deadline for Tourist Hotel Travelers

The deadline has extended from the end of 2020 to the end of 2022.

 

VI. ConsumptionTax Cut for Car Purchasers

70 percent of taxcuts will be provided for car purchases temporarily

 

Learn more about Korean tax system by visiting our website



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