Financial and Tax Support for businesses affected COVID19

Date: Apr 24, 2020

I. Introduction

Last month's column introduced the government's support package for businesses affected by COVID19. As the COVID19 economic stimulus package has enacted some changes in support measures and coverage have been made. This post will introduce the changes and details.

II. TaxReduction or Exemption

① Tax Reduction or Exemption for Small-Housing Rental Business Operators

Where a land lord leases a commercial housing to a micro-merchant and lowers commercial rents during the period between Jan 1, 2020 and June 30, 2020, 50% income or corporate tax break for the discount will be provided.

② Temporary Tax break for small-scale businessmen

VAT on an individual micro-business as a general taxable person with supply value of 40 million  won for half a year will be reduced to the tax level of simplified taxable person for the taxable period for Jan,1^st 2020 ~ Dec 31^st2020.

③ Temporary VAT Tax exemption for simplified taxable person

A simplified taxable person with supply value of 30 million won or less has been subject to VAT exemption. However, the VAT tax exemption will be expanded to the ones with supply value of  48 million won  for the period of Jan 01, 2020 ~Dec 31, 2020.

④ Employee Retention Subsidies

Employee retention subsidies are given to a corporation which makes efforts to maintain employment by reducing work hours with using measures such as furloughs instead of laying off its workers even under the situation where the corporation finds it difficult to keep employment due to financial difficulties.

Employee retention subsidies include general employee retention subsidy, special employee retention subsidy and COVID19 employee retention subsidy.

☞ General Employee Retention Subsidy

General employee retention subsidy is offered to a company which maintains its workforce despite financial difficulties. Corporations subject to preferential support will be offered 2/3 of business suspension allowance and leave benefits with a limit of 66 thousand won a day for 180 days.

☞ Special Employee Retention Subsidy

Special employee retention subsidy is for businesses hit hard such as tourism, tourist accommodation business, tourist transport business, and performing industry.Those industries will be offered 9/10 of business suspension allowance and leave benefits with a limit of 70 thousand won a day for up to 180 days.

☞ Employee Retention Subsidy for COVID19 response

Employee retention subsidy for COVID19 response is offered to a corporation which doesn't meet the criteria for general employee retention subsidy but when the local government having jurisdiction over the corporation designates it as a business affected by COVID19 the subsidy is offered to the corporation for up to 180 days with a limit of 66 thousand won a day.

★ Temporary Increase in Employee Retention Grant (6months)

The government will provide the increased benefits to employers who maintain edemployment (as a form of furloughs, temporary business closure) and offer leave benefits to employees from Feb 1^st to July 31^st 2020.

☞ Businesses subject to preferential support: Increase financial support from 2/4 to 4/3 of leave benefits

☞ Large companies: Increasefinancial support from 1/2 to 2/3 of leave benefits

The increased financial support will relieve an employer's financial burden by 120 thousand won for each worker with KRW 2 million salary.

Learn more about Korean tax system by visiting our website

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 who are in the bottom income bracket or living in the specialdisaster zone are eligible for benefits including tax cuts or tax paymentdeferrals.

Tax cuts will be offered for health insurance and industrialaccident compensation insurance. 30% of reduction in health insurance premiumwill be offered to those who are under 40% of income bracket. 50% reductionwill be offered to those who are under 20% of income bracket and living in thespecial disaster area.

30% industrial accident compensation insurance premium cuts willbe temporarily offered to the businesses with 30 or fewer workers.

Temporary tax payment deferrals will be offered for nationalpension service, employment insurance, and job injury insurance for threemonths from March to May.