Mobile Gift Certificate Stamp Tax Direct Hit... "Issued Reduced by 80%"

Tax Regulations Shake Related Industries
Imposed on Amounts Exceeding 30,000 Won Starting This Year
Concerns Over Burden Shift to Small Business Owners and Consumers
National Assembly Prepares Amendment for 'Exceeding 50,000 Won'... Passage Could Provide Relief

[Asia Economy Reporter Bu Aeri] Since this year, the imposition of stamp tax on mobile gift certificates has been shaking the related industry. Coup Marketing, the largest mobile gift certificate issuer in Korea, lamented, "We have already stopped issuing more than 80% of gift certificates exceeding 30,000 won."

Mobile gift certificates, familiar to us as 'Gifticons' such as Starbucks coffee exchange coupons, are subject to a stamp tax of 200 to 800 won imposed on issuers if the value of the gift certificate exceeds 30,000 won starting this year, according to the stamp tax law amendment passed in 2018. The industry is concerned that the mobile gift certificate market, which has high growth potential domestically, will stagnate due to tax regulations.

◆Mobile Gift Certificates Growing 20% Annually, Expected to Reach 3 Trillion Won This Year= According to the related industry on the 13th, the mobile gift certificate market centered on 'Kakao Gift' is expected to reach 3.28 trillion won this year. According to Coup Marketing's analysis, the transaction volume of mobile gift certificates was 1.56 trillion won in 2017, increased to 2.15 trillion won in 2018, and further grew to 2.68 trillion won in 2019. This represents an annual growth rate of 20%. An industry official said, "Korea has the largest mobile gift certificate market in the world," adding, "The mobile gift certificate industry is gradually expanding overseas, but if the tax burden is imposed, the domestic market itself will stagnate."

Earlier, the National Assembly amended the stamp tax law in 2018 to impose a stamp tax on gift certificates exceeding 30,000 won starting this year. Mobile gift certificate issuers, whose average profit margin is just about 1%, are expressing difficulties due to the stamp tax. When selling exchange coupons exceeding 30,000 won, the profit is 300 won, but they have to bear a stamp tax of 200 won.

Currently, about 90% of mobile gift certificates use a 'third-party issuance system.' Due to the costs of setting up the system, small and medium-sized brands and small business owners issue mobile gift certificates through agencies called issuers rather than issuing them directly. Ultimately, if issuers suffer losses due to the stamp tax, there are concerns that the burden will be passed on to small business owners or consumers.

◆Will Passing the Amendment for 'Over 50,000 Won' Provide Relief?= There are also criticisms that it does not align with tax fairness. In the case of paper gift certificates, large distribution companies that generate actual sales pay taxes, whereas for mobile gift certificates, the issuer, not the product company, is the taxpayer. An issuer official said, "A company cannot distribute at a loss. One of the parties?issuer, small business owner, or consumer?must bear the burden," adding, "This goes against the government's policy to reduce card payment fees for small business owners."

In response to these industry concerns, the National Assembly prepared an amendment to adjust the stamp tax threshold from 'over 30,000 won' to 'over 50,000 won.' In November last year, the National Assembly's Planning and Finance Committee passed an amendment to the stamp tax law imposing stamp tax only when mobile gift certificates sent via mobile phones exceed 50,000 won. It also added a provision excluding cases where sales are canceled within 7 days from the sale date, with full refunds and disposal.

However, the stamp tax law amendment passed by the Planning and Finance Committee is currently pending at the Legislation and Judiciary Committee, and the National Assembly plenary session approval process remains before enforcement. Until the amendment passes, mobile issuers must bear the burden under the current stamp tax law. An industry official emphasized, "Most mobile gift certificates are low-value," adding, "While abolishing the stamp tax would be best, adjusting it to 50,000 won would at least provide some relief, so passing it through the National Assembly is urgent."

This content was produced with the assistance of AI translation services.