Government Extends Corporate and Excise Tax by up to 9 Months with Tax and Customs Clearance Support

National Tax Service Establishes 'Special Response Team for New Coronavirus Tax Support'
Strengthening Export Procedures for Masks and Hand Sanitizers... Transition from Simplified to Formal Process

Hong Nam-ki, Deputy Prime Minister and Minister of Economy and Finance, is delivering opening remarks at the 'New Coronavirus Response Economic Ministers' Meeting and Economic Vitality Measures Meeting' held on the 5th at the Government Seoul Office in Jongno-gu, Seoul. Photo by Kang Jin-hyung aymsdream@

[Asia Economy Reporters Kwangho Lee, Minyoung Kim, Sehee Jang] The government will support taxpayers such as self-employed individuals facing difficulties due to the novel coronavirus infection (Wuhan pneumonia) by extending filing and payment deadlines, deferring collection, postponing delinquency measures, and delaying or suspending tax audits. Additionally, it will provide supply support for hygiene and medical products such as masks and hand sanitizers to block large-scale overseas exports, as well as customs clearance support for the import of raw materials. The government is also preparing multifaceted support measures such as interest reduction and new fund supply in case the situation worsens.

On the 5th, the government held an Economic Relations Ministers' Meeting and Economic Vitality Measures Meeting chaired by Deputy Prime Minister and Minister of Strategy and Finance Hong Nam-ki at the Government Seoul Office, announcing the "Support Measures for Taxation and Customs Related to the Novel Coronavirus Situation."

Deputy Prime Minister Hong stated, "We will mobilize all available policy tools to prevent the spread of this situation, achieve an early end without casualties, and maintain momentum for domestic economic recovery, responding with full force."

First, the National Tax Service will extend the filing and payment deadlines up to 9 months for taxpayers affected in sectors such as medical, tourism, travel, performance, food, and lodging industries for corporate tax (March) and value-added tax (April). If the situation continues, it plans to extend the comprehensive income tax (May) filing and payment deadlines as well. Also, already notified national taxes will have collection deferred up to 9 months, and in cases where national tax refunds occur for small and medium enterprises exporting to China, payments will be expedited as much as possible. Enforcement of delinquency measures will also be postponed for up to one year. Furthermore, tax audits on affected taxpayers will be suspended in principle until the situation stabilizes. In particular, the National Tax Service headquarters, seven regional tax offices nationwide, and 125 tax offices will establish a "Novel Coronavirus Tax Support Dedicated Response Team" to systematically support affected taxpayers.

The Korea Customs Service will provide unsecured support for up to one year for payment extension and installment payments upon submission of payment plans to companies experiencing disruptions in raw material supply and exports due to factory closures in China. Additionally, customs refund cases applied by affected companies will be converted to electronic documents (P/L) and refund decisions and payments will be made on the day of application. Customs investigations will also be postponed until the end of the damage regulation period. Moreover, to block large-scale overseas export of masks and hand sanitizers, simplified export procedures will be converted to formal export procedures to strengthen export customs clearance management. If it is suspected that the goods were stockpiled through hoarding during export screening, customs clearance will be withheld and a report will be filed.

◆ Interest Reduction Support for Small Business Owners = The Ministry of Strategy and Finance and the Ministry of SMEs and Startups are also considering interest reduction support for small business owners. This is a strong measure not seen during the 2003 Severe Acute Respiratory Syndrome (SARS) or the 2015 Middle East Respiratory Syndrome (MERS) outbreaks. However, during the Gangwon wildfire damage, a 0.5% interest reduction was supported only for small business owners. A government official said, "Discussions among related ministries on interest reduction support measures have been completed," adding, "The Ministry of Strategy and Finance will make an official announcement soon." He further stated, "We plan to announce after analyzing the extent of the impact and the factors that caused it." Previously, the Ministry of SMEs and Startups provided 20 billion KRW in management stabilization funds to small business owners and supplied 100 billion KRW in special guarantees through regional credit guarantee institutions with a 0.2% point reduction in guarantee fees.

Regarding these measures, Professor Sangbong Kim of Hansung University’s Department of Economics expressed regret, saying, "It is not easy to come up with new sharp measures. Whether corporate tax or VAT is paid now or later is the same. Tax audits can help but do not significantly reduce the burden."

◆ Living Expenses and Paid Leave Support to be at MERS Level = Meanwhile, the government has decided to provide living expenses support for self-quarantined individuals at the level of the MERS outbreak.

The government supported one month’s emergency living expenses in 2018 for domestic MERS quarantined individuals who were unable to engage in income-generating activities.

A Ministry of Health and Welfare official said, "We are reviewing support measures for living expenses and paid leave based on the official standards established by the Ministry of Health and Welfare in 2018," adding, "Payments will be differentiated according to income level and household type, and paid leave will be set at a maximum of about 130,000 KRW."

According to the Ministry of Health and Welfare notice enacted in September 2018, households subject to quarantine with a monthly income of 3.09 million KRW or less for a family of four, property under 135 million KRW in metropolitan areas, and financial assets under 5 million KRW were supported according to household size: 1 person (409,000 KRW), 2 persons (696,500 KRW), 3 persons (901,100 KRW), 4 persons (1,105,600 KRW), 5 persons (1,310,200 KRW), and 6 persons (1,514,700 KRW). Paid leave costs (for employees) were paid at a daily wage cap of 130,000 KRW per person.

Accordingly, in 2015, 15 billion KRW was supported through supplementary budgets for 47,700 confirmed quarantined individuals, and in 2018, a total of 17 million KRW was paid to 1 confirmed case and 21 quarantined individuals.

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