South Korea Faces Severe Populism Debate Over Disaster Relief Funds... Africa Also Implements 'Corporate Tax Deferral'

South Africa Defers Corporate Tax for SMEs with Sales Under 3.4 Billion KRW Over 6 Months
Azerbaijan Offers Simplified Taxation for Small Businesses, Georgia Provides Tailored Tax Support for Accommodation and Travel
Advanced Countries Also Provide Tax Support Without Exceptions... Japan Defers National Tax, Social Insurance, and Local Taxes

[Image source=Yonhap News]

[Asia Economy Reporter Moon Chae-seok] As South Korea struggles with the scope of emergency disaster relief funds, it has come to attention that some countries overseas are going all out to save businesses through measures such as corporate tax deferrals. Since each country’s circumstances differ, it is difficult to apply a one-size-fits-all approach, but voices are emerging that several policies stand out as lessons for South Korea, where 'populism' political strife is spreading ahead of the April 15 general election.

According to the Korea Institute for International Economic Policy on the 11th, countries are implementing and promoting tax benefit policies such as deferrals of corporate and local tax collection to respond to the novel coronavirus disease (COVID-19). Representative policies not being pursued in South Korea include ▲tax support ▲support for healthcare sectors and medical personnel ▲wage compensation systems for workers ▲support for communication fees ▲and control of the rush toward safe-haven assets.

First, South Africa is deferring 20% of withholding tax for the next four months and part of corporate tax and loan interest for six months for 75,000 small and medium enterprises with sales under 50 million rand (approximately 3.4 billion KRW).

Japan, on the 18th of last month, decided through the 'Emergency Measures to Address Living Anxiety' to defer national tax, social insurance premium payments, and local tax collection. Indonesia announced an additional government expenditure plan of 70 trillion rupiah (approximately 5.4 trillion KRW) for tax reductions and loan interest deferrals on the 31st of last month and is awaiting approval from the House of Representatives.

Other countries are also implementing tax support policies such as ▲applying simplified taxation for a certain period to small businesses (Azerbaijan) ▲extending deadlines for property and income tax and value-added tax payments by 3 to 4 months for hotels, restaurants, and travel agencies (Georgia) ▲exempting import tariffs on medical devices and pharmaceuticals (Nepal).

Some countries prioritize support for relatively vulnerable businesses when providing corporate aid. However, there is controversy when the government intervenes in the ownership shares of companies. South Africa is investing about 200 million rand (approximately 14.6 billion KRW) to support tourism operators (small businesses) with annual sales under 2.5 million rand (approximately 170 million KRW), adjusting so that 70% of beneficiary companies are black-owned and 50% are female-owned.

Both developed and emerging countries are supporting the healthcare sector and medical personnel. The United States has prepared a new program to provide 100 billion dollars (approximately 121 trillion KRW) to healthcare insurers.

India has planned to provide insurance worth 5 million rupees (approximately 80 million KRW) per medical worker deployed on the frontlines. Indonesia also announced an additional government expenditure plan of 75 trillion rupiah (approximately 5.8 trillion KRW) focused on protecting COVID-19-related medical personnel in the healthcare sector, awaiting House approval.

Cases of wage compensation for workers cannot be overlooked. Singapore plans to implement a wage subsidy scheme that supports part of wage increases. It also has plans to implement a job support system that compensates 25-75% of wages for workers earning up to 4,600 Singapore dollars (approximately 3.95 million KRW) per month.

Policies supporting household communication fees, mainly in emerging countries, are also notable. Nepal has instructed telecommunications service providers to reduce charges for data and voice calls by 25%. Ghana, since the 20th of last month, has directed the central bank to exempt fees for remittances under 100 cedis (approximately 21,825 KRW) for three months in consultation with telecom companies.

To control the rush toward the safe-haven asset gold, Nepal is implementing a policy to reduce the daily import quota from 20 kg to 10 kg.

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