Office Worker with Annual Salary of 40 Million KRW, Up to 17% Refund on Year-End Tax Settlement for July Purchases

Discount Effect Ranging from 11% to 25% of Purchase Amount Based on Annual Salary

[Asia Economy Reporter Kwangho Lee] If you plan to purchase home appliances or furniture this year and buy them within July, it is analyzed that you can get a discount effect of about 11~25%.

The Korea Taxpayers Federation announced on the 23rd, "As a result of applying the government's temporary increase plan for credit card deductions, introduced as a measure against the novel coronavirus infection (COVID-19), to actual product prices, benefits range from 11% to 25% of the purchase amount depending on the annual salary."

Earlier, the National Assembly passed an amendment to the Restriction of Special Taxation Act at the end of April, expanding the income deduction rate for credit and check card usage across all industries to 80% until July.

According to the Federation's own analysis, if a worker with an annual salary of 40 million KRW purchases the same product with a credit card in July and August respectively, the difference in refund amounts is about 10.7% of the product price. For an annual salary of 80 million KRW, the refund difference between July and August widens to 17.2%.

Also, if products are purchased using check cards or cash receipts, the refund difference for a worker earning 40 million KRW annually is 8.2% of the product price, and for those earning 80 million KRW, it is 13.2%. However, workers with an annual salary of 14.08 million KRW (tax exemption threshold) or less, due to mid-term resignation or joining, do not receive refund tax amounts, so no discount effect occurs.

The Federation explained the reason for these results as follows: "For credit cards, the deduction rate in July is 80%, but after August it drops to 15%, a 5.3 times difference. For check cards and cash receipts, it decreases from 80% to 30%, a 2.7 times difference."

For example, if a worker A with an annual salary of 40 million KRW purchases an air conditioner (L company 17-pyeong actual model) priced at 1,287,990 KRW with a credit card in July, they can receive a refund of 170,150 KRW through year-end tax settlement, whereas if purchased in August, the refund is 31,878 KRW. The difference in refund amounts reaches 138,137 KRW. Converting the refund amount received by purchasing the product in July into a product discount rate corresponds to 10.7%. Buying a 1 million KRW product in July means getting 110,000 KRW back in the year-end tax settlement next February.

If a worker B with an annual salary of 80 million KRW purchases the same product with a credit card, the discount effect is even greater. If B buys the product in July, they can receive 272,023 KRW, and if in August, 51,004 KRW, as a refund during year-end tax settlement. The discount effect when purchasing in July corresponds to 17.2%.

Similarly, for workers earning 120 million KRW or more annually, the discount effect reaches 25% when purchasing the same product in July and August respectively.

If a worker with an annual salary of 40 million KRW purchases a product with a check card or cash instead of a credit card, assuming the consumer price is 1,899,000 KRW (S company double-door refrigerator actual model), they can receive a refund of 250,668 KRW when purchased in July and 94,001 KRW when purchased in August. Purchasing the product in July applies an 8.2% discount effect.

The Korea Taxpayers Federation stated, "Our analysis is based on the National Tax Service's year-end tax settlement statistical data, assuming that the credit card income deduction amount exceeds the deduction threshold and is within the maximum deduction limit," adding, "Actual refund amounts may vary depending on individual income deduction situations."

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