Second Disaster Relief Fund, 1 Million KRW+α Lump Sum Payment to Small Business Owners and Self-Employed with Sales Decline

'4th Supplementary Budget' to be Announced at This Week's Emergency Economic Meeting
Additional Tax Benefits Not Considered

Prime Minister Chung Sye-kyun and Lee Nak-yeon, leader of the Democratic Party of Korea, are greeting each other at the high-level party-government council held at the Prime Minister's official residence in Jongno-gu, Seoul on the 6th. Photo by Moon Ho-nam munonam@

[Asia Economy Reporter Jang Sehee] The government plans to provide a uniform payment of 1 million won + α to small business owners and self-employed individuals affected by the novel coronavirus infection (COVID-19). They have decided not to differentiate disaster relief funds based on the extent of sales decline. This decision is understood to be made after comprehensively considering that differentiated support could raise fairness issues and that the process of segmentation could incur enormous administrative costs and time.

On the 7th, a government official said, "We will provide a uniform payment of 1 million won + α to all self-employed individuals affected by business suspension or restrictions, without limiting to 12 industries," adding, "It is not a differentiated support method based on sales volume." Choi In-ho, the senior spokesperson of the Democratic Party, also stated at a National Assembly briefing after a high-level party-government meeting on the 6th, "Once a certain standard is set, those who meet the criteria will receive the same payment."

According to government departments on the 7th, the 'Small Business New Hope Fund' support targets all self-employed and small business owners who could not operate properly due to the escalation of social distancing. Applicants include high-risk facilities such as karaoke rooms and PC rooms, which were ordered to close, as well as bakeries, beverage specialty stores, and others.

The method is to limit the target to self-employed individuals who prove damage based on quarterly or semi-annual sales and provide the same amount uniformly. It is expected that the Ministry of SMEs and Startups will comprehensively review data they have built and sales reports filed with the National Tax Service to make judgments.

However, some point out that it is difficult to measure damage solely based on sales. Ahn Jin-geol, director of the Minsheng Economy Research Institute, said, "For those who operate with cash transactions, it will be difficult to prove sales one by one," adding, "There are limitations in assessing the extent of damage based only on sales." He also mentioned, "There may be dissatisfaction among those who narrowly miss the sales criteria."

Separate from cash support, additional tax benefits are not being considered. The Ministry of Economy and Finance announced a value-added tax reduction system for small individual business owners in the 'Second Half Economic Policy Direction' in June. It decided to reduce the VAT payment amount for individual general taxpayers with annual sales of 80 million won or less to the level of simplified taxpayers until the end of this year.

Meanwhile, the Ministry of Economy and Finance plans to announce the 4th supplementary budget, including disaster relief funds, through this week's Emergency Economic Measures Meeting. Accordingly, the second disaster relief payment is expected to be executed before the Chuseok holiday begins on the 30th of this month.

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