Extension of Tax Credit for Good Landlords... On-site Voices Cry Out for Direct Support

Six-Month Extension of Good Landlord Tax Credit
50% Reduction on Discounted Rent for Rent Cuts

Due to the resurgence of the novel coronavirus infection (COVID-19), economic downturn continues in areas densely populated with small business owners in the Seoul metropolitan area, including Seoul and Gyeonggi Province. On the 21st, the area around Cheonggyecheon Tool Market in Jung-gu, Seoul, appeared deserted. Photo by Kim Hyun-min kimhyun81@

[Asia Economy Reporter Jang Sehee] The government has decided to extend the 'Good Landlord Tax Credit' policy until June next year to ease the rent burden on small business owners struggling due to the novel coronavirus infection (COVID-19). However, on the ground, there are claims that only direct support to tenants will have a real effect.

According to the government on the 15th, the government decided to extend the Good Landlord Tax Credit policy until June next year. The Good Landlord Tax Credit policy is a system that reduces 50% of the reduced rent amount from the landlord's income tax and corporate tax regardless of the income or reduction amount when the rent for small business owners is lowered. The application period for the tax credit was initially extended from June to the end of this year, and now it has been extended by another six months. As of the end of October, 5,915 landlords participated in the Good Landlord Movement by reducing rent for 42,977 stores.

In addition, financial support for landlords who reduced rent will also be expanded. ‘Landlords who have reduced rent by a certain level’ will be temporarily included in the target industries for small business policy funds (loans) until June next year.

Private financial companies also plan to launch preferential financial products for good landlords. Saemaeul Geumgo plans to sell a preferential savings product with an annual interest rate of 5.0% and a maximum maturity of one year (monthly deposit limit of 500,000 won). For credit loans, they are considering providing up to 30 million won with an interest rate within 3% per good landlord, with a maximum maturity of three years.

Although the government has introduced various support measures for landlords, concerns arise that the actual effect may not be significant. This is because many landlords are unable to collect rent due to COVID-19, and the tax benefits are not very attractive. Professor Kim Sangbong of Hansung University’s Department of Economics said, "Many landlords are small business owners themselves and sometimes borrow through financial institutions," adding, "The effect of the tax credit policy will not be significant."

Meanwhile, small business owners stated in a commentary on the 12th, "This measure has the effect of inducing landlords' voluntary rent reductions, but to enhance policy effectiveness, we hope the government considers 'direct rent support'." They added, "We hope that direct rent support measures for small business owners will be more actively discussed by the government and the National Assembly." While demands such as VAT reductions are being made on the ground, the government stated that it is not currently considering additional policies beyond the landlord tax credit.

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