"Good Landlords" Who Reduced Rent Last Year Must Apply for Tax Credit by May This Year

On the 19th, a rental notice was posted at a store within the fashion town shopping area in Dongdaemun-gu, Seoul, which is experiencing a recession due to the prolonged impact of COVID-19. Due to the effects of COVID-19, Dongdaemun shopping malls, symbolized by fashion accessories, are also becoming vacant. According to the Shopping Mall Information Research Institute, the vacancy rate of medium to large shopping malls in the Dongdaemun commercial district was 10.8% in the second quarter of last year. The vacancy rate in the Dongdaemun commercial district has been continuously rising since the second quarter. Photo by Kim Hyun-min kimhyun81@

[Sejong=Asia Economy Reporter Kim Hyunjung] Individual business owners who reduced rent last year must complete their application by May to receive a comprehensive income tax credit. For corporate business owners, the deadline is within three months from the end of the fiscal year.

On the 5th, the National Tax Service provided guidance on how individual and corporate business owners can apply for income and corporate tax credits.

The Good Landlord Tax Credit was first introduced at the end of February last year as part of the government's early COVID-19 recovery efforts. On the 26th of last month, a partial amendment to the Restriction of Special Taxation Act related to this was passed by the National Assembly plenary session, extending the tax credit benefit until the end of this year and increasing the credit rate from the previous 50% to 70%.

The tax credit application is available to business owners who reduced rent and can claim the credit when filing comprehensive income tax or corporate tax. For individual business owners (comprehensive income tax), applications for rent reductions made last year must be submitted by May of this year (or June for those submitting a faithful reporting confirmation), and applications for reductions made this year must be submitted by May of next year. Corporate business owners must apply within three months from the end of their fiscal year.

To receive the Good Landlord Tax Credit, in addition to rent reduction, it is necessary to meet requirements stipulated by law, such as tenant conditions and submission of supporting documents. In particular, tenants must be small business owners as defined in Article 2 of the Small Business Act who began operations before January 31 of last year, and certain industries (gambling businesses, taxable entertainment businesses) are excluded. Whether a tenant qualifies as a small business owner can be confirmed by obtaining a confirmation letter from the Small Enterprise and Market Service website or any regional center nationwide.

For further details on specific credit requirements and eligibility, inquiries can be made through the dedicated consultation phone line, which has changed from the previous 126 to 6. For local government support benefits such as property tax reductions for Good Landlords, contact the tax department of each city, county, or district.

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