Hong Nam-ki "Tax deferral? Not allowed at will... Arbitrary action violates collection law"

National Assembly Budget Committee Comprehensive Policy Inquiry

Deputy Prime Minister for Economy Hong Nam-ki is responding to lawmakers' questions about the 2022 budget bill at the plenary session of the Budget and Accounts Special Committee held at the National Assembly on the 9th. 2021.11.9 Photo by National Assembly Press Photographers [Image source=Yonhap News]

[Sejong=Asia Economy Reporter Son Seon-hee] Hong Nam-ki, Deputy Prime Minister and Minister of Economy and Finance, said on the 10th regarding the Democratic Party's claim for 'tax payment deferral' to secure funds for the 'nationwide quarantine support fund' payment, "It is not something that can be done arbitrarily; there are deferral conditions in the National Tax Collection Act," adding, "If the executive branch arbitrarily grants payment deferral without meeting the conditions, it violates the National Tax Collection Act."

Deputy Prime Minister Hong made this remark in response to a question from Jeong Hee-yong, a member of the People Power Party, during the National Assembly Budget and Accounts Special Committee comprehensive policy inquiry, asking, "Is it possible to defer tax revenue to next year as the Democratic Party claims?"

According to Article 13 of the National Tax Collection Act, payment deferral can be granted in cases such as ▲ when the taxpayer suffers severe property damage due to disaster or theft ▲ when the business operated by the taxpayer incurs significant losses or there is a risk of default or bankruptcy ▲ when the taxpayer or their cohabiting family member requires treatment for more than six months due to illness or serious injury, or is in mourning due to death. In such cases, the taxpayer must apply to the head of the relevant tax office.

When asked about the scale of excess tax revenue within this year, Deputy Prime Minister Hong said, "It is difficult to make an accurate prediction," but added, "There seems to be excess tax revenue in the range of 10 trillion won."

He further explained, "(If the tax) is received by the end of this year and carried over as excess tax revenue to next year, it must be handled according to the settlement results, and the national settlement procedure is completed in April next year." In other words, it is not possible to use this for support fund payments before March, when next year's presidential election will be held.

Deputy Prime Minister Hong continued, "There is a 'payment deferral' system that allows taxes not to be collected this year but to be paid next year, and due to the COVID-19 crisis this year, many deferral measures were granted to small business owners and small and medium enterprises facing difficulties," adding, "If taxes are deferred to be collected next year, the revenue can be recorded as next year's income." However, even in this case, there are not many tax items scheduled to be collected including this month through December, and there is a lack of justification for tax payment deferral, making it practically difficult.

Meanwhile, regarding a question about the '50 trillion won compensation for losses of self-employed businesses' plan proposed by Yoon Seok-yeol, the People Power Party's presidential candidate, Hong expressed concern, saying, "It would be good to examine whether such support is truly necessary and whether the funding can be backed, and if such talk arises," adding, "If support is only talked about but not realized, the public's expectations will be high, which could cause confusion."

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