Highest Inflation Rate in 10 Years... Taxes on Beer and Makgeolli Also to Increase

Ministry of Economy and Finance Announces Follow-up Enforcement Decree Amendments for 2021 Tax Law Revision
Beer Up 20.8 KRW per Liter, Makgeolli Up 1 KRW
'Late Payment' Penalty Rate Reduced by 0.003%p
Support for Low-Income Citizens Including 250 KRW per Liter Refund for Gasoline and Diesel in Compact Cars

[Image source=Yonhap News]

[Sejong=Asia Economy Reporter Moon Chaeseok] This year, the liquor tax per 1ℓ (liter) on beer and Makgeolli (Takju) will be increased by 20.8 won and 1 won respectively. This is because last year's consumer price inflation rate recorded 2.5%, the highest in 10 years. Policies to support low-income earners, such as lowering the penalty tax rate for late tax payments beyond the due date, will also be promoted.

The Ministry of Economy and Finance announced the "2021 Tax Law Amendment Follow-up Enforcement Decree Amendment" containing these details on the 6th. Among the livelihood measures, the notable points are the adjustment of liquor tax rates due to inflation, lowering the penalty tax rate for late payments, and expanding the individual consumption tax refund limit for fuel in compact cars, all to be implemented simultaneously.

First, the timing and rates of tax adjustments on beer and Takju will be changed. Considering that the tax base reporting period is at the end of each quarter, the application period of the tax rate under the inflation-linked system will be adjusted from April 1 to March 31 of the following year. Currently, it is from March 1 to the end of February of the following year, which is out of sync with the quarterly reporting period.

Additionally, the liquor tax on beer will be raised from 834.4 won to 855.2 won per 1ℓ, an increase of 20.8 won, and on Takju from 41.9 won to 42.9 won per 1ℓ, an increase of 1 won. According to the Liquor Tax Act, the tax rate is calculated by multiplying the rate as of December 31 of the previous year by 'consumer price inflation rate + 1.' The higher the inflation rate, the more the tax inevitably rises. This will apply to shipments from liquor manufacturing plants or import declarations made after the enforcement date of the decree.

However, to ease the burden on taxpayers, the penalty tax rate for late tax payments will be lowered from 0.025% per day to 0.022%, a reduction of 0.003 percentage points. This results in an annual rate decrease from 9.125% to 8.03%, a reduction of 1.095 percentage points. This will apply to penalty taxes imposed after the enforcement date of the decree. However, penalties for periods before the enforcement date will follow the previous regulations.

Furthermore, the scope of individual consumption tax refunds on fuel will be expanded for households owning one compact car. Gasoline and diesel will be refunded 250 won per 1ℓ, and liquefied petroleum gas (LPG) and butane 161 won per 1ℓ. Also, the refund limit for compact car fuel individual consumption tax will be raised from 200,000 won to 300,000 won annually, easing fuel cost burdens for the middle and low-income classes and self-employed individuals. The amendment will apply starting from this year's refund on compact car fuel.

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