Transition Team "Extension of Income Tax and VAT Payment Deadlines... Tax Credit for Kind Landlords"

Transition Team Announces COVID-19 Emergency Response Roadmap
Strengthening Tax and Fiscal Support... Extension of Tax Payment Deadlines
Expansion of Input Tax Credit, Promotion of Tax Law Amendments

Ahn Cheol-soo, Chairman of the 20th Presidential Transition Committee, is announcing a 100-day roadmap for emergency COVID-19 response based on scientific estimates for full compensation of losses at the transition committee press conference hall in Tongui-dong, Jongno-gu, Seoul on the 28th. [Image source=Yonhap News]

The Presidential Transition Committee has decided to extend the payment deadlines for income tax and value-added tax by 2 to 3 months to support small business owners and self-employed individuals affected by COVID-19, and to extend the tax credit for "Good Landlords" until 2023.

On the 28th, Ahn Cheol-soo, the head of the Transition Committee, announced a 100-day emergency response roadmap for full compensation for losses caused by COVID-19 during a briefing at the committee's office in Tongui-dong, Jongno-gu, Seoul.

The committee has set a policy to expand tax support for small business owners and self-employed individuals who have suffered long-term sales declines due to the spread of COVID-19 and government quarantine measures. The main points regarding strengthening tax and tax administration support include ▲expanding deductions ▲extending tax payment deadlines ▲and combining local tax benefits.

First, the preferential deduction limit for deemed input tax credit on tax-exempt agricultural products will be raised by 5 percentage points. This aims to reduce the burden on business owners by increasing the input tax credit given when supplying goods or services manufactured or created using raw materials such as agricultural products, livestock products, and marine products purchased tax-exempt by the business owner.

Along with this, the tax credit period for "Good Landlords" will be extended from this year to next year. This system provides tax benefits to landlords who reduce commercial rent for small business tenants, which is expected to help small business owners burdened by high rents.

Furthermore, the prepayment tax credit will be reintroduced and the credit rate will be increased. This expands income tax credits for small business owners who meet certain conditions and make prepayments, which can help increase their sales. The committee explained, "To enhance the effectiveness of the system, the credit rate will be raised considering market interest rates."

The committee plans to implement these measures by revising tax laws by August, coinciding with the launch of the new government.

Additionally, the payment deadlines for income tax and value-added tax will be extended by 2 to 3 months. By next month, an automatic refund system for comprehensive income tax for personal service income earners will be introduced. Moreover, regulations will be newly established to allow additional reductions through ordinances by local governments, and the payment deadline for local income tax will also be extended by 3 months.

Kim So-young, a member of the Transition Committee's Economic Division 1, said at the briefing, "We have prepared various tax credit expansion measures to minimize the tax burden," adding, "Through this, it is expected that the tax burden on small business owners will be alleviated and that it will contribute to the rapid recovery of business conditions as social distancing measures are eased."

Meanwhile, the committee estimated that 5.51 million small businesses and micro-enterprises suffered losses of approximately 54 trillion won due to COVID-19 from 2020 to 2021, and stated that support funds will be provided differentially after comprehensively considering the size and extent of damage of individual companies.

However, specific support amounts were not disclosed. Jang Sang-yoon, head of the COVID-19 Special Committee's Policy Support Group, said, "The exact amount will be finalized during the supplementary budget process, so we cannot yet specify how much will be deducted or provided based on the estimated loss scale."

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