[Exclusive] Democratic Party Considers Refund of Comprehensive Real Estate Tax on Corporate Housing for Non-Speculative Purposes

Concerns Over Excessive Corporate Property Tax Burden Lead to Investigation of Multi-Home Holding Corporations
Plan to Identify and Apply Cases of 'Unjust Taxation'... Proposal to Amend Special Tax Treatment Control Law
Ruling Party Also Pushes for Property Tax Relief... Competition Between Ruling and Opposition Expected in Regular National Assembly

Members of the Citizens' Coalition for the Unconstitutionality of the Comprehensive Real Estate Tax posted notices regarding the unconstitutionality claim of the Comprehensive Real Estate Tax at an apartment in Seocho-gu, Seoul on the 22nd. Photo by Jinhyung Kang aymsdream@

[Asia Economy Reporters Chae-eun Koo, Hyun-joo Lee] It has been confirmed that the Democratic Party of Korea is collecting cases where corporate housing, such as employee accommodations, was subject to the comprehensive real estate holding tax (종합부동산세) bomb despite not being for speculative purposes, and is considering selective refunds.

Unlike individuals, corporate housing has been hit with a 'comprehensive real estate tax bomb' without a basic deduction (600 million KRW), with a single tax rate of 3% for up to two houses and 6% for three or more houses and two houses in regulated areas. The party intends to collect cases of 'unfair and excessive comprehensive real estate tax' and refund them. Since the ruling party has also proposed easing the comprehensive real estate tax, it is expected that the ruling and opposition parties will compete to reduce the tax ahead of the tax law amendment discussions at the regular National Assembly session in September.

According to a summary of Asia Economy's coverage on the 13th, the Democratic Party is conducting a fact-finding survey to see if there are cases related to corporate housing that should be reflected in amendments to the Restriction of Special Taxation Act. A key member of the Democratic Party's real estate task force said, "We are reviewing unfair comprehensive real estate tax cases, such as those where apartment complexes are owned by corporations and subject to the tax, and preparing countermeasures."

Significant Differences Between Individual and Corporate Comprehensive Real Estate Tax... Violates Tax Equity

This measure stems from the judgment that the comprehensive real estate tax burden on some corporations is excessive. For example, in the case of employee accommodation housing, if a corporation owns one house with a publicly announced price exceeding 300 million KRW, a 3% tax rate is applied, and a 6% single tax rate is applied for multiple houses. Unlike individual housing, comprehensive real estate tax must be paid even if the publicly announced price is below 600 million KRW, and progressive tax rates do not apply, leading to criticism that this is not in line with tax justice. In such cases, small businesses may bear an excessive tax burden simply because the property is owned by a corporation. This points to a flawed framework equating 'corporations = multiple homeowners = speculators,' which has undermined tax equity between corporations and individuals.

Kim Jin-pyo, elected as the Speaker of the National Assembly for the second half of the year, is giving his acceptance speech at the plenary session held at the National Assembly on the 4th. Photo by Yoon Dong-joo doso7@

Regarding this, a Democratic Party official explained, "In the past, the criteria for imposing additional capital gains tax on corporations were lower than for individuals, leading some multiple homeowners to switch to corporate ownership, but the situation changed with the June 17, 2020 measures," adding, "The fact that no basic deduction is applied to corporations and that excessive comprehensive real estate tax has been imposed in some cases has been a topic of discussion at the policy committee level even before the presidential election."

Ruling and Opposition Parties Enter Tax Cut Competition

As the Democratic Party begins reviewing comprehensive real estate tax relief, including for corporate housing, the ruling and opposition parties are expected to compete over tax relief in the second half of the National Assembly session. Both parties have declared 'correcting the Moon Jae-in administration's real estate policies' and 'restoring public trust in real estate policies.'

The ruling party plans to temporarily raise the comprehensive real estate tax threshold for single homeowners from 1.1 billion KRW to 300 million KRW this year through an amendment to the Restriction of Special Taxation Act, led by Representative Seong-geol Ryu. The amendment also allows temporary two-homeowners due to moving or those who inherited houses to defer comprehensive real estate tax payments.

In addition to the comprehensive real estate tax, competition over the extent of fuel tax cuts is also expected. Regarding fuel tax, Representative Jun-young Bae of the People Power Party proposed a bill within the inflation special committee to lower the flexible tax rate on fuel from the current 30% to up to 50%. From the Democratic Party, Representative Min-seok Kim proposed a bill to increase the fuel tax cut to 70%. Earlier, Representative Byung-soo Seo proposed a bill to exempt fuel tax up to 100%. These 'tax cut' bills are expected to undergo party consensus adoption shortly after the National Assembly's organization, followed by joint review after bipartisan agreement.

Kwon Seong-dong, floor leader of the People Power Party, is attending the party floor strategy meeting held at the National Assembly on the 8th and delivering opening remarks. Photo by Yoon Dong-joo doso7@

Park Hong-geun, floor leader of the Democratic Party of Korea, is attending the party strategy meeting held at the National Assembly on the 5th and delivering opening remarks. Photo by Yoon Dong-joo doso7@

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