Focus on Livelihood and Local Economy Support... 'Amendment to Local Tax Revenue Related Laws' Approved at Cabinet Meeting

Scheduled for Finalization Within the Year After National Assembly Deliberation

Expansion of Exemption Support Targets for Social Welfare Facilities (Special Act)

[Asia Economy Reporter Lim Cheol-young] The Ministry of the Interior and Safety announced on the 11th that it has finalized the government's proposal to amend local tax-related laws at the Cabinet meeting, which includes expanding the exemption support targets for social welfare facilities and extending the support period for hybrid vehicles by two years.

On August 11, the Ministry of the Interior and Safety held the Local Tax Development Committee meeting and announced the '2022 Local Tax-Related Law Amendment Bill' to boost economic vitality and support livelihood stability. Afterward, consultations with relevant ministries and legislative notice were conducted for five bills to gather diverse opinions, followed by review by the Ministry of Government Legislation, vice-ministerial meetings, and the Cabinet meeting to finalize the government proposal.

The government proposal extends local tax exemptions for social welfare corporations to provide robust social welfare support. Previously, local tax exemptions were only applied to some social welfare facilities, but to strengthen support for vulnerable groups and improve fairness among social welfare facilities, the exemption target will be expanded to all social welfare facilities under the 'Social Welfare Services Act.'

For eco-friendly and new technology support, to promote the distribution of eco-friendly vehicles and technology development, the acquisition tax exemption for hybrid vehicle purchasers will be extended for two years at the current level (up to 400,000 KRW). Furthermore, for balanced development support, special acquisition tax and property tax benefits will be newly established for companies starting businesses or establishing/moving workplaces in depopulated areas and for business transformation companies under the Special Act on Promotion of Business Transformation for Small and Medium Enterprises, supporting the attraction of companies and revitalization of the regional economy in depopulated areas.

Establishment of Special Provisions for Companies in Population Declining Areas (Special Act)

The proposal also includes measures to reduce taxpayers' burdens and improve convenience. The government allows owners of temporary two-households to report the house subject to heavy taxation within 60 days from the expiration of the disposal period for the previous house, without imposing underreporting penalties or late payment surcharges. Additionally, a system for installment payment of individual local income tax on comprehensive income will be introduced, allowing installment payments within two months if the tax amount exceeds 1 million KRW.

The finalized government proposal reflects opinions raised during inter-ministerial consultations and legislative notice, such as including disability activity support agencies as non-profit organizations eligible for resident tax exemptions, in addition to the original plan to expand local tax exemptions to all social welfare facilities.

The government proposal will be submitted to the National Assembly for in-depth discussion and is expected to be finalized within the year and implemented from January next year. Choi Byung-kwan, Director of the Local Finance and Economy Office at the Ministry of the Interior and Safety, said, “The proposed amendments to local tax-related laws to be submitted to the National Assembly this time are expected to greatly contribute to supporting the livelihood economy and revitalizing the regional economy,” adding, “We will work closely with the National Assembly to ensure the government proposal passes safely within the year.”

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