Focus on Reducing 'Jungsancheung' Burden...Easing 'Banryeoin' Burden and Tax Benefits for High-Value Donors [2023 Tax Reform]

100 Frequently Occurring Pet Diseases Exempt from VAT
Tax Benefits for High-Value Donors Also Strengthened

The government will exempt value-added tax (VAT) on veterinary medical services for companion animals. This is to alleviate the high medical expenses burden on households raising pets. Tax benefits for high-value donors will also be strengthened. The government explained that this is intended to ease the burden on the middle class.

According to the government’s ‘2023 Tax Reform Proposal’ announced on the 27th, VAT exemption for 100 common diseases in companion animals will be implemented starting October 1. Currently, the government imposes a 10% VAT on medical fees except for some items aimed at disease ‘prevention’ such as vaccinations and neutering surgeries. The plan is to significantly expand the scope of medical fees exempt from VAT.

This measure is to ease the high medical expenses burden on the increasing number of households raising companion animals. According to the ‘2022 National Awareness Survey on Animal Protection’ conducted by the Ministry of Agriculture, Food and Rural Affairs last year, about 6.02 million households were raising companion animals as of 2022. The average monthly cost per pet is 150,000 KRW, of which 60,000 KRW is spent on hospital fees. Deputy Prime Minister and Minister of Economy and Finance Choo Kyung-ho explained, “The number of households living with companion animals has increased tremendously,” and “this reflects the substantial realistic demand.”

The Ministry of Economy and Finance will first start VAT exemption on 100 common medical items frequently treated in the field, such as otitis externa, conjunctivitis, and atopic dermatitis, and plans to gradually expand the scope later. The 100 common diseases broadly include medical items in veterinary fields such as internal medicine, dermatology, ophthalmology, and surgery, covering about 80% of actual veterinary medical treatments.

Tax support for donations will also be strengthened. In particular, the aim is to spread a culture of giving through tax benefits for high-value donors. Currently, a tax credit rate of 15% is applied to donations up to 10 million KRW, and 30% for donations exceeding 10 million KRW. Going forward, a 40% deduction rate will also be applied to donations exceeding 30 million KRW.

The scope of tax benefits for volunteers will also be expanded. Currently, volunteer services in ‘special disaster areas’ are recognized as donations up to 50,000 KRW per day and receive tax credit benefits. In the future, the areas eligible for tax benefits will be expanded to include national, local governments, and schools, and the recognized donation amount will be increased up to 80,000 KRW. Income deduction benefits for the Housing Subscription Savings will also be increased to support housing acquisition for workers without homes. The deductible payment limit, currently up to 2.4 million KRW per year, will be raised to 3 million KRW per year.

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