VAT Exemption on Petroleum Products for Agriculture and Fisheries Extended for 3 Years Until 2026... Special Sunset Provisions Extended

Starting January 1 Next Year, 11 National Tax and 8 Local Tax Agricultural Tax Reduction Amendments to Take Effect

The sunset period for the exemption of value-added tax and other indirect taxes on petroleum products used in agriculture and fisheries will be extended by three years until 2026.

The Ministry of Agriculture, Food and Rural Affairs announced on the 29th that the 2023 tax law amendment for the agricultural sector passed the National Assembly plenary session on the 20th-21st and the Cabinet meeting this week, and will be implemented from January 1 next year.

With the amendment to the Restriction of Special Taxation Act, the indirect tax exemption on petroleum products for agricultural use, capital gains tax exemption on farmland transferred as retirement payment for farmland cultivated for more than three years, and the increase in the deduction rate for deemed input tax credit on agricultural and livestock products through the amendment of the Value-Added Tax Act, a total of 11 national tax special cases in the agricultural sector have had their sunset deadlines extended. Nine special cases, including the indirect tax exemption on petroleum products for agricultural use, are extended by three years until December 31, 2026, and two cases, including special cases for companies located in agricultural and industrial complexes and the National Food Cluster, are extended by two years until December 31, 2025.

Additionally, with the amendment to the Restriction of Local Tax Special Cases Act, eight local tax special cases such as a 50% reduction in acquisition tax on farmland and agricultural facilities (fixed greenhouses, livestock facilities, etc.) for self-cultivating farmers, exemption of acquisition tax on agricultural machinery, and a 75% reduction in acquisition tax on farming real estate acquired within two years of establishment by farming cooperatives and agricultural corporations (four years for young agricultural corporations) have been extended by three years until December 31, 2026.

Furthermore, according to the amendment to the Restriction of Special Taxation Act, the non-taxable limit on dividend income from members’ capital contributions to cooperatives such as the NongHyup has been raised from 10 million KRW to 20 million KRW, improving the system for the first time in 30 years since 1992.

Lee Deok-min, Director of Agricultural Management Policy Division at the Ministry of Agriculture, Food and Rural Affairs, said, "We hope that this extension of special tax cases in the agricultural sector will help reduce the economic burden on farmers who are facing difficulties such as rising production costs due to domestic and international conditions and contribute to management stability."

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