[Amendment to Enforcement Decree of Tax Law] Support for Refinancing Long-term Housing Mortgage Loans...Easing of Income Deduction Requirements

Ministry of Economy and Finance's 'Follow-up Enforcement Decree Amendment after Tax Law Revision'
Value-Added Tax Exemption Also Applies to Worker Dispatch Services

In the future, the income deduction requirements that borrowers can apply for when refinancing with cheaper loans will be relaxed. Borrowers will be able to receive income deductions even if they deposit the new bank's loan amount into their own account and immediately repay the existing loan themselves.

On the 23rd, the Ministry of Economy and Finance announced a "Follow-up Enforcement Decree Amendment after Tax Law Revision" based on these contents.

On the 21st, a notice about personal credit loan and mortgage loan interest rates was posted at a commercial bank in Seoul. Photo by Kang Jin-hyung aymsdream@

Previously, income deductions were only applied when financial institutions directly repaid the existing loan balance with the new loan. In other words, income deductions were only available when the borrower had no involvement in the loan transfer process. This was intended to prevent unpredictable side effects that could occur during the loan transfer process. Going forward, borrowers will also be able to receive linked income deductions when they directly repay the existing loan balance with the new loan.

With the development of internet banking and sufficient computer system infrastructure, it was judged that there was less need to maintain such strict regulations. This reflects the fact that infrastructure is now in place to sufficiently verify whether the borrower used the refinancing loan to repay a long-term housing mortgage loan, whether it was a pure refinancing, and whether the collateralized house is the same as before.

However, the Ministry of Economy and Finance explained that the relaxation of requirements is not intended for individuals to secure temporary liquidity. The purpose is to resolve administrative inconveniences that have existed for both banks offering lower interest rates and individuals using them.

Value-added tax (VAT) on worker dispatch services will also be exempted. Previously, VAT was imposed on fees incurred during worker dispatch and service processes. This measure aims to activate manpower supply and expand transparency in manpower provision.

The scope of industries eligible for income tax reductions for employees of small and medium-sized enterprises will also be expanded. Computer academies will be added to the list of industries eligible for income tax reductions. Additionally, to strengthen the social safety net for self-employed individuals, employment insurance and industrial accident insurance premiums for the self-employed themselves will be included as necessary expenses for business income.

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