Promotion of 80% Income Tax Deduction Rate for Traditional Market Card Payments... Expansion of Onnuri Gift Certificate Usage Locations

Income Tax Deduction Rate Increased from 40% to 80%
Gift Certificates Allowed Everywhere Except Entertainment Venues
Government to Announce Comprehensive Small Business Measures Early Next Month

The government is once again pushing to raise the income deduction rate for credit card usage at traditional markets to 80%. The usage scope of Onnuri gift certificates, which can be used at traditional markets, will be significantly expanded, and the issuance volume will also be increased.

According to the Ministry of SMEs and Startups on the 24th, the government is re-promoting the revision of the Restriction of Special Taxation Act to raise the income deduction rate for credit card usage at traditional markets from the current 40% to 80%. The bill to amend the Restriction of Special Taxation Act, which the ruling party and government had been promoting, was discussed in the 21st National Assembly but was scrapped with the end of the term. This is being pursued again to stimulate domestic demand and support small business owners. The Ministry of SMEs and Startups reportedly proposed to the Ministry of Economy and Finance to raise the income deduction rate for credit card usage at traditional markets, and negotiations are currently underway. Previously, the Federation of Small Businesses had requested an increase in the income deduction rate at least for businesses with a small business confirmation certificate. The issuance targets for the small business confirmation certificate are businesses with annual sales of 1 billion KRW or less and fewer than five regular employees in the case of restaurants and lodging businesses.

Minister Oh Young-joo of the Ministry of SMEs and Startups and Lee Bok-hyun, Governor of the Financial Supervisory Service, are shopping at Tongin Market in Jongno-gu, Seoul, after concluding the Traditional Market-Financial Market Partnership Janggeumi On&On Expansion Report Meeting on the afternoon of the 11th. Photo by Jo Yong-jun jun21@

Additionally, the government plans to revise the Enforcement Decree of the Traditional Market Act to significantly expand the usage scope of Onnuri gift certificates at traditional markets and shopping districts. Currently, the usage of Onnuri gift certificates is limited to retail and service industries. Even within retail and service industries, they cannot be used in tobacco brokerage, liquor retail, pubs, real estate, karaoke rooms, and similar sectors.

The Ministry of SMEs and Startups plans to change the regulations on Onnuri gift certificate usage to a negative regulation system (a comprehensive approach allowing all except some exceptions) by revising the Enforcement Decree of the Traditional Market Act in early the second half of the year. This will allow Onnuri gift certificates to be used at all affiliated stores except for some sectors such as entertainment establishments.

This year, the issuance target for Onnuri gift certificates has been set at 5 trillion KRW, an increase of 1 trillion KRW from last year. In January this year, Park Seong-hyo, the president of the Small Enterprise and Market Service, explained, "Last year's sales target for Onnuri gift certificates was 4 trillion KRW, but sales fell slightly short at 3 trillion KRW. This year's target is 5 trillion KRW, but considering the unsold certificates from last year, it could reach 6 trillion KRW."

However, the government drew a line on raising the income deduction rate for credit card usage at small business sites and introducing an exclusive electricity rate system for small business owners, which small business organizations had demanded. This is due to concerns about fairness issues if electricity rates are discounted for specific business sectors and the potential worsening of Korea Electric Power Corporation's deficit. Instead, a special support project was separately conducted to support micro small business owners with annual sales of 30 million KRW or less by providing up to 200,000 KRW in electricity bill support.

The government plans to announce a ‘Comprehensive Measures for Small Business Owners’ in early next month, which will include debt burden relief, support for business sector transition and restart, and employment transition plans. It is reported that the focus is on tailored measures considering the management situation of small business owners rather than income deduction-type measures. To this end, this year, related ministries such as the Ministry of Economy and Finance and the Ministry of SMEs and Startups have launched the ‘Small Business Support Comprehensive Measures TF’ to prepare measures that can be felt on the ground. The measures will include expanded supply of low-interest policy funds, strengthening digital capabilities, and the special law on corporate succession, which is being promoted for enactment within the year, will also be part of the measures.

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