[2024 Tax Revision] Will 'Fruit-Flavored Makgeolli' Increase... Expansion of Liquor Tax Reduction Benefits

Relaxation of Traditional Liquor Tax Reduction Condition 'Shipment Volume'
Addition of 'Flavoring and Coloring Agents' to Ingredients for Takju Production

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The government will expand tax reduction benefits and eligible recipients for traditional liquor to support the alcoholic beverage industry. It will also increase the raw materials allowed in Takju to encourage the release of diverse products and lower market entry barriers by easing licensing requirements.

On the 25th, the Ministry of Economy and Finance held the Tax System Development Committee and announced the "2024 Tax Law Amendment" containing these measures. According to the plan, the conditions for receiving tax reductions on traditional liquor will be significantly relaxed. For fermented liquor, the previous year's shipment volume had to be 500㎘ or less, but going forward, tax reduction benefits will be available if the shipment volume is 700㎘ or less. For distilled liquor, the limit was adjusted from 250㎘ or less to 350㎘ or less.

The reduction limits and reduction rates have also increased. Until now, tax benefits for fermented liquor applied only up to 50% for shipment volumes of 200㎘ or less. The government will maintain this standard but will also allow a 30% tax rate reduction for shipment volumes between 200㎘ and 400㎘. For distilled liquor, only a 50% reduction was possible for shipment volumes of 100㎘ or less, but an additional 30% tax reduction benefit will be granted for volumes between 100㎘ and 200㎘.

Institutional improvements for the development of the alcoholic beverage market are also included. The government will add "flavoring and coloring agents" to the raw materials allowed in Takju production. Currently, if flavoring or coloring agents are added to Takju, it is classified as "other alcoholic beverages" and subject to high tax rates of 72% or 30%. However, if classified as Takju, a volume-based tax of 44.4 won applies, which is a much lower rate. This means various Takju products with added flavor and color can be produced with less tax burden.

Additionally, to reduce the management burden on small-scale liquor manufacturers, the government raised the "shrinkage allowance" limit. Shrinkage refers to losses occurring during the liquor production process. Since liquor can be spilled or lost during storage or transfer, the government considers shrinkage and reduces the shipment volume accordingly. Because liquor tax is based on shipment volume, increasing the shrinkage allowance also increases tax benefits. In particular, whiskey and brandy receive an additional 2% shrinkage allowance due to aging in wooden barrels; the government will increase this to 4% and expand the target to all types of liquor.

Licensing requirements for comprehensive liquor wholesalers will also be eased. To engage in comprehensive liquor wholesale business domestically, one must have a capital of at least 50 million won, a warehouse area of at least 66㎡, and an exclusive business obligation. Among these, the warehouse area requirement will be significantly lowered to 22㎡ to improve entry conditions.

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