Population-Declining Areas to Receive 40% Acquisition Tax Reduction for Tourism Complexes... Promoting 'Balanced Development' [2025 Local Tax Reform]

Differentiated Tax Reductions for Balanced Regional Development
Stronger "Second Home" Benefits in Non-Metropolitan Areas
50% Acquisition Tax Cut for Unsold Apartments in Provincial Regions

In regions experiencing population decline, a differentiated tax reduction system has been established to promote balanced regional development. For example, the acquisition tax reduction rate for tourism complexes in these areas will be set at 40%, which is four times higher than the rate applied in the Seoul metropolitan area. In addition, to address the issue of unsold apartments in provincial areas, a 50% reduction in acquisition tax will be applied, and these properties will be exempt from additional acquisition tax surcharges.

On August 28, the Ministry of the Interior and Safety convened the Local Tax Development Committee and announced the "2025 Local Tax System Reform Plan," which includes these measures. The proposed amendments were developed through a process of gathering feedback from local governments and experts, including joint institutional improvement forums and integrated reviews of local tax reductions.

First, a regionally differentiated tax reduction system has been created to promote balanced national development, with preferential treatment for non-metropolitan and population-declining areas. For industries closely linked to the local economy-such as industrial, logistics, and tourism complexes-higher tax reduction rates will be applied in the following order: population-declining areas, non-metropolitan areas, and then the metropolitan area. Previously, tourism complex developers received a 25% acquisition tax reduction regardless of location, but going forward, the rates will be 10% for the metropolitan area, 25% for non-metropolitan areas, and 40% for population-declining areas.

If a new startup or business is established in a population-declining area, acquisition tax and property tax on real estate will be fully exempted for five years, followed by a 50% reduction for the next three years. The range of eligible industries has also been expanded from the previous 32 sectors, such as mining and manufacturing, to now include camping grounds, tourism pensions, and renewable energy generation businesses.

Tax support for boosting regional investment and employment will also be strengthened. Companies located in population-declining areas will receive a local corporate income tax credit when hiring local residents. The credit amount is 450,000 won per employee (700,000 won for small and medium-sized enterprises). In addition, a new 50% acquisition tax reduction will be introduced for housing and dormitories acquired by companies in these areas for the purpose of leasing or providing them free of charge to employees.

Measures to revitalize the local real estate market, as outlined in the local-centric construction investment reinforcement plan announced on August 14, have also been included in this local tax reform. To reduce unsold apartments in provincial areas, a 50% acquisition tax reduction will be granted for such purchases, and these properties will be exempt from the additional acquisition tax imposed on owners of multiple homes. This applies to apartments with an exclusive area of 85 square meters or less and a purchase price of 600 million won or less that remain unsold after completion in provincial areas. The benefit will be available for one year only.

For individuals without a home or with only one home, the acquisition and property tax benefits for acquiring a "second home" in a population-declining area have been expanded, with the acquisition price ceiling for non-metropolitan areas raised. Non-metropolitan areas of interest for population decline have also been added to the list of eligible regions. The acquisition price ceiling for the acquisition tax benefit has been increased from 300 million won to 1.2 billion won in non-metropolitan population-declining areas. For the property tax benefit, the official property value ceiling has been raised from 400 million won to 900 million won in these areas.

An official from the Ministry of the Interior and Safety explained, "In consideration of consistency with government policies such as the metropolitan area regulation measures announced in June, metropolitan areas within regions of interest for population decline have been excluded from the support areas, and the price criteria for metropolitan areas within population-declining regions will remain unchanged."

Additionally, homes acquired in population-declining areas for short- or long-term private rental purposes will be excluded from the housing count for acquisition tax surcharges for one year. This measure aims to quickly resolve the inventory of unsold housing in these areas while stabilizing the rental market. When the amended law takes effect, homes acquired for rental purposes in population-declining areas will be subject to the standard acquisition tax rate of 1-3% and will not be counted toward the total number of homes owned. However, if the property is not used for rental purposes after acquisition, or if it is sold or gifted during the rental period, the tax benefit will be reclaimed.

Tax support will also be expanded to encourage the maintenance and utilization of vacant homes. As abandoned vacant homes have become a social issue by damaging urban landscapes and worsening local residential environments, the aim is to encourage voluntary maintenance and efficient utilization.

Going forward, property tax on land after the demolition of a vacant home will be reduced by 50% for five years. For the entire period during which the land is used for public or communal purposes, such as parking lots, the property tax burden will be eased. If a new house or building is constructed on the land within three years after demolition, a 50% reduction in acquisition tax (up to 1.5 million won) will also be granted.

The laws to be amended as part of the tax reform include the "Framework Act on Local Taxes," the "Local Tax Collection Act," the "Local Tax Act," the "Restriction of Special Local Taxation Act," and the "Act on the Collection of Local Administrative Sanctions and Surcharges." The legislative notice period will begin on August 29 and last for 24 days. After review by the Ministry of Government Legislation and approval by the Cabinet, the amendments are expected to be submitted to the National Assembly in early October.

Minister of the Interior and Safety Lee Hojoong stated, "After much deliberation, we have established this local tax reform plan to help achieve balanced national development and support the recovery of the people's livelihoods and the economy." He added, "Going forward, the Ministry of the Interior and Safety will strive to create a fair tax system that earns the people's trust and a rational tax system that ensures strong local finances."

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