[Exclusive] Lee Joong-geun Requests Government Meeting to Keep 100 Million Won Childbirth Support Tax for Employees Under 10 Million Won

It has been confirmed that Lee Gi-il, the 1st Vice Minister of the Ministry of Health and Welfare, and Lee Jung-geun, Chairman of Booyoung Group, held an unofficial meeting. While the government is considering ways to provide tax benefits to Booyoung, which received a 'generous' childbirth support fund, Booyoung repeatedly requested the government to prepare support measures for companies encouraging low birth rates.

Lee Joong-geun, Chairman of Booyoung Group, is taking a commemorative photo after presenting childbirth incentives to families with multiple children at the New Year's ceremony held at the Booyoung Building in Jung-gu, Seoul, on the morning of the 5th. Chairman Lee announced that to address the serious low birthrate issue, a childbirth incentive policy will be implemented, providing 100 million KRW in cash per child for 70 employees' children born since 2021. The total support amount is 7 billion KRW. [Photo by Yonhap News]

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According to the government and related industries on the 19th, Booyoung reportedly requested during the unofficial meeting with Vice Minister Lee, which lasted about 40 minutes on the 15th, that the taxes for employees receiving childbirth support funds should not exceed 10 million won. It is known that Chairman Lee emphasized that the childbirth support funds paid to children should be recognized as expenses in tax accounting.

At the meeting, Chairman Lee also explained the background of providing childbirth support funds since 2021. He said that in the process of considering ways to fulfill social responsibility rather than accumulating cash as corporate retained earnings, he focused on the role of companies in encouraging childbirth. Vice Minister Lee conveyed his intention to prepare multifaceted government efforts to support such generous childbirth policies by companies.

Prior to this, Booyoung announced that it would provide the 100 million won childbirth support fund in the form of a 'gift' to children rather than 'earned income.' This is because providing childbirth support funds as a gift rather than earned income can reduce the tax burden on employees.

However, this is only Booyoung's intention, and if the tax authorities determine it as earned income, Booyoung Group will find it difficult to provide it in the form of a gift. On the 16th, Jeong Jeong-hoon, Director of the Tax Policy Bureau at the Ministry of Economy and Finance, told reporters, "If a company gives something to an employee, whether it is a childbirth support fund or a holiday allowance, it is basically earned income," adding, "We are continuously considering and reviewing whether it is a gift or earned income."

The Ministry of Economy and Finance is reviewing which tax category to apply between earned income tax and gift tax, as the taxation standards for corporate childbirth support funds may vary slightly depending on various situations. In particular, if it is considered earned income, various measures such as applying installment taxation to reduce the employee's tax burden are being discussed. Applying installment taxation, which allows earned income tax to be paid over several years, can significantly lower the actual tax burden to a level similar to that of a gift.

The Ministry of Economy and Finance reiterated that "no specific tax support measures for corporate childbirth encouragement funds have been decided." The ministry plans to announce tax support measures for childbirth support funds early next month.

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