The 1.8 Million Won Spent by Husband Was on a Corporate Card... Enough Sales to Buy Out Emart

Editor's Note'Corporate entertainment golf,' which uses company credit cards, has driven the golden age of the golf industry in Korea since COVID-19. However, as companies have recently begun restricting corporate card payments at golf courses, the industry now faces a crisis. The 'golf fever' was so intense during the pandemic that even the term 'Gollini' (Golf + Orini, meaning golf beginners) was coined, but now the enthusiasm is rapidly cooling amid economic instability. In fact, golf courses, which were the biggest beneficiaries of increased corporate card spending due to the raised entertainment expense limit in 2020, have seen a decline in visitors and worsening business conditions since last year. The number of large companies restricting corporate card use at golf courses is also on the rise.

Golf Entertainment for 4 People

　Green Fee: 800,000 KRW (200,000 KRW per person)
+ Lunch, Dinner, and Snack Bar Meals: 777,000 KRW
+ Cart Fee: 100,000 KRW
+ Gifts: 150,000 KRW
= 1,827,000 KRW

Let's take a look at the receipt of Executive Director Kim from Company A, who recently played an entertainment golf round with a client. Despite being a weekday, the green fee was 200,000 won per person. For a team of four, the green fee totaled 800,000 won, and the cart fee was 100,000 won. The combined cost of lunch and snacks at the start house before golf, and dinner at the golf course after the game, came to 777,000 won. Adding a 150,000 won gift purchased at the pro shop, the total reached 1,827,000 won. Even after deducting the 150,000 won caddie fee paid in cash on-site, the cost per person for a single round exceeded 450,000 won. The payment was made with a corporate card.

Although there is ongoing criticism that Korea has some of the highest golf course fees in the world, these fees show no sign of coming down. On the surface, the increase in the golf population seems to have driven up course fees, but a major underlying factor is the rise in entertainment golf following the government's decision in 2020 to raise the deductible limit for business entertainment expenses (entertainment expenses) to stimulate domestic demand during COVID-19.

Golf Course Corporate Card Sales Surged After 2020 Corporate Tax Law Revision

According to the latest data from the Korea Golf Consumer Agency on the 21st, corporate card spending at golf courses surpassed 2 trillion won for the first time in 2022. From 2013 to 2019, annual corporate card spending at golf courses hovered around 1 trillion won, but it surged from 2020 onward: 1.5195 trillion won in 2020, 1.916 trillion won in 2021, and 2.1625 trillion won in 2022. This is a 67.7% increase compared to 1.2892 trillion won in 2019, when COVID-19 began. The proportion of corporate card sales at golf courses also reached 27.9%, nearly one-third of total sales.

Corporate card sales at domestic golf courses (left)

The main factor behind the nearly 1 trillion won increase in corporate card spending in a short period was the revision of the Corporate Tax Act, effective from January 2020. The revision raised the deductible limit for entertainment expenses, increasing the amount that could be processed as business expenses, and thus expanded the potential for entertainment golf paid with corporate cards. At the time, the government relaxed the entertainment expense limit as part of efforts to stimulate the economy, which had sharply contracted due to COVID-19.

Corporate tax is levied on a company's income after deducting losses and expenses, known as deductible expenses. Even if companies have the same income, those with higher deductible expenses pay less corporate tax. The Corporate Tax Act recognizes only a certain amount of entertainment expenses as deductible, based on revenue. The deductible limit for entertainment expenses is calculated by adding each company's basic deduction limit and a revenue-based limit. The basic deduction is 12 million won for general companies and 36 million won for small and medium-sized enterprises (SMEs). The SME deduction limit increased from 24 million won to 36 million won after the 2020 revision.

The revenue-based limit is calculated by adding a standard limit based on sales size and an additional limit based on a certain percentage of sales. There are three categories: companies with sales up to 10 billion won, those with sales between 10 billion and 50 billion won, and those with sales over 50 billion won. For companies with sales up to 10 billion won, the standard limit increased from 0.2% to 0.3% of sales after the 2020 revision. For these companies, no separate additional limit applies.

For companies with sales between 10 billion and 50 billion won, the standard limit increased from 20 million won to 30 million won. The additional limit, previously 0.1% of the amount exceeding 10 billion won, was raised to 0.2%. For companies with sales over 50 billion won, the standard limit increased from 60 million won to 110 million won, while the additional limit remained at 0.03% of the amount exceeding 50 billion won.

For example, for an SME with 10 billion won in sales, the entertainment expense limit increased from 44 million won (24 million won basic deduction + 20 million won revenue-based limit) before 2019 to 66 million won from 2020. For companies that previously had to split golf course expenses exceeding the deductible limit into other categories such as welfare or advertising, the burden was greatly reduced.

Entertainment Golf Expanded After COVID-19

The 1.8 Million Won Spent by Husband Was on a Corporate Card... Enough Sales to Buy Out Emart

As indoor gatherings were restricted due to COVID-19, major entertainment venues shifted en masse to golf courses. With higher corporate card limits, companies paid for golf, gifts, and meals all with their cards, leading to a sharp increase in corporate card spending at golf courses. As reservations became difficult due to surging demand, golf courses raised their green fees and food and beverage prices.

The average weekday green fee at domestic golf courses jumped 31.5% in just four years, from 134,000 won in 2020 to 177,000 won in 2023. Weekend green fees also rose 22.1%, from 181,000 won to 221,000 won. Although green fees have slightly decreased this year, they remain significantly higher than in 2020. As of last month, the average weekday green fee at 18-hole public golf courses in Korea was 169,600 won, and 213,700 won on weekends. This is more than 24% higher than the average green fee of 15,342 yen (about 134,500 won) for the Tokyo area, according to the Japan Golf Course Managers Association.

As a result, some argue that only the disappearance of entertainment golf will bring down the sky-high green fees and expensive food and beverage prices at golf courses. To revitalize the use of public golf courses, it is suggested that the excessively high deductible limit for entertainment golf expenses should be lowered.

Seo Cheonbeom, head of the Korea Golf Consumer Agency, stated, "For the sound development of the domestic golf course industry, corporate card spending at golf courses, except for employee welfare purposes, should not be recognized as deductible expenses." He added, "If corporate card spending is not recognized as deductible expenses, the 5.69 million golfers in Korea will be the biggest beneficiaries." He further emphasized, "Japan also achieved a healthier industry by not recognizing corporate card spending at golf courses as deductible expenses."