South Korea

Welcome to the high-level summary of Covid-19 related actions by the South Korean Government. The details and links below have been split between “Tax Filings Affected”, “Government Employee Wages Benefits Programs” and “Government Loan and Support Programs”; and are simply extracts from the more detailed information available on the websites of the South Korean Praxity Participant firms’ websites, links to which are available at the bottom of this page. Praxity Participant Firms in South Korea are Mazars and Dasan Accounting Corporation.

Tax Filing Affected

VAT and Indirect Tax Measures

Reduction of VAT for small business (2020): For 2020, only small individual business, i.e. with sales under KRW 80 million (excluding real estate, bar, etc.) are allowed to apply simplified calculation method.

Exemption for simplified taxable persons (2020): Only simplified taxable person – KRW 48 million annual sales (vs. KRW 30 million annual sales).

Corporate Income Tax Measures

Reduction of income tax and corporate income tax for disaster areas (2020): Both individual business and legal entities. Conditions: 1) SMEs (excl. real estate, bar, etc.) and 2) disaster area of the infectious disease (Daegu, Gyeongsan, Bonghwa and Cheongdo). Tax reduction: 60% for small enterprise and 30% for medium enterprise. No special rural development tax on the reduced amount.

Extension for tax filing and payment deadline (up to 9 months): For companies if there are “exceptional circumstances”. Other cases:

  • For special disaster zone: 1 month.
  • Businesses in tourism, travel business, wholesale, retail, etc. with infected employees, visited by infected person, China-trading SMEs, tax payers with business disruption from factories in China. Application 3 days at least before the tax return date.

Extension for payment deadline of local taxes up to 1 year: In case of infection case, quarantine impact and closure. Upon approval by the local gov’t tax office.

Rental business operators providing rent reduction to commercial stores: Rate reduction AND no increase of rent at the end of the year. Income tax deduction of 50% of the rent decrease for the 1st semester 2020. Increase of the limit of deduction for entertainment expenses for 2020 entertainment expenses.

Other Taxes

80% tax deduction rates for payments with personal credit/debit card: April 1 to July 31, 2020 purchases by credit/debit card. 80% uniform deduction rates (regardless of method of payment).

Special consumption tax (“SCT”) reduction: For purchasing vehicles from March 1 to June 30, 2020. Reduction of SCT by 70% (with a cap of KRW 1 million).

Government Employee Wages Benefits Programs

Employee retention subsidy Eligibility:

  • In case of *management difficulties (*Management difficulties criteria is detailed by Ministry of Employment and Labor) leading to suspending/closing temporarily the business (휴업)
  • Requesting employees to take leaves due to the decrease of business
  • All industries for 3 months (April to June)
  • Submission of employment retention plan
  • Monthly submission Impact: Support up to 90% of salary allowances (salary allowances equal 70% of average wage) with a maximum of KRW 66,000 per day and per person Contact: Ministry of Employment and Labor (Application: Employment Insurance Website)

Subsidy for Work & Life balance (measure available before the covid19 outbreak) Eligibility:

  • Companies that have introduced work & life balance system for a better Work & Life balance, such as remote working system or flexible hour system.
  • Maximum 30% of employees Impact:
  • Subsidy up to KRW 5.2 million per person per year (only for 1 year)
  • No retroactive support
  • Some IT system fee support is also possible Contact: Ministry of Employment and Labor (Application: Employment Insurance Website)

Government Loan and Support Programs

Tax reductions for disaster areas Reduction of income tax and corporate income tax for disaster areas (2020)

  • Eligibility: Both individual business and legal entities. Conditions: SMEs (excl. real estate, bar, etc.) and disaster area of the infectious disease (Daegu, Gyeong- san, Bonghwa and Cheongdo)
  • Tax Impact: Tax reduction: 60% for small size enterprise and 30% for medium size enterprise - No special rural development tax on the reduced amount

Tax reductions for individuals & Individual businesses

Reduction of VAT for small business (2020)

  • Eligibility: For 2020, only small individual business, i.e. with sales under KRW 80 million (excluding real estate, bar, etc.)
  • Tax Impact: Allowed to apply simplified calculation method

Tax exemption for simplified taxable persons (2020)

  • Eligibility: Simplified taxable persons with annual sales below KRW 48 Million
  • Tax Impact: KRW 48 million annual sales (vs. KRW 30 million annual sales)

Double tax deduction rates for payments with personal credit/debit card

  • Eligibility: March 1 to June 30, 2020 purchases by credit/debit card
  • Tax Impact: Double deduction rates

Special consumption tax (“SCT”) reduction

  • Eligibility: For purchasing vehicles from March 1 to June 30, 2020
  • Tax Impact: Reduction of SCT by 70% (with a cap of KRW 1 million)

Tax reductions for companies Rental business operators

providing rent reduction to commercial stores

  • Eligibility: Rental fee reduction
  • Tax Impact: Income tax deduction of 50% of the rent decrease for the 1st semester 2020

Increase of the limit of deduction for entertainment expenses

  • Eligibility: For 2020 entertainment expenses
  • Tax Impact: Increase of limits, based on revenue

Links to Our Member Firms

Further Covid-19 advice

You may want to visit some of our other member firms in South Korea

Dasan Accounting Corporation

For any other news come to Praxity

To find more information on other countries

The information contained herein on Covid-19 government measures within the G8, consists solely of information that can be found on the websites of one or more Praxity Participant firms, and has not been written, modified or verified by Praxity, it’s staff, officers or directors.