110,000 Won Saved Per Capita from the Year-end Tax Adjustment

It has been forecasted that 6.2 million workers (according to tax payment standards) will save about approximately 113,000 won each on their taxes after the year-end tax adjustments.

Also, those workers (based on a family of four) with an annual salary of 30 million won and having the same income as last year will probably reduce their tax burden by approximately 20 percent.

The National Tax Service (NTS) announced these matters in the “2003 Year-end Tax Adjustments Notice” report yesterday, and presumed that workers will reduce 3,000 billion won from the expanded special deduction and 4,000 billion won from the tax credits and deductions, altogether totaling 7,000 billion won in lower tax burdens.

According to the NTS, starting with this year’s year-end tax adjustments, the earned income deduction rate of those whose annual salary is 5~15 million won will increase from 45 percent to 47.5 percent, a 2.5 percent increase.

Also, those whose earned income taxes are below 500,000 won will have a 50 percent deduction, increasing from the formal 45 percent, and the deduction limit will be raised from 400,000 won to 500,000 won.

The range of special deductions such as insurance premiums, medical expenses, and educational expenses has been substantially expanded.

In particular, the total amount for insurance premiums for health and employment will be deducted and guaranteed insurance premiums will increase the deduction limits from an annual 0.7 million won to 1 million won.

Lee Jun-sung, director of NTS Withholding Tax Department, said, “We are planning to strengthen the ex-post management because the benefits from special deductions have increased, and those using false receipts for unreasonable deductions will be levied an additional tax and will be charged.”

Ji-Wan Cha cha@donga.com