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Increased Deduction Benefit of Year-end Tax Settlement

Posted December. 02, 2004 23:03,   


If the income is tantamount to last year’s and if there are no expenditure changes in medical and education expenses and credit card usage this year, the earned income tax will decrease by 140,000 won (11.7 percent) from last year on average.

This is because new tax exemption benefits were created as nurture allowances for children younger than six years old, and the deduction limit of education expenses was extended.

The office of National Tax Administration announced yesterday that 6.2 million earned income tax payers paid 1.22 million won per person on average as earned income tax last year, assuming a four-member family (self-included), but the amount decreases to 1.08 million won this year.

Classifying by incomes, the amount of income tax for a worker with an annual salary of 50 million won decreases by 185,000 won (8.0 percent) from last year’s average of 2,312,550 won to 2,127,550 won this year.

If a worker has a child younger than six years old, the income tax decreases by 365,000 won (15.8 percent) to 1,947,550 won.

For those with salaries of 30 and 70 million won, it was analyzed that the taxes decrease 49,358 won (26.0 percent) and 185,000 won (3.5 percent), respectively.

The office of National Tax Administration decided to analyze the integrated computer network of national taxation and the materials of relevant organizations thoroughly to find out whether income deductions were sincerely reported after the year-end tax settlement.

For those who received unrighteous income deductions using false donations and medical expense receipts, the government decided to collect the taxes plus penalties and punish according to relevant laws.

Director of the Withholding Tax Department of the National Tax Administration office Kang Jong-won asked for honest reports, saying, “Since various income deductions were increased compared to last year, one can save tax if he carefully gathers documentary evidences satisfying requisite conditions, but disadvantages against unrighteous deductions are huge.”

Jae-Seong Hwang jsonhng@donga.com