Posted March. 24, 2005 22:35,
The government and ruling Uri Party agreed on March 24 that they would keep the current policy that one house per one household will be free of capital gains tax for the time being.
Early this month, the Ministry of Finance and Economy (MOFE) said at a briefing to the president that it would reduce the tax exemption benefit of capital gains for one house per household. However, the ministry changed its policy towards keeping the current benefit system at a government-ruling party conference this day.
In addition, the government and ruling Uri Party agreed to introduce a Simple Tax Payment System that the self-employed and small- and medium-sized enterprises (SMEs) can use to report and pay taxes easily. All the self-employed and SMEs that use this system will be exempt from tax audits according to todays agreement.
In todays meeting, Deputy Prime Minister and Minister of Finance and Economy Han Duck-soo, Minister of Commerce, Industry and Energy Lee Hee-beom, floor leader of Uri Party Chung Sye-kyun, and vice-chairman of the Policy Committee Kang Bong-kyun all participated. They made the above agreement, saying, In Korea, where houses are the biggest property asset of most people, it would distort the income distribution structure to apply same level of taxation to the people who own more than two houses to people who own only one house.
Regarding the Simple Tax Payment System, the director general for Tax Affairs at the Finance and Economy Ministry, Lee Jong-kyu, explained, The self-employed and SMEs whose revenues are less than certain level can calculate their taxable income by revenue, accounts receivable, accounts payable, and costs if they have a basic account record such as a tax invoice, credit card bill, and cash receipts, as well as a cash book.
The governments policy is that it will exclude the self-employed and SMEs from the target of the tax audit, as well as reducing the increased tax burden if company taxes increase because of taxable income disclosure after reporting tax through the Simple Tax Payment System.