New Tax Revisions to Take Effect

Starting in 2006, all self-employed Koreans with one or more employees must submit wage receipts to the tax authorities. Failure to comply with this will result in fines.

Another tax law states that even if a housing area is under 25.7 pyeong, a price over 300 million won requires one to pay taxes on registration for deductions on interests for savings accounts.

In addition, retirement pensions, along with personal and national annuity accounts exceeding six million won yearly are subject to progressive tax rates.

The Finance Ministry announced these tax revisions and others in release titled: “19 Tax-collecting Guidelines” on January 9. After ratification in a cabinet council meeting, they will go into effect later this month.

The government has decided to subject all businesses to two percent income taxes if their wage receipts are not submitted to the tax authorities.

Currently, there are about 1.1 million self-employed businesses, and 600,000 more will be subject to tax responsibilities.

The standard amount for transaction receipts will be toughened from 100,000 won to 50,000 won, enabling the government to survey businesses with more accuracy.

In addition, more civic groups will be authorized to receive donations, to which the government grants tax breaks if the amount exceeds 50 percent of the total budget.

People who left the country previously qualified for tax benefits without eligibility, thanks to the rule that stated you must possess property for over three years in Seoul, Gyeonggi, and other areas, but now the restriction is that one must sell within two years of leaving.

Do-Young Kim nirvana1@donga.com legman@donga.com