In this revision of the Enforcement Decree of the Tax Law, the value-added rate by business type of simple taxpayers who pay less VAT has been significantly increased. The increase in eight years after the 2013 cut will increase the actual tax rate of simple taxpayers.
The simplified taxpayer pays VAT by multiplying the consideration for the supply of goods or services by the value-added rate by industry and the value-added tax rate (10%). The value-added rate is calculated by the formula of (Sales-Buy)/Sales. Currently, it is 5-30% by industry, but it will increase to 15-40% from July this year. It can be interpreted as being conscious of the criticism that the simplified taxation standard has risen from 48 million won to 80 million won, and that the tax of the simplified taxpayer is too low. By industry, restaurants increase from 10% to 15%, accommodations from 20% to 25%, and real estate leasing from 30% to 40%.
A large number of industries excluding simplified taxation have also been added. Product brokerage business, electricity, gas, steam and water business, construction business, specialized, scientific and technical service business, business facility management, business support, and rental service business are excluded from the simple taxation. However, some of the sub-industries that directly supply goods and services to consumers have decided to be classified as simple taxation through the enforcement regulations.
Even if there is no evidence, the upper limit of acceptable entertainment expenses will rise from 10,000 won to 30,000 won. It’s been 12 years since 2009. “It is to reflect the real conditions caused by rising food prices and to support the revitalization of the economy,” the Ministry of Information and Communication explained. The annual limit for small advertising and advertising expenses, such as souvenirs that companies give to unspecified people, has been increased from 30,000 won to 50,000 won.
Service positions such as hairdressers will also be able to enjoy tax-free benefits for night and holiday allowances. Currently, the tax-free benefits for overtime, nighttime, and holiday work allowances are up to 2.1 million won per month, and the corresponding amount of production workers will be expanded. In the beauty, cooking, and food industries, only those employed by businesses with less than 30 full-time workers and a tax base of 500 million won or less, but this requirement has disappeared.
Business types and items that are excluded from the specific application of the integrated investment tax credit were also determined. Excluding the real estate rental and supply business and the consumer service business, investments in all industries are deducted, and land and buildings and vehicles are excluded from the tax credit. Even if it is reorganized in a negative manner, the intention is to recognize the tax credit that is only possible for pure equipment investment such as machinery. 25 technologies, including memory semiconductor manufacturing and design, and carbon dioxide utilization, were added to the range of facilities for commercialization of new growth technologies that apply a higher tax credit than general investment.
Reporter Jinkyu Kang/Minjun Seo [email protected]
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