Maintenance Tax Under Review

The government is taking a step back from its plan to levy taxes on the maintenance bills paid by apartment residents.

An official at the Millennium Democratic Party said Monday that it will introduce a proposal to exempt rental-only apartments and smaller units from value added tax. A full exemption for all types of apartment units will not be proposed because it raised questions of equity when compared with commercial units, which are currently assessed tax on maintenance fees, he said.

The tax on the portion of maintenance bill paid to outsourced management companies is set to go into effect in July. Residents fearing a hike in the bill have been calling for the plan to be scrapped

A finance ministry official said it is nearly certain that residential rental units will be exempt from the tax. It is reviewing expanding the exemption to include smaller units.

A National Tax Service official assured that the tax will be applied only to a portion charged for maintenance and wages for the management personnel. "The increase in the bill will be limited to 3 percent at most," he said.

Nearly 70 percent of the apartment complexes in Seoul and 90 percent of those in newer residential municipalities including Ilsan and Bundang are managed and maintained by outside management companies.

by Lee Hyo-joon