Special Tax On Nightclubs May Be Close To Repeal

The government may end the 26-percent special consumption tax on special bars and nightclubs next year if a plan requiring restaurants and entertainment establishments to use credit cards to buy alcohol wholesale is adopted.

"Taxes on hostess bars and nightclubs are too high, so evasion practices are common," a government official said Wednesday. "If the credit card system for wholesale alcoholic purchases passes, bars will report higher sales and their taxes payable will jump."

He said the "real situation" forces authorities to repeal the tax. Government ministries are discussing the tax repeal, the official said. A decision is due in July.

After collecting opinions and comments from advisors, the government will present a revised bill to the National Assembly, which, if passed, would take effect next year, he said.

Another official, at the National Tax Service, said, "If the special consumption tax is done away with, tax revenues will increase." He said that, if the credit card system is introduced, the reported sales of hostess bars and night clubs would jump at least 90 percent.

Hostess bars and nightclubs have been demanding the repeal of the special tax on the condition they will adopt the card system. "The taxes we're supposed to pay, including special consumption and value added taxes, are more than half our sales," one club owner said.

by Lee Hyo-joon