Newest tax rules go into effect in mid-February

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Newest tax rules go into effect in mid-February

Starting next month, anyone who makes more than 6 million won ($5,586) a month in salary will have at least 360,000 won more a year deducted from his or her monthly salary for tax.

But the government stressed that the additional deduction from that monthly pay will actually be refunded in the person’s year-end tax settlement.

The Ministry of Strategy and Finance yesterday announced 22 detailed tax revisions that will be implemented Feb. 21.

The revisions on the 22 tax laws passed the National Assembly on the last day of 2013 and included the widening of the income bracket that is charged the highest tax rate.

The highest income tax rate of 38 percent, which was imposed on people with annual incomes of more than 300 million won, will now be imposed on people making 150 million won a year and above.

According to the Finance Ministry, anyone who makes 6 million won a month, or more than 72 million won a year, will have to pay an additional 30,000 won every month as a withholding tax.

“It may feel like the tax burden has increased more than when the government announced the revised tax legislation last year,” said Kim Nak-hoe, head of the Finance Ministry’s tax department. “However, [many] will be refunded the difference in their tax settlement next year.”

Currently, people who make 6 million won get 370,000 won deducted every month as a withholding tax. Starting next month, this figure goes up to 400,000 won.

For those who make more than 6 million won, the burden will be heavier. For those who make 10 million won, the additional monthly burden will be 110,000 won while those who makes more than 20 million a month will see a 390,000 won deduction.

Other revised bills include stepped up support for small and midsize businesses such as tax cuts. Additionally, taxes on business inheritances and start-up investments have been eased in hopes of stimulating business.

Additionally, to promote the brewery industry, the government not only eased regulations but has also lowered taxes on smaller beer makers.

Previously, home-brewed beers were not permitted to be sold outside the places they were made.

The government also said it will settle the details on how it would tax religious institutions within the next month. It plans to come up with a plan after negotiating with religious groups and pass it through the National Assembly next month.

“There’s no argument opposing levying taxes on religious institutions,” Kim of the Finance Ministry said. “But there is still room for discussion on how they should be taxed.”

In particular, there are debates on what type of tax should be levied on the clergy and the monks. They claim the money they raise is not income like a laborer.

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