From haircuts to tax cuts, 2021 policy list has it all

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From haircuts to tax cuts, 2021 policy list has it all

It’s that time of the year again, time for the government to roll out its laundry list of new policies, programs and initiatives. The list didn’t disappoint, with everything from bold income tax increases to moisturizer for soldiers.
 
The Ministry of Economy and Finance released a pamphlet for 2021 listing more than 270 new policies spanning government ministries and agencies taking effect. This kind of report has been published and distributed since 1997. 
 
Starting in January, the tax rate for incomes over 1 billion won ($921,000) will be raised to 45 percent from the current 42 percent. The adjustment was introduced as a way to reallocate resources to help those facing pandemic-related hardship. According to the ministry’s brochure, a new category of over 1 billion won was added in the income tax system.
 
More small businesses will be eligible for the simplified taxation system this year, including private businesses with sales between 48 million won and 80 million won. Last year, businesses with sales under 48 million won could file under the simplified system.
 
Businesses exempt from the value-added tax (VAT) will include those with sales under 45 million won, from the current 30-million-won maximum.
 
For real estate businesses and entertainment venues subject to taxation, the eligibility for simplified taxation will remain the same as before.
 
For the military, a soldier’s monthly salary will break 600,000 won for the first time. Soldiers will receive reimbursements for haircuts, 10,000 won each month, to get services from professional barbers. Soldiers have been cutting each other’s hair. The military will start covering costs for skin care items, including moisturizers.
 
More businesses will be required to issue cash receipts starting this year. As of 2020, businesses in specialty occupations including law firms, hospitals and pharmacies were required to do so. Going forward, hospitality businesses, including inns and gosiwon, or one-room apartments for students, as well as hair salons will be covered by the regulation.
 
The stock transfer tax will be lowered in stages. The tax rate for Kospi shares has been 0.1 percent, and a 0.25 percent rate for the Kosdaq market. This year, Kospi transactions will be taxed 0.08 percent, and Kosdaq transactions will be taxed 0.23 percent. In 2023, the rates will go down to 0 percent for the Kospi and 0.15 percent for Kosdaq.
 
The Defense Ministry said the soldiers will get a 12.5 percent raise. A sergeant’s monthly salary will increase from 549,000 won in 2020 to 608,500 won. The amount is 45 percent of the minimum wage in 2017, and the ministry is planning on raising it to the 50-percent range by 2022. In that scenario, the monthly salary for sergeants will be 676,100 won. 
 
The military’s total budget for the stipend for soldier self-development, including achieving certificates and purchasing books, will be taken from 8 billion won in 2020 to 23.5 billion won this year. The allowance covers movie tickets as well after evaluation. After uploading tickets or receipts to an online portal, they can receive 80 percent reimbursement.
 
The training session for the army’s subsidiary roles, such as public service workers, will be shortened from four to three weeks. The ministry said it is a measure for fairness, since their counterparts in the navy go through three weeks of training. 
 
The safety grade system for electric equipment will be in five levels, instead of two. The levels will take into account more specific causes of electrical fires to better manage them. The safety measures for apartments and traditional markets, which are especially vulnerable to fire, will be strengthened. There will be more types of equipment under examination, including electrical transformers, distributors as well as circuit breakers and wires inside buildings.
 
The subjects of the Ministry of Trade, Industry and Energy’s financial support for enterprises, which was limited to small- and medium-sized enterprises (SMEs), will be expanded to cover larger businesses in terms of sales. Starting in April, corporations that steal ideas of SMEs and ventures with be assessed treble damages. Previously, there was no protection for losses from illicit and intentional idea theft. 
 
The Ministry of Agriculture, Food and Rural Affairs is increasing the stipend for insurance premiums for the national pension specifically for farmers from 43,650 won to up to 45,000 won this year. The monthly stipend will not go over half of the premium per person. For eligibility, the total annual taxable income should not exceed 60 million won, and assets are capped at 1 billion won in assets.
 
A six-month experiential program for agricultural life will start this year for younger people who want to farm, but do not have adequate knowledge or resources. There will be activities customized per region, including field trips and cultivation in villages. Those who participate more than 15 days a month can receive a monthly stipend of 300,000 won.
 
The Ministry of Oceans and Fisheries will introduce a navigation system for the sea in order to provide ship operators with information on destination, climate and safety. The system will implement LTE technology to enable speedy exchange of information for locations that are maximum 100 kilometers (62 miles) offshore.
 
BY CHO HYUN-SOOK, KIM SANG-JIN AND LEE JEE-YOUNG   [lee.jeeyoung1@joongang.co.kr]
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