Tax cuts for south korea

In an effort to stimulate their stalled domestic property market, South Korea has introduced new measures, including reducing the level of capital gains tax on land sales, in the hope that this will reverse the drop in demand...

Since South Korea's property market has seen a huge drop in domestic demand, the Korean Ministry of Strategy and Finance has decided to ease the tax system in the country in a bid to lift the economy.

It has been predicted that South Korea, Asia's fourth largest economy, will see a contraction of two per cent at some point this year, which would be the first annual contraction since the Asian financial crisis 11 years ago.

In a bid to boost the market, the Ministry has reduced the level of capital gains tax on land sales to between six per cent and 35 per cent for multiple property owners to bring them onto a par with those who only own one home.

The tax cuts will also be offered to companies who are selling their assets in order to pay off financial debts, as part of an effort to help businesses cope with the economic crisis.

At present, if someone owns three or more properties, they will have to pay a 45 per cent capital gains tax when they decide to sell one of the properties. Companies that sell land unrelated to their business operations have been taxed as much as 52 per cent.

Now, under the proposed measures, companies that sell their assets for debt payment can delay paying taxes for three years on income from the transactions.

The Ministry said, "To stimulate the economy and stabilize the livelihoods of ordinary people, we will strengthen tax support mostly in areas where preemptive and direct help is needed.

"The tax cuts will mainly aim to accelerate corporate restructuring, normalize the housing market and encourage job sharing," the Ministry added.

Other plans are also in the pipeline to help life the economy out of the doldrums and foreign investors also stand to benefit. They will no longer have to pay interest income on their investments in state and currency bonds.

Picture by koshyk