[Enforcement Decree of the Tax Act] Exclusion of Pre-Modification Vehicle Price for Camper Van from Standard Task Sheet and Recognition of Small Entertainment Expenses up to 30,000 KRW

Ministry of Economy and Finance, Follow-up Enforcement Decree Amendments After 2020 Tax Law Revision

(Photo) [Image source=Yonhap News]

[Sejong=Asia Economy Reporter Joo Sang-don] Starting this year, the recognition threshold for small entertainment expenses has been raised to 30,000 KRW, and the threshold for small advertising expenses not considered as entertainment expenses has been increased to 50,000 KRW annually and 30,000 KRW per item. This is intended to boost consumption activity. Additionally, the pre-modification vehicle price of camping cars will be excluded from the individual consumption tax base to reduce the tax burden.

On the 6th, the Ministry of Economy and Finance announced that it has prepared amendments to 21 follow-up enforcement ordinances, including the Income Tax Act Enforcement Decree.

The increase in the threshold for small entertainment expenses without proper evidence and small advertising expenses not considered as entertainment expenses was included in the '2020 Tax Reform Bill' announced last July. Accordingly, from January 1 of this year, even without proper evidence such as credit card sales slips, the threshold for recognizing expenses as entertainment expenses has been expanded from 10,000 KRW or less to 30,000 KRW or less. Also, the threshold for small advertising expenses not considered as entertainment expenses has been raised from the previous annual 30,000 KRW and 10,000 KRW per item to an annual 50,000 KRW and 30,000 KRW per item.

The non-taxable range for night shift allowances for production workers has also been expanded. For production workers with a fixed monthly salary of 2.1 million KRW or less, overtime, night, and holiday work allowances are non-taxable up to a limit of 2.4 million KRW, and telemarketing, rental sales, and leisure-related service industries have been added to the eligible job categories.

Furthermore, tax support to strengthen industry-academia cooperation and promote university student employment has been enhanced. Until now, only commissioned training expenses and on-site training expenses for students of industry-demand customized high schools were included in the personnel development expenses eligible for R&D tax credits. Now, on-site training expenses paid to university students during the standard on-site training semester system have also been added.

For tax system rationalization, public official awards have been added to taxable earned income, while real estate rental income, considering its low relevance to labor like interest and dividend income, will be excluded when calculating earned income tax credit payments.

Additionally, to adjust double taxation, when a passenger car subject to individual consumption tax is converted into a camping car, the 'pre-modification vehicle price' will be excluded from the tax base. The tax rates for beer and Takju, which are subject to specific tax, have been adjusted to 834.4 KRW and 41.9 KRW per liter respectively, reflecting consumer price inflation.