Special Workers and Freelancers, Expense Deduction Up to 80% for Income Below 36 Million Won

Ministry of Strategy and Finance to Promote Amendment of Income Tax Act Enforcement Decree

[Asia Economy Sejong=Reporter Song Seungseop] The government has decided to raise the expense deduction rate for special-type workers (teukgo) and freelancers with an annual income below 36 million won to up to 80%.

According to the Ministry of Economy and Finance on the 25th, the government will revise the Enforcement Decree of the Income Tax Act this year and raise the simple expense rate application standard for personal service providers from an annual income below 24 million won to below 36 million won. The adjusted income amount will be announced by the end of next month and applied from the tax period including the enforcement date.

The simple expense rate is a system that considers a certain percentage of income as expenses for small business owners who find it difficult to keep expense books. For example, if the simple expense rate is 50%, when earning 10 million won, 5 million won is regarded as expenses and deducted from taxable income. Additional deductions are also possible on the remaining 5 million won of income.

The simple expense rate is set differently depending on the industry. Quick service delivery is 79.4%, private tutor instructors 75.0%, and substitute drivers 73.7%. The number of personal service providers benefiting from this is estimated by the government to reach about 4.2 million people.

The system for identifying business income will also be improved. Study cafes, ambulance services, and fishing boat businesses will be newly added to the 197 consumer-facing industries required to register as credit card and cash receipt merchants. If the income in the previous tax period is 24 million won or more and the business is included in consumer-facing industries, consumers must be able to use credit cards and cash receipts. If card payments are refused or prices higher than the official price are demanded, reports can be filed.

The number of industries required to issue cash receipts mandatorily will increase from 112 to 125. Thirteen industries including department stores, large marts, convenience stores, bookstores, butcher shops, automobile brokerage, parking lot operations, telecommunications equipment repair, and boiler repair and other household goods repair will be added. These businesses must issue cash receipts mandatorily when the transaction amount is 100,000 won or more, even without consumer requests.