From Next Year, Two-Child Families Also Eligible for 'Multiple Children' Benefits... Car Acquisition Tax Reduction

Approval of the Local Tax Revenue Related Law Amendment Proposal at the Cabinet Meeting

From next year, two-child households will also receive a reduction in automobile acquisition tax. Acquisition tax reductions will also be introduced to attract resident populations to areas experiencing population decline.

The Ministry of the Interior and Safety announced that the "Amendment to Local Tax Revenue-Related Laws" containing these provisions was approved at the Cabinet meeting on the 31st. The related laws include the Framework Act on Local Taxes, Local Tax Collection Act, Local Tax Act, Restriction of Special Local Taxation Act, the Act on Collection of Local Administrative Sanctions and Charges, and subordinate statutes (enforcement ordinances and enforcement rules). The amended laws are scheduled to take effect from January 1, 2025.

First, to align with the national policy to overcome low birth rates, the criteria for multi-child households will be relaxed from three children to two children starting next year. Accordingly, a new 50% reduction in automobile acquisition tax for two-child households has been introduced. Three-child households, which previously received tax reductions, will continue to receive a 100% reduction as before.

Additionally, all company-operated daycare centers, whether directly managed or outsourced, will receive a 100% reduction in acquisition tax and property tax. Until now, outsourced workplace daycare centers that were not mandatory installations did not receive tax reduction benefits.

To reduce housing costs for low-income households, a housing acquisition tax exemption of up to 3 million KRW will be granted for first-time purchases of small-sized houses rather than apartments. A special provision has also been introduced allowing those who lived in small or low-priced houses as tenants to receive the first-time home acquisition tax reduction again when purchasing an apartment later.

Acquisition tax reductions to encourage the inflow of resident populations into population-declining areas will also be introduced. Homebuyers who are either homeless or own one house and purchase a home located in a population-declining area will receive up to a 50% reduction in housing acquisition tax. In cases where unsold apartments completed in non-metropolitan areas are used as rental housing, up to a 50% reduction in new construction acquisition tax will be granted. This aims to support the resolution of unsold housing problems in local areas.

Improvements have also been made to the system for taxpayer convenience. To ease the burden of costs for representatives in taxpayer objections, the threshold for appointing a family member as a representative in objection cases has been raised from under 10 million KRW to under 20 million KRW. The eligibility to apply for free representative selection from local governments for rights protection has been expanded from individuals to corporations.

Furthermore, to protect taxpayer rights, the one-month public notice procedure after the Local Tax Deliberation Committee’s review has been omitted, simplifying the suspension procedure for delinquent tax collection.

Han Soon-gi, Director of the Local Finance and Economy Office at the Ministry of the Interior and Safety, stated, "This amendment focuses on overcoming low birth rates by significantly relaxing the multi-child criteria, supporting livelihood stabilization, revitalizing the regional economy, and improving taxpayer rights protection and convenience. We will actively support taxpayers in utilizing the benefits of the amendment by cooperating with local governments."