- A comprehensive reform of quasi-taxes levied on departure, issuance of passport, etc.,
reducing burdens on Korean people by 2 trillion won annually -
The Ministry of Economy and Finance (MOEF) announced “Measures to Strengthen Management of Charges” at the 23rd Emergency Meeting on Economy and Livelihood chaired by President Yoon Suk Yeol on March 27. This measure, developed through a comprehensive review on a total of 91 charges by MOEF and related ministries, marks the first full-fledged reform since the introduction of the charge management system in 2002. It aims to reduce the burden on citizens and businesses by approximately 2 trillion won annually by abolishing or reducing 32 charges, excluding those related to national health and environmental conservation and the principle of liability of causers and the benefit principle.
[Abolishing or reducing 8 charges related to the daily lives of Korean people]
Above all, 8 charges that people may not be aware of or can provide direct effects on their daily lives will be abolished or cut. The admission charges included in movie ticket prices (3% of the ticket price) will be removed, and the electric power fund charges included in electricity bills will be gradually reduced by 1 percentage point (currently 3.7% → 3.2% from July 2024 → 2.7% from July 2025).
In addition, the departure tax included in airfare will be cut by 4,000 won (11,000 → 7,000 won) while expanding the scope of subjects to tax exemptions. The contributions to the Korea Foundation will be reduced by 3,000 won upon the issuance of multiple passports, and single passports and travel certificates will be exempted from the charges. The contributions to business of subsidizing damage from motor vehicle accidents included in automobile insurance premiums will also be down by 50% over 3 years. (1.0% of the liability insurance premium → 0.5%).
[Restructuring 24 charges in consideration of boosting corporate economic activities and changes in conditions]
11 charges that undermine economic activities in the private sector will also be abolished or reduced. The charges for school sites, which imposes 0.8% of the sales price (based on apartment units) on house owners, will be abolished. Not only that, the development impact fees (DIF), which levy a certain percentage of development profits on developers, will be reduced by 50% for projects approved in 2024 in the metropolitan area and exempted for those in non-metropolitan areas, thereby boosting construction activity and inducing a drop in housing prices.
The environmental improvement charges imposed on diesel vehicle owners will be cut by 50% for self-employed small business owners. Also, the criteria for applying discounts for small and medium-sized enterprises to the waste disposal charges, levied on waste incineration and landfill, will be expanded (annual sales 60 billion → 100 billion won), easing the burden on small businesses. The farmland preservation charges, imposed on using farmlands for non-agricultural purpose, will also be cut from 30% to 20% of the officially assessed individual land prices, applicable only to non-agricultural promotion areas, in an effort to promote efficient conservation and management of farmland. Moreover, chewing gum will be excluded from the waste charge imposition targets considering lower environmental concerns regarding waste management issues.
Lastly, 13 charges that have conventionally persisted despite low effectiveness due to changing conditions, such as charges borne by causers on road damages, will be entirely abolished.
The government will promptly initiate legislative amendments to ensure that Korean people can feel the effect of charge cuts in the near term. The revised enforcement decree will take effect from July of this year, and amendments to the abolition of charges will also be submitted to the National Assembly in the latter half of this year.
Furthermore, even after this revision, the government will strive to continue to bolster the management system for charges through a range of measures, including constantly monitoring the validity and appropriateness of existing charges, introducing validity assessment for newly proposed charges, establishing obligations for the durations of charge imposition, and pursuing a rapid tax relief.
Please refer to the attached files.
