Hidden in Tax Reform Plan: "Hand Out 150,000 Won and Take Back 5 Million Won?"

The government's recently announced tax reform plan includes a reduction in the value-added tax (VAT) credit benefit for credit card sales of sole proprietors starting next year.

Some small business owners are strongly protesting, calling it a "de facto tax hike."

According to the government's tax reform plan, the VAT deduction rate, which allows sole proprietors to deduct an amount equivalent to 1.3% of their credit card sales, will be lowered to 1.2% starting next year.

In addition, the annual deduction limit will be lowered from 10 million won to 5 million won.

Some small business owners are protesting, stating that their tax burden will increase due to measures such as the reduction of the VAT credit limit.

On small business communities such as "It Hurts Because I'm a Boss," comments were posted such as "They spend taxes like crazy and then collect them back," and "It's getting harder and harder to do business in South Korea."

Kwak Dae-joong, a chief aide to the New Reform Party who previously served as a convenience store owner, also posted on his Facebook, claiming, "Such deductions are a desperate issue for small business owners, especially convenience store owners, and nearly 90% of convenience stores nationwide enjoy this benefit."

He directly criticized, saying, "This is why people are saying, 'They hand out 150,000 won in livelihood support funds and snatch 5 million won more in taxes from small business owners.'"

The tax credit benefit targets sole proprietors with annual sales of 1 billion won or less, and as of 2024, about 2.3 million sole proprietors benefited from it.

The government acknowledged that the tax burden for some small business owners will increase, but stated that it did not intend to raise taxes on small business owners.

It explained that the 1.3% deduction rate and 10 million won deduction limit were temporary special exceptions introduced due to the global financial crisis and COVID-19, and that this is a measure to normalize them.

In addition, an official from the Ministry of Finance and Economy added, "Business owners with annual card sales of about 400 million won or less will not have tax credit amounts exceeding 5 million won, so even if the limit is reduced, there will be almost no change in their tax burden," noting that they account for about 95% of all business owners.

Reported by Kim Minjeong | Video by Ahn Jun-hyeok | Graphics by Lim Do-hee | Produced by SBS Digital News
※ Please note: This article was translated by AI and may contain errors.