Board of Audit and Inspection Rules Employment Charges for the Disabled Qualify for Corporate Tax Deductions

The Board of Audit and Inspection has ruled that employment charges for the disabled are special levies with incentive and regulatory characteristics, and therefore qualify as deductible expenses for corporate tax purposes.

The board released five major decision cases from its review request rulings for the first half of this year, which include this conclusion, today (Sept. 8).

The review request system is a procedure through which citizens whose rights or interests have been infringed upon by illegal or inappropriate actions of administrative agencies can seek relief by filing a review request with the Board of Audit and Inspection.

According to the board, the claimants filed for a tax rectification request seeking refunds for corporate tax and special rural development tax, arguing that the employment charges for the disabled fall under deductible expenses. However, the tax office rejected the request, claiming that the charges possess a punitive nature.

In response, the board ruled that the disposition was unlawful, stating, "The charges strongly exhibit the character of special levies with incentive and regulatory purposes aimed primarily at promoting employment for disabled individuals who face difficulties in securing jobs, rather than serving a fiscal purpose, and the subject charges have been recognized as deductible expenses."

The employment charges for the disabled are levied on employers who fail to meet the mandatory employment quota for disabled workers under the Act on Employment Promotion and Vocational Rehabilitation of Persons with Disabilities.

In another decision case, the board judged that it was unfair to levy industrial accident compensation insurance benefit collection charges on an employer regarding a hearing loss injury sustained by an employee who had worked for just one month.

In addition, the board concluded that even if real estate acquired to operate a welfare facility for the elderly was leased to a spouse, acquisition taxes can still be exempted under the Restriction of Special Local Taxation Act as long as the owner performs a role bearing actual responsibility.
 
(Photo: Yonhap News)
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