Published : 2014-03-25 13:52
Updated : 2014-03-25 18:24
South Korea said Tuesday that it will toughen its criteria used to determine whether to provide tax exemptions and other benefits as part of efforts to reduce excessive tax expenditure.
Under the 2014 tax expenditure plan, which was approved by a Cabinet meeting, the finance ministry said that it will not approve any new tax exemption or cut whose value exceeds about 10 billion won ($9.29 million) if it fails to pass a feasibility test. The exact threshold will be decided later.
The ministry will also let existing tax benefits expire in principle after "in-depth" evaluation of whether their intended objectives have been achieved. Any future tax exemptions or reductions will be designed to expire in three years, it added.
Tax expenditure refers to spending by the government through tax exemptions and reductions aimed at boosting investment, employment and other specific objectives.
Most tax breaks up until now have been temporary but the government has customarily extended many such programs for years, which led critics to demand tougher analysis and feasibility studies into existing and future expenditure.
The government has been pushing to reduce what is seen as unnecessary and excessive tax breaks at a time of growing fiscal demand for diverse welfare programs promised by President Park Geun-hye.
"Starting in 2015 when the in-depth evaluation and feasibility test will be enforced in full swing, we expect that excessive tax benefits and breaks extended even after their expiration will be significantly declined," the ministry said.
The latest standards and guidelines for tax expenditure will be conveyed to each ministry and agency by the end of March, with the relevant parties required to submit their opinions by the end of April. Their views will be reflected in this year's revision of the tax code, the ministry said. (Yonhap)