South Korea’s Finance Ministry said Tuesday it will seek changes in tax incentives early this year in a bid to promote marriage as well as increase jobs and corporate investment.
To promote marriage, the ministry plans to offer up to 1 million won ($835) of tax deduction for a couple who ties the knot, until 2019.
Following the 10-day preannouncement of the bill containing such changes in tax incentive rules, the government will submit it to the National Assembly by early February for review after holding vice-ministerial and Cabinet meetings, the ministry said.
The tax revision plan comes amid the country’s low birthrate and the trend of people getting married later in life.
If a person who earns a salary of less than 70 million won or less than 55 million won of annual income gets married before Dec. 31, 2019, he or she will be offered a 500,000 won deduction in income tax.
Some have raised doubts about whether a 1 million won tax deduction will be effective enough to encourage young couples to marry, but the plan is part of the government’s big picture to support marriages and boost the birthrate, a government official said.
“Last year, the Finance Ministry expanded tax deductions for a second child and a third child to boost the birthrate. This year, we’re expanding the support for marriages,” the ministry official said, declining to be named.
“The amount of tax deductions was decided considering fiscal burden as well.”
The revision also seeks to increase tax deductions for companies hiring more employees from a year earlier.
Small and medium-sized enterprises will benefit from 7 million won of tax deduction per person hired, up from the current 5 million won per person. Conglomerates will be offered 3 million won of tax deduction per increased employee, up from the current 2 million won.
SMEs that convert irregular workers to regular ones will get 5 million won of tax deduction per person, instead of the current 2 million won, the government said.
For a limited time of one year, the government will also increase the “additional deduction rate,” which is multiplied to the amount of corporate investment when calculating tax deductions for companies that increase employment.
The additional deduction rate for SMEs will be increased to 6-8 percent from 4-6 percent, while that for conglomerates will go up to 4-6 percent from 3-5 percent, the ministry said.
By Kim Yoon-mi (firstname.lastname@example.org)