In the COVID-19 outbreak, a plan to expand the tax credit benefits for'good landlords' who voluntarily reduce rent to small business owners to 70% is being considered promising.
In addition, according to the Democratic Party and the government, it is highly likely that the Party will announce a plan on the 29th to increase the tax credit level for good landlords from 50% to 70%.
The Good Landlord's Tax Credit is a system in which 50% of the reduction is deducted from income and corporate taxes when the building owner of a shopping mall reduces the rent of small business owners.
Half of the lower rent is returned as a tax credit.
If the tax credit is expanded to 70%, there is an expectation that more landlords will participate in the rent cut and the benefits will go to small business owners.
This plan is being actively promoted by the politicians.
Both parties have proposed a bill to raise the tax credit ratio by up to 100%.
Democratic Party Rep. Park Hong-geun proposed an amendment that would allow 70% of the cuts to be refunded as tax credits, 100% of the cuts for workplaces prohibited from collectively, and 85% for those with collective restrictions.
Power of the People Rep. Gyeong-ho Chu also issued a revised bill that deducts 100% of the cut amount for workplaces that are prohibited from gathering.
However, it is known that the government has compromised the level of tax credit to around 70% in consideration of the reduction in tax revenue and the effectiveness of the system.
However, some are concerned about'reverse traits'.
This is because the higher the credit rate, the higher the income owners will receive.
For example, if landlord A receives a rent of 4 million won, the average income tax rate of 40% is applied, and the income tax owed on that rent is 1.6 million won.
If A lowers the rent to 2 million won, which is half, the average income tax rate of 40% is applied, and the tax is 800,000 won.
However, the current 50% (1 million won) tax credit is applied to the 2 million won reduction, which means that 200,000 won will be returned.
If you do not pay the rent, you get 1.8 million won in tax savings compared to the tax (1.6 million won).
However, if the tax credit is expanded to 70%, A will receive a 70% (1.4 million won) tax credit and get 600,000 won back.
If the rent is not lowered, it means that the tax is reduced by 2.2 million won from the tax (1.6 million won).
In other words, the rent is reduced by 2 million won and the tax benefit is 2.2 million won, and 200,000 won is refunded.
In the case of low-income landlords, the likelihood of a refund is lower even if the income tax rate is lower than 40% and the tax credit rate increases, but high-income landlords are more likely to receive a refund.
An official of the Ministry of Materials said, "If the landlord cuts the rent even under the current 50% tax credit conditions, there is little damage to the landlord if the amount of tax preservation is taken." In particular, the higher the applied tax rate, the higher the income building owner, the more these benefits will be.”
The government is expected to announce financial support measures for small business owners as a'package', in addition to tax support such as financial support such as rental cash support and the expansion of tax credit for good renters.
In particular, measures to ease requirements such as emergency loans for small business owners or increase the amount will be discussed.
It is expected to include an extension of the payment deadline for small business owners, four major insurance premiums, and other tax burden reduction measures.