If the gym usage fee and personal training (PT) expense are not separately paid, half of the PT expense can be deducted from taxable income. The government had previously stated that 'the costs of classes such as fitness and swimming are excluded from deductions,' but it included in the revised implementation regulation following the tax law revision that 'if the facility usage fee and class fee are not distinguished, half (50%) of the total amount is considered the facility usage fee for income deduction.' Currently, many gyms operate by waiving the gym usage fee when the PT expense is paid.
On the 26th, the Ministry of Strategy and Finance announced that it will promote the revision of 17 implementation regulations, including this content, through the '2024 Tax Law Amendment Subsequent Implementation Regulation Revision.' This revision is expected to be announced and implemented in March following legislative notice, departmental discussions, and review by the Legislation Office.
On this day, the government announced various tax law amendment implementation regulation revisions to address issues such as vacant homes and sluggish duty-free shop conditions. The government decided to expand the period for exempting from the heavy tax rate on capital gains tax after a building is demolished and the land becomes non-business land from the current 2 years to 5 years. This is to prevent landowners from neglecting vacant homes to avoid the heavy tax on capital gains.
Considering the unfavorable housing construction market, the period exempting from the comprehensive real estate tax aggregation for unsold housing owned by new housing sellers will also be extended. This will be temporarily recognized for the current year and next year, extending the aggregation exemption period from 5 years to 7 years. If there are unsold houses from 2020 to the present, the seller will be required to pay the comprehensive real estate tax starting in 2027.
The government also decided to reduce the license fee for duty-free shops by 50% to support their sluggish business conditions. The license fee rate for duty-free shops with sales below 200 billion won will decrease from 0.1% to 0.05%. Duty-free shops with sales between 200 billion won and 1 trillion won will see a reduction from 0.5% to 0.25%, while those exceeding 1 trillion won will drop from 1% to 0.5%. Additionally, the limit on the number of bottles (2 bottles) as one of the duty-free standards for alcoholic beverages brought in by travelers will be abolished. Travelers can bring in alcohol without tariff if the total amount is less than 2 liters and valued at $400, regardless of the number of bottles.
The interest rate applied when calculating the additional charge for national tax and tariff refunds, and the deemed rental income for real estate rental deposits, will be adjusted downward from 3.5% per annum to 3.1% per annum, a decrease of 0.4 percentage points (p). The government lowered the rate to reflect the recent trends in the Bank of Korea's base rate and market interest rates. This interest rate will be used as a standard for calculating the additional charge for refunds of national tax and tariff due to overpayment, and when taxing the interest equivalent amount of rental deposits for income tax, corporate tax, and value-added taxes. Compared to last year, the amount refunded for national tax and tariffs will decrease, while the tax on rental deposits will be lower.
The scope of facilities eligible for tax credit benefits under national strategic technology commercialization has been expanded. The number of facilities applying a maximum investment tax credit rate of 25% for national strategic technology commercialization has increased from 54 facilities in 7 existing fields to 58 facilities. In the display sector, hybrid cover window material manufacturing facilities and micro LED component manufacturing facilities have been added; in the hydrogen sector, hydrogen processing bioenergy production facilities have been included; and in the secondary battery sector, metallic compound manufacturing and processing facilities for cathode materials have been added. The semiconductor sector has also been expanded to include manufacturing facilities for high bandwidth memory (HBM) and other components.
The scope of new growth commercialization facilities eligible for an investment tax credit rate of up to 18% has been expanded from the current 14 fields and 182 facilities to 183 facilities. Facilities in the carbon neutrality sector have been added. This will apply to investments made from January 1 of this year.
The Corporate Tax Act has rationalized the standards for sharing joint expenses. When a corporation invests or develops together with another corporation, the standards for sharing joint research and development expenses and joint usage fees for tangible assets have been established. The requirements for transferring shares in a qualifying partitioning have also been rationalized. Currently, corporations can transfer shares if the direct trading proportion with the partitioned business department is more than 30% during a qualifying partition; however, it has been added that shares of wholly-owned subsidiaries with a direct and indirect proportion of 20% can also be transferred.