South Korea’s government has announced an expansion of simplified tax benefits to include tenants entering major retail hubs such as Starfield Hanam, Costco Pyeongtaek, and Busan International Market. This move aims to support small businesses amid economic pressures.
Details of the Simplified Tax System
The simplified tax regime allows small business owners with monthly sales around 1.4 million won to pay a flat 10% tax rate on sales, offering reductions of 1.5% to 4% compared to standard value-added tax calculations. Officials confirm that even high-volume operations in large complexes now qualify, provided they meet base sales thresholds.
Previously, special branches, key operations, and prominent stores in major sites faced exclusions. However, landlords raising rents to offset tax savings risk disqualifying tenants from these benefits due to tighter branch classifications.
Massive Expansion Targets Economic Boost
To deliver the largest possible economic stimulus, authorities plan a significant increase in eligible regions for simplified taxation. Among 1,176 total markets, stores, marts, hotels, and department stores previously reviewed, 46.3% (544 facilities) were excluded. Now, numerous new operators across various sectors stand to gain.
A government official stated, “Newly eligible businesses in large retail sites were selected after comprehensive analysis of factors like population density, store concentration, business environment, and employment status.”
Newly Included Traditional Markets
Traditional markets newly qualifying include 98 sites, such as Seoul’s Jongno Daemyung Yeoulbi Geori Market, Seoul Jung-gu Samik Fashion Town, Busan Gukje Market, Gangwon Jayu Market, and Ulsan Jungang General Market.
Department Stores and Marts
Department stores and marts feature 317 new entrants, including Songpa Kadunpaib, Eunpyeong 2001 Outlet, Busan Jeonpo Dongchulmul Store, Daejeon Yuseong-gu Moda Outlet, Gwangju Yuseu Square, and Costco Pyeongtaek.
Hotels and Department Stores
Hotels and department stores add 129 eligible sites, among them Busan Lotte Hotel, Daejeon Hotel Ononoma, Jeonnam Yeosu Yutap Marina Hotel, Pyeongtaek Newsongtan Hotel, Gwachon Grace Hotel, Shins Segye Department Store branches in Uijeongbu, Changwon, Daejeon, and Gwangju, Lotte Department Store locations in Bundang, Busan Busanjin, Daejeon Seogu, Gwangju Donggu, Jeonbuk Jeonju, and Daegu Yeok, Hyundai Department Store in Busan Busanjin, Ulsan Namgu, and Daegu, plus Hanwha Galleria in Gyeongnam Jinju and Chungnam Cheonan.
Implementation Timeline
Officials plan detailed reviews next week before finalizing adjustments. New tenants will access benefits starting late July. One official noted, “This initial measure enables up to 40,000 business operators to utilize simplified tax relief, marking a comprehensive win.”
