KOTRA to Continue to Get Overseas Tax Exemptions
By Lee Hyo-sik
Staff Reporter
There are many benefits for employees of state-affiliated organizations working in foreign countries. To name a few, they include handsome housing subsidies, larger paychecks, and other extra monetary and residential perks. But the icing on the cake has to be the income tax exemption, meaning they do not pay a single dime in taxes on what they earn abroad.
But the government said last year that it would slash tax benefits given to workers of state-funded entities overseas as part of its efforts to raise tax revenues amid the deteriorating fiscal conditions, following the unprecedented worldwide economic downturn.
Regardless of their affiliation, employees would be allowed to deduct only one million won per month from their taxable income.
However, the government has changed its mind and decided to permit employees of Korea International Cooperation Agency (KOICA), Korea Trade Investment Promotion Agency (KOTRA) and Korea Tourism Organization (KTO) to continue to enjoy income tax exemptions.
``We will continue to exempt workers of the three organizations abroad from paying income taxes because they work in foreign countries on behalf of the government. Additionally, their wages and other benefits are financed through taxpayers' money,'' the Ministry of Strategy and Finance said.
But the tax benefits for employees of the Bank of Korea, the Korea Development Bank and other state-linked bodies will diminish from July as initially planned. They will only be able to deduct one million won from taxable income, while having to pay tax on the rest of their earnings.
At the Cabinet Meeting presided over by Prime Minister Chung Un-chan Tuesday, policymakers approved these and other changes to the nation's taxation system.
The government had previously planned to levy a 5-percent special excise tax on air conditioners that consume over 400 kilowatts of electricity per hour in April. But in a bid to further encourage companies to manufacture more energy-efficient products and consumers to save energy, coolers that use more than 370 kilowatt per hour will be slapped with the excise tax.
Buyers of refrigerators that consume over 40 kilowatts per hour will also pay 5 percent more. Previously, those who use over 45 kilowatts per hour were subject to the new tax.
In order to promote the construction of more rental housing amid its shortage in and around Seoul, the government plans to exempt owners of untenanted leasing homes from the comprehensive real estate tax. Currently, those who own rental homes that are uninhabited for over two years are required to pay the tax.