South Korea Changes Tax Rules For Credit Cards

Abstract

The South Korean government has changed the rules governing tax deductions for credit card spending, a spokesperson for the Korean National Tax Service tells PaymentsSource.

The South Korean government has changed the rules governing tax deductions for credit card spending, a spokesperson for the Korean National Tax Service tells PaymentsSource. To promote the use of payment cards, the government previously offered a 20% tax deduction to citizens who used credit cards to spend at least 20% of their annual incomes. The government has raised the spending threshold to 25% while offering the same tax deduction, the spokesperson says. The government also reduced the maximum tax deduction a citizen can receive to 3 million won (US$2,600 or 1,800 euros) from 5 million won. The Korean tax authority made these changes because it has achieved its goal of promoting the use of payment cards for retail purchases, according to an official from the Credit Finance Association of Korea, a trade group. "Now they have more room for pulling back these deductions," a spokesperson for the association tells PaymentsSource.