On 17 March 2020, the Korean Ministry of Economy and Finance has announced a corporate income tax exemption for small and medium enterprises (SMEs) located in specific areas (Daegu, Gyeongsan, Bonghwa, and Cheongdo). Before that, on 28 February 2020, the Korean Ministry of Economy and Finance announced several tax incentive measures for domestic businesses affected by COVID-19 pandemic is located in specific areas. The main measures are as following:
- Extension ( for small businesses) of tax filing return up to nine months, and an extension of up to one year for filing and paying local taxes;
- The deadline for the submission of corporate tax (Companies located in disaster areas) returns is extended for 1 month to 4 May 2020 for the fiscal year ended 31 December 2019;
- Extension of the scope of tax support for overseas companies that return to Korea;
- Increase of tax deduction for the use of debit cards from 30% to 60% and credit cards from 15% to 30% for the period from March to June 2020;
- Reduction of VAT for small self-employed business;
- VAT exemption threshold for simplified taxpayers has been increased to KRW 48 million from KRW 30 million;
- VAT payable by small businesses with less than KRW 80 million in annual sales will be reduced in 2020.
