South Korea: Tax and financial measures associated with COVID-19

The COVID-19 situation in South Korea is as follows: As of 23 April 2020, there have been 10,702 confirmed cases; 8,411 have been released from quarantine, 2,051 are currently isolated and 240 are deceased. Tests performed 583,971, Test concluded 573,832, Positivity rate 1.9%. Daily new confirmed cases; 10~20 from 19th Apr to 28th Apr 2020

Tax measures As the general election was done in 15th Apr in favour of government party, the congress will set up and change tax laws and regulations related with grant, incentive, tax rate, etc to keep financial market stable, to stimulate real economy and to help SME’s and low-income class. Social security measures

• KRW 20 trillion for social security
  1. Emergency relief efforts
  2. Social security contribution support and tax payment deferrals
  3. Export financing support
  4. Venture and start-up financing
  5. SME support
• Others
  1. Emergency relief payments to 100% households
  2. Vouchers to help low-income households
  3. Cuts in social security contributions
  4. Measures to encourage rent cuts
  5. VAT cuts for business
  6. SME R&D support
  7. Wage support
  8. Support business reopening
  9. Day-care vouchers to parent with children younger than 7 years

Business support

• KRW 100 trillion to avoid financial market volatility
  1. Bond market and stock market stabilization fund
  2. Quick bond takeover program
  3. Corporate bond refinancing
  4. Short-term money market stabilization
• KRW 32 trillion to stimulate the real economy
  1. Low interest loans for small enterprises
  2. Special guarantees for SMEs and small enterprises
  3. Guarantees an insurance for exporters
  4. Loans and investments in ventures and start-ups
  5. Full guarantees for emergency small enterprise loans
  6. Purchase of small enterprises’ overdue debt
  7. Loans for SMEs and medium-sized leading enterprises
• Industry-specific supports
  1. Airplane; Emergency financing for lower cost airlines, landing fee cuts
  2. Tourism; Loan repayment deferrals and loan extensions, new unsecured loans
  3. Shipping lines; Emergency financing, cuts-in port charges including facilities rental charges
  4. Performing arts; Production support and admission fee support
  5. Dinging out; Expanded loans for farm product exporters
  6. Car; 70% cut of individual consumption tax for all passenger cars

Employee and employer supportive measures

1. Maintenance of employment; KRW 630 billion to a) help certain industries such as tour, shipbuilding, lodging, DFS, etc b) help employees on leave-without-pay and c) subsidize the companies that keep the previous employment level.
2. Keep employment for SME, freelancers, etc; KRW 1.5 trillion
3. Korean ‘New Deal’ of public project for new recruitment; KRW 3.24 trillion
4. Help Unemployed, youths and provide job training; KRW 3.76 trillion

Accounting implications

1. There is no material effect on accounting implications.
2. But, for audit implications; KICPA emphasize ‘subsequent event’ in FY 2019 audit as a one of key audit matters (KAM) in some industries such as aviation, tour, etc.

Click here to learn more.