Revised income tax law causes confusion

The revised income tax law is confusing taxpayers, stirring them up. The National Tax Service said Friday that the income tax revision, which passed the National Assembly three days ago requires the readjustment of last year’s year-end tax return for about 15 million taxpayers. This accounts for more than half of the country’s entire economically active population.

On the same day, the Korea Taxpayers Association, the country’s largest nongovernment organization on tax studies, said in a press release that more than 5,000 taxpayers used its year-end additional tax return calculator program, offered online and on mobile phones, daily.

The KTA cited a simulated case of a working taxpayer, who is eligible for 1.1 million won ($1,008) tax return, the highest estimation according to the KTA’s calculator. This user was found to receive an annual salary of 73 million won, and has a child under 6 and has given birth to newborn twins last year.

The confusion also paralyzed the tax agency, hit by the inceasing telephone inquiries. The agency said its daily work was affected due to the flooding calls, most of which were inquiries on the eligibility for the revised tax return policy.

The frenzy was largely expected after the government’s new annual income tax adjustment policy, which started this year, allowed less tax refund for not only the high-income earners but also singles.

The key change in the tax return policy was to “collect less tax and return less” from the old policy of “collect more and return more.”

Some nongovernment tax specialists, such as the KTA, had alleged that the controversial tax adjustment policy can impose a heavier tax burden on the middle-income earners, compared to the old income tax adjustment law.

Following the nationwide confusion, the NTS urged the taxpayers and their hiring companies to hurry with submitting additional papers for tax readjustment.

By Chung Joo-won (joowonc@heraldcorp.com)