Selective Designation of Speculating Area from Next Year

Speculating areas to be designated by the government from the next year will be selectively specified. Also, the flexible tax rate on the speculating areas which can add the maximum 15% in the basic tax rate, is restrictively applied only when the speculation of the real properties is severe.

A medical certificate can be subject to the income reduction, but the Internet fee, highway fee, apartment management expense and the purchasing expense of gift certificates will not be subject to the income reduction of a credit card.

The ministry of finance and economy announced on December 5 that it was planning to make a revised bill of an Enforcement Ordinance of tax law for 2003 and to execute it gradually from January 1, 2003.

According to the revised bill, as the condition of `a speculation area of housing`, the increase in asset price of housing of the previous month must be 30% higher than the increase in national consumer price. Among areas equivalent for it, these conditions can be applicable to areas where the average increase in asset price of housing of previous two months is 30% higher than the increase in asset price of national housing, or where the increase in asset price at the same month of the previous year exceeds the average increase in asset price of housing of prior three years.

As the government decided to specify the speculating areas selectively in regions where meet these conditions. So, the equity seems to be argued in the execution process.

The flexible tax rate doesn`t have a uniform basis. When the speculation of the real properties is severe, the Enforcement Ordinance will be revised. It will be applicable to all speculating areas.

The ministry of finance and economy decided to reduce and exempt taxes for a while for three years to prepare for the possibility of suddenly increasing taxes as the income estimation method of the enterprises which don`t use an account book was changed to the basic expense rate from the standard income rate. When the income amount estimating by the basic expense rate exceeds the certain ratio of the income calculated by the method of simple expense rate, there will be an upper limit.

In addition, the system which deducts 10% of temporary investment tax when the enterprise makes the equipment investment, was originally supposed to be finished at the end of the year, but will be extended to the end of next June to facilitate the investment.

Kwang-Hyun Kim Kwang-Am Cheon kkh@donga.com iam@donga.com