South Korea Unveils Bold Measures to Boost Economy and Tourism

South Korean Government Announces Measures to Stimulate Economy and Boost Tourism

The South Korean government has unveiled plans to bolster the economy and promote tourism through an expansion of credit card usage and tax benefits. As part of its “2024 Economic Policy Direction,” the government aims to revitalize domestic consumption and tourism.

Expansion of Credit Card Usage and Income Deductions

In an effort to encourage increased credit card usage, the government will provide additional income deductions for individuals whose card usage exceeds 5% compared to the previous year. Those who experience a 5% or more increase in card usage can receive a maximum additional deduction of 10% within a limit of 1 million won. For example, if card usage increases from 20 million won to 30 million won, individuals can deduct 1 million won from the excess 10 million won.

To alleviate anticipated sluggishness in card usage during the first half of this year, the government plans to temporarily expand the income deduction limit to 20%.

Promoting Environmentally Friendly Consumption

In a bid to support environmentally friendly consumption, the government will provide substantial tax reductions for individuals who replace old vehicles with electric or high-efficiency vehicles. The reduction in individual consumption tax can reach up to 70%. Additionally, subsidies ranging from 3 million won to a maximum of 30 million won will be granted for scrapping diesel vehicles, depending on their weight and grade.

Furthermore, the government will expand subsidies for the purchase of electric vehicles and promote the widespread adoption of energy-efficient devices such as LED lighting. These efforts aim to contribute to a greener and more sustainable society.

Boosting Domestic Tourism

To invigorate domestic tourism, the government plans to expand various initiatives. The accommodation coupon program, which has already been expanded from 90,000 to 450,000, will be further enlarged. Additionally, the worker vacation support program will be expanded to accommodate 150,000 individuals. However, to prioritize the revitalization of regional tourism, the usage of these programs will be limited to non-capital areas.

In an effort to utilize vacant houses for accommodation purposes, the government will incentivize their conversion and improve regulations for rural homestays. The target number of eligible houses will be increased from 50 to 500, and restrictions on expansion and reconstruction will be eased.

Expansion of Visa Waiver Program and Support for Tourism

To attract more tourists, the government plans to expand the visa waiver program for group tourists. Currently applicable to China, the program will be extended to include Vietnam, the Philippines, Indonesia, India, and Cambodia. The government aims to achieve a target of attracting 2,000 foreign tourists by the end of this year.

Furthermore, customized transportation and services tailored to small group travel trends will be strengthened. The range of accommodations eligible for VAT refunds for foreigners will also be expanded to include traditional, waterfront, medical, family, small hotels, hostels, and resort condos.

Supporting Duty-Free Shopping and Medical Tourism

To support the duty-free industry, the government will expand the “Duty-Free Fiesta” event by increasing the discount rate from 20% to 30% and extending the event period from 31 to 40 days. This initiative will be combined with events such as K-pop concerts to encourage consumer spending.

Additionally, the government plans to relax regulations on VAT refunds for online travel agencies and intermediaries, allowing for refunds on payments made through these platforms. The range of accommodations eligible for VAT refunds will be expanded to include traditional, waterfront, medical, family, small hotels, hostels, and resort condos.

Furthermore, the government aims to improve visa regulations, enhance the convenience of electronic visa issuance, and allow medical advertising within medical tourism special zones to promote the growth of medical tourism.

Overall Economic Stimulation and Tourism Promotion

These comprehensive measures are designed to invigorate the South Korean economy, promote domestic consumption, and attract a larger number of tourists to the country. By expanding credit card usage, providing tax benefits, and supporting various tourism initiatives, the government aims to create a thriving and sustainable economy.

Source: 뉴시스