Higher Tax Relief for Population-Declining Areas / population-declining areas tax relief in korea
Korea’s central government has unveiled the 2025 Local Tax Reform Plan to channel resources and people back into the regions. The headline: stronger population-declining areas tax relief that outperforms benefits in non-capital regions and the Seoul metro. In practice, incentives will be tiered—population-declining areas > non-capital regions > capital area—and will touch housing, business investment, jobs and everyday life. If you plan to start a business, purchase a home, clear a vacant house, or expand hiring outside the capital, this guide breaks down what the new population-declining areas tax relief means for you and how to qualify.
1) National Balanced Development: What’s New in 2025
Corporate & employment
New local corporate income tax credit when firms in population-declining areas hire local residents.
Long-service allowance excluded from the employee-based resident tax base to curb skilled-worker turnover.
50% acquisition tax reduction for employee housing and dormitories acquired in population-declining areas for rent or free use.
Unsold housing & second homes
To cut post-completion unsold apartments outside the capital: a new acquisition tax reduction for individuals buying units up to 85㎡ and KRW 600 million—paired with a one-year exemption from heavy rates on multi-homeowners.
For restructuring REITs that acquire such units, the heavy-tax exemption (1–3% rate) is extended one more year through 2026.
Second-home (in population-declining areas) relief expands: higher eligible price caps and a wider geography including “areas of concern” beyond the strict decline list.
Private rentals & vacant houses
Homes in population-declining areas acquired for 10-year (long) or 6-year (short) private rentals will be excluded from the house-count used for acquisition-tax surcharges.
Vacant house policy push: after demolition, the land receives a 50% property tax reduction; if a new house/building is constructed, a new acquisition-tax reduction applies.
Where the cleared lot is used for public purposes (e.g., parking), existing burden-cap and separate-summation reliefs are expanded to cover the entire public-use period.
2) People & Families: Housing Relief Where It Matters
First-time homebuyers: 100% acquisition tax relief extended nationwide. In population-declining areas, the exemption cap rises to KRW 3 million (from KRW 2 million).
Birth & child-rearing purchases: the 100% acquisition tax relief is extended to stabilize housing for growing families.
Work–family balance: wages for employees hired as parental-leave replacement staff are newly excluded from the resident-tax base.
3) Safety Net & Public Interest
Public rental housing relief expands to include HUG (in addition to LH and local housing corporations).
Local tax relief extensions for social welfare entities and public bodies supporting workers, persons with disabilities, and industrial safety.
Fire safety incentive: small lodging businesses that voluntarily install sprinklers (not legally mandatory) receive local tax reduction.
4) Taxpayer-Friendly Reforms
Taxpayer Advocate can now participate and submit opinions during pre-assessment review and objection stages.
Seizure-free property list expands: tools, machinery and equipment essential for livelihood and business are protected without conditions.
Local Administrative Penalties Act scope widens from collection to assessment, refunds, deferrals, and installment payments.
Compliance relief for corporations: if you file a tax-compliance confirmation, the local corporate income tax filing/payment deadline extends from 4 to 5 months.
5) Quick Eligibility Checklists
For individuals
Unsold-unit special: outside capital, post-completion, ≤85㎡ and ≤KRW 600m → acquisition tax reduction + one-year multi-home heavy-tax suspension.
Second home in population-declining areas: higher price cap, wider map (including “areas of concern”).
First-time / birth & child-rearing: confirm documents (family registry, birth proof). Remember the higher population-declining areas tax relief cap (KRW 3m).
Private rental intent: 10-/6-year rentals in population-declining areas are excluded from house count for surcharges.
For companies
Is your address in a population-declining area? If yes, acquisition & property tax exemptions for new establishments apply.
Local hiring unlocks a new local corporate income tax credit; track rates, caps, and documentation.
Employee housing & dorms in population-declining areas: 50% acquisition tax reduction.
REITs (restructuring): heavy-tax exemption (1–3%) on eligible unsold units extended to 2026.
• Korea Policy (editor’s hub): koreapolicy3.blogspot.com
6) Timing, Procedure & Fine Print
Legislative timeline: Public notice and comment Aug 29–Sep 22 → Ministry of Government Legislation review → Cabinet resolution → submission to the National Assembly in early October. Some numbers may be polished during the process, but the direction—stronger population-declining areas tax relief—is clear.
Action steps now: (1) Verify whether your location is officially designated a population-declining area (or an “area of concern”). (2) Prepare proof of purpose (first-time, birth/child-rearing, rental), price caps, and deadlines—some specials are time-limited. (3) Submit comments or questions via the official portal below.
Summary
The 2025 reform aims to rebalance Korea by making it more rewarding to live, invest, and hire in the regions. The package intensifies population-declining areas tax relief across housing (first-time, birth/child-rearing, second homes, private rentals), business (local hiring credits, 50% acquisition tax cuts for employee housing), and urban renewal (vacant-house demolition with 50% property-tax relief and new-build reductions). Together with taxpayer-friendly changes—an empowered Taxpayer Advocate, broader seizure-free lists, and longer corporate filing time—the plan pairs regional vitality with fairer administration. If you’re considering relocation, investment, or hiring outside the capital, this is the window to act.
FAQ
Q1. How do I confirm a “population-declining area”?
Check the latest central/local government designations. Boundaries can be fine-grained (down to towns/ri), so verify your exact address with your local tax office.
Q2. Is the first-time buyer tax exemption nationwide?
Yes—100% acquisition tax relief is extended nationwide. In population-declining areas, the exemption cap rises to KRW 3 million.
Q3. What’s the key for second-home relief?
You must be a zero- or one-home owner acquiring an additional home in a population-declining area. Eligible price caps go up and coverage expands to “areas of concern.”
Q4. What changes after vacant-house demolition?
The land receives a 50% property tax reduction; if you build a new home/building, a new acquisition-tax reduction applies. Public-use lots enjoy relief for the entire use period.
Q5. I run a company—what’s the quickest win?
Open or move a site into a population-declining area to access acquisition/property tax exemptions and claim the local-hiring corporate tax credit.
Q6. When will this take effect?
The bill is under public notice (Aug 29–Sep 22) and will be submitted to the National Assembly in early October. Target benefits may have limited windows, so track final enforcement dates.
• Ministry of the Interior and Safety (MOIS): mois.go.kr
Conclusion
If you’re weighing a move, a family-friendly home purchase, or a new business site, the upgraded population-declining areas tax relief makes the regions financially compelling. Start by confirming your area’s designation, lining up documentation (first-time, birth/child-rearing, rental intent), and mapping out dates for any time-limited specials (unsold units, second homes). Then coordinate with your local tax office or adviser to lock in eligibility. Balanced development is the national goal—this reform lets households and businesses turn that goal into tangible savings.
