Nearly 6 million self-employed and small businesses in Korea will be saved from regular tax audits and won’t be double-checked for their tax reports until the end of 2019, in the government’s latest measure to appease shopkeepers that have vowed collective action and boycott of next year’s minimum wage that would go up 29 percent from 2017 levels after two double-digit hikes.

The National Tax Service (NTS) said on Thursday it will not audit the books of 5.19 million self-employed owners - about 89 percent of the entire self-employed population - with annual sales of less than 600 million won ($533,100). They would be exempt from reporting their incomes and filing taxes until the end of 2019.

The audit relief would also be extended to 500,000 small businesses that either have annual sales of between 1 billion won and 12 billion won or employ less than 10 workers.

The announcement came two days after President Moon Jae-in pressed Han Sung-hee, the NTS commissioner, to come up with a measure to ease the tax burden on self-employed businesses.

“Self-employed business owners make up a large portion of the country’s economy but their wages are considerably lower than those of salaried workers,” said Moon. “This temporary audit waiver is a way to lessen their tax burden so they can focus on their livelihood during these difficult times.”

The government is expected to follow up early next week with its own comprehensive package to help small businesses.

NTS data showed that almost nine out 10 self-employed businesses do not make it to their second year. Business owners have expressed worries that the sharp rise in minimum wage is putting a strain on their already poor businesses amid a slowing economy. Many said they have cut hiring or part-time workers to make ends meet.

In a push to boost the economy with income growth, the Korean government has hiked the country’s compulsory minimum wage by 16.4 percent to 7,530 won an hour this year. It is set to raise it by another 10.9 percent next year to 8,350 won. It also cut the maximum weekly hours from 68 to 52, further weighing on the business operation.

The series of government measures to boost income have ironically put a brake on job growth, which added a monthly average of 142,000 jobs in the January-June period, the slowest gain since the 2008-09 global financial crisis, according to Statistics Korea.

The slumping economy has been a major drag on Moon’s approval ratings, which have dropped to 55.6 percent, the lowest since he took office in May 2017.

By Sohn Il-seon and Kim Hyo-jin

[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]