To support small restaurant owners facing management difficulties due to rising raw material costs and labor expenses, the application period for the preferential rate of the value-added tax deemed input tax deduction will be extended by two years.
The Ministry of Agriculture, Food and Rural Affairs announced on the 9th that the '2026 Tax Reform Plan' released by the Ministry of Finance includes an extension of the preferential deduction rate for individual restaurant operators with annual sales of less than 400 million won until December 31, 2028.
The deemed input tax deduction allows businesses that supply goods or services made from tax-exempt agricultural products to treat their input tax as deductible for value-added tax purposes. The original basic deduction rate was set at 8/108, but a temporary preferential rate of 9/109 has been applied to small individual restaurants with annual sales below 400 million won to reduce their tax burden.
This tax relief was set to expire at the end of this year, but the recent tax reform extends the application period to the end of 2028. The Ministry of Agriculture, Food and Rural Affairs expects this measure will alleviate the burden on the restaurant industry, which is struggling with rising costs for ingredients, labor, and public utilities, ultimately contributing to the stabilization of dining prices.
Meanwhile, the 2026 Tax Reform Plan will undergo a legislative notice period until August 20 and will be submitted to the National Assembly in September, with final approval expected in December.
* This article has been translated by AI.
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