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Clergy tax excludes some income

But offerings made by churchgoers will be taxed starting in 2018
Dec 22,2017
The Ministry of Strategy and Finance revised the country’s first tax on clergy, requiring religious leaders to report income they receive from their religious organization but not taxing it.

The government’s move on Thursday came after it decided earlier this month to not tax payments by religious organizations to religious leaders, such as pastors and monks, for their religious activities. Other income, such as offerings made by churchgoers, will be taxed.

“Since payments doled out for religious activities are usually spent for charity, research purposes and helping the vulnerable, they will be kept from being taxed,” said the ministry in a statement.

It noted that it decided to require religious members to report the incomes as ordinary taxpayers do.

With the change in the planned law, which is expected to be approved at a cabinet meeting Tuesday for immediate promulgation, religious leaders will be required to report incomes from their organizations on March 10.

The Finance Ministry estimates that it will be able to collect roughly 16 billion to 20 billion won ($15 to 18 million) in taxes every year from the country’s religious leaders, who number about 50,000.

That’s double the tax revenue that the government has been able to collect in the past from voluntary payments by the clergy.

Based on a 2015 study, the most recent data available, the government collected roughly 8 billion won that year from 26,000 religious practitioners.

Among the OECD’s 35 member countries, Korea is the only one that does not tax its clergy, a status that will change on Jan. 1.

Japan taxes the clergy at the same rate as individual earners, while in the United States, religious leaders face not just federal taxes but also state taxes.

First discussed in 1968, it took nearly half a century for the government to submit a clergy tax legislation bill in 2013 to the National Assembly. The long-awaited bill was passed in 2015 with a grace period of two years, which expires this year.

Some lawmakers across party lines, including Kim Jin-pyo of the ruling Democratic Party, called for an extension of the grace period for another two years, which was turned down.

The ministry said it will form a consultative body with religious groups in February to discuss ways to improve the first religious taxation policy.


BY KANG JIN-KYU [kang.jinkyu@joongang.co.kr]