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South Korean's government will allow taxpayers to pay more taxes with credit cards starting on 1 Oct., the country's Ministry of Strategy and Finance has announced. The directive enables citizens to use cards to pay income taxes, value-added taxes, property taxes, education taxes and tariffs. South Korean authorities first allowed card use for tax payments in 1997 but limited payments to local taxes, Jiah Choi, who oversees payments and settlement statistics for the Bank of Korea, the country's central bank, tells CardLine Global. Statistics show that consumers paid 12.6% of local taxes using credit cards in 2005. Citizens using credit cards to pay taxes must pay commissions of about 1% of the transaction amount, Choi notes. The ministry says taxpayers can use cards to pay up to 2 million won (US$1,700 or 1,180 euros) in taxes. Korean taxing authorities proposed the current scheme in 2007 to reduce administration costs and tax evasion, Sunil Devmurari, an Asia-Pacific analyst for United Kingdom-based research firm Euromonitor International, tells CardLine Global. The scheme is "a coup for credit card [issuers], as this represents high value and [high] volume transactions for every working individual each year," he adds. Other Asian countries allow credit card tax payments, Devmurari says. "For instance, in Singapore, income and property taxes, along with some government fees, can be paid by credit card or direct debit," he says. "Similarly, in Japan [cardholders] can pay taxes and utility bills." Devmurari anticipates the concept will spread further in Asia's most-developed economies as card issuers seek ways to increase transaction values and sales volume in card-saturated markets.
