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Gift card issuance grows 13% on-year

The total value of gift cards issued in South Korea last year topped 9 trillion won ($7.8 billion) for the first time, data showed Thursday.

The trend is apparently good news for department stores, supermarket chains, oil refiners and other related businesses.

Models show gift cards in a file photo. (Yonhap)
Models show gift cards in a file photo. (Yonhap)

But it also raises worries about such adverse effects as tax evasion.

The Korea Minting, Security Printing & ID Card Operating Corp. said it issued 9.5 trillion won worth of gift certificates in 2016, up 12.7 percent from the previous year.

The KOMSCO is charge of more than 90 percent of all gift cards in circulation in the country. The volume nearly doubled from 4.7 trillion won posted in 2011. Especially, the issuance of those priced at 500,000 won or more jumped 16 percent on-year to 1.3 trillion won in 2016.

For consumers, gift vouchers can serve as a way of saving some money as they sometimes buy them at a discount.

A problem is the possibility that gift cards will be used for tax evasion, rebate, bribery or corporate slush funds, with a strict anti-corruption law in effect here.

Local civic groups have demanded legislation on regulating the gift certificate market.

"Companies receive the benefit of less corporate taxes by handling gift card purchase with corporate credit cards as cost," Kwon Tae-hwan, an official at the Citizens Coalition for Economic Justice, said.

Such a benefit should be granted only when gift cards are transparently used, he added. (Yonhap)

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