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Spotlight on Korea's Tax Proposed Tax Amendments 2019Aug-26-2019

Insight from the IBFD Asia-Pacific Team

 

In the wake of escalating tensions between South Korea and Japan, as well as weakening economic growth for the year, the South Korean government, on 25 July 2019, proposed tax amendments for the year 2020. The proposals appear to be targeted at boosting the economy, supporting industrial innovation, broadening the tax base and improving the tax system.  We understand that it is the government’s hope that the proposed measures will increase the country’s revenue by KRW 4 billion for the next 5 years.
 
Key proposals include:
  • expanding the R&D tax incentives in new growth engines and source technologies;
  • reducing corporate tax rates for small and medium-sized businesses if investment is made to improve business productivity;
  • improving the taxation system on domestic-source royalties for the use of patents not registered in Korea;
  • increasing the personal deduction on earned income up to KRW 20 million; and
  • lowering the threshold for the de minimis safe harbor from KRW 6 million to KRW 3 million.