Spotlight On… Korea’s Tax Reform Proposals

The proposals include deferring the Undertaxed Payment Rule (UTPR) implementation to 1 January 2025, expanding the scope of technologies eligible for research and development (R&D) tax credits, extending the concessional flat tax rate for foreign employees, strengthening some anti-avoidance provisions and several other changes in relation to international taxation.

The key proposed changes are as follows:

• deferring the implementation of the UTPR 
• expanding the scope of technologies eligible for R&D tax credits 
• extending the application timeline for the concessional flat tax rate available to foreign employees 
• requiring the reporting of foreign stock-based compensation provided to employees 
• shortening the deadline for submission of local files and master files 
• imposing penalties on foreign electronic service suppliers for failure to register for value added tax 
• granting special taxation for omnibus accounts used by foreign investors 
• forming a consultative committee for tax treaty implementation 

The proposals were announced on 27 July 2023 and are subject to approval by the National Assembly.