Korean Tax Brief 2022년 8월호

 

1. Introduction

On July 21, 2022, the Ministry of Economy and Finance (MOEF) announced tax reform proposals (“Tax Reform Proposal”) for 2022. The Tax Reform Proposal includes measures that would i) rationally reorganize tax systems in line with global standards and ii) rationalization and normalization of tax burdens with purpose to “revitalize capital markets” and “enhance public finance sustainability and improve public welfare”.

Also, the Tax Reform Proposal includes legislative proposals to adopt global minimum tax regimes, which are aligned with the Global Anti-Base Erosion Model Rules (Pillar Two) released by the Organization for Economic Cooperation and Development (OECD).

The government’s tax reform proposals will be pre-announced through a legislative notice from July 22 to August 8, 2022, followed by Secretary Meeting on August 18, 2022 and Council Meeting on August 23, 2022 and finalized with modifications before being submitted to the National Assembly on September 2, 2022.

In this newsletter, we summarized key features of the Tax Reform Proposal that could have any impacts to the clients as provided below.

 

2. Highlights of Draft Tax Amendment in 2022

•   Change in Corporate Income Tax Rates and Bracket

•   Income Exclusion of Dividend Received from Foreign Subsidiary

•   Revised Domestic Dividend Received Deduction (DRD)

•   Increased Net Operating Loss Utilization Rate

•   Expiration of Accumulated Earnings Reserve Tax

•   Relaxation of Ownership Requirement for Tax Consolidation

•   Introduction of Integrated Employment Tax Credit

•   Additional Supporting Document Requirement to Apply Tax Exemption Granted Under the Tax Treaty

•   Expansion of Exemption Threshold to Submit International Transaction Related Information

•   Reduction of Securities Transaction Tax

•   Mitigation of Conditions to Issue Revised Import VAT Invoices

•   Introduction of Purchaser-issued VAT Invoices

•   Deletion of Sunset Date for Application of Flat Income Tax Rate to Foreign Employees

•   Extension of Income Tax Exemption Period for Foreign Engineers

•   Two-year Postponement of Tax on Financial Investment Income

•   Extension of Retention Period for Offshore Transaction Documents

•   New Requirement to Maintain Transfer Pricing Related Documents Domestically

•   Introduction of Global Minimum Tax Rule (BEPS 2.0 Pillar Two)

 

Please check the attached link for details.