Korea: Tax reform proposals for 2022
Subject to administrative and ministerial proceedings before final text is submitted to the National Assembly on 2 September 2022
Subject to administrative and ministerial proceedings before final text is submitted
The Ministry of Economy and Finance on 21 July 2022 announced tax reform proposals for 2022.
The tax reform proposals for 2022 include (1) measures that would aim to reorganize the Korean tax systems in line with certain global standards, and (2) legislative proposals to adopt global minimum tax regimes aligned with the global minimum tax rule (Pillar Two) of the Organisation for Economic Cooperation and Development (OECD).
The tax reform proposals are subject to certain administrative and ministerial proceedings before final text is submitted to the National Assembly on 2 September 2022.
Among the measures being proposed are the following:
- A change in corporate income tax rates and bracket
- An income exclusion of dividend received from a foreign subsidiary
- A revised domestic dividend received deduction (DRD)
- An 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 a tax exemption granted under an income tax treaty
- Expansion of exemption threshold to submit international transaction-related information
- A reduction of the securities transaction tax
- Mitigation of conditions to issue revised import value added tax (VAT) invoices
- Introduction of purchaser-issued VAT invoices
- Repeal of a sunset date for application of flat income tax rate to foreign employees
- Extension of an income tax exemption period for foreign engineers
- A two-year postponement of the tax on financial investment income
- An extension of retention period for offshore transaction documents
- New requirement to maintain transfer pricing-related documents domestically—read TaxNewsFlash
- Introduction of global minimum tax rule (BEPS 2.0 Pillar Two)
Read an August 2022 report [PDF 376 KB] prepared by the KPMG member firm in South Korea
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