The Ministry of Economy and Finance (MOEF) in July 2024 announced the tax reform proposal for 2024, which is expected to be submitted to the National Assembly by September 2, 2024.
- Corporate income tax law: The proposal introduces significant changes to the corporate income tax law, including extending the grace period for small and medium-sized enterprise (SMEs) under the consolidated tax regime from three to five years and simplifying the tax exemption process for overseas investment vehicles (OIVs). Additionally, the useful life for research and development (R&D) equipment would be reduced from five to three years for accelerated depreciation, and new tax incentives would be introduced for companies increasing shareholder returns.
- Tax incentive limitation law: Extensions and increases in R&D and investment tax credits include an additional tax credit ratio for integrated investment tax credits rising to 10%. The proposal also includes adjustments to the criteria for middle-standing enterprises (MSEs) and would extend the SME grace period to five years. Furthermore, the proposal aims to rationalize the scope of SMEs by excluding certain industries and introduces a gradual reduction of tax credits for companies graduating from SME status.
- International tax: The proposal would expand the exemption criteria for reporting foreign financial accounts and would simplify penalties for non-reporting. It would also mandate the submission of tax exemption applications for domestic-source personal service income and includes provisions for the automatic exchange of information on cryptocurrency assets. The inheritance and gift tax law would see the abolition of the premium valuation for shares held by controlling shareholders, effective January 1, 2025.
- Inheritance and gift tax law: The tax reform proposal would eliminate the premium valuation rule for controlling shareholder to support business succession.
- National tax framework law: The proposal would reduce rewards for reporting non-issuance of cash receipts and expand the scope of refund claims to include underreported tax credits. It would introduce a one-year statute of limitations for carryforward tax credits and would extend the pre-notice period for tax audits from 15 to 20 days.
Read an August 2024 report prepared by the KPMG member firm in Korea