Korea: Tax amendments in pending legislation

Korea: Tax amendments in pending legislation

Tax legislation in South Korea is pending consideration by the National Assembly, with votes expected from September through December 2020.


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Among the tax measures in the pending tax amendment bill are provisions that would:

  • Introduce a new integrated investment tax credit
  • Extend the tax credit carryforward period generally for 10 years
  • Extend the foreign tax credit carryforward period and allow a deduction for unused foreign tax credits
  • Extend net operating loss (NOL) carryforward period for a period of 15 years
  • Extend the period available for tax credits for increasing wages by two years
  • Increase tax credits for enterprises hiring certain targeted populations including women and seniors
  • Impose limitations on tax reductions for enterprises relocating outside of the Seoul metropolitan area
  • Increase the threshold for “small” advertisement expenses not treated as entertainment expenses
  • Increase the threshold for entertainment expenses not requiring supporting evidence
  • Revise the income tax reduction system for foreign engineers
  • Increase the individual income tax rate
  • Impose tax on non-resident or foreign corporation’s income derived from virtual assets (e.g., bitcoins) and require virtual asset company to report certain information
  • Clarify the place of supply for electronic services
  • Clarify the treatment of a related party to whom an advance is not allowed as a bad debt deduction
  • Add persons required to submit a statement of payment for payments of domestic-source income to foreign corporation or non-resident and subject foreign corporation to non-compliance penalties for not submitting a statement of payment
  • Expand the definition of foreign related party
  • Expand the scope of passive income for controlled foreign corporation (CFC) regime
  • Extend the due date for submission of certain international transaction-related data

Read an August 2020 report [PDF 844 KB] prepared by the KPMG member firm in South Korea

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