Korea to expand tax incentives for highly-skilled foreign engineers

Korea to expand tax incentives for highly-skilled foreign engineers

Deputy Prime Minister and Minister of Economy and Finance Choo Kyung-ho, second from left, speaks during a tax policy deliberation committee meeting at the Korea Federation of Banks in central Seoul, Thursday. To his right is CJ Group Co-chairman Sohn Kyung-shik who heads the committee. The ministry announced a tax code revision proposal aimed at revitalizing the economy on the same day. Yonhap

Gov’t to lower maximum corporate tax rate to 22% from 25%

By Yi Whan-woo

The government has imposed an income tax on skilled foreign engineers for the current five years to attract more talented workers from abroad and to encourage these people to stay longer amid growing concerns about population decline. 50% reduction in 10 years from.

The government also provides a flat income tax rate of 19% for foreigners working in South Korea. The
uniform income tax rate was only offered to foreigners who worked in South Korea for 5 years. After that, the normal progressive income tax rate of 6% to 45% will be applied.

New measures are being taken as Asia’s fourth-largest economy faces a population crisis as it undermines the country’s growth potential with chronically low fertility rates and rapid population aging.

The Ministry of Economy and Finance announced on Thursday that tax incentives for foreigners are part of the first amendment to the tax law proposed by the Yun Suk-yul administration as it transitions to a market-oriented economy.

Under the Moon Jae-in administration, the tax burden increased sharply and was seen as one of the important regulations that hindered the innovation of private-sector-led entrepreneurship.

A total of 18 tax laws will be amended with the three main goals of reviving the economy, stabilizing people’s lives, and creating a taxpayer-friendly environment.

The Government will submit a tax reform proposal to Parliament for approval by September 2, after drafting the guidelines and other related processes.

Deputy Prime Minister and Minister of Economy and Finance Choo Kyung-ho attends a plenary session at the National Assembly in Yeouido, Seoul, Thursday. The finance ministry announced a proposal for tax code revision on the same day, with a plan to win an Assembly approval before Sept. 2. Yonhap

“The tax system is overused as a political regulator and policy principles deviate from global standards,” Choo Kyung-ho, Deputy Prime Minister and Minister of Economy and Finance, said in a press conference.

He added, “The government thus creates a tax system that meets global standards, lowers tax burdens to reasonable levels, lays the foundation for economic growth, and ultimately creates a tax cycle that leads to higher growth. Let’s add. ”

To facilitate business investment and create more jobs, the government reinstated its first plan in June to reduce the maximum corporate tax rate from 25% to the OECD average of 22%.

Korean companies that bring back manufacturing facilities will receive a wider range of incentives in terms of corporate and capital gains taxes.

To prevent generations of family-owned small and medium-sized enterprises (SMEs) from being closed due to high taxes, successors are given a grace period to pay inheritance tax if certain criteria are met. From January
2023, plans to impose a tax on return on investment from financial instruments and crypto assets will be postponed for two years.

To support low- and middle-income households, the government is 15 years old and amends the taxable income category, which is considered abolished to properly reflect actual household income. If the inheritance tax on a home is less than 1.2 billion won (the US $ 917,700) from the current 1.1 billion won,
4 single homeowners will be exempt from the so-called inheritance tax.

Apart from property tax, a comprehensive property tax has been levied on expensive apartment owners and a few apartment owners to prevent speculation and stabilize the housing market.

However, there are criticisms that it violates the supply and demand rules, especially in Seoul, where housing demand is high.

To boost the the pandemic tourism industry, the government will raise the inbound tax exemption limit from the current $ 600 per person to $ 800.

Comprehensive tax reform is expected to reduce tax revenue by 13.1 trillion won.

In this situation, the Deputy Prime Minister said, “Don’t worry,” such a decline will occur in the coming years, not immediately.

He also considered that the positive impact of tax reform on the business was large enough to offset the negative impact of lower tax revenues.

 

Credit/Source : https://www.koreatimes.co.kr/www/biz/2022/07/488_333162.html

 

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