The main focus of the 2019 Corporate Income Tax Law (CITL) reform should be facilitating job creation and innovative growth, as well as narrowing income inequality. The reform has also been undertaken to embrace the base erosion and profit shifting (BEPS) initiatives taken by the Organisation for Economic Co-operation and Development (OECD). In this connection, the Korean government has abolished certain incentives and benefit packages for foreign companies to attract foreign direct investment (FDI). For example, the existing individual or corporate income tax exemption or reduction for qualified high-tech FDI and foreign investors in specially designated areas, such as foreign investment zones, free economic zones, free trade zones, and strategic industrial complexes exclusively developed for foreign invested companies, have been terminated. Also, the permanent establishment (PE) rules have been strengthened in respect of activities of a foreign corporation or a dependent agent that are preparatory and auxiliary nature. In addition, the taxation on Korean-source income of overseas investment vehicles has been strengthened.
Last Reviewed - 02 December 2019