Korea, Republic of

Korea’s National Assembly approved the government's Bill to amend 15 tax laws, including the Corporate Income Tax Law (CITL), on 21 December 2023. The approved Bill includes measures to refine domestic global minimum tax rules, which are implemented from the fiscal year starting on or after 1 January  2024, and generally aligned with the Organisation for Economic Co-operation and Development (OECD) Pillar Two Model Rules and Administrative Guidance on the Global Anti-Base Erosion (GloBE) Model Rules (note that the application of the Undertaxed Payment Rule [UTPR] will be delayed by one year, revising the effective date to 1 January 2025, in consideration of global progress in UTPR implementation). Furthermore, the Bill introduces new reporting requirements concerning offshore trusts and employee stock-based compensations to bolster regulations against tax avoidance.

The approved Bill includes amendments aimed at fostering corporate investment by extending and expanding the existing tax credits. Notably, the Bill adds bio-pharmacy to the list of designated national strategic technology sectors, such as semiconductors and secondary batteries, which are eligible for preferential higher rates of research and development (R&D) tax credits to qualifying expenditures and facility investments aimed at commercialising technologies. In addition, the Bill raises the basic deduction rate for video content production costs by two or three percentage points and provides an additional credit of 10% to 15% for expenditures meeting specific criteria. Additionally, a new tax credit is introduced for small and medium-sized enterprises (SMEs) and middle-scale enterprises investing in film, TV series, and over-the-top (OTT) content made through specialised companies in the cultural content industry. Moreover, the approved Bill reinstates tax credits for investments in overseas natural resource developments, which had been sunsetted in 2013. This move aims to support corporate investments in securing core minerals, extending the application of the tax credit until 2026.

Under the approved Bill, the application period for special tax for rural development is extended by ten years, lasting until 30 June 2034. This extension is intended to continuously enhance the industrial competitiveness of the agricultural and fisheries sector to cope with the expanded opening of the agricultural and fishery market.