Korea, Republic of
As the Korean tax law reform proposals were approved in the National Assembly in December 2020, most of the changes contained in the reform proposals become effective in January 2021 unless otherwise be specified. The tax law changes for 2021 aim to support the Korean economy and individuals to cope with hardships during the COVID 19 pandemic. The latest changes focus on overhauling the existing investment tax incentive schemes to encourage corporate investment and reinvigorating consumer spending to help prepare for economic recovery after COVID-19. One of the significant investment tax credit overhauls is a negative list system whereby investment tax credits should be generally available for all types of business-purpose tangible assets with some exceptions. Another significant change extends the carry forward period of unused tax credits to 10 years from 5 years under the tax incentive law. In addition to changes to facilitate innovative growth and develop new growth engines, they also include measures to promote inclusive growth, collaborative cooperation between large companies and small- and medium-sized enterprises (SMEs) and strengthen fair taxation.
Korean tax measures in response to the COVID-19 crisis
In a volatile economic environment with the unprecedented challenges of the COVID-19 crisis, the Korean government announced a series of measures to boost individual consumptions and the private sector’s economic activities. For the latest updates on Korean tax measures, please refer to the latest COVID-19 tax, legal, and economic response by territory at www.pwc.com/gx/en/services/tax/navigate-the-tax-measures-in-response-to-Covid-19.html
In line with the government’s measures, the National Tax Service (NTS) will continue to reduce the scope of tax investigation targets to help companies focus on coping with economic difficulties in the COVID-19 crisis. The number of companies subject to NTS audit this year will be kept at the last year’s level of 14,000, compared with 16,000 prior to the COVID-19 crisis. Periodic tax audits will be conducted in an approach to increase the predictability for taxpayers, while being waived or postponed for SMEs which receive fiscal support under the Korean New Deal project or carry out new deal projects on their own. In addition, simplified audits with a focus on providing useful consulting will be expanded to ease administrative burden on taxpayers. Applications for the postponement or suspension of tax audits will be considered in support of taxpayers affected by the COVID-19 crisis.