On 2 August 2017, South Korea's Ministry of Strategy and Finance published the government's proposed tax reforms, which include several initiatives meant to support employment and lower-income individuals, as well as SMEs. These include credits for increased employment, increased deduction for social insurance premiums, a new retained employee condition for M&A tax relief, increased tax relief for wage growth, and additional start-up relief in relation to employment, among others.
The initiatives are to be funded by increased tax revenue from large companies and high-income individuals, including through:
Further to the rate increases, the government is also planning to reduce certain tax credits for large companies, including the R&D expense credit and the capital investment credit with respect to facilities for improved productivity, environmental protection, and safety equipment.
In addition to the employment and tax rate measures, the government is also planning to introduce certain BEPS measures, including:
The legislation for the proposals is to be finalized and submitted to parliament on 1 September and, subject to approval, would generally apply from 2018. Additional details will be published once available.
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