The Korean Ministry of Economy and Finance plans to submit the following Korean Tax reform proposal to theNational Assembly and seeks approval before the 2nd of September 2022. The Korean Tax Reform Plan consists of changes with an emphasis on three goals of the new administration: Tax Incentives for foreign professionals working in KoreaThe Korean Government intends to extend a 50% cut to income taxes for highly skilled foreign engineers to 10 years from the current criteria of 5 years.
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What is a Social Security Totalization Agreement?
The Social Security Totalization Agreement (“Agreement”) works by assigning social security coverage and, in turn, tax liability, to only one country, as determined by the rules of the particular agreement. Thus, these agreements allow you, in short, to avoid double taxation on the same earnings. The United States and South Korea executed a Totalization Agreement. Specific details of the Agreement may be found at: Social Security Totalization Agreement Between the U.S. & South Korea. Rules vary substantially, between agreement to agreement,
Continue readingKorean Tax Law Amendments for Individuals for 2021
The Korean National Assembly passed a proposal by the Ministry of Economy & Finance and the Ministry of Interior & Safety related to Taxation of Businesses and Individuals in December of 2020. The Amendments shall take effect in 2021. The following is a summary of the major amendments to Korea’s Tax Code and regulations related to individuals in 2021. For an article on Taxation for Corporations please see: Korean Corporate Tax Law Amendments for 2021. 1. Amendment to Administrative Fines
Continue readingSouth Korea to Impose Taxes on Cryptocurrency in 2022
The Ministry of Economy and Finance confirmed that on the 1st of January 2022, profit from cryptocurrencies shall be subject to a 20% tax. And gifts and inheritance in the form of cryptocurrencies shall be taxed by the same rate of 20%. Exempted from Cryptocurrency Tax Any profit, gift and/or inheritance worth 2.5 million won and below will be exempted from the cryptocurrency tax. And only the profit, gift or inheritance in excess of 2.5 million won will be covered
Continue readingCan a Foreign Company be Deemed a Domestic Company for Tax Purposes and Taxed on Worldwide Income?
If Korea deems a foreign incorporated company a Domestic Corporation, the company shall be taxed on its worldwide income. The relevant law, this determination is made under, is the Corporate Tax Act of Korea (“CTA”). In the typical case, the National Tax Service of Korea designates the foreign-incorporated company a Domestic Corporation and requests details on overseas earnings in order to impose taxes on overseas earnings. Of course this leads, invariable, to your Korean tax lawyer challenging the determination to
Continue readingKorean Tax Incentives for 2020: Korean Tax Law Updates
Because of increased tax liabilities of many companies in Korea and because of perceived deteriorating market conditions, the Korean government implemented programs that may assist some SMEs, and larger companies doing business in Korea. Numerous conditions apply for each of these incentive/abatement tax programs below. The following is, only, intended as a basic explanation of the programs that may be available to businesses operating in Korea. Tax Support for Investments in Korea Investments in facilities that “improve productivity” shall receive
Continue readingAmendment to the Korean Foreign Investment Promotion Act 2019 – Investment Incentives in Korea
The Korean Foreign Investment Promotion Act (hereinafter as “FIPA”) is intended to support foreign investment in Korea by providing investment incentives to investors in the Korea market. The Korean National Assembly amended the FIPA this year. Key-facts about the Korean FIPA The Korean FIPA shall “…promote foreign investment in Korea by providing necessary support and benefit and to contribute to the sound development of the nation’s economy.” (FIPA Art. 1). FIPA may benefit foreign investors, including, individual investors, companies established
Continue readingTax Breaks for Korean Landlords: Real Estate Taxation Basics
Proposed by the Chairman of the Strategy and Finance Committee of the Republic of Korea on September 20, 2018, the Amendment to the Korean Restriction of Special Taxation Act came into force on January 1, 2019. The amendment has decreased the taxation burden of some landlords. The Act was amended in favor of Korean landlords who renew long-term rentals with tenants by charging a lower increase of rent by a percentage lower than a percentage set by Presidential Decree. This
Continue reading7 Musts to Succeed in Business in Korea
We have the unique pleasure to have a bird’s-eye view of numerous clients’ businesses in Korea. At this stage of our experience in Korea we are, typically, able to determine which companies will, likely, succeed and which companies will, likely, fail. We are far from perfect, but companies that succeed in Korea, normally, have the following seven things in common: 1. Comprehensive Understanding of the Korean Market by a Neutral Local Consultant This understanding, normally, comes from one of the
Continue readingBithump Crypto-Currency Exchange in Korea to Ban Trading in 11 Countries
With the Korean government auditing Korean Alt Currency exchanges and the Korean government looking at the regulation of crypto-currency, a major exchange, in Korea, has banned the trading on the exchange from Iran, Syria, Iraq, Ethiopia, Serbia, Sri Lanka, Trinidad and Tobago, Tunisia, Vanuatu, and Yemen. These aforementioned nations are on the Financial Action Task Force’s Non-Cooperative Countries or Territories black list. This Task Force, an intergovernmental agency, has deemed these countries to not have sufficient legal procedures in place to
Continue readingCompany Car Expense Deductions in Korea: Korean Tax Law Updates
Companies, in Korea, sometimes provide senior employees of the company a company car. A tax issue arises concerning the deduction of car expenses and the refunding of VAT. In practice “company cars” are, often, used for the company as well as private use. Thus, Korea has excluded deduction of expenses and exclusion of VAT for some automobiles. Corporate Tax Law formalities require Korean companies and Foreign Capital-Invested Companies, in Korea, to have detailed operation records or sufficient evidence to claim
Continue readingTax Liability of Controlling Shareholders in a Korean Company: Tax Law Updates
Under Article 39 of Korea’s Framework Act on National Taxes, unpaid taxes owed to the Korean government are enforceable against certain “ologopolistic” shareholders of respective debtor company’s shareholder. This secondary liability of shareholders is codified within the Framework Act on National Taxation. Article 39 of the Framework Act on National Taxes, specifically, notes that: “Where the property of a corporation is not enough to pay national taxes, additional dues and disposition fees for arrears imposed upon or to be paid
Continue readingKorean National Tax Service Tax Law News Release to Foreign Corporate Taxpayers: Korean Tax Law Updates
The following Korean Tax Law News is a publicly released Korean tax notification that is intended for foreigner companies in Korea. The notification was not translated or drafted by this law firm. For any questions on this notification please Contact Us. Korean Tax Law News 【January 2018】 ☞ The following Korean tax information is translated from Korean for foreign-invested companies, and is not legally binding. ※ Year-end tax settlement by foreign workers in Korea □ With the increase in foreigners
Continue readingKorean Tax Law Amendment Press Release by Korean Government
The following is a Press Release by the Korean Government on recent Korean Tax Law enforcement decrees. We shall update the reader when more is known. The following press release was not proofread or translated by this firm. The Press Release was published by the Ministry of Strategy & Finance in the English language and copied, in its entirety, below. Decree Focuses on Boosting Investment and Broadening Tax Base The government announced a revision to a total of 17 tax
Continue readingKorean Tax Risk of Foreign Corporation Deemed “Actual Business Management Locale” within Korea: Korea Tax Law Basics
Foreign corporations, doing business in Korea, may be deemed local corporations subject to taxation on worldwide income if the foreign-incorporated company is deemed a Korean “domestic corporation” for Korean tax purposes. This liaison-office Korean Tax Risk can, thus, lead to taxes on worldwide income, a tax audit and even criminal sanctions against those operating in Korea. We have dealt with matters were employees, even, received exit bans. Thus, in most cases the establishment of a local Korean corporation is essential
Continue readingKorean Real Estate Acquisition Taxes for Purchase of Real Estate in Korea
The following are the Korean real estate acquisition taxes for the purchase of real estate in Korea. These acquisition taxes are applicable to the purchase of an apartment, land or a commercial property. Taxes in Korea change, often, when new administrations come into office. Thus, these taxes may change, thus, please consult with your real estate agent and/or accountant. Foreigner may purchase property in Korea, certain restrictions do apply to the purchase of property by foreigners. Basic Taxes Related to
Continue readingEnglish-speaking Korean lawyers and International Lawyers at International Law Firm in Korea discussing issues of Korean Law
IPG Legal is a leading client-focused international law firm with offices in Korea that is, often, selected over the ubiquitous Korean Law Firms when success is essential and success depends on nuanced street-smart advice, proactive and unconflicted representation. Our attorneys are, intentionally. different from the crowd. From our retired judge partners to our junior associates, we are all trained with an intense focus on client success, lawyer proactivity, and to understand the nexus between your commercial and legal needs. Our attorneys
Continue readingFiling your U.S. Taxes as an Expat in Korea: Foreign Earned Income Tax Exclusion
Often, American expats and American Permanent Residents are unaware of the fact that they, as U.S. citizens or resident aliens living abroad, are required to file U.S. tax returns even if they do not owe money to the U.S. government or earn income in the U.S. If you are behind on filing your U.S. taxes, you can file your prior year tax returns retroactively. If you are caught by the IRS, prior to filing your taxes, you may be subject
Continue readingKorea’s Real Name Transaction Act Strengthened: Korea’s Banking Law Basics
The National Assembly of Korea, in May of 2014, passed an amendment to the Act Concerning Financial Transactions by Real Name and Confidentiality Protection (“Real Name Transactions Act”). The Real Name Transactions Act, prior to this amendment, only, imposed fines on employees of financial institutions that violated the law, but did not impose these fines on those that lend or borrow a name/identification details in order to engage in a transaction. The new Real Name Transactions Act shall be enforced
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