As with the corporate tax rate, the government passed a law to decrease tax rates in Korea, however, the government has backpedaled and scrapped the law. The taxes will increase for individuals with adjusted gross incomes over KRW 88mil/year. 2012 TAX BRACKETS TAX RATES KRW 12mil or Less 6.6%KRW 12mil to KRW 46mil 16.5%KRW 46mil to KRW 88mil 26.4%KRW 88mil to KRW 300mil 38.5%OVER KRW 300mil 41.8%
Continue readingCategory: Korean Tax Law
Amendments to Corporate Tax Rates in Korea for 2012: Korea Corporate Tax Rates in Korea
The Korean government passed a law to decrease the corporate tax rate in Korea, however, the government has backpedaled and has increased the corporate tax rate for companies with earnings over KRW 20bil through a recent amendment to the Korean corporate tax law. We receive many requests from clients to compare the corporate taxes, general investment environment, and benefits in doing business in free trade zones in Asian countries in order to determine the most feasible location for a regional
Continue readingWill Korea Impose a New Capital Gains Tax on Stocks?
The ruling party in Korea, because of recent popularity in bashing the “rich,” has proposed a new tax on capital gains on stocks. Many of us that assist investment companies in Korea are very afraid that the growing radical liberal minority in Korean society will, through its efforts to gain the presidency, scare away foreigners from the Korean market. Luckily, the government is much more “cautious.” “I am cautious about imposing a tax on capital gains from profits from stock
Continue readingTax Exempt Foreign-Denominated Bonds in Korea Coming to an End for Holders with Offices in Korea
Some bad news for the Korean bond market. A law passed in 2011 entitled the Special Tax Treatment Control Law of Korea makes, for many investors, the Korea bond market much less attractive when compared to the bond market of regional rivals. Non-Korean currency denominated bonds issued in 2012 will no longer receive tax exempt status in Korea if they are payable to any company with an establishment in Korea or were issued in Korea. This and other punitive-like taxes
Continue readingKorean Tax Tribunal on the Adjustment of Value of Imported Goods and Transfer Pricing
Late last year the Korean Tax Tribunal ruled that the “Customs Value” shall not be effected by a “Transfer Price Adjustment.” The holding will make it more difficult for those importing products into Korea where the product may be paid for by the importer only after the sale of the item. The case involved the import of motorcycles and auto parts by a foreign parent of a local company. The transfer prices were set in 2009 based on exchange rates
Continue readingKorean Corporate Tax Changes Affecting Businesses in Korea
I hate taxes, as I assume you also do, but my M & A and other corporate clients in Korea may be hating Korean taxes just a little bit less after the recent changes in Korean Corporate Tax Law. First, the Enforcement Decree of the Corporation Tax Act of Korea was amended this year to allow expanded preferential tax treatment in an acquisition of a Korean company. Before the present amendment, a majority/controlling shareholder could avail of “preferential tax treatment”
Continue readingPromoting Economic Freedom
Korea Times October 23, 2009 by Sean C. Hayes (Host of this blog) Two roads diverged in Korean yellow woods. Will Korea remain on the road less traveled and maintain its cumbersome regulatory framework governed by an inefficient, illogically burdensome and self-interested bureaucracy or will Korea free itself from its autocratic regulatory regime and bureaucracy and choose the other road? In a country with a notorious Sybil-type personality, only the most arrogant of pontificators will take a stab at predicting
Continue readingTransfer Pricing Reform In Korea
A U.S. NASDAQ listed company requested information concerning a specific transfer price scheme, amongst other issues, in Korea. The company has recently decided to enter the Korean market after having successfully entered the Japanese and other Asian markets. For obvious reasons, I can’t answer the question here, but a brief description of recent amendments to the law may be of interest to those that have considered global transfer price issues. The transfer pricing rules underwent a major change a couple
Continue readingExemption From National Health Insurance Plan
Exemption From National Health Insurance Plan Appeared in the Korea Times on January 10, 2007 Dear Professor Hayes: I am an American working for a company in Korea. My company and I pay for a private insurance policy, but I also pay for the Korean National Insurance Plan. I found that last month premiums drastically increased and I think it is unfair for me to have to pay for two insurance plans when one of the plans I will never
Continue readingRestrictions on Foreigners Purchasing Property in Korea
Foreigner Purchasing Property in Korea is not longer restricted for most acquisitions. An article on Korean Real Estate can be found at: Korean Real Estate Acquisition Taxes. Dear Sean Hayes: I was informed that there are limitations on foreigners purchasing property in Korea. I would like to purchase an apartment and was wondering what restrictions are on foreigners in purchasing property in Korea. What does a foreigner need to do to purchase property in Korea and is it true that
Continue reading76 Percent of Apartment Owners to Pay More Tax
Chosun Ilbo A Lesson in Survival From the Finance Minister The real estate tax burden this year will rise for 7.38 million households or 76 percent of the 9.7 million apartments, condominiums and villa complexes across the country. The 9.7 million will pay W85,000 (US$1=W945) in combined property tax per household on average this year, up about 12 percent (W9,000) from last year, the Ministry of Government Administration and Home Affairs said Thursday. The increase is small, the government explained,
Continue readingRules to Change for Entertainment Spending
Chosun Ilbo Feb. 21, 2007The existing government regulation that requires a receipt for corporate entertainment spending exceeding 50,000 won will be tightened. Entertainment spending which will require a receipt will be lowered to 30,000 won in 2008 and 10,000 won in 2009. In response, businesses are expressing their anger against the government’s measure, saying it will increase the tax burden and add more work for them. They also argued that the government’s excessive intervention may lead to contraction of business
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