Revised Enforcement Rules of Tax Laws

The major changes to the enforcement rules of the Basic National Tax Law, the Individual Income Tax Law and the Special Tax Treatment Control Law are as follows.

l Change in the rate used to calculate interest on tax refunds, deemed rental income for rental security deposits, amounts due on collection of over-refunded customs duty, etc.

Current	Revised
1.6%	Increased to 1.8%, considering the interest rate of time deposits recently offered by banks.

The new rate shall be effective for the period on or after March 21, 2018. As for the deemed rental income, the new rate shall be effective from the fiscal year beginning on or after January 1, 2018.

l Addition to the scope of non-taxable income

No income tax shall be levied on allowances received by workers listed in below table for overtime work, night-shift work, or holiday work.

Classification	Korean standard classification of occupations
Cleaning and Guard Related Elementary Occupations	- Cleaning and Guard Related Elementary Occupations (94)
Cooking and Food Service Occupations	- Cooks (441) - Food and Beverage Service Workers (442)
Store Sales Occupations	- Store Sales Workers (521) - Mobile Telecommunication Device and Service Salespersons (5311) - Online Salespersons(5312)
Elementary Workers	- Food Preparation Related Elementary Workers (952) - Sales Related Elementary Workers (953) - Agriculture, Forestry and Fishery Related Elementary Workers (991) - Gauge Reading, Money Collecting and Parking Control Related Workers (992) - Other Service Related Elementary Workers (999)

The new rule shall be effective from the fiscal year beginning on or after January 1, 2018.

l Addition to the scope of new growth engine service businesses

Under the Special Tax Treatment Control Law, certain small or medium start-up enterprises engaging in new growth engine service businesses can claim tax exemption at 50% ~ 75% of corporate income taxes for 3 years. In this regard, the following businesses have been added to the scope of new growth engine service businesses.

Classification	New growth engine service businesses
Contents	 Advertising agency, outdoor and exhibition advertising ‚ Market research and public opinion polling
Tourism	 Exhibition organization under the Exhibition Industry Development Act
Scientific and technical activities	 Technical testing and analysis ‚ Surface and geological survey, cartographic activities

This amended rule shall be implemented from the fiscal year beginning on or after January 1, 2018.

l Increase in the threshold rate for the tax credit for earned income increase of SMEs

Under the Special Tax Treatment Control Law, small and mid-sized enterprises (“SMEs”) are entitled to tax credit until the taxable year in which December 31, 2020 falls if its rate of increase in average wages of its full-time employees is greater than the average increase rate of all SMEs. The tax credit allowed is 20% of the portion of wage increased. Under the revised Enforcement Rules, the current average increase rate of all SMEs (“threshold”) of 3.3% is increased to 3.6% as below.

Current	Revised
The rate of increase in the average wages of full-time employees should be greater than 3.3% (the increase rate of the average wages of all small or medium enterprises)	The threshold rate increased to 3.6%, considering the recent 3-year average increase rate of wages of all SMEs.

The new rule shall be effective from the fiscal year beginning on or after January 1, 2018.