Promulgation and enforcement of the presidential decrees and enforcement rules of tax laws revised in late 2021
The amended presidential decrees following the tax laws revised in late 2021 came into force starting February 15, 2022. The related enforcement rules are also under amendment process, which will be completed and promulgated in March 2022
Major items of proposed amendments of the enforcement rules include (1) specification of detailed scope of facilities for commercialized national strategic technology (i.e., three industrial sector of semiconductor, secondary battery and vaccine) that are subject to the highest tax credit rate of 6/8/16%, (2) expansion of scope of facilities for commercialized new growth or source technology area that are subject to higher tax credit rate of 3/5/12% compared to general facilities that are subject to the tax credit rate of 1/3/10% (i.e., new list for the carbon-neutral technology area and additional list for bio and resource circulation area, etc.), and (3) elimination of the duty-free shopping limit (currently USD 5,000 per Korean national at departure).
In addition, the government’s bill includes the change in the base rate which is deemed as an arm’s length interest rate (“safe harbor”) applicable to loan transaction between a Korean resident and its OSRP, from the current LIBOR for each major currency + 1.5% to the index interest rate for each major currency (i.e., KOFR for KRW loans) + 1.5%.