Recent Changes in Korean Tax Laws
On March 14, 2025, the government promulgated amended tax laws, including the Special Tax Treatment Control Law (“STTCL”), which were approved by the Strategy and Finance Committee of the National Congress on February 18, 2025. These amendments include increased tax credit rates for investment in semiconductor national strategic technologies.
Below is a summary of the key amendments applicable to foreign-invested companies. Most of the tax law revisions will come into effect from the fiscal year starting, or income earned, on or after January 1, 2025, unless indicated otherwise.
· The temporary investment tax credits for middle-scale companies and SMEs are extended for investments made during 2024 and 2025.
|
Category (%) |
|
Current (basic tax credit, %) |
|
Incremental increase (additional tax credit, %) |
||
|
Large company |
Middle-scale company |
SME |
||||
|
General |
|
1 |
5->7 |
10->12 |
|
3->10 |
|
New growth and source technologies |
|
3 |
6->8 |
12->14 |
+ |
|
|
National strategic technologies |
|
15 |
15 |
25 |
|
4->10 |
<Effective Date>
(Investments made in 2024): Applicable from the filing on or after January 1, 2025
(Investments made in 2025): Applicable to investments made in fiscal year beginning on or after January 1, 2025
· A new 10% tax credit has been introduced for medium-sized companies engaged in the publishing business within the Seoul metropolitan area.
· The integrated employment-related tax credit for career-interrupted individuals, previously limited to female employees, now includes male employees as well. Additionally, the condition requiring employment within the same industry has been removed.
· The grace period for applying dividend received deduction rates under the pre-amendment law, effective before January 1, 2023, is extended to December 31, 2026.
· Introduction of enforcement fines for non-compliance with document submission requirements during tax audits
- (Scope) Applicable to individuals or entities who fail to submit without justifiable reasons relevant accounting records, documents, or other required materials during tax audits. Deliberation of the Enforcement Fine Review Committee is required to impose the fines.
- (Amount) Up to 0.3% of the taxpayer’s average daily revenue, calculated from the day after the submission deadline. If the average daily revenue is difficult to calculate, fines may be imposed up to KRW 5 million per day.