Korea to Reduce Corporate Tax for Mid-sized Companies
The Korean government announced plans to reduce the top marginal corporate tax rate to 20% for companies with tax bases between 200 million won and 50 billion won in 2012.
- (1888PressRelease) November 30, 2011 - However, the current corporate tax rate of 22% (effective rate of 24.2% including resident surtax) will be maintained for companies with a tax base of over 50 billion won.
According to the announcement, the new middle tax bracket was proposed to achieve financial stability and improve business benefits for the small and medium sized businesses.
The Korean government also proposed a slew of other changes and developments for the year 2012, some of which are listed below:
* Maintaining a top marginal corporate tax rate of 22% (effective rate 24.2%) and creation of a new middle tax bracket
*Unification of the VAT return due date of local companies and foreign companies.
*Maintaining the top marginal individual income tax rate of 35%.
*Tax Information Exchange Agreements to be signed between Korea, British Virgin Island and Costa Rica.
*NTS (National Tax Service ) targets offshore tax evasions
VAT Submission Due Date
The proposal also includes plans for foreign establishments to have the same due date (e.g., a branch or a permanent establishment in Korea) for VAT submissions as the local companies, which is within 25 days from each quarter end. Currently, foreign companies are allowed to file the VAT return within 50 days from each quarter end.
Tax Evasion
The Korean taxation board, the National Tax Service is also said to be actively investigating tax evasion cases against such individuals who have allegedly concealed personal holdings and earnings in offshore accounts.
The proposed revisions above will be applied for the fiscal year starting on or after January 1, 2012 if the proposed tax law changes are passed by the National Assembly.
Please call or email if you need more details on how the Korea's corporate tax and other changes can affect your business.
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