What You Need To Know About the Reduction Of Corporate Tax In Korea
For companies with tax bases between 200 million won and 50 billion won, the Korean government
has announced plans to reduce the top marginal corporate tax rate to 20 percent in 2012.
However, the current corporate tax rate of 22 percent (effective rate of 24.2 percent 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.
In addition, the Korean government has proposed a slew of other changes and developments for
the year 2012, and some of which are include maintaining a top marginal corporate tax rate of 22
percent (effective rate 24.2 percent) 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 percent; Tax Information Exchange Agreements to be signed
between Korea, British Virgin Island and Costa Rica ; and 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 (for
example, 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.
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 provided the proposed tax law modifications are passed by the
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