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Resolution of 16 amendments to tax laws, including the Committee of the National Assembly, the Final Tax Law and the Income Tax Law
The highest income tax rate from 42% to 45%
Failed handling of new tax exemption and reduction limits for individuals and similar corporations that exceed income tax withheld and relocated local businesses
Amendments to the scope of the tax representative assignment and completion of practical training for attorneys who have automatically acquired the tax accountant qualification are retained.
The comprehensive real estate tax credit for the elderly and long-term holders, which have been controversial for equity, is also allowed for single-family inhabitants under the common name of the couple, and the minimum rate of income tax is raises from 42% to 45%.
The tax bill has been suspended due to excess income withheld by private corporations and similar and the modification of the Tax Lawyers Law on the scope of the tax representative relief and the realization of practical training for lawyers who have automatically acquired the qualification of tax accountant.
The Planning and Finance Committee of the National Assembly held a plenary session on the 30th of last month and decided a total of 16 tax amendments, including the Income Tax Law and the Corporation Tax Law.
On the 2nd of last month, Representative Yoon Hee-suk, the people’s power, proposed an amendment to the tax law that exceeded the threshold above the description. As in the current case, couples receive a basic deduction of 600 million won each, or a basic deduction of 800 million won, as a home and owner.
The deduction for seniors and long-term tenures only applies to one owner in a home and does not apply to joint names, and controversy over reverse discrimination has been raised in several places.
If the revised bill goes through plenary and is implemented, the burden of the tax burden will be reduced by as much as 80% for couples who own a home together for a long time starting next year. Starting next year, the deduction rate applied to seniors aged 60 and over is 20-40%, and the long-term deduction for those aged 5 and over is 20-50%. If you take both deductions, you can receive up to 80% (currently 70%).
The ‘pincer surge’ for ultra-high-income people also approved the committee. In this year’s amendment to the tax law, the government created a section that exceeds the global income tax base of 1 billion won, raising the income tax rate from 42% to 45%. Before the plenary meeting, there was a controversy between the tax subcommittee deliberating on the revised tax law, but eventually the bill was approved according to the government’s proposal.
The amendment to the Excise Tax Restriction Act, which taxed excess income withheld from similar private companies, has not been approved. Beginning next year, the government announced an amendment to the tax law that considers excess income withheld from similar private corporations as dividends and imposes income tax.
The main idea of the government’s proposal is that if a company with an 80% or more stake owned by related parties, such as the largest shareholders and family members, accumulates more than 50% of the net income or more than 10% of the capital stock , will be considered dividends and will be taxed.
The government made commitments, such as reducing the scope, due to growing opposition from small and medium-sized enterprises (SMEs), which have a large proportion of family-owned businesses, but which ultimately frustrate themselves on the threshold of the plenary session.
The plan to establish a new limit for tax reduction and exemption for relocated local businesses was also suspended. Currently, if the factory or head office relocates to a local area, income tax and corporate tax reductions of 100% are provided for 7 years and 50% for an additional 3 years, and the government judges this to be excessive and proposes a proposed amendment to the tax law to impose a reduction limit. I have a bar.
The amendment to the Tax Law on the scope of tax agent relief and the completion of practical training for lawyers who have automatically acquired the status of tax accountant has been suspended.
A plan to allow attorneys to perform tasks other than accounting and fidelity verification and to receive practical training for more than 3 months, automatically awarding a tax accountant qualification, and a plan to allow attorneys to perform all duties of fiscal agent and allow all fiscal agent functions. A proposal to receive practical training prescribed by Presidential Decree was discussed, but ultimately it was not decided.
In the case of dividend income from the ‘New Deal Infrastructure Fund (collective organization)’ related to the government’s ‘Korean version of the New Deal’, a separate taxation will be established giving preferential treatment until the end of 2022 at a tax rate 9% for the payment limit of 200 million won or less.
Regarding the establishment of the income tax on financial investments, an amendment to the Securities Transaction Tax Law was also voted to reduce the security transaction tax by 0.02 percentage points next year and 0.08 percentage points in 2023 to finally lower it to 0.15%.
Taxes on income derived from virtual asset transactions, which was scheduled to take effect as of October 1 of next year, will be applied to the transfer, rental and withdrawal of January 1, 2022 with a delay of three months.
As of October 1 next year, the government proposed an amendment to classify income from the transfer and rental of virtual assets as other income for national residents and tax 20% of the amount of other income minus 2.5 million won. For non-residents of Korea, the related income was classified as domestic source and other income, and the virtual asset trading operator decided to withhold tax.
However, the Commission decided to postpone the implementation period for three months considering the preparation period for the establishment of the tax infrastructure for masked assets.
For liquid e-cigarettes, an individual excise tax of 370 won is charged per ㎖ of nicotine solution. The government drafted an amendment to increase the tax rate to 740 won per ml of nicotine solution.
In addition, the person who is obliged to pay VAT on the fiduciary property changes. In addition to the cases in which the beneficiary is not specifically determined or does not exist, in the case of a trust in which the consignor is a beneficial owner, the consignor becomes a taxpayer for the income attributable to the trust asset.
The penalty rate for infidelity in the filing of payment statements between earned income will be reduced to half the current one. If a payment status is not presented between earned income, it is reduced from the current 0.5% to 0.25%, and in case of delay in filing, it is reduced from the current 0.25% to 0.125%.
Regarding the amount of credit card use, the basic deduction limit for each payment level will be increased by 300,000 won for the amount used for credit card use this year as per the government’s proposal.
After returning to SMEs and medium-sized companies, where workers completed parental leave for at least 6 months, they decided to deduct 10% of their labor costs (5% for medium-sized companies) for one year, and increased parental leave by 30% (15% for medium-sized companies). Support to be activated.
The tax deduction, which reduces the rent to a good landlord who suffers from Corona 19 and reduces the rent to a good landlord, from income tax and corporate tax, will be extended for 6 months until June 30 of next year, and a special case for the accelerated depreciation of investment assets in facilities. It is limited to 50% for large companies and 75% for small and medium companies for one year until next year.
Bills that have exceeded the threshold above description will be finalized in plenary this month.