|
|
|
|
|
Newsletter | February 2016, Issue 1
|
|
|
|
|
|
|
TAX
|
|
|
|
The Korean Government Promulgates Amendments to the Presidential Decrees of the Recently Approved Tax Laws
|
|
|
|
On December 24, 2015, the Ministry of Strategy and Finance announced proposed amendments to the presidential decrees, aimed at providing details on the changes in the recently approved tax laws for 2016.
|
|
|
|
In February 2016, the amendments to the Presidential Decrees of the Tax Laws were promulgated.
|
|
|
|
1. Company automobile expenses – new rules
|
|
|
|
|
|
New rules for deducting company’s automobile expenses have been adopted 26.
|
|
|
|
Below are the details of the new rules27.
|
|
|
|
To claim a deduction for automobile expenses, a company’s automobiles should be covered by car insurance that limits the coverage to the company’s officers and employees only.
|
|
|
|
The new deduction rules for automobile expenses apply to depreciation, lease payments, fuel, repairs, and insurance relating to acquisition and maintenance of the automobiles.
|
|
|
|
In addition, the company should maintain operational record of the automobiles or other evidence to support the claim should be maintained.
|
|
|
|
However, where a company has appropriate insurance coverage, but does not maintain operational record, the deduction for automobile expenses will be limited to KRW 10 million per year. Higher deduction is available if the company maintains operational record or provides other evidence to support the deductions.
|
|
|
|
|
|
2. High income secondees – withholding tax obligation
|
|
|
|
|
|
In an effort to ensure greater income tax compliance for foreign company high-income expatriates seconded to Korean entities, a new 17% withholding tax (18.7% inclusive of local income tax) has been introduced on payments made by the Korean host entity to the foreign company seconding the expatriates.
|
|
|
|
To pay any tax shortfall or claim a refund for any overpaid taxes, the foreign employer (or the Korean host company as agent for the foreign employer) will be required to file an annual income tax reconciliation on behalf of the secondees by February of the following calendar year.
|
|
|
|
The new withholding tax rule applies to Korean host companies meeting all of the following criteria:
|
|
| 1) |
Total payments to a foreign company for services provided by the secondees exceed KRW 3 billion (on an aggregate basis if such payment is made to more than one foreign company);
|
| 2) |
Prior fiscal year revenue amounted to at least KRW 150 billion, or assets amounted to at least KRW 500 billion; and
|
| 3) |
The host company is in one of the following industries:
- Air transportation, construction, professional, scientific and technical services.
|
|
|
|
|
|
The new withholding tax rules will apply to payments made by Korean entities on or after July 1, 2016.
|
|
|
|
|
|
|
|
| 26 |
|
Took effect for fiscal years commencing on or after January 1, 2016.
|
|
| 27 |
|
Under the Presidential Decree (Article 50-2 of the Presidential Decree to the Corporate Income Tax Law).
|
|
|
|
|
|
Back to Main Page
|
|
|
|
|
|
If you have any questions regarding this article, please contact below:
|
|
|
|
|
|
|
|
For more information, please visit our website:
|
|
|
|
|
|
|
|