Updates on 2019 Tax Revision

The government announced its enforcement decree of the 2019 tax revision on January 6, 2020.  Changes have been made to the 2019 tax revision as the government has more eagerly sought ways to promote innovation-driven growth.  Tax support has been increased to encourage supplies manufacturing and promote new growth engines.  Major changes to the 2019 tax revision are as follows.

1) Promote innovation-driven growth:  Expand the R&D tax incentives, an up to 40 percent cost deduction for R&D investment, from 173 technologies to 223 technologies, including manufacturing supplies, manufacturing equipment and a system-on-a-chip, as well as expand the 50 percent income tax reduction for startups and ventures to fintech companies, which is given during the first five years of their business operation

2) Promote consumption:  Make liquor and cigarettes be outside the US $600 duty-free shop purchase limit for the liquor adding up to one liter or less with the price not exceeding US $400 and the cigarettes not exceeding 200 sticks, applied to duty-free shops in Jeju island

3) Promote inclusiveness:  Expand corporate tax reduction for employing female returnees.  Those leaving work to get married or educate children will be included, as well as those quitting jobs due to childbirth and newborn care

Tax revenues are expected to decrease by 120 billion won from the 2019 tax revision mainly due to the increased R&D tax incentives. 

Please refer to the attached pdf