2025 Tax Revision Framework The government has drawn up the 2025 tax revision bill, focusing on the following directions: 1) Effective tax support to achieve technology-driven growth 2) Inclusive tax policy for shared growth 3) Strengthening the revenue base to promote equitable growth The 2025 tax revision aims to establish a fair and efficient tax system that supports genuine economic growth. To this end, the three key strategies are to be carried out as follows. 1. Facilitate Korea’s Transition to a Global Economic Leader 1-1. Enhance support for future strategic industries 1) Establish new national strategic technologies and commercialization facilities in the field of artificial intelligence (AI). 2) Extend the applicable period for income tax reductions for returning high-skilled professionals, including those in the AI sector. 3) Extend the designation period for manufacturing and repair facilities eligible for tariff reductions on items with tariff rate imbalances, such as semiconductor manufacturing equipment and aircraft. 4) Introduce a new tax credit for webtoon content production costs. 5) Expand tax support for video content production and extend its applicable period. 6) Enhance tax credits for investments in specialized cultural content companies and extend their applicable period. 7) Increase tax support for future mobility and transportation technologies designated as national strategic technologies. 8) Revise the tax credit scheme for leading cargo owners. 9) Strengthen tax incentives for the defense industry. 10) Reform the Integrated Employment Tax Credit. 11) Strengthen tax incentives for companies’ reshoring to Korea. 12) Introduce a new tax deferral scheme for in-kind contributions of foreign subsidiary shares by domestic corporations to foreign entities. 1-2. Invigorate capital markets and enhance tax support for venture investment 1) Introduce separate taxation on dividend income from companies that pay high dividends. 2) Revise the tax incentive scheme for promoting investment and mutually beneficial cooperation. 3) Grant tax exemption on investment income earned by the Bank for International Settlements (BIS) from investments in Korean won-denominated assets. 4) Expand tax support for universities acquiring substitute income-generating assets. 5) Shore up tax incentives for venture investments through private venture capital master fund. 6) Extend the applicable period for income deductions on investments in venture businesses. 7) Introduce a new tax incentive for venture investments made through special purpose companies (SPCs) established by venture investment funds. 1-3. Support regional growth 1) Raise the tax credit rate for contributions under the Hometown Love Donation. 2) Increase tax incentives for businesses located in Industrial Crisis Response Regions. 3) Improve the tax relief scheme for companies relocating to regional areas. 4) Introduce a tax deferral measure for in-kind contributions to Project REITs. 5) Extend the applicable period for tax support for regional economic and industrial special zones. 2. Inclusive Tax Policy for Improving People’s Livelihoods 2-1. Expand tax support for low- and middle-income households and multiple-child families 1) Increase the income deduction limit for credit card spending based on the number of children. 2) Raise the tax exemption limit for childcare allowances based on the number of children. 3) Expand the scope and increase the cap of tax exemptions for parental leave benefits and similar allowances. 4) Provide tax support for extracurricular education expenses in arts and physical education for lower-grade elementary students. 5) Remove the income requirement for the special tax credit on college education expenses. 6) Expand the eligibility and applicable housing types for the monthly rent tax credit. 7) Extend the value-added tax (VAT) exemption period for management services of multi-family housing. 8) Extend the VAT exemption period for dormitory fees at Happy Dormitory. 9) Extend the tax support period for hosing subscription savings accounts. 10) Lower the withholding tax rate on pension income. 11) Extend the applicable period for special taxation on tax-free comprehensive savings. 12) Raise the non-taxable threshold for income from timber harvesting and transfer. 13) Shift the tax incentive approach for farmland investments in agricultural cooperative and similar entities. 14) Extend the tax exemption period and rationalize the scope of application for deposits and equity contributions of mutual finance cooperative members. 15) Extend the applicable period of tax support for the Lump-Sum Saving of Farming and Fishing Households. 16) Extend the applicable period for the zero-rating and VAT exemption on farming and fishing equipment and rationalize the grounds for additional taxation. 2-2. Strengthen tax support for small business owners and promote mutually beneficial cooperation 1) Expand the deductibility and extend the applicable period for corporate business expenses paid with Local Love Gift Certificates. 2) Provide tax relief in the event of early termination of the Yellow Umbrella program due to business deterioration. 3) Relax the eligibility requirements for special tax arrears relief for small-scale sole proprietors. 4) Raise the income threshold for tax reductions applicable to the livelihood-based startup SMEs. 5) Extend the applicable period of the special VAT deduction for purchases of recycled waste resources and used cars, and introduce a cap on the deductible amount. 6) Expand the tax deductibility of donations made by social enterprises. 7) Extend the applicable period of tax credits for landlords who reduce commercial rent. 8) Introduce a new tax support scheme for smart factory-related facilities of SMEs. 9) Extend the applicable period for tax credits on contributions to the Fund for Mutually Beneficial Cooperation between Large Enterprises and Small-Medium Enterprises. 2-3. Safeguard taxpayers’ rights and improve taxpayer services 1) Rationalize the scope of capital gain tax carried forward. 2) Introduce new exceptions to additional taxation on land portion of comprehensive real estate holding tax. 3) Rationalize the scope of entities subject to the prohibition on duplicate customs audits and adjust the prior notification period. 4) Expand the grounds for reducing penalties for inaccurate declarations in advance customs rulings. 5) Revise the method for calculating penalties on late payments made after the designated payment deadline. 6) Streamline the inspection system for alcoholic beverage containers. 7) Expand eligibility for government-appointed tax representatives to include those filing grievance petitions. 8) Broaden the scope of recipients eligible to receive tax payment notices through regular postal service. 9) Defer the monthly submission deadline for simplified payment statements for regular employees. 3. Broaden the Revenue Base and Improve the Rationality of the Tax System 3-1. Restore tax burden fairness in accordance with the ability-to-pay principle. 1) Revert the corporate tax rate to the 2022 level. 2) Revert the stock transaction tax rate on domestic stock transfers to the 2023 level. 3) Revert the threshold for major shareholders liable for capital gains tax on stock transfers from KRW 5 billion or more back to KRW 1 billion or more. 4) Increase the education tax rate for the finance and insurance sectors on income exceeding KRW 1 trillion. 5) Rationalize the taxable scope of reduced capital reserve dividends. 3-2. Rationalize the tax system 1) Streamline tax incentives by phasing out temporary support measures. 2) Rationalize corporate tax benefits for cooperative entities. 3) Broaden the taxable scope of exit tax to include foreign stocks holdings. 4) Apply foreign tax credits to indirect investment income earned in pension accounts. 5) Introduce Domestic Minimum Top-up Tax (DMTT). 6) Expand the scope of liability for tax payment in kind for Comprehensive Real Estate Holding Tax on trust assets. 7) Add required documents for rectification claims related to arm’s length price adjustments. 8) Strengthen joint tax liability of purchasing agents for overseas direct purchases. 9) Expand the scope of taxation on circumvention dumping. 3-3. Prevent tax evasion and bolster the efficiency of tax collection 1) Broaden the scope of inheritance tax obligors in cases of bequests to for-profit corporations. 2) Introduce penalties for foreign corporations that fail to submit required reports on their liaison offices. 3) Establish regulations for outsourcing the sale of seized virtual assets. 4) Introduce new exclusion criteria for detention requests concerning high-amount tax delinquents. 5) Include the delivery costs of tax demand notices in the late payment penalty tax.