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Revision to 2017 Tax Enforcement Decree

  • DivisionTax and Customs Office - Tax Policy Division
  • DateJanuary 8, 2018
  • Tel0442154111

Tax Enforcement Decree Revision


Decree Focuses on Boosting Investment and Broadening Tax Base



The government announced a revision to a total of 17 tax enforcement decrees, including ones to help create jobs, improve income and broaden the tax base.  Major revisions to the 2017 tax enforcement decrees are as follows.


- Expand the angel investment tax incentives (30 to 100 percent income tax deduction):  Include crowdfunding investment in companies run for less than 7 years, or investment in companies run for less than 3 years if they are qualified by credit rating agencies

- Ease requirements for the venture capital trust tax incentive (10 percent income tax deduction) while introducing an investment ceiling (30 million won per investor):  Require an investment of 15 percent or more of the total fund in newly issued venture shares, or 35 percent or more in venture shares or KOSDAQ shares issued by those used to be ventures less than 7 years ago, a relaxation from 50 percent investment in newly issued venture shares

- Expand the capital gains tax imposed on large shareholders by redefining large shareholders



Current law


From April 1 2018

From April 1 2020

From April 1 2021


1% or 1.5 billion won or more worth of shares

1% or 1.0 billion won or more worth of shares

1% or 0.3 billion won or more worth of shares


2% or 1.5 billion won or more worth of shares

2% or 1.0 billion won or more worth of shares

2% or 0.3 billion won or more worth of shares


4% or 1.0 billion won or more worth of shares

4% or 0.3 billion won or more worth of shares


- Expand tax credit for insurance costs (12 percent of reduction up to 1 million won a year):  Include key money repayment insurance costs for housing rent

- Make capital gains in the K-OTC market nontaxable unless they belong to large shareholders:  Those holding less than 4 percent of shares or less than 1 billion won in shares as of April 1 2018

- Mandate the reporting of overseas financial accounts whose deposits exceed 0.5 billion won in total, an expansion from 1 billion won in total

- Expand capital gains taxes on nonresident shareholders:  Lower the tax exemption ceiling from less than 25 percent of shares to 5 percent

- Relax the residency requirement from 183 days over the most recent two tax years to 138 days in the tax year

- Manage the capital gains tax on derivatives trade more flexibly from the 20±5% rate to 20±10%

- Expand withholding taxes on foreign workers[1]:  Expand the taxation from companies spending more than 3 billion won a year on foreign worker wages to those spending more than 2 billion won from July 1 2018, and include shipbuilding, offshore construction and financial services

- Allow tax authorities to share information taxpayers provide to get advanced pricing agreements with their overseas counterpart authorities, which is aimed at increasing tax transparency and recommended by OECD’s BEPS Action 5

- Reintroduce the VAT return for foreign tourist accommodation expenses:  Apply temporarily for 2018 to tourist hotels if they raise rates by less than 10 percent compared with a year ago


The enforcement decrees will take effect following a three-week advance notice from January 30.


Please refer to the attached pdf


[1] Tax rates to be raised from 17 percent to 19 percent according to the 2017 income tax revision

Ministry of Economy and Finance
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