In late December 2019, the Korean National Assembly enacted the 2020 amendments to existing tax laws, including the Corporate Income Tax Law (“Corporate Tax Act”).
Unless otherwise specified, most of the changes have or will become effective on or after January 1, 2020.
On January 6, 2020, following the amendment of the tax laws, the Ministry of Economy & Finance (the “MOEF”) announced the government’s bill to amend the Presidential Decrees to the revised tax laws, and invited public comments on the amendments until January 28, 2020. Presidential decrees provide more detailed guidance on the laws.
Should the bill be finalized in the cabinet meeting, we expect the amended Presidential Decrees to be enacted in February 2020.
Below please find a summary of the key changes.
1. New special rule under the Corporate Tax Act – expanded scope of deductible bad debts for Small and Medium-sized Enterprises (“SMEs”)
2. New special rule under the “Restriction of Special Taxation Act” for companies in the Materials, Parts and Equipment (“MPE”) sectors
3. New rule under the “Restriction of the Special Taxation Act” – imposes restriction on tax deferral benefits for establishing or converting to a holding company
4. Other tax amendments
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