Korea: Recent developments on corporate taxation

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With the aim of encouraging the development of new growth-engine industries, reinforcing employment-friendly tax schemes, and facilitating corporate restructuring, a few amendments that affect foreign investment or foreign invested companies have been taken in Korea.

The amendments are as follows:

  • the research and development (R&D) tax credit has been restructured for qualified technologies to stimulate the economy;
  • tax support given to companies with foreign investment with high-technology has also been restructured and a tax credit has been introduced for facility investment to commercialize technologies;
  • while calculating the corporate tax base using the tax credit method, foreign tax included in gross income cannot be deducted from the tax base of the local income tax; and
  • foreign corporate branches in Korea shall be added to the scope of companies subject to restriction of net operating loss deductions.

Most of the above mentioned amendments became effective from 1 January 2017.

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