Written by Kim, Chang Jin

                                                                                                                                                                      13th, June 2017

 

Let me write changed tax system for your information.

1. Increased income tax rate (income taxarticle 55. 1)

Background : consolidation of taxation for highincome earner.

Contents: tax rate increase for the generalincome tax and transfer income tax.

Taxation standard	Tax rate
Under KRW 12 million	6%
12 million ~ 46 million	15%
46 million ~88 million	24%
88 million ~ 150 million	35%
150 million ~ 500 million	38%
Over 500 million	40%

Enforcement date is applied to the income fromJan. 1^st  2017.

Explanation) 40% will be applied to the over500 million earner.

 

2. Postponed taxation support period for thehousing lease income (income tax clause 12. 25①.

Background : stability of housing lease market.

Contents : ① applyingperiod of non taxable income for the housing lease for the under KRW 20 millionyearly: postponed until 31^st Dec 2018.

② smallhouse area from the deemed rent taxation in the deposit (lease deposit)

Present: under KRW 300 million house as 85square meter.

Revised: under KRW 300 million house as 60square meter.

③ Applying period for the ② : postponed until 31^st,Dec 2018.

Enforcement date: 1^st Dec 2017.

Explanation) -applying period of non taxable income up to KRW 20 million yearly for thehousing lease is postponed until 2018.

-small house area exempted from deposit deemedrent taxation is reduced from under 85 square meter to under 60 square meter.

 

3. Reduced tax rate for the start-up company ofyoung man is increased. (special taxation act 6)

Background : taxation support for the start- upcompany of young man.

Contents : exemption condition- establishingstart-up company in the area except overcrowding capital area.

·Amountreduced: 75% of corporation and income tax is deducted from the first taxationyear after occurring income and for 2 years. ( 50% is deducted for 2 yearssince then.)

Enforcement date: 1^st Jan 2017.

 

4. Tax deduction for the installment of mutualaid association of small scale enterprise and small business ( special taxationact article 86. Clause 3. ①)

Background : fairness for the installmentmember of mutual aid association of small scale enterprise and small business.

Contents: adjustment of deduction.

Income amount	previous	Revised
Under 40 million	3 million	5 million
40 million ~ 100 million	3 million	3 million
Over 100 million	3 million	2 million

Enforcement date: 1^st Jan 2017.

5. Cash receipt joining company and expansionduty to issue cash receipt.

Background: taxation clarity for theindependent businessman.

·Cashreceipt joining company

Present: retail business. Lodging industry. Eateryindustry. Retail industry.

Revised: 2 businesses are added. Sportseducation institute. Other education support service.

·Cashreceipt industry to issue cash receipt as obligation.

Previous : 52 business industry

Revised : 6 businesses are added (52→82).

Catering service, used cars retail andbrokerage art and antique retail business. Athletics and sports game goods,sports education institute, other education support service.

Enforcement date: It is applied from July 1^st  2017 and has duty to join the cashreceipt business within 3 months from the end of the date goods and service issupplied. ( Industry which has duty to issue cash receipt is added.)

It is applied to July 1^st 2017.

Explanation) business industry to issue cash receiptis expanded.

 

6. Taxation method for the payment mileage isreorganized (additional decredd 61)

Background: precedent of supreme court

Contents: ① mileage(the mileage can use when buy something from the same business operator whoissue the mileage) is excluded from the taxation standard.

② Forthe third party mileage, the amount business operator can receive actually canbe included to the taxation standard.

Enforcement date: It is applied from 1^stApril 2017.

 

7. Extention of deduction period for the deemedinput tax of agricultural and marine products.

Background: Support for the management stabilityof business operator as eatery.

Individual business (until at the end of 2018).

 

 Individualbusiness

Sales (6 months)	basic	Eatery special act
Under 100 million	50% from sales	60% from sales
100~200 million	50% from sales	55%
Over 200 million	40%	45%

 

Corporate

Sales (6 months)	Basic	Eatery special act
30% (35% until at the end of 2018)

 

8. Reduction of deduction for the inheritance,gift tax filing ( inheritance tax and gift tax act).

Background: rational reduction.

Contents: reductions rate; present: 10%,revised 7%.

Enforcement date: 1^st Jan 2017.

 

9. Extension of applying period for the incomededuction of credit card (special taxation act 126.2)

Background: ease the tax burden.

Contents: extended applying period 31^stDec 2018.

Differential application with credit carddeduction limit.

salary	previous	revised
Under 70 million	3 million	3 million
70 million ~120 million		3 million (250,000 from 1st Jan 2018.)
Over 120 million		2 million

Enforcement date; 1^st Jan 2017.

 

10. Ageing diesel deduction of individualincome tax for the ageing diesel changing. (special taxation act 109.2)

Background : when the diesel car registered 31^st,Dec 2016 is scraped in 30, June 2016 and registered new car within 2 months,70% will be deducted in individual income tax.

Enforcement date: registering new car for 5^thDec 2016 ~30 June 2017.

Explanation) support for the scrapping olddiesel car.

 

11. Enhanced support of employment subsidy.

Background: support for the low incomehouseholds.

Contents: increased employment subsidy.                                (KRW)

Description	previous	revised
Single household	700,000	770,000
Single income family	1,700,000	1,850,000
Double income family	2,100,000	2,300,000

 

② Housecondition for the application of labor, children grant is repealed.

Previous: homelessness, one household havingone house or temporarily 2 houses.

Revised: house condition is repealed ③ double applying for the labor grant and women income deduction (KRW500,000) is permitted.

Enforcement date : 1 st Jan 2017.

 

12. Extention of tax deduction for thechildbirth and adoption. ( income tax 59.2).

Background: support childbirth

Contents: extention of tax deduction for thechildbirth and adoption.         (KRW)

	previous	revised
First child	KRW 300,000	300,000
Second child		500,000
Over third child		700,000