Written date: 2018.08.29

Written by: Jaesun Kim 

1. Overview 

Employment-promoting tax incentive has been newly established through converging existing employment-promoting investment tax exemption and Youth-employment promoting tax incentive.

Note) In case Youth-employment promoting tax incentive is applied in 2017, follow up management will be applied until Dec. 31st, 2019.

2. Requirements and applied period

(1) Requirements

Local residents(except for local resident in consumer services sector)

(2) Applied period

Shall be effective from the taxable year, beginning on January 1, 2018.

3. Contents

(1) When the number of full-time workers increases compared to the previous year

In case the number of full-time workers increased during the taxation year compared to previous year, up to Dec 31th, 2020, the tax amount shall be deducted as below.

(2) In case the number of full-time workers has not decreased compared to the previous year

The number of full-time workers during the period from the end of the taxable year for which the tax is deducted to the end date of the taxable year is not decreased compared to taxed year (in case the number of employees is maintained), the amount of each item shall be deducted in the following year.

① When the number of full time workers such as youth employee does not decrease: The amount deducted according to the increase of regular workers such as youth employee

② Other than ①: The amount deducted according to increase of full-time workers such as youth employee

->Which can be translated as, if the employment is maintained without reduction, the amount deducted from the previous year's tax amount will be further deducted. 

(3) 20% tax based on Act on Special Rural Development Tax

(4) Subject to the minimum tax

(5) Duplicate application with social insurance premium tax deduction, various investment tax deduction

4. Follow-up measurement

In case the number of full-time workers during the period from the end of the taxable year for which the tax is deducted to the end date of the taxable year is decreased compared to taxed year, the amount of each item shall be imposed in the following year.

Taxable amount = ① - ②

(Limit: the total amount of tax which was deducted within the previous two years of the taxed year)

① Reducted tax amount and following full-time workers on taxation year * The amount in accordance with the table above (in case tax was deducted for two consecutive years or more, the last year's taxable amount is deducted)

② Reducted tax amount and following full-time workers on taxation year * The amount in accordance with the table above (in case the deducted tax year is the immediately preceding tax year, it is regarded as 0)