Strengthening post-management of tax Credits for Research and Human Resources Development Expenses

Date: Apr 29, 2020

I. Introduction

As new legal provisions which aim to strengthen post-management of tax credits for R&D and human resources development expenses have newly inserted into new laws this paper looks into the details of the law provisions.

II. Revisions

1) A national who wishes to be eligible under Article 10 (1) of the Act, shall submit an application for tax credits and a statement of research and human resources development expenses in the forms prescribed by Ordinance of the Ministry of Strategy and Finance, and evidentiary documents, such as a research and development plan, to the head of the tax office having jurisdiction over the place of tax payment, along with his/her tax return.

2) Enforcement Date: Taxation year after Jan, 01 2020 commences

3) Document Retention Period: Five years from the end date of taxation year

4) Required Documents

II. Laws and Regulations

Article 10 (Tax Credits for Research and Human Resources Development Expenses)

(1)  Where a national has research and human resources development expenses incurred in a taxable year, the aggregate of the following amounts shall be subtracted from the income tax (limited to incometax on business income) or corporate tax for the relevant taxable year. In such cases, subparagraph 1 shall apply only to research and human resources development expenses incurred by no later than December 31, 2018

1.  As regards the research and development expenses incurred in the new growth engine industries prescribed by Presidential Decree or the research and development expenses incurred inacquiring source technologies (hereafter in this Article, referred to as"research and development expenses incurred for new growth engines or source technologies"), an amount calculated by multiplying the researchand development expenses incurred for new growth engines or source technologies during the relevant taxable year, by the rate classified as follows

Article 9 (Tax Credits for Research and Human Resources Development Expenses)

(8)  A national who wishes to be eligible under Article 10 (1) 1 of the Act, shall keep separate accounting for research and development expenses incurred for new growth engines and source technologies and for general research and human resource development expenses. If the research and development expenses incurred for new growth engines and source technologies overlap with the general research and human resource development expenses, the full amount of such research and development expenses incurred for new growth engines and source technologies shall be deemed general research and human resource development expenses.

(9)  A national who wishes to be eligible under Article 10 (1) of the Act, shall submit an application for tax credits and a statement of research and human resources development expenses in the forms prescribed by Ordinance of the Ministry of Strategy and Finance, and evidentiary documents, such as a research and development plan, to the head ofthe tax office having jurisdiction over the place of tax payment, along withhis/her tax return.

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