South Korea proposed tax cuts to encourage companies to shift operations back home and nurture the biopharmaceutical and visual entertainment industries, to stimulate domestic growth and reduce reliance on traditional manufacturing sectors. | Reuters
The proposals come as slowing economic growth is yielding lower tax revenue. The government expects the economy to grow 1.4 percent this year – the least in three years – and 2.4 percent in 2024.The ministry proposed that corporate income tax exemption for re-shoring companies – those who invest domestically to return production from overseas – be 100 percent for seven years and 50 percent for the following three years, up from five and two years.
It said tax exemption rates for visual content production should be raised to a maximum 30 percent from 3-10 percent, and that the biopharmaceutical sector should be added to a list of industries eligible for higher tax breaks on investment. While parent-to-child gifts are taxable above a certain threshold, the ministry proposed that a current exemption should be tripled if the money is for marriage purposes. It also said childbirth and childcare incentives should double, and proposed income tax deduction for mortgage payments be raised.
The ministry said most of the tax revenue shortfall would come from increasing childbirth subsidies, which it proposed to raise by 25 percent to a maximum of 1 million won per child, with easier criteria. The proposals will be submitted to the National Assembly by Sept. 1 for approval, and will require revisions to 15 tax codes, the finance ministry said.Subscribe to our daily newsletter
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