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By Sean Na
Aug. 12—An increase in the flat-rate tax to 19 percent from 17 percent was proposed July 28 by the South Korean Ministry of Strategy and Finance.
The proposal also would extend the deadline for nonresidents to receive the flat tax to Dec. 31, 2019, from Dec. 31, 2016. Additionally, small and medium-size enterprises would receive tax breaks effective Jan. 1, 2017.
Nonresident workers who apply for the special tax rate before Dec. 31, 2019, would pay a 19 percent flat tax rate for five years from when they start working in South Korea, Lee Sang-Kil, deputy director of the ministry's tax relief division, told Bloomberg BNA on Aug. 11.
Nonresident workers now are taxed at the same progressive individual income tax rates as residents, 6 percent to 38 percent. Alternatively, nonresident workers may apply for a flat-rate tax of 17 percent.
The proposed tax legislation for 2017 also would include tax breaks for businesses with total assets of less than 500 billion won ($453.4 million).
Businesses that increase employee wages would receive a 50 percent reduction of employment-related taxes, including income taxes and social taxes, on the higher wages. Businesses that convert employees to full time from part time would receive a tax credit of 2 million won ($1,808) for each converted employee.
Nearly 90 percent of South Korean employees work small to medium-size businesses.
The ministry is seeking comments on the proposal until Aug. 18.
The proposal is to be sent to the National Assembly on Sept. 2.
Minor changes in the language of the proposal are possible, but Lee said the measure likely would be approved by early December.
To contact the reporter on this story: Sean Na at firstname.lastname@example.orgTo contact the editor responsible for this story: Michael Trimarchi at email@example.com.
The proposed legislation can be found, in Korean, at http://www.mosf.go.kr/nw/nes/detailNesDtaView.do?searchBbsId1=MOSFBBS_000000000028&searchNttId1=MOSF_000000000004797&menuNo=4010100.
The law that defines part time work is available at - http://www.law.go.kr/eng/engLsSc.do?menuId=2&query=#liBgcolor1 .
More information on payroll issues in South Korea can be found in the South Korea country primer.
Copyright © 2016 The Bureau of National Affairs, Inc. All Rights Reserved.
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