The 2017 tax revision focuses on

• Revising corporate tax incentives to promote job creation
• Working on the redistribution of income
• Seeking ways to ensure increased tax revenues to support the expansionary fiscal policies

• Introduce an employment-promoting tax incentive: Up to 20 million won tax credit per new employee for SMEs, up to 14 million won for medium-sized leading enterprises, and up to 3 million won for large conglomerates
• Increase the SME tax credit for re-employing women or career high school graduates from 10 percent of the labor costs to 30 percent, along with a 3 year extension of the deduction
• Expand the FDI tax incentive: From the tax reduction for 50 percent of investment and 40 percent of labor costs to 50 percent of investment and 50 percent of labor costs

• Expand the SME tax reduction for raising wages of employees earning 70 million won or less a year: Job creation tax credit of 20 percent of the increase, an increase from 10 percent
• Expand the SME tax reduction for shifting temporary positions to permanent positions: From 7 million won tax credit per a shift to 10 million won per a shift
• Expand corporate tax deduction for SMEs when they raise wage rates to fill the pay gap between before and after reduced work hours: From 50 percent of the amount paid to fill the gap to 75 percent
• Promote corporate investment, wage increase and spending on shared growth or welfare: Corporations will be subject to additional taxes if they do not spend a certain amount on the above

• Provide an extra tax reduction to startup SMEs according to the number of jobs they create: Startup SME tax reduction of 50 percent for 5 years plus additional up to 50 percent reduction according to the number of jobs created
• Expand the angel investment tax deduction to promote high-tech ventures: Angel investment will be tax-deductible 30 to 100 percent, and the deduction will cover a larger range of companies invested
• Strengthen SME tax support: SMEs will be able to receive multiple tax support, such as employment-friendly taxation and social insurance credit, in addition to the special SME tax reduction
• Offer a delinquent tax exemption after business failure to the self employed if they open new businesses or get hired as of December 31 2018, up to 30 million won per person

• Increase the income tax rates of the top 2 brackets:

  Income Tax Rates(won, %)

  Taxable amount (won)	Current tax rates	Revised tax rates
  12 million or less	6%	-
  12 million – 46 million	15%	-
  46 million – 88 million	24%	-
  88 million – 150 million	35%	-
  150 million – 300 million	38%	-
  300 million – 500 million		40%
  500 million or more	40%	42%

• Increase capital gains taxes on stock transactions: 20 percent for up to 300 million won of taxable gains and 25 percent for more than the 300 million won tax bracket, and include those holding more than 300 million won worth of shares in the large shareholder category by April 2021
• Expand ‘the deemed gift tax on profits from related party transactions’ : Revise the method to calculate the gift tax to avoid tax fraud, expand the deemed gift tax base to 20 percent or more of the total transactions if the transactions exceed 100 billion won, and expand the scope of application of the deemed gift tax to affiliates of large conglomerates, which was designated according to the Fair Trade Act among the ones whose assets are 5 trillion won or more.
• Gradually reduce tax credits given to reported inheritances and gifts from 7 percent to 3 percent by the beginning of 2019

• Increase EITC and CTC (child tax credit) by 10 percent
• Increase the rent tax credit from 10 percent to 12 percent of the total rent payments
• Add daycare centers to the list of designated donation recipients
• Provide as much childcare support as possible: Standard deduction (1.5 million won per child), child tax credit and maternity or adoption tax credit can be provided at the same time
• Allow withdrawal before maturity from the Individual Savings Account (ISA) without the tax break being damaged due to the withdrawal, and raise the tax exemption cap

• Increase the corporate tax rate for the more than 200 billion won bracket from 22 percent to 25 percent

  Corporate Tax Rates(won, %)

  Taxable amount (won)	Current rates	Revised tax rates
  200 million or less	10%	-
  200 million – 20 billion	20%	-
  20 billion – 200 billion	22%	-
  200 billion or more		25%

• Revise the financial gains tax: Put an end to the tax reduction for individual shareholders’ dividend income, lift the separate taxation for long-term bond yields, put an end to the tax exemption for gains from international equity mutual funds and remove the separate taxation for gains from high-yield funds

• Impose a withholding VAT on the sales at bars and restaurant, of which the payment is made with credit cards: Credit card companies will be required to pay the VAT, 4/110 of the debt owed to them, on behalf of their business customers. Bars and restaurants will be given a tax credit for the amount paid by their credit card companies.
• Increase taxes on overseas income: Those with a total of 500 million won or more in overseas financial accounts will be obliged to report, an expansion from 1 billion won or more, the tax payment of overseas financial gains, such as interest or dividend income earned through mutual funds, will be refunded 10 percent, a decrease from 14 percent, and strengthen punishment for reporting fraud with regard to overseas transactions
• Work to broaden the tax base of multinational corporations: Overseas interest payments for hybrid financial instruments will be tax- deductible only if it is taxed in the country for the year, and overseas interest payments to related foreign parties will be tax-deductible for the amount up to 30 percent of adjusted gross income from 2019
• Increase income taxes for non-residents and foreign corporations: Shareholders with 5 percent or more of the ownership of a Korean company will be subject to capital gains taxes for their stock transactions on Korea Exchange, an expansion from the 25 percent of ownership, and increase the withholding tax rate for foreign workers from 17 percent to 19 percent and expand industries subject to the withholding tax
• Manage tariff delinquency: Expand reporting duties for credit card use from US$5,000 or more per quarter to every transaction worth US$600 or more, impose a 5 million won or less fine for neglecting to report the export of used cars, announce the list of those with repeated delinquency or in default on large amount of tariffs if the amount left unpaid is 200 million won or more, an increase from 300 million won or more

• Revise residency status rules for foreigners and overseas Koreans: 183 days or more for the tax year
• Revise the capital gains tax on derivatives: Raise the tax rate from 5 percent to 10 percent, and impose taxes on the entire gains or losses at home and abroad to avoid taxing gains from some accounts while others running losses

• Improve taxpayer protection with regard to tax investigation: Give a notice 15 days prior to the investigation, an increase from 10 days, and notify the investigation outcome in detail
• Improve taxpayer protection with regard to tax investigation: Give a notice 15 days prior to the investigation, an increase from 10 days, and notify the investigation outcome in detail