For companies with tax bases between 200 million won and 50 billion won, the Korean government has announced plans to reduce the top marginal corporate tax rate to 20 percent in 2012. However, the current corporate tax rate of 22 percent (effective rate of 24.2 percent including resident surtax) will be maintained for companies with a tax base of over 50 billion won. According to the announcement, the new middle tax bracket was proposed to achieve financial stability and improve business benefits for the small and medium sized businesses.
In addition, the Korean government has proposed a slew of other changes and developments for the year 2012, and some of which are include maintaining a top marginal corporate tax rate of 22 percent (effective rate 24.2 percent) and creation of a new middle tax bracket; unification of the VAT return due date of local companies and foreign companies ; maintaining the top marginal individual income tax rate of 35 percent; Tax Information Exchange Agreements to be signed between Korea, British Virgin Island and Costa Rica ; and NTS (National Tax Service ) targets offshore tax evasions
VAT Submission Due Date
The proposal also includes plans for foreign establishments to have the same due date (for example, a branch or a permanent establishment in Korea) for VAT submissions as the local companies, which is within 25 days from each quarter end. Currently, foreign companies are allowed to file the VAT return within 50 days from each quarter end.
The Korean taxation board, the National Tax Service is also said to be actively investigating tax evasion cases against such individuals who have allegedly concealed personal holdings and earnings in offshore accounts. The proposed revisions above will be applied for the fiscal year starting on or after January 1, 2012 provided the proposed tax law modifications are passed by the National Assembly.
When doing business overseas in any emerging market, investors needed to know about the risks involved in investing in their market segment of choice. Incomplete or inaccurate knowledge about foreign markets can be a real hurdle to your prospective business venture. Take the help of a business expert who has good understanding the complexities of taxation be it VAT or tax equalization expat or internal audit compliance. A good service provider would be focused on providing exceptional assistance in aligning your tax profile.
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