01 July 2015The South Korean Ministry of Strategy and Finance has announced its economic 
polici...

1. Tax-News.com: South Korea Specifies Its Tax Policies for
2nd Half 2015
01 July 2015
The South Korean Ministry of Strategy and Finance has announced its economic
policies for the second half of this year, including tax breaks and incentives
to increase support to small- and medium-sized enterprises (SMEs), encourage
a rise in young adult employment, and boost outgoing overseas investment.
The Ministry is hoping that a focus on stimulating the country's economy will
halt the current fall in its growth rate, having had to reduce its initial forecast
of a 3.8 percent rise in gross domestic product to 3.1 percent. The recovery
in the economy, which was already weak, has suffered further from the recent
outbreak of Middle East Respiratory Syndrome.
To promote young adult employment, the Government will offer tax incentives to companies,
particularly SMEs, that increase the number of young adults they employ, and give businesses tax
credits for changing temporary positions to permanent ones, in addition to the existing
tax credits they receive for increasing employee wages.
Gift and inheritance tax incentives given to startup SMEs will also be given
to existing SMEs, and the ceiling for low tax rates provided to SMEs will
be raised. The 50 percent tax cut provided to certain startup businesses for
the first five years after making a profit will be extended.

2. There will be additional support for sole traders.
The Government
will encourage "trying again after failure" by
providing financial
support for starting new businesses and extending
tax deferral until 2018.
In addition, tax incentives will encourage savings
and investment. A tax-exempt
individual savings account will be introduced, and fund investors will in the future pay taxes only
once when they sell their investments (thereby avoiding
the payment of taxes even when they lose money). Tax incentives will be added
for high-yield bond investments, while those intended to encourage venture capital
investment will be revisited.
Finally, the Ministry announced that it intends to help individual investors
to diversify their assets into foreign holdings to improve their returns. It
is hoped that when profits from such investments are repatriated, it will also
help the local economy.
Taxes on foreign investments and foreign exchange-related regulations will
therefore be improved. For example, there will be tax exemptions for funds investing
in foreign stocks, not only on their earnings but also on any foreign exchange
profits.
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