The government of the Republic of Korea has introduced a stimulus package, which includes tax incentives that are intended to give the sagging economy a much-needed boost. The package was announced on 14 July, after the National Assembly ratified a supplementary budget.
The Korean Ministry of Finance and Economy will increase the exemption rate for capital investment by companies from 10% to 15%, beginning on July 1 2003 until December 31 2003. Rap Choi, tax partner at Kim & Chang in Seoul, said: "Companies should consider bringing forward capital investment plans to fall within the increased exemption period."
The government also revised the tax exemption regulations to increase foreign investments and the import of technology into Korea. As a result, 75 new types of business will qualify for a 100% exemption from corporate income tax for the first seven years and a 50% exemption for the subsequent three years.
There are also new tax measures regarding personal income tax for company CEOs who play key roles in setting up regional headquarters in Korea and changes to foreign investment promotion regulations. "Taken as a whole, these tax measures could represent a large saving for some companies," said Yong Hae Cho, a tax partner with Deloitte & Touche in Seoul.
