Tax deduction of up to 10% of corporate investment increase

2024-07-26 22:06:27

[2024년 세법 개정안]

Tax benefits even for short-term part-time work
3-year expanded shareholder return tax credit

ⓒNewsis

The government will increase the corporate tax additional deduction rate for companies that increase investment in business assets to up to 10% starting next year in order to encourage increased corporate investment. Tax benefits that were only available when additional full-time employees were hired will be expanded to include short-term jobs. In order to support the stock market, the government will deduct 5% of corporate tax for companies that increase shareholder returns and also reduce dividend income tax for individual shareholders of such companies.

The tax law revision bill released by the Ministry of Strategy and Finance on the 25th includes a number of support measures to increase economic dynamism. A representative example is the increased deduction rate for the integrated investment tax credit. This is a system that provides additional corporate tax deduction benefits for the portion where the investment amount for business tangible assets exceeds the average annual investment amount for the previous three years. Previously, a 4% corporate tax deduction was given for additional investment in national strategic technology commercialization facilities, and a 3% corporate tax deduction was given for additional investment in general facilities or new growth and original technology commercialization facilities, but this will be increased to 10%.

In addition, the cap on the inheritance tax deduction for businesses that are established in local opportunity development special zones or relocated from over-congested areas in the metropolitan area to opportunity development special zones has been eliminated. Currently, when owners of small and medium-sized businesses who have managed them for more than 10 years pass on their companies, they can deduct up to 60 billion won in inheritance tax, but they will not have to pay any inheritance tax on the assets subject to the inheritance tax deduction. The sales cap for medium-sized businesses, which was uniform at 300 billion won, will be adjusted to three times the standard for small and medium-sized businesses in consideration of the characteristics of each industry. The sales standard for the tax deduction for research and development expenses will be raised to five times that of small and medium-sized businesses. The period for granting tax benefits to small and medium-sized businesses that have grown into medium-sized businesses will be extended from three to five years.

The integrated employment tax credit system, which reduces corporate tax and income tax when companies or self-employed individuals increase their number of employees, will be reorganized. If labor costs for contract workers with less than one year of service and ultra-short-term workers working less than 15 hours a week increase, they will receive tax credit benefits. However, daily workers are excluded. Previously, tax credits were only given when regular workers working more than 60 hours a month and regular workers with contracts of more than one year increased.

The support period was reduced from a maximum of 3 years to 2 years, but the deduction amount was increased. Regular workers will receive a tax deduction of up to 24 million won per year (previously a maximum of 15.5 million won) per additional person. Contract workers of less than 1 year and ultra-short-term workers will receive a deduction of 10-40% of the increase in personnel expenses for 2 years.

A corporate tax credit system for listed companies that expand shareholder returns will be newly introduced for a limited period of three years starting next year. This is to eliminate the ‘Korea discount’ (undervaluation of the Korean stock market). Companies that have implemented value-up voluntary disclosure and expanded shareholder returns through dividends and treasury stock cancellation are eligible for the credit. A 5% corporate tax credit will be applied to the portion where the shareholder return amount exceeds 5% of the average for the previous three years. Individual shareholders of the companies will be separately taxed on a portion of the dividends they receive for three years starting in 2026.

Sejong = Reporter Jeong Soon-gu [email protected]

#Tax law amendment#Tax benefits

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2024-07-26 22:06:27