South Korea’s sunset refundable tax credit for credit card spending for salary workers due to expire by the end of this year would be extended for another three years as part of tax revisions aimed to stimulate corporate and individual spending, according to the government Thursday.

Tax revisions for the corporate sector have been designed to encourage companies to restructure and invest in new growth industries, as well as venture enterprises and innovations, the government said.

The set of proposed revisions in 13 tax codes were approved in a cabinet meeting and will be submitted to the National Assembly for review and approval.

The refundable amount in credit card spending will be reduced for those earning more than 120 million won ($106,572) a year from next year and the rest from 2019, and subsides for low-income families and tax deductions for every second and third child will be increased.

The government said it worked on the individual and corporate tax provisions to excite new growth, aid livelihood, enhance more fairness, and bolster tax revenue through rationalization.

Along with credit-card deduction for salary-workers, the government proposed to widen tax credits for monthly rents to ease housing cost. Income tax on landowners of residential home valuing 20 million won or less would be exempted from levy until 2018. The refund of 100,000 won in gasoline tax for small car drivers also would be granted until 2018.

On the corporate front, companies in 11 future industries including vehicle and artificial intelligence would see up to 30 percent deduction in their tax rates. Capital investment for production in the new growth sector would also be deducted with 10 percent. Acquisition of new technology would be granted a 5 percent deduction for large companies and up to 10 percent for smaller companies. Tax credit for exercise of option in venture stocks would be expanded.

To bolster tax revenue and ensure more fairness in taxation, the exclusive uniform income tax rate of 17 percent for foreign residential workers would be upped to 19 percent. The preferential tax rate aimed to draw foreign talents is valid until Dec. 31 2019 for five years. Those hired before Jan. 1 2014 would enjoy the benefit until the end of 2018.

From 2018, a large shareholder would be levied with 20 percent transfer tax if becoming a resident of another state by assuming he or she had sold off the stockholding. If service fees for a technology used overseas are paid in Korea, they will be subject to a 3 percent levy.

Single tax refund for foreign nationals for purchases in Korea would be upped to 5 million won from 2 million won.

By Kim Gyu-sik and Yong Hwan-jin

[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]