South Korea's Ministry of Economy and Finance has issued a release providing an overview of the proposed 2021 Tax Revision Bill, which is to be submitted to the National Assembly no later than 3 September 2021. According to the release, the measures of the bill focus on three key policy areas:

• Promote new industries and support recovery by promoting employment, investment, and consumption;
• Pursue inclusive growth, such as through expanded tax support for low-income earners and small enterprises, and continue with fair taxation; and
• Improve the tax base and taxpayer convenience.

Some of the key measures fall under the first policy area, which are summarized in the release as follows:

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1. Promote new industries and support recovery

Promote new industries

1) Incentivize R&D and facilities investment in national strategy technologies, such as semiconductors, batteries, and vaccines by giving them extra support

2) Expand the R&D investment tax reduction given to new growth engines and core technologies

• Add to the up to 40 percent R&D investment tax cut such technologies as carbon emissions reduction technologies and phase 3 clinical trials for biosimilars
• Work on the careful selection of technologies for the support and extend it to the end of 2024
• Extend the tax payment deferral for the government share of investment in those technologies to the end of 2023

3) Promote the intellectual property market

• Provide tax reduction for the purchases of intellectual properties
• Expand the tax reduction for equipment investment to intellectual properties
• Provide a 50 percent cut for technology transfer for two more years and a 25 percent cut for the lending of technologies

Support job market recovery

1) Promote investment in startups and ventures

• Provide the startup tax reduction of 50-100 percent for three more years until the end of 2024
• Expand the special tax on venture stock options, composed of non-taxable amount, payment deferral and installment plans, to employees, the tax benefit extending to the end of 2024
• Ease requirements for going public through a SPAC deal
• Expand the 10 percent tax reduction given high-tech venture acquisition from a separate purchase of over 50 percent of shares to over 50 percent of share acquisition via multiple purchases throughout the year, the tax cut extending to the end of 2024
• Extend the capital gains tax deferral for all-inclusive exchange of shares to the end of 2023, as well as the capital gains tax deferral given when reinvesting in ventures

2) Support job creation and retention

• Extend the tax reduction to promote hiring until the end of 2024, as well as introduce a temporary cut of 1 million won per new hiring, which will end in 2022
• Ease the requirement for tax reduction of up to 30 percent of labor costs given to companies hiring women who seek reemployment with the term 'reemployment' extending to being hired after two years of job seeking, a change from three years
• Extend the tax reduction for corporate contributions to employees' social security insurance until the end of 2024
• Extend the tax benefits for hiring permanent employees, up to 10 million won per employee, until the end of 2022
• Extend the job retention tax incentives, a 10 percent tax cut for labor cost reduction, until the end of 2023

Boost consumption and support businesses

• Expand the reshoring tax incentives of 100 percent income tax cut for five years to those completing the relocation in less than two years, an increase from one year, until the end of 2024
• Give tax reduction for producing OTT contents
• Provide tax incentives for moving headquarters outside the Seoul metropolitan area, 100 percent income tax cut for seven years and 50 percent cut for three more years
• Provide a special tax payment deferral if the capital gains are invested in new industries, such as in carbon neutrality, and ease the corporate debt ratio rules required after business restructuring if it is jointly done by two companies
• Provide a sales tax cut for the natural gas purchased for hydrogen production
• Extend the sales tax cut of up to 1 million won per hybrid car purchase until the end of 2022
• Expand the customs duties cut for the SME imports of smart manufacturing equipment to up to 70 percent until the end of 2022
• Provide customs duties exemption, according to the Korea-Singapore FTA, for aircraft parts imported from Singapore
• Impose a special separate tax on gains from New Deal Infra Fund for five years from the investment
• Ease beer brewing regulations concerning the use of fruit
• Ease beer manufacturing facilities regulations to promote the use of new technologies