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[Bills in Focus] Tax breaks, talent sourcing for domestic tech industry

By Korea Herald

Published : June 19, 2023 - 12:05

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Proposed bill: Partial Amendment to the Act on Restriction of Special Taxation

Proposed by Rep. Kim Sang-hoon (People Power Party)

● The South Korean government has recently enhanced tax support for facility investments in semiconductors and other national strategy industries to bolster domestic production capabilities. However, the offered tax credits can only be claimed via corporate tax deductions, which means that businesses that invest in national strategy industries but fail to generate profit cannot benefit from the current system.

This amendment aims to provide incentives for businesses that invest in national strategic technologies but cannot receive tax credits through corporate tax deductions. It allows national strategic technology businesses that did not receive investment tax reductions to partially or wholly receive incentives equivalent to the tax credits by providing cash refunds or allowing the transfer of the incentives to a third party.

Proposed bill: Special Act on the Human Resources Innovation in High-Tech Industries

Proposed by Rep. Yang Kum-hee (People Power Party)

● Despite increasing demand for highly skilled human resources in the rapidly growing domestic high-tech industry, Korea has been facing a persistent shortage of qualified talent, which has been compounded by the outflow of domestic talent and a limited influx of high-quality foreign professionals.

This bill aims to address the talent-supply issue in high-tech industries by fostering collaboration between industrial circles and universities. It introduces policies for the sustainable nurturing of human resources in high-tech industries, supports the stable establishment of a system where high-tech industries self-foster human resources and creates a public sector framework that enables the timely accommodation of evolving business needs.

Pending bill: Partial Amendment to the Subsidy Management Act

Proposed by Rep. Song Eon-seog (People Power Party)

● Given the substantial amount of national finances invested in subsidy projects, external audit policies must be reinforced to ensure the transparent management of national subsidies and prevent any erroneous operations.

This amendment broadens the range of companies subject to the verification of settlement reports and submission of audit and inspection reports by lowering the threshold amount of subsidies of which recipients have the duty to receive verification on their settlement reports -- from 300 million won ($234,000) to 100 million won -- and the duty to submit audit and inspection reports -- from 1 billion won to 300 million won within a fiscal year.

Promulgated bill: Enforcement Decree of the Fair Agency Transactions Act

Competent Ministry: Korea Fair Trade Commission

● The current legal system stipulates that penalty surcharges for suppliers involved in prohibited practices shall be determined by a primary adjustment based on the terms and number of violations followed by a secondary adjustment that considers the nature of the violation and other factors, such as the offender’s voluntary correction or cooperation in the investigation.

This enforcement decree aims to encourage voluntary corrections of violations, such as redressing damages suffered by the aggrieved party, and to enhance the concrete validity of the penalty surcharge calculation by raising the limit of the adjustable penalty surcharge during the secondary adjustment from 50 percent to 70 percent of the penalty surcharge determined in the primary adjustment.

Administrative announcement: Partial Amendment to the Regulations on the Supervision of Retirement Pension

Competent Ministry: Financial Services Commission

● This amendment aims to enhance the flexibility of reserve operations in retirement pensions, rectify unsound operational practices and improve financial stability.

It reinforces the autonomous operation of defined contribution plans and individual retirement pension plans, expands the scope of products eligible for investment up to 100 percent of the reserve fund and raises the permissible investment limit for employees when investing in securities issued by an affiliated company of their employer.

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The Korea Herald republishes a weekly legislative report by local law firm DR & AJU LLC to provide the latest information on bills approved, proposed, pending and set to be promulgated. -- Ed.

For any queries about the bills, contact cr@draju.com.