When a corporation’s listed stocks are traded and the share of the largest shareholder of the listed stocks changes by more than 1%, corporate tax is subject to a premium on the capital gains generated from the trade. The interest rate on refunds added when paying excessive taxes was lowered to 1.2% per year, reflecting the trend of market interest rates.
On the 9th, the Ministry of Strategy and Finance announced an amendment to the enforcement regulations following the revised tax law in 2020.
First of all, the method of calculating the market price of listed stocks is contained in the Enforcement Rules of the Corporate Tax Act. In the case of intraday or overtime competitive bulk trading, bulk trading, basket trading, etc., the closing price on the trading day is considered as the market price of the listed stock.
If the largest shareholder changes or the share of the largest shareholder fluctuates by more than 1%, it is considered as a’transaction involving management right’ and a 20% premium on corporate tax imposed on the capital gains from the sale of the corresponding stocks. An official from the Ministry of Information and Transportation explained, “We have prepared standards in consideration of the premium provisions stipulated in the Capital Market Act, Income Tax Act, Inheritance Tax and Gift Tax Act, etc.”
The rate of interest applied to refunds of national taxes and tariffs decreased from 1.8% per annum to 1.2%. This is a measure that reflects the lower market interest rate. Accordingly, the amount of tax paid later is expected to be reduced by the amount of the interest rate cut.
The interest rate used to calculate the deemed rent when receiving a rental deposit has also decreased to 1.2%. This allows rental business owners to pay less tax than before when reporting income tax and value-added tax.
The number of exemptions from the stock exchange tax on the transfer of stocks by market makers has been drastically reduced. Stock exchange tax is imposed on stocks with a market capitalization of KRW 1 trillion or more or with a turnover rate of 50% or more by securities market and KOSDAQ market. The stocks with a market capitalization of over KRW 1 trillion are 170 in the securities market, including Samsung Electronics and SK Hynix, and 47 in the KOSDAQ, including Celltrion Health.
Among the integrated investment tax credits, system semiconductor, carbon dioxide reduction, and solar cell-related facilities were added to the new growth technology commercialization facilities that receive a higher basic deduction rate than general investment. In principle, the application of the integrated investment tax credit for buildings and vehicles is excluded, but construction machinery and equipment for the construction industry and lodging facilities for the tourism and lodging industry are considered essential assets, and the details that are deducted when investing are also included in the enforcement regulations of the Restriction of Special Taxation Act.
With the revision of the Enforcement Regulations of the Income Tax Act, employees of leisure and tourism services, telemarketers, and simple labor jobs related to housekeeping are also exempt from tax on nighttime earned income. The tax exemption standards for crew members have been raised.
Reporter Kang Jin-kyu [email protected]
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