The Korean economy emerged from the recent global financial crisis and has been maintaining the momentum of economic recovery. Especially, job markets show positive signs adding 400,000 jobs to the economy in 2011. However, such a favorable atmosphere is not fully felt in the real economy. Downgrading of U.S. credit rating, European debt crisis and other external factors are adding uncertainty to the Korean economy. Against this backdrop, the Korean government revised its tax system in 2011 with a view to encouraging job creation and supporting mid and low-income families.
To be more specific, first, we realigned our tax system with a view to boosting job creation and expanding tax incentives for R&D and the services sector. Temporary Tax Credit for Investment, which was relatively less investment-inducing, was replaced by Tax Credit for Job-creating Investment.Second, we reinforced our tax system in an effort to stabilize the livelihood of mid and low-income families. More people will benefit from the EITC. Tax incentives will also be given to ensure price stability in the property markets. Last but not least, our tax reform was also aimed at
enhancing the fairness of the tax system and strengthening fiscal soundness. We created the grounds for imposing gift tax on conglomerates which place an unproportionate number of orders with their affiliates. Inefficient tax exemptions and reductions were also eliminated.
Korean Taxation 2012 covers the tax laws revised by the end of 2011 and correspondingly amended enforcement decrees and rules in early 2012. I hope that this edition will serve as a useful reference for readers to understand the new tax systems in force from 2012.
