'Yuteon' Overseas Workers Receive 50% Income Tax Reduction for 5 Years... Significant Expansion of New Growth Tax Credits

[Asia Economy Reporter Kwangho Lee] Starting this year, outstanding talent returning to Korea from overseas and gaining employment can receive a 50% income tax reduction for five years. Additionally, the scope of recognized new growth engines and original technologies, which offer higher tax credits than general research and development (R&D), will be significantly expanded from 173 to 223 items.

On the 4th, the government held a Cabinet meeting presided over by President Moon Jae-in at the Blue House, where it reviewed and approved 20 items including amendments to the Enforcement Decrees of the Income Tax Act, Corporate Tax Act, Restriction of Special Taxation Act, and Comprehensive Real Estate Tax Act.

Accordingly, starting this year, outstanding Korean talent returning from overseas and gaining employment will receive a 50% income tax reduction for five years. This is intended to support the return of Korean talent stationed abroad.

The amendment to the Enforcement Decree specifies the requirements for outstanding Korean talent. First, candidates must hold a doctoral degree in natural sciences, engineering, or medical fields, have resided abroad for the five years immediately preceding the employment date or the first income tax reduction date, and have at least five years of research or technology development experience at foreign universities or research institutions.

Additionally, there must be no management control relationship with the employing institution. Eligible employment institutions for the income tax reduction are defined as 'corporate-affiliated research institutes or R&D departments' or 'government-funded research institutes, universities, or university-affiliated research institutes.'

Furthermore, tax credits for R&D expenses will be applied to 223 technologies across 12 fields including future-oriented automobiles, artificial intelligence, and advanced materials. This practically includes all of the 100 core items of materials, parts, and equipment designated by the government for focused development as countermeasures against Japan's export regulations.

The R&D tax credit rates for new growth and original technologies are 20-30% for large enterprises, 20-40% for mid-sized enterprises, and 30-40% for small and medium enterprises. In comparison, general R&D tax credit rates are up to 2% for large enterprises, 8-15% for mid-sized enterprises, and 25% for small and medium enterprises.

In addition, the tax refund limit that foreign tourists can receive immediately at duty-free shops after purchase will be increased.

The burden of maintaining driving logs, which were required to expense business-use passenger car costs such as depreciation and fuel expenses, will be reduced.

In adjustment target areas where housing prices have surged, including all of Seoul and Sejong and parts of Gyeonggi Province, temporary two-homeowners who purchase a new home while owning an existing home must sell the existing home within one year to qualify for the one-household one-home capital gains tax exemption benefit.

This content was produced with the assistance of AI translation services.