Providing Excellence In Client Services
September 2012
Newsletter
Bi-monthly Newsletter of Horwath Choongjung LLC
Contents
This newsletter is prepared and issued by Horwath Choongjung LLC
(Choongjung Accounting Corp.) on a bi-monthly basis and intended to
provide foreign investors with an update on tax law changes in Korea
2012 Tax Law Changes
and other related subjects of special interests to foreign investors.
The information provided herein should not form a basis of any
Revision of 'Quick Tax
Table' to reduce
withholding taxes
Due date for submission
of supporting documents
for early VAT refund in the
case of electronic VAT
return filing
New Tax Rulings
Application of the rules on
“denial of unfair
transactions” to the
individual income tax
payment made on behalf
of an employee
decision as to a particular course of action, nor should it be relied upon
as a substitute for a detailed advice in individual cases.
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Please contact any of the following individuals with any inquiries or
comments.
Contacts: H.S. Kim or G.S. Sim at Tax&BPO Services of Horwath
Choongjung [Tel: (82)(2) 316-6600, Fax: (82)(2) 775-5885, E-mail:
post@crowehorwath.co.kr]
(You may find this newsletter and other items of interest at
http://www.crowehorwath.co.kr)
Compensations paid to the
employees as a part of the
conversion of Severance
Payment Plan into Defined
Contribution Retirement
Pension Plan fall under
wages and salaries under
the Labor Standards Act
Audit l Tax l Advisory
www.crowehorwath.co.kr
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September 2012
2012 Tax Law
Changes
1. Revision of 'Quick Tax Table' (monthly withholding tax table) to reduce
withholding taxes
The government revised ‘Quick Tax Table’ to cut down monthly payroll withholding
taxes by approximately 10% to encourage consumer spending by increasing the
amount of disposable income of employees.
The revised 'Quick Tax Table' is applied to the salaries and wages paid from
September 2012, and may also be applicable to the withholding taxes already
withheld from January through August 2012.
The over-withheld tax amounts based on the revised ‘Quick Tax Table’ compared to
the previous ‘Quick Tax Table’ during the period of January through August 2012 may
be deducted from the taxes withheld (or to be withheld) starting September 2012 and
onward.
If an employer withheld payroll taxes in September according to the previous 'Quick
Tax Table' and it is before payment due date of October 10, 2012, the taxes withheld
may be refunded to employees up to withheld tax amounts in September 2012 and
remainder of the over-withheld tax amounts may be deducted from the withholding
taxes after September 2012.
Employers should first refund, when necessary, the payroll withholding taxes to the
employees before payment to the tax office and then offset the taxes refunded against
the taxes payable to the tax office in the future.
2. Due date for submission of supporting documents for early VAT refund
in the case of electronic VAT return filing (NTS Notice No. 2012-50)
This NTS Notice is to stipulate the due date for submission of supporting documents
for early VAT tax refund by a taxpayer in the case of electronic VAT return filing under
Article 5-2, Paragraph 3 of the Basic Law on National Taxes (“BLNT”) and Article 1-3,
Paragraph 3 of the Presidential Decree (“PD”) of BLNT.
When a taxpayer who files VAT return electronically under Article 5-2, Paragraph 2 of
the BLNT applies for early VAT refund by the application of zero-rate VAT, the
taxpayer should submit the zero-rate related documents stipulated under Article 64,
Audit l Tax l Advisory
www.crowehorwath.co.kr
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September 2012
Paragraph 3 of the PD of the VAT law to the district tax office by the filing due date
under the VAT law.
New Tax
Rulings
This Notice became effective from August 24, 2012.
1. Application of the rules on “denial of unfair transactions” to the
individual income tax payment made on behalf of an employee ( Beopin345, 2012.5.31)
In case a company made individual income tax payment on behalf of its employee
and recorded it in a suspense payment account on the balance sheet, such payment
shall be regarded as a loan to the employee, which is subject to Article 52 (Denial of
Unfair Transactions) of the Corporate Tax Law (“CTL”) unless it falls under one of
exceptions prescribed in Article 44 of the Enforcement Regulations of the CTL.
2. Compensations paid to the employees as a part of the conversion of
Severance Payment Plan (progressive system) into Defined Contribution
Retirement Pension Plan fall under wages and salaries income
(Woncheon-235, 2012.04.30)
When an employer establishes internal regulations to pay compensations to its
employees as a part of the transition of Severance Payment Plan (progressive
system) to Defined Contribution Retirement Pension Plan without payment of interim
severance pay under the Employee Retirement Benefit Security Law, and the
employer pays compensations (including amounts paid to retirement pension account
instead of paid- in cash) to the employees as of the transition date, the compensations
shall fall under wages and salaries income under Article 20 of the Individual Income
Tax Law.
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Horwath Choongjung LLC
Member Crowe Horwath International
PMAA Jaram Building, 16th Floor, 566 Dohwa-dong,
Mapo-gu, Seoul 121-815, Korea
TEL: (82)(2) 316-6600 FAX: (82)(2) 775-5885 E-mail: post@crowehorwath.co.kr
Website: http://www.crowehorwath.co.kr
Horwath Choongjung LLC is a member of Crowe Horwath International, a Swiss association. Each member firm of Crowe Horwath International is a
separate and independent legal entity. Horwath Choongjung LLC and its affiliates are not responsible or liable for any acts or omissions of Crowe Horwath
International or any other member of Crowe Horwath International and specifically disclaim any and all responsibility or liability for acts or omissions of
Crowe Horwath International or any other Crowe Horwath International member.
Audit l Tax l Advisory
www.crowehorwath.co.kr
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