■ Objective Tax Law I

Chapter 1 Corporate Tax Law
Section 1 General Provisions
Section 2 Tax Adjustment and Income Disposition (Ⅰ)
Section 3 Profit and loss and non-profit
Section 4. Loss and non-deduction of loss
Section 5. Timing of attribution of profits and losses
Section 6 Valuation of Assets and Liabilities
Section 7 Depreciation
Section 8 Reserves and Reserve Funds
Section 9 Denial of Unfair Act Calculation
Section 10 Tax Adjustment and Income Disposition (II)
Section 11 Tax Base
Section 12 Tax Calculation
Section 13 Special provisions for mergers and divisions
Section 14 Corporate Tax Procedures
Section 15 Other corporate taxes
Section 16 Consolidated Tax Payment Method

Chapter 2 National Tax Basic Act
Section 1 General Provisions
Section 2 Taxation and Application of Tax Laws
Section 3 Tax obligations
Section 4 Tax Claims Preservation System
Section 5 Tax
Section 6 Tax refunds and tax refund surcharges
Section 7 Tax Relief System
Section 8 Taxpayer Rights
Section 9 Supplementary Provisions

Chapter 3 Local Tax Law

■ Objective Tax Law II

Chapter 4 Income Tax Act
Section 1 General Provisions
Section 2 Interest and Dividend Income
Section 3 Business Income
Section 4: Earned income, pension income, and other income
Section 5 Special provisions for calculating income and tax amounts
Section 6 Comprehensive Income Deduction
Section 7 Comprehensive Income Tax Calculation
Section 8 Retirement Income Tax
Section 9 Capital Gains Tax
Section 10 Procedural provisions for income tax and provisions for foreign corporations and non-residents
Section 11 Special Taxation Provisions for Partnership Enterprises

Chapter 5 Value Added Tax Act
Section 1 General Provisions
Section 2 Taxable Transactions
Section 3. Small business tax rates and tax exemptions
Section 4 Tax base and sales tax amount
Section 5 Purchase tax and deductible tax
Section 6 Special provisions for tax calculation for taxable and tax-exempt business operators
Section 7 Tax Invoices and Procedural Regulations
Section 8 Simplified Taxation

Chapter 6 Inheritance Tax and Gift Tax Act
Section 1. Taxpayers of Inheritance Tax
Section 2 Inheritance Tax Calculation Structure
Section 3 Gift tax payers and calculation structure
Section 4 Valuation of Property
Section 5 Procedural provisions for inheritance tax and gift tax

■ Answer book

[preface]

Since its publication in 1990, this book has been published in its 36th edition this year.
We would like to express our deepest gratitude to our readers for their support and encouragement, which has enabled us to continue publishing this book.

The main contents of the revised tax law for 2025 are as follows.

Major amendments to corporate tax

ㆍThe corporate tax base brackets for corporations whose main business is real estate leasing will be consolidated into the "KRW 200 million or less" and "over KRW 200 million and up to KRW 20 billion" brackets, and a 19% tax rate will be applied to this bracket.
ㆍDomestic corporations belonging to a public disclosure-targeting enterprise group under the Monopoly Regulation and Fair Trade Act shall calculate the interim tax amount or consolidated interim tax amount based on the corporate tax amount for the relevant interim tax payment period.
ㆍIn cases where a corporation that was a small or medium-sized enterprise in the fiscal year immediately preceding the consolidated fiscal year is no longer subject to the provisions regarding small or medium-sized enterprises due to the application of the consolidated tax payment system, the grace period for recognizing it as a small or medium-sized enterprise even after the initial application of the consolidated tax payment system is extended from 3 years to 5 years.
ㆍAmong the public charges not deductible from expenses, the definition has been revised to “public charges imposed due to non-performance of obligations under laws or violation of prohibitions, restrictions, etc.”, clarifying that even public charges imposed as a “sanction” for violations are not deductible.
ㆍThe amount of discount given to employees for goods and services produced and supplied by a corporation is included in the scope of revenue and expenses, and if an employee pays an amount equivalent to the discount received from an affiliate, that amount is included in expenses (amended enforcement ordinance).
ㆍSupplementation of the criteria for distribution of joint expenses: In cases where non-contributing joint business operators, etc. do not have sales in the previous fiscal year, distribution of joint expenses is prohibited based on sales in the previous fiscal year, and provisions for calculating deductions for joint expenses of jointly owned assets are established (amendment to the enforcement ordinance and enforcement regulations).

Major Amendments to Income Tax

ㆍAbolition of Financial Investment Income Tax: To promote capital market development and protect domestic investors, the financial investment income tax will be abolished, and the current capital gains tax system for stocks, etc. will be maintained.
ㆍProfits from piecemeal investment products are added to the scope of dividend income (effective from July 1, 2025).
ㆍDividends received after deducting a 3% revaluation reserve (including the amount included in the merger profit or division profit in the event of a qualified merger/division) from dividend income excluding the dividend gross-up amount, dividends due to paid-in capital reduction, and profits from fragmented investment products (effective from July 1, 2025) are added.
ㆍRegulations on Employee Discount Amounts as Earned Income and Tax Exemption: Profits earned by executives or employees by providing goods or services produced or supplied by the company or its affiliates at a discount are defined as earned income. Of these profits, the amount that is not permitted for resale and is intended for consumption by the executives or employees (the greater of 20% of the market price and KRW 2.4 million per year) is exempt from taxation.
ㆍTax exemption for corporate childbirth support grants: The full amount of childbirth support paid by a company to an employee or his/her spouse in up to two installments within two years after the child's birth is exempt from tax.
ㆍExpansion of the child tax credit amount: The tax credit amount will be increased by KRW 100,000 per child or grandchild aged 8 or older of a resident with comprehensive income. This means that a resident with one child or grandchild can deduct KRW 250,000 per year from the comprehensive income tax calculation amount, KRW 550,000 per year for two children or grandchildren, and KRW 950,000 per year for three children or grandchildren.
ㆍExpansion of the scope of withholding tax for foreign professional athletes: If a resident foreign professional athlete provides services and receives income pursuant to a contract with a professional sports team, a withholding tax rate of 20% will be applied to the income, regardless of the contract period.
ㆍTaxation deferral for virtual assets: The enforcement date of taxation regulations for virtual assets has been deferred by two years, from January 1, 2025, to January 1, 2027.
ㆍWhen a business operator provides a discount to employees, the discount amount is included in the total income and necessary expenses of the business operator or affiliate related to the income (amended enforcement ordinance).
ㆍAdd common stocks received as a gift within one year prior to the date of transfer to the assets subject to carryover tax on capital gains tax.
ㆍThe deadline for temporary exemption from capital gains tax on multiple homeowners has been extended by one year from May 9, 2025, to May 9, 2026 (amended enforcement ordinance).

Major amendments to value-added tax

ㆍAdded animal blood supplies prepared for therapeutic, preventive, or diagnostic purposes to the list of items exempt from value-added tax.
ㆍEstablishment of a system of ad hoc assessment: In cases where a business does not supply goods or services during the taxable period but issues a tax invoice or credit card sales receipt, the head of the tax office in charge of the place of tax payment may assess value-added tax on the business by setting the period from the start of the relevant taxable period to the date on which the reason for ad hoc assessment arises as the ad hoc assessment period.
ㆍIncreased surcharge rate for undercover business operators: The surcharge rate for general taxpayers who are undercover business operators is increased from '1%' to '2%' of the total supply price from the date of commencement of business under another person's name to the day immediately preceding the date on which the business is confirmed to be actually being conducted. The surcharge rate for simplified taxpayers who are undercover business operators is increased from '0.5%' to '1%.'

Major amendments to the National Tax Basic Act

ㆍIf a tax credit is carried forward and deducted in a taxable period after the expiration of the statutory statute of limitations for assessment, the statutory statutory statutory period for assessment of income tax or corporate tax in the taxable period in which the carried forward tax credit occurred shall be one year from the statutory reporting deadline for the taxable period in which the tax credit was deducted.
ㆍIf the assets held by a corporation are insufficient to cover national taxes, etc. to be paid by the corporation, members of an agricultural cooperative corporation or an English cooperative corporation are added to the scope of investors who bear secondary tax obligations.
ㆍWhen a tax official conducts a tax investigation, he/she must notify the subject of the investigation, the investigation period, and the reason for the investigation 15 days prior to the start of the investigation, but must provide a prior notice 20 days prior. However, in the case of a reinvestigation based on a request for examination or an objection, he/she must provide a prior notice 7 days prior.

Major Amendments to the Inheritance Tax and Gift Tax Act

ㆍRegarding the business inheritance tax deduction, employee housing and student loans have been added to the scope of corporate business assets, and non-business land has been excluded from the scope of individual business owners' business assets.
Adding businesses operating ‘century-old stores’ to the list of businesses eligible for the family business inheritance tax deduction (amendment to the enforcement ordinance).
ㆍAdded the right to purchase with a supply price of 1 billion won or less in the supply contract to the range where the appraised value of one appraisal agency is recognized as the market price (amendment to the enforcement ordinance).

Other major revisions

ㆍEstablishment of a new marriage tax credit (KRW 500,000) (Tax Special Exceptions and Restrictions Act)
ㆍRationalization of the scope of small and medium-sized enterprises: To enhance tax equity between individuals and corporations, real estate leasing businesses and small corporations subject to verification of honest reporting are excluded from the scope of small and medium-sized enterprises under the Special Tax Exceptions and Limitations Act (Amendment to the Enforcement Decree of the Special Tax Exceptions and Limitations Act).

I received help from many people around me in publishing this book.
On behalf of this publication, I would like to express my deepest gratitude and deepest gratitude to President Kim Su-jin and the editorial staff of Segyeongsa, who have devoted their utmost efforts to editing day and night.
I would like to express my gratitude to accountant Hyunwoo Lee, who stayed up all night to proofread the manuscript despite his busy schedule.

I also extend my apologies to my family, with whom I could not spend time, through the publication of this book.
We promise to humbly accept your advice on this book and continue to strive for even greater improvement.

January 19, 2025
Co-authors Lee Cheol-jae and Joo Min-gyu