Global minimum corporate tax scheme to take effect in Korea next year
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Korea will implement new global minimum corporate tax rules starting next year, which are designed to reduce tax competition between countries and prevent large multilateral businesses from dodging taxes, the finance ministry said Thursday.
Last year, the country enacted the new rules through the passage by the National Assembly, which call for a minimum corporate tax rate of 15 percent for multinational enterprises with more than 750 million euros ($803 million) in annual revenues.
It is to align with the Organization for Economic Co-operation and Development's Base Erosion and Profit Shifting 2.0 Pillar Two, which was approved by 143 countries.
For the implementation, South Korea's Ministry of Economy and Finance on Thursday put up a pre-legislation notice about the planned revision of the enforcement decrees for the Law on the Coordination of International Tax Affairs, effective on Jan. 1, 2024.
The revised decrees provide more specific guidance on the regulations, and the government plans to promulgate the revision next month following an approval by the Cabinet.
Around 200 Korean companies, including tech giant Samsung Electronics, are expected to be affected by the global agreement.
In 2021, the international community agreed on a landmark deal on the two-pillar solution to the tax challenges arising from the digitalization and the globalization of the economy.
Under another rule, dubbed Pillar 1, for companies with global revenues of more than 20 billion euros and profitability of above 10 percent, 25 percent of profits above 10 percent would be taxed according to a new formula based on where a company's customers are located. (Yonhap)