Government Administration and Home Affairs Committee Passes Special Decentralization Law

The National Assembly passed several bills during its main meeting on its last day of the regular session on December 9, including reform bills for the corporate tax, inheritance tax and gift tax.

According to the corporate tax bill passed that day, the corporate tax rate decreases by two percent, from the existing rate of 15 percent to 13 percent, for corporations with an assessment standard of less than 100 million won, and from 27 percent to 25 percent for corporations with an assessment standard of more than 100 million won.

In addition, a gift tax has been enacted for gift transfers or for the increased value of property, even though they are not among the 14 categories of objects for taxation included in the reform bills for inheritance tax and gift tax, adopting a complete inclusive system of taxation.

Also, the added interest rate for deferred tax payment was decreased from five percent to three percent through an amendment to the national tax collection law. The reform bill for custom law has improved the payment methods and evaluation methods for honest tax payers and decreased the added interest rate from five percent to three percent.

Meanwhile, the Government Administration and Home Affairs Committee approved a “Special Law of Decentralization” that outlines the transfer of a sizable amount of the central government’s authority and work to the local governments and turned over the bill to the main meeting.

This bill clarifies the independent management of the police force by the local governments and the central government in the next five years and urges the adoption of policies on voting, summons and lawsuits by the residents.

However, the committee failed to resolve split opinions as to whether or not the local assembly should have a right to approve national projects as part of the discussion of the residents’ vote system related to the Buan nuclear waste disposal site controversy.

Chairman of the National Assembly Park Gwan-young will hold a joint meeting on December 11 regarding ratification of the Korea-Chile FTA (Free Trade Agreement), which will be discussed during the temporary session of the Assembly, in a meeting that would include representatives from the National Assembly, the government, and farmers’ organizations.

Ho-Won Choi bestiger@donga.com