Posted January. 21, 2005 22:45,
If you are the head of a family of four, including yourself, and a salary earner of three million won per month, then your annual earned income tax for this year will decrease by approximately 150,000 won compared to last year.
On January 21, the Ministry of Finance and Economy (MFE) announced that it has revised the law enforcement ordinance regarding income tax and corporation tax preferences to include such contents and will be introduced beginning this month.
According to the earned income tax table of the revised income tax enforcement ordinance made by the MFE, up until this year, taxes amounting to 111,250 won were withheld monthly from the heads of families of four as earned income tax. Starting this month, however, this tax amount will decrease by 12,660 won a month. Across a years span, this is a 151,920 won tax reduction.
The earned income tax table is the criterion table applied when the withholding agent (the corporation) of earned income collects withholding tax from the monthly salary of employees. The monthly salary includes base wages, bonuses and various allowances while excluding such items as food expenses and maternity benefits.
Director General for Internal Revenue & Tax Affairs Heo Yong-seok explained, As the income tax rate will be reduced by one percent from the previous nine to 36 percent, to eight to 35 percent, we adjusted the tax table.
Those who pay withholding taxes this month according to the previous tax rate will receive returns on the difference next month or at year-end tax adjustments.
Even if monthly salary is identical, the more family members you have, the larger the reduction in taxes is due to the fact that you can receive a base deduction of one million won per family member including the person in question.
For example, even if families salaries are identical at four million won, the amount of monthly earned income taxes could vary: for a family of four, monthly earned income taxes of 249,820 won are levied, 263,990 won in taxes for a family of three, 288,070 won for a family of two, and 295,150 won for an individual (family of one).
On the other hand, MFE has decided to grant research and development (R&D) tax credits when large sized corporations transfer dormant patents without compensation to middle and small sized corporations.
Also, if a corporation that moves into a corporation city invests over 10 billion won, if R&D corporations or corporations operating compound cargo terminals, collaborate collection and delivery centers, or if port facilities invest over five billion won, these corporations receive a tax deduction of 100 percent for the first three years and 50 percent for the next two years on their corporation taxes (or income tax).
While in the past, workers only received deductions from education expenses of formal schooling for the worker in question and their children such as expenses of elementary school, secondary school, high school and college, beginning this year, they can receive deductions from training expenses used to develop the workers occupational skills. However, this is only possible for individuals attending occupational ability development facilities designated by the Minister of Labor or national vocational centers.