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This is part of the 2019 tax revision's enforcement ordinances unveiled Monday by the Ministry of Economy and Finance. The new measures are to take effect in February.
Under the change, holders of, or those who have de facto control over an overseas financial account with 500 million won ($446,000) or more in countries with which Korea has no tax treaties, will no longer be able to avoid regular tax filings.
This is a strengthened measure to the status quo whereby only corporate entities in Korea that have such accounts are required to file the report, a reason the “real owners” have long been exempt from the scrutiny of tax authorities.
Private individuals who fail to make the filing will be fined up to 5 million won. The fine will be 10 million won for corporate entities.
“The revision seeks to strengthen government monitoring to better identify taxable assets in a fair manner,” a ministry official said.
“The money in overseas accounts should be equally subject to tax duty as those in Korea. We are trying to close the loophole long exploited by owners of overseas assets."
The ministry will identify an individual as an owner of such an account if part of the fund is held by their immediate family members, or executives or employees at a firm of which they are owner.
This reflects criticism over a long-held practice whereby financial assets are held under “borrowed names” mostly identified as their “close acquaintances.”
Up to 40 percent tax deduction will be granted to small- and medium-sized enterprises (SMEs) for research and development (R&D) costs spent on blockchain technologies, wearable robots, electric vehicles, efficient charging and fine dust reduction.
Between 20 percent to 30 percent such tax benefits will be granted to large conglomerates.
The measure is part of efforts to boost innovation-led growth and the Fourth Industrial Revolution, a signature overnment policy led by Moon Jae-in administration that seeks to identify new growth engines.
The revision also stipulates that those who profit from derivatives investments will no longer be able to avoid capital gains tax.
The gains made through domestic and overseas investment will be equally subject to tax duty here, the ministry added.
Under the revision, owners of a single home will be able to avoid the heavier capital gains tax only when they live over two years there.
Also, those who made income by renting property will be exempt from the heavy tax only for the proceeds made from the first home they lived in over two years.