Special Cases Applied to Innovation City and Sejong City
Provincial Government New Towns Not Eligible Due to Fairness Issues
"Tax Payment Deferral, Corporate Tax Reduction"
Kim Hyeong-dong, a member of the People Power Party representing Andong and Yecheon, on the 12th, took the lead in proposing the "Partial Amendment to the Restriction of Special Taxation Act," which includes measures to apply capital gains tax deferral and corporate tax reduction benefits to public institutions relocating to the provincial government new town in Andong and Yecheon, Gyeongbuk Province, to attract public institutions to the new provincial government town.
According to the current Restriction of Special Taxation Act, when a public institution relocates its headquarters from the metropolitan area to innovation cities or Sejong Special Self-Governing City, it can receive capital gains tax deferral and corporate tax reduction benefits. However, when a public institution relocates its headquarters from the metropolitan area to the provincial government new town under the "Special Act on Construction and Support of Cities for Provincial Government Relocation," it does not receive these special benefits, causing an issue of fairness.
Therefore, there have been continuous calls to expand the benefits of capital gains tax deferral and corporate tax reduction for the relocation of public institution headquarters to include the Gyeongbuk provincial government new town, creating a tax environment that enables the relocation of metropolitan public institution headquarters.
In response, Kim Hyeong-dong of the People Power Party took the lead in proposing a partial amendment to the Restriction of Special Taxation Act to apply corporate tax reduction benefits to public institutions relocating their headquarters to the provincial government new town.
The amendment extends the sunset date of the special tax benefits for public institutions relocating their headquarters to innovation cities by two years until December 31, 2025, and includes provisions to apply these special benefits to public institutions relocating their headquarters to the provincial government new town to promote national balanced development and foster regional growth hubs.
Currently, the Yoon Seok-yeol administration is promoting the second phase of public institution relocation to local areas and is known to plan to announce the second phase of public institution relocation after the 22nd general election next year.
Kim Hyeong-dong said, “If tax benefits for the relocation of metropolitan public institution headquarters to the provincial government new town are established, it is expected to boost the new attraction of public institutions located in the provincial government new town in Andong and Yecheon,” adding, “I will take the lead in strengthening the self-sufficient functions of the provincial government new town and revitalizing the economy of Andong and Yecheon through attracting companies and public institutions to the provincial government new town.”
Kim Hyeong-dong has consecutively proposed the "Partial Amendment to the National Balanced Development Act" (designating the provincial government new town as an innovation city), the "Complete Amendment to the Provincial Government Relocation Act" (strengthening special provisions for the provincial government new town to the level of innovation cities), and the "Partial Amendment to the Restriction of Special Taxation Act" (providing income and corporate tax reductions for companies located in the provincial government new town) for the development of the provincial government new town.
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