Tax Support for Export-Oriented SMEs and Mid-Sized Firms with Falling Sales... Corporate Tax Payment Deadline Extended by Three Months

1.18 Million Corporations Liable for Corporate Tax... Up 30,000 from Previous Year
Tax Support for 100,000 Corporations... "Expected Liquidity Boost of About 3 Trillion Won"

The National Tax Service has decided to grant, ex officio, a three-month extension of the corporate tax payment deadline to prevent small and medium-sized enterprises and mid-sized companies from falling into a management crisis due to temporary cash-flow difficulties amid tough economic conditions.

On the 23rd, the National Tax Service announced that it will ex officio extend by three months the corporate tax payment deadline from March 31 to June 30 for: export-oriented small and medium-sized enterprises and mid-sized companies whose sales have declined; small and medium-sized enterprises and mid-sized companies engaged in the petrochemical, steel, and construction industries that are struggling due to oversupply and an economic downturn; and small and medium-sized enterprises and mid-sized companies located in regions designated for preemptive responses to employment and industrial crises. In addition, for corporations with tax refunds, the statutory refund deadline of April 30 will be brought forward by 20 days, and refunds will be paid promptly by April 10.

An official from the National Tax Service said, "This reflects the difficulties raised during on-site meetings held since January this year at locations such as the Gimhae Chamber of Commerce and Industry, the Pohang Steel Industrial Complex, the Yeosu Petrochemical Complex, and the Daedeok Innopolis," adding, "Through this tax support, we expect to provide liquidity support of about 3 trillion won to around 100,000 corporations."

For companies eligible for tax support, the payment deadline for installment payments of tax will also be extended, so corporations whose tax due exceeds 10 million won may pay the installment amount by July 31 (by September 1 for small and medium-sized enterprises). However, even if the payment deadline is extended, corporate tax returns must still be filed by March 31. Corporations that still face cash-flow difficulties and cannot pay by June 30 may apply for an additional extension of the payment deadline for up to six more months, until December 31.

◆ Corporations with a December year-end must file and pay corporate tax by March 31 = Corporations whose business year ended on December 31 last year must file and pay their corporate tax by March 31. The current filing population consists of 1.18 million entities, including for-profit corporations, non-profit corporations with business income, and foreign corporations with domestic-source income, an increase of 30,000 compared with the previous year.

For corporations with a December year-end, the general filing and payment deadline is March 31, but corporations subject to consolidated taxation that file corporate tax returns by treating parent and subsidiary as a single tax unit, and corporations subject to the faithful reporting confirmation requirement, may file and pay by April 30.

Corporate tax due must also be paid by March 31, in line with the filing deadline. However, if the tax due exceeds 10 million won, it may be paid in installments. If the tax due is 20 million won or less, 10 million won must be paid by March 31 and the remaining amount by April 30 (by June 1 for small and medium-sized enterprises). If the tax due exceeds 20 million won, 50% must be paid by March 31 and the remaining amount by April 30 (by June 1 for small and medium-sized enterprises).

◆ Attention required to changes in the revised tax law = Under this filing, the tax rate on small corporations whose main business is real estate leasing and that have fewer than five full-time employees has been raised, and a 19% tax rate (previously 9%) will apply to the tax base bracket of 200 million won or less. In addition, to receive the integrated employment tax credit, corporations must submit a statement of full-time employees, and the startup small and medium-sized enterprise tax reduction and the integrated employment tax credit cannot be claimed simultaneously, so care is needed when filing.

When corporate business promotion expenses are paid with a corporate card at traditional markets, previously an additional deduction was allowed within 10% of the deductible limit, but this limit ratio has now been raised to 20%.

Shim Ukki, Director General of the Corporate Taxation Bureau at the National Tax Service, said, "To strengthen verification of the private use of corporate funds, we plan to conduct strict reviews of corporations that file non-compliant returns by closely analyzing whether the post-filing assistance data have been properly reflected," and added, "Please keep in mind that 'faithful reporting is the best tax-saving strategy' and faithfully file your returns after checking the filing assistance data provided by the National Tax Service."