Korea vows favorable taxation for US, foreign firms

South Korea's National Tax Service (NTS) and the American Chamber of Commerce in Korea (AMCHAM) held a meeting on Sept. 16 to discuss favorable tax policies for foreign companies.

It was the first such meeting in seven years between the tax authority and the US business chamber in Korea.

“Through fair taxation and world-class tax service, Korea will forge an investment environment where foreign companies can operate with little tax burden,” NTS Commissioner Kim Chang-ki told the AMCHAM delegation, which included Chairman and CEO James Kim and Chairman of Board of Governors Henry An.

The NTS Commissioner also asked AMCHAM to act as a communication channel between foreign companies and the government.

He also explained the NTS's recent tax reform plans for foreign companies, such as a cut in the top corporate tax rate from 25% to 22%, an extension of a 19% flat income tax rate for foreigners from the current five years to their entire employment period, as well as an extension of the reduced tax period for foreign technicians.

The chamber's delegation raised some concerns that foreign companies have with tax investigations in Korea.

They also suggested that Korea permit substitute papers for proof of residence when applying for tax exemptions on interest income and capital gains from foreigners’ investment in Korea treasury bonds.

The tax authority said it will review AMCHAM’s suggestions and reinforce communications with US-based and other foreign firms in Korea, said the NTS Commissioner.

Total foreign direct investment from the US to Korea reached $2.95 billion in the first half of 2022, up 39.5% from the same period in 2021, according to Korea's Ministry of Trade, Industry and Energy.

Write to Byung-Uk Do at dodo@hankyung.com
Jihyun Kim edited this article.