On this day, the National Assembly held a plenary session to process 35 budget-related bills designated by the Speaker of the National Assembly. First, the amendment to the Income Tax Act, which includes the abolition of the financial investment tax scheduled to take effect next year, was passed. Initially, the Democratic Party pushed for the implementation of the financial investment tax, but after party leader Lee Jae-myung agreed to its abolition on the 4th of last month, the direction changed. The taxation of virtual assets was also postponed for two years.
The government's amendment to the Inheritance and Gift Tax Act was rejected. The government aimed to lower the maximum inheritance tax rate from 50% to 40% and eliminate the 20% premium valuation for major shareholders. However, the opposition party has opposed it since the committee stage, citing it as a 'tax cut for the wealthy'. The inheritance tax law has maintained its tax rates and standards for 25 years since 2000, and once again, it has failed to be amended.
Tax reform measures aimed at 'value-up' in the domestic stock market, including the Special Tax Treatment Control Act and the Corporate Tax Act, also failed. Initially, the government planned to provide a 5% tax credit benefit to companies that significantly engaged in dividends and stock buybacks to invigorate the domestic stock market, and to allow shareholders who invested in such companies to receive separate taxation on dividend income. The Democratic Party expressed opposition, arguing that such benefits would be concentrated among asset holders.
The Democratic Party plans to utilize an amendment to the Commercial Act that expands the duty of loyalty of directors to shareholders as a tool for value-up.
The K-Chips Act only passed with the provision to extend the current special treatment sunset period from the end of this year to three years. The ruling and opposition parties agreed to increase the tax credit rate for facility investment and research and development investment by semiconductor companies by 5 percentage points, but ultimately, the government's proposal to postpone the sunset period passed the National Assembly amid the state of emergency.
The expansion of the tax support system for the re-employment of career-disrupted workers also failed. Currently, if a career-disrupted woman is employed by a small business, the company is subject to a unified employment tax credit, and the employee receives a 70% income tax reduction for three years. The government planned to add men to the category of career-disrupted workers and eliminate the existing requirement for 're-employment in the same industry'. However, the amendment to the Special Tax Treatment Act containing these provisions was passed unchanged in its original form.
[Reporters: Ryu Young-wook / Yoo Jun-ho / Kim Jung-seok]
