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Newsletter | July 2016, Issue 2
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TAX
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Ministry of Strategy and Finance Announces the 2016 Amendments to the Ministerial Decree of Corporate Income Tax Law
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On March 7, 2016, the Ministry of Strategy and Finance (“MOSF”) announced the amendments to the Ministerial Decree of the Corporate Income Tax Law.
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Summarized below are the key items:
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1. Example of company automobile use for work
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New rules for deducting company’s automobile expenses have been adopted, and will take effect for fiscal years commencing on or after January 1, 2016.
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If an employee of a company complies with certain requirements (e.g., completion of usage log), the automobile expenses related to work usage is deductible.
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The ratio of the deductible expenses for work usage is calculated based on mileage for work usage over the total mileage of the automobile.
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The amended Article 27-2 of the Ministerial Decree to the Corporate Income Tax Law lists examples of eligible company automobile use (such as a visit to a company’s business location including manufacturing and sales facilities, visit to a customer or agent, attendance at conference and promotional activities, and commuting to and from home).
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2. Reduction of arm’s length interest rate
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The statutory arm’s length interest rate on a loan between domestic related parties has been reduced from 6.9% p.a. to 4.6% p.a.
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The reduced arm’s length interest rate takes effect for intercompany loans made on or after March 7, 2016.
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However, the previous arm’s length interest rate of 6.9% p.a. will continue to apply on loans made prior to this date (until expiration of the loans).
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Back to Main Page
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If you have any questions regarding this article, please contact below:
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For more information, please visit our website:
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