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Democratic Party’s Candidate Lee Jae-myung Elected as 21st President of Korea 1. Election Results and Upcoming Schedule In the 21st presidential election held on June 3, 2025, Lee Jae-myung of the Democratic Party of Korea garnered 49.42% of the vote, Kim Moon-Soo of the People Power Party received 41.15%, and Lee Jun-Seok of the Reform Party received 8.34%. President-elect Lee commenced his five-year term as the 21st president of the Republic of Korea simultaneously with the confirmation of his election by the National Election Commission on June 4. Under ordinary circumstances, the president-elect forms a presidential transition committee before officially starting the term to prepare for the launch of the new administration. However, as this election was held following the impeachment of former President Yoon Suk-Yeol, Lee’s presidential term started immediately upon confirmation of his election. Going forward, President Lee is expected to appoint key officials, including the Prime Minister and Chief of Staff, and to establish and operate a National Policy Planning Advisory Committee (tentative name) to handle restructuring of government organizations, selection of cabinet members, and setting national policy agendas. Meanwhile, the National Assembly is expected to convene special hearings to vet cabinet nominees and proceed with other necessary steps such as enacting amendments to the Government Organization Act to enable the formation of the new administration. 2. Background of President Lee Jae-myung Growing up in poverty, young Lee Jae-myung spent his childhood working in various factories after elementary school. These early experiences as a factory worker are said to have heavily influenced his later roles as a human rights lawyer and politician. He passed the high school equivalency exam and graduated from Chung-Ang University’s College of Law, passed the bar exam in 1986, and practiced law primarily in Seongnam, Gyeonggi Province. Lee was elected Mayor of Seongnam in the 2010 local elections and was re-elected in 2014. While serving as mayor, he ran in the Democratic Party’s primary for the 19th presidential election in 2017, but did not win the nomination; in 2018, he was elected Governor of the Gyeonggi Province. Lee then ran as the Democratic Party of Korea’s candidate in the 20th presidential election held on March 9, 2022, competing against former President Yoon Suk-Yeol of the People Power Party, but was narrowly defeated. Later, in the June 2022 by-election, he was elected as a member of the 21st National Assembly, and in August, became the leader of the Democratic Party of Korea. He was re-elected as a member of the 22nd National Assembly in April 2024. Most recently, following the impeachment of former President Yoon, Lee was elected as the 21st president of Korea in the resulting presidential election. 3. Anticipated Key Policy Directions Considerable political, economic, and social uncertainty engulfed Korea over past six months in part as a result of former President Yoon’s emergency martial law declaration and subsequent impeachment. With the inauguration of the new administration, much of this uncertainty is expected to alleviate, and stability will likely return quickly. In particular, as the ruling Democratic Party of Korea holds a majority in the National Assembly (171 out of 300 seats), the new administration will likely have sufficient stability and momentum to push through its agenda with the National Assembly’s cooperation. President Lee has been advocating “pragmatic progressivism” and is generally assessed as taking a realistic approach. In the presidential race, he articulated visions such as making Korea a “Top 3 AI nation,” achieving a “3% potential growth rate,” and becoming a “Top 5 global power.” He highlighted “sustainable growth”—improving growth potential through structural reform and innovation rather than artificial stimulus or imitation—and “inclusive growth,” in which all citizens participate in and benefit from innovation and value creation, rather than growth benefiting only a few. This vision is expected to be further detailed in the process of establishing the new government’s policy agenda. Based on his campaign pledges and speeches, the new administration’s anticipated policy directions are as follows: AI Transformation The new government is expected to place its highest priority on developing the AI industry. During the campaign, President Lee pledged concentrated investment totaling KRW 100 trillion in advanced strategic industries such as AI, and placed AI industry development as his top policy agenda. He promised to strengthen the development and investment in next-generation AI infrastructure, AI semiconductors, and quantum information & communication technology, improve related laws and systems, enhance the role of the Presidential National AI Commission, establish a Chief AI Policy Officer within the presidential office, strengthen future AI education, and foster AI talent. ICT and New Industries The new administration is expected to pursue policies for the safe and convenient use of data in the AI era. To foster a trustworthy media environment, Lee pledged to enhance the responsibility of platforms to monitor and address fake news, extreme content, hate speech, and anti-social or unconstitutional content. He also pledged to form a national consultative body to integrate and improve broadcast and media governance and legislation and to revise the Act on the Establishment and Operation of Korea Communications Commission to strengthen the Korea Communications Commission’s expertise. President Lee also promised to concentrate on nurturing the software and advanced industries, including investment and support for pharmaceuticals, biotechnology, digital healthcare, K-culture, K-defense, semiconductors, and battery industries. He emphasized stable support for R&D, and expanded support for unicorn companies in science & technology, startups, digital creators, deeptech/fintech, K-OTT content and platforms. Climate Response, Energy The new government is expected to formulate energy policies centered on eco-friendly renewable energy. President Lee pledged to establish the Ministry of Climate and Energy, enact the Carbon Neutrality Industry Act, create a global climate crisis response control tower, and strengthen support for carbon neutrality industries. He further pledged to build “energy highways” centered on renewable energy, develop and expand the electricity grid, build smart grid infrastructure, expand and secure flexibility resources through long-duration BESS and mobile ESS, expand R&D and investment for sector coupling, and provide tax support for solar and wind power as national strategic technologies. He also pledged to strengthen support for SMEs to transition to carbon neutrality and to enact laws to support regions affected by coal power plant closures. Fair Trade The new administration is expected to pursue policies that reduce the gap between large corporations and SMEs, and strictly respond to unfair trade practices. President Lee emphasized strict actions against technology theft from SMEs and pledged to enact the Online Platform Act. He also proposed to improve the rights and responsibilities of large platform companies, reinforce social and economic accountability, and enact supplementary bans against forced in-app payments. He pledged to grant collective bargaining rights to franchisees, agents, subcontractors, and online platform sellers, and give SMEs negotiation rights. Capital Markets President Lee has expressed his intention to improve corporate governance, eradicate private benefits for controlling shareholders, and protect general investors by preventing market manipulation and unfair practices. Expected measures include a “one-strike, you are out” rule for unfair practices like stock manipulation, mandatory return of short-term trading profits by officers/shareholders in listed companies, a Korea-style Fair Compensation Fund, mandatory appointment of independent directors, revitalization of cumulative voting for large listed firms, application of fair valuation in M&As, guaranteed allocation of new shares to existing shareholders in spin-off IPOs, and introduction of merger inspection rights for general shareholders in mergers between listed companies and affiliates. Labor The new government is expected to pursue various measures to protect workers. President Lee promised to promote amendments to the Trade Union Act (often referred to as the “Yellow Envelope Act” in Korea), legally ban comprehensive wage systems, introduce a wage distribution system for equal pay for equal work, promote industrial, sectoral, and regional collective bargaining, institutionalize permanent employee representative committees, and enhance integrated safety and health management systems for contractors and subcontractors. He also pledged to reduce average working hours to below the OECD average, introduce a 4.5-day work week, activate annual leave, and implement a minimum rest period system. Taxation President Lee pledged to establish new tax incentives to promote domestic production of national strategic industries, offer tax benefits for culture content, R&D investment in defense exporters, and for OTT content producers, all as part of policies to nurture key future industries. He also stated a plan to review tax exemption systems to optimize tax expenditures and secure resources, suggesting potential changes to existing tax support structures and operations. Diplomacy and Trade President Lee is expected to strengthen “pragmatic diplomacy” to respond to changes in the global trade environment, focusing on stabilizing supply chains, enhancing cooperation in emerging/high-tech fields, and responding to climate-driven global environmental trade. He has pledged to strengthen comprehensive and strategic alliance with the United States, especially in military and advanced science and technology, continue future-oriented cooperation with Japan, and closely cooperate to maintain and develop the Korea-US alliance, and Korea-US-Japan trilateral cooperation. He also stated that he will maintain stable relations with China, given its impact on security on the Korean Peninsula. Regarding North Korea, President Lee plans to maintain stable cooperation with China and Russia, restore consultation channels with the United States, reduce tensions, and promote inter-Korean dialogue and US-North Korea talks.
2025.06.04

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Proposed Amendment to the Commercial Code Following the Start of the New Administration Lee Jae-myung was elected as the 21st president of Korea through the June 3, 2025 election and sworn in the following day, marking the start of a new administration. The market and corporate sector are showing great interest in the new administration’s policies aimed at enhancing corporate governance and systems related to corporate law, as well as in the content and timeline of related amendments to the Korean Commercial Code (the “KCC”). As noted in our previous newsletter, the Democratic Party of Korea (the “DPK”), the ruling party as a result of the election, proposed recovery, growth, and happiness as its three visions. Specifically regarding growth, it introduced a number of campaign pledges on corporate law and governance under the sections of its pledge booklet titled “Building a Foundation of Growth” and “Fair Economy” (Link). In furtherance of such pledges, the DPK’s Stock Market Revitalization Task Force held a press conference earlier on June 5, shortly after the president’s inauguration, and announced its stance on the amendment to the KCC. At the press conference, the DPK stated that the upcoming bill to amend the KCC would essentially be the same as the one introduced last November by DPK Assembly Member Lee Jungmun (which was integrated into an alternative bill by the National Assembly’s Legislation and Judiciary Committee and passed at the National Assembly plenary session but vetoed by the previous administration (Link)), which we discussed in a previous newsletter. According to the DPK, the bill will cover directors’ fiduciary duty to protect shareholders and virtual general meetings of shareholders, among other things. With respect to the timing of enforcement, in order to expedite shareholder protection, all parts other than those concerning virtual general meetings of shareholders will take effect from the date of promulgation by the president. Additionally, the bill is said to include a proposed amendment to the 3% rule (which would amend the application method and the calculation of voting rights for the 3% rule limiting the voting rights of the largest shareholders and related parties to 3% when appointing statutory auditors or members of the audit committee within the board of directors). Once again, the DPK stressed that President Lee Jae-myung had expressed the need to improve the existing bill to amend the KCC which had been passed by the National Assembly during his candidacy, and that the legislative process should take less than a month. During a follow-up briefing held after the press conference, the DPK mentioned that a separate bill to amend the Capital Markets Act had been submitted and was awaiting review. Such bill is said to not cover the cancellation of treasury stocks. The bill to amend the KCC was submitted to the National Assembly following the June 5 press conference and the legislative process has been initiated. Once the bill is passed, the new administration’s policies aimed at enhancing corporate governance and systems related to corporate law may significantly impact companies’ corporate restructuring, investments, strategic planning, financial capabilities, investor relations decisions, etc. Companies currently reviewing such key transactions as well as associated stakeholders may want to closely monitor related developments. [Korean Version]
2025.06.11

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Outlook for the New Administration’s AI Policies and Regulations 1. Background In the 21st presidential election held on June 3, 2025, Lee Jae-myung of the Democratic Party of Korea was elected as the nation’s 21st president. President Lee formally began his term the following day on June 4, 2025, without a Presidential Transition Committee. During his campaign, President Lee unveiled the Democratic Party’s campaign Party Platform, titled “From Now On, the Real Republic of Korea” (the “Party Platform”), which is built around three core visions: recovery, growth, and happiness. These visions are supported by 15 policy tasks and 247 specific pledges. Among these, fostering new AI-related industries is one of the key policy tasks within the “growth” category. Below, we summarize the key details. 2. Key AI-Related Pledges by President Lee President Lee announced his vision to position South Korea among the world’s top three AI powerhouses through the AI Transformation (“AX”) initiative. His plan outlines key priorities such as (i) creating an AI-related industrial innovation ecosystem, (ii) building the world’s most advanced AI infrastructure, (iii) introducing legislations and systems to ensure secure and accessible data utilization, and (iv) establishing AI governance, as well as other important initiatives. (1) Creating an AI-Related Industrial Innovation Ecosystem The Party Platform outlines plans for government-led advancement of the AI industry with more investment. Central to this initiative is the creation of a large-scale national fund, which will be open to all economic stakeholders, to drive growth in Korea’s high-tech strategic industries such as AI, with a targeted investment of KRW 100 trillion. Additionally, key policy proposals include (i) supporting the development of next-generation AI semiconductors, (ii) providing assistance for the R&D and commercialization of large and small language models (LLMs and SLMs), and (iii) promoting the growth of the physical AI (humanoid robot) industry within both industrial and service sectors. The Party Platform further sets out plans to cultivate leading domestic AI companies, plans to establish a pilot city dedicated to AI, and plans to invest in “AI infrastructure for industries with regional strength” by leveraging private sector expertise in partnership with government support. These initiatives signal the new administration’s strong commitment to actively investing in and promoting AI-related industries. Furthermore, to ensure access for all citizens, the Party Platform proposes (i) developing a national LLM and releasing it as an open source, (ii) expanding level-based, customized education and providing digital devices and services to individuals disadvantaged in AI, and (iii) expanding and improving the quality of public Wi-Fi infrastructure in public places, such as public facilities and downtown areas. (2) Building AI Infrastructure The Party Platform includes promises to build AI infrastructure nationwide. Key policy proposals include (i) advancing the commercialization of next-generation (6G) AI-based networks by 2030 (with pilot services to be launched in 2028), (ii) developing an “AI highway” by building AI data centers equipped with the latest GPUs, and (iii) establishing specialized industrial AI clusters to serve as a foundation for a national AI innovation hub. In particular, the Party Platform provides goals to (i) actively promote the transition from public clouds to domestically operated private clouds and (ii) designate AI data centers as “next-generation national social overhead capital (SOC).” To support this initiative, the government will implement a comprehensive support system to streamline administrative processes. Collectively, these measures will create more opportunities for businesses operating in the AI sector. (3) Improving Laws and Systems to Facilitate the Use of AI The Party Platform includes plans to enhance the legal and regulatory framework to promote the development and utilization of AI. The National Artificial Intelligence Commission (“NAIC”), a presidential committee, will serve as an effective AI control tower. The new administration will establish (i) a position of Senior Secretary for AI Policy in the President’s Office, who will serve as the country’s Chief Artificial Intelligence Officer, and (ii) an AI strategic organization to devise and implement AX strategies. A key legislative milestone is the anticipated prompt enactment of the subordinate legislations under the Basic Act on the Development of Artificial Intelligence and the Establishment of Foundation for Trustworthiness (the “AI Basic Act”), which is set to take effect on January 22, 2026. The government is also expected to promptly issue a presidential decree and guidelines outlining specific plans for the implementation of the AI Basic Act. The Party Platform also contains a variety of promises designed to promote the use of data in the private sector. To this end, the new administration plans to increase access to public data and, with particular emphasis on ensuring that such data is released in machine-readable formats to enhance the practical utility of the data. The Party Platform also proposes (i) establishing a cluster for integrating high-quality data for AI training and creating a Party Platform to make these datasets available, and (ii) purchasing and processing data from broadcasters, which will then be disclosed through designated data hubs. (4) Others The Party Platform presents a number of additional policies, including (i) education and research programs to nurture AI experts, (ii) measures to promote IT and SW exports, and (iii) policies to revitalize youth entrepreneurship, such as lowering corporate and personal income taxes. Through these policies, the government plans to concentrate its investments in AI-related industries and actively support the development of skilled professionals in this field. 3. Conclusion and Implications According to the Party Platform, the Lee Administration will fully mobilize all national resources to actively invest in AI-related industries. Given the direction of the policies aimed at developing and revitalizing the AI industry, the new administration’s stance on the enforcement of AI-related regulations remains to be seen. Moreover, with the rapid growth and evolution of the AI industry and related services, the Lee Administration may revise its policies in the Party Platform to keep pace with changing market conditions and emerging trends. We anticipate that the new administration’s approach will become clearer once it appoints a Chief AI Officer and key ministers of relevant ministries, such as the Ministry of Science and ICT and the NAIC, and releases more detailed plans. [Korean Version]
2025.06.10

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New Administration’s Labor Agenda: Key Policy Changes Ahead With Democratic Party candidate Lee Jae-myung’s victory in the June 3 Presidential Election, Korea is poised for a significant labor law transformation. His campaign promise of “respecting labor and guaranteeing workers’ rights” will reshape how businesses operate in Korea. We summarize below key labor policy changes that will be particularly relevant for multinational companies doing business in Korea. 1. Reduced Working Hours President Lee aims to implement broad working hour-reduction measures. The administration plans to introduce support measures for companies adopting a 4.5-day workweek. During his campaign, President Lee emphasized that the goal is to reduce Korea’s average working hours below the OECD average whilst maintaining the same level of wages. 2. Repeal of Comprehensive Wage System The comprehensive wage system is a wage calculation arrangement that many multinational companies use. This is typically implemented by adding a provision in the employment contract stating that the employee will receive a fixed amount as monthly salary and that such fixed amount will cover all or part of overtime, nighttime or holiday work performed by the employee. This has been the subject of debate for many years with criticism that the system allows “unpaid” overtime work. President Lee’s pledges include explicitly prohibiting the comprehensive wage system and implementing a new requirement that would force employers to track employees’ working hours accurately (e.g., mandatory clock-in, clock-out). 3. Promotion of Annual Leave To promote the use of annual leave, measures such as shortening the paid annual leave eligibility threshold from one year to six months of employment and an annual leave savings system to allow employees to carry over unused annual leave days may be introduced. 4. Extension of Retirement Age The mandatory retirement age is expected to be gradually extended to 65 to align with the national pension eligibility age. Rather than pursuing concurrent wage system reforms to address labor cost concerns, the government will instead support voluntary labor-management agreements on improving wage structures and working conditions. 5. Extension of the Labor Standards Act to Small Businesses The Labor Standards Act may expand to fully cover businesses with fewer than five employees, ending Korea’s long-standing exemption for small enterprises. This change could have sweeping implications for small businesses, as they would become subject to the same employee protection measures as larger companies, including having to meet the strict just cause standard for terminations, paying overtime premiums, granting paid annual leave, and offering holiday pay. 6. Enhanced Union Rights President Lee’s flagship labor initiative centers on expanding collective bargaining rights through the controversial “Yellow Envelope Act” ? a legislation that has faced two presidential vetoes under the previous administration. This reform will allow subcontractor workers to negotiate directly with the contracting entity and significantly limit businesses’ ability to claim damages from strikes and other industrial actions (whether or not legal) and also other types of union activities. 7. Industry Level Bargaining The area most emphasized by President Lee in his policy pledges is the guarantee of workers’ rights and the expansion of the role of labor unions. His representative pledge in this regard is to promote industry level bargaining and we expect the administration to start with public sector industry-wide collective bargaining agreements before expanding to private enterprises. The administration will seek to expand the binding force of collective bargaining agreements by requiring that, even in cases where there is no collective agreement or an unfavorable one has been concluded, a collective bargaining agreement with equal conditions in the same industry, region, or sector will be applied, effectively standardizing conditions across entire industries and regions. 8. Anti-Discrimination: Equal Work, Equal Pay The principle of “equal pay for equal work” may be legally codified with concrete enforcement mechanisms. Companies will be required to disclose wage distribution data, including job categories, ranks, tenure, and salary levels to enable a systematic monitoring of pay equity. Employment equality wage disclosure requirements will mandate publication of gender employment ratios and their respective average wages. The administration plans to introduce a so-called “employment insurance experience rating system” that increases unemployment insurance premiums for companies with an excessive number of terminations or non-regular employee hirings. Conclusion and Business Implications President Lee’s projected labor policies have the potential to reshape not only labor relations and market structures but also the business operating environment itself. While it is difficult to predict which policies will take priority, the political landscape suggests significant changes lie ahead. With the Democratic Party holding 171 of 300 National Assembly seats until May 2028, President Lee may pursue these labor reforms during the first half of his term. [Korean Version]
2025.06.04

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The 21st President’s Main Tax Related Pledges As a result of the 21st presidential election in Korea, held on June 3, Mr. Jae-myung Lee of the Democratic Party of Korea was elected. Although the announcement of his campaign promises came relatively late, Mr. Lee’s pledges and the Democratic Party of Korea’s platform include a variety of tax-related policies. These policies can be broadly classified into three categories: economic security and focus on new industries, establishment of a foundation for growth and stable living/balanced national development, and tax reform to address low birth rates and the aging society. The detailed pledges are as outlined below. 1. Economic Security and Focus on Developing New Industries (1) Major Structural Transformation of Advanced Industries Driven by Innovation This includes a plan to implement the “Future Advanced Manufacturing K-Quantum Jump Project” to secure global leadership in AI and other advanced industries. The project covers a wide range of new and advanced industries, such as advanced semiconductors/nanotechnology, future mobility, next-generation secondary batteries, renewable energy, next-generation displays, AI, quantum computing, advanced biotechnology/digital healthcare, intelligent robotics, green hydrogen, and aerospace. Furthermore, various support measures will be implemented to strengthen the industrial ecosystem, boost export and industrial competitiveness, and further stabilize supply chains, all aimed at bolstering economic security and securing future growth engines. While concentrating an investment of KRW 100 trillion in AI and other advanced strategic industries at home, bold tax benefits including individual income tax and corporate tax reductions/deductions will be granted for investments made by the general public and enterprises. Additionally, AI data centers will be designated as national strategic technology commercialization facilities, with additional tax reductions/deductions granted to corporate investors in private venture funds to promote the venture investment market. (2) Introduction of “Tax System to Promote Domestic Production in Strategic Industries” The “Tax System to Promote Domestic Production in Strategic Industries” offers corporate tax deductions based on domestic production and sales volume, to those who domestically manufacture and sell advanced products designated as national strategic or new growth/source technologies to end consumers in Korea. It also examines measures to refund a portion of tax deductions in cash under certain conditions when necessary to protect strategic industries. This is somewhat in line with the “Tax Incentive for Promoting Domestic Production of Advanced Strategic Industries” proposed by the five major economic organizations in May, including the Korea Chamber of Commerce and Industry, ahead of the 21st presidential election, although there appear to be differences in the specific targets and levels of support. In addition, related bills to amend the Restriction of Special Taxation Act have already been proposed by National Assembly members Jeong Il-young, Kim Tae-nyeon, and Jin Seong-jun. Therefore, if the details of the tax incentives for promoting domestic production of strategic industries are finalized, it is likely that they will be discussed together with the already proposed amendment bills as early as this year’s regular session of the National Assembly. (3) Expanded Tax Incentives for the “Contents Industry” As the Korean cultural contents industry becomes more competitive and gains greater influence worldwide, a number of pledges have been made to increase tax incentives as part of the expanded national support system for the cultural contents industry. First, the tax deduction system for video content production cost, currently set to expire at the end of this year, will be extended, with tax deductions newly applied to music and various other performing contents and webtoon production, currently not eligible for tax deductions. Also, measures to increase tax deductions for published content will be examined, taking into account the unique nature of the publishing industry, alongside measures to further apply tax deductions to fields prescribed under the Framework Act on the Promotion of Cultural Industries as well as production, investment, and equity participation in platforms. Support is also expected to be provided for investments and equity participation between large corporations and small/medium sized enterprises (“SMEs”) in companies specializing in the cultural industry and cultural content companies. Additionally, to strengthen support for content R&D, the scope of new growth/core technology support will be expanded to include AI content, content platforms, music, publishing, characters, performances, etc. Additional Tax support for OTT content production will also be implemented. The pledge also includes supporting reimbursement-type incentives when the purpose is reinvestment in the contents industry, but the specific method and details of support are expected to be clarified during the subsequent review process. 2. Establishment of Foundation for Growth and Balanced National Development (1) Compliance with Statutory Limit on National Tax Reduction/Exemption Rates The National Finance Act stipulates that the national tax reduction/exemption rate for the current year should be maintained at no more than 0.5 percentage points above the average reduction/exemption rate of the previous three years. Meanwhile, the Special Tax Treatment Control Law includes provisions on the performance evaluation of tax expenditures and the improvement of related systems to ensure the efficient management of tax expenditures. That said, the national tax reduction/exemption rate for each year currently exceed the national tax reduction/exemption limit stipulated in the National Finance Act. In light of these circumstances, actively managed tax expenditure items that meet the substitutability and abolition standards and subject to tax exemption/reduction adjustment will be adjusted to ensure compliance with the statutory national tax reduction/exemption limit. Meanwhile, exemption requirements will be tightened for preliminary feasibility studies necessary for large-scale tax expenditures exceeding KRW 30 billion, with the results of these studies required to be reported to the National Assembly. (2) Strengthening Tax Incentives for a Stable Everyday Livelihood At the same time as strengthening the ultimate safety net for daily livelihood, such as the National Basic Livelihood Security System, the policy promises to expand both the eligibility and payment amounts of the Earned Income Tax Credit (“EITC”) and the Child Tax Credit (“CTC”), thereby supporting the self-sufficiency of low-income working households. The income threshold for monthly rent tax deductions will also be raised to reduce the monthly rent burden on urban workers, while at the same time strengthening oversight of tax sources related to rental income. For families with multiple children, the eligible housing size and related benefits will be increased. The policy also includes the creation of new tax credits for mobile phone expenses paid by workers themselves, their children, and parents aged 65 or older. The “Good Landlord” tax credit will be made permanent, and measures such as the extension of VAT exemptions to lower dormitory/housing costs and restructuring the education tax burden borne by financial companies (to alleviate interest burdens for consumers, as education taxes are commonly paid by borrowers in financial loans) will be pursued. (3) Support for SMEs and Balanced National Development To boost SMEs’ competitiveness through digital transformation, the budget for SME smart factories will be greatly increased while providing tax benefits and other incentives to large corporations and SMEs participating in mutually beneficial smart factory projects. Also, investment-related tax support will be expanded to prevent industrial accidents and ensure workplace safety to make SMEs safer workplaces. Meanwhile, to support a balanced national development, companies will be encouraged to relocate their headquarters to provincial regions outside the greater Seoul metropolitan area through expanded corporate tax reductions/exemptions, prioritized housing provision for employees, etc. Additionally, improvements will be made to the “Hometown Love Donation” system, such as increasing the amount of tax deductions, improving donation procedures, and diversifying use, to strengthen local provincial finances. 3. Tax Amendments to Respond to Low-Birthrate/Aging Society (1) Phased Implementation of “Our Children’s Independence Fund” The policy pledge is a phased introduction where the government creates a fund account in the name of a child and makes regular deposits. For this fund, parents will also be allowed to make matching contributions, and tax benefits will be provided on financial income generated by the fund. To achieve the policy’s goals, withdrawals will be prohibited until the account holder becomes an adult, and the use of the funds will be restricted to purposes such as educational expenses or start-up business costs. In addition, the program will be linked with schools’ financial and economic education programs to enhance the educational effect. (2) Improved Individual Income Tax System with a Family-friendly Approach The administration will promote the introduction of a married couple-based tax system. Through the couple-based individual income tax, various deductions—such as basic deductions for dependents, deductions for credit card spending for household expenses, and deductions for education and medical expenses—will be applied to the entire income of the married couple. Therefore, this will eliminate the need for determining which income-earner to assign such deductions, thus increasing convenience for the public. In designing the system, measures will be taken to ensure that progressive taxation does not arise from combining the couple’s incomes, and taxpayers will be allowed to choose between individual-based and couple-based taxation. In addition, the administration plans to develop a new tax system that comprehensively considers both spouses’ incomes and the number of children, and to establish a plan to revise various tax exemption and deduction items in line with the transition to this new system. (3) Enhancing Tax Benefits for Child Rearing In consideration of the increasing living expenses that come with raising children, the administration plans to expand tax benefits based on the number of children and to broaden the scope of those eligible. First, the plan includes an increase in both the individual income tax credit rate and the deduction limit for credit card use, based to the number of children. Specifically, the administration plans to raise the credit card deduction rate by five percentage points for each child, up to a maximum of 20% per child, and increase the deduction limit by KRW 1 million. Additionally, the administration will include expenses for elementary school children’s participation in arts, music, and sports academies or facilities in the education tax credit scheme, thus strengthening tax support for working parents who may have difficulty providing direct childcare. 4. Other Pledges Enactment of the Carbon Neutrality Support Act to define the scope of carbon reduction support projects and introduce tax benefits for joint R&D among industries Including solar and wind power as national strategic technologies for tax support Promoting the expansion of the outstanding shipowner/shipper certification system to the coastal shipping industry The recent election was a presidential election held to fill a vacancy, and the President’s term begins once the election results are confirmed. Since there will be no period for developing and reviewing the new government’s policies through a Presidential Transition Committee—which typically assists the president-elect and is responsible for transition tasks after the election—the Presidential Office and relevant ministries will set priorities for the various policies presented as election pledges. Reviews on how to implement each pledge are expected to proceed swiftly, including determining and adjusting policy details and scope of application, while taking into account the potential need for coordination with other policies and overall feasibility. During this process, the details of the announced pledges may be adjusted or changed. Pledges that need to be promptly reflected in policy or rapidly concretized for implementation are expected to be included in the “2025 Second Half Economic Policy Direction,” to be announced in late June, or in the “Proposed Tax Law Amendments,” to be announced in mid-to-late July. Proposals for legislative changes are expected to be discussed during this year’s regular session of the National Assembly, where their adoption will be decided. [Korean Version]
2025.06.04

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Named “South Korea National Law Firm of the Year”

Kim & Chang was recognized as the “South Korea National Law Firm of the Year” at the Chambers Asia-Pacific & Greater China Region Awards 2025. Since the first awards ceremony in 2010, our firm has been honored with this title ten times.
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“Tier 1” in All Ten Practice Areas

In the 2025 edition of Benchmark Litigation Asia-Pacific, a guide that recognizes leading litigation law firms and lawyers in the Asia-Pacific region, Kim & Chang once again received “Tier 1” (top tier) rankings across all ten practice areas surveyed.
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“Jurisdictional Firm of the Year: South Korea”

Kim & Chang was awarded the “Jurisdictional Firm of the Year: South Korea” recognition at the IFLR Asia-Pacific Awards 2025. This award is given to one law firm in each jurisdiction that has engaged in the most innovative cross-border transactions in the Asia-Pacific region.
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