A path has opened for domestic automobile and battery corporations receiving U.S. Inflation Reduction Act (IRA) subsidies to avoid additional taxation under the 15% global minimum tax.
According to the Ministry of Economy and Finance on the 5th, the Organisation for Economic Co-operation and Development (OECD) released a global minimum tax reform plan that includes a clause favoring tax incentives for real investment.
The ministry said this means that even if Korean corporations receive a tax credit for overseas investment and their effective corporate tax rate falls below the 15% minimum tax, they will not have to pay additional taxes.
The ministry said, "Korea's integrated investment tax credit, research and development (R&D) expense tax credit, and the U.S. IRA advanced manufacturing production tax credit fall under eligible tax incentives."
This is an issue that the Korean government has continuously sought during international negotiations, and domestic automobile and battery companies that entered the United States are expected to benefit.
The ministry also said a side-by-side package that allows the global minimum tax to run in parallel with country-specific minimum tax systems has been prepared.
If a system sufficiently similar to the global minimum tax (an eligible parallel regime) is operated, overseas subsidiaries of multinational corporations will not be subject to the global minimum tax in that country.
The United States' domestically operated minimum tax system has also been recognized as an eligible parallel regime. As a result, U.S. multinational corporations such as Google and Apple are also expected not to be subject to the minimum tax.