MODERNIZATION OF NATIONAL TAX LAW ACT

Where a resident with earned income (excluding daily workers; hereinafter the same applies in this Article) pays insurance premiums under an insurance contract for insurance where the amount refunded upon maturity does not exceed the insurance premiums paid during the relevant taxable period, the amount equivalent to 12/100 (15/100 in the case of subparagraph 1) of the amount of the following insurance premiums paid shall be deducted from the calculated amount of comprehensive income tax for the relevant taxable period. However, if the sum of insurance premiums for each of the following subparagraphs exceeds 1,000,000 won annually, the excess amount shall be deemed non-existent for each item. 1. Insurance premiums for long-term care insurance for persons with disabilities, designated by Presidential Decree, where the insured or beneficiary is a person with disabilities among the basic deduction 대상자 (basic deduction recipients) 2. Insurance premiums designated by Presidential Decree, where the insured is a basic deduction 대상자 (excluding insurance premiums for long-term care insurance for persons with disabilities under subparagraph 1)

Where a resident with earned income pays educational expenses designated by Presidential Decree for himself/herself and basic deduction 대상자 (not subject to age or income limitations, but in the case of institutions under subparagraph 3(b), only persons under 18 years of age as of the end of the taxable period shall apply) during the relevant taxable period, the amount equivalent to 15/100 of the following amounts shall be deducted from the calculated amount of comprehensive income tax for the relevant taxable period. However, educational expenses designated by Presidential Decree, which are exempt from income tax or gift tax, shall not be deducted. 1. The sum of educational expenses paid for a spouse, lineal descendant, sibling, adopted child, or foster child (hereinafter referred to as "lineal descendant, etc." in this subparagraph) who is a basic deduction 대상자. However, educational expenses paid to graduate schools or paid by lineal descendant, etc. using student loans under subparagraph 2(a) shall be excluded, and the limit shall be 9,000,000 won per person annually for university students, and 3,000,000 won per person annually for children before elementary school enrollment, and elementary, middle, and high school students. a. Educational expenses paid to schools under the 「Early Childhood Education Act」, 「Elementary and Secondary Education Act」, 「Higher Education Act」, and special laws, or paid for taking exams pursuant to Article 34, Paragraph 3 of the 「Higher Education Act」 b. Educational expenses paid for lifelong education facilities or courses of the following nature: 1) Lifelong education facilities of school type that grant academic credentials equivalent to or lower than high school graduation, as per Article 31, Paragraph 2 of the 「Lifelong Education Act」; lifelong education facilities that can use the title of professional college as per Article 31, Paragraph 4 of the same Act (hereinafter referred to as "professional colleges"); and lifelong education facilities of distance learning type as per Article 33 of the same Act (hereinafter referred to as "distance colleges") 2) Courses designated by Presidential Decree among courses under Article 3 and Article 5, Paragraph 1 of the 「Act on Recognition of Credits, etc.」 and the 「Act on Obtaining a Degree through Self-Study」 (hereinafter referred to as "degree acquisition courses" in this paragraph) c. Educational expenses paid to overseas educational institutions designated by Presidential Decree (for residents working in Korea who pay educational expenses for students of overseas educational institutions, only students designated by Presidential Decree shall apply). d. Educational expenses paid to childcare facilities under the 「Infant Care Act」, academies under the 「Act on the Establishment and Operation of and Remedial Teaching in Academies」, or sports facilities designated by Presidential Decree for children before elementary school enrollment (in the case of expenses paid to academies and sports facilities, only the amount designated by Presidential Decree shall apply). e. Educational expenses paid to academies that teach arts and sports facilities designated by Presidential Decree for elementary school students under 9 years of age or in the 2nd grade or lower as of the end of the taxable period, within the amount designated by Presidential Decree. 2. The sum of educational expenses paid for the resident, as specified in the following subparagraphs. a. Educational expenses falling under subparagraph 1(a) through (c). b. Educational expenses paid for university (including professional colleges, distance colleges, and degree acquisition courses) or graduate school courses of at least one semester, and for part-time courses under Article 36 of the 「Higher Education Act」. c. Tuition fees for vocational skills development training conducted at vocational skills development training facilities as defined in Article 2 of the 「National Lifelong Vocational Skills Development Act」. However, amounts reduced by subsidies, etc. designated by Presidential Decree shall be excluded. d. Educational expenses paid for the repayment of principal and interest of student loans designated by Presidential Decree. However, payments designated by Presidential Decree, such as additional payments due to overdue loan repayments, shall be excluded. 3. Special educational expenses designated by Presidential Decree, paid to any of the following entities for a disabled basic deduction 대상자. a. Social welfare facilities and non-profit corporations designated by Presidential Decree. b. Institutions designated by Presidential Decree that provide developmental rehabilitation services for the improvement of functional abilities and behavioral development of persons with disabilities. c. Facilities or corporations located abroad that are similar to the facilities or corporations in subparagraph (a).

When applying the provisions of Paragraphs 1 to 3, if amounts have already been paid for a former spouse, dependent, person with disabilities who no longer qualifies as a basic deduction 대상자 due to marriage, divorce, separation, or employment, or for a person aged 65 or over as of the end of the taxable period, before the end of the taxable period, the amount calculated by applying the rates under Paragraphs 1 to 3 to the amounts paid until the date of occurrence of such reason shall be deducted from the calculated amount of comprehensive income tax for the relevant taxable period.

The Commissioner of the National Tax Service may request the provision of data, such as student loan and repayment details, designated by Presidential Decree, from institutions performing student loan and repayment services, such as the Korea Student Aid Foundation established under the 「Act on the Establishment of the Korea Student Aid Foundation, etc.」 (hereinafter referred to as "Korea Student Aid Foundation, etc." in this Paragraph), to verify whether educational expenses under Paragraph 3, Subparagraph 2(d) are eligible for tax credit. In this case, the Korea Student Aid Foundation, etc. that receives the request shall comply with the request without special reason.

Where a resident falls under any of the following subparagraphs, the amount determined according to the classification of the following subparagraphs shall be deducted from the calculated amount of comprehensive income tax (hereinafter referred to as "standard tax credit"). 1. For a resident with earned income who has not applied for income deduction or tax credit under Paragraph 6, Article 52, Paragraph 8, and Article 95-2, Paragraph 2 of the 「Restriction of Special Taxation Act」: 130,000 won annually. 2. For a resident with comprehensive income (excluding those with earned income) who has not applied for tax credit under Article 122-3 of the 「Restriction of Special Taxation Act」: The amount according to the classification of the following subparagraphs. a. For businesses that meet the requirements designated by Presidential Decree, such as reporting business accounts under Article 160-5, Paragraph 3 (hereinafter referred to as "diligent businesses"): 120,000 won annually. b. In cases other than (a): 70,000 won annually.

Other matters necessary for the special tax credit shall be determined by Presidential Decree.