[Bills in Focus] Tax exemption for strategic tech, subcontracted labor protection

Proposed Bill: Partial Amendment to the Labor Standards Act

Proposed by Rep. Yang Kyung-kyoo (Green Justice Party)

● As of March 2023, the Ministry of Employment and Labor’s employment type disclosure system revealed that companies with 300-500 employees hire 25.2 percent of their workforce directly and 3.4 percent indirectly. However, companies with at least 10,000 employees employ 11.7 percent of their workforce directly and 32.0 percent indirectly. This indicates a trend where larger companies tend to rely more on indirect employment. In addition, data indicates that the 82 large business groups designated by the Fair Trade Commission also have a distinct preference for indirect employment, with direct employment constituting 9.9 percent of their workforce and indirect employment accounting for 30.5 percent of their staff.

However, there has been insufficient protection for indirect workers and subcontracted workers, particularly in the aspect of employment succession. Therefore, this amendment ensures the succession of subcontracted workers’ rights and obligations when there are changes to the subcontractor in a contracting project.

Pending Bill: Partial Amendment to the Act on Restriction on Special Cases Concerning Taxation

Proposed by Rep. Yang Hyang-ja (New Reform Party)

● The current act offers tax exemptions for research and development or investment in business facilities. It specifies that a certain portion of research and development expenses or facility investments related to national strategic technologies, such as semiconductors, secondary batteries, and vaccines, shall be subtracted from income tax or corporate tax for the relevant taxable year. However, these tax credits are set to expire on Dec. 31, 2024.

Therefore, to facilitate the growth of domestic high-tech strategic industries, this amendment extends the provision of R&D tax exemption for research and development expenses and facility investments related to national strategic technologies by six years until Dec. 31, 2030.

Promulgated Bill: Enforcement Decree of the Monopoly Regulation and Fair Trade Act

Competent Authority: Fair Trade Commission

● This bill allows domestic companies, non-profit corporations, and organizations to be designated as the same person even if a natural person already controls the business group, provided that the scope of the business group remains consistent and there are no concerns regarding the provision of undue benefits.

Administrative Announcement: Partial Amendment to the Enforcement Decree of the Mobile Device Distribution Improvement Act

Competent Authority: Korea Communications Commission

● In response to the amendment to the Mobile Device Distribution Improvement Act (Act No. 20065, promulgated on Jan. 23, 2024, and to be enforced on July 24, 2024), which imposes administrative fines on persons engaging in transactions with unauthorized persons without prior approval from mobile communications business operators, this amendment imposes a maximum of 50 million won ($36,640) in administrative fines on mobile device sales stores that engage in transactions without obtaining prior approval from mobile communication business operators.

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The Korea Herald republishes a weekly legislative report by local law firm DR & AJU LLC to provide the latest information on bills approved, proposed, pending and set to be promulgated. -- Ed.

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For any queries about the bills, contact cr@draju.com.