By Yena Park, Jihoon Lee and Cynthia Kim SEOUL - South Korea's major exporters of cars and smartphones are bringing home a bigger chunk of their earnings this year to enjoy new tax breaks,By Yena Park, Jihoon Lee and Cynthia Kim
The flows, the bulk of which is from globe-trotting exporters such as Samsung Electronics, Hyundai Motor Co and Kia Corp, are a welcome relief for the won which has been crushed by Korea's falling exports and a broad U.S. dollar rally. That rush comes after a tax break President Yoon Suk Yeol introduced this year to encourage reshoring of cash hoarded outside Korea, and allows up to 95% of corporate income generated abroad to be repatriated tax-free. Such repatriation was previously subject to corporate tax of as much as 25%.
The $33 billion of repatriated money more than offsets the country's $26 billion trade deficit in the first half of this year. In August, the country's foreign exchange reserves dropped to the lowest level in nine months to $418.30 billion as authorities intervened to support the won. Hyundai Motor has used the tax break to channel money into investments. The automaker said on June 12 it plans to invest 7.8 trillion won of retained earnings from overseas operations this year in electric car factories at home.