Published at 18th of October 2020 09:18:49 PM
Chapter 594: Certificate of Inno-Biz 1 – Part 1
Gun-Ho was thinking about the corporate tax that he would have to pay.
'GH Development wouldn't be imposed on corporate tax at all, or the amount should be nominal since it's not generating any profit. But the problem is Dyeon Korea. It's generating a significant amount of profits, and they are being accumulated in the reserve.
If I just let it be as it is now, we will have more than 10 billion won in the reserve by the end of this year. If I assume the corporate tax is 22%, the government will take 2.2 billion won out of 10 billion won. If we make even more by working harder and generate 100 billion won, we will have to give 22 billion won to the government. To make the situation worse, say, the workers form a labor union, and claim that they are entitled to a piece of the pie since the company is making a lot of money because of their hard work, then I will have to give away part of the profits.
The tax rates which a company falls into depends on its taxable income level. If we make less than 200 million won, we will have to pay 10% of it as corporate tax. If we make more than 20 billion won and less than 300 billion won, the tax rate will be 25%. Their reasoning to impose the tax is that a company could make money because the society provides the desirable business environment and market. If I say I am being extorted for the money that I made, they would say that I'm an unscrupulous businessman.'
Gun-Ho looked outside the window while tying his hands together behind his back. The internal auditor was crossing the yard toward the building entrance.
Gun-Ho asked for the secretary— Ms. Seon-Hye Yee.
"Yes, sir?"
"Please ask the internal auditor to come to my office, and prepare two cups of tea for us. Thank you."
"Yes, sir."
A moment later, the internal auditor entered Gun-Ho's office.
"Please have a seat, Mr. Internal Auditor."
Secretary Seon-Hye Yee brought two cups of tea and placed them on the table.
"I just wanted to have a cup of tea with you."
While sipping his tea, the internal auditor said, "Dyeon Korea is doing very well. Not many companies achieve this much in their first year. It is very rare."
"I think we will be imposed with a significant amount of corporate tax."
"I've been actually thinking about it. The government no longer gives any special tax benefits to a joint venture company that is using foreign investment funds, these days. The proper tax rate would be in the range between 20% and 22%."
"We will have to figure out how to save tax."
"One thing that would work favorably for our company in terms of saving tax is that we are located in Asan City which is not a densely populated metropolitan area. I'm looking into special tax deduction cases relevant to midsize companies."
"Are you saying that there is a special tax deduction benefit for the companies that are located in some places other than a densely populated metropolitan area?"
"Yes, sir. I will have to look further to be sure though. And there should be more requirements other than just the location to be eligible for the tax benefit."
"Of course. If they offer a tax deduction for all companies that are located outside of the metropolitan area, they would have trouble collecting enough taxes. The government needs money as well in order to pay the government workers, and the number of government workers is increasing every year. Also, their welfare budget is on the rise too."
"I was thinking of getting a certificate of Inno-Biz."
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"Inno-Biz?"
"Yes. It was created in order to promote enterprises that are equipped with advanced and innovative technologies. Once we get the Inno-Biz certificate, it would be easier to obtain a certificate for a start-up company with technology, as well."
"Hmm, really?"
"We won't be able to get a tax reduction with the Inno-Biz certificate only, but if we could get the certificate issued to a start-up company with technology, I'm certain that we will enjoy the tax benefit."
"By the way, what does Inno-Biz mean?"
"It's a compound word made with 'Innovation' and 'Business.' The Inno-Biz certificate will absolutely be helpful when we register the company with KOSDAQ later on. The examiners will take account of it in evaluating a company.
"Really? Let's get the certificate right away then!"
"A company with the certificate of Inno-Biz gets deferment for tax investigation as well, and also has the access to funds provided by Korea Technology Finance Corporation. Our company is exporting our products to India and China. With the Inno-Biz certificate, we can even get a discount on the trade insurance cost, up to 20%."
"Hmm, is that right?"
"Furthermore, we could get support for developing new technology. Maybe we want to call our compound room a 'technology research center' to clearly show that we have a separate department that is dedicated solely to developing new technology. If we could raise the chance to receive the technology support fund by changing the name of our compound room, maybe we should do it. What would you say, sir?"
"Technology research center?"
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"We have the former chief officer of GH Mobile's research center here with us at Dyeon Korea, with an advisory position. He doesn't often come to work these days just because there is nothing much he could do here anyway. I think that he will fit right in our new technology research center's chief officer position."
"By the way, if the Inno-Biz certificate offers that many benefits, why GH Mobile hasn't obtained one yet?"
"GH Mobile has that certificate already. The company was established a long time ago, so it won't be considered as a start-up company with technology, but it's holding the Inno-Biz certificate. With the Inno-Biz certificate, we would have access to a lot of benefits that it offers, but it's also cumbersome to obtain and maintain the certificate since it requires a lot of paperwork such as reports and extensive documents."
"Hmm, I see."
"Can I talk to you one more thing, sir?"
"Sure, go ahead."
"We have many employees in the management, who used to work for GH Mobile. They are aware that all of GH Mobile's workers' salaries have increased by 7% last time through the negotiation between the labor union and the company. However, the pay for the workers at Dyeon Korea's management has stayed the same while the production workers' salaries have been increased according to the minimum wage increase rate. I think we need to raise their pay. We have more than enough funds in the reserve, and if we leave them as it is, we will just have to pay more taxes which would be unnecessary."
"Of course, we will raise their salaries. Why don't you bring up this issue during our next executive meeting? It would be better that way rather than you and I decide it in this room right now. If you make the proposal during the next meeting, I will give my official approval."
"Thank you, sir. I will do that."
It was Friday, and Gun-Ho went to work at GH Building in Sinsa Town.
When he arrived at work, he called for Assistant Manager Ji-Young Jeong to his office.
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"Did Mr. Woon-Hak Sim come to pick up his passport?"
"Yes, sir. I gave his passport back to him with a visa to China on it."
"Hmm, I see."
Gun-Ho then made a call to Seukang Li.
"Oh, Gun-Ho Goo. I've heard that you finally received the bus line permit in Antang City."
"We will use the buses manufactured by Daewoo in Guilin."
"You are not visiting Shanghai City anytime soon to see me?"
"Today is Friday… I can go to Shanghai City early next week. What do you think? Things seem to be going well in Antang City, so I think I can take some time off from that business in Antang City."
"I have a meeting in Beijing City on Tuesday, so Wednesday will be perfect for me. Let's have a drink."
"Sounds good. Do you often see Jien Wang these days?"
"Nah. He has been very busy with writing a book. It seems that he will be busy for a while."
"Really? Well, it must be a part of his work since he is a scholar. I will see you on Wednesday then."
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