The Financial Times reported that the quartet of Brazil, Russia, India and China that made up the BRIC index of emerging markets is being replaced by the TICKs, made up of Taiwan, India, China and Korea. Over the past decade Brazil and Russia led economic growth in emerging markets. However, plummeting commodity prices have resulted in deepening recessions in the two countries. Reacting to the change, fund managers are eyeing tech-heavy Korea and Taiwan as replacements.

The South Korean government plans to invest 5.6 trillion won ($5 billion) into new growth engine industries by 2020, ministries said, reaffirming Park Geun-hye administration’s will to realize its creative economy initiative.

The South Korean government’s efforts to create more jobs, support startups, improve the unemployment rate and boost the nation’s economy globally does not stop here. They have expanded the scope of special tax treatment on capital gains of angel investors, and the scope of business start-ups for which investment is eligible  for tax deduction.

Angel investors may enjoy tax benefits for gains derived from investment in certain start-up ventures. Currently, in order for angel investors to qualify for the tax benefits, their investment must be made in a venture enterprise which has started business or a company converted to a venture enterprise in the last three years or less. The three-year threshold is proposed to be five years under the proposed change of the Presidential Decree.

In addition, in order for angel investors to qualify for the tax benefits, certain conditions must be satisfied: the capital of an angel investor cannot be provided in a venture business  which  is the angel  investor’s related party; the angel investor cannot be a related party with any of the shareholders in the venture, excluding minority shareholders holding less than 1% interest (“1%” rule) nor the family of these shareholders.

Under the proposed amendment, the conditions for tax benefits will be relaxed for additional injections of capital in the venture: i) Additional capital may be injected in the period of three years from the date of the initial injection of capital; ii) the total amount of investment cannot exceed KRW 1billion; and iii) exception will be granted in applying the 1% rule.

Angel investors may take a tax deduction on investments in a qualifying venture when they invest directly or via an individual investment association. Under a proposed change, the scope of qualifying ventures will expand to include a small and midsize company having the following attributes: i) a startup small and midsize company which has engaged in business for no more than three years (two years for a company in any of 16 specified knowledge-based service businesses); and ii) annual R&D investment amounts to at least KRW 30million (KRW 20million for knowledge-based service business). However, the deduction ranging from 30% to 100% of the investment amount from taxable income will remain unchanged. In addition, the deduction continues to be limited to 50% of the amount of the angel investor’s taxable income.