KIET Calls For Corporate Tax Cut To Boost Investment

by Mary Swire, for LawAndTax-News.com, Hong Kong

14 April 2008

According to a report released at the weekend by the state-run Korea Institute for Industrial Economics and Trade (KIET), the corporate tax cuts being planned by the new administration could boost business investment in facilities and expansion.

The government-owned Korea Information Service (KOIS) revealed that the Institute drew on figures from 1976, which showed that increasing profits and decreasing costs by cutting the tax burden for businesses has an effect on the investments that they can make.

"Lowering taxes reduces costs for companies and this money can be diverted to facility investment," the KOIS quoted the report as observing.

Korea's newly appointed Finance Minister, Kang Man-soo in March pledged to cut corporate taxes, as part of a government drive to boost economic growth.

Newly elected President, Lee Myung-bak had already signalled tax reform plans with this aim in mind, and Kang revealed in a report to the President that he intends to slash corporate tax rates to between 11% and 22% in 2009, and to bring then down again, to between 10% and 20%, by 2013.

At his inauguration earlier this year, President Lee Myung-bak reiterated pledges to boost the country's economy, promising to take a pragmatic approach.

Lee is reported to be aiming for 6% growth this year, although this is thought by many observers to be over-optimistic.

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