Korea Think Tank Calls For Fixed Policy On CGT

by Mary Swire, Tax-News.com, Hong Kong

18 October 2001

A Korean think tank has urged the government to continue its policy of imposing lower rates for capital gains tax because it promotes the country's competitiveness and attracts foreign investment. Sohn Won-ik from the Korea Institute of Public Finance (KIPF) told participants at a seminar this week: 'It is also desirable for the government to raise tax rates on real estate, if possible, to increase the proportion of indirect tax revenues.'

He suggested that the government conduct a review of its taxation policies in the likelihood that foreign governments may introduce measures to lower corporate taxes. 'It, however, will be necessary for the government to closely follow the movements of foreign governments before lowering corporate taxes,' he said.

Meanwhile, Deputy Prime Minister and Minister of Finance and Economy Jin Nyum has repudiated a newspaper article indicating that the government is considering reducing corporate income tax rates in an attempt to boost the economy.

The Yonhap News Agency had reported that the tax rate for companies with a taxable income in excess of 100 million won will be reduced from 28 per cent to 26 per cent until the end of 2002 or 2003, and the tax rate for companies with a taxable income under 100 million will be cut from 16 per cent to 14 per cent. But Minister Jin stated: 'The government is not mulling a corporate income tax cut in the least. I have not issued such an instruction to that effect, either.'

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