It was announced on Thursday that the Korean government's first phase of corporate tax cuts will be coming into force next month.
In a radio interview, Vice Finance Minister, Choi Joong Kyung announced that the corporate tax rate would be cut from 25% to 22% in June, in a move designed to assist in the government's drive to improve the business environment in Korea.
There are plans to cut the rate still further in coming years, bringing it down to between 10% and 20% by 2013.
According to regional media reports, Choi observed that: "A high corporate tax rate scares away investors, takes away chances of creating new jobs."
He explained that:
"South Korea is faced with various difficulties including rising oil and grain prices. We have to take steps and make an environment so companies will invest, because all economic indicators point downwards, meaning the economy is entering a downturn."
Plans for a supplementary budget bill making use of last year's tax surplus have been scrapped, Choi further revealed, in the interests of returning the surplus to the private sector as soon as possible, thereby stimulating the economy.
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