New South Korean President Sworn In

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

26 February 2008

At his inauguration on Monday, South Korea's new President, Lee Myung-bak reiterated pledges to boost the country's economy, promising to take a pragmatic approach.

Lee's transition team had previously released details of several tax cuts for the business sector, key among which was the extension of corporate tax breaks for 29 types of business.

An investment tax credit program, which permits a 7% of capital expenditure deduction for businesses in the sectors in question, was launched in 2000, and has since been renewed on an annual basis.

However, the measure expired in December 2007, and requests for its extension were refused by the previous administration, which was noted by foreign businesses in particular for its non-business friendly stance.

According to Lee's transition taskforce in January, the extension of the tax break would be worth around 2 trillion won (just over USD2 billion), and is likely to create in the region of 21,000 jobs.

According to a report from the Xinhua news service, Lee announced on Monday that:

"Economic revival is our most urgent task. New engines of growth must emerge assuredly, the economy grow vigorously and more jobs be created. We will start with the government and transform it into a lean and capable organization. We shall increase our effectiveness by applying big-market principles to small government."

Other measures announced by the new Korean President's team to boost the economy include the lifting of restrictions on inter-company investment, and ownership by non-commercial companies of commercial banks.

Lee is reported to be aiming for 6% growth this year from an estimated 4.9% last year and 5.0% in 2006.

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