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Korean Lawmakers Argue Over Corporate Tax Hike

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

17 October 2016


An argument is ongoing in South Korea between the Government and the parliamentary opposition over the latter's call for an increase to the country's headline 22 percent corporate tax rate.

Opposition lawmakers have said that a restoration of the corporate tax rate for larger companies to the pre-2009 level of 25 percent, or at least to 24 percent, would restore the proportion of South Korea's tax revenue provided by corporate taxes, provide additional revenue for social welfare measures, and help reduce the country's fiscal deficit.

However, Finance Minister Yoo Il-ho has repeated the Government's belief that a corporate tax rate rise would hurt South Korean corporate competitiveness, and therefore also investment and employment in the economy, particularly during a time of weak growth in the domestic economy and global economic uncertainty.

The Government instead intends to increase the effective tax rates paid by larger companies, by further closing tax breaks to which they are entitled, and by widening the corporate tax base.

However, the opposition parties currently control a majority in the National Assembly and, working together, would be able to present and pass legislation.

TAGS: tax | economics | fiscal policy | corporation tax | ministry of finance | tax rates | Korea, South

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