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South Korea Approves Supplementary Budget

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

30 July 2015


The South Korean Government's supplementary budget bill was approved by the National Assembly on July 24. It provisions KRW5.4 trillion (USD4.6bn) to cover shortfalls in tax revenue this fiscal year and KRW6.2 trillion for additional public expenditure.

A statement from the Ministry of Strategy and Finance confirmed that, as a result of the supplementary budget, South Korea's fiscal deficit will rise to three percent of its gross domestic product (GDP), compared with the 2.1 percent targeted in the original 2015 Budget.

The outbreak of Middle East Respiratory Syndrome and a worsening in South Korea's already-weak economic growth prospects had prompted the Government's plans for a supplementary budget, and there had already been warnings that the country's fiscal position was bound to worsen in the short term.

Passage of the additional budget was only possible after long negotiations between the ruling Saenuri Party and the main opposition party, wherein the Saenuri Party agreed to discuss opposition proposals for a hike to the corporate tax rate – currently 22 percent for companies with a turnover of over KRW20bn – to 25 percent.

TAGS: tax | fiscal policy | budget | corporation tax | tax rates | Korea, South | tax breaks

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