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South Korea Releases New Fiscal Management Framework

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

18 May 2015


On May 13, South Korean President Park Geun-hye presided over the "2015 National Fiscal Policy Meeting" and discussed the country's fiscal policies for the next five years.

She said her Government's policies focus on stimulating economic growth while ensuring fiscal stability.

It was agreed that the Government will "use its financial resources to stimulate the economy, while continuing to pursue aggressive fiscal reforms to improve soundness. … The Government will keep total expenditure increases below total revenue increases during the 2015-19 period when drawing up its Budget, while also reviewing tax exemptions and reductions to increase total revenue."

The Government is to draft medium-term tax policies that will be submitted to the National Assembly in September this year. It will also push for the institutionalization of long-term fiscal rules, probably including the "Pay-Go" rule that requires new spending to be paid for by cuts to other projects or by new revenue-raising measures.

Previously announced measures to boost public-private partnerships were confirmed, including the provision of tax incentives, and the Government committed to continuing its review of tax incentives.

It has already been announced that expiring tax expenditures will be extended only if they meet certain criteria, and that new tax breaks and incentives will be introduced only after a satisfactory analysis of their expected economic outcome.

TAGS: tax | investment | economics | business | tax incentives | fiscal policy | Korea, South | tax breaks | business investment

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