The Ministry of Economy and Finance at the Sejong Government Complex (Yonhap)
SEJONG — The scale of corporate tax cuts will increase by more than 1 trillion won ($727 million) year on year in 2023, with its share of total tax cuts for all sectors increasing, state data showed on Tuesday.
According to next year’s tax expenditure budget, presented by the Ministry of Finance to the National Assembly, collective tax cuts for all sectors are estimated at 69.3 trillion won.
Among them, corporate tax cuts – including deductions for research labor promotion expenses and investment deductions – will reach 12.7 trillion won.
This is an increase from 11.3 trillion won in 2022 and 8.8 trillion won in 2021.
In addition, the share of corporate tax reductions in total reductions will increase to 18.4% in 2023, from 17.8% in 2022 and 15.6% in 2021.
This contrasts with the share of personal income tax cuts in total tax cuts, which has been on a downward trend. Personal tax cuts will fall to 58.3% of total tax cuts in 2023, from 58.6% in 2022 and 60.6% in 2021.
Although the scale of income tax cuts will also increase by 3 trillion won year on year to reach the 40 trillion won mark in 2023, the gap between corporate tax shares and income tax cuts shrink.
Other reductions relate to the value added tax, which will represent 16.3% of the total tax reductions for next year.
The share of value added tax reductions is also on a downward trend, falling from 17.8% of the total in 2021 to 16.7% in 2022.
Earlier this year, the Ministry of Finance announced that it would reduce the cap on corporation tax to 22% of business profits, from 25% currently.
The ministry also unveiled its tax system overhaul plan to address double taxation of businesses at home and abroad. In addition, he plans to revise inheritance and gift tax laws to help family-controlled companies smoothly transition management power.
The policy should promote business investment and job creation, according to the ministry.
By Kim Yon-se ([email protected])