By Kwanwoo Jun
South Korea’s new conservative government plans to cut corporate taxes in a bid to boost business investment, create jobs and spur economic growth.
The maximum corporate tax rate will be lowered to 22% from 25% under a new bill, the economy and finance ministry said in a statement on Thursday.
The revised bill also suggests that the current four-tier corporate tax rate system, which ranges from 10% to 25% depending on income, be streamlined into two rates of 20% and 22%.
The ministry expects the new tax code, which also includes tax breaks or reductions for small businesses and workers, could reduce the country’s tax revenue by 3%, or $13.1 trillion. won ($9.98 billion) a year, but this should not significantly undermine the tax base.
The revisions aim to help the country’s economy weather the difficult period of soaring inflation and weakening growth by relieving businesses of the tax burden and encouraging them to invest more and create more revenue. jobs in the country, the ministry said.
The corporate tax cut by the conservative pro-business government of President Yoon Suk-yeol, which took office in May, would reverse the tax hike put in place by his liberal predecessor Moon Jae-in. Mr. Moon raised the maximum corporate tax from 22% to 25%.
The revised tax bill will need to be approved by parliament, which is currently controlled by the Liberals.
Write to Kwanwoo Jun at [email protected]