South Korea’s government estimates it loses $9.5 billion in corporate tax revenue through tax breaks

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South Korea’s government plans corporate and personal income tax next year to boost spending and expects to lose 13 trillion won ($9.5 billion) in tax revenue on companies next year.

The government estimates 69.3 trillion won in tax exemptions for next year, according to the 2023 tax expenditure plan that the Ministry of Economy and Finance submitted to the legislature for its budget outline review.

The biggest cut will be made in income tax amounting to 40.4 trillion won to absorb more than half of next year’s total tax exemption. The main tax deduction programs are special deductions (5.8 trillion won) and employment subsidies (5.2 trillion won).

The income tax exemption has steadily increased from 34.6 trillion won in 2021 and 37.3 trillion won this year to 40 trillion won next year. However, its share of total tax cuts will decline slightly to 58.3% next year from 58.6% this year. It represented 60.6% in 2021.

The next big tax break will be given to corporate income.

The government will reduce corporate tax by 12.8 trillion won in 2023 through various programs, including a 4.5 trillion won tax deduction on R&D projects and a 2.4 trillion won investment deduction.

Greater tax relief has been given to companies over the years, rising from 8.9 trillion won in 2021 and 11.3 trillion won in 2022 to nearly 13 trillion won next year. It will represent 18.4% of total tax relief next year, up from 15.6% in 2021 and 17.8% this year.

The value-added tax will be lowered by 11.3 trillion won next year, or 16.3 percent of the total tax reduction. The amount fell from 10.2 trillion won in 2021 to 10.6 trillion won this year, but the proportion is down from 17.8 percent in 2021 and 16.7 percent this year.

Other tax deductions planned for next year include a 2.2 trillion won reduction in inheritance/gift tax and a 1.04 trillion won reduction in individual consumption tax.

By impulse

[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]

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