Korea: Aim To Raise KRW10.5 Trillion More In Tax Revenue From Revision
Announcing its latest revision to the taxation system, the government said it will set the lowest tax rate for large-capitalized companies at 15% from next year from 13% as planned just a year earlier.
Seoul will also ask financial institutions to pay tax for interest income from bond investment monthly from 2010 instead of annually. The tax rate for such investment will remain at 14%.
"Fiscal soundness has worsened with the nation's debt rising to 35.6% this year from 30.1% last year as we had to set up a supplementary budget, while tax revenue has declined due to the global economic downturn," the government said in a statement. The tax revision will expand tax revenue sources, it said.
The latest measures come amid signs of economic recovery and are also in line with the International Monetary Fund's advice to the government to take steps to normalize the nation's balance sheet.
The latest lowest tax rate for large companies reverses the government's plan announced last year. The finance ministry said then that the government aims to trim the corporate-tax band to 10%-20% by 2011 from a 13%-25% range. According to that plan, companies with revenue exceeding KRW100 billion will pay 13% corporate tax in 2010, lower than 14% this year. Instead of paying a lower rate, they will pay 15% in 2010 under the new plan.
Companies in a tax bracket of between KRW10 billion and KRW100 billion in revenue will pay 13% corporate tax next year compared with 11% this year, instead of 10% as initially planned.
The tax-revision package will also affect high-income individuals. The government is currently giving a basic tax exemption of KRW500,000 to all individuals regardless of their income levels. But individuals earning more than KRW100,000,000 annually will no longer enjoy the tax exemption.
The plan will be discussed at the Cabinet meeting in September and submitted to the National Assembly for approval later that month.
The government will also exempt interest-income tax for foreign investors who buy sukuk issued by local firms. Sukuk is a type of Islamic bond that complies with Islamic law.
In a bid to boost energy efficiency, the government will impose a 5% individual consumption tax on energy-consuming home appliances, such as air conditioners and refrigerators, for five years. This will affect products produced from April next year.
The nation will also impose a security transaction tax for public mutual funds and pension funds from next year.
-By Kanga Kong, Dow Jones Newswires; 822-2198-2230; kanga.kong@dowjones.com
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Publié le 25 Août 2009 Copyright © 2009 Dowjones
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