Image: Reuters Berita 24 English - As promised by President Yoon Suk-yeol during the election campaign , South Korea on Thursday proposed a ...
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| Image: Reuters |
Berita 24 English - As promised by President Yoon Suk-yeol during the election campaign, South Korea on Thursday proposed a number of tax cuts for businesses, employees, and individual stock investors.
The Yoon administration recommended lowering the income tax threshold to include more salaried people in the lower income tax bracket of 15 percent and lowering the highest corporate tax rate from the existing 25 percent to 22 percent in his first yearly tax code reform.
The government proposed to eliminate capital gains taxes on retail investments, with the exception of holdings worth more than 10 billion won ($7.63 million) in any one stock, in an effort to revive the stock market, which has fallen about 20 percent so far this year.
The finance ministry stated in a statement that "our goal is to rewrite tax regulations to fit into the global norms, and to revitalise the market, businesses, as well as markets."
The Ministry of Finance stated that a maximum corporation tax rate of 22 percent would place South Korea's tax burden on businesses at a level with the average for OECD nations, which would ultimately benefit "shareholders through dividends and consumers through cheaper pricing of goods and services."
The annual revision comes as the fourth-largest economy in Asia braces for slower growth this year as resource-poor nation struggles with increasing energy prices made worse by the conflict in Ukraine.
The trade imbalance between January and June reached a record high, export growth in June was the worst in 19 months, and rising import costs are harming private spending, which accounts for nearly 50% of the GDP.
Once authorised by the National Assembly, the ministry said it plans to change a total of 18 tax laws this year, resulting in a 13.1 trillion won ($10 billion) decrease in government revenue over the following five years.
The tax deduction rate for capital investment in important technical sectors, including as semiconductors, batteries, and vaccines, will be increased from 6 percent to 8% for big firms, among other incentives to promote commercial activity, according to the proposal.
Taxes on foreign investors' income from holding treasury bonds and monetary stabilisation bonds would also be eliminated, which is thought to propel South Korea one step closer to participation in the FTSE World Government Bond Index.
By September 2, the finance minister will deliver the plan to the National Assembly.
The ministry projects that over the next five years, the total tax burden will decrease by 6.8 trillion won for businesses and 2.5 trillion won for wage earners, making up 71% of the decline in government revenue.
($1 = 1,310.1100 won)
