South Korea’s effective corporate tax rate fell more than 3 percentage points in 2010 from a year earlier as the government pushes to lower tax burdens on businesses, data showed Monday.
According to the data by the finance ministry and Statistics Korea, the country’s effective corporate tax rate stood at 16.6 percent last year, down 3.1 percentage points from a year earlier.
The figure is derived by dividing businesses’ tax payment of 29.58 trillion won ($25.07 billion) by their total taxable income of 178.63 trillion won that they reported last year. It reflected the diverse tax credits and income benefits offered to companies here.
For those earning more than 200 million won a year, the highest income bracket, the effective corporate tax rate stood at 17 percent. This compared with their statutory tax rate of 22 percent.
The effective corporate tax rates here have been on a decline over the past few years thanks to the government’s push to lower corporate tax burdens.
The rate was 20.5 percent in 2008 but it fell to 19.6 percent and 16.6 percent in 2009 and 2010, respectively, according to the data.
South Korea recently withdrew its bid to further cut the corporate tax rates in the face of opposition from political circles. Opponents claimed that the tax reductions will likely benefit only the wealthy and could be a drain on the nation’s coffers.
The government, instead, introduced a new income bracket ranging from 200 million to 50 billion won for which it will lower the corporate tax rate from 22 percent to 20 percent starting next year. Those earning more than 50 billion won will pay an unchanged 22 percent tax rate.
(Yonhap News)
