Korea’s corporate tax posts above OECD average

A report from the National Assembly Budget Office is expected to rekindle the debate on revision of the corporate tax rate, with critics continuing to push for a hike to improve fiscal soundness.

Justifying the current level, the parliamentary office ― citing data from the Organization for Economic Development and Cooperation ― said Korea’s corporate taxes are above the average of the 34 OECD member nations.

“Korea’s corporate taxes amounted to 3.4 percent of its gross domestic product in 2013,” said the office. “It was ranked sixth among the 32 surveyed OECD members.”

Norway topped the list with a tax-GDP ratio of 8.5 percent, followed by Australia at 5.2 percent, Luxembourg with 4.9 percent, New Zealand with 4.4 percent and Japan at 3.9 percent.

Among others that posted lower corporate tax standings were the U.K. at 2.5 percent, the U.S. with 2.3 percent, Turkey with 1.9 percent, Germany with 1.8 percent, Estonia with 1.7 percent, Hungary with 1.4 percent and Slovakia at 1.2 percent.

Local advocates of tax cuts highlight that major economies, such as Sweden, Denmark, Ireland and Japan, have already ― or are moving to ― cut their corporate tax rate in their bid to upgrade industrial competitiveness.

Opponents say that Korea has already slashed taxes on businesses, noting that this has led to a deterioration in fiscal soundness.

By Kim Yon-se (kys@heraldcorp.com)