Tax revisions to result in 4.7 tln won in additional corporate tax: report

Local businesses are expected to pay an additional 4.7 trillion won ($4.2 billion) per year in corporate tax due to tax revisions over the past four years, a study showed Tuesday, amid growing calls from the opposition bloc to further hike corporate tax.

Since the incumbent administration came into office in early 2012, the government has enacted 14 separate revisions to various tax-related laws that have resulted in a significant increase in the amount paid by local firms, according to the Federation of Korean Industries.

For instance, a 2 percentage point increase in the minimum tax rate for companies in 2012 followed by another 1 percentage point hike in 2013 have led to an additional 774.5 billion won paid by local businesses in taxes, the FKI said, citing the report by Prof. Kim Woo-cheol of the University of Seoul.

Also, a brand new tax on company cars that went into effect last year is expected to force local companies to pay an additional 298 billion won in corporate tax per year.

"Some insist on the need for a corporate tax hike, but numerous revisions to laws on corporate and local taxes since the inauguration of the incumbent administration are already expected to cause an additional 4.7 trillion won in corporate tax while some of those revisions have already led to an increase in the amount paid," the professor was quoted as saying.

The report also argued what it called the de facto tax rate of large firms with more than 100 billion won in taxable income have come to 19.9 percent in 2015, up from 18.9 percent in 2013.

"The FKI believes the recent tax revisions have been rather aimed at large companies, while recent cuts in tax incentives designed to promote corporate investment have been discriminatingly greater for large firms," an FKI official said.

"Corporate tax is expected to breach the 50 trillion won mark for the first time in the country's history this year, but such a result will have been caused by a rise in the amount paid by companies due to tax revisions since the start of this administration instead of a rise in the companies' income," he added.

FKI is the largest business lobby in South Korea that is often referred to as an employers' club as it represents the country's 600 largest companies. (Yonhap)