People earning more than 100 million won (US$89,847) a year will see their effective tax rate rise faster than other income brackets next year under the government's latest tax code overhaul plan, the finance ministry said Friday.
The ministry unveiled its 2013 tax code overhaul proposal on Thursday in which it plans to phase out most of the income deduction programs and replace them with tax deductions in a bid to provide more benefits to low- and middle-income earners.
The government estimated that it could raise about 2.49 trillion won more over the next five years through the plan as well as through other changes to the tax code. The proposal requires parliamentary approval before going into effect.
Under the proposal, people whose annual income exceeds 100 million won will see their effective income tax rate rise an average of 1.5 percentage points next year, which is much higher than the rates to be applied to those belonging to lower income brackets, according to the ministry.
The tax code overhaul proposal will raise the effective tax rates for those earning 40-50 million won, 50-60 million won and 60-70 million won a year by an average of 0.3 percentage points each, the ministry said.
In particular, people whose annual income ranges from 120 million won to 150 million won will see their effective tax rate increase from 12 percent to 14 percent next year. This translates into an additional 2.56 million won in taxes than this year, according to the ministry. (Yonhap News)