The Korea Chamber of Commerce and Industry said Thursday it delivered a proposal to the National Assembly calling for lower corporate and income taxes.
The government had planned to lower the corporate tax rate to 20 percent from the current 22 percent for firms with over 200 million won in earnings beginning next year.
But the plan is being held up in the National Assembly as some lawmakers argue that the corporate tax rate should either be maintained or increased to 30 percent.
“The consistency of state policy and the calculability are among the most important factors in business operations,” said Chun Su-bong, executive director at the KCCI.
“Our local companies are in a confused state as the lowering of the corporate tax rate, which has been repeatedly discussed over the year, is seeing sudden changes.”
Chun said Korea’s neighboring economies like Taiwan and Hong Kong were lowering their corporate tax rate to raise the competitiveness of firms and to recruit more foreign investment.
Taiwan cut its corporate tax rate from 25 percent in 2009 to 17 percent in 2010, Hong Kong decreased its rate from 17.5 percent in 2007 to 16.5 percent in 2008 and Singapore lowered it from 20 percent in 2007 to 17 percent in 2010, according to KCCI officials.
The country’s largest business lobby also said another income bracket should be added to the tax code.
Currently, income is taxed at four different income brackets ― less than 12 million won, less than 46 million won, less than 88 million won and over 88 million won. The tax rates for each bracket are 6 percent, 15 percent, 24 percent and 35 percent, respectively.
The KCCI, however, suggested that a new bracket should be introduced for those earning between 88 million won and 150 million won or between 88 million won and 200 million won. They also said the income tax rate for that bracket should be lowered to 33 percent from 35 percent.
Those who earn more than 200 million won in yearly income should be subject to the 35 percent tax rate, it added.
“Higher taxes are likely to hurt local economic conditions, so we should get the economy up and running through tax reductions,” said Chun.
By Cho Ji-hyun