Corporate taxes in South Korea are still nearly 3 percentage points higher than the average among the OECD countries, although the government reduced the rates last year, a report showed Thursday.
According to the OECD report, the average corporate tax rate, including local taxes, among the 114 countries that levy corporate taxes fell to 20 percent last year from 28 percent in 2000. The data highlights the global trend of lowering corporate tax rates to stimulate investments.
The average corporate tax rate among 38 OECD countries stands at 23.6 percent. Korea’s highest rate is 26.4 percent, counting last year’s tax revision that lowered the rates by 1 percentage point.
However, Korea still maintains rates 2.8 percentage points higher than the OECD average.
The OECD report noted that among the 38 member countries, Korea remains the only country applying progressive taxation with more than four income brackets, as opposed to the single-rate system adopted by 35 countries.
In March, the Federation of Korean Industries (FKI) submitted an opinion to the Ministry of Economy and Finance, suggesting that the reduction in corporate tax rates was insufficient to enhance the competitiveness of Korean businesses and promote foreign capital inflow.
The business lobby group argued that alongside tax rate reductions, simplifying the tax system is also necessary.
Currently, corporate tax rates in many countries are at historically low levels, the report said. The number of countries with corporate tax rates exceeding 30 percent has significantly declined over the past 22 years.
In 2000, there were 72 countries with rates above 30 percent, but by last year, this number fell to 18.
However, during the same period, the number of countries with rates between 25 percent and 30 percent increased from 14 to 31, those with rates between 20 percent and 25 percent increased from 4 to 11, those with rates between 10 percent and 20 percent increased from 14 to 34, and those with rates below 10 percent increased from 10 to 20.
By Lee Hee-jo and Minu Kim
[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]