The Ministry of Economy and Finance announced the corporate tax reform plan on the 13th. According to the plan, the tax rate applied to the corporate tax base of 300 billion won or more will be reduced from 25% to 22%. Also, the tax rate applied to the tax base of 200 million won to 500 million won will be reduced from 20 percent to 10 percent except for large companies.
South Korea currently has four corporate tax rates (10, 20, 22, and 25%). The ministry’s plan is to decommission the last one. Currently, 24 OECD member countries, including the United States, each have one corporate tax rate. That number is her two in 11 including Australia. South Korea and Costa Rica alone have more than four.
The International Institute for Management Development announced in June that South Korea’s tax competitiveness and corporate tax competitiveness fell by 11 notches and 12 notches after the introduction of a 25% corporate tax rate in 2018.
According to the Korea Institute of Finance, Korea’s effective corporate tax rate was 21.4% in 2019, while the US, Japan and UK were 14.8%, 18.7% and 19.8% respectively.
