(Source: Kim So-hyun Asia News Network (MCT) — The government and the ruling Saenuri Party of South Korea yesterday agreed on raising the minimum tax rate for large firms that receive various tax benefits from the current 14 per cent to 15 per cent.
The revised tax bill also includes lowering the tax cut limits for big businesses; imposing taxes on financial income of more than 30 million won (US$26,514), down from the current 40 million won; expanding taxation on gains from stock transfers by major shareholders; and introducing transaction taxes on derivatives.
The Saenuri Party’s Rep. Na Seong-lin said his party received a report on the bill in a meeting with the government on tax reform plans.
“Reducing the tax cut limits for large companies will contribute toward increasing tax revenue and promoting fair taxation,” Na said in a briefing.
“Toughened taxation on financial or capital gains also dovetails with the Saenuri Party’s policy direction to expand the source of tax revenue and lower the tax rates.”
The envisioned tax reform plan is expected to raise tax revenue by about 1.8 trillion won, Na said.
The new bill reflects the ruling party’s demands for higher taxes on capital gains and less tax cuts for conglomerates, which were its campaign pledges in the parliamentary elections on April 11.
The bill, however, does not include taxation on people engaged in religious service.
The government will also push to expand income tax deductions for individuals investing in start-up ventures, introduce an earned income tax credit for senior citizens, raise the limit for seamen’s non-taxable income earned abroad and expand the provision of tax-free oil for fishing.
The Saenuri Party agreed to the government’s plan to reduce tax cuts and exemptions to push up tax revenue, Na said.
The party asked the government, however, to reconsider eliminating tax relief for financial institutions that deal with low-income earners and to ease the conditions for reverse mortgage loans for the baby boomer generation.
The Saenuri Party also requested a careful approach on cutting consumption tax on members-only golf courses and expanding tax credits for successions of family businesses in a bid to stimulate demand as they could unnecessarily raise public criticism.
The ruling party stressed that the income tax system should be rationally revised, while the government maintained a wait-and-see stance.
(1 won = $0.0009)
©2012 the Asia News Network (Hamburg, Germany)
Visit the Asia News Network (Hamburg, Germany) at www.asianewsnet.net/home/
Distributed by MCT Information Services