Changes in the Tax Code of South Korea: Reducing Social Inequality

According to information provided by Interfax, referring to the Ministry of Finance, it became known that the South Korean authorities were ready to raise the nominal tax rate on income from companies from 22% to 25%. Changes in the legislation will affect the budget of organizations whose annual profits exceed $ 178 million. Also, company employees and hired workers with an annual income of over 300 million won should be prepared for the fact that the income tax will no longer be 38%, but already 40%. For individuals with income from 500 million, the level of income tax will increase to 42%, from the previous 40%.

As it can be understood from the forecasts of the Ministry of Finance of South Korea, the increase in the rate will replenish the country’s budget by 5.5 trillion only in the first year since the introduction of changes in the country’s legislation.

However, in order for amendments to the tax legislation to enter into force, approval of amendments by the South Korean parliament is required. The funds received will be used to allocate benefits to people with low incomes, which will help reduce the gap between social strata in society. It also provides  a reduction in the taxation of developing companies that create new jobs, and thus hinder the growth of unemployment in the country.