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Proposed reductions to tax rates/base — Orbitax Tax News & Alerts

Further to the report on the South Korean administration's plans to introduce tax cuts, the Finance Minister on 1 September 2008 announced the following:

-   The personal income tax rate is to be reduced by for all income brackets by 2010, from the current 8% to 35%, to 6% to 33%;
-   The income deduction is to be increased from KRW 1 million to KRW 1.5 million;
-   The corporate income tax reduction programme is to be accelerated from a 5-year programme to a 3-year programme, from the current 13% to 25%, to 11% to 22% in 2009, and 10% to 20% by 2010;
-   The tax base for small and medium-sized enterprises is to be increased from KRW 100 million to KRW 200 million;
-   The threshold for capital gains tax is to be increased from KRW 600 million to KRW 900 million; and
-   The range of the inheritance and gift tax rates is to be reduced, from the current 10%to 50%, to 6% to 33 by 2009.

The above rules will take effect when the amendment bills to relevant laws are approved by the National Assembly. The amendment bills are expected to be submitted to the National Assembly in early October 2008.