South Korea’s tax reforms, which are due to be implemented next year, will focus on narrowing the gap between rich and poor.
According to Korea Joongang Daily, it will be the first time that the country’s revenues fall as a result of tax reform. Proposed measures include lowering the qualification criteria for an earned-income tax credit to people on low incomes and increasing the amount of credit available to them.
Under the proposals, a single-person household would qualify for the credit if they make less than 20 million won (US$17,876) per year, up from 13 million won (US$12,000) under the current tax code. For a family with just one wage earner, the maximum amount of annual salary that qualifies for the credit will be raised from 21 million (US$18,690) to 30 million won (US$27,000).
The amount of tax credit will also go up. For single-person households, the refund will increase from 850,000 won (US$756) to 1.5 million won (US$1,334).
Kim Dong-yeon, the finance minister and deputy prime minister for the economy, said: "Overall household incomes in Korea are on the rise, but the distribution index has yet to show much improvement due to the fall in wages for workers in the first quintile [bottom 20%]. This is one of the most painful issues our society is facing today and requires an urgent solution."
The government also plans to raise the amount of child tax credit given to low-income households. The refund per child will increase from a range of 300,000 won (US$267) to 500,000 won (US$445), up to a range of 500,000 to 700,000 won (US$623).
Wealthier Koreans can expect steeper tax bills as a result of these moves, although the focus is on boosting the amount collected from property owners as corporate and income taxes on conglomerates and high-earners were raised last year. As of next year, foreign enterprises will also no longer receive reductions or exemptions from corporate and income taxes.
Emma Woollacott is a freelance business journalist. Her work has appeared in a wide range of publications, including the Guardian, the Times, Forbes and the BBC.
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South Korea’s tax reforms, which are due to be implemented next year, will focus on narrowing the gap between rich and poor.
According to Korea Joongang Daily, it will be the first time that the country’s revenues fall as a result of tax reform. Proposed measures include lowering the qualification criteria for an earned-income tax credit to people on low incomes and increasing the amount of credit available to them.
Under the proposals, a single-person household would qualify for the credit if they make less than 20 million won (US$17,876) per year, up from 13 million won (US$12,000) under the current tax code. For a family with just one wage earner, the maximum amount of annual salary that qualifies for the credit will be raised from 21 million (US$18,690) to 30 million won (US$27,000).
The amount of tax credit will also go up. For single-person households, the refund will increase from 850,000 won (US$756) to 1.5 million won (US$1,334).
Kim Dong-yeon, the finance minister and deputy prime minister for the economy, said: "Overall household incomes in Korea are on the rise, but the distribution index has yet to show much improvement due to the fall in wages for workers in the first quintile [bottom 20%]. This is one of the most painful issues our society is facing today and requires an urgent solution."
The government also plans to raise the amount of child tax credit given to low-income households. The refund per child will increase from a range of 300,000 won (US$267) to 500,000 won (US$445), up to a range of 500,000 to 700,000 won (US$623).
Wealthier Koreans can expect steeper tax bills as a result of these moves, although the focus is on boosting the amount collected from property owners as corporate and income taxes on conglomerates and high-earners were raised last year. As of next year, foreign enterprises will also no longer receive reductions or exemptions from corporate and income taxes.
Emma Woollacott is a freelance business journalist. Her work has appeared in a wide range of publications, including the Guardian, the Times, Forbes and the BBC.
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