SEOUL, Jul. 12 (Korea Bizwire) — South Korea’s effective corporate tax rate has remained at around 16 percent since 2010 due to various deductions and exemptions despite the nominal corporate tax rate marked at 22 percent, government data showed Wednesday.
The effective corporate tax rate was 16.6 percent last year, up 0.5 percent from the previous year, according to the figures provided by the National Assembly Budget Office.
The figures for last year reflect taxable corporate earnings in the previous year.
The latest findings showed that the real rate had moved down 16.6 percent in 2010 from 20.5 percent in 2008 and stood at 19.6 percent in 2009
The Lee Myung-bak administration reduced the nominal corporate tax rate to 22 percent in 2009 from 25 percent to help businesses invest in facilities, and research and development activities.
The corporate tax rate that takes into account dues firms paid to foreign governments also fell to 17.8 percent last year from 21.1 percent in 2008, while tax numbers that encompasses local and overseas tax payments stood at 19.5 percent last year from 23.1 percent during the same time span.
By tax bracket, the corporate tax rate was 8.3 percent for firms with taxable earnings ranging from 100 million won (US$87,260) to 200 million won last year.
The rate for companies in the 200-500 million-won range was 10.6 percent, with numbers rising steeply to 19.5 percent for those in the 100-500 billion-won bracket.
The comparable figure, however, shrank to 17.2 percent for companies with taxable earnings topping 500 billion won.
The drop is attributed to various tax deductions and favors given to 49 of the country’s very big businesses, which have reported earnings exceeding 500 billion won.