SEOUL - South Korea imposed stiff tax hikes on Wednesday, targeting leading conglomerates, high-income individuals and investors with large holdings of South Korean shares as President Moon Jae-in seeks to tackle income inequality and fund increasing welfare benefits.
The corporate tax changes will hit 129 companies in South Korea and are expected to increase government revenue from corporate taxes by 5 per cent or 2.6 trillion South Korean won (S$3.14 billion) from the 2018 tax year, the finance ministry said.
The top marginal corporate income tax rate will be raised to 25 per cent from the current 22 per cent for corporations with more than 200 billion won of taxable income a year, the finance ministry said in its annual statement on revisions to the tax code.
An income tax rate of 42 per cent will kick in on personal earnings exceeding 500 million won ($447,0000) a year starting 2018, up from 40 per cent currently, Wednesday's statement said.
Income tax for annual earnings of 300 million won to 500 million won will be subject to income tax of 40 per cent from next year, up from 38 per cent.
The proposed changes in the tax code are subject to parliamentary approval, posing a challenge for the government in passing the bill as Moon's ruling Democratic Party only holds 40 per cent of the 299 seats in the National Assembly.