South Korean companies paid more corporate taxes than their rivals in developed countries in 2022, losing competitiveness, with the nation’s corporate tax revenues to the size of Asia’s fourth-largest economy at a record high in that year, a local business lobby group said on Thursday.
The ratio of South Korea’s corporate tax revenue to its gross domestic product (GDP) rose by 1.6 percentage points to 5.4% in 2022, the Korea Enterprises Federation (KEF) said in a report, citing data of taxes on corporate profits by the Organisation for Economic Co-operation and Development (OECD).
That was the highest ratio since 1972 when the OECD started compiling such data for South Korea, the KEF said.
“Korea lagged in competition of cutting corporate tax rates among OECD member countries, while an increasing number of companies may have raised corporate tax revenues,” the KEF said.
HIGHER THAN G7 COUNTRIESSouth Korea’s corporate tax revenue ratio to GDP in 2022 was higher than the average 3.8% of OECD member countries and those of the Group of Seven (G7) nations.
The ratio of the US was a mere 1.8%, while those of Japan and Germany were 4.6% and 2.4%, respectively.
“Korea needs to lower
the maximum corporate tax rate to the OECD average as major countries increased support for their companies to raise their competitiveness amid tough economic conditions,” said Ha Sang-woo, head of economic research at the KEF.
Write to Jin-Won Kim at
jin1@hankyung.com
Jongwoo Cheon edited this article.
