 Knowledge Economy Minister |
Staff Reporter
The government plans to cut corporate income tax to as low as 20 percent next year from the current rate of up to 25 percent in a move to attract more foreign investment, Knowledge Economy Minister Choi Kyung-hwan said Wednesday.
``To create jobs and stimulate the economy, it is essential to secure more foreign direct investment (FDI). To that extent, the government plans to cut corporate tax to the level of 20 percent by the end of 2010,'' the minister said during the opening speech of the 2009 CEO Forum for Foreign-Invested Companies in southern Seoul.
``Korea will make sure of creating a business-friendly environment supportive of investing firms.''
Currently, taxes levied by the central government for profits on companies here are set between 13 and 25 percent. With local taxes added the rates average 24.2 percent, the ninth-lowest among members of the Organization for Economic Cooperation and Development (OECD).
Requests, however, have been mounting in the local business community that bigger perks are necessary in an export-driven country like Korea.
Below the OECD average of 26.3 percent, Korea's corporate tax rates are still higher in comparison with other members in the race to attract more FDI. A lot of fast-growing European countries, including Ireland, the Czech Republic and Poland impose taxes less than 20 percent, with Ireland the lowest at 12.5 percent.
Most rival Asian countries are looking at lower corporate taxes ― Taiwan plans to slash its rate by 5 percentage points to 20 percent next year; and Singapore from 18 percent to 17 percent. In Hong Kong, the rate is 16.5 percent.
Choi said foreign-invested firms have become a mainstay in the Korean economy. This year's accumulated FDI amounted to more than $8 billion as of September, up 8 percent from the same period last year.
He told foreign business leaders that the environment here is ``notably getting better,'' citing the expansion of free economic zones, improvement in labor-management relations and the protection of intellectual property rights.
Calling foreign-invested companies ``our significant neighbors,'' he quoted an old saying that a good neighbor ``is better than a brother far off.''
Also at the forum, Strategy and Finance Minister Yoon Jeung-hyun said the country will focus on fostering growth potential, expanding openings to the global business community and strengthening damage control for post-crisis economic policies.
Jeffrey Jones, the former president of the American Chamber of Commerce in Korea (AMCHAM Korea), delivered a speech under the theme ``The 10 Charming Things About Investing in Korea.''
Other guests at the forum included the incumbent AMCHAM Korea Chairman David Ruch and Seoul Japan Club Chairman Tsutomu Awaya.
hckim@koreatimes.co.kr
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