[Corporate Burden Corporate Tax] Samsung 25% vs Intel 8.5%... Korea 10%p Higher Than Global Competitors

Average Corporate Tax Burden Rate of Korean Companies 25.7%
10%p Difference from Global Competitors at 15.7%

[Asia Economy Reporter Park Sun-mi] Although Korean companies lag behind global competitors in sales, assets, market capitalization, and research and development (R&D) investment, their average tax burden is 10 percentage points higher, indicating a need for improvement.

On the 14th, the Federation of Korean Industries (FKI) announced that a comparison of the 2021 business performance between Korean companies in export-driven industries and their global competitors showed that in 2021, global competitors’ sales were 2.2 times those of Korean companies, and their assets were 1.3 times larger.

Excluding Samsung Electronics and LG Electronics, which are global leaders in semiconductors and home appliances, the gap widened further, with sales reaching three times and assets 1.8 times those of Korean companies. The market valuation of global competitors was also significantly higher, with their market capitalization being 3.1 times that of Korean companies.

In 2021, R&D investment by global competitors amounted to $8.4 billion, 1.4 times larger than the Korean companies’ average of $5.8 billion. Among the surveyed items, only facility investment was higher for Korean companies, at 1.7 times that of global competitors.

While global competitors significantly outperformed Korean companies in sales, assets, and market capitalization, the corporate tax burden rate for Korean companies averaged 25.7%, which is 10 percentage points higher than the global competitors’ average of 15.7%.

Yoo Hwan-ik, head of the Industry Division at FKI, stated, “Even though Korean representative companies in the seven major export-driven industries have sales and market capitalization only about one-half to one-third the size of their global competitors, their tax burden is significantly higher. To enable our companies to compete equally with global firms in overseas markets, corporate tax burdens must be lowered, and discriminatory regulations against large corporations that hinder business growth should be urgently resolved.”