Minimum Tax Rate Bracket for Earned Income Tax Raised from 12 Million to 14 Million Won
"Corporate Tax and Financial Investment Tax Delegated through Negotiation with Floor Leaders"
[Asia Economy Reporter Kang Joo-hee] The Democratic Party of Korea reached a tentative agreement with the ruling party on the 8th to raise the basic deduction amount for the comprehensive real estate holding tax (Comprehensive Real Estate Tax, 종부세) for single-home households and low-priced multi-homeowners.
Kim Seong-hwan, the Policy Committee Chair of the Democratic Party, held a press conference related to budget negotiations at the National Assembly on the same day and announced that the basic deduction standard for the comprehensive real estate tax was agreed to be "raised from 1.1 billion KRW to 1.2 billion KRW for single-home households, and from 600 million KRW to 900 million KRW for low-priced multi-homeowners."
Accordingly, the basic deduction for single-home households will increase from 1.1 billion KRW to 1.2 billion KRW starting next year. Other basic deduction amounts will also be adjusted upward from the current 600 million KRW to 900 million KRW. As a result, for jointly owned single homes by a married couple, each will receive a basic deduction of 900 million KRW, totaling 1.8 billion KRW.
The ruling and opposition parties also agreed that for two-homeowners, even if they own homes in regulated areas, the basic tax rate of 0.6% to 3.0% will be applied instead of the heavy tax rate of 1.2% to 6.0%.
However, no agreement was reached on abolishing the progressive taxation for owners of three or more homes. Chair Kim criticized, "Two hours after the agreement, the ruling party additionally demanded to 'ease the progressive system for owners of three or more homes,' which is typical of a wealthy party."
Shin Dong-geun, the Democratic Party floor leader on the National Assembly's Planning and Finance Committee, explained, "There is a tentative agreement on the comprehensive real estate tax and inheritance and gift tax, and the negotiations on corporate tax and financial investment income tax (금투세) have been delegated to the floor leaders."
Shin said, "The ruling party proposed gradually lowering the corporate tax rate to 22%, but since this is a tax cut for large corporations, we cannot accept anything below 25%."
Regarding the financial investment income tax, he said, "We negotiated lowering the securities transaction tax to 0.15%, but the ruling party is only interested in raising the exemption threshold for the financial investment income tax to 10 billion KRW for shareholders, representing the interests of the wealthy, so we cannot accept that either."
However, Shin stated that the government proposal to expand the taxable income bracket subject to the lowest tax rate of 6% on earned income tax from 12 million KRW to 14 million KRW was accepted.
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