Business Groups Express Both Expectations and Concerns
Concerns Over 1 Percentage Point Corporate Tax Rate Hike Across All Brackets
"Hope for Forward-Looking Improvements"
The business community expressed expectations for economic recovery regarding the government’s 2025 tax reform plan, which was announced, but also voiced concerns that certain measures, such as the corporate tax rate increase, could increase the burden on companies.
Hyungil Lee, First Vice Minister of Strategy and Finance (right), is giving a detailed briefing on the 2025 tax reform plan at the briefing room of the Civil Service Building, Government Complex Sejong, on the 29th. On the left is Geumcheol Park, Director of the Tax Bureau. Photo by Yonhap News
On July 31, the Ministry of Economy and Finance finalized the tax reform plan, stating, “This year’s tax reform plan focuses on laying a stronger foundation for weakened tax revenues to support the leap toward becoming a leading economic power and to stabilize people’s livelihoods, while also ensuring fiscal sustainability.”
The Korea Chamber of Commerce and Industry evaluated, “This tax reform plan reflects the government’s intent to foster high-tech industries and revitalize the capital market,” and added, “Introducing separate taxation for dividend income for investors in high-dividend companies, and including dividends in the scope of the investment and mutual cooperation promotion tax system, are appropriate measures to promote dividend expansion and revitalize the capital market.”
However, they pointed out, “The plan to raise the corporate tax rate by one percentage point for each tax base bracket contrasts with major countries such as the United States, which are lowering corporate tax rates to enhance their own companies’ tax competitiveness and actively attract foreign companies.” They added, “We are concerned that this could only increase the burden on our companies.”
The Korea Employers Federation stated, “We expect that these measures could help boost the dynamism of our economy, which is facing a near-zero growth crisis, and aid in the recovery of the people’s economy.” However, they also expressed concern that “the corporate tax rate increase and the expiration of the temporary investment tax credit will reduce the effectiveness of these support measures and dampen investment sentiment.”
The Federation urged, “We hope that the government and the National Assembly will supplement the legislative process with more forward-looking measures to enhance the competitiveness of our companies, which are struggling due to the recent deterioration of internal and external conditions.”
Lee Sangho, Head of the Economic and Industrial Headquarters at the Federation of Korean Industries, said, “It is regrettable that the tax reform plan includes measures that increase the burden on companies, such as the corporate tax rate hike.” He also expressed concern that “in the face of a complex crisis involving weakening growth potential, worsening trade conditions, and prolonged domestic market stagnation, increasing the management burden on companies could lead to a decline in global competitiveness.”
Lee further stated, “The expiration of the temporary investment tax credit could also dampen companies’ investment sentiment.” He added, “We hope that sufficient improvements and supplements will be made during the upcoming National Assembly discussions so that the government’s tax reform can serve as a strong catalyst for our companies to overcome the crisis and take a leap forward.”
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