Mid-sized Companies Call for Further Corporate Tax Cuts

Proposal for Tax System Improvement to the Government
Additional Corporate Tax Reduction, Expansion of Exclusion from Minimum Tax Application, etc.

To overcome the economic crisis warning signs such as the global economic downturn and the worst export performance, there is an opinion that bold measures such as additional corporate tax cuts and exclusion from the minimum tax application should be taken to promote investment by mid-sized companies, the 'backbone' of the economy.

The Korea Federation of Mid-sized Enterprises announced on the 6th that it submitted the "2023 Tax Policy Recommendations for Mid-sized Enterprises" containing these contents to the Ministry of Economy and Finance. The Federation stated, "While major competing countries are lowering taxes to support corporate competitiveness, maintaining a uniquely high corporate tax rate only hampers corporate activities and the national economy itself.

Lee Ho-jun, the full-time vice chairman of the Federation, said, "Last year, the original government plan to lower the highest corporate tax rate from 25% to 22% and reduce the number of tax brackets was changed to a 1% tax rate cut across all brackets, which had the positive aspect of expanding the target, but with a high top rate of 24% and a mere 1% reduction, it is difficult to expect a substantial effect from the corporate tax cut." He added, "Aligning corporate tax and various corporate regulations with global trends is the minimum measure to provide the same starting line for our companies that must compete with world-leading firms."

The Federation also stated that to enhance the effectiveness of non-taxation and exemption systems supporting corporate investment activation and securing global competitiveness, such as research and development (R&D) and integrated facility investment tax credits, the minimum tax for mid-sized companies should be abolished. The minimum tax is a system that imposes a minimum tax on companies receiving various tax reduction benefits.

They also proposed continuously easing the current inheritance tax rate, which is at the highest level among OECD countries, to support stable business succession such as the transfer of entrepreneurship and management know-how, and expanding the gift tax installment payment period to a maximum of 20 years, the same level as the inheritance tax installment payment period.

This content was produced with the assistance of AI translation services.