Gyeongnam Chamber of Commerce Association Urges Prompt Passage of Partial Amendment to Corporate Tax Act

Need to Promote National Balanced Development through Differential Application of Corporate Tax

The Gyeongsangnam-do Chamber of Commerce and Industry Council sent a petition on the 30th to the leaders of each political party, members of the National Assembly's Planning and Finance Committee, and lawmakers from the Gyeongnam region, expressing hope for the prompt passage of the "Partial Amendment to the Corporate Tax Act," which centers on the differential application of corporate tax between the metropolitan area and non-metropolitan areas.

In the petition, the Gyeongnam Chamber of Commerce Council pointed out that "the overconcentration of growth in the metropolitan area and the crisis of local extinction are identified as the biggest obstacles to sustainable growth in our country."

Changwon Chamber of Commerce and Industry, Gyeongnam.

Regarding this, the petition explained the background, stating that the "Partial Amendment to the Corporate Tax Act" (Bill No. 2107607), jointly proposed in 2021 by National Assembly members Yoon Young-seok, Kang Ki-yoon, Choi Hyung-do, and others, includes provisions to promote national balanced development by encouraging corporate relocation to non-metropolitan areas and enhancing the competitiveness of companies in those areas through differential corporate tax rates between the metropolitan and non-metropolitan regions. Despite high expectations, the bill remains pending in the National Assembly, which is regrettable.

The review report by the Planning and Finance Committee's expert noted positive opinions regarding the bill, stating that if regional differential corporate tax rates are implemented, it could induce companies to relocate outside the metropolitan area, thereby promoting regional balanced development in accordance with Article 120, Paragraph 2 of the Constitution. It also cited cases from overseas countries such as Israel, where applying regional differential corporate tax rates has contributed to increasing industrial employment and income in underdeveloped areas.

Additionally, the National Assembly Budget Office's cost estimate projected that if the amendment is enacted, tax revenue would decrease by an average of 5.3 trillion won annually over five years (2022?2026).

In the petition, the Gyeongnam Chamber of Commerce Council argued, "The estimated annual tax revenue decrease of 5.3 trillion won can be offset by reducing social costs caused by the current overconcentration in the metropolitan area and the hollowing out of non-metropolitan areas, by encouraging companies and jobs to move to non-metropolitan regions. Furthermore, this effect can be achieved at a lower cost than the national balanced development budget annually allocated (16.6 trillion won as of 2020), thereby swiftly realizing the national task of balanced development."

A representative of the Gyeongnam Chamber of Commerce Council stated, "National balanced development is a nationwide common goal that must be achieved for the future. To this end, it is necessary to create an environment that encourages companies, which are the main agents of production and job creation, to relocate to non-metropolitan areas or to enhance the competitiveness of existing non-metropolitan companies to increase investment."

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