Wealthy Koreans to Pay Higher Taxes

January 3, 2012 Taxation in South Korea

KRWSEOUL – Korea has instated a new income tax, which will raise tax liabilities for the country’s richest individuals.

On December 31st the National Assembly of Korea voted in a bill to introduce a new income tax bracket and a higher rate of income tax for the country’s highest earning taxpayers. The new tax rate of 38 percent will apply to individuals earning in excess of KRW 300 million annually. Previously, the highest individual income tax rate in Korea was 35 percent. It is currently estimated that the new tax will raise an additional KRW 770 billion in tax revenues per annum.

Approximately only 0.17 percent of the Korean population will have to pay the new tax, and some Korean politicians have already criticized the new rule, saying that it will be ineffective, as it does not target enough Korean taxpayers. Political analysts have suggested that the new tax was instated in order to improve the image of the ruling Grand National Party ahead of the country’s upcoming general election in April. However, representatives of the Party have said that the tax can be optimized in the future, and the applicable rate and payment threshold will be adjusted in order to target more taxpayers.

Photo by Zhang Erning