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S. Korea's top biz groups pay less tax on low earnings
Publication Date : 16-08-2013
South Korea's top 10 industrial groups paid significantly less in income taxes mostly on the back of lackluster earnings amid a sluggish economy, figures showed on Thursday.
This, in turn, indicates that the government will earn less in taxes from the corporate sector. The Park Geun-hye administration is currently struggling for more tax revenue as it seeks to uphold its welfare pledges.
Tax revenues for the first half of this year tumbled to the lowest in three years to 96.7 trillion won. A year ago, revenues had reached 106.8 trillion won.
Data from the financial regulator and the National Tax Service showed that the 10 largest companies and their 92 affiliates paid up to 12.18 trillion won in corporate taxes for the fiscal year of 2012.
This was up 10.9 per cent compared to last year, but industry watchers were quick to note that it was due chiefly to Samsung Group’s improved earnings.
Minus Samsung, the nine industrial groups saw their corporate tax expenses fall by 21.3 per cent to 6.45 trillion won from 8.19 trillion won.
The effective tax rate for these groups also fell to 20.4 per cent from 22.1 per cent, indicating that the actual amount of income taxes they paid fell when excluding tax credits and other exemptions from before-tax earnings.
“These figures are an indication that in general, companies performed less than satisfactorily, with the exception of Samsung, and therefore paid less tax,” said Jung Sun-sup, head of Chaebul.com, a website devoted to collecting and analyzing information on conglomerates.
Among the 10, Hyundai Heavy Industries saw the biggest decline in income taxes, followed by SK Group, Hanwha, GS, Lotte, POSCO, LG and Hyundai Motor.
Samsung, on the other hand, saw its income tax expenses shoot up by 105.3 per cent to 5.73 trillion won after its before-tax net income rose more than 70 per cent to 31.1 trillion won.
US$1 = 1,117 won