The Moon Jae-in administration has announced a plan to raise taxes on the rich and large-sized companies to fund its job-oriented policy initiatives, marking a departure from the two previous conservative governments.
 
In a tax-related ministerial meeting presided over by Finance Minister Kim Dong-yeon on Wednesday, the government finalized a tax code revision, seeking significant changes including in income tax, corporate tax, inheritance tax and gift tax beginning next year.
 
Under the plan, the maximum income tax rate, or the rate for those whose annual taxable income exceeds 500 million won, or about 445-thousand U.S. dollars, will be raised to 42 percent, up two percentage points from the current level.
 
The maximum corporate tax imposed on companies with taxable income exceeding 200 billion won will be raised by three percentage points to 25 percent.
 
The target income tax rate will be the highest level since 1995, while the target corporate tax rate will reach a level not seen for nine years.
 
The amount of annual earned income tax credits given to low-income working households will be raised to up to two-point-five million won, up from two-point-three million won.  
 
The refund rate on monthly rent will be raised from ten percent to 12 percent, meaning the government will give back up to 900-thousand won per year to tenants paying monthly rent through year-end tax adjustment. Currently, monthly-paying tenants get back up to 750-thousand won.
 
The government also seeks to impose higher tax on stocks transferred by large shareholders, raising the maximum level from 20 percent to 25 percent, while also beginning to roll back various tax deduction benefits for large-sized companies.
 
On the other hand, the government plans to strengthen taxation to assist its job initiatives, introducing tax benefits for companies recruiting more workers or turning their nonregular employees into regular ones.
 
The government will make an advance notice of the revised tax code by August 22nd. If the Cabinet approves it by the end of this month, it will be submitted to the National Assembly on September first.