Samsung Elec, LG Chem could face tough challenges if taxes are raised: report
SEOUL, Oct. 11 (Yonhap) -- Samsung Electronics Co. and LG Chem Ltd. could face difficult times if South Korea marks up corporate tax rates to boost state revenue, a local think tank said Wednesday.
If corporate taxes rise by 3 percentage points to 25 percent as proposed by the government, the Korea Economic Research Institute (KERI) estimated that Samsung Electronics and LG Chem will face the biggest corporate tax burden among their global peers.
"Korean companies currently pay 22 percent of their net income in corporate taxes. As the tax breaks they are entitled to are small in comparison to the tax benefits enjoyed by foreign firms such as Apple Inc. and Intel Corp., they could be paying even more down the road," a spokeswoman for the Federation of Korean Industries (FKI) claimed.
KERI is a research institute under the FKI, one of South Korea's largest business lobbies.
In addition to the chip giant and the chemical firm, Hyundai Motor Co. will also be affected if corporate taxes go up, the institute said.
The institute said raising corporate taxes does not necessarily result in overall higher tax earning by the state.
Six of the 35 member countries of the Organization for Economic Cooperation and Development (OECD) raised corporate taxes during the past decade, but four of those saw their tax revenue decline. The four nations are France, Hungary, Chile and Portugal, the latest numbers showed.