Posted August. 24, 2010 08:01,
A tax policy designed to give tax breaks to companies making big investments will instead be offered to entities that create jobs on top of making investments.
The measure was introduced to give more benefits to companies that create jobs in the wake of the jobless growth era, in which expansion of corporate investment does not lead to more jobs.
The Strategy and Finance Ministry said Monday that it will finalize a plan on reforming tax policy for 2011 for creating jobs and stabilizing the livelihoods of ordinary people at a meeting of a tax policy developmental committee. The ministry will submit a finalized revision bill to that end to the regular National Assembly session next month.
The ministry will introduce a system of tax exemptions for job creation under which it plans to cut taxes for a company that invests and raises employment, while revoking the system for temporary tax exemptions on investments at years end. A tax exemption of seven percent has been offered to a company that invests in production facilities, but the benefit will apply only if the company increases employment from the previous year as well.
The latest tax measures are expected to raise tax revenues by 1.9 trillion won (1.61 billion U.S. dollars) over the next five years. Pursued by the Lee Myung-bak administration since its inauguration, the tax cut plan has effectively collapsed again this year after doing so last year.
Of the increased tax revenues, 1.3 trillion won (1.12 billion dollars) will be put on the shoulders of conglomerates and high-income earners, while 140 billion won (118 million dollars) will be borne by small and medium-sized companies and the working class.