Samsung Electronics headquarters in Seoul / Korea Times file

By Kim Hyun-bin

Samsung Electronics' corporate tax burden was found to be 2.6 times higher than Taiwan's TSMC, and voices are emerging that the competitiveness of domestic companies should be improved through corporate tax cuts, according to industry officials, Tuesday.

The Federation of Korean Industries (FKI) released a book titled "Corporate Tax Improvement Directions for Businesses" to member companies and the National Assembly, which contains the current corporate tax address, the need for corporate tax reduction, and the improvement of major corporate tax systems.

According to the book, Korea's highest corporate tax rate (27.5 percent) is listed in the top 10 among 38 OECD countries. The ratio of corporate tax revenue to GDP is also 3.4 percent in Korea, higher than the OECD average (2.7 percent).

Due to its high corporate tax rate and complex taxation system, Korea's corporate tax system competitiveness ranks 34th out of 38 OECD countries.

The corporate tax burden of Samsung Electronics was 27.0 percent, which is 2.6 times higher than the 10.5 percent of TSMC, Taiwan's semiconductor giant.

Furthermore, 35 out of 38 OECD countries levy corporate tax at a single tax rate, Korea is the only OECD country to apply a complicated, four-step progressive tax system, which is also cited as a problem.

"Lowering corporate tax promotes corporate investment and employment, and brings a positive ripple effect to stakeholders such as shareholders and workers, which not only benefits society as a whole but also promotes economic growth," FKI said.

The corporate tax reduction has the effect of stabilizing prices in the mid-to-long-term by inducing vitalization of corporate investment and R&D, while increasing the economy's supply capacity, the lobby group said.

The FKI also insisted that major corporate tax systems that work against companies be revised.

"The corporate tax system is one of the most important factors that determine the global competitiveness of domestic companies," the FKI said. "We urgently need to improve the corporate tax system, which is unreasonable compared to major foreign countries, so that Korean companies can overcome the business crisis they are facing and secure a global competitive edge."