SEOUL (BLOOMBERG) - South Korea's parliament raised the nominal corporate tax rate for the highest earning companies, a move that runs counter to the global trend.
Lawmakers agreed late on Tuesday to increase the rate on companies whose taxable income exceeds 300 billion won (S$371.8 million) to 25 per cent from 22 per cent, the current top rate.
While that's a modest victory for President Moon Jae In to take away from his budget battle with opposition parties, he had previously hoped to apply the new rate at a lower threshold of 200 billion won.
Mr Moon was elected in May with vows to reduce inequality and to be a "jobs president." Other countries around the world, including Japan and the US, are moving to cut corporate taxes, with American lawmakers set to slash the rate to 20 per cent from 35 per cent.
Separately, the South Korean parliament passed a 428.8 trillion won budget in a vote that was delayed until after midnight in Seoul. The figure was largely in line with earlier plans and an increase of about 7 per cent on the initial 2017 budget.
The opposition and ruling parties had struggled to reach agreement on the spending plan, especially over increasing the number of public officials and the corporate tax rate. This led to them failing to pass the budget by a deadline of Dec 2.
The revised budget includes plans to hire around 9,500 more central government officials in 2018, smaller than the government's initial proposal for about 12,200. During the election campaign, Mr Moon had pledged to increase the number of public officials by 174,000 during his term.
Lawmakers from the Liberty Korea Party, the biggest conservative party, boycotted the votes. In a statement on its website, the party expressed disapproval of the government's plan to hire more employees and to offer financial aid to small companies burdened by its minimum-wage increase.