Tax System to be Changed

The value added tax system will be changed from the three-stage system currently in operation to a two-stage system. The global financial income tax will be re-introduced by 2001 at the latest, while the interest income tax will be reduced to 15 percent from the current 22 percent.
The Ministry of Finance and Economy announced on August 15 that it will submit the 'Tax reform bill for improvement of income distribution' to the National Assembly, following up President Kim Dae-jung's National Liberation Day address, which emphasized tax reforms.
According to the ministry's plan, the special tax system for value added tax, to which business people with an annual income of less than 48 million won fall subject, will be abolished and these people will fall under the simple tax system. Taxpayers who currently fall under the simple tax system, with income between 48 million won and 150 million won, will be subject to the general tax system, which imposes a 10 percent value added tax.
The global financial income tax will be levied on families with more than 40 million won in annual financial income from bank interest, bonds and so on.
Inheritance tax, when applied to inherited wealth over 5 billion won will rise to 50 percent from the current 45 percent.
Kang Joo-an : jooan@joongang.co.kr