Conglomerates’ shrinking tax bill a big concern

Korea’s major conglomerates, excluding top two Samsung and Hyundai Motor groups, are likely to pay far less in income taxes this year due to a prolonged economic slump, data showed yesterday, sparking fears over a drop in government tax revenue.

According to the data by Chaebul.com, a tracker of local business groups, 82 affiliates of the country’s top 10 conglomerates are estimated to pay 11.72 trillion won ($10.8 billion) in taxes this year, up 10.04 trillion won from a year earlier.

The increase is mainly attributable to the improved earnings of Samsung and Hyundai Motor groups, Chaebul.com said, adding that tax estimates for the remaining conglomerates are expected to drop sharply.

“Except for Samsung Group and Hyundai Motor Group, most of the country’s business groups are expected to pay less in income taxes due to the prolonged economic slowdown,” said Jung Sun-sup, who heads Chaebul.com.

Affiliates of top conglomerate Samsung are projected to see their combined income taxes jump two-fold from a year earlier to reach 5.02 trillion this year, due to their robust global sales.

The income tax on Hyundai Motor Group, the world’s fifth-largest automaker, is expected to rise 15.4 percent on-year to 3.1 trillion won.

Affiliates of Samsung and Hyundai Motor account for 69.6 percent of the combined income tax estimate for the country’s top 10 business groups.

In contrast, SK Group, the country’s third-largest conglomerate, is expected to see its income tax plunge 46.3 percent on-year to reach 766 billion won as its affiliate SK hynix reported a net loss in 2012.

The income tax of LG Group, which owns LG Electronics and LG Display, is forecast to decline 14.8 percent on-year to 819 billion won.

The remaining conglomerates are also expected to see their corporate taxes drop this year due to the protracted economic slump, according to the data.

In addition, smaller conglomerates’ income taxes are estimated to drop, raising worries about decreased government tax revenues. Corporate income taxes account for one-fifth of Korea’s tax revenues.

Yonhap