Korea has lowest income tax among developed nations

Corporate tax rate in line with other countries

South Korea has the lowest individual income tax rate among the member countries of Organization for Economic Cooperation and Development (OECD). According to findings released by the Korea Institute of Public Finance (KIPF) May 29, the rate of individual income tax versus gross domestic product (GDP) was 3.1 percent in 2002, a third of the OECD average of 9.8 percent.

Denmark had the highest tax level, at 26.0 percent, followed by Sweden (15.3 percent), New Zealand (14.8 percent), Iceland and Belgium (14.7 percent), and Finland (14.3 percent). The data confirmed that citizens of countries with more advanced welfare systems pay for such programs through their income tax. But other advanced nations, as well, such as the U.S. (10.0 percent), Germany (9.0 percent) and France (7.6 percent), recorded individual income tax rates two or three times higher than that of Korea. Countries with low income tax rates included the Slovac Republic (3.4 percent), Japan (4.7 percent), Greece and the Czech Republic (5.0 percent), and Turkey (5.5 percent).

On the other hand, Korea’s corporate profit tax versus GDP was 3.1 percent, comparable to the OECD average of 3.4 percent. Germany had the lowest rate at 1.0 percent, followed by Iceland (1.1 percent), the U.S. (1.8 percent), Australia (2.3 percent), Sweden (2.4 percent), Switzerland (2.7 percent) and Denmark, France and England (2.9 percent).

Researcher Jeon Byeong-mok of the Korea Institute of Public Finance said that Koreans’ reluctance to accept income tax as "fair" has resulted in such a comparatively low tax rate.