OECD Economics Department Working Papers

Working papers from the Economics Department of the OECD that cover the full range of the Department’s work including the economic situation, policy analysis and projections; fiscal policy, public expenditure and taxation; and structural issues including ageing, growth and productivity, migration, environment, human capital, housing, trade and investment, labour markets, regulatory reform, competition, health, and other issues.

The views expressed in these papers are those of the author(s) and do not necessarily reflect those of the OECD or of the governments of its member countries.

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The Tax System in Korea

More Fairness and Less Complexity Required

The tax burden in Korea is among the lowest in the OECD area, mainly reflecting that the social safety net is at an early stage of development. The low tax burden implies limited tax induced economic distortions but as expenditure pressures will mount in the future, neutrality and efficiency of the tax system will have to be substantially improved if more sizeable deadweight losses are to be avoided. Some progress have been made over the past decades in terms of broadening parts of the tax base and lowering rates along the lines followed in many other OECD countries, but a number of weaknesses remain. These include overly generous allowances for individuals, large-scale and wide-ranging tax preferences for enterprises, an inappropriate taxation of property and a lack of strong and uniform tax enforcement. Main directions for reform should include a significant broadening of the bases for personal and corporate taxation as well as in the VAT system; increasing holding taxes on real estate while reducing ...


Keywords: tax policy, taxation, Korea
JEL: H2: Public Economics / Taxation, Subsidies, and Revenue
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