Reasons for Proposal
Recently, economic inequality and polarization are worsening due to COVID-19. Social distancing has taken a toll on the service industry which employs many people in tourism and food services, and many have lost jobs. By contrast, IT, telecommunications, and finance show better business performance than prior to COVID-19 as the world is going contactless.
Inequality where “socially and economically weak people bear more pain while the virus does not discriminate against people” is getting worse. Historically, the social and economic structure undergoes changes during the outbreak of a large-scale infectious disease, and unequal income distribution needs to be corrected to maintain a healthy community.
In this regard, this Act aims to impose “special disaster solidarity tax” for social solidarity until the 2022 taxable year on high income earners and companies that achieve high income and growth in the changing economic structure due to COVID-19.
Half of the additionally collected national taxes from the “special disaster solidarity tax” will be deposited into the Disaster Management Fund under the Framework Act on the Management of Disasters and Safety and the other half to the Employment Insurance Fund under the Employment Insurance Act.
Details
A. Impose additional income or corporate tax on 5 out of 100 of the increased income in the event that Korean nationals whose global income is 70 million won or more in a taxable year have increased at least 10 million won from the previous taxable year or Korean entities whose income is 10 billion won or more and has increased at least 0.5 billion won (Article 141-3 paragraph 1).
B. Impose income or corporate tax by adding the highest tax rate of 5 out of 100 under the Income Tax Act or the Corporate Tax Act on Korean residents whose global income is 100 million won or more or Korean entities whose income is 100 billion won or more (Article 141-3 paragraph 2).
Notes
This Act needs to be designated as a legislative bill annexed to the 2021 budget bill under Article 85-3 paragraph 4 of the National Assembly Act.
Major Provisions
Article 141-3
