The combined profits made by South Korea’s top 0.1 percent companies, including Samsung Electronics Co., SK Hynix Inc., Hyundai Motor Co., and LG Electronics Inc., accounted for more than half the profits made by all domestic companies. Their corporate taxes paid also took up over 60 percent of the total.
According to the data submitted by the National Tax Service to Rep. Sim Sang-jung of the Justice Party on the Strategy and Finance Committee of the National Assembly on Sept. 6, the total income of 695 companies, which were top 0.1 percent of the firms that filed corporate taxes last year, came to 179.2 trillion won (US$159.5 billion). The figure accounted for 52 percent of 330.34 trillion won (US$294.03 billion) of the combined income of 417,264 companies, which were the top 60 percent of the companies that didn’t show a loss. Also, 69,544 companies, which were the top 10 percent, earned 304.46 trillion won (US$271 billion) of income, taking up 92.25 percent of the total income.
In fact, Samsung Electronics posted 11.04 trillion won (US$9.83 billion) in net profit in the second quarter this year, while SK Hynix recorded at 4.33 trillion won (US$3.85 billion). Hyundai Motor and LG Electronics also had a net profit of 810.7 billion won (US$721.58 million) and 326.5 billion won (US$290.61 million), respectively, over the same period.
Since conglomerates made most of the nation’s income, their corporate taxes took up a big part of the total. The total amount of corporate taxes collected in 2016 stood at 43.95 trillion won (US$39.12 billion), and the total amount of taxes paid by the top 0.1 percent of the firms reached 27.49 trillion won (US$24.46 billion), accounting for 63 percent of the total.
As the tax revenues increased, the government drew up the next year’s budget of 470.5 trillion won (US$418.78 billion) and allocated 23.5 trillion won (US$20.92 billion) in the budget for creating jobs alone.
However, there are concerns that the government’s move to impose regulations at a faster pace as it is now without regulation reform will only drag down global leading conglomerates. There is a general consensus among experts that the South Korean government needs policy that helps conglomerates which have the global competitiveness lead the nation’s economic growth and small and mid-size companies employ the fruits.