Semiconductor local government expected to increase corporate local income tax by up to 12 times next year

Due to the strong performance of Samsung Electronics and SK Hynix this year, next year's corporate local income tax revenue for local governments in Gyeonggi-do where semiconductor plants are located is expected to be up to 12 times this year's amount.

According to Yonhap News coverage on the 7th, based on last year's performance, the corporate local income tax paid by Samsung Electronics to Hwaseong, Pyeongtaek, Suwon, and Yongin cities this year was KRW 180 billion, KRW 155 billion, KRW 127 billion, and KRW 63.5 billion, respectively.

Corporate local income tax is calculated by applying the tax rates under the local tax law based on the corporate tax base. Corporations with business sites in multiple local governments are divided among each local government according to a proportion calculated based on the number of employees at each business site and the total floor area of ​​the building.

The proportional ratio is calculated by reflecting half each of the ratio of the number of employees and the ratio of the total floor area of ​​the building occupied by the local government workplace to the total workplace. If the number of employees or the area of ​​business increases, the proportion of local governments may also increase.

As of this year, the distribution rates were found to be 27.8% in Hwaseong, 24.0% in Pyeongtaek, 19.6% in Suwon, and 9.7% in Yongin.

While there are forecasts that Samsung Electronics' annual operating profit this year could exceed 300 trillion won, the corporate local income tax to be received from Samsung Electronics next year is estimated at 1.8 trillion won in Hwaseong City, 1.6 trillion won in Pyeongtaek City, 1.3 trillion won in Suwon City, and 740 billion won in Yongin City.

All four places are paying 10 times this year's amount, and Yongin's is about 11.7 times the amount paid.

Personal local income tax revenue from performance bonus payments is also expected to increase.

In Hwaseong City, which has the largest number of employees in Samsung Electronics' DS division, the personal local income tax levied on special wages is expected to increase from the annual level of 133 billion won to about 400 billion won next year.

This is based on the forecast that the combined amount of existing performance bonuses and special performance bonuses could reach up to 600 million won per person.

Icheon City, where SK Hynix is ​​located, is also estimated to receive 2 trillion won in corporate local income tax next year, about three times the 720 billion won paid this year.

These local governments plan to use the increased tax revenue to invest in infrastructure such as roads and railways, which have been put on hold due to lack of financial resources, while also saving some of it as a fund to prepare for a future recession in the semiconductor industry.

A local government official said, "Just three years ago, due to the sluggish performance of the semiconductor industry and a sharp decline in local income tax, we even considered supplementary budget reductions to reduce the existing expenditure project budget, but it is expected that the highest ever corporate local income tax will be collected next year. We plan to accumulate a significant portion of the excess tax revenue into a fund to prepare for and respond to the future and execute it on an annual basis."