SEOUL, Aug 2 (Reuters) - South Korea imposed stiff tax hikes on Wednesday, targeting leading conglomerates, high-income individuals and investors with large holdings of South Korean shares as President Moon Jae-in seeks to tackle income inequality and fund increasing welfare benefits.
The corporate tax changes will hit 129 companies in South Korea and are expected to increase government revenue from corporate taxes by 5 percent or 2.6 trillion South Korean won ($2.31 billion) from the 2018 tax year, the finance ministry said.
The top marginal corporate income tax rate will be raised to 25 percent from the current 22 percent for corporations with more than 200 billion won ($179 million) of taxable income a year, the finance ministry said in its annual statement on revisions to the tax code.
An income tax rate of 42 percent will kick in on personal earnings exceeding 500 million won ($447,0000) a year starting 2018, up from 40 percent currently, Wednesday's statement said.
Income tax for annual earnings of 300 million won to 500 million won will be subject to income tax of 40 percent from next year, up from 38 percent.
The proposed changes in the tax code are subject to parliamentary approval, posing a challenge for the government in passing the bill as Moon's ruling Democratic Party only holds 40 percent of the 299 seats in the National Assembly.
($1 = 1,117.9000 won) (Reporting by Cynthia Kim)