Taxation provides the government with most of its income. Levies include the income tax, 12% value-added tax (VAT), stamp tax, real estate tax, transfer tax, municipal taxes, and inheritance and gift taxes.
The basic tax on corporate income after the 1990 tax reform was 25% on undistributed profits and 36% on profits paid to foreign stockholders residing abroad. Since 1999, the Labor Law has required that 15% of profits be distributed to employees as profit sharing before the corporate tax is paid. By another 1999 law, there is a 1% capital circulation tax that is incurred in the distribution of profits before paying the 25% corporate profit tax. This brings the effective corporate tax rate 36.25%. From 1 January 2002, the tax on reinvested profits was set 15%. The municipal tax is 0.0015% of total assets less current liabilities. The basic corporate tax rate for oil companies with risk service contracts is 44%. Personal income tax is assessed according to a progressive schedule ranging from 5% to 25%, up from a range of 0% to 15% in 2000. The personal exemption level in 2002 was equivalent to 2.4 times the per capita GDP, and the threshold for the highest bracket was a relatively low 8.3 times per capita GDP (down from 23.4 times in 1999). Additional rates and surcharges are applicable to certain classes of income. A stamp tax is levied on almost all commercial and legal documents. Estate, inheritance, and gift taxes vary according to the amount involved and the closeness of family relationship between donor and recipient. Municipal real estate taxes range from 0.3% to 2%. A special consumption tax is imposed on cigarettes, alcoholic beverages, and soft drinks at rates ranging from 20.6% to 103%.
A new tax reform package was slated for September 2000.