The government will lower the maximum corporate tax rates from 25 to 22 percent as it streamlines tax brackets in an effort to spur private sector growth.

The adjustments were announced as part of the 2022 Tax Revision Bill released on Thursday.

The tax cut is aimed at boosting corporate investment and job creation. The number of tax brackets will also be simplified from the existing four to two or three based on the size of the company.

Currently, corporate taxation comprises four rate brackets at ten, 20, 22 and 25 percent, but the new plan abolishes the 25-percent bracket.

Large firms will be subject to the 20 and 22 percent brackets while all three rates will apply to medium- and small-sized firms with annual sales of less than 300 billion won

The adjustments correlate to the government’s view that the nation's higher corporate tax rates compared to other countries are discouraging both domestic and foreign firms from investing in South Korea, with domestic outfits opting instead to venture overseas.

In a detailed briefing on the announcement, finance minister Choo Kyung-ho said tax adjustments are focused on expanding support for corporate activities, namely investment and job creation, to help revitalize the private sector. He vowed to revamp the corporate tax regime in line with global standards.