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Korea posts major tax shortfall after slow earnings season

Published: 10 Feb. 2025, 15:13

SHIN HA-NEE
[email protected]

The Ministry of Economy and Finance office building in Sejong [MINISTRY OF ECONOMY AND FINANCE]

Korea posted another major shortfall in tax revenue in 2024, weighed heavily down by weak corporate performance, the Ministry of Economy and Finance said Monday.

The Korean government collected 336.5 trillion won ($231.9 billion) in taxes last year, down 7.5 trillion won from the previous year, according to the ministry.

The decline in tax revenue was largely driven by a sharp drop in corporate income tax collection, which plummeted 22.3 percent, or 17.9 trillion won, on year to 62.5 trillion won, due to weaker corporate performance on continued economic slowdown.

The figure fell 30.8 trillion won short of the ministry's initial forecast in the 2024 budget plan, following a record 56.4 trillion won shortfall the previous year.

The ministry had revised its forecast downward in September, projecting tax revenue of 337.7 trillion won for 2024. The final figure fell short of that revised estimate by 1.2 trillion won.

Regarding discrepancies in tax revenue estimates, the Finance Ministry said it is considering involving outside experts in the evaluation process and exploring the use of AI.

In 2023, the combined operating profits of listed companies in Korea slumped 44.2 percent from a year earlier to 46.9 trillion won, while those of firms on the tech-heavy Kosdaq tumbled 39.8 percent.

In contrast, income tax revenue increased by 1.6 trillion won in 2024, driven by higher interest income tax due to rising interest rates, as well as improved employment and wage growth.

Value-added tax collected last year also went up by 8.5 trillion won from that of 2023, reflecting increased private consumption, the ministry said.

BY SHIN HA-NEE, YONHAP [[email protected]]