Ministry of Economy and Finance, May National Tax Revenue Status
Corporate Tax Drops Sharply by 35%
From January to May this year, national tax revenue was 9.1 trillion won less than the same period last year. This was due to a significant decrease in corporate tax amid poor corporate performance, combined with a decline in securities transaction tax. In response to the unexpected tax revenue shortfall, the government has officially announced a tax revenue re-estimation.
According to the national tax revenue status announced by the Ministry of Economy and Finance on the 28th, national tax revenue from January to May amounted to 151 trillion won, down 9.1 trillion won compared to the same period last year.
The progress rate of this year’s national tax revenue against the budget was 41.1%, slightly improved from last year’s record low of 40.4%, but 5.9 percentage points lower than the recent 5-year average of 47.0%. An early warning is triggered if the revenue progress rate deviates by ±5 percentage points or more from the recent 5-year average.
Yoon Su-hyun, head of the Tax Analysis Division at the Ministry of Economy and Finance, stated, "Since the national tax revenue progress rate as of May deviates by ±5 percentage points from the past 5-year average, we will re-estimate tax revenue according to the early warning criteria."
The decrease in corporate tax, one of the three major tax categories along with value-added tax and income tax, affected the decline in national tax revenue. On a cumulative basis from January to May, corporate tax collected was 28.3 trillion won, a sharp drop of 15.3 trillion won (35.1%) compared to a year earlier. The progress rate of corporate tax against the budget was only 36.5%, not only lower than the same period last year (54.3%) but also significantly below the recent 5-year average (54.5%).
During the same period, income tax revenue was 51.5 trillion won, an increase of 30 billion won (0.7%) compared to the same period last year. This was due to an increase in interest income tax from high interest rates and the effects of increased employment and wage hikes, which reduced the decline in earned income tax.
Value-added tax revenue increased by 5.4 trillion won (16.1%) compared to the same period last year, reaching 38.8 trillion won, maintaining an upward trend due to increased consumption and reduced refunds.
Securities transaction tax recorded 2.3 trillion won, a decrease of 200 billion won (9.0%) compared to the previous year due to a reduction in the tax rate. While the government postponed the introduction of the financial investment income tax, it decided to lower the securities transaction tax rate from 0.2% last year to 0.18% this year.
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