Only Costa Rica Has a More Complex Corporate Tax Structure Than Korea Among OECD Countries

Korea's Corporate Tax Base Structure Among the Most Complex in the OECD
Business Community Warns: "Negative Impact on Management... Potential for Greater Losses"

As the government and the ruling party are pushing for an increase in the corporate tax rate, there have been calls for a revision of the excessively complex corporate tax base structure.

Currently, Korea's corporate tax base is divided into four brackets, which is the highest among OECD member countries except for Costa Rica.

According to a survey conducted by the National Assembly Budget Office on the corporate tax base brackets of the central governments of 38 OECD member countries as of July 27, 2025, 24 countries?including the United States, Germany, Canada, Italy, Ireland, Spain, Mexico, New Zealand, and Switzerland?have adopted a single-bracket system.

The data shows that out of 38 OECD countries, 24?including the United States, Germany, Canada, Italy, Ireland, Spain, Mexico, New Zealand, and Switzerland?operate a single-bracket system. Ten countries, including Japan, France, Australia, the Netherlands, Belgium, and Chile, use a two-bracket system, while the United Kingdom and Luxembourg have a three-bracket system. Korea has a four-bracket structure, and Costa Rica is the only country with a five-bracket system.

This kind of progressive tax base structure reduces incentives for corporate growth and increases uncertainty in tax revenue forecasts. Because the tax rate increases as the tax base rises, companies are reluctant to grow beyond a certain size, or they may even artificially split corporations to divide profits.

According to the Korea Federation of Middle Market Enterprises, as of the end of 2023, there were 301 companies that grew from small and medium-sized enterprises (SMEs) to middle market enterprises, but 574 companies reverted from middle market enterprises back to SMEs, nearly twice as many. The number one reason cited for considering this reversion was tax burden.

It is also assessed that a tax structure that deviates from global standards has a negative impact on attracting domestic investment from foreign companies.

Meanwhile, there is also analysis that the recent push to increase the corporate tax rate itself does not align with global trends. According to OECD statistics, over the past 10 years, 11 countries have raised their top corporate tax rates, while 18 countries have lowered them. Nine countries made no changes. The overall average top rate dropped from 25.2% in 2014 to 23.9% in 2024.

In contrast, Korea's top corporate tax rate rose by 2.2 percentage points from 24.2% to 26.4% over the same period, which is 2.5 percentage points higher than the OECD average.