[Lee Administration's First Budget] Next Year's Tax Revenue to Reach 390 Trillion Won...Corporate Tax to Increase by 3 Trillion Won

The government has projected that next year's national tax revenue will exceed 390 trillion won, reflecting improved tax collection performance driven by the ongoing economic recovery. As the overall economy rebounds, including private consumption and improved corporate performance, all three major tax categories-corporate tax, value-added tax, and income tax-are expected to increase.

Next Year’s Tax Revenue to Increase by 18.2 Trillion Won Compared to This Year...Corporate Tax Up 3.6%

According to the “2026 Revenue Budget Plan” announced by the Ministry of Economy and Finance on the 29th, next year’s tax revenue is expected to reach 390.2 trillion won, falling short of the 400 trillion won mark. This represents an increase of 18.2 trillion won (4.9%) compared to this year’s budget (based on the second supplementary budget), but is 10.2 trillion won less than the mid-term fiscal plan’s projection of 400.4 trillion won.

Tax revenue is expected to rise in all three major categories compared to this year. First, next year’s corporate tax is projected to reach 86.5474 trillion won, an increase of 2.9803 trillion won (3.6%) due to improved corporate performance this year.

Income tax is estimated at 132.1175 trillion won, up 5.3 trillion won (4.2%) from this year. With the economic recovery, comprehensive income tax is expected to increase by 568.8 billion won (2.6%), while wage income tax is projected to rise by 3.7201 trillion won (5.7%) due to higher wages and an increase in the number of employed persons.

Value-added tax is estimated to reach 86.575 trillion won next year, an increase of 3.2457 trillion won (3.9%) due to the recovery of domestic demand. Inheritance and gift tax, securities transaction tax, and individual consumption tax are also expected to increase by 1.5726 trillion won (10.2%), 1.5299 trillion won (39.8%), and 630.7 billion won (7.2%), respectively, compared to this year.

The securities transaction tax is expected to see a significant increase compared to this year, reflecting the revised tax law that partially restores the tax rate. Education tax is projected to rise by 666.8 billion won (11.5%) this year, as the increase in the education tax rate for financial companies will be reflected in performance starting in 2027.

There are ongoing concerns that the government’s revenue base has weakened, as tax revenue shortfalls have been certain for three consecutive years through this year. Due to the Yoon Suk-yeol administration’s tax cut policy and the economic slowdown, there has been a large-scale tax revenue shortfall of approximately 97.5 trillion won over the past three years. As a result, another shortfall is expected this year, prompting a supplementary revenue adjustment of 10.3 trillion won.

Although national tax revenue for the first half of this year (cumulative from January to June) reached 190 trillion won, an increase of 21.5 trillion won (12.7%) compared to the same period last year, experts note that this is mainly due to the base effect from last year’s large-scale tax revenue shortfall, making it difficult to view this as a genuine recovery.

The government expects the average annual growth rate of tax revenue to remain at around 4.6% through 2029, which is higher than next year’s projected nominal growth rate of 3.9%.