[Tax Focus] Tax Review Nears End... National Assembly and Government in Tug-of-War Over Tax Revenue Reduction

First Reading of Bills Nears Completion
Contentious Issues Remain Unresolved

The Tax Subcommittee of the National Assembly's Planning and Finance Committee plans to complete the first reading of over 500 bills on the 26th. While non-contentious bills were provisionally agreed upon quickly based on the government’s proposals, disagreements persist in key contentious areas.

On the morning of November 26, starting at 10 a.m., the Tax Subcommittee convened its 7th meeting at the National Assembly to discuss volumes 13 to 15, which are the final sections of the tax review materials. A total of 510 bills are being addressed, including 486 partial amendments to the Restriction of Special Taxation Act proposed by the government and lawmakers, one amendment to the Special Rural Tax Act, and 23 amendments to the Customs Act.

Between November 12 and 25, the Tax Subcommittee held six meetings and swiftly consolidated and reviewed non-contentious bills. However, for contentious and budget-related bills, not only are the ruling and opposition parties at odds, but there is also ongoing tug-of-war between the National Assembly and the Ministry of Economy and Finance. For example, on November 25, regarding the proposed amendment to the Inheritance and Gift Tax Act, the Ministry of Economy and Finance suggested switching to an inheritance acquisition tax. However, subcommittee members opposed this, citing concerns about tax cuts for the wealthy and a reduction in tax revenue of 2 trillion won. While lawmakers generally agreed on easing spousal inheritance tax for residential real estate, the Ministry of Economy and Finance opposed it, also citing concerns about decreased tax revenue. In addition, when lawmakers proposed expanding credit card tax deductions to include traditional markets and simplified taxpayers, the ministry expressed reservations.

Corporate tax, separate taxation of dividend income, and education tax-issues included in the budget-related bills-still require further discussion. For these budget-related bills, a smaller subcommittee meeting is scheduled for November 27 to revisit the issues. If no agreement is reached, the matter may be handed over to the full committee meeting of the Planning and Finance Committee on November 28 or be settled through negotiations between the floor leaders of both parties.

A member of the Tax Subcommittee told The Asia Business Daily, "Bills that cannot be resolved in the smaller subcommittee will require a decision at the floor leader level, so they will be settled through discussions between the floor leaders of both parties." He assessed that the likelihood of passing the bills through a full committee vote or having them brought to the floor by the Speaker’s authority is low. He added, "It has long been customary to process tax-related bills through consensus. The possibility of the Speaker exercising his authority to bring them to the floor is not high."

On the 26th, the Tax Subcommittee of the Planning and Finance Committee was held at the National Assembly in Yeouido, Seoul. November 26, 2025. Photo by Kim Hyunmin