Gwangju City to Manage 29 Trillion Won in Local Consumption Tax Nationwide Next Year

Selected as "Local Consumption Tax Payment Administrator" by the Ministry of the Interior and Safety
Annual Interest Income Expected to Reach 10 Billion Won

Gwangju Metropolitan City will oversee the management of approximately 29 trillion won in local consumption tax funds for local governments nationwide throughout next year. Interest income generated during the distribution process of the local consumption tax is expected to reach around 10 billion won annually, providing much-needed relief amid challenging fiscal conditions.

Gwangju Metropolitan City Hall. Photo by Song Bohyun

On January 22, Gwangju City announced that it has been selected by the Ministry of the Interior and Safety as the "2026 Local Consumption Tax Payment Administrator" and will carry out this work for one year starting February 1. The payment administrator receives 25.3% of the value-added tax collected each month by the heads of tax offices and customs offices as local consumption tax, and is responsible for distributing these funds to cities, provinces, city and county districts, and education offices nationwide in accordance with legal allocation standards.

The local consumption tax was introduced in 2010 to address the vulnerability of local finances and reduce dependence on national taxes by converting a portion of the value-added tax, which is a national tax, into a local tax. The payment administrator is able to secure interest income through fund management during the quarterly distribution of the local consumption tax.

Gwangju City expects that the approximately 10 billion won in annual interest income secured through this selection will help support the city’s finances and the recovery of livelihoods, which have been challenged by a decline in tax revenue due to the economic slowdown.

Kim Daejeong, Head of the Taxation Division of Gwangju City, stated, "This selection is a result of Gwangju City being recognized for its eligibility as a payment administrator based on various indicators, such as the ratio of local consumption tax to population and fiscal independence." He added, "Since we are managing the valuable local consumption tax resources of local governments nationwide, we will do our utmost to ensure accurate and transparent distribution." He further stated, "We plan to use the interest income as a resource to improve citizens’ quality of life and to prepare for Gwangju’s future."