Tax Revenue Decline Prompts Review of Government Office Lease Agreements

1 July 2024

The Ministry of Economy and Finance’s headquarters in the central city of Sejong [YONHAP]

Korea’s tax revenue fell by 9.1 trillion won ($6.6 billion) during the first five months of 2024, primarily due to reduced earnings from corporate taxes, data showed Friday.

The government collected 151 trillion won in taxes over the January-May period, down 5.7 percent from 160.2 trillion won tallied a year earlier, according to the Ministry of Economy and Finance.

Corporate Tax Decline

The decline was mainly attributed to the fall in corporate taxes collected. The collection of corporate taxes sank 35.1 percent on-year, or 15.3 trillion won, to 28.3 trillion won during the five-month period. Operating profits of companies listed on the main bourse nose-dived 45 percent on-year in 2023, according to government data. Those listed on the tech-heavy Kosdaq market also saw their earnings sink 39.8 percent over the period.

Income Tax and Value-Added Tax

Interestingly, the amount of income tax collected increased by 0.7 percent on-year to 51.5 trillion won due to higher wages and the rise in the number of employed people. The data also showed that the amount of value-added tax rose by 16.1 percent to 38.8 trillion won on the back of improved consumption.

Import Duties and Overall Imports

Import duties, however, fell by 8.4 percent to 2.7 trillion won due to a decrease in imports. Korea’s imports over the first five months of 2024 came to $262.6 billion, down from $280.2 billion tallied a year earlier.

In May alone, the country’s total tax revenue came to 25.5 trillion won, down from 26.2 trillion won tallied a year earlier.

Last year, the country’s total revenue fell by 77 trillion won on-year to 497 trillion won, as tax collections dropped due to poor corporate performance and a slump in the property market.

BY PARK EUN-JEE, YONHAP [park.eunjee@joongang.co.kr]

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What caused Koreas tax revenue to drop by 9.1 trillion won in early 2024?

Koreas tax revenue dropped by 9.1 trillion won in early 2024 due to a combination of economic slowdown, reduced corporate profits, and lower consumer spending. Additionally, government tax relief measures aimed at stimulating the economy further impacted revenue collection.

Can reduced corporate earnings explain Koreas tax revenue fall in early 2024?

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