South Korea’s tax revenue for this year is expected to be around 340 trillion won, which is 60 trillion won lower than the initial estimate. The country’s slowing economy has led to sluggish revenue sources like corporate tax and capital gain tax. The Finance Ministry is set to release an update on the estimated tax revenue soon. This year, Korea’s tax revenue in the first seven months was significantly lower than the same period last year.

The weakened economy has resulted in lower tax income for Korea, as it heavily relies on corporate taxes. For example, Samsung Electronics’ corporate taxes dropped by 97 percent in the first half of 2023 due to a decline in earnings. If the low tax revenue continues, Korea’s yearly tax income will be significantly lower than the initial estimate and even below last year’s tax income.

Despite the decline, the government has ruled out the possibility of planning a supplementary budget, emphasizing the importance of managing finances. However, the Finance Ministry has proposed a budget for next year that shows a small increase. The ministry remains optimistic about future tax income projections, expecting a rebound in tax income as the economy recovers.

The lower-than-expected tax revenue highlights the need for the government to improve its tax income projection model. If the tax income for 2023 is 60 trillion won lower than projected, the difference will be 15 percent. In the past two years, Korea saw a larger-than-expected surplus in tax revenue due to increased real estate tax and corporate tax as the economy recovered from the pandemic.

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By hassani

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