Last year, the corporate tax paid by corporations was less than the earned income tax. This is the first time since the beginning of tax statistics that earned income tax has surpassed corporate tax. However, this year, corporate tax revenue is expected to recover and surpass earned income tax again, becoming the largest tax revenue source. This is based on the rebound in corporate performance and recovery in exports last year.
According to the Ministry of Strategy and Finance's '2024 National Tax Revenue Performance' released on the 20th, last year's national tax revenue was recorded at 336.5 trillion won. This is a decrease of 7.5 trillion won compared to the previous year (344.1 trillion won). Compared to the forecasted tax revenue of 367.3 trillion won in the initial budget, it is 30.8 trillion won short.
The main cause of the revenue shortfall is attributed to the decrease in corporate tax. Due to deteriorating corporate performance, corporate tax revenue last year amounted to 62.5 trillion won, a decrease of 17.9 trillion won (-22.3%) compared to the previous year. In particular, the reported corporate tax, which is determined by corporate operating profit, fell sharply to 39.4 trillion won, a decrease of 21 trillion won (-34.7%) compared to the previous year.
In contrast, the earned income tax paid by wage earners increased. According to the '2024 Tax Revenue Status by Category' data received from the National Tax Service by Ahn Do-geol, a member of the ruling Democratic Party, earned income tax revenue last year was 64.2 trillion won, an increase of 3.8 trillion won (6.3%) compared to the previous year (60.4 trillion won). Despite a record tax revenue shortfall, earned income tax has steadily increased.
However, this year, corporate tax is likely to play a major role in the recovery of national tax revenue. The National Assembly Budget Office projects that corporate tax revenue this year will increase by 24.5 trillion won (38.5%) to 88.1 trillion won compared to the previous year.
The expected increase in corporate tax this year is due to the rebound in corporate performance last year. Corporations that close their accounts at the end of December typically file corporate tax returns by the end of March. Corporations that are subject to self-reporting verification or those that apply the consolidation taxation method can file their returns by the end of April.
Based on the improvement in corporate operating performance last year, it is expected that there will be an expansion of corporate tax revenue this year. According to an analysis of forecast data from securities firms by FnGuide, the operating profit of publicly listed domestic corporations is expected to increase by 69% in 2024 compared to the previous year. As corporate performance improves, the taxable income is expected to increase, leading to an increase in reported corporate tax and contributing to revenue recovery.
Cho Mun-kyun, head of the Tax Analysis Division at the Ministry of Strategy and Finance, said, 'Corporate tax is imposed based on performance from the previous year, and since corporate performance was relatively good until the third quarter last year, corporate tax revenue is expected to increase this year,' adding, 'Once the fourth-quarter results are confirmed, we will be able to gauge the increase in corporate tax revenue more accurately.'
The government has projected this year's national tax revenue to be 382.4 trillion won, while the forecast office has estimated it at 378.5 trillion won. Although there is a difference of about 4 trillion won in the revenue projections, both agencies agree that the increase in corporate tax will be a key factor in the recovery of tax revenue.
However, it remains uncertain whether this trend of increasing corporate tax will continue beyond next year. If the U.S. trade policy favoring national interests, promoted by President Donald Trump, leads to sluggish corporate activity, it may result in a decrease in corporate tax next year.
Experts assess that the likelihood of a reversal in the trend of increasing corporate tax specifically for this year is low. Seok Byeong-hoon, a professor at Ewha Womans University, noted, 'Overall tax revenue is expected to increase due to the rise in corporate tax' and added, 'The volatility in consumption and the real estate market will act as variables adjusting the degree of increase or decrease in tax revenue.'