The government projected that this year's national tax revenue will decrease by 2.2 trillion won from what was expected when the second supplementary budget was drawn up in Jun. Despite carrying out a 10.3 trillion won revenue revision in the supplementary budget, a tax revenue error occurred, but the government said it "significantly reduced the scale."
According to the "2025 tax revenue re-estimate results" released by the Ministry of Economy and Finance on the 25th, this year's national tax revenue is expected to be 369.9 trillion won, 2.2 trillion won (0.6%) short of the projection (372.1 trillion won) at the time of the supplementary budget in Jun. It is 12.5 trillion won less than this year's main budget (382.4 trillion won), and 33.4 trillion won more than last year's national tax revenue performance (336.5 trillion won).
The government cited a decrease in value-added taxes and tariff due to the fall in the exchange rate as the cause of the revenue shortfall. It also explained that the extension of the flexible tax rate cut on fuel taxes to ease the public's fuel cost burden, and the expansion of income tax refunds for small-scale personal service earners such as delivery riders, had an impact.
By tax item, value-added tax is expected to decrease by 2.4 trillion won to 80.9 trillion won compared with the supplementary budget. Tariff is projected to collect 7.4 trillion won, 1 trillion won less. Transportation taxes, including fuel taxes, are forecast at 13.1 trillion won, down 900 billion won. Cho Man-hee, Director General for Comprehensive Tax Policy, said, "The income tax refund for delivery riders went about 200 billion won more than the government expected."
However, income tax, which accounts for the largest share, is expected to come in at 128.4 trillion won, up 1.5 trillion won on the back of economic and asset market recovery and larger bonuses. Corporate tax is also projected at 83.6 trillion won, up 100 billion won, as corporations posted strong results in 2024 and in the first half of this year.
According to the Ministry of Economy and Finance, listed companies' operating profit in 2024 was 113.7 trillion won, up 146.2% from 2023 (46.2 trillion won).
Regarding this tax revenue re-estimate, Cho, the Director General, said, "Excluding 2021–2024, when tax revenue errors of tens of trillions of won occurred, the tax revenue error rate for the most recent 10 years was about 4.8%," adding, "This year, the error rate is as low as 3.3% even compared with the main budget."
He added, "If we had not revised revenues at the time of the second supplementary budget, it would have been difficult to respond to the tax revenue shortfall," and said, "We believe the 2.2 trillion won tax revenue decrease can be managed through the usual 6–7 trillion won in unused budget."
Previously, there were excess tax revenues of 61.4 trillion won and 52.5 trillion won in 2021 and 2022, and tax revenue shortfalls of 56.4 trillion won and 30.8 trillion won in 2023 and 2024. Because of this, the government, which has been assessed as having "undermined the credibility of the revenue budget," has sought ways to reduce tax revenue estimation errors.
In 2024, it improved the corporate tax estimation model by reflecting technical advice from the International Monetary Fund (IMF) and actively incorporated private experts' opinions by operating a public-private joint tax revenue estimation committee and creating a market advisory group. In addition, to enhance the predictability of corporate tax, which is institutionally volatile, it made it mandatory for public disclosure-targeted business groups (asset 5 trillion won or more) to prepare provisional settlements at the time of interim prepayment.
This year, even before submitting the budget, it continued efforts such as discussing model improvements with the National Assembly Budget Office and using AI to forecast corporations' operating profits.
A government official said, "We also plan to continue institutional improvements, including pushing to amend the National Finance Act to mandate a re-estimate of the current year's tax revenue every September."