The race among tax offices nationwide for the No. 1 spot in tax revenue is heating up on the back of a semiconductor boom and a roaring stock market. Seoul Namdaemun Tax Office has been the undisputed leader from 2022 through last year, but there is speculation that Busan Suyeong Tax Office, home to Korea Securities Depository (KSD), could surge ahead this year. Gyeonggi Dong Suwon and Icheon tax offices, which are grouped as the so-called "semiconductor tax offices" because they host Samsung Electronics and SK hynix, are also emerging as dark horses.
◇ Race for No. 1 in tax revenue: "Seoul Namdaemun vs. Busan Suyeong"
According to the National Tax Statistics Portal on the 30th, among some 130 tax offices nationwide last year, Namdaemun Tax Office ranked No. 1 with about 2.23 trillion won collected. Tax revenue rose 23% from a year earlier. Namdaemun's annual tax take exceeds that of most metropolitan cities, including Daejeon (2 trillion won), Incheon (2 trillion won), and Gwangju (1.7 trillion won).
About half of the revenue comes in as corporate tax (1.14 trillion won). That is thanks to the presence of the headquarters of the Bank of Korea (BOK) and major financial firms in Namdaemun. The Central Bank is classified as a corporation and pays taxes on revenue from foreign currency asset management. When the won-dollar exchange rate rose last year, the BOK sold dollars it held as a market-stabilizing measure, generating large gains. Domestic banks also posted strong results, earning more than 6 trillion won in interest revenue alone last year.
There is speculation, however, that Busan Suyeong Tax Office could threaten Namdaemun's No. 1 spot this year. Suyeong collected 1.64 trillion won last year, ranking third in tax revenue after Namdaemun and Yeongdeungpo (No. 2, 1.68 trillion won). Although there are no large conglomerates in Suyeong's jurisdiction, it hosts the headquarters of Korea Securities Depository (KSD). More than half (860 billion won) of its revenue comes from the security transaction tax and The Special Tax for Rural Development.
Suyeong's tax revenue increases when domestic stock settlement amounts rise. It even overtook Namdaemun to rank No. 1 in 2020–2021. At that time, as governments expanded fiscal expenditure and eased rates during COVID-19, a stock investing frenzy erupted. Stock settlement amounts surged, hitting a record high in 2021. Settlement amounts have been steadily rising since last year, so this year's revenue conditions are also favorable.
Yeongdeungpo Tax Office also benefits from the stock market. Yeongdeungpo collected the most income tax (820 billion won) nationwide last year. That is because many high-salary financial firms and securities companies are concentrated there. Earned income tax is withheld at the source by employers. Yeongdeungpo and Suyeong have been trading places between No. 2 and No. 3 for years.
◇ With the semiconductor boom, tax offices hosting Samsung and SK collect income tax in the trillion-won range
Meanwhile, tax offices newly drawing attention amid the semiconductor boom that took off in earnest last year include Gyeonggi Dong Suwon and Icheon, which host the headquarters of Samsung Electronics and SK hynix, respectively. The two are sometimes called the "semiconductor tax offices." Last year, Dong Suwon and Icheon collected 990 billion won and 5.5 trillion won, respectively.
At Dong Suwon, 3.7 trillion won in income tax and 2.7 trillion won in corporate tax were collected, but 5.6 trillion won in value-added taxes refunds were made, reducing the overall tax take. At Icheon, income tax came to 1.6 trillion won and corporate tax to 5.1 trillion won.
Given that corporate results have improved this year, including a surge in semiconductor exports, both tax offices are expected to see hefty revenue. In particular, Samsung Electronics decided to pay a "special management performance bonus" to employees in its semiconductor (DS) institutional sector in the form of treasury shares, funded by 10.5% of annual operating profit, which is expected to significantly boost income tax revenue.