Seoul: South Korea's tax revenue decreased by 7.5 trillion won (US$5.2 billion) in 2024 compared to the previous year, primarily due to subdued corporate activities, the finance ministry announced Monday. The government accumulated 336.5 trillion won in taxes last year, a decline from the 344.1 trillion won recorded in 2023.
According to Yonhap News Agency, the tax revenue also missed the ministry's initial forecast by 30.8 trillion won as per the 2024 budget plan. This shortfall follows an unprecedented deficit of 56.4 trillion won recorded the previous year. The ministry had adjusted its forecast in September, predicting tax revenue of 337.7 trillion won for 2024, but the final figures again fell short of the revised expectations.
To address the discrepancies in tax revenue projections, the finance ministry is considering involving external experts in the evaluation process and is exploring the use of artificial intelligence (AI) models. The decline in tax revenue was chiefly attributed to a significant decrease in corporate income tax collection, which fell by 44.2 percent year-on-year, resulting in a 17.9 trillion won loss, largely due to poorer corporate performance amid a prolonged economic slowdown.
In 2023, the operating profits of companies listed on the main bourse dropped 45 percent year-on-year, while those of firms on the tech-heavy KOSDAQ market declined by 39.8 percent. In contrast, income tax revenue increased by 1.6 trillion won in 2024, spurred by higher interest income tax due to rising interest rates, alongside improved employment and wage growth.
Additionally, the value-added tax collected last year increased by 8.5 trillion won compared to 2023, indicating a rise in private consumption, according to the ministry.