Korea estimated to have collected $42 bn less in tax revenue in 2023

The South Korean government is estimated to have suffered a record tax shortfall of 56.4 trillion won ($42 billion) in 2023 amid the sluggish economy.

According to the Ministry of Economy and Finance on Wednesday, the country’s national tax revenue amounted to 344.1 trillion won, which is 56.4 trillion won less than what was projected in the initial budget. It is 2.7 trillion won more than the revised tax revenue estimate released by the government in September 2023.

The national tax revenue was down by 13.1 percent from 395.9 trillion won in 2022 mainly due to the downturn in key manufacturing sectors, which saw corporate operating profits plummet in the first half of 2023.

Corporate tax collected last year was 80.4 trillion won in 2023, down 22.4 percent from the previous year.

Capital gains tax revenue also fell by 14.7 trillion won, as the slowdown in the real estate market led to a decline in land and housing transactions.

Overall income tax revenue came in at 115.8 trillion won, down 10 percent from a year ago.

The government revised its tax revenue forecast in the second half of last year as a significant shortfall was expected in revenue. It adjusted the outlook to 341.4 trillion won, which was 59.1 trillion won lower than the initial budget.

For 2024, the government projected to collect 367.4 trillion won in tax revenue. Concerns, however, rise that this year’s tax revenue may also be less than the projection, with a series of tax reduction policies being introduced ahead of the general elections in April.