Korea’s tax revenue down $4.5bn in 2023 as businesses struggle

[Courtesy of National Tax Service]

South Korea’s corporate tax revenue dropped by more than 6 trillion won ($4.3 billion) in 2023 from a year ago as four out of 10 companies reported losses amid the sluggish economy.

According to data from the National Tax Service on Monday, the number of companies that filed corporate tax returns last year hit a record high of 1.03 million, up 49,000 from the same period a year earlier.

However, 379,000 of the companies reported losses, up by 12,000 from the previous year.

The increase in the number of loss-making companies resulted in the total corporate tax burden falling by 6.2 trillion won in a year to 81.6 trillion won.

Corporate tax is levied on the profits earned by companies, so no tax is imposed when they incur losses.

The decline is directly attributable to weaker corporate earnings due to the sluggish economy.

Given that corporate tax is collected based on the previous year‘s performance, the significant decline in corporate profits last year is attributed to the economic impact during the 2022 pandemic period.

The corporate tax burden fell from 67.2 trillion won in 2019 to 53.6 trillion won in 2020, then rose to 60.2 trillion won in 2021 and 87.8 trillion won in 2022, before declining again last year.

By company type, the total tax burden of 2,464 listed companies was 28.9 trillion won, accounting for 35.4 percent of the total. The remaining 64.6 percent was borne by 1.03 million unlisted companies. Uh