Corporate Tax Shrinks Due to COVID-19... Tax Revenue Declines for Second Consecutive Year Last Year (Comprehensive)

First Ever Two Consecutive Years of Decline... Second Largest Decrease Since 1998 IMF Crisis
Corporate Tax Down 23.1% Year-on-Year... Largest Drop Ever
National Tax Revenue 285.5 Trillion Won, 5.8 Trillion Won More Than Budget
Active Market Transactions Due to Soaring Asset Prices Like Real Estate and Stocks

[Sejong=Asia Economy Reporter Kim Hyunjung] Due to the impact of the COVID-19 pandemic and the resulting recession, national tax revenue decreased for the first time in history for two consecutive years.

According to the "2020 Fiscal Year Total Revenue and Total Expenditure Closing Results" announced by the Ministry of Economy and Finance on the 9th, last year's national tax revenue was 285.5 trillion won, down 7.9 trillion won (-2.7%) from 293.4 trillion won in 2019. This marks the first time in history that revenue has declined for two consecutive years, following a decrease of 116.1 billion won in 2019. In terms of the scale of the revenue decline, it is the second largest since the IMF financial crisis (1998, -3.0%).

The closing results showed total revenue of 465.5 trillion won and total expenditure of 453.8 trillion won. The surplus on settlement was 11.7 trillion won, and after deducting a carryover amount of 2.3 trillion won, the world surplus recorded a surplus of 9.4 trillion won. This marks six consecutive years of surplus since 2015.

Total revenue increased by 63.5 trillion won compared to the previous year and by 5.5 trillion won compared to the budget. Total expenditure was executed at 453.8 trillion won (98.1%) out of the budget amount of 462.8 trillion won. This is an increase of 56.6 trillion won compared to the previous year.

Looking at major tax items, corporate tax decreased by 16.7 trillion won compared to the previous year due to poor performance of each corporation, but capital gains tax (7.6 trillion won), securities transaction tax (4.3 trillion won), and inheritance and gift tax (2 trillion won) increased due to increased asset transaction volume. Corporate tax fell sharply by 23.1% compared to the previous year, marking the largest decline ever. A Ministry of Economy and Finance official explained, "Although tax revenue decreased compared to the previous year due to delays in economic recovery caused by COVID-19, the increase in asset-related tax revenue partially offset the decline."

Compared to the national tax revenue forecast of 279.7 trillion won at the time of the third supplementary budget formulation in June last year, when revenue adjustments were made, 5.8 trillion won more was collected. This is smaller than the average tax revenue error of 10.6 trillion won over the past five years.

After deducting the carryover of 2.3 trillion won from the surplus on settlement, the world surplus recorded a surplus of 9.4 trillion won. Of this, the 5.7 trillion won world surplus generated in the general account can be used for local allocation tax settlement, public fund contributions, debt repayment, supplementary budget formulation, etc., according to the National Finance Act. Unused funds amounted to 6.6 trillion won, down 1.3 trillion won from the previous year, and the unused rate (1.4%) recorded the lowest level since the budget accounting system (d-Brain) was established in 2007.

Meanwhile, based on the closing results, the government plans to additionally calculate fiscal balance, national debt, and financial statements, prepare the "National Settlement Report," and submit it to the National Assembly by the end of May after the Board of Audit and Inspection conducts the settlement audit.

This content was produced with the assistance of AI translation services.