1

The government unveiled its 2025 tax reform plan on Thursday, aimed at restoring the revenue base by raising corporate tax and stock transaction tax rates, while tightening capital gains tax rules for major shareholders. The reform, which effectively reverses the previous administration’s tax-cutting stance, is projected to boost tax revenue by over 8 trillion won over the next five years, though it will increase burdens on large corporations and high-income earners.

According to the Ministry of Economy and Finance, the top corporate tax rate for taxable income over 300 billion won will be raised from the current 24% back to 25%, returning to its 2022 level. Lower brackets will also rise by 1 percentage point across the board:

• Up to 200 million won: 9% → 10%

• 200 million to 20 billion won: 19% → 20%

• 20 billion to 300 billion won: 21% → 22%

• Over 300 billion won: 24% → 25%

The ministry stressed that stabilizing revenue is crucial for fiscal sustainability, citing weakened tax bases from previous tax cuts and economic slowdowns. However, concerns have been raised that this move runs counter to the global trend of lowering corporate taxes. Including local taxes, Korea’s corporate tax rate will rise to 26.4%, compared to the OECD average of 23.9%.

The government also plans to raise the stock transaction tax rate from 0.15% to 0.20% starting next year. The threshold for imposing capital gains tax on major shareholders will be lowered significantly, from holdings worth 5 billion won per stock to 1 billion won, expanding the taxable base.

Officials explained that previous cuts in stock transaction taxes were premised on the introduction of a financial investment income tax, which was eventually scrapped after repeated delays. The new measures aim to improve tax equity by targeting high-value investors.

The reform is expected to generate an additional 8.2 trillion won in revenue over the next five years, driven mainly by corporate tax (4.3 trillion won) and stock transaction tax (2.3 trillion won) increases. Other sources include restructuring of education taxes on financial firms (1.3 trillion won), the expiry of temporary investment tax credits (200 billion won), and stricter capital gains taxation (200 billion won).

While low- and middle-income households earning under 87 million won annually will see tax relief of about 102.4 billion won over five years, the burden will rise for large companies (4.16 trillion won), small and medium-sized enterprises (1.59 trillion won), and high-income earners (684 billion won).

The ministry emphasized that this reform is intended to secure fiscal sustainability while minimizing the impact on ordinary households.