Tax revenue falls 8.8 tln won through July on weak corporate earnings

South Korea’s tax revenue fell 8.8 trillion won (US$6.59 billion) from a year earlier over the first seven months of 2024, due to the lackluster corporate earnings, data showed Friday.

The government collected 208.8 trillion won of taxes over the January-July period, down 4 percent from the same period last year, according to the data from the Ministry of Economy and Finance.

In July alone, however, the country’s total tax revenue increased 1.2 trillion won from a year earlier, reaching 40.3 trillion won, driven by higher consumption and imports.

Over the January-July period, the corporate tax collection dipped 31.9 percent to 33 trillion, due to the weak earnings by local businesses in 2023.

Operating profits of companies listed on the main bourse dipped 45 percent on-year in 2023. Those of firms listed on the tech-heavy KOSDAQ market also tumbled 39.8 percent, according to government data.

The ministry, however, said the amount of income tax collected went up 0.2 percent over the period to 68.1 trillion won on the back of an increase in the number of employed people, along with wage hikes.

The amount of value-added tax collected also rose 10.8 percent to 62.9 trillion won, reflecting improved consumption.

The tax collection from securities transactions shed 11.1 percent to 3.1 trillion won despite an increase in trade volumes as the government lowered the tax rate, according to the ministry.

Last year, the country’s total revenue fell 77 trillion won on-year to 497 trillion won, as tax collections dropped due to poor corporate performance and the property market slump.