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Photo courtesy of Yonhap News |
[Alpha Biz= Paul Lee] SEOUL – South Korea’s government and the Democratic Party announced on July 29 that they will raise the corporate tax top rate back to 25%, reversing the previous administration’s cut, and tighten rules on stock capital gains taxation.
Under the 2025 tax reform outline, the maximum corporate tax rate will increase from the current 24% to 25%, returning to its 2022 level. The rate had been lowered to 22% in 2009 under the Lee Myung-bak administration, later restored to 25% under Moon Jae-in, and then cut again to 24% by the Yoon Suk Yeol government.
The reform will also tighten the threshold for major shareholders subject to stock transfer tax: the bar will drop from KRW 5 billion to KRW 1 billion in listed stock holdings. Anyone holding over KRW 1 billion in shares will now be liable for capital gains tax.
Officials described the move as a “normalization” of the tax code, arguing that tax relief measures under the previous government amounted to “tax cuts for the wealthy.” Rep. Jung Tae-ho, a senior lawmaker on the National Assembly’s Strategy and Finance Committee, said the corporate tax increase would boost revenue by about KRW 7.5 trillion.
However, there is still debate within the party over a proposal to lower taxes on dividend income through separate taxation. Proponents argue it could encourage dividend payouts and stock market activity, while critics warn it might again be perceived as a tax break for the wealthy.
The government plans to finalize and announce the full tax reform package following the Tax Development Review Committee meeting on July 31.
AlphaBIZ Paul Lee(hoondork1977@alphabiz.co.kr)
