S. Korean gov't and ruling party agree to raise top corporate tax rate back to 25%

Amid growing concerns over growing debt, South Korea is moving towards tax reform starting with raising the corporate tax that was rolled back three years ago, alongside taxes on shareholders with large stock holdings.

Our Moon Hye-ryeon has more.

The South Korean government and the ruling party have agreed to raise the country's top corporate tax rate to 25 percent reversing a cut introduced by the previous administration.

The decision was made on Tuesday during a policy consultation meeting at the National Assembly, as part of ongoing efforts to finalize the 2025 tax reform framework.

This increases the rate by one percentage point from the current 24 percent, as set back in 2022.

The two sides also plan to tighten capital gains tax rules by lowering the threshold for major shareholders.

Currently, only those holding over 5 billion won roughly 3-point-6 million U.S. dollars in a single listed stock are taxed.

Under the new plan, that threshold would be reduced to 1 billion won, or just under 720 thousand dollars.

Officials say the changes aim to restore tax equity and rebuild the nation's revenue base, with the Democratic Party having criticized the Yoon Suk Yeol administration's previous cuts as benefiting the wealthy.

"We'll correct the tax system to fix the revenue collapse and fiscal crisis. The treasury is empty — we are buried in debt. In just two years, corporate tax revenues have dropped by 41 trillion won. For the first time ever, income taxes from workers have surpassed those from corporations. This level of shortfall, year after year, is not just emptying the state coffers — it's shaking the foundation of government operations."

Meanwhile, debate continues over a separate proposal to apply lower, flat-rate taxation to dividend income.

While the government argues it would encourage corporate payouts and boost the stock market, some ruling party politicians warn it could disproportionately benefit high-net-worth investors.

Moon Hye-ryeon, Arirang News.