Published on: 2025/08/01 11:34
The government unveiled its tax reform plan, to address a substantial shortfall in tax revenue.. and support economic growth.
Our finance correspondent Moon Ji-young explains more.
The 2025 tax reform bill introduces a mix of targeted tax credits for strategic industries and welfare, alongside adjustments to corporate and capital gains taxes.
"Over the past three years, our tax revenue base has weakened rapidly, leading to a significant drop in the tax burden ratio.
Therefore, this year's tax reform bill prioritizes reinforcing the weakened tax revenue base for fiscal sustainability, while also supporting economic strength and stabilizing people's livelihoods"
The reform package aims to enhance tax credits for R&D and investment in future strategic industries, including AI.
Furthermore, to enhance K-content competitiveness, tax credits for webtoons will be newly introduced, and tax support for video content creation will be expanded.
Beyond these targeted incentives, the framework includes tax cuts designed to encourage corporate payouts and boost the stock market.
Specifically, to encourage high dividends, a separate taxation system for dividend income from high-dividend companies is being introduced.
This approach excludes these dividends from the comprehensive financial income tax base, allowing earnings from stock dividends to be taxed independently, rather than combined with other income.
Despite the debate over tax cuts for the super-rich, a 35 percent tax rate is expected to be applied to the highest dividend income bracket.
On the other hand, the bill aims to restore tax equity and rebuild the nation's revenue base based on the principle of ability to pay.
The country's corporate tax rate will be raised by one percentage point across the board, with the top corporate rate increasing to 25 percent, effectively reversing a cut introduced by the previous administration.
The bill also tightens capital gains tax rules by lowering the threshold for major shareholders.
While currently only those holding 5 billion won, or roughly 3-point-6 million U.S. dollars, in a single listed stock are taxed, that threshold will be reduced to 1 billion won, or just under 720 thousand dollars.
Tax support will be expanded for low-and middle-income households, with measures such as an increase in the income deduction limit for credit card use by up to 500,000 won, or roughly 360 dollars, depending on the number of children for families.
The tax burden on self-employed individuals and small business owners is also expected to be alleviated.
The bill will first go through Cabinet meetings before being submitted to the National Assembly for final approval.
Moon Ji-young. Arirang News.
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