July 30, 2025
SEOUL – South Korea’s ruling bloc on Tuesday outlined plans to raise the corporate tax rate and expand the scope of capital gains taxation, signaling a U-turn from policies aimed at tax relief under the previous conservative Yoon Suk Yeol administration.
Following a policy consultation held at the National Assembly in Seoul, the government and the ruling Democratic Party of Korea said they had agreed to raise the top corporate tax rate from the current 24 percent to 25 percent — the same level as in 2022, before former President Yoon’s administration lowered it by 1 percentage point.
The corporate tax rate has seen several changes over the past decades, largely influenced by the shift in political power.
It was lowered from 25 percent to 22 percent under President Lee Myung-bak in 2009, raised back to 25 percent under President Moon Jae-in in 2017, and then brought down to 24 percent in 2022 under the Yoon administration, which argued the cut would spur corporate investment.
Rep. Chung Tae-ho of the Democratic Party, a senior member of the Assembly’s Strategy and Finance Committee, said the tax changes represent a “normalization” of South Korea’s tax regime, restoring tax policies to the levels in place before the Yoon government.
“There is little evidence that the corporate tax cut directly led to (an increase in) investment,” Chung said, adding that restoring the higher rate would help secure a stable tax base.
The plan also includes widening the scope of those subject to capital gains tax.
Under current law, individuals who own stocks worth more than 5 billion won (approximately $3.6 million) in a company listed on the Kospi, Kosdaq or Konex — the three markets operated by the Korea Exchange — are subject to capital gains tax when they sell.
The ruling bloc aims to lower that threshold to 1 billion won per listed company to broaden the tax base. For unlisted companies, capital gains tax applies to all shareholders regardless of their ownership size.
The government and the ruling party also discussed introducing a separate taxation scheme for dividend income to encourage shareholder-friendly practices and stimulate the capital market.
Currently, dividend and interest income exceeding 20 million won per year is subject to progressive taxation, with rates reaching up to 49.5 percent.
Under the proposed changes, a portion of dividend income could be taxed separately rather than being combined with other income, potentially reducing the overall tax burden. Specific criteria for this scheme have not yet been finalized.
Regarding the proposed dividend tax scheme, the Ministry of Economy and Finance said it is “necessary,” citing the importance of redirecting capital flows from the real estate market to capital markets and supporting the growth of strategic and high-tech industries.
Tuesday’s policy consultation reportedly lasted about 90 minutes and was attended by Democratic Party lawmakers from the Assembly’s Strategy and Finance Committee, along with First Vice Minister of Economy and Finance Lee Hyoung-il.
Moving forward, the Democratic Party said it will continue discussions through a special task force on tax reform, chaired by three-term lawmaker Kim Yeong-jin, with Rep. Chung Tae-ho serving as secretary.
