Semiconductor earnings drive corporate tax windfall

Finance Ministry: 'Corporate tax target fully met'

Tax collection rate hits highest level in 5 years at 80.5%

National tax revenue surged more than 26 trillion won last month compared with a year earlier, boosted by improved earnings at chipmakers and a pickup in stock market trading. Cumulative tax revenue through September also climbed more than 95 trillion won from the same period last year.

September national tax revenue reached 55.2 trillion won, up 26.4 trillion won, or 91.6 percent, from the same month a year ago, according to the Ministry of Economy and Finance's monthly tax revenue report released Friday.

Government Complex Sejong in Eojin-dong, Sejong [Newsis]
Government Complex Sejong in Eojin-dong, Sejong [Newsis]

Corporate tax was the primary driver of the revenue increase. Corporate tax receipts reached 36.2 trillion won in September, up 23.6 trillion won, or 187.6 percent, from the same month last year. The gain reflected a rise in installment payments under the mid-year corporate tax prepayment system, as chipmakers led a broad improvement in operating earnings.

Under the mid-year prepayment system, companies pay a portion of their taxes in advance based on first-half earnings. "Most installment payments under the prepayment system are made in August and September, with only a small portion remaining in October," a Finance Ministry official said.

Securities transaction tax revenue also rose on the back of increased stock market activity, reaching 700 billion won — up 500 billion won, or 231.8 percent, from a year earlier. The gain was driven by a 118.6 percent increase in listed share trading volume, which climbed from 453.4 trillion won in August last year to 991.2 trillion won in August this year, along with the restoration of the securities transaction tax rate to its 2023 level — 0.05 percent on the Kospi and 0.20 percent on the Kosdaq.

The special rural development tax, which is levied on Kospi trading volume, also rose 800 billion won, or 120.9 percent, to 1.4 trillion won.

However, it remains uncertain whether the upward trend in securities transaction tax revenue will continue through year-end. "Trading volume in the September-to-November period last year was quite high, so whether this year's figures can surpass that level is key," a Finance Ministry official said. "Volatility in trading volume is also significant, making it difficult to forecast securities transaction tax revenue through the end of the year."

Income tax revenue came in at 9.7 trillion won, up 1.2 trillion won, or 14.7 percent, from the same month a year ago, as growth in employment and total wage payments lifted wage income tax receipts, while capital gains tax revenue increased alongside a rise in housing transactions.

Inheritance and gift tax revenue rose 200 billion won to 1.5 trillion won, driven in part by an increase in real estate gifting. Customs revenue climbed 100 billion won to 800 billion won on the back of higher imports. Total imports last month reached $71.09 billion, up 26.0 percent from the same month a year earlier.

In contrast, the transportation, energy and environment tax fell 200 billion won, or 16.0 percent, to 1 trillion won from the same month last year. Value-added tax revenue slipped 22.5 billion won, or 0.9 percent, to 2.4 trillion won.

Cumulative national tax revenue for the January-through-September period reached 385 trillion won ($288 billion), up 95.4 trillion won, or 33.0 percent, from the same period last year.

Breaking down the gains by tax category, corporate tax accounted for more than half of the total increase, rising 51.9 trillion won to 127.8 trillion won. Income tax climbed 15.7 trillion won to 110.8 trillion won, boosted by higher performance bonuses and increased real estate transactions.

Securities transaction tax revenue rose 7.5 trillion won to 9.9 trillion won, while the special rural development tax increased 10.3 trillion won to 16.4 trillion won. Value-added tax also gained 7.4 trillion won to reach 67.5 trillion won, supported by growth in imports and private consumption.

Against the government's revised full-year national tax revenue forecast of 478.6 trillion won — adjusted upward to reflect improved corporate earnings from the semiconductor boom and higher stock trading activity — the collection rate through September stands at 80.5 percent, the highest level for the same point in the year over the past five years on a revised-estimate basis.

The government cautioned, however, that the high collection rate does not necessarily mean year-end tax revenue will exceed the revised forecast, given that corporate tax installment payments are concentrated in August and September.

Corporate tax collections through September reached 127.8 trillion won, equivalent to 93.7 percent of the full-year revised forecast of 136.4 trillion won. A Finance Ministry official described the corporate tax performance as "a perfect score."


y2k@heraldcorp.com