Excess Tax Revenue to Reach KRW 63 Trillion This Year... Future Response Fund Nears KRW 220 Trillion

Corporate Tax Up KRW 34 Trillion Thanks to Samsung Electronics and SK hynix
Income Tax Rises as Wages, Dividends, and Property Transactions Increase

The government has projected that, thanks to the semiconductor boom, this year’s tax surplus will reach 63.2 trillion won. This is mainly due to the significant increase in corporate tax revenues resulting from improved earnings by Samsung Electronics and SK hynix, as well as a rise in income tax fueled by higher wages, dividends, and housing transactions. Consequently, the funds available for the Future Response Fund, which the government will operate next year, are also expected to increase from the previously estimated 162.3 trillion won to as much as 218.5 trillion won.

According to the Ministry of Economy and Finance’s revised national tax revenue forecast for 2026, released on September 30, this year’s national tax revenue is projected to amount to 478.6 trillion won. This is 104.7 trillion won more than last year’s actual tax collection of 373.9 trillion won and 63.2 trillion won more than the 415.4 trillion won projected at the time of the supplementary budget passed in April. In other words, actual revenue is expected to exceed earlier supplementary budget estimates by 15.2%.

On the 27th, cargo containers are piled up at Pyeongtaek Port as seen from the sky. [Aerial shooting cooperation = Seoul Metropolitan Police Agency Aviation Unit, Pilots: Lieutenant Shin Seungho - Lieutenant Park Jihwan, Crew: Lieutenant Park Sangjin] Photo by Jinhyung Kang aymsdream@

34 trillion won more in corporate tax, thanks to Samsung Electronics and SK hynix

Above all, the improvement in earnings of semiconductor companies such as Samsung Electronics and SK hynix was especially remarkable. Corporate tax revenue for this year is expected to reach 136.4 trillion won, which is 35 trillion won more than projected during the supplementary budget process. As companies generate higher profits, their tax liabilities also rise correspondingly, so the semiconductor boom has directly translated into higher tax revenue. Market forecasts for the combined annual operating profit of Samsung Electronics and SK hynix have also surged.

The two companies’ combined operating profit for this year is anticipated to reach around 638 trillion won, according to securities industry analysts. This is about 1.9 times the government’s forecast of 339 trillion won at the time the supplementary budget was formulated in April. Even in just the first half of this year, Samsung Electronics posted 146.7 trillion won and SK hynix posted 98.1 trillion won in operating profit, a total of 244.8 trillion won. This far exceeds the market expectations from February, which were 79 trillion won for Samsung Electronics and 67.6 trillion won for SK hynix.

Increases in wages, dividends, and home sales drive income tax boost

Income tax revenue (152.4 trillion won) is now expected to increase by 15.6 trillion won compared to the supplementary budget forecast. As bonuses grew particularly in semiconductors and finance, the projected wage growth rate was raised from 2.6% to 3.0%. An official from the Ministry of Economy and Finance stated, "Special dividends by semiconductor firms and an increase in housing transactions led to higher earned income, dividend income, and capital gains taxes." Notably, Samsung Electronics’ announcement on August 21 of a plan to pay out 30 trillion won in third-quarter dividends was also reflected in the revised dividend tax revenue estimate. Furthermore, the year-on-year increase rate of home sales transactions subject to price reflection in the first half of this year was 12.8%, up from 11.5% in the second half of last year.

Value-added tax (VAT) is projected to amount to 89 trillion won, an increase of 2.4 trillion won. This is attributed to the simultaneous effects of a recovery in private consumption and growth in import volumes. The government raised its private consumption growth forecast for this year from 1.5% to 2.0% compared to the supplementary budget, and the consumer price inflation projection from 2.1% to 2.6%. The cumulative import value through July also increased by 18.2% compared to the same period last year. Driven by bullish stock markets, securities transaction tax is expected to rise by 1.9 trillion won to 12.4 trillion won, while the special tax for rural development is projected to increase by 6.7 trillion won to 20.3 trillion won.

Additional tax revenue to be used for the Future Response Fund... maximum of 218.5 trillion won

The additional tax revenue will serve as a resource bolstering fiscal management for next year. The government had initially set the base funding for the 2027 Future Response Fund at 162.3 trillion won. The Future Response Fund is a financial reserve prepared by the government to respond to business cycles or invest in future strategies, funded by additional and surplus tax revenue, the balance of national surpluses, and returns from the management of idle funds. "Additional tax revenue" refers to funds set aside by the government in anticipation of long-term growth in domestic tax revenues, while "tax surplus" is defined as the amount by which actual revenue exceeds budget expectations. The government now believes it can utilize an additional 56.2 trillion won in domestic tax revenue identified in this latest forecast, on top of the existing 162.3 trillion won.

If these are simply summed, the fund’s resources could reach a maximum of 218.5 trillion won. However, not all of the 56.2 trillion won will automatically flow into the fund. Certain categories, such as the tobacco portion of the individual consumption tax, must be excluded from the domestic tax total, and the government is still discussing exactly how much to transfer to the fund. A Ministry of Economy and Finance official said, "Under regulations permitting tax surplus transfer to the Future Response Fund, the increased domestic tax revenue can be contributed to the fund." The tax revenue deviation rate compared to the supplementary budget stands at 15.2% this year—the fifth-highest on record after 21.5% in 1950, 17.6% in 1988, 16.6% in 2000, and 15.3% in 1989. The government commented, "A significant portion of this deviation is due to increased production of key products resulting from the semiconductor boom, thus widening the margin of error."

National tax revenue collected through August this year totaled 329.9 trillion won—an increase of 69.1 trillion won over the same period last year. In particular, corporate tax rose by 28.2 trillion won to 91.6 trillion won, leading the overall gain in tax income. The government noted that the 23.8 trillion won increase in August corporate tax will likely result in similar gains in September and October due to installment payments, compared to last year. The results of this revised national tax revenue forecast will be submitted to the National Assembly this month in accordance with the National Finance Act.

This content was produced with the assistance of AI translation services.