South Korea’s corporate tax revenue is likely to far exceed an earlier government estimate this year, helping to ease the country’s persistent revenue shortfall, a government report showed Monday.
According to the report by the National Tax Service, initial corporate earnings reports rose nearly 11 percent last year from a year earlier as of end-March, which means corporate tax revenue could rise by 5 trillion won ($4.57 billion) to 6 trillion won ($5.48 billion) in 2015.
This estimate can translate into a sizable increase in revenue for the state, with some officials predicting it may be possible to meet this year’s target of 46 trillion won.
Last year, the country collected 42.7 trillion won in corporate taxes, 1.2 trillion won less than expected, due to an economic slowdown in 2013, when it posted an on-year growth rate of 3 percent.
Asia’s fourth-largest economy faced tax revenue shortages from 2012 through 2014. Last year, the shortfall ballooned to 10.9 trillion won from 2.8 trillion won in 2012 and 8.5 trillion won in 2013.
Corporate taxes are collected in the year following actual earnings, so money collected in 2015 is for earnings reported last year.
“One of the main reasons for the rise can be attributed to the NTS sending tax payment notices and related information to businesses early in the year that provided clear guidelines used by business owners when filing their earnings reports,” a tax official said.
The goal is to get people to report honestly about their earnings from the outset, which can reduce the hassle of conducting audits and taking legal action, he said.
In addition, the NTS said there are signs that value-added tax earnings may increase this year from a shortage in 2014. Last year the country collected 57.1 trillion won in VAT, 1.4 trillion shy of the target. (Yonhap)
