Analysis of the 2024 Tax Revision Bill

Published on October 30, 2024
Published by First Tax Analysis Division, Estimates & Tax Analysis Department

   The primary focus of the government's 2024 Tax Revision Bill, submitted to the National Assembly, is to revitalize the economy and capital markets by promoting investment and job creation, while upholding the ongoing tax reduction policy. Key elements of the bill include the abolition of the financial investment income tax, reforms to inheritance and gift taxes, tax exemptions for companies that increase shareholder returns, and the expansion and extension of R&D and integrated investment tax credits, as well as the introduction of marriage tax credits.
   This report analyzes the overall policy direction and details of each component of the 2024 Tax Revision Bill. It also compares the NABO's projections regarding tax revenue effects and tax burden incidences with those of the government. The NABO estimates a tax revenue reduction of 19.5 trillion won for the 2025-2029 accumulated period, with the following projected impacts: an increase of 1.7 trillion won for low- and middle-income individuals, a 20 trillion won increase for high-income earners, and a 0.7 trillion won uptick for small and medium-sized enterprises.
   The difference in projected tax revenue effects between the NABO and the government (19.8 trillion won for the 2025-2029 accumulated period) is 0.3 trillion won. The variations by tax category are as follows: income tax shows an increase of 1.1 trillion won, corporate tax increases by 0.9 trillion won, and inheritance and gift tax rises by 1.5 trillion won. These discrepancies stem from differences in data usage, estimation methodologies, and approaches to distributing the tax revenue effects.
   Additionally, the NABO assessed major amendments to the 2024 Tax Revision Bill, considering their feasibility and effectiveness, and provided further recommendations for policy implementation.