Tax System of the Republic of Korea 2025

Published on April 7, 2025
Published by Tax Policy Analysis 1, Estimates & Tax Analysis Department

   Taxation serves not only as a means of securing resources for national fiscal management, but also as a policy tool for income redistribution, economic stabilization, and other public objectives. As Korea faces growing societal challenges that are expected to increase fiscal expenditures, such as a low fertility rate and an aging population, the role of taxation in ensuring fiscal sustainability is becoming ever more critical. In addition, with rising uncertainties in global trade and tariff policies and lower 2025 GDP forecasts for Korea from major domestic and international institutions, tax policy has taken on greater significance in the efforts to revitalize the economy.
   To respond to these demands, Korea’s tax policies are formulated and implemented through the legislative process of the National Assembly, in accordance with the constitutional principle of no taxation without legislation. To promote a better understanding of the tax system and related policy developments, the National Assembly Budget Office (NABO) has published its annual “Tax System of the Republic of Korea” since 2020, faithfully reflecting recent tax law amendments and policy trends.
   The 2025 edition is structured as follows. ‘Part 1: Understanding Taxes’ provides an overview of general tax principles, including the concept and functions of taxes, and the taxation process as well as an introduction to Korea’s tax system and its current status. ‘Part 2: National Taxes’ and ‘Part 3: Local Taxes’ outline the history of major amendments, key provisions of the revised tax laws effective in 2025, and relevant international trends, thereby helping readers grasp the structure and main issues of each tax category. Finally, ‘Part 4: Tax Expenditures’ presents information on Korea’s tax expenditure status and its management framework.