[비즈한국] The government has announced that it will raise the top corporate tax rate back to 25%, a rate that had been lowered under the Yoon Suk-yeol administration. Although the government and the ruling party previously described the corporate tax hike as a move toward "tax system normalization," concerns are being raised that it could dampen corporate investment, as it runs counter to the global trend of cutting corporate taxes.
In fact, according to corporate tax reports from Deloitte and KPMG, two of the world's "Big Four" accounting firms, 30 countries have lowered their corporate tax rates over the past 10 years, while only 17 countries—about half that number—have raised them. Notably, major Western developed nations such as the United States, France, Greece, and Italy have been aggressively cutting corporate taxes. In contrast, many of the countries that have raised their corporate taxes are concentrated in South America, where there are significant issues with national finances.
On July 31, the government held a Tax Development Deliberation Committee at the Korea Federation of Banks in Jung-gu, Seoul, chaired by Lee Hyung-il, First Vice Minister of Economy and Finance, where they deliberated and approved the "2025 Tax Reform Proposal," which centers on increasing corporate tax rates. Accordingly, among the four tax brackets, the rates will each increase by 1 percentage point: from 9% to 10% for income up to 200 million won; from 19% to 20% for income over 200 million to 20 billion won; and from 21% to 22% for income over 20 billion to 300 billion won. The top rate of 24%, currently applied to income exceeding 300 billion won, will be raised to 25%.
Two days earlier, at a party-government meeting on July 29, Rep. Jung Tae-ho, the Democratic Party's secretary for the National Assembly's Strategy and Finance Committee, explained, "This corporate tax rate hike is about normalizing [the tax system] to the 2022 levels." While the government and ruling party described the hike as tax normalization, the global trend remains dominated by corporate tax cuts. According to Deloitte and KPMG, among 47 countries that have changed their corporate taxes in the last decade, 63.8%, or 30 countries, have lowered them.
The United States has been strongly pushing for corporate tax cuts since the Donald Trump administration took office. The U.S. corporate tax rate (top rate) was 35% until 2017, a full 13 percentage points higher than Korea's (22% as of 2017). However, following the passage of a massive tax reform bill in 2018 during the first Trump administration, the rate was slashed by 14 percentage points to 21%. Upon entering his second term, President Trump immediately passed a tax cut bill to make the corporate tax rate reductions, which were set to expire this year, indefinite. President Trump has even suggested going further, with a policy goal of lowering the 21% corporate tax rate to 15%.
France is also continuously lowering its corporate tax. The French corporate tax rate was 33.3% ten years ago in 2015, but it was lowered to 33% in 2018, followed by 31% in 2019, 28% in 2020, and 26.5% in 2021. It has since been further reduced to 25% in 2022. Belgium lowered its corporate tax rate from 34% in 2015 to 29% in 2018, and then further to 25% in 2021. Italy lowered its corporate tax rate from 31.4% in 2015 to 24% in 2017.
Norway reduced its corporate tax rate from 27% in 2015 by 1 percentage point each year, reaching 25% in 2016, 24% in 2017, 23% in 2018, and 22% in 2019. Austria also lowered its corporate tax rate by 1 percentage point annually from 25%, reaching 24% in 2023 and 23% in 2024. Belgium, having cut its 34% rate to 29% in 2018, reduced it by another 4 percentage points to 25% in 2021. Other countries that have lowered corporate taxes include Luxembourg (29.22% → 27.08% in 2017 → 26.01% in 2018 → 24.94% in 2019 → 23.87% in 2025), Sweden (22% → 21.4% in 2019 → 20.6% in 2021), Spain (28% → 26% in 2016), and Croatia (20% → 18% in 2018).
Japan, a neighbor of Korea, is also following a trend of corporate tax cuts. Japan lowered its corporate tax rate from 35.64% in 2015 to 33.86%, then down to 30.86% in 2016, and eventually to 30.62% in 2019. Most countries have set corporate tax cuts as a major policy direction and are lowering them in stages.
In contrast, corporate taxes in South Korea fluctuate wildly with every change of administration, placing a burden on corporate management. The corporate tax rate was lowered from 25% to 22% in 2009 under the Lee Myung-bak administration, but it was raised back to 25% in 2017 during the Moon Jae-in administration, and lowered again to 24% under the Yoon Suk-yeol administration. With the launch of the Lee Jae-myung administration, corporate taxes are being raised once again.