South Korea’s Excess Tax Revenue May Top $36 Billion This Year, Future Response Fund Seen Exceeding $154 Billion

South Korea’s excess tax revenue this year is projected to exceed 50 trillion won ($36.2 billion), driven in part by higher corporate tax receipts as the semiconductor industry recovers. That would lift the Future Response Fund, which the government plans to launch next year, above 200 trillion won ($144.9 billion).

Yonhap News reported on September 27 that the Ministry of Economy and Finance is understood to have estimated excess tax revenue this year at more than 50 trillion won in its revised 2026 national tax revenue forecast, due later this month. Based on the 415.4 trillion won tax revenue outlook raised during the supplementary budget in April, annual tax revenue could exceed 465.4 trillion won ($337.1 billion).

That would far surpass the previous record of 395.9 trillion won ($286.9 billion) set in 2022. It would also be more than 91.5 trillion won ($66.3 billion) higher than last year’s 373.9 trillion won ($270.9 billion) in national tax revenue. National tax revenue for January through July totaled 274 trillion won ($198.6 billion), up 41.4 trillion won ($30 billion) from a year earlier. Tax collection reached 66% of the supplementary budget target, above the five-year average.

The increase in tax revenue was driven by stronger corporate earnings and a recovery in consumption. Corporate tax revenue through July rose 4.4 trillion won ($3.2 billion) from a year earlier to 51.8 trillion won ($37.5 billion). Income tax revenue increased 12.2 trillion won ($8.8 billion) to 89.3 trillion won ($64.7 billion), while value-added tax climbed 8.1 trillion won ($5.9 billion) to 69.4 trillion won ($50.3 billion). Supported by heavier stock-market trading, securities transaction tax and the rural and fisheries special tax also rose sharply to 8.2 trillion won ($5.9 billion) and 13.1 trillion won ($9.5 billion), respectively.

A key variable for tax revenue in the coming months is interim corporate tax payments from semiconductor companies. Samsung Electronics Co. and SK Hynix Inc. posted cumulative first-half operating profit of 146.7 trillion won ($106.3 billion) and 98.2 trillion won ($71.1 billion), respectively. Combined, that comes to about 245 trillion won ($177.4 billion). If their interim payments are reflected in August and September tax receipts, annual national tax revenue could increase further.

The increase in excess tax revenue is also set to affect funding for the Future Response Fund, which the government is pushing to create. Additional tax revenue calculated based on next year’s domestic tax revenue budget stands at 162.3 trillion won ($117.6 billion). Adding this year’s excess tax revenue of 50 trillion won would bring the total to 212.3 trillion won ($153.8 billion). The government has not yet decided whether to allocate all of that excess revenue to the fund.

The government plans to use the Future Response Fund to invest in youth, future growth engines, regional development, and education and talent, while also using it as a fiscal resource to prepare for tax shortfalls. The government’s draft spending plan for next year’s fund includes 45.4 trillion won ($32.9 billion) in investment and a 12.5 trillion won ($9.1 billion) reduction in new government bond issuance. Once the revised tax estimate is released, the government plans to finalize how the excess revenue will be used after consultations with relevant ministries.