Last year, tax breaks for major corporate groups surged by over 80% compared to the previous year. In contrast, the increase in tax breaks for small businesses was limited to just 4%, significantly raising the share of tax breaks allocated to large corporations.
According to the '2025 Tax Expenditure Statement' received by Representative Lee Yang-soo of the People Power Party from the Ministry of Economy and Finance on August 23, tax breaks for inter-affiliated corporate groups amounted to 4.2685 trillion won, an 81.8% increase from 2.3476 trillion won the previous year.
Inter-affiliated corporate groups are classified as those with total assets exceeding 0.5% of the country's GDP, typically referred to as 'major corporate groups.' As of this year, 47 groups have been designated.
Of the total corporate tax breaks of 26.7612 trillion won, inter-affiliated groups accounted for 16.0%, a rise of 6.2 percentage points from the previous year. Tax expenditures are a system where the government reduces taxes for specific policy purposes, effectively resembling fiscal spending.
In contrast, tax breaks for small businesses reached 18.8301 trillion won, reflecting a modest 4.3% increase from the previous year. Their share of total corporate tax breaks also declined from 75.1% to 70.4%.
The significant increase in tax breaks for large corporations is attributed to the expansion of tax credits related to research and development (R&D) and facility investments. Last year, tax credits for research and human resource development amounted to 4.1476 trillion won, an increase of 1.1902 trillion won, while the integrated investment tax credit rose by 719.4 billion won to reach 2.4887 trillion won.
The improvement in corporate performance in 2024 also contributed to the reflection of carryover deductions during last year's corporate tax filing process, along with the expansion of tax credit eligibility for new growth and core technologies, as well as national strategic technologies.
Last year, the total amount of national tax breaks was 76.1084 trillion won, an increase of 5.5914 trillion won from the previous year. The national tax break rate was 15.9%, a decrease of 0.2 percentage points from the previous year, but still exceeded the legal limit of 15.5% by 0.4 percentage points.
The largest category of tax breaks was 'special income deductions and special tax credits for insurance premiums,' totaling 7.253 trillion won. This was followed by pension insurance deductions (4.7581 trillion won), earned income tax credits (4.6367 trillion won), income deductions for credit card usage (4.3243 trillion won), and integrated employment tax credits (4.3035 trillion won).
Meanwhile, the government projects this year's national tax breaks to reach 80.5277 trillion won, with a tax break rate of 16.1%. The Ministry of Economy and Finance recently announced a '2026 tax reform plan' that aims to streamline 115 out of 241 total tax expenditures, resulting in an estimated reduction effect of about 2.5 trillion won.
* This article has been translated by AI.
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