Analysis of the 2023 Tax Revision Bill

Published on Oct., 31, 2023
Published by First Tax Analysis Division

    In recent times, our economy has experienced sluggish trends due to deteriorating internal and external economic conditions, including high inflation and elevated interest rates. Although the economic downturn is expected to improve next year driven by increased consumption and a boost in lackluster exports, external uncertainties may continue to persist. These uncertainties encompass prolonged monetary tightening policies in major overseas economies, escalating global energy prices, and ongoing political instability in the Middle East. Furthermore, structural issues that threaten economic growth potential are intensifying in Korea, notably the declining fertility rate and the aging population, which lead to a shrinking working-age population.
   At this critical juncture, the 2023 Tax Revision Bill, submitted to the National Assembly by the government, prioritizes economic vitality, livelihood stability and addressing the structural crisis. It includes provisions aimed at supporting key national policies, such as promoting investment and providing tax incentives for marriage, childbirth, and childcare support. This bill can be viewed as a relatively minor amendment that upholds the existing tax policy stance.
   In line with the 2023 Tax Revision Bill submitted by the government, this report offers a policy analysis encompassing the overall policy direction and specific details for each tax item. It also analyzes the discrepancies between NABO's forecast (over the next five years (2024-2028), an estimated increase of 4.2 trillion won based on the cumulative method, and an estimated increase of 0.6 trillion won based on the net method) and the government's announcements (over the next five years (2024-2028), an estimated increase of 3.1 trillion won based on the cumulative method, and an estimated increase of 0.5 trillion won based on the net method) regarding the tax revenue effects and tax burden implications resulting from the tax law amendment.
   Additionally, NABO conducted an analysis of the government's tax revision bill from various perspectives, including feasibility and effectiveness, and provided further considerations for its implementation.