South Korean conglomerate tax exemptions surge 81.8%

Tax exemptions for major South Korean conglomerates increased by 81.8% last year, reaching 4.27 trillion won, according to the 2025 tax expenditure settlement report. This represents a significant jump from the 2.35 trillion won recorded in 2024. In contrast, tax exemptions for small and medium-sized enterprises (SMEs) grew by only 4.3%, totaling 18.83 trillion won.

The disparity is largely attributed to increased utilization of R&D tax credits and integrated investment tax credits by large business groups. The R&D tax credit rose to 4.15 trillion won, while the integrated investment tax credit reached 2.49 trillion won. These increases were driven by improved corporate performance and an expanded scope for national strategic technologies.

Additionally, the value of assets exempted through family business inheritance deductions saw a 136% increase, rising to 541 billion won. In response to these trends, the government has announced a 2026 tax reform plan aimed at tightening requirements for family business inheritance deductions and reorganizing various tax expenditure items to achieve a reduction of approximately 2.5 trillion won.