Why Did Over 470,000 S. Korean Firms Fail to Report Net Profit in 2024?
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Synopsis
In a startling revelation, over 470,000 South Korean companies reported no net profit amid economic challenges in 2024. This significant trend raises concerns about the future of the nation's economy and corporate viability. Explore the implications of this data on the broader economic landscape.
Key Takeaways
- Over 470,000 South Korean companies reported no net profit in 2024.
- This represents a 10.8% increase from the previous year.
- 44.5% of all firms that paid corporate taxes were unprofitable.
- Companies earning over 10 billion won saw a 7.3% decline in numbers.
- Tax revenue shortfall reached 30.8 trillion won in 2024.
Seoul, Oct 10 (NationPress) Over 470,000 firms in South Korea that paid corporate taxes in 2024 did not report a net profit, reports from the government indicate, reflecting an ongoing economic downturn. According to the National Tax Service (NTS), the count of companies with no net income reached 471,163, marking an increase of 45,933 or 10.8% from 425,230 the previous year.
This represents the largest yearly increase since the NTS initiated the collection of such data in 2012.
Last year, 44.5% of the 1,058,498 firms that paid corporate taxes reported no profits, a record high. This percentage had remained below 40% until 2019, first exceeding that mark in 2020 and reaching 41.3% in 2023.
In contrast, the number of companies declaring a net profit exceeding 10 billion won ($7.03 million) decreased by 296, or 7.3%, to 3,776 from 4,072 during the same timeframe, marking the first annual decline in this category.
In 2024, South Korea reported a tax revenue deficit of 30.8 trillion won, continuing a trend of substantial shortfalls after a 56.4 trillion-won deficit in 2023. The government anticipates a 12.5 trillion won shortfall in this year's national tax revenue, primarily due to weak domestic demand, forecasting a total tax revenue of 369.9 trillion won for 2025, an increase of 33.4 trillion won from the year before.
Additionally, earlier reports from the Financial Supervisory Service revealed that British investors were the most active participants in South Korean stock trading this year, engaging in transactions worth 1,247.7 trillion won ($889.01 billion) from January to August, with British traders accounting for 557.4 trillion won, or 44.7% of the total.
Point of View
It's crucial to view these statistics through an unbiased lens. The rising number of firms failing to report net profits indicates pressing challenges in the South Korean economy. While the government projects future tax revenues to increase, the current scenario requires immediate attention and strategic policies to support struggling businesses. The implications of these figures are vital for understanding the broader economic landscape.
NationPress
10/10/2025
Frequently Asked Questions
What are the main reasons for the lack of net profit among South Korean firms?
The lack of net profit among South Korean firms is primarily attributed to an ongoing economic slowdown, sluggish domestic demand, and increasing operational costs.
How does the failure to report profits affect the economy?
The failure to report profits can lead to reduced tax revenues, which affects government spending and investment in public services, potentially stalling economic growth.
What can be done to improve the profitability of these firms?
Improving profitability may require government intervention through policy changes, financial support, and incentives for businesses to innovate and adapt to market changes.
How does this situation compare to previous years?
This situation marks a significant increase in non-profitable firms compared to previous years, with the percentage surpassing 40% for the first time in 2020 and continuing to rise.
What impact does foreign investment have on South Korean firms?
Foreign investment, particularly from British investors, plays a crucial role in the South Korean stock market, providing essential capital and potentially boosting the profitability of local firms.
