The Organisation for Economic Co-operation and Development released its 2026 Economic Survey of Korea on July 2, urging Seoul to overhaul a tax system it described as skewed toward taxing property transactions rather than ownership.
Korea's holding tax (property tax on ownership) accounts for roughly 29 percent of total real-estate tax revenue, compared with an OECD average of 56 percent. Transaction taxes, by contrast, make up about 50 percent of the Korean total. The OECD said a revenue-neutral shift, collecting the same overall amount but tilting it away from transaction levies and toward holding levies, would ease barriers to buying and selling homes, improve labour mobility, and reduce friction in the housing market. It added that overall real-estate tax revenue, at about 3 percent of GDP against an OECD average of 1.6 percent, is already high, so any redesign should be handled carefully.
Looking further ahead, the OECD recommended moving the tax base from official assessed values to actual market prices, and applying higher rates to vacant properties and holiday homes.
President Lee Jae-myung has already signalled an intention to raise holding taxes. At a press conference last month, he said Korea's ownership burden is low by Western standards and should be brought closer to those levels. He did not address transaction-tax cuts at the time.
On corporate taxation, the OECD said Korea's four-tier progressive rate structure, combined with numerous exemptions, distorts business decisions. It proposed broadening the tax base and shifting eventually to a single flat rate regardless of company size. Separately, it noted that roughly a third of wage earners pay no personal income tax at all and called for narrowing those exemptions, including a long-term move toward taxing capital gains on equities uniformly.
The OECD also flagged the family-business inheritance deduction, which can shield up to 60 billion won in assets, warning it may be used to avoid tax. It suggested reviewing the scheme and considering a switch from estate-based to inheritance-based taxation.
On indirect taxes, Korea's value-added tax rate of 10 percent is about half the OECD average of 19.3 percent. The OECD recommended raising VAT and excise duties, increasing tobacco taxes, and moving alcohol taxes to an alcohol-content basis.
The survey also proposed raising the pension eligibility age to 68 by 2035 and linking it further to rising life expectancy, projecting that a comprehensive reform along those lines could add 1.9 percent to GDP by 2060. On monetary policy, it noted lingering upward price pressure but said a tightening bias would eventually be warranted. It also warned that heavy reliance on the semiconductor sector, while a growth engine, heightens vulnerability to external shocks.