South Korea Establishes Future Response Fund to Secure 100 Trillion Won in Additional Corporate Tax Revenue

According to Citi economist Kim Jin-wook on July 10, the South Korean government has formally announced the establishment of a Future Response Fund, which is expected to secure approximately 100 trillion won in additional corporate tax revenue next year.

Kim stated the fund will significantly improve fiscal spending efficiency compared to alternatives such as fiscal surplus carryover or supplementary budgets. Unlike fiscal surplus, where only 29% of additional revenue becomes available to the central government after local distribution and debt repayment obligations, the Future Response Fund allows the central government to allocate up to 100% of additional revenue at its discretion. The fund is also expected to provide more fiscal flexibility, with government treasury bond issuance projected to decline to 1.98 quadrillion won next year from 2.26 quadrillion won this year.