The amount of non-tax revenue — fines, penalties and various levies — that the South Korean government failed to collect or gave up collecting exceeded 38 trillion won ($26.5 billion) last year, an increase of 12 trillion won in a single year. The collection rate for non-tax revenue also fell to its lowest level in a decade.
According to data submitted by the Ministry of Economy and Finance, the National Tax Service and other agencies to the office of Rep. Kim Sang-hoon of the People Power Party, a member of the National Assembly's Finance, Economy and Planning Committee, the government decided to levy 301.9 trillion won in non-tax revenue last year. Of that, only 263.4 trillion won was actually collected. Uncollected amounts totaled 36.1 trillion won, while 2.4 trillion won was written off the books after collection efforts were abandoned. Combined, the two figures came to 38.5 trillion won, the data showed on the 20th.
Jump of 12 Trillion Won in a Year, With Collection Rate at 10-Year Low
Collection performance deteriorated markedly from a year earlier. Uncollected amounts rose 11 trillion won, or 44%, to 36.1 trillion won last year from 25.1 trillion won in 2024. Write-offs increased by 1 trillion won over the same period, to 2.4 trillion won from 1.4 trillion won. The combined total grew by 12 trillion won, to 38.5 trillion won from 26.5 trillion won in 2024.
The collection rate — the share of the amount the government decided to levy that was actually received — stood at 87.2% last year, the lowest since 2016. Looking at uncollected amounts alone, the figure has risen about 2.6-fold, to 36.1 trillion won last year from 13.7 trillion won in 2016.
Non-tax revenue refers to income the government takes in outside of taxes. Typical examples include administrative fines, surcharges, various levies and fees for the use of state property. When a payment the government has decided to impose is not made, it remains an uncollected amount; sums deemed no longer collectible are processed as write-offs.
Fines and Penalties Also Go Unpaid, With Police Agency Topping 1 Trillion Won
By category, the problem was most pronounced in revenue tied to legal violations, such as penalties for breach of contract, criminal fines and forfeitures, and administrative fines. Uncollected current transfer revenue, excluding fund revenue, reached 21 trillion won last year. Current transfer revenue covers income received without the provision of goods or services in return, including breach-of-contract penalties, criminal fines and forfeitures, and administrative fines.
By agency, as of the end of last year, the Korean National Police Agency had 1.1053 trillion won in uncollected criminal fines, forfeitures and administrative fines. The Korea Customs Service had 692.9 billion won in uncollected surcharges, and the Fair Trade Commission had 437.6 billion won in uncollected criminal fines, forfeitures and administrative fines. In other words, even penalties imposed for breaking the law are going uncollected on schedule.
Tax Agency Surcharge Collection Rate at About 1% as Long-Term Arrears Prove Hard to Recover
Surcharges levied on taxes not paid by the deadline have also seen poor collection. Last year the National Tax Service decided to levy about 15.7 trillion won in surcharges, but actually collected just 176.5 billion won — a collection rate of about 1%. Of those surcharges, 1.2474 trillion won was written off for reasons including the expiration of the statute of limitations. Through July of this year, about 700 billion won had been written off.
The tax agency said recovery is difficult because most of the uncollected surcharges are long-term arrears that arose before a change in the system. Under a 2020 revision of tax law, national tax surcharges were converted into late-payment penalty taxes, leaving the earlier surcharges concentrated in amounts attributable to 2019 and before. The longer arrears go unpaid, the harder it becomes to identify assets and recover the money, the agency said.
"Most of the uncollected surcharges are long-term arrears that arose before the 2020 system change, so the likelihood of recovery declines as time passes," an NTS official said. "Even when arrears are collected, enforcement costs and national taxes must be covered first, and surcharges can only be paid out of what is left, which makes recovery even harder."
Integrated Collection Unit Launched as Government Moves to Overhaul System
The government has begun building an integrated collection system to reduce arrears in non-tax revenue. The National Tax Service launched a preparatory task force for integrated collection of non-tax government revenue this year and, over three months from July to September, verified the circumstances of delinquent payers and collected about 82.7 billion won. The task force is a temporary body set to operate through the end of this year and is expected to become a permanent organization if legislation on integrated collection is enacted.
"More than 38 trillion won in public money has gone uncollected, and the figure grew by 12 trillion won in just one year, yet the government has effectively taken its hands off collection management," Kim said. "Failing to collect even fines and administrative penalties is not just a fiscal leak but a matter of trust in law enforcement. The causes of non-collection must be examined category by category, and the collection system should be thoroughly reviewed."
