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flag South Korea South Korea: Tax system

In this page: Corporate Taxes | Accounting Rules | Consumption Taxes | Individual Taxes | Double Taxation Treaties | Sources of Fiscal Information


Corporate Taxes

Tax Base For Resident and Foreign Companies

A corporation having its head or principal office, or effective management in Korea is considered a resident corporation.

A non-resident corporation is generally deemed to have a permanent establishment if:

  • It has any fixed place of business in Korea, where the business of the entity is wholly or partly carried on
  • Its employees provide services in Korea for more than six months within 12 consecutive months
  • Its employees continuously or repeatedly render similar services in Korea for two or more years, even if each service visit is for less than six months within 12 consecutive months
  • It is represented by a dependent agent in Korea, i) who has the authority to conclude contracts on its behalf and who has repeatedly exercised that authority; ii) who, even if having no such authority, repeatedly performs a principal role in the course of concluding contracts.

Tax Rate

Corporate tax
  • 9% up to KRW 200 million)
  • 19% from KRW 200 million to KRW 20 billion
  • 21% between KRW 20 billion and KRW 300 billion
  • 24% over KRW 300 billion
Alternative minimum tax
  • 10% (up to KRW 10 billion)
  • 12% (between KRW 10 billion and KRW 100 billion)
  • 17% (over KRW 100 billion)
  • 7% (for SMEs)
Local income tax
  • 0.9% on the first KRW 200 million
  • 1.9% for the tax base between KRW 200 million and KRW 20 billion
  • 2.1% for the tax base between KRW 20 billion and KRW 300 billion
  • 2.4% for the excess
Accumulated earnings tax, applicable to companies with net assets of KRW 50 billion or more
  • 20% supplementary tax
Agriculture and fishery surtax If a corporate taxpayer claims specific tax credits or exemptions under the Special Tax Treatment Control Law (STTCL), a surtax of 20% on agriculture and fishery is imposed on the lowered CIT liability.
Tax Rate For Foreign Companies
Resident corporations are taxed on their worldwide income. Non-resident corporations with a permanent establishment in Korea are taxed only on their Korean-source income. Non-resident corporations without a permanent establishment in Korea are generally taxed through a withholding tax on each separate item of Korean-source income.

A resident company subject to tax in Korea and overseas is entitled to a foreign tax credit for foreign tax paid in respect of income earned overseas (limited to the amount of tax payable in Korea). The excess foreign tax credit can be carried forward for up to 10 years from the fiscal year starting 1 January 2021.

Capital Gains Taxation
For resident companies, capital gains are treated as ordinary business income and taxed at the normal corporate tax rate. However, capital gains from the sale of non-business purpose real estate are subject to additional capital gains tax, at the rate of 10% (40% in the case of non-registered land or houses).
For non-resident companies, Korean-source capital gains are taxed at either 11% of sales or 22% of the gains realized (whichever is less). In general, no special taxes are levied on gains from mergers.
Main Allowable Deductions and Tax Credits
As a general rule, expenses incurred in the ordinary course of business are deductible, with those above KRW 30,000 needing to be supported by qualifying evidence.

A doubtful accounts reserve is allowed as a deduction for tax purposes at the greater of 1% on the tax book value of the receivables at a year-end or actual bad debt ratio (does not apply to financial institutions). Entertainment expenses of more than KRW 30,000 on an event basis supported by corporate credit card vouchers, cash receipts, or tax invoices can be deductible (up to certain limits). With some exceptions, interest paid in the ordinary course of business is deductible as long as the related loan is used for business purposes. Insurance premiums paid to an insurance company are deductible.

Start-up expenses, such as incorporation expenses, founders’ salary, and registration fees and taxes, are deductible if the expenses are recorded per the articles of incorporation and are actually paid. Goodwill can be amortised over a period of five years using the straight-line method.

Certain charitable contributions can be deductible at up to 50% of the total taxable income for the concerned fiscal year after the deduction of net operating loss (including donations to public interest entities like government bodies and social welfare organisations, or for academic research, technical development, etc.) or up to 10% of the total taxable income for the fiscal year after the 50% deduction of other donations and net operating loss. The amount in excess of such limits can be carried over for ten years.

Net operating losses can be carried forward 10 years up to 80% of a fiscal year's taxable income, or for 15 years when incurred in fiscal years starting on or after January 1, 2020. SMEs and certain qualifying companies under recovery process are allowed to deduct the net operating losses carried over from prior years without limitation. The carryback of losses is not permitted; however, SMEs can elect to carry back a net operating losses for one year if they have duly filed tax returns for the year when NOL was incurred and the preceding year.

A special deduction from 5% to 30% (depending on corporate location, size, business types, etc., capped at KRW 100 million) applies to SMEs operating in a qualified business (applicable to taxable income arising in the tax years that end before 31 December 2022). New startup SMEs located outside of metropolitan and overpopulated areas, engaging in specified businesses such as manufacturing, mining, restaurants, audio-video production, telecommunications, computer programming, advertising, and amusement facilities (excluding cryptocurrency trading), are eligible for a tax relief of 50% to 100% reduction in corporate income tax for the first five years. Furthermore, several tax credits are available for qualified investments.

Other Corporate Taxes
A capital registration tax of 0.48% (or 1.44% for the Seoul Metropolitan Area) is levied. A property tax ranging from 0.1% to 4% is levied on land and buildings for residential and commercial use, vessels, and aircraft. A comprehensive real estate holding tax, as a national tax, ranging from 0.5% to 6% is charged on a certain excessive aggregated statutory value of land and houses.

Nominal stamp duty is levied on agreements relating to the creation, transfer and alteration of rights. Starting from January 1st, 2023, the transferor of shares will be obligated to pay a securities transaction tax, which will be 0.35% of the share transfer price. However, for listed share transfers, the rate will be 0.2% from January 1st to December 31st, 2023. If the shares being transferred are listed on the Korea New Exchange (KONEX), the rate will be 0.1%.

Companies acquiring real estate, motor vehicles, heavy equipment, and certain other items must pay acquisition tax, with rates generally ranging from 1% to 7% (including the local surtax). A 12% acquisition tax rate is applicable to the acquisition of a residential house by a corporation.

Stamp duties ranging from KRW 50 to KRW 350,000 apply to agreements relating to the creation, transfer, or alteration of rights.

When a person receives a gift that increases their property or its value, they are subject to a gift tax. However, if the gifted property is already subject to CIT or individual income tax, the gift tax will not be imposed. The tax rate for gift tax ranges from 10% on a tax base of not more than KRW 100 million to the highest marginal tax rate of 50% on the excess over KRW three billion in the tax base.

The four types of social security contributions in Korea are national pension (4.5% of salaries, capped at a monthly salary of KRW 5,530,000 until June 2023), national health insurance (3.925%), and employment insurance. In addition to a 0.90% contribution to employment insurance, employers are required to make a 0.25% to 0.85% contribution to employment stabilisation insurance and occupational competency development insurance. Furthermore, contributions to the Worker’s Accident Compensation Insurance rates vary from 0.7% to 18.6% of total wages and payroll, depending on the type of industry.

Other Domestic Resources
National Tax Service, to obtain a summary of taxes and mandatory contributions

Country Comparison For Corporate Taxation

  South Korea OECD United States Germany
Number of Payments of Taxes per Year 12.0 10.1 10.6 9.0
Time Taken For Administrative Formalities (Hours) 174.0 163.6 175.0 218.0
Total Share of Taxes (% of Profit) 33.2 41.6 36.6 48.8

Source: The World Bank - Doing Business, Latest data available.

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Accounting Rules


Accounting System

Accounting Standards
Listed companies and unlisted financial institutions are required to adopt K-IFRS (Korea- International Financial Reporting Standards). However, unlisted companies may choose either K-IFRS or Korean Generally Accepted Accounting Standards (K-GAAP) for financial accounting. Certain provisions of the tax laws (e.g. depreciation, foreign currency translations) have been amended to reflect the adoption of K-IFRS.

For more information, consult the Korea Accounting Standards Board website.

Accounting Regulation Bodies
FSS, Financial Supervisory Service
Accounting Law
Consult the Regulation on External Audit and Accounting on Financial Supervisory Service.
Difference Between National and International Standards (IAS/IFRS)
Consult the list of International Financial Reporting Standards (IFRSs) and corresponding Korean International Financial Reporting Standards as issued by the IASB (K-IFRS).

Accounting Practices

Tax Year
A company's tax year is its accounting period as specified in the articles of incorporation, which normally is a 12-month period. The tax year cannot exceed 12 months.
Accounting Reports
Financial statements (income statement, balance sheet, statement of cash flows, statement of changes in equity and statement of appropriation of retained earnings) and a business report must be filed each accounting year.
Publication Requirements
1) Companies listed at the stock exchange and KOSDAQ market must follow the following disclosure regulation:
- Periodic disclosure: business reports after the end of a fiscal year, semi-annual reports and quarterly reports.
- Timely disclosure: major business details as outlined in the Securities Exchange Act and the Disclosure Regulations of the KRX-Stock Market.
- Special disclosure: mergers, spin-offs, reports of business takeover and transfer, reports of acquisition and disposal of treasury stocks, etc.

2) External Auditing companies are required to disclose auditing reports.

3) Corporations issuing securities are required to disclose public securities registration statements, business prospectuses, records of securities issuances, etc.

More information is available at the Korea exchange website.


Accountancy Profession

Certified public accountants (CPA) and certified tax accountants (CPTA) are specialists providing accounting and tax support to companies operating in Korea. CPAs offer the service on the performance of audits under the CPA law, while cerfied tax accountants offers the service on tax agent services, preparation of tax documentation and tax consultations under the Certified Tax Accountant Law. Auditors operates under the Korean standard on auditing.
Member of the International Federation of Accountants (IFAC)
The Korean Institute of Certified Public Accountants is a member of the International Federation of Accountants (IFAC).
Member of Other Federation of Accountants
The Korean Institute of Certified Public Accountants is a member of the Confederation of Asian and Pacific Accountants (CAPA), which represents the national accountancy organisation in the Asia-Pacific region.
Audit Bodies
Companies are required to utilise a statutory auditor for an annual audit of the organisation's financial health. Some examples of entities that offer statutory auditing services include Ernst and Young Global, Deloitte Touche Tohmasu, KPMG International, PricewaterhouseCoopers.

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Consumption Taxes

Nature of the Tax
Value Added Tax (VAT) - Boo-ga-ga-chi-se (also known as Boo-ga-se)
Standard Rate
Reduced Tax Rate
A 0% rate applies to exported goods, services rendered outside Korea, international transportation services by ships and aircraft, and other goods or services supplied for foreign currency.
Exclusion From Taxation
Exempt goods and services include social welfare services (for example, medical and health services and education services); goods or services related to culture (e.g. books, newspapers, magazines, official gazettes and communications, artistic works and admission to libraries); personal services similar to labour; postage stamps; basic life necessities and services (e.g. unprocessed foodstuffs such as agricultural products, livestock products, marine products, forest products, piped water, briquette and anthracite coal); services supplied by the government; finance and insurance services; supplies of land.
Method of Calculation, Declaration and Settlement
VAT applies to supplies and imports of goods and services as well as reverse-charge services within Korea. All domestic businesses supplying taxable goods or services must register for VAT purposes.
VAT applies also to foreign suppliers that provide electronic services (e.g., games, audio or video files, software, etc. activated through mobile communication devices or computers) to persons (other than tax-registered businesses) in Korea using information communication networks.
VAT is generally filed quarterly. The return deadline in Korea is 25 days from the period's end, and any associated VAT liability must also be paid by this deadline.
Other Consumption Taxes
Korea imposes excise duties on alcoholic beverages (volume-based) and tobacco.
Stamp duties ranging from KRW 50 to KRW 350,000 apply to agreements relating to the creation, transfer, or alteration of rights.
A company acquiring real estate, motor vehicles, heavy equipment, and certain other items must pay an acquisition tax ranging from 1% to 7% (generally at 4.6%, including the local surtax).

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Individual Taxes

Tax Base For Residents and Non-Residents
South Korea considers as an individual resident taxpayer any individual having a domicile in Korea or having a residence within Korea for 183 days or more; individuals having an occupation that would generally require them to reside in Korea for 183 days or more; or individuals who are deemed to reside in Korea for 183 days or more by accompanying families during a tax year or by retaining substantial assets in Korea. However, even when a person has a job overseas and stayed there for more than 183 days, but they have their general living relationship, including their family and property, in Korea, they still can be regarded as a resident of Korea ("facts and circumstances" test, evaluated on an individual basis).

If a foreigner is classified as both a resident of Korea and a resident of the home country, the primary country of residence is determined in accordance with the provisions of the tax treaty between the two countries.


Tax Rate

Basic income tax
Up to KRW 14 million 6%
From KRW 14 to 50 million 15%
From KRW 50 to 88 million 24%
From KRW 88 to 150 million 35%
From KRW 150 to 300 million 38%
From KRW 300 million to 500 million 40%
From KRW 500 million to 1 billion 42%
Over KRW 1 billion 45%
Local income surtax
Up to KRW 14 million 0.6%
From KRW 14 to 50 million 1.5%
From KRW 50 to 88 million 2.4%
From KRW 88 to 150 million 3.5%
From KRW 150 to 300 million 3.8%
From KRW 300 to 500 million 4%
From KRW 500 million to 1 billion 4.2%
Over KRW 1 billion 4.5%
Alternative minimum tax
(business income of a resident individual and Korean-source business income of a non-resident individual)
The greater of:
45% of income tax liability (35% applied to income tax liabilities of up to KRW 30 million) before exemptions
actual tax after exemptions
Allowable Deductions and Tax Credits
The Korean law provides for employment income deductions ranging from KRW 0 to 14,750 + 2% on the excess of KRW 100,000, according to the level of income. Standard personal deductions are also available: KRW 1.5 million per year per taxpayer plus KRW 1.5 million per year per spouse or dependant child when each of them has an adjusted gross yearly income of less than KRW 1 million. Additional deductions are available for handicapped persons (KRW 2 million), persons aged 70 or older (KRW 1 million), female taxpayers (KRW 500,000, conditions apply), and single parents (KRW 1 million).

Tax credits are available for medical expenses (15% with a limit of KRW 7 million, exclusively when they exceed 3% of total employment income), insurance premiums (12%, capped at KRW 120,000), donations (15% for the donation amount up to KRW 10 million and 30% for the excess) and education expenses (up to 15% with no cap for the taxpayer, limited to KRW 9 million for each dependant attending university or college, and KRW 3 million for each dependant attending preschool to high school). A tax credit of KRW 150,000 per child aged 7 or older for up to two children and KRW 300,000 per child for the third and more is also available.
National pension contributions paid by a taxpayer based on National Pension Law, Veteran Pension Law, Civil Service Pension Law et similia, arefully deductible.

All business-related expenses are tax-deductible. Business losses are deductible against employment income, pension income, other income, interest income, and dividend income; whereas rental losses can only be deducted against rental income. Capital losses are deductible only against capital gains.

Special Expatriate Tax Regime
Non-residents are taxed only on their Korea-sourced income. However, a non-resident is not entitled to claim any personal exemptions for their dependents (except for themselves), income deductions, and tax credits. Foreign residents who have stayed in the country for up to five years during the last ten-year period are taxed on Korea-source income. Nevertheless, foreign residents who have stayed in Korea for longer than five years during the last ten-year period are taxed on their worldwide income.

Foreign employees or executive officers who start to work in Korea before 31 December 2023 may elect to apply for the flat tax rate of 20.9% (including the local income tax surcharge of 1.9%) for five consecutive tax years, without deductions (non-taxation, tax deductions, tax reductions/exemptions, and tax credits are forfeited). In order to do so, they must file an application with the local tax authority.

Capital Tax Rate
Inheritance and gift taxes of 10% to 50% depending on the tax base (after deduction of exempt amounts such as spouse, old age and dependent allowance) are levied on residents for assets acquired worldwide and on non-residents for assets located in Korea only. An annual tax is charged on the statutory value of land, buildings, houses, vessels and aircraft, with rates between 0.07% and 5%.

Employees in Korea are liable for social security contributions, as follows:
National pension: 4.5% of salary (capped at a monthly salary of KRW 5,530,000)
National health insurance: 3.924% of salary (capped at a monthly salary of KRW 8,203,680)
Employment insurance: 0.90% of salary.

An individual consumption tax (ICT) is assessed on certain goods and activities.

If a company or individual possesses land, buildings, ships, or aircraft on a specific assessment date, they will be liable to pay property tax on those assets. The tax rate varies from 0.1% to 4%, based on the category of property. Moreover, if an individual or company owns real estate like land or residential buildings, they will be subject to the comprehensive real estate tax along with the local property tax.

Starting from January 1st, 2023, the transferor of shares will be obligated to pay a securities transaction tax, which will be 0.35% of the share transfer price. However, for listed share transfers, the rate will be 0.2% from January 1st to December 31st, 2023. If the shares being transferred are listed on the Korea New Exchange (KONEX), the rate will be 0.1%.

Gains arising from the disposal of capital assets are included in an individual’s taxable income but are taxed separately from global income (basic deductions of KRW 2.5 million/year and a special deduction for retaining for a long-term period may apply).

Korea does not levy a wealth tax.

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Double Taxation Treaties

Countries With Whom a Double Taxation Treaty Have Been Signed
List of Korea's International Tax Treaties
Withholding Taxes
  • Dividends: 0% for domestic companies, 15.4% for resident individuals  (including the surtax), 22% for non-residents (including the surtax)
  • Interest: 15.4% for interests obtained from financial institutions (including the surtax), 27% for regular loans (including the surtax) paid to a resident company or individual, 22% if paid to a non-resident company or individual
  • Royalties: 0% for domestic companies, variable rates for resident individuals, 22% for non-residents (including the surtax)

Different withholding taxes may apply to non-residents of countries with which South Korea signed a tax treaty, with rates as low as 0%.

Bilateral Agreement
Spain and South Korea signed a Double Taxation Treaty.

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Latest Update: April 2024