National Tax
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Contact
KOTRA Investment Consulting Center (ICC)
Official dispatched by the National Tax Service
T.+82-2-3497-1059 E.icc_fisc@kotra.or.kr
Corporate Tax
A corporate tax refers to an income tax imposed on corporations. Incorporated associations and foundations, including for-profit corporations and non-profit corporations, are taxed like general corporations.
Taxpayer and Taxable Income
Domestic corporations and foreign corporations with domestic sources of income are liable to paying corporate tax. Taxable income includes income from each business year, liquidation income, and capital gains from the transfer of land, etc.The income for each business year is calculated by adding or subtracting profits and losses according to the Corporate Tax Act from a corporation’s net profit.
Business Years
A business year is defined as one accounting period as prescribed by decree or articles of incorporation. The period shall not exceed one year.Reporting Deadlines
The tax base and the tax payable on income for that business year must be reported to the head of the relevant tax office with jurisdiction within 3 months from the last day of the month in which the end of the business year falls.
Tax Rate
| Tax Base | Tax Rate |
|---|---|
| KRW 200 million or less | 9% of the tax base |
| Over KRW 200 million ~ KRW 20 billion | KRW 18 million + (19% of the amount exceeding KRW 200 million) |
| Over KRW 20 billion ~ KRW 300 billion | KRW 3.78 billion + (21% of the amount exceeding KRW 20 billion) |
| Exceeding KRW 300 billion | KRW 62.58 billion + (24% of the amount exceeding KRW 300 billion) |
※ This rate will be applied from the business year biginning on or after January 1, 2023.
Value-Added Tax
Value-added tax (VAT) is a tax that is reported and paid for added value acquired in the process of providing products or services and importing goods.
Taxpayer and Taxable Income
Taxpayers are businesses that provide goods or services or importers of goods, and VAT is calculated by subtracting input tax (total sales x tax rate) from output tax (total amount of purchase x tax rate).Business Years and Reporting Deadlines
The two taxable periods of VAT shall be from January 1 through June 30 and from July 1 through December 31. Due to the preliminary reporting period, there is a duty to report on a quarterly basis.
| First Period | Second Period | |||
|---|---|---|---|---|
| Period | Jan. 1~Mar. 31 | Apr. 1~Jun. 30 | Jul. 1~Sep. 30 | Oct. 1~Dec. 31 |
| Due on Report & Tax Payment | Apr. 1~Apr. 25 | Jul. 1~ Jul. 25 | Oct. 1~Oct. 25 | Jan. 1~Jan. 25 of following year |
Obligation to Issue Tax Invoices
When a business supplies goods or services, an invoice (hereinafter a “tax invoice”) must be issued for the person who receives the goods or services.Businesses are obliged to issue electronic tax invoices, which can be issued through the website of the National Tax Service of Korea (www.hometax.go.kr ▶ Login with digital certificate ▶ Inquiry/Issuance Service).
Tax invoices should be issued at the time of supplying goods or services although since there are various exceptions concerning the supply of goods or services, any issuer must adhere to Article 34 of the Value Added Tax Act or be subject to a penalty.
Tax Rate
| Tax Base | Tax Rate |
|---|---|
| Domestic sales | 10% |
| Export of goods, cross-border supply of services, etc. | 0% |
Wage and Salary Income Tax (for workers)
Wage and salary income tax is a tax levied on the price of providing and receiving work. Wage and salary income, regardless of its name or form, includes goods and stocks in addition to cash.
Taxpayer and Taxable Income
The worker who receives compensation (payment, bonus) for labor performed is a taxpayer. Taxpayers should calculate the tax amount based on the simplified tax table to file a tax return and pay the tax due. Each month, companies withholding tax pay income tax. In February of the following year, the year-end settlement finalizes the income tax to be paid by workers in the previous year and settles the withheld tax amount.Reporting Deadlines
Income tax returns must be filed no later than the tenth day of the month following the month in which the salaries were paid.
Tax Rates
| Tax Base | Tax Rate |
|---|---|
| KRW 14 million or less | 6% of the tax base |
| Over KRW 14 million – KRW 50 million | KRW 840,000 + (15% of the amount exceeding KRW 14 million) |
| Over KRW 50 million – KRW 88 million | KRW 6.24 million + (24% of the amount exceeding KRW 50 million) |
| Over KRW 88 million – KRW 150 million | KRW 15.36 million + (35% of the amount exceeding KRW 88 million) |
| Over KRW 150 million – KRW 300 million | KRW 37.06 million + (38% of the amount exceeding KRW 150 million) |
| Over KRW 300 million – KRW 500 million | KRW 94.06 million + (40% of the amount exceeding KRW 300 million) |
| Over KRW 500 million - KRW 1 billion | KRW 174.06 million + (42% of the amount exceeding KRW 500 million) |
| Over KRW 1 billion | KRW 384.06 million + (45% of the amount exceeding KRW 1 billion) |
※This rate will be applied to income arising after January 1, 2023.
Capital gains tax (stocks, etc.)
Capital gains tax is levied when an asset is transferred to an entity for payment through sale, exchange, or in-kind contribution made for a corporation. This book covers only capital gains tax on transfer of stocks or shares that frequently occur between foreign investors. In the case of capital gains, some countries are subject to taxation while others are tax exempt under tax treaties.
Taxpayer and Taxable Income
The person who actually transfers the assets for value is obliged to pay the tax, and the taxable income is the amount calculated by deducting necessary expenses from the transfer price.Reporting Deadlines
Capital gains tax must be filed within two months of the end of the half year in which the resident transfers an asset.Tax Rates
Stocks, etc. transferred by the majority shareholders
- Stocks, etc. of corporations other than small and medium size enterprises, held for less than a year: 30 percent of the tax base
- Stocks, etc. that do not fall under the above
| Tax Base | Tax Rate |
|---|---|
| KRW 300 million or less | 20% |
| Over KRW 300 million | KRW 60 million + (25% of the amount exceeding KRW 300 million) |
Stocks, etc. transferred by persons other than the majority shareholder
- Stocks, etc. of small and medium size enterprises: 10% of the tax base
- Stocks, etc. that do not fall under the above: 20% of the tax base
Security Transaction Tax
Securities transaction tax refers to a tax imposed on the transfer value of share certificates, etc. where the ownership of share certificates or shares is transferred for value due to a contract or legal causes.