Taxation in Korea

Taxation in Korea is an important topic whether you want to move here for employment or to start a business. Find out below the taxes you must pay based on your status and how our local specialists can help you.

What tax-related services do you offer?

Our accountants in Korea are at the service of foreign citizens and investors, with support in registering for various taxes, preparing and submitting tax returns.

What are the main taxes applied in South Korea?

• personal income tax;
• corporate tax;
• local income tax;
• value added tax;
• withholding taxes applied to dividends, interest, and royalties payments;
• property tax;
• excise taxes.

How are taxes imposed in Korea?

Taxes are levied on the principle of residency on both natural persons and companies, as follows:

• people who ordinarily reside in Korea must pay the personal income tax on their worldwide income, while non-residents must pay the tax on the earnings obtained in Korea;
• domestic companies must pay the corporate tax on their worldwide profits, while those operating through branch offices are subject to the same tax on the profits generated in Korea.

Do I need to register for taxation in Korea?

Yes. However, the following rules apply:

• as an employee, the employer will register you in the payroll;
• as a company, you must apply for a tax identification number after incorporation.

NOTE: Foreign nationals must register with the National Tax Service if they intend to take up residency here. They must also pay attention to living here for more than 183 days in a calendar year, which will make them subject to local taxes.

What is the rate of the personal income tax in South Korea?

The personal income tax applies progressively, and its rates are:

• 6% on an annual income up to KRW 14 million;        
• 15% on incomes ranging from KRW 14 million to KRW 50 million per year;
• 24% on an annual income starting KRW 50 million to KRW 88 million;
• 35% for an income ranging from KRW 88 million to KRW 150 million per year;
• 38% for annual incomes ranging from KRW 150 million to KRW 300 million;
• 40% for a yearly income starting at KRW 300 million and up to KRW 500 million;
• 42% for an income of KRW 500 million to KRW 1 billion per year;
• 45% for an income of more than KRW 1 billion per year.

NOTE: Foreign employees can choose to pay a 19% flat tax rate in Korea, subject to specific conditions which can be explained by our local specialists.

What is the corporate tax rate in Korea?

Korean companies must also pay corporate tax progressively, as follows:

• 10% for an annual tax base of up to KRW 200 million;
• 20% for an annual tax base ranging from KRW 200 million to KRW 20 billion;
• 22% for annual profits from KRW 20 billion to KRW 300 billion;
• 25% for profits of more than KRW 300 billion per year.

Our Korea company formation advisors can provide further details on the corporate income tax in this country. We can also assist you in starting a business in Korea.

If you have any questions about the tax system in Korea, or need help to open a company in Korea, please get in touch with us.