Income Tax Filing
Income tax returns must be filed with the National Tax Service by the 10th of the following month.
Year-End-Income Tax Filing
The tax settlement fiscal year is from 1st January to 31st December, and the settlement results are reflected in the February Payroll Report by conducting the previous year’s tax settlement process from mid-January to mid-February every year.
Individual Taxation
South Korea taxes its residents on their worldwide income, while non-residents are taxed only on Korean-sourced income. Individual income tax rates range from 6% to 45%.
| Income Bracket (KRW) | Tax Rate |
| Below 14 million | 6% |
| 14 million – 50 million | 15% |
| 50 million – 88 million | 24% |
| 88 million – 150 million | 35% |
| 150 million – 300 million | 38% |
| 300 million – 500 million | 40% |
| 500 million – 1 billion | 42% |
| Over 1 billion | 45% |
Corporate Taxation
Corporate tax rates in South Korea vary based on the company’s taxable income.
| Taxable Income (KRW million) | Tax Rate |
| 0 – 200 | 9% |
| 200 – 20,000 | 19% |
| 20,000 – 300,000 | 21% |
| 300,000 – above | 24% |
Value Added Tax (VAT)
VAT is a significant component of taxation in South Korea, with a standard rate of 10%.
VAT Framework:
- Registration Threshold: Businesses with annual taxable sales exceeding KRW 48 million must register for VAT.
- Electronic Invoicing: Mandatory for suppliers of goods or services to issue electronic VAT invoices.
- From 1 January 2024, a 1% penalty of the supply price applies for non-compliance with simplfied VAT registration.
- If electronic services are supplied via third parties, the third party must register and account for VAT.
International Tax Treaties
South Korea has entered into several international tax treaties to avoid double taxation and promote cross-border trade.
Compliance and Reporting Standards
- Filing Deadlines: Adhering to tax deadlines is crucial to avoid penalties.
- Consequences of Non-Compliance: Non-compliance can result in fines, interest charges, and legal actions.
- Record-Keeping: Maintaining accurate financial records is essential for compliance and audits.
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Taxation in South Korea plays a vital role in shaping the economic landscape. Understanding the nuances of the tax system, including individual and corporate taxes, VAT, and international tax treaties, is essential for businesses to ensure compliance and strategic financial planning.
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Please note that all the information listed below are to be used as a general guideline. For more detailed accounts of South Korea employment laws and regulations, please visit the official governmental websites.
Updated on: 16th January 2025
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