Korea corporate tax rate, incentives, filing dates, and compliance explained

Why expand to South Korea?

South Korea rules the world thanks to the K-wave – a global cultural phenomenon driven by music, films, dramas, cuisine, fashion, and beauty. But did you know that it is also a magnet for global businesses?

Foreign corporations are drawn to Korea for its dynamic and steady economy, skilled talent pool, influential consumer market, and strategic location (especially its proximity to Japan and China). It's a world leader in advanced infrastructure – home to smart cities, free economic zones, and one of the busiest global ports situated in the city of Busan. Its 5G network is among the fastest, while its Internet and mobile penetration rates make it one of the largest e-commerce markets globally. Thanks to its commitment to innovation, research and development, South Korea also has one of the best digital ecosystems.

But what probably counts most is its foreign investment-friendly environment, driven by attractive tax exemptions, reduced tax rates, and various other incentives.

Korea corporate tax

South Korea's corporate tax system is considered progressive and conducive to small and medium-sized enterprises and start-ups. There are four tax bases and four tax rates ranging from 10% to 25%.

In addition, Korean tax authorities impose a local income tax, ranging from 1% to 2.5%. Separate from the corporate income tax regime, this local tax has its own tax bases, rates, and incentives.

When combined, the maximum effective corporate income tax rate is 27.5%.

Corporate income tax in Korea is levied on the worldwide income of resident companies and the Korean source income of non-resident corporations with a permanent establishment. Non-resident companies without a permanent establishment are subject to withholding tax (more on this later).

The National Tax Service (NTS) is authorised for tax administration and collection in Korea.

Tax rates and structures

Starting with corporate income tax rates, there are four tax rates with corresponding income brackets:

• 10% on taxable income up to KRW 200 million
  
• 20% on taxable income between KRW 200 million and KRW 20 billion
  
• 22% on taxable income between KRW 20 billion and KRW 300 billion
  
• 25% on taxable income above KRW 300 billion
  

The local income tax rates are:

• 1% on the first KRW 200 million
  
• 2% for a tax base between KRW 200 million and KRW 20 billion
  
• 2.2% for a tax base between KRW 20 billion and KRW 300 billion
  
• 2.5% for a tax base exceeding KRW 300 billion
  

When calculating their corporate tax liability in South Korea, businesses might be required to account for the following taxes, too:

• A 20% additional tax on excess earnings reserves. Valid till December 2028, this tax is aimed at large domestic companies and encourages them to make continuous investments and payroll increases.
  
• A Minimum Tax that is the greater of (a) the amount calculated by applying 10% on a KRW 10 billion or less tax base, 12% on anything above KRW 10 billion but less than KRW 100 billion, and 17% on anything exceeding KRW 100 billion, before tax deductions and credits, or (b) the corporate income tax liability after deductions and credits.
  
• A 15% Global Minimum Tax applicable on all constituent entities of multinational enterprises with annual consolidated revenues of 750 million euros. This top-up tax is calculated under the Global Anti-Base Erosion (GLoBE) Rules, including the Income Inclusion Rule, and effective for fiscal years beginning January 1, 2024.
  
• A 20% agriculture and fishery surtax imposed on a company's reduced corporate tax liability as a result of claiming a tax credit or exemption under the Special Tax Treatment Control Law (STTCL). This tax is valid till June 30, 2024.
  

What is taxable income?

To calculate corporate tax in Korea, business entities must start with gross income, which includes their trade earnings as well as income, profits, or gains from property dealings, rent, royalties, and any other transactions carried on for profit. From this, they must subtract deductible expenses, which include:

• Expenses incurred in the course of business
  
• Employee salaries and related expenses
  
• Depreciation and amortisation costs
  
• Start-up expenses (incorporation and registration fees, taxes, salaries, etc)
  
• Company car expenses
  
• Management service fees, interest, and royalties paid to foreign affiliates
  
• Interest on loans related to running the business
  
• Bad debt
  
• Certain reserves (for bad debt, emergencies, non-profit organisations, etc)
  
• Donations to public interest entities and for academic research and technical development (deductible up to 50% of taxable income)
  
• Business promotion (entertainment) expenses.
  

Certain expenses cannot be deducted. These include fines and penalties, and income taxes.

The next step is to factor in applicable tax exemptions and tax credits. Once the final taxable income is determined, corporate taxpayers must apply the right corporate income tax rate, add in the local income tax as well as any other applicable corporate taxes.

Historical tax rates and recent reforms

After peaking at 40% in 1975 and hitting a low of 24% in 2023, the Korean corporate tax rate has averaged 29.81% since 1974.

In January 2026, the corporate tax rate went up by 1%. rates in 2025 were 9%, 19%, 21%, and 24%.

Another major reform was the introduction of a Qualified Domestic Minimum Top-up Tax under the Korea Adjustment of International Taxes Act. This move ensures that domestic constituent entities with an effective corporate tax rate below 15% pay a top‑up tax consistent with GloBE Rules.

In other reforms, the South Korean government clarified that gift income received by foreign corporations from an asset in Korea will be classified as Korean-sourced other income and be subject to withholding tax at 22%.

Tax incentives and exemptions

Korea's business environment is especially supportive of small and medium-sized enterprises, which receive special deductions on corporate tax. Eligible SMEs receive a 5% to 30% tax deduction up to a limit of KRW 100 million, while new start-up SMEs located outside metropolitan areas are eligible for a 50% to 100% corporate tax deduction for the first five years.

To encourage foreign investment, Korea offers companies located in foreign investment zones, free economic zones, and free trade zones tax relief in the form of a 100% exemption from corporate income tax for the first five years and a 50% reduction for the subsequent two years.

To promote research and development, the Korean government provides Korean corporations as well as foreign companies with various types of tax credits. In fact, the Korean government's support for R&D ranks among the highest in the world and its R&D-focused tax incentives are credited with contributing to the country's transformation into an innovation-led economy.

Korea continues to captivate global businesses with various other tax incentives, including foreign tax credits, integrated investment tax credits, tax credit for increasing employment and corporate payroll, cash grants, and so on.

When to file tax returns

Filing timely tax returns is a key part of fulfilling corporate tax obligations in South Korea. An interim tax return for the first six months of the tax year is due within two months of the end of the six-month period. Then, an annual tax return must be filed for the entire fiscal year within three months of the fiscal year-end.

Companies subject to external audit requirements may receive a one-month extension to the tax filing deadline if the audit process isn't complete. They must, however, pay a delinquent interest of 3.1% per year.

Corporate tax payments must be completed by the filing due dates. Payment in instalments is available in some cases. Where the tax amount to be paid by a resident corporation exceeds KRW 10 million but is KRW 20 million or less, the excess over KRW 10 million may be paid in instalments within one month from the tax return filing due date (two months for SMEs).

Where the tax amount to be paid exceeds KRW 20 million, 50% or less of the tax amount may be paid in instalments

All corporate tax payments must be made in KRW. Tax filings and payments are made primarily through the NTS' online Hometax system, though one can also pay in person by visiting a bank or district tax office.

Reducing tax burden with double taxation agreements

South Korea has double taxation agreements (DTAs) with over 90 countries, including Singapore. Each tax treaty's primary aim is to prevent dual taxation and tax evasion and lay down a roadmap for effective cross-border trade.

Under the Singapore-Korea DTA, which came into force in 1979, Singapore corporations with business dealings in Korea benefit from reduced withholding tax rates. In Korea, the standard withholding tax rate for dividends, interest, and royalties is 20%. But under treaty benefits, Singapore firms are eligible for reduced rates of 10%-15% on dividends, 10% on interest, and 5% on royalties.

Tax treatment of dividends in Korea

As already mentioned, Korea charges a withholding tax on dividends, interest, and royalties at the rate of 20%, unless lowered under a tax treaty.

Withholding taxes in Korea are of special significance to non-resident companies. While foreign corporations with a permanent establishment in Korea are subject to corporate income tax, foreign companies without a permanent establishment must instead pay withholding tax on Korean-sourced income.

However, in a special relief effective January 2023, foreign companies without a permanent establishment and qualified overseas financial institutions are exempt from withholding tax on Korean-sourced interest income and capital gains from government bonds and various other bonds. To receive the tax exemption, the foreign entity must file an application with the appropriate district tax office.

Other taxes in Korea

VAT

A 10% value added tax (VAT) is applicable on the supply of goods and services. Certain supplies are zero-rated, such as goods for export, international ship and air transport services, and eligible services provided to non-resident corporations without a permanent establishment that earn foreign currency.

Basic necessities (agricultural produce, medical services, finance services, etc) are exempt from VAT. Companies registered for VAT must submit returns, which are generally filed quarterly, or monthly in the case of large corporations.

Customs duty

Imports into Korea attract customs duty at the rate of 8%, although this rate can be reduced under a free trade agreement.

Comprehensive real estate holding tax

Corporations must pay an annual comprehensive real estate holding tax at rates ranging from 0.5% to 5% on certain land and residences.

Acquisition tax

Businesses that acquire real estate, vehicles, boats, construction equipment, etc, must pay a 1%-7% acquisition tax on the acquisition price of the asset. The tax rate for acquiring a residential house is 12%.

Registration tax

If not included in the acquisition tax, a separate registration tax is levied on corporate registrations at rates between 0.2% and 5%.

Property tax

This is an annual tax imposed at rates between 0.07% and 5% on the statutory value of land, buildings, houses, vessels, and aircraft. Property tax, acquisition tax, and registration tax are all local taxes.

Securities transaction tax

This is a tax levied on the sale or purchase of securities on recognised stock exchanges. The securities transaction tax rate for shares traded on the Korea Composite Stock Price Index (KOSPI) and Korean Securities Dealers Automated Quotations (KOSDAQ) is 0.20% as of January 2026. Shares traded on the Korea New Exchange (KONEX) will, however, attract a tax rate of 0.1%.

Gift tax

This tax is imposed on the acquisition of property by gift at rates ranging from 10% (tax base not exceeding KRW 100 million) to 50%(tax base over KRW 3 billion). However, if the gifted property is subject to corporate income tax or individual income tax, the gift tax isn't imposed.

Tax compliance and registration

• Registration: Register with the NTS' district tax office within 20 days of starting operations. The business registration number you receive is your tax ID.
  
• Corporate tax rate: Calculate your taxable profits and apply the right corporate tax rate. Remember, small and medium-sized enterprises are eligible for reduced rates.
  
• Local income tax: Don't forget to add the local income tax, levied at 10% of corporate tax liability.
  
• Filing obligations: Adhere to filing and tax payment deadlines to avoid penalties, fines, and interest charges. Note that there are interim and annual returns to be filed.
  

How Aspire can help your expansion into South Korea

If you are headed to South Korea (or any other country for that matter), here's how Aspire can support your global expansion plans:

• With a multi-currency business account that comes with a multitude of useful features, including market-leading forex rates, low and transparent pricing, unlimited virtual corporate cards for each of your employees, and easy account set-up with no initial deposit, monthly fees, or minimum balance requirement.
  
• You'll be able to send and receive money in 30+ major currencies across more than 130 countries. With same-day transfers, you can avoid payment delays and pay your overseas suppliers quickly, easily, and securely.
  

Frequently Asked Questions

Is Korea a high-tax country?

With a maximum effective tax rate of 27.5% and various taxes on property, the tax burden on corporations in Korea is considered moderate to high.

What is the corporate tax in South Korea?

South Korea imposes corporate tax at different rates across four income brackets – 10%, 20%, 22%, and 24%.

What is NTS in Korea?

The NTS in Korea stands for the National Tax Service, which is the authority in charge of tax administration.

What is the 10% tax in Korea?

Value-added tax (VAT) is levied at 10% on the supply of most goods and services in Korea.

How to get corporate tax ID in Korea?

Upon incorporation, corporations must apply to their district tax office to receive a tax ID (business registration number) and start paying corporate tax.

Does South Korea have VAT or GST?

The consumption tax in South Korea is VAT, not GST.

Which country has 0% corporate tax?

Various countries, such as the Bahamas, Bermuda, and Cayman Islands, have 0% corporate tax.