Corporate Tax in Korea : Understanding Progressive Tax Rates and Filing Requirements

1) Defining the Taxpayer: Domestic vs. Foreign

Domestic corporations: A company whose head office or main office is in Korea—or a foreign-invested subsidiary established in Korea—is treated as a domestic corporation. It is taxed on worldwide income.
Foreign corporations: A company with its head office outside Korea. It is taxed in Korea only on domestic-source income.

Tip: Set up a subsidiary in Korea? That subsidiary is a domestic corporation and must report/pay corporate tax on worldwide income in principle.

2) The Three Types of Corporate Tax

Corporate tax on income for each business year: The standard, annual corporate income tax on operating profits.
Corporate tax on capital gains on land, etc.: An additional tax imposed when transferring certain assets (e.g., housing including attached land, non-business land). Indicative rates often cited: registered land gains 10%, housing 20%, unregistered land 40%.
Corporate tax on liquidation income: Tax at the time of dissolution on remaining assets after settling liabilities.

Actual tax base/scope and rates can vary by asset type and year. Always verify with the latest rules for your facts.

3) Defining the Business Year (Fiscal Year)

A corporation’s business year is set in its articles of incorporation and cannot exceed 12 months.
Common choice: January 1 to December 31 (calendar year).

4) Understanding the Progressive Tax Rates

Korea uses a progressive rate: higher slices of taxable income are taxed at higher percentages. Think of stacked buckets—once one fills up, the overflow moves into the next, which has a bigger “leak” (higher rate).

Tax Base (Taxable Income)	Corporate Tax Rate
Not over KRW 200 million	9% of the tax base
Over KRW 200 million and not over KRW 20 billion	KRW 18 million + 19% of the amount over KRW 200 million
Over KRW 20 billion and not over KRW 300 billion	KRW 3.78 billion + 21% of the amount over KRW 20 billion
Over KRW 300 billion	KRW 62.58 billion + 24% of the amount over KRW 300 billion

Analogy: The first “bucket” (up to KRW 200M) leaks only 9%. Overflow to the next bucket is taxed at 19%—and so on—so the overall effective rate rises with income.

5) When to File and Pay Corporate Tax

National Corporate Tax (file with the National Tax Service)

Deadline: File and pay within 3 months from the last day of the month containing your fiscal year-end.
Example: Year-end December 31 → deadline March 31 of the following year.

Corporate Local Income Tax (file with the local authority)

Deadline: Within 4 months from the last day of the month containing your fiscal year-end (e.g., Apr 30 for Dec 31 year-ends).
Rate structure: Roughly about 10% of the national corporate tax amount (i.e., an effective additional ~0.9%–2.4% of the corporate tax base, aligned to the 9%–24% brackets).

Heads-up: Installment payments, extensions, and penalties depend on conditions. For any filing, confirm with the year-specific law and official guidance (NTS/WeTax).

In Summary

Domestic corporations are taxed on worldwide income; foreign corporations on domestic-source income.
Corporate tax is progressive, from 9% to 24%; the first KRW 200M is at 9%.
National filing deadline: 3 months after year-end; local filing: 4 months.

Next (Part 3): Tax Adjustment — how accounting profit is transformed into taxable income under Korean tax law (add-backs/deductions, non-deductibles, etc.).

Disclaimer

This post is for general information only and does not constitute legal or tax advice. Rules change, and outcomes depend on your facts. Consult a qualified professional before acting.

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Korean Corporate Tax Progressive Tax Rates Corporate Tax Filing Corporate Local Income Tax Domestic vs Foreign Corporation Korean Taxation Series

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