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Korea, Republic of Corporate - Taxes on corporate income

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Resident corporations are taxed on their worldwide income, whereas non-resident corporations with a permanent establishment (PE) in Korea are taxed only to the extent of their Korean-source income. Non-resident corporations without a PE in Korea are generally taxed through a withholding tax (WHT) on each separate item of Korean-source income (see the Withholding taxes section).

The basic Korean CIT rates are 10% on the first 200 million Korean won (KRW), 20% for the tax base between KRW 200 million and KRW 20 billion, and 22% for the excess.

Additional tax on corporate income

In order to motivate corporations to utilise corporate retained earnings to fund facility investment, wage increases, and dividend payments, the CITL has introduced a 10% additional tax if the company’s qualified expenditures for facility investment, wage increases, and dividend payments fall short of a certain threshold (i.e. either 80% or 30% of adjusted taxable income, see computation below). Effective from the tax year beginning on or after 1 January 2015 through the tax year including 31 December 2017, the additional tax shall apply to companies whose net assets exceed KRW 50 billion (excluding small and medium-sized enterprises [SMEs]) and companies belonging to business groups subject to restrictions on cross-shareholdings under the Act on Monopoly Regulation and Fair Trade.

Companies should elect one of the following methods in computing the additional tax (election valid for three years):

  • ([adjusted taxable income for the year x 80%] - the total amount of facility investment, wage increases, and dividend payments) x 10%, or
  • ([adjusted taxable income for the year x 30%] - the total amount of wage increases and dividend payments) x 10%.

Agriculture and fishery surtax

When a corporate taxpayer claims certain tax credits or exemptions under the Special Tax Treatment Control Law (STTCL), a 20% agriculture and fishery surtax is levied on the reduced CIT liability.

Minimum tax

Corporate taxpayers are liable for the minimum tax, which is defined as the greater of 10% (if the tax base is KRW 10 billion or less, 12% on the tax base exceeding KRW 10 billion but not more than KRW 100 billion, 17% on the tax base exceeding KRW 100 billion) of the taxable income before certain tax deductions and credits pursuant to the STTCL or the actual CIT liability after various deductions and credits.

For SMEs, the minimum tax is the greater of 7% of taxable income before certain tax deductions and credits or actual CIT liability after the deductions and credits. For middle market companies that exceed the size of SMEs (so-called ‘medium-scale companies’), an 8% minimum tax rate is applicable for the first three years, starting from the year when the size exceeds an SME for the first time, and a 9% rate is applicable for the next two years.

Local income tax

The local income tax is a separate income tax that has its own tax base, tax exemption and credits, and tax rates. The local income tax rates for corporations are 1% on the first KRW 200 million, 2% for the tax base between KRW 200 million and KRW 20 billion, and 2.2% for the excess.


Last Reviewed - 17 August 2017

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