Korea, Republic of

Value-added tax (VAT)

VAT is generally levied at a rate of 10% on the supply of goods and services in Korea. However, certain supplies of goods and services may be eligible for a zero-rated VAT, including exports of goods, the provision of certain listed services to non-residents or foreign corporations where the consideration is received in foreign currency, and the supply of international transportation services by ship or aircraft. For certain listed services provided to a non-resident or a foreign corporation for consideration received in foreign currency, a zero-rated VAT is available only on a reciprocal basis. These services include professional services (e.g., legal, accounting, tax, advisory, market survey, management consulting), business support services, and investment advisory services. In addition, VAT is exempt on certain goods and services, including basic necessities and services, such as unprocessed foods and agricultural products, medical and health services, finance and insurance services, and duty-free goods.

The issuance of electronic VAT invoices is mandatory for suppliers of goods or services in Korea. If a supplier fails to issue an electronic VAT invoice or to report it electronically to the tax authorities, the relevant penalties shall be imposed.

If a foreign corporation or a non-resident without a PE in Korea supplies certain electronic services to consumers, other than persons registered for Korean VAT, through an information and communication network (as defined under relevant Korean law), it shall comply with the requirements for simplified VAT registration, VAT return filing, and VAT payment in respect of those electronic services. With effect from 1 January 2024, a penalty of 1% of the supply price of electronic services for the period up to the day preceding the simplified registration date is imposed for failure to comply with the simplified registration requirement. Electronic services supplied by a foreign corporation or non-resident include games, audio or video files, electronic documents, etc. that are supplied in an electronic format through an information and communication network, as well as cloud computing, advertising placement services, and intermediary services that involve mediating activities of renting, using, consuming, supplying, or purchasing goods or services in Korea. If foreign electronic services are supplied to Korean consumers through a third party, such as electronic marketplaces or intermediaries who transmit payment from the purchaser to the seller, the third party must register and account for the VAT. A foreign corporation or non-resident engaging in electronic services  subject to the simplified VAT registration regime is required to retain records of transaction details for five years from the VAT return filing due date for the taxable period to which the transaction belongs. In addition, with effect from 1 July 2025, non-residents or foreign corporations acting as sales agents or intermediaries for online marketplace operators, payment gateway providers, and other persons as prescribed by law are required to submit monthly transaction statements to the tax authorities on a quarterly basis.

Customs duties

Customs duties are generally assessed at 8% on imported goods, although the rate can be partly or wholly reduced by an applicable free trade act. Generally, 'importation’ refers to the delivery of foreign goods into Korea (e.g. delivery of foreign goods into Korea from a bonded area to a non-bonded area) to be consumed or to be used in Korea.

Property tax

An annual property tax, as a local tax, ranging from 0.07% to 5% is charged on the statutory value of land, buildings, houses, vessels, and aircraft. Five times the property tax rate is applied to factories that are newly constructed or expanded in a designated metropolitan area for the first five years.

Comprehensive real estate holding tax

A comprehensive real estate holding tax, as a national tax, ranging from 0.5% to 5% (depending on the type and number of assets) is charged on a certain excessive aggregated statutory value of certain land and residential houses. It is levied annually on corporations and individuals owning the assets held as of 1 June of each year.

Securities transaction tax

A securities transaction tax at the rate of 0.35% is imposed on the transfer of unlisted Korean shares or interests. The flexible tax rates prescribed by the Presidential Decree are 0.18% and 0.15% (including the special tax for rural development) for listed shares traded on the Korea Stock Exchange (KOSPI) in 2024 and 2025, respectively, and 0.18% and 0.15% for shares traded on the Korean Securities Dealers Automated Quotations (KOSDAQ) for the respective year. Effective for share transfers made on or after 1 January 2026, the tax rate for listed shares traded on the KOSPI and KOSDAQ markets increases from 0.15% to 0.20% (including the special tax for rural development). The tax rate remains unchanged at 0.1% for shares traded on the Korea New Exchange (KONEX).

Acquisition tax

Acquisition tax is charged on the acquisition price of real estate, motor vehicles, construction equipment, golf membership, boats, etc. The acquisition tax rate varies depending on the type of assets subject to the tax, ranging from 1% to 7%. A weighted rate is charged on acquisitions in a designated metropolitan area or on acquisition of luxury items, such as villas, golf courses, and yachts. A 12% acquisition tax rate shall be applicable to the acquisition of a residential house by a corporation.

Registration tax

In principle, registration tax is included in the acquisition tax. However, in some cases, a separate registration tax ranging from 0.2% to 5% is charged upon the act of registering the creation, alteration, or lapse of property rights or other titles and incorporation with the concerned authorities. Registration tax upon the registration of title or right and incorporation for corporations located in a designated metropolitan area may be subject to three times the normal registration tax rate of 0.4%.

Stamp tax

Stamp tax is levied on a person who prepares a document certifying the establishment, transfer, or change of rights to property in Korea. The stamp tax ranges from KRW 50 to KRW 350,000, depending on the type of taxable document. The electronic stamp system has been implemented to make it mandatory to use stamps bought online rather than paper stamps bought at banks or post offices.

Gift tax

Gift tax is imposed on a person who acquires any property or value increase by gift. If CIT or individual income tax is imposed on the gifted property, however, the gift tax shall not be imposed. Gift tax ranges from 10% on not more than KRW 100 million in tax base to the top marginal tax rate of 50% of the excess over KRW 3 billion in tax base.

The Inheritance and Gift Tax Law (IGTL) provides various deemed gift rules, under which certain transactions with related parties may be subject to gift tax. Under the IGTL, for example, if a controlled corporation prescribed receives profits through any of the specified transactions with a related party of its controlling shareholder, such profits, proportional to the shareholding ratio, are considered deemed gifts to the controlling shareholder of the controlled corporation, provided certain conditions are met. Previously, the scope of controlled corporations subject to this rule was limited to domestic corporations in which the controlling shareholder, together with his or her relatives, directly or indirectly holds 30% or more of shares. However, effective from 28 February 2025, the amended IGTL expands the scope of controlled corporations subject to this rule to include foreign corporations in which the controlling shareholder meets the same ownership criteria of 30% or more. Additionally, effective from 14 March 2025, the scope of specified transactions subject to this rule is broadened to include profits received by the controlled corporation through capital transactions, such as disproportionate capital reductions, as prescribed in the Presidential Decree, in addition to profits from goods or services provided at excessively low or high prices, without consideration, or other similar transactions as previously prescribed.

Inheritance tax

Inheritance tax is imposed upon a person who acquires property through inheritance or bequest. However, an inheritor that is a non-profit company shall be exempt from the inheritance tax. Inheritance tax rates are the same as those for gift tax.

Education tax

Education tax is imposed on corporations engaged in the finance and insurance business, as well as on taxpayers liable for individual consumption tax, transportation energy environment tax, and liquor tax. Previously, the education tax rate for finance and insurance businesses was a flat 0.5% of adjusted gross revenue. Effective 1 January 2026, the education tax rate for finance and insurance businesses will increase under a new bracket system: for a tax base below KRW 1 trillion, the 0.5% rate continues to apply; and for a tax base exceeding KRW 1 trillion, a 1.0% rate will apply. This marks the first increase in the education tax imposed on financial institutions since its introduction in 1981.

Payroll taxes

Employers are required to withhold income taxes on salaries paid to employees on a monthly basis, finalise their employees' tax liability for a calendar year, and file the final payroll tax settlement receipt with the tax authorities no later than the tenth day of March of the following year.

Social security contributions

There are four types of social security contributions in Korea, namely national pension, national health insurance, employment insurance, and worker’s accident compensation insurance. For the first three types of social security taxes (i.e. national pension, national health insurance, and employment insurance), employees and employers jointly bear certain percentages of salaries. Meanwhile, the worker's accident compensation insurance is borne by employers only, which varies by industry types (see Social security contributions in the Other taxes section of the Individual tax summary for more information).