Korea, Republic of

Corporate - Taxes on corporate income

Last reviewed - 23 May 2025

Resident corporations are taxed at normal CIT rates on their worldwide income, whereas non-resident corporations with a permanent establishment (PE) in Korea are taxed at normal CIT rates 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 following tax table summarises the CIT rates applicable for the fiscal year starting on or after 1 January 2023:

Tax base (KRW* million) CIT rates**
Over (column 1) Less than Tax on column 1 (KRW)* Marginal tax rate (%)
0 200 0 9
200 20,000 18 19
20,000 300,000 3,780 21
300,000 62,580 24

* Korean won

** Excluding the local income tax.

Additional tax on corporate income

To encourage corporations to use their corporate retained earnings for facility investment and payroll increases, a 20% additional tax shall be imposed on the excess corporate earnings reserve of eligible companies (excluding SMEs and others) until 31 December 2025. Eligible companies should elect one of the following methods in computing the excess corporate earnings reserve subject to the additional tax.  The excess corporate earnings reserve may be carried forward for up to two years.

  • ([adjusted taxable income for the year x 70%] – [the total amount of facility investment, wage increases, and expenditures for mutual growth of large corporations and SMEs]) x 20%; or
  • ([adjusted taxable income for the year x 15%] – [the total amount of wage increases and expenditures for mutual growth of large corporations and SMEs]) x 20%.

The rule imposing a 20% additional tax was originally set to expire at the end of December 2022.  However, companies with untaxed excess corporate earnings reserves carried over from the prior years of 2021 and 2022 remained subject to the additional tax in the current year of 2023 or 2024 according to the rule, if qualifying expenditures, such as facility investment and wage increases, in the current year were less than the prior year’s excess corporate earnings reserve. In December 2022, the sunset date was extended by an additional three years, until 31 December 2025 (and until 31 December 2027 for untaxed excess earnings reserve carried over from 2025).  With this extension, the scope of eligible companies subject to the 20% additional tax has been refined to apply only to domestic companies within a conglomerate group that are subject to restrictions on cross-shareholdings as specified in the Anti-Monopoly and Fair Trade Act.  Prior to 1 January 2023, domestic companies with net assets exceeding KRW 50 billion at the end of a fiscal year were subject to the 20% additional tax.

Special Tax for Rural Development

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. The application period has been extended for ten years to 30 June 2034.

Minimum tax

Corporate taxpayers (except SMEs) 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 certain deductions and credits under the STTCL.

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 the companies that are disqualified from SMEs due to specific reasons, the applicable rates are 7% during the first six years after ceasing to qualify (or the first eight years for those listed on the Korea Exchange or the KOSDAQ), which has been extended from the first four years, 8% for the next three years, and 9% for the subsequent two years. The extension from four years to six years (or to eight years) will apply when the reason for no longer qualifying as an SME first arises in the tax year that includes December 31, 2024, or thereafter.

New rules for global minimum tax

Korea has introduced new rules for global minimum tax (‘GloBE Rules‘ or ’Rules‘) at the end of December 2022. The Rules include an ‘Income Inclusion Rule’ (IIR) and ‘Supplementary Rule for Income Inclusion’ (referred to as the UTPR). Under domestic tax law, the IIR is effective for fiscal years beginning on or after 1 January 2024 while the UTPR is effective for fiscal years starting on or after 1 January 2025. The Rules apply to all constituent entities of a qualified multinational enterprise (MNE) group with annual consolidated revenues of 750 million euros (EUR) or more in at least two of the four fiscal years immediately preceding the tested fiscal year.  The Rules shall not apply to entities that are excluded entities, which refer to a government entity, an international organisation, a non-profit organisation, a pension fund, an investment fund that is an ultimate parent entity, and a real estate investment vehicle that is an ultimate parent entity. In addition, the rules shall not apply to an entity that is directly or indirectly owned by an excluded entity. 

The effective tax rate is calculated by dividing the adjusted covered taxes incurred by the net global anti-base erosion (GloBE) income for all of the MNEs’ constituent entities that are located in the same jurisdiction (i.e. jurisdictional blending). If the effective tax rate is lower than 15% in a given jurisdiction, an additional top-up tax for the jurisdiction for the fiscal year is calculated in accordance with the prescribed formula and paid by other constituent entities within the group under the relevant law. 

Korea has adopted safe harbor rules which are generally aligned with the guidance recommend by the OECD.  Under the CbCR safe harbour rules, a domestic filing constituent entity may elect to treat the top-up tax of a relevant jurisdiction as zero (0) if it passes one of the prescribed CbCR safe harbour tests, during a transitional period covering fiscal years beginning before December 31, 2026 and ending before June 30, 2028.  Effective 1 January 2025, the amended domestic tax law also introduced a new provision for transitional UTPR safe harbor rules. The UTPR safe harbor rules allows the jurisdiction which the ultimate parent entity is located in, at the discretion of the filing constituent entity, to reduce the UTPR top-up tax to zero (0) if the statutory corporate tax rate of that jurisdiction is at least 20%, during a transition period covering fiscal years that begins before December 31, 2025 and ends before December 30, 2026.

Filing a tax return and payment shall be due 15 months from the end date of the tested fiscal year. However, for the first year, the due date extends to 18 months from the end date of the tested fiscal year.  Failure to submit the GloBE information report or submitting a false report triggers a penalty of up to KRW100 million, which shall not apply during the transition period if certain requirements are met.

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 0.9% on the first KRW 200 million, 1.9% for the tax base between KRW 200 million and KRW 20 billion, 2.1% for the tax base between KRW 20 billion and KRW 300 billion, and 2.4% for the excess.