Korea, Republic of

Corporate - Taxes on corporate income

Last reviewed - 27 February 2024

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 facilitate the use of corporate retained earnings to fund facility investment and payroll increases, 20% additional tax shall be applied for excess corporate earnings reserve of a company (excluding small and mid-size enterprises [SMEs], etc.) by 31 December 2025. Companies should elect one of the following methods in computing excess corporate earnings reserve subject to the additional tax:

  • ([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 mutual growth expenditures) x 20%.

The rule for 20% additional tax was scheduled to sunset at the end of December 2022 although a company having untaxed excess corporate earnings reserve carried over from prior years from 2021 and 2022 shall be subject to additional tax in a current year according to the former rule if qualifying expenditures, such as facility investment, salary increase, etc., in a current year is less than the prior year’s excess corporate earnings reserve.  The sunset date has been extended by additional three years until December 31, 2025.   In extending the sunset, the application of the additional tax has been refined to only include those within a conglomerate group which are subject to restrictions on cross-shareholdings as specified in the Anti-Monopoly and Fair Trade Act.

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 10 years to June 30, 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 four years after ceasing to qualify, 8 percent for the next three years, and 9 percent for the subsequent two years.

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.