Korea, Republic of

Tax credits

Certain tax credits against global income tax liability are available for resident taxpayers. These include the items shown below. 

Credit for Class A and Class B wages

A maximum credit of KRW 740,000 per year is available for Class A and Class B wages:

Where the calculated tax amount is KRW 1,300,000 or less, the credit allowance is the calculated tax amount multiplied by 55%.

Where the calculated tax amount is more than KRW 1,300,000, the credit is KRW 715,000 plus 30% of the calculated tax amount in excess of KRW 1,300,000, subject to the maximum of KRW 740,000 per year if annual wages do not exceed KRW 33 million. In case annual wages exceed KRW 33 million, the annual credit threshold shall be lowered to KRW 660,000, KRW 500,000, and KRW 200,000 depending on the income bracket (the higher the income, the lower the tax credit) with effect from 1 January 2023.

Credit for Class B wages through a licensed taxpayers’ association

A tax credit of 5% of the income tax is available (up to KRW 1 million per annum) for Class B wage earners who voluntarily report their monthly earnings and pay monthly income taxes through a licensed taxpayers’ association.

Credit for dividend income

A tax credit of 10% of certain dividends received by each shareholder is available against the individual income tax calculated on global income, which is grossed-up by adding 10% of dividends received.

Credit for casualty losses

Where a business income earner has lost assets equivalent to 20% or more of the total value of the business assets due to disasters occurring during the year in question, an amount calculated according to the ratio of the loss shall be deducted for the income tax.