Corporate Tax in North Korea

North Korea's corporate tax system applies a rate of approximately 25% for foreign investment enterprises, with a lower ~10% rate for domestic enterprises. The tax framework is administered by the State Planning Commission and the Ministry of Finance.

Corporate Income Tax Rate

The corporate income tax rate in North Korea is 25% for foreign investment enterprises (joint ventures, foreign-invested enterprises). Domestic enterprises pay approximately 10%. For simplified calculation purposes, 25% is used as the standard rate for most business activity involving foreign entities.

Taxable Income

Taxable income is calculated as gross revenue minus allowable deductions. The tax year follows the calendar year. Companies must maintain accounting records in accordance with DPRK accounting standards.

Deductible Expenses

• Operating expenses directly related to business activities
• Depreciation of fixed assets
• Employee salaries and social contributions
• Raw materials and production costs

Non-Deductible Expenses

• Fines and penalties
• Dividends distributed
• Capital expenditures (must be depreciated)

Tax Incentives

North Korea offers tax incentives for foreign investment in priority sectors:

• Free Economic Zones: Reduced CIT rates may apply in Rason, Kaesong, and other SEZs
• Priority Sectors: Technology, manufacturing, and infrastructure projects may qualify for exemptions
• Tax Holidays: Certain foreign-invested enterprises may receive temporary tax exemptions

Filing Requirements

• Annual Tax Return: Due within 3 months after the tax year end
• Quarterly Payments: Advance CIT payments may be required
• Financial Statements: Must be filed with the tax return

Withholding Taxes

Companies are required to withhold tax on certain payments to non-residents:

• Dividends: 20%
• Interest: 20%
• Royalties: 20%

International Taxation

North Korea taxes foreign investment enterprises on DPRK-source income. Foreign tax credits may be available under limited tax treaties. Transfer pricing rules apply to related-party transactions.