South Korea Corporate Tax Guide 2026

Corporate Tax Rates (2026)

South Korea applies a progressive corporate income tax based on taxable income brackets:

• Up to KRW 200 million: 9%
• KRW 200M to 20 billion: 19%
• KRW 20B to 300 billion: 21%
• Above KRW 300 billion: 24%

A resident surtax (주민세) of 10% of the CIT liability applies to all corporations. This adds an effective 0.9% to 2.4% to the base rate. The all-in effective rates are approximately 9.9% to 26.4%.

Large Corporation Surtax (최저한세)

Large corporations (defined as those with total assets exceeding KRW 500 billion or that are listed on KOSPI with certain thresholds) face additional tax compliance obligations including:

• Minimum tax (최저한세): A minimum tax provision ensures that corporations with significant tax credits pay at least a certain percentage of their book income. For large corporations, the minimum tax rate is 17% (including surtax).
• Accumulated earnings tax (기업소득 환류세제): Designed to discourage excessive retention of earnings. Large corporations that do not distribute or invest a certain portion of earnings may be subject to an additional 20% tax on the shortfall.

Taxable Income and Filing

Corporate taxable income is calculated as gross revenue less deductible expenses. Korea follows Korean International Financial Reporting Standards (K-IFRS) for public companies and K-GAAP for others. Deductible expenses include ordinary business expenses, depreciation, salaries, interest, and certain reserves.

Corporate tax returns are due within three months of the fiscal year-end (by March 31 for calendar-year companies). An interim tax payment (중간예납) is due during the fiscal year, calculated based on the previous year's tax or half of the projected current-year tax. Consolidated filing is not permitted — each legal entity files separately.

R&D and Investment Tax Credits

South Korea offers generous tax credits to encourage R&D and capital investment. The main credits include:

R&D tax credit (연구·인력개발비 세액공제): Two methods are available — the regular method (credit at 25–50% of R&D spending exceeding the prior 4-year average) and the simplified method (2–5% of total R&D spending). Large corporations receive lower rates; SMEs receive more favourable rates (up to 50% for qualifying R&D). Unused credits may be carried forward up to 10 years.

Facility investment credit (시설투자 세액공제): Credits range from 1% to 12% of facility investment costs depending on the type of facility and the size of the business. Productivity-enhancing facilities, safety facilities, and environmental facilities qualify for higher rates.

National strategic technology credits: Increased rates apply for R&D and facility investment in national strategic technologies (semiconductors, batteries, vaccines, hydrogen, etc.) — up to 50% for R&D and up to 20% for facility investment, with enhanced carryforward provisions.

Foreign Tax Credit (외국납부세액공제)

Korean-resident corporations may claim a foreign tax credit for foreign income taxes paid on their foreign-source income. The credit is generally limited to the Korean CIT attributable to the foreign income. An indirect foreign tax credit (간접외국납부세액공제) is available for dividends received from foreign subsidiaries, subject to certain holding requirements (at least 10% ownership for 6+ months).

Transfer Pricing (이전가격)

South Korea has comprehensive transfer pricing rules aligned with OECD guidelines. Transactions with related parties must be conducted at arm's length. Companies with cross-border related-party transactions exceeding KRW 10 billion must submit contemporaneous documentation (master file, local file, country-by-country report). The NTS actively audits transfer pricing, particularly for transactions involving tax havens or intangibles.

Withholding Taxes

Korean corporations must withhold tax on certain payments to residents and non-residents:

• Employment income: IIT at progressive rates
• Interest and dividends to residents: 15.4% (14% + 1.4% surtax)
• Interest and dividends to non-residents: 20% (or reduced treaty rate)
• Royalties to non-residents: 20% (or reduced treaty rate)
• Service fees to non-residents: 20% on certain categories (or reduced treaty rate)

FAQs

What is the deadline for filing corporate tax?

Three months from fiscal year-end (by March 31 for calendar-year companies). An extension of up to one month may be granted with valid reasons.

Can losses be carried forward?

Yes, net operating losses (NOLs) can be carried forward for up to 15 years. No carryback is permitted. For SMEs, losses can be carried forward indefinitely (subject to certain limitations).

How are foreign branches taxed?

Korean companies' foreign branch income is subject to Korean CIT with a foreign tax credit for local taxes paid. Alternatively, a foreign branch may be eligible for the foreign-source income exemption (limited to certain qualifying business activities in specific countries).

Is there a group/consolidated tax regime?

No. Each legal entity is taxed separately. However, the accumulated earnings tax and certain anti-avoidance rules look at group-level behaviour.

Disclaimer

This guide provides general information about South Korean corporate income tax for the 2026 tax year. Tax laws and rates may change. Always consult with a qualified Korean tax advisor (세무사) or the NTS directly for advice specific to your situation. InvestmentKit does not provide tax advice.