Foreign companies with a permanent establishment in Korea are subject to a standard corporate income tax on the income which is generated from the country. Foreign companies which do not have a permanent establishment in the country are subject to taxes which range from 2% to 20% on their income deriving from Korean sources.
In this article, our company formation consultants in Korea explain different aspects related to taxation in South Korea. If you decide on immigration to Korea, our agents can explain the taxes to pay here.
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The corporate income tax in Korea
At the present, the basic corporate tax rates in Korea are:
• 10% on the first KRW 200 million of the tax base;
• 20% up to KRW 20 billion;
• 22% for income above KRW 20 billion.
Our immigration lawyers in Korea are at your disposal if you decide to move here. There are several ways through which you can secure Korean residency. Employment is one of the most common, as it can be accessed by a wide variety of workers from all over the world. If you would like to apply for a residence visa based on employment, contact us. We can also advise on labor matters.
For the tax years 2015 to 2017, a 10% rate of cash reserve tax is applied on a local company, including a Korean subsidiary of a foreign company, but not to a branch, which falls into one of these categories:
• A business which belongs to a group of companies, in which cross holdings are not allowed by the anti-trust law; or
• A business with a capital of more than KRW 50 billion, excepting small and medium-sized businesses under the Restriction of Special Taxation Act.
A business has to choose one of these methods for the calculation of its cash reserve tax base and permanently use it:
• 80% of adjusted business profits, minus any sum for facility investment, workers’ salary increase from the last year, or dividend distribution;
• 30% of adjusted business profits minus any amount for the workers’ salary increase or dividend distribution.
Our Korea company formation advisors can provide further details on the corporate income tax in this country. We can also assist you in starting a business in Korea. We can also advise on relocation to South Korea.
For people who desire to immigrate to South Korea and have relatives who are already established here, family reunion is an alternative. However, it is important to remember that there are various regulations to respect in this sense, as this is not quite a common pathway to relocate to this country.
You can also contact us for accounting services. All financial records can be created and verified to be accurate before being filed by our Korean accountants. No matter if you require a long-term or short-term solution, you can rely on us if you require a local agent to keep in tough with the tax authorities in this country.
Tax incentives in Korea
The local government provides different investment incentives for businesses which operate in certain high-tech activities or which are located in foreign investment areas, free economic areas, free trade zones and special industrial complexes. Our Korea company registration executives can provide more information on what these incentives are.
According to the Tax Incentive Limitation Law, a tax exemption can be offered for new foreign investment in a company which does business in the high-tech industry, or which is located in the foreign investment area or the free economic one, if the approval is issued by the Ministry of Strategy and Finance.
If you have any questions about the tax system in Korea, or for help to open a company in Korea, please get in touch with us. You can also get in contact with our immigration lawyers in South Korea if you want to establish yourself here.
You can also rely on us if you have plans related to immigration to South Korea. We can help you apply for short and long-term residence visas, depending on your needs, but also on whether you meet the relocation requirements. Please keep in mind that you also need sufficient funds to support your stay here.
The Ministry of Justice is in charge of overseeing immigration and resident status throughout the country. When it comes to residency in South Korea, the Department issues visas based on one’s country of origin, reason for immigration, education and skills. So, if you want to relocate, you can address our lawyers for support.