Corporate taxation and Employers’ Mandatory Contributions in Korea

By Joseph Zoh
Tax and Financial Services Expert in Korea,
in partnership with CEO SUITE for clients’ tax and financial requirements.
jz@jzassociate.com

1. Corporate Income Tax (11% / 22% / 24.2%)

Rates are accumulated for up to EBT (Earnings Before Tax) of 0.2 billion Korean Won at 11%, at 22% if it is less than 20 billion Korean Won, and at 24.2% with earnings of more than 20 billion Korean Won.

For an EBT of 30 billion Korean Won, your tax calculation shall be

How does this compare with other Asian cities?

When are Corporate Income Taxes due?
Within 3 months after the fiscal year ends (if the fiscal year end falls in December, the returns are expected to be filed by March the following year). All business entities are required to file an interim return by August through a qualified public Tax agency.

2. Value Added Tax (VAT)
VAT rate is at 10% for any purchases other than land, raw farming/fishery products, and this can be reimbursed if they form part of the business expense via a quarterly filing.

3. Social Security Program (SSP)
Part of mandatory contributions when an organization hires in Korea (whether it is a regular employee, periodic, part-timers, or freelancers). According to the regulation, employees will bear half of the National Pension, National Health and Unemployment Insurance Premium while the other half will be borne by the employer. This cost stands at about 8 to 10% of total labor costs (salary, wage and other employee income).

4. Retirement Fund (RF)
An additional labor-related expense when any one of the employees (regular, periodic, part-timers) have served more than a year. The Retirement Fund is equivalent to a month of salary per year, which is usually about 8.34% of the annual salary or wage.