Business Income vs. Other Income

We receive so many questions on this. The relevant Korean Income Tax Law specifically describes the types of business and other income.

Types of Business Income (Article 19, Income Tax Act)

  • Income from agriculture, forestry and fishing businesses
  • Income from mining and manufacturing businesses
  • Income from electricity, gas, steam and water supply businesses
  • Income from construction business
  • Income from wholesale, retail, lodging and restaurant businesses
  • Income from transportation, publication, visual image, broadcasting and telecommunication, and information service business
  • Income from financial and insurance services
  • Income from real estate business, leasing business, business facility management and business supporting service business
  • Income from professional, science and technology service business (excluding payments
  • for services provided under a contract, etc.)
  • Income from educational service business
  • Income from health business and social welfare service business
  • Income from service business related to art, sports and leisure
  • Income from associations and organizations, repairing and other personal services
  • Income from hiring activities in households
  • Income similar to those listed above incurred by continuous/repeated for-profit activities under self-assessment and responsibility

Types of Other Income (Article 21, Income Tax Act)

Other income means income other than interest income, dividend income, business income, wage and salary income, pension income, retirement income and capital gains. Other income consists mostly of income generated on a one-off, non-regular basis. Under the Income Tax Act, the types of other income are as follows:

  • Prize money or reward and other money or goods corresponding thereto
  • Money or goods obtained through a lottery ticket, raffle ticket, or prize draw ticket
  • Winnings received by a purchaser of a betting ticket in a horse race, bicycle race, bullfighting match, etc.
  • Money or goods received for the use of copyright by any person other than an author, stage performer, album producer or broadcasting business operator
  • Money and goods received for the transfer, lease or use of movie films, tapes or films for radio and television broadcast, or other similar assets or rights
  • Income from the transfer or lease of mining rights, fishing rights, industrial property rights and industrial information, industrial secrets, trademark rights, business rights (including the rights to lease a store), rights incidental to permission to collect earth, sand and rocks, rights to develop and use underground water, and other similar assets or rights
  • Money and goods received as a rent for temporary lease of any goods (including securities) or premises
  • A penalty or indemnity received by breach or cancellation of a contract
  • Income generated from an exercise of stock option after retirement

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