Changes in the external audit requirements

Under the current Act and its Enforcement Decree, the mandatory (external) audit requirements apply to the below companies in Korea: Listed in Korea; or Total asset exceeds KRW 12 billion; or Total asset and liability exceed KRW 7 billion; or The number of employees is over 300 and total asset exceeds KRW 7 billion It’s […]

Value-Added Tax in Korea

VAT is levied at a rate of 10% on the supply of goods and services, except zero-rated VAT on certain supply of goods and services (i.e.  services rendered to non-residents earning foreign currency, etc.) and exemption on certain goods and services (e.g. basic life necessities and services, such as unprocessed foodstuffs and agricultural products; medical and health services; finance and […]

Basic Reporting Requirements in Korea

Under the Korean Commercial Law and related tax laws, a company is required to keep its accounting records using “double-entry” bookkeeping system, and prepare financial statements and maintain them for at least five (5) years. Also, once you start a business in Korea, you would be required for following reporting requirements : Value Added Tax […]

Increase in dispatched workers’ withholding tax rate and expansion of scope of withholding agents

Article 156-7 (1) of the Income Tax Act, Article 207-10 (1) of the Enforcement Decree of the Act □In order to tighten control on the tax source from foreign dispatched workers, the following revisions will be made: ○Expansion of scope of withholding agents: -Current: A domestic company whose total payment in return for labor provided […]

Amended Korean Tax Law for Foreign Tax Residents in Korea – Requirement for Submission of Foreign Investment or Real Estate

Under the Income Tax Act Article 165-2 (Duty to Submit Documents about Overseas Investment or Real Estate), a Korean tax resident is required to report and submit certain documents to the Korean tax authority on a yearly basis – by end of May every year. Types of documents to submit to the Korean tax authority […]

Transfer Pricing (TP) in Korea

Transfer Pricing refers to the pricing of international transactions between two “associated” enterprises. Due to the special relationship between related parties, the transfer price may be different than the price that would have been agreed between unrelated parties. A price between unrelated parities is known as the “arm’s length” price. Under Korea’s transfer pricing rules, […]

2018 Korean Social Security Rates

Korean social security system consists of national pension, national health insurance, unemployment insurance and workplace injury insurance. Except for some special cases, it is mandatory to enroll for those social securities in Korea for the salaried employees. The social security contributions are subject to be withheld when salary income is paid. For 2018, Korean social […]

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 […]

Taxation on Foreign-source Income

Taxation on Foreign Source Income Should you report income generated overseas? Under South Korea’s Income Tax Act, individuals are categorized as either a resident or non-resident for tax purposes, depending on which the scope of taxable income and method of taxation differs. Residents are subject to income taxation for all income that have accrued in […]