The Korean corporate tax rate runs on a four-bracket progressive national schedule from 10% to 25% for fiscal years beginning on or after January 1, 2026, and a mandatory local income tax adds another tenth on top, lifting the combined top rate to 27.5%. The 2025 Tax Reform restored each bracket by one percentage point after a temporary cut that had been in place from 2023 through 2025.
The National Brackets for 2026
South Korea taxes corporate income in slices. Each portion of taxable income is taxed at the rate for its bracket, not the top rate the company reaches.
- Up to KRW 200 million: 10%
- KRW 200 million to KRW 20 billion: 20%
- KRW 20 billion to KRW 300 billion: 22%
- Above KRW 300 billion: 25%
A corporation earning KRW 25 billion in taxable income pays 10% on the first KRW 200 million, 20% on the next KRW 19.8 billion, and 22% on the remaining KRW 5 billion. Taxable income is gross revenue for the fiscal year less allowable business expenses, and companies calculate their own liability under a self-assessment system.
Local Income Tax
Every corporation also owes a local income tax equal to 10% of the national rate for each bracket. For 2026 that works out to:
- Up to KRW 200 million: 1.0%
- KRW 200 million to KRW 20 billion: 2.0%
- KRW 20 billion to KRW 300 billion: 2.2%
- Above KRW 300 billion: 2.5%
Combining the two, the effective rate on the lowest bracket is 11.0%, and the highest bracket carries a combined rate of 27.5%. The local income tax is filed and paid separately from the national return.
Add-Ons That Change the Real Bill
The bracket rates are the starting point. Several extra charges can raise what a corporation actually pays.
Accumulated Earnings Tax
Large conglomerates designated under the Monopoly Regulation and Fair Trade Act pay an additional 22% charge (inclusive of local income tax) on earnings that are not directed to qualifying uses such as facility investment, employee wages, or welfare funds. The regime runs through the fiscal year that includes December 31, 2028. SMEs and smaller corporations are not subject to it.
Capital Gains Surcharges on Real Estate
Corporate capital gains from real estate normally fold into ordinary taxable income at the regular brackets. If the property is non-business-purpose land or housing, an additional capital gains tax of 10% or 20% applies on top of the normal corporate rate. For unregistered land or houses, that surcharge rises to 40%.
Branch Profits Tax
A foreign company operating through a Korean branch pays the standard corporate rate on its Korean-source income. Where an applicable tax treaty allows it, a branch profits tax of 20% may be levied on the branch’s adjusted taxable income in addition to the regular corporate tax. Many treaties reduce or eliminate this charge.
Withholding on Payments to Non-Residents
Payments from Korean entities to non-resident companies without a permanent establishment in Korea are taxed at source. The statutory rates:
- Royalties: 20%
- Interest: 14% or 20%, depending on the type (certain government bonds may qualify for 0% through a separate application)
- Dividends: 20%
Treaties between South Korea and the payee’s home country frequently cut these rates. Qualifying overseas financial institutions approved by the Korean tax authority can apply for a full withholding exemption on interest from government and stabilization bonds.
Credits That Can Lower the Rate
Incentives in South Korea lean heavily toward research and strategic-technology investment, and the rates differ sharply by company size.
R&D Tax Credits
For general-technology research, SMEs can claim a volume-based credit of up to 25% of current-year R&D spending. Mid-tier companies can claim up to 8%, and large companies up to 2%. An incremental method comparing current spending to a three-year average is also available, though SMEs generally stay with the volume-based route because their baseline rate is already high.
The rates rise for research classified as national strategic technology. Large and mid-tier companies can claim 30% to 40% of qualifying expenses, and SMEs 40% to 50%. The exact rate within each range depends on the ratio of R&D spending to total sales.
Investment Credits for Strategic Technology Facilities
Separately from R&D spending, companies investing in facilities that commercialize national strategic technologies can claim an investment tax credit of 15% for large and mid-tier companies and 25% for SMEs.1InvestKOREA. Tax Deductions for Koreans and Foreigners Semiconductors carry a temporary additional credit on top of these base rates. As of early 2026, the government has designated 64 facility categories across sectors including semiconductors, future transportation, and biopharmaceuticals as eligible.
Foreign Investment in Special Economic Zones
Foreign direct investment in designated Special Economic Zones can qualify for a full exemption from both national and local corporate taxes for an initial period, followed by a partial reduction. Duration and terms depend on the specific zone and investment type.
The Minimum Tax Floor
South Korea imposes an alternative minimum tax so that stacked credits cannot drop a company below a statutory floor. The floor varies by company size, with SMEs facing a lower minimum than large corporations. In practice, the R&D and investment credits above are capped by this threshold: a company cannot push its effective rate below the minimum for its size category.
Net Operating Loss Carryforward
Net operating losses can be carried forward for up to 15 years. Large corporations can only offset up to 80% of a given year’s taxable income with carried-forward losses. SMEs and certain companies in restructuring are not subject to that cap and may deduct the full carried-forward amount.
The Global Minimum Tax
For fiscal years beginning on or after January 1, 2026, South Korea applies a Qualified Domestic Minimum Top-up Tax under the OECD’s Pillar Two framework. It covers multinational groups with consolidated revenues of at least EUR 750 million in at least two of the previous four fiscal years.2OECD. FAQs on Model GloBE Rules If a Korean entity inside such a group has an effective tax rate below 15%, a top-up closes the gap, calculated as excess profits (net income less a substance-based exclusion) multiplied by the difference between 15% and the actual effective rate.
Because the standard Korean rates already exceed 15%, the top-up tax rarely bites on normal domestic operations. It matters mainly when a Korean subsidiary of a qualifying multinational has stacked enough credits or incentives to pull its effective rate below the floor.
Residence and Scope
A corporation is a Korean tax resident if its head office or principal place of business sits in Korea, or if its place of effective management is located there. Resident corporations are taxed on worldwide income. Foreign corporations without those ties pay tax only on Korean-source income.
Filing and Payment Deadlines
The corporate tax year follows the fiscal year. The annual return and final payment are due within three months after fiscal year end. Companies filing consolidated returns get an extra month, so their deadline is four months after year end.
At the midpoint of the fiscal year, corporations must make an interim payment within two months after the end of the first six-month period. The interim amount is generally half of the prior year’s final liability, but a company can instead calculate it on actual first-half results.
When the final tax bill exceeds KRW 20 million, a corporation can pay up to 50% in installments. The installment balance is due within one month of the original filing deadline, or within two months for qualifying SMEs. For bills between KRW 10 million and KRW 20 million, the portion exceeding KRW 10 million can be paid in installments on the same timeline.