The corporate tax regime in South Korea (KR) continues to follow a progressive system in 2025, with several distinct tax brackets and surtaxes that companies must take into account. This overview presents the core information relevant for corporations subject to Korean corporate income tax, including rates, thresholds, and key additional charges.
Corporate Tax Rates and Brackets in South Korea
Korea applies a progressive corporate income tax structure assessed directly at the corporate level. The 2025 rates and brackets are as follows (all amounts in millions of Korean Won, KRW):
| Taxable Income (KRW, millions) | Rate (%) |
|---|---|
| ₩0 – ₩200 | 9% |
| ₩200 – ₩20,000 | 19% |
| ₩20,000 – ₩300,000 | 21% |
| Above ₩300,000 | 24% |
Using a KRW/USD exchange rate of approximately ₩1,350 = $1, the income brackets above translate roughly as follows:
- ₩200 million ≈ $148,000
- ₩20 billion ≈ $14.8 million
- ₩300 billion ≈ $222 million
Surtaxes Applicable to Corporate Tax
There are important surtaxes and supplementary charges that significantly affect the effective corporate tax burden for many companies operating in South Korea:
| Description | Rate (%) | Condition/Threshold |
|---|---|---|
| Local income tax (lowest bracket) | 0.9% | Tax base up to ₩200 million ($148,000) |
| Local income tax (mid-bracket) | 1.9% | ₩200 million – ₩20 billion ($148,000–$14.8 million) |
| Local income tax (upper bracket) | 2.1% | ₩20 billion – ₩300 billion ($14.8 million–$222 million) |
| Local income tax (highest bracket) | 2.4% | Above ₩300 billion ($222 million) |
| Excess corporate earnings reserve | 20% | For eligible companies (excluding SMEs & certain others) until 31 Dec 2025 |
| Agriculture and fishery surtax | 20% | On reduced CIT liability from Special Tax Treatment Control Law credits/exemptions |
Assessment Basis and Holding Periods
Corporate tax liability is determined on the basis of corporate-level profits. There is no specific minimum or maximum holding period information required or published for the application of the main corporate tax regime as of 2025. If your business structure involves unique holding scenarios, verify directly with the latest government announcements.
Calculation Example
Consider a company with a taxable profit of ₩250 million (≈ $185,000) in 2025:
- The first ₩200 million is taxed at 9%.
- The next ₩50 million is taxed at 19%.
- Local income tax applies at 0.9% for the first ₩200 million, and at 1.9% for income between ₩200 million and ₩20 billion.
Surtaxes, such as those related to excessive earnings reserves or special tax credits, should be carefully monitored if they are relevant to your company’s activities or tax planning.
Key Deadlines and Noteworthy Provisions for 2025
A prominent temporary surtax is the 20% charge on excess corporate earnings reserve, in place until 31 December 2025. Companies making use of certain tax exemptions provided under Korea’s Special Tax Treatment Control Law (STTCL) also face a 20% agriculture and fishery surtax on the reduction in income tax liability, adding another layer of complexity for those eligible for such credits.
Pro Tips for Navigating Korean Corporate Tax (2025)
- Segment your taxable profits meticulously according to each bracket to ensure correct rate application and avoid costly miscalculations.
- Review eligibility for SME-specific exemptions or exclusions, particularly regarding the excess earnings reserve surtax, as this dramatically alters exposure.
- When claiming tax credits or exemptions under the STTCL, prepare for a potential additional 20% agriculture and fishery surcharge on the CIT liability reduction.
- Double-check applicable local income tax rates, as they shift progressively with your taxable base—organizational structure may influence these exposures annually.
Additional Resources
Official guidance and updates about corporate taxation in South Korea can be found on the Korean National Tax Service website.
The 2025 South Korean corporate tax regime combines a clearly tiered structure with numerous surtaxes that are relevant to both local and foreign-owned companies. Careful analysis of income brackets and surtax triggers is essential to maintain compliance and optimize your company’s post-tax position. As always, keeping up with annual changes and leveraging available exemptions can have a significant impact on your effective tax burden.