For fiscal years beginning on or after January 1, 2026, the Korean corporate tax rate runs on a four-bracket progressive scale from 10% to 25% at the national level. Add the mandatory local income tax and the combined rate ranges from 11.0% on the lowest bracket to 27.5% on the highest. The 2025 Tax Reform lifted each bracket by one percentage point, undoing a temporary cut that had been in place from 2023 through 2025.
The National Brackets
Each slice of taxable income is taxed at the rate for its bracket, not the top rate on the whole amount.
- 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 company earning KRW 25 billion, for example, pays 10% on the first KRW 200 million, 20% on the next KRW 19.8 billion, and 22% on the remaining KRW 5 billion. The brackets apply to net taxable income after allowable deductions and exemptions, and Korea uses a self-assessment system: each company computes and reports its own liability.
Local Income Tax on Top
Every corporation also owes a local income tax equal to 10% of the national rate for each bracket. The 2026 layer looks like this:
- 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%
Combined, the lowest bracket is 11.0% and the highest is 27.5%. The local tax is filed and paid separately from the national return.
Surcharges That Push the Rate Up
Accumulated Earnings Tax
Large conglomerates designated under the Monopoly Regulation and Fair Trade Act face an accumulated earnings tax of 22% (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 excluded.
Real Estate Capital Gains
Corporate capital gains from selling real estate are normally folded into ordinary taxable income and taxed at the standard brackets. Where the property qualifies as non-business-purpose land or housing, an additional capital gains tax of 10% or 20% applies on top of the regular corporate income tax. For unregistered land or houses, that surcharge climbs to 40%.
Credits That Bring the Rate Down
Korea’s incentive system is weighted heavily toward R&D and technology investment, and the rates diverge 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 expenses. Mid-tier companies can claim up to 8%, and large companies up to 2%. An incremental method that compares current spending against a three-year average is also available, though SMEs typically prefer the volume-based route because their baseline is already high.
For research classified under national strategic technologies, the rates jump. Large and mid-tier companies can claim 30% to 40% of qualifying R&D expenses, and SMEs 40% to 50%. The exact rate within each range depends on the ratio of R&D spending to total sales revenue.
Investment Credits for Strategic Technology Facilities
Separately from the spending credit, 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, 64 specific facility categories are designated as eligible, spanning semiconductors, future transportation, and biopharmaceuticals.
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 zone and investment type. KOTRA or the relevant Free Economic Zone authority handles applications, and the requirements are detailed and time-sensitive.
The Floor Beneath the Credits
Alternative Minimum Tax
Even after applying all available credits and deductions, a corporation’s final liability cannot fall below a statutory floor. Minimum tax rates vary by company size, with SMEs facing a lower floor than large corporations. In practice this caps how far the R&D and investment credits can lower an effective rate.
Global Minimum Tax (Pillar Two)
For fiscal years beginning on or after January 1, 2026, Korea applies a Qualified Domestic Minimum Top-up Tax under the OECD’s Pillar Two framework. It reaches multinational enterprise 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 in such a group has an effective tax rate below 15%, a top-up brings it to 15%. The top-up equals excess profits (net income minus a substance-based exclusion) multiplied by the gap between 15% and the entity’s actual effective rate.
Because Korea’s standard rates already sit above 15%, the top-up rarely bites for ordinary domestic operations. It becomes relevant mainly when a Korean subsidiary of a qualifying multinational has stacked enough credits or incentives to pull its effective rate below 15%.
How the Rate Applies to Foreign Corporations
A corporation is a Korean tax resident if its head office or principal place of business is in Korea, or if its place of effective management is located there. Resident corporations pay tax on worldwide income. Foreign corporations without those ties pay tax only on Korean-source income.
Branch Profits Tax
A Korean branch of a foreign company pays the standard corporate income tax on Korean-source income. Where an applicable tax treaty allows, an additional branch profits tax of 20% may apply to the branch’s adjusted taxable income on top of the regular corporate tax. Many treaties reduce or eliminate this rate.
Withholding on Payments to Non-Residents
Payments from Korean entities to non-resident companies without a permanent establishment in Korea are subject to withholding at the source. Statutory rates:
- Royalties: 20%
- Interest: 14% or 20% depending on the type; certain government bonds may qualify for a 0% rate through a separate application
- Dividends: 20%
Tax treaties frequently lower 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.
Filing and Payment
The corporate tax year follows the fiscal year. The annual return and final payment are due within three months of fiscal year end. Consolidated filers get an extra month, so four months after year-end.
An interim payment is due within two months after the first six-month period ends. It is generally half of the prior year’s final liability, though a company can instead compute it from actual first-half results.
If the final tax exceeds KRW 20 million, up to 50% can be paid in installments, with the balance due within one month of the original filing deadline (two months for qualifying SMEs). For bills between KRW 10 million and KRW 20 million, the amount above KRW 10 million can be split under the same timeline.