FAQS ON ACCOUNTING & TAXES
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What tax does Korea company need to pay every year?
The most basic tax items in South Korea include corporate tax, corporate local income tax and value-added tax (surtax). Depending on the industry, there may be additional tax items if they are injured by specific reasons specified in the tax law. What is the ratio of business tax and corporate tax in South Korea?
Collection range of business tax and corporate tax:
Below 200 million won: 10% (VAT: 1% on this basis)
More than 200 million won, less than 20 billion won: 20% (on this basis: 2%)
More than 20 billion won, less than 300 billion won: 22% (on this basis: 2.2%)
Over 300 billion: 25% (on this basis: 2.5%)
※ from January 1, 2019, South Korea's corporate tax relief system for foreign-funded companies has been abolished. Do you need to explain the source of funds when remitting the company's registered capital to Korea?
No, i it is not necessary for foreign investors to disclose the source of funds. However, if you need to apply to Jeju Island for the permission of casino license, you need to provide documents to prove the source of registered capital. What is the calculation method of value-added tax in Korea?
The calculation method of value-added tax is: deduct the tax paid when purchasing goods from the tax on selling goods. Namely:
Tax paid = sales tax (sales X10%) - sales tax (sales X10%)
The value-added tax of a fixed taxpayer is calculated by subtracting the sales tax at the applicable value-added tax rate from the sales tax at the applicable value-added tax rate.
Tax paid = sales x VAT rate X10% - tax deducted (sales tax x VAT rate on tax calculation sheet) What is the calculation method of Korean corporate tax (profit tax)?
From January 1, 2018, the income tax rate of Korean companies in the business year is applicable to all domestic and foreign-funded companies in Korea and is charged at the following cumulative tax rate:
• corporate income is less than 11% of 200 million won.
• 22% of corporate revenue between 200 million won and 20 billion won.
• the company's revenue is between 20 billion won and 300 billion won, accounting for 24.2%.
• 27.5% of corporate revenue exceeding 300 billion won. What is the calculation method of individual income tax in Korea?
The top personal tax rate in Korea is 42% (including a local income tax corresponding to 10% of the personal income tax due), and this rate applies to taxable income in excess of KRW 500 million. However, expatriates can elect to apply a 19% flat tax rate to total Korea-sourced employment income. Progressive Income tax table for 2016
Can I apply for the refund of Korean value-added tax?
In Korea, value added tax refund refers to the amount of tax refund that occurs when the purchase tax is more than the sales tax when the value-added tax declaration is made in Korea.
In case of additional tax refund, the tax bureau of the jurisdiction will pay the enterprise according to the tax refund in each tax period. What are the types of export tax rebates for Korean companies?
The types of export goods that can apply for tax refund in Korea include: value-added tax, special consumption tax, alcohol tax and tariff. Export enterprises apply for export tax rebate twice a year, and each half year is divided into scheduled declaration and determined declaration. When determining the declaration, the errors or omissions in the scheduled declaration can be corrected. When handling the export tax rebate, the enterprise needs to fill in the tax return summary form with the local tax bureau where the time limit is located, and provide the tax calculation sheet (equivalent to the special invoice for value-added tax) and the export exemption form (i.e. export declaration form). What is the source tax of Korean companies?
Source tax refers to the tax levied on the income of withholding objects such as labor income. Generally, it refers to that the income tax borne by workers is first limited from the wages of workers, and then paid by institutions instead.
Therefore, when paying wages to workers, legal persons and institutions must withhold income tax, etc., and declare and pay before the 10th of the month on which the income payment date belongs. |
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FAQs on Accouting & Taxes
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