Korea Tax Compliance Map

Email: sel4ww@evershinecpa.com
or
Contact us by WeChat or Skype or WhatsApp in the day-work-time of China (GMT+8)
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Ms. Cindy Victoria Speaks English and Chinese.
Whats App +886-989-808-249
wechatid: victoria141193

GLA – South Korea Corporate Income Tax

GLA-KR-01 GLA Tax Entity

Question from client:
Is South Korea corporate income tax a national income tax? A local income tax? Or is there a national and local income tax?
What if the national income tax and the local income tax are levied separately or levied together?
What is the standard tax rate? What is the special tax rate?

Answer from Evershine RD: Corporate transactions in South Korea are taxed at both national taxes and local taxes.
Corporate tax is collected at the National level.
The local income tax has its own tax base and tax exemption.
Local income tax is levied at a rate of 10% of the applicable corporate tax rate.

GLA-KR-02 Registration

Question from client:
Which government unit is responsible for the collection of South Korea corporate income tax?
The registration of the country’s corporate income tax status, that is, the tax certificate number application procedure, paper certificate number application? Or online account application? URL?
What is the advance certificate number for applying for this certificate number?
Do I need to use the industrial and commercial certificate electronic card to apply?

Answer from Evershine RD:
National Tax Service is responsible for South Korea corporate income tax.
National taxes are administered by National Tax Service (NTS) but local taxes are administered by the responsible local governments.
The main authorities responsible for enforcing taxes on corporate transactions are the NTS and each local government authority.
The company must apply for business registration to the tax office within 20 days from the date of business commencement.
Business registration can be applied electronically and submit the required documents in the Hometax at https://www/hometax.go.kr.

GLA-KR-03 GLA Order (OD)

Question from client:
What is the order of South Korea corporate income tax return (information flow determines tax base) and payment (fund flow)?
Pay first and then declare? Report first and then pays?
At the same time as the declaration and payment?

Answer from Evershine RD:

Deposit first (DF). Pay by installment first and declare later.

GLA-KR-04 Mechanism of Filing (MOF)

Question from client:
What is the return method for South Korea corporate income tax return (information flow determines the tax base)?
Filing cycle: monthly? Every bimonthly? Every season? every half year? Per year?
Electronic filing? Manual filing? Electronic filing and manual filing coexist? If electronic filing is possible: website URL?

Answer from Evershine RD:

A corporation must file an interim tax return with due payment for the first 6 months of the fiscal year, and the filing/ payment must be made within 2 months after the end of the interim 6-month period.
Annual corporate tax returns are due within 3 months (4 months for the consolidated tax return) of the end of the company’s fiscal year.
Corporations usually file electronically, but it is not mandatory to do so.
Electronic returns are filed on the National Tax Service’s “Hometax” portal at https://www/hometax.go.kr.

GLA-KR-05 Mechanism of Payment (MOP)

Question from client:
What is the funding method for South Korea corporate income tax payment (funds flow)?
Payment cycle: M per month? B every bimonthly? Q every season? H every six months? A every year?
Automatically authorize the deduction of ACH (that is, take the initiative of the recipient)?
Electronic remittance to EFT (that is, the payer takes the initiative)?
Bank counter payment OCT?
Or the above methods coexist?

Answer from Evershine RD:
A corporation must file an interim tax return with due payment for the first 6 months of the fiscal year, and the filing/ payment must be made within 2 months after the end of the interim 6-month period.
Interim tax payment must be made by the end of the 8th month of the taxable year.
The payment due is equal to the payment base multiplied by a percentage calculated as dividing six by the number of months in the preceding taxable period.
If they had no tax liability for the preceding taxable year, corporations must file an interim tax return based on the profits for the first 6 months.
There are no special requirements to establish a local bank account or to make electronic payments. However, such payments are recommended.

VAT – South Korea VAT

VAT-KR-01 VAT Tax Entity

Question from client:
Is South Korea VAT National VAT? Local VAT? Or is there a national plus Local VAT?
What if the National VAT and Local VAT are levied separately or levied together?
What is the standard VAT rate? What is the special VAT rate?

Answer from Evershine RD:
The South Korean VAT Law is applicable to the entire territory of South Korea.
VAT levied at national level. There are no state, provincial, or local indirect taxes in South Korea.
In South Korea, the following VAT rates apply:
Standard rate: 10%
Reduced rates: None
Other: Zero rate and exemptions

VAT-KR-02 Registration

Question from client:
Which government unit is responsible for the levying of VAT in South Korea?
The registration of South Korea’s VAT levy status, that is, the application procedure for VAT certificate number, paper certificate number application?
Or an online account application? URL?
What is the advance certificate number for applying for a VAT certificate number?
Do I need to use an industrial and commercial certificate electronic card to apply?

Answer from Evershine RD:
Administrative oversight of the South Korean VAT is carried out by the National Tax Service (NTS).
Entrepreneurs are required to register and pay VAT under Article 3 and Article 8 of the South Korean VAT law.
Article 2 of the VAT provides that a person is an entrepreneur if he or she engages in the supply of goods or services independently in the course of business.
Article 8(1) of the South Korea VAT Law provides that any entrepreneur starting a new business in South Korea must register its particulars with the tax authorities within 20 days from the commencement date of the business.

A business may be registered before it commences (i.e., prior to the corporate registration or the granting of a business license), with underlying documents, such as a copy of the application for the business license or a business plan or transcripts of the resident registration cards of the promoters.
Under Article 11(5) of the VAT Enforcement Decree, the tax office is required to issue a business registration certificate within two business days (extended to five if deemed necessary by the NTS) from the filing date of the registration application.

Upon registration, a business is assigned a 10-digit VAT registration number of the form 123-45-67891.
It includes the code of the district tax office (first three figures), the type of legal entity (two middle figures), the identification number (the four subsequent figures), and the check digit (one).
South Korea offers online VAT registration in English and Korean.
The online portal is NTS Hometax https://www.hometax.go.kr/websquare/websquare.html?w2xPath=/ui/pp/a/a/UTXPPADA01.xml&lang=en

VAT-KR-03 WWT Order (OD)

Question from client:
What is the order of South Korea’s VAT declaration (information flow determines the tax base) and payment (fund flow)?
Pay first and then declare? First declare and then pay?
At the same time as the declaration and payment?

Answer from Evershine RD:

Same period (SP): Filing of VAT return and pay the taxes due by the same time.

VAT-KR-04 Mechanism of Filing (MOF)

Question from client:
What is the return method for South Korea VAT declaration (information flow determines the tax base)?
Reporting cycle: every month? Every bimonthly? Every season? every half year? Per year?
Electronic filing? Manual filing? Electronic filing and manual filing coexist? If electronic filing is possible: Website URL?

Answer from Evershine RD:
Under Article 49 of the VAT Law, the filing and payment deadline for South Korean VAT returns is 25 days after the end of each preliminary period or taxable period.
There are two return periods each year, running from January 1 until June 30, and July 1 until December 31, under Article 5 of the South Korean VAT Law.
Final returns are filed for each of these periods.
In addition, preliminary VAT returns are required for the periods from January 1 to March 31, and July 1 to September 30, under Article 48 of the VAT Law.
In South Korea, electronic VAT return filing and electronic payment of VAT are compulsory for all registered corporate taxpayers.
Electronic returns are filed on South Korea’s Hometax website.

VAT-KR-05 Mechanism of Payment (MOP)

Question from client:
What is the funding method for South Korea VAT payment (funds flow)?
Payment cycle: M per month? B every bimonthly? Q every season? H every six months? A every year?
Automatically authorize deduction of ACH (that is, take the initiative of the recipient)?
Electronic remittance to EFT (that is, the payer takes the initiative)?
OCT payment at the bank counter?
Or the above methods coexist?

Answer from Evershine RD:
Articles 48–49 of the VAT Law provide those businesses must pay the tax for the preliminary and final return periods by the deadline for filing these returns.
Payment can be made via transfer to the VAT bank account held by the NTS at Woori Bank.

Please be aware of below Warning:
The above contents are digested by Evershine R&D  and Education Center in October 2021.
Regulations might be changed as time goes forward and different scenarios will adopt different options.
Before choosing options, please contact us or consult with your trusted professionals in this area.

Contact Us

Seoul Evershine BPO Service Limited Corp.
E-mail: sel4ww@evershinecpa.com
or
Contact us by Skype or WhatsApp in the day-work-time of China  (GMT+8)
The Engaging Manager from Headquarter
Project Manager Cindy Victoria Speak in Bahasa, English, and Chinese.
Whats App +886-989-808-249
WeChat: victoria141193

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(version: 2024/07)
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