Accounting & Tax Compliance in South Korea
Statutory accounts under K-IFRS or K-GAAP, VAT filings, and corporate tax returns filed and paid within 3 months of fiscal year-end.
South KoreaCurrency
KRW (Korean won)
Corporate tax rate
Progressive 10% / 20% / 22% / 25% (FYs from 1 Jan 2026) + 10% local surtax on the national tax — up to 27.5% effective
VAT standard rate
10%
Legal forms
Chusik Hoesa (주식회사, stock company) · Yuhan Hoesa (유한회사, limited liability company)
Bookkeeping standard
K-IFRS (mandatory for listed companies and unlisted financial institutions) or K-GAAP (optional for other unlisted companies)
Annual filing
Corporate income tax return filed and tax paid within 3 months of fiscal year-end; year-end payroll tax settlement (yeonmal jeongsan) finalized and reported to the National Tax Service by end-February
How accounting and tax compliance work in South Korea
South Korea's corporate income tax is progressive across four brackets, raised for fiscal years beginning on or after 1 January 2026: 10% up to KRW 200 million, 20% up to KRW 20 billion, 22% up to KRW 300 billion, and 25% above that, with a further 10% local income tax surcharge on the national tax lifting the effective top rate to 27.5%. VAT is a flat 10% with no reduced rates. Employers also administer four mandatory social insurances — National Pension, National Health Insurance (with a linked long-term care premium), Employment Insurance and Workers' Compensation Insurance — each with its own base, cap and cost-sharing structure.
South Korea's operational complexity is administrative rather than headline-rate driven: four social insurances tracked in parallel, and a year-end tax settlement process that shifts each employee's annual tax filing onto the employer's payroll cycle.
Discuss your South Korea accounting setupRate structure and what it applies to
Progressive 10% / 20% / 22% / 25% (FYs from 1 Jan 2026) + 10% local surtax on the national tax — up to 27.5% effective
- Year-end tax settlement (yeonmal jeongsan) — — the employer, not the employee, reconciles actual annual income tax liability against monthly withholding, collects deduction documentation, and finalizes the report to the National Tax Service by end-February
- Four major social insurances tracked in parallel — , each with a distinct contribution base and cap — National Pension is mid-way through an eight-year phased rate increase running to 13.0% by 2033
- 2026 corporate tax rate increase — — all four brackets were raised for fiscal years beginning on or after 1 January 2026, changing prior-year comparables for budget planning
- Workers' Compensation Insurance is employer-only and industry-rated — (0.6%–18.5%), unlike National Pension, Health Insurance and Employment Insurance, which are cost-shared with the employee
Rates that apply in South Korea
| Rate | Applies to |
|---|---|
| 10% | Standard rate — most goods and services |
| None — flat 10% on most goods and services; exports zero-rated | Reduced rate(s) — defined categories of goods and services |
K-IFRS (mandatory for listed companies and unlisted financial institutions) or K-GAAP (optional for other unlisted companies), and when an audit is required
Statutory bookkeeping in South Korea follows K-IFRS (mandatory for listed companies and unlisted financial institutions) or K-GAAP (optional for other unlisted companies). External audit mandatory when a company meets 2 of 3 thresholds for two consecutive years: total assets ≥KRW 12 billion, total liabilities ≥KRW 7 billion, annual revenue ≥KRW 10 billion — the External Audit Act extends this to Yuhan Hoesa as well as Chusik Hoesa.
Confirm your audit obligationAnnual accounts and registration
Corporate income tax return filed and tax paid within 3 months of fiscal year-end; year-end payroll tax settlement (yeonmal jeongsan) finalized and reported to the National Tax Service by end-February.
Entity registration runs through the Local district Court Registry (법인등기소) for corporate registration, followed by business registration with the local tax office, typically taking 2–3 weeks (commonly cited as 15–30 business days) for a Yuhan Hoesa; a Chusik Hoesa follows a comparable sequence.
Plan your filing calendarFrequently asked questions
Talk to a South Korea accounting expert
The year-end settlement is the single most consequential recurring obligation for any employer of record in Korea, precisely because it sits on the employer's calendar rather than the employee's. It should be built into the payroll cycle as a hard end-February deadline, with deduction documentation collection starting well before January, not treated as a year-end formality.