Each of the four brackets rose for FY2026, and a 10% local surtax sits on top of the national tax. How the effective top rate reaches 27.5%.
- Year-end tax settlement (yeonmal jeongsan)
- 2026 corporate tax rate increase
- Is there a minimum capital requirement to incorporate in South Korea?
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.
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.
What a company pays in South Korea. Every figure below is published on the South Korea country page.
| South Korea | |
|---|---|
| VAT reduced rates | None — flat 10% on most goods and services; exports zero-rated |
| Accounting standard | K-IFRS (mandatory for listed companies and unlisted financial institutions) or K-GAAP (optional for other unlisted companies) |
| Annual accounts 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 |
| Statutory audit | 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 |
| Company registry | Local district Court Registry (법인등기소) for corporate registration, followed by business registration with the local tax office |
What makes it complex in South Korea
- 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.
- 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.
Is there a minimum capital requirement to incorporate in South Korea?
The Commercial Code does not set a statutory minimum for either a Chusik Hoesa or a Yuhan Hoesa. In practice, KRW 100 million is the commonly used benchmark for foreign direct investment registration and is the minimum investment required for a D-8 corporate investor visa, but it is not a legal precondition to incorporation itself.
Year-end tax settlement (yeonmal jeongsan) is one of the points HTLC Network handles for clients operating in South Korea, within a single engagement that covers every other country they operate in — executed locally, governed centrally.
In South Korea the scope is: Statutory accounts under K-IFRS or K-GAAP, VAT filings, and corporate tax returns filed and paid within 3 months of fiscal year-end.
See Accounting & Tax Compliance in South Korea for the full scope, or the South Korea country page for the statutory framework across every service.
Figures as published on the HTLC Network country pages, reviewed September 2026 and collected from public sources. They are not a substitute for advice on a specific case and should be verified before being relied on.