VAT cycles, corporate income tax, withholding on cross-border payments and transfer pricing documentation.
Korean corporate tax tests client entertainment twice: first on how it was paid, then on how much of it there was. A foreign-owned subsidiary usually fails the first test on receipts and the second on a ceiling it assumed was three times higher.
A Korean subsidiary paying a dividend, interest or a royalty to its parent withholds 22% unless the parent's treaty documents are in the payer's hands before the payment. From 1 January 2026 holding them is no longer enough — the payer has to file them with the tax office too.
A Korean corporation files VAT four times a year, not twice, and the next deadline is 26 October 2026. The rate is the easy part — what costs foreign-owned companies money is input VAT that was never recoverable and zero-rating on parent-company invoices that does not hold.
Every Korean company with a December year-end owes an interim corporate tax payment by 31 August 2026. This is the first interim payment computed at the restored 10/20/22/25% rates, and the choice between the two calculation methods is worth real money this year.
The Ministry of Economy and Finance proposed on 3 August 2026 to raise the optional flat income tax rate for foreign employees from 19% to 21%, while extending the entry window from end-2026 to end-2029. Here is what changes, what does not, and what a foreign-invested employer should be modelling now.
