Temporary postponement of corporation tax payments

Temporary deferment of corporation income tax payment:

In Korea the government will now allow a three (3) month temporary deferment of a corporation income tax payment in order to alleviate the financial difficulties of Corona-stricken companies in Korea.

This newly proclaimed policy will be applied to medium and small sized enterprises prescribed in Korea tax law and for the corporation income tax payable during the period from September to December, 2021.

In Korea, the government allows three (3) months to prepare a corporation income tax return, so the company with the June 30 fiscal year needs to file the corporation income tax return on or before September 30. So, this benefit will be applied to the companies with fiscal year ended from June to September.

Taxation to the sales of stock listed in the Korea Stock Exchange (KSE)

Currently, the sales of stock listed in KSE will not be subject to capital gain tax except for larger shareholders. The large shareholder, based on Korea tax law, is an individual who has a stock of a certain company worth more than 1 billion KRW as of the last fiscal year-end. The tax rate to be applied to the capital gain earned by a large shareholder is 22% (27.5% when it is over 300 million KRW) and even 33% when owned less than one (1) year.

Effective from Jan 1, 2023, regardless of being a large shareholder, a person who earns capital gains (including dividend, etc.) of more than 50 million KRW will be subject to tax. The rate will be 22% in general and 27.5% when the gain is over 300 million KRW.

Currently, if a person invests into 100 stocks in KSE at 900 million each, he/she can remain tax free even though he/she makes enormous gain because he/she does not belong to the large shareholder to any single company. However, effective from 2023, he/she will be subject to tax provided the gain from stock investment is over 50 million KRW. On the other hand, if a person invests more than 1 billion KRW to one company and the income is 40 million KRW in a year, then effective from 2023, he/she will be tax free even though taxable currently.

For more information contact Simon S. Yun at Dongnam Accounting Corporation.

About Dongnam Accounting Corporation:

Dongnam Accounting Corporation is a fully-fledged accounting firm based in Seoul which offers a wide range of professional services. Our professionals include CPAs qualified in South Korea and the U.S., certified tax accountants, consultants and accounting staff who offer bookkeeping, payroll and secretarial services.

From setting up an entity in Korea through to traditional accounting, tax and auditing functions, we can provide comprehensive advice and assistance tailored to the clients’ tax minimization and accounting needs.