---
title: "Korea Corporate Tax 2026: Every Bracket Just Went Up"
description: Korea raised corporate income tax across all four brackets for 2026. The new rates, the local surtax on top, and what foreign companies now actually pay.
---

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# Korea Corporate Tax 2026: Every Bracket Just Went Up

![Irene Kim](https://blog.pearsonp.com/hs-fs/hubfs/%ED%94%BC%EC%96%B4%EC%8A%A8%20%EB%A1%9C%EA%B3%A0%20(1).jpg?width=45&name=%ED%94%BC%EC%96%B4%EC%8A%A8%20%EB%A1%9C%EA%B3%A0%20(1).jpg) 

[Irene Kim](https://blog.pearsonp.com/author/irene-kim)

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Korea raised corporate income tax across every bracket, effective for fiscal years beginning on or after 1 January 2026. If you budgeted your Korean subsidiary off last year's numbers, those numbers are now wrong.

The increase is one percentage point at each tier. That sounds small. Once the local income surtax is layered on top, the real figure most foreign companies pay is higher than the headline rate suggests, and almost nobody is quoting the combined number.

Here is what changed, what you actually pay, and who needs to act before their next filing.

## The New Corporate Tax Rates

The 2026 tax reform bill was enacted on 23 December 2025. Every bracket moved up by one point:

| Taxable income | Previous rate | 2026 rate |
| --- | --- | --- |
| Up to KRW 200 million | 9% | **10%** |
| KRW 200 million to KRW 20 billion | 19% | **20%** |
| KRW 20 billion to KRW 300 billion | 21% | **22%** |
| Over KRW 300 billion | 24% | **25%** |

These apply to fiscal years beginning on or after 1 January 2026. A company on a calendar year sees the new rates for its full 2026 year. A company on a non-calendar fiscal year does not switch until its next year begins.

**Modelling your Korean entity's 2026 tax position? [Talk to Pearson & Partners Korea](https://pearsonkorea.com/contactus/) before your next filing cycle.**

## The Number Everyone Forgets: Local Income Tax

Korea levies a local income tax on top of corporate income tax, calculated at 10% of the corporate tax amount. It is not optional and it is not a separate negotiation. It simply raises your effective rate by a tenth.

That produces the figures that actually hit your accounts:

| Taxable income | Corporate tax | Plus local income tax | Effective combined rate |
| --- | --- | --- | --- |
| Up to KRW 200 million | 10% | 1.0% | **11.0%** |
| KRW 200 million to KRW 20 billion | 20% | 2.0% | **22.0%** |
| KRW 20 billion to KRW 300 billion | 22% | 2.2% | **24.2%** |
| Over KRW 300 billion | 25% | 2.5% | **27.5%** |

If you are comparing Korea against another jurisdiction, compare the combined column. Quoting Korea at 10% against a competitor's all-in rate is not a comparison, it is a mistake.

## What This Means by Company Size

### Small Korean subsidiaries

Most newly established foreign subsidiaries sit in the first bracket for their first few years. The move from 9% to 10% raises the combined rate from roughly 9.9% to 11.0%. In absolute terms that is modest, but it compounds against thin early margins.

### Mid-sized operations

The KRW 200 million threshold arrives faster than founders expect. Once crossed, income above it is taxed at 20% plus surtax, a combined 22%. Companies that cross mid-year should revisit their provisioning rather than discovering the gap at year end.

### Large groups

Beyond the rate rise, a Qualified Domestic Minimum Top-up Tax now applies to multinational groups whose Korean entities are taxed below 15%, also effective for fiscal years beginning on or after 1 January 2026. This is Korea's implementation of the global minimum tax framework. If your group is in scope for Pillar Two elsewhere, it is in scope here.

## What Else Changed for Foreign Companies

The same reform package carried changes that hit foreign parents specifically rather than their Korean subsidiaries:

| Change | Who it affects | From |
| --- | --- | --- |
| Treaty rate applications must be filed within two months after the year end in which income was paid | Any withholding agent paying treaty-reduced income out of Korea | Income paid on or after 1 Jan 2026 |
| Dividend equivalents from OTC derivatives such as total return swaps counted as Korean-sourced dividend income | Foreign corporations holding Korean derivative exposure | Paid on or after 1 Jan 2026 |
| Low-consideration asset sales where the gap to fair market value is 30% or more taxed as Korean-sourced other income | Related-party and below-market transfers | 1 Jan 2026 |

The treaty filing change is the one most likely to catch people out, because it converts something previously done on request into a standing deadline. We cover it in detail in our guide to [Korea's 2026 withholding tax changes](https://blog.pearsonp.com/korea-withholding-tax-2026-the-new-deadline-foreign-parents-miss?hsLang=en).

## What to Do Before Your Next Filing

1. **Reprice your 2026 provision.** Apply the combined rate, not the headline rate.
2. **Check your fiscal year start.** The rates bite from the first fiscal year beginning on or after 1 January 2026, not from the calendar date itself.
3. **Test your bracket position.** Companies near KRW 200 million in taxable income should model both sides of the threshold.
4. **Confirm Pillar Two exposure.** If your group is in scope globally, the Korean top-up tax now applies.
5. **Diarise the treaty filing deadline** if you pay dividends, interest, or royalties out of Korea.

**Want this modelled against your actual numbers? [Pearson & Partners Korea](https://pearsonkorea.com/contactus/) handles corporate tax filing and provisioning for foreign-invested companies.**

## If You Have Not Incorporated Yet

Tax rates are one input into the structure decision, not the whole of it. A branch and a subsidiary are taxed differently and carry different liability. Our [guide to Korea company setup and business structures](https://blog.pearsonp.com/step-by-step-guide-to-korea-company-setup-business-structures-regulations?hsLang=en) compares the options, and our [complete guide to business incorporation in South Korea](https://blog.pearsonp.com/comprehensive-guide-to-business-incorporation-in-south-korea?hsLang=en) covers the wider picture.

For the registration mechanics, see our [Korea business registration requirements and process guide](https://blog.pearsonp.com/step-by-step-guide-to-korea-business-registration-requirements-process?hsLang=en) and our [comprehensive guide to Korea company registration](https://blog.pearsonp.com/comprehensive-guide-to-korea-company-registration-for-entrepreneurs?hsLang=en).

If you are hiring before you incorporate, an [Employer of Record arrangement](https://blog.pearsonp.com/streamline-your-business-expansion-in-south-korea-with-an-employer-of-record-eor?hsLang=en) places the employment with a provider's existing Korean entity in the meantime.

## Work With Pearson & Partners Korea

Pearson & Partners Korea handles corporate tax and accounting for foreign companies operating in Korea, alongside company incorporation and branch registration, foreign investment reporting, Employer of Record (EOR), payroll and the four mandatory social insurances, and visa advisory including D-8 sponsorship.

Because we run both the tax and the incorporation side, we can tell you how a structure decision changes your tax position before you file, rather than after.

More at [pearsonkorea.com](https://pearsonkorea.com/) and our [Insights hub](https://pearsonkorea.com/insights/).

**Contact us:**  
 Web: [pearsonkorea.com/contactus](https://pearsonkorea.com/contactus/)  
 Phone: 02 6952 7579  
 Office: 서울특별시 강남구 영동대로 511, WTC 트레이드타워 30층 (06164)

**Official and authoritative sources:** the [National Tax Service](https://www.nts.go.kr/) publishes corporate tax filing guidance, the [Ministry of Economy and Finance](https://www.moef.go.kr/) publishes the tax reform legislation, [EY's alert on the enacted 2026 reform bill](https://globaltaxnews.ey.com/news/2026-0126-korea-enacts-2026-tax-reform-bill) sets out the bracket changes, and the [OECD BEPS framework](https://www.oecd.org/tax/beps/) covers the global minimum tax rules behind the top-up tax.

## Frequently Asked Questions

**What is the corporate tax rate in Korea in 2026?**  
Ten percent on taxable income up to KRW 200 million, 20% from KRW 200 million to KRW 20 billion, 22% from KRW 20 billion to KRW 300 billion, and 25% above KRW 300 billion. A 10% local income tax applies on top of these amounts.

**What is the effective combined corporate tax rate in Korea?**  
Including the local income surtax, roughly 11.0%, 22.0%, 24.2%, and 27.5% across the four brackets.

**When do the new rates take effect?**  
For fiscal years beginning on or after 1 January 2026. A company with a non-calendar fiscal year does not switch until its next fiscal year starts.

**Does local income tax apply to foreign-invested companies?**  
Yes. It applies to the corporate tax liability of Korean entities regardless of ownership.

**What is the Qualified Domestic Minimum Top-up Tax?**  
Korea's implementation of the global minimum tax. It applies to multinational groups whose Korean entities are taxed below an effective 15%, for fiscal years beginning on or after 1 January 2026.

**Is a branch taxed differently from a subsidiary in Korea?**  
Both are taxed on Korean-source income, but branches carry branch-specific considerations and the parent bears unlimited liability. The structure choice affects more than the rate.

**Do I need to refile anything because of the rate change?**  
Not retroactively. The change affects fiscal years beginning on or after 1 January 2026, so it flows into your provisioning and your next filing rather than prior years.

*This article is general information, not tax advice. Rates and rules change, and your position depends on your facts. Confirm with a qualified adviser before acting.*

**Tags:** Korea corporate tax, Korea corporate tax rate 2026, Korea tax reform, local income tax Korea, Korea subsidiary tax, foreign-invested company tax Korea, Korea company registration, Korea business registration, Korea incorporation, Korea market entry, EOR Korea, Korea business setup, Pearson Partners Korea

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