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Korea Tax

In: Business and Management

Submitted By hd520
Words 450
Pages 2
October 6th 2012 Soojin Lee

Taxable Income (KRW million) Over 300 88 ~ 300 46 ~ 88

Marginal Rate (%) 38 35 24

12 ~ 46
0 ~ 12

15
6

Statutory Corporate Income Tax
(from fiscal years beginning on or after 1.1.2012)
Taxable Income (KRW million) Over 20,000 200 ~ 20,000 0 ~ 200 Marginal Rate (%) 22 20 10

Data Source: Korean Tax Service, access: http://www.nts.go.kr

∑( Dividend + Interest Income) < KRW 40 Mil.

• Dividend income is taxed by withholding, at 14%
• Dividend Tax Credits

∑( Dividend + Interest Income) > KRW 40 Mil.

• Included in global income • Subject to ordinary income tax rate

Corporate Shareholders

• Double taxation can be partially eliminated by DRD (Dividend Received Deduction) for corporate shareholders.

DRD

• Allowable DRD range: 30% to 100% (100% DRD for 100% ownership applied)

Foreign Corporation
Recipient

• Subject to withholding tax at 22% ( included 2% Local income tax)



VAT Revenues as a percentage of GDP 2010 VAT = 46,949 (KRW Billion) 2010 GDP = 1,172,803 (KRW Billion) = 4.0 %

Data source: Bank of Korea (http://ecos.bok.or.kr)

30 25 20 15 10

5
0 1995 2000 2005 2008 2009 2010

Data Source:OECD Revenue Statistics. 1965-2010

Data Source : OECD Revenue Statistics. 1965-2010

Data Source: Korean Tax Service : access: http://www.nts.go.kr



Tax System:

Classical √ vs. Imputed No



Progressivity: Yes √ Treatment of Dividends



◦ Dividend Received Deduction (DRD)
◦ Dividend Paid Deduction (DPD) : allowed for special purpose companies (investment companies, under the special financial laws)

◦ Dividend tax credits (withholding tax) for individual shareholders



Group Taxation
◦ Limited to Parent – Subsidiary companies with 100% ownership.

◦ Intergroup dividends are taxable but relieved mostly through DRD
◦ Corporate income tax paid by...

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