Korea Tax Updates and Trends

Daewon Tax Accounting Corp., a Korean tax accounting firm (“we” or “Daewon”), is very much pleased to get an opportunity of sending out this informative letter to you. By way of this letter, we’d like to introduce you to our tax advisory services. 

Informative Letter :

This letter is intended to cover both Koreans and non-Koreans as an audience. Accordingly, the letter is drawn up mainly in English interlaced with some Korean-language excerpts mostly from Korean Tax Acts, tax rulings or news articles for the sake of clear understanding and preventing any misunderstanding due to the translation. Should you need further translation of the Korean-language excerpts for your internal communication, please feel free to let us know.

Draft of Revised Tax Law : Shift to mandatory submission of theapplication of reduced tax rates(세법개정안 : 제한세율신청서 제출 의무로 전환)

On July 31, 2025, the government finalized and announced the Draft for the 2025 Tax Law Revision. Among the amendments related to foreign-invested and foreign corporations, a notable change from a tax compliance perspective is the introduction of a mandatory submission requirement for the application for the reduced withholding tax rate for non-residents and foreign corporations. The amendment aims to strengthen tax base management and will be effective for income paid on or after January 1, 2026. Accordingly, during the second half of 2025, it is recommended to proactively communicate with your foreign parent companies that receive dividends, royalties or other income to prepare the necessary documents, including the application for the reduced tax rate, the certificate of tax residency, and the certificate of corporate registration.

정부는 2025년 7월 31일자로2025년 세제개편안을 확정하여 발표하였습니다. 외투법인 및 외국법인과 관련된 개정사항 중 Tax Compliance 측면에서 미리 대비를 해야 할 사항으로 비거주자 및 외국법인 제한세율 특례신청서 제출의무가 신설될 예정입니다. 세원관리 강화를 개정 이유로 하며 2026년 1월 1일 이후 소득 지급분부터 바로 적용될 예정이기 때문에2025년 하반기에는 미리 배당, 사용료, 기타소득을 수취하는 외국 모회사와 커뮤니케이션하여 제한세율 특례신청서, 거주자증명서 및 외국법인등록증명서(외국의 법인등기부등본에 준함)를 구비하는 것을 권장 드립니다.

Korea Tax Authorities’ Official Response

Introduction of Mandatory Submission Requirement for the Application of Reduced Withholding Tax Rates for Non-Residents

Income Tax Act §156-6, Income Tax Enforcement Decree §207-8 (Paragraph 8),

Corporate Tax Act §98-6, Corporate Tax Enforcement Decree §138-7 (Paragraph 8)

Current Provision	Proposed Amendment
The withholding agent retains the application document, etc.* for the reduced tax rate under a tax treaty* Application form for reduced rate, Report of Overseas Investment Vehicle Retention Period) 5 years from the due date* of withholding tax payment* Payment Due Date: The 10th day of the month following the payment date (tax-withholding date)	Same as left
⟪Newly Introduced⟫	The withholding agent must submit the application documents to the competent tax office.Due date for submission: By the end of February* of the year following the year to which the payment date belongs* Same as the due date for submitting the payment statement
<Amendment Rationale> Strengthening Tax Base Management<Effective Date> Applicable to income paid on or after January 1, 2026

Implications and Future Outlook

We highly recommend that multinational companies operating here in Korea should revisit their past transactions with their parent company in relation to the payment towards overseas which is subject to reduced withholding tax rate in accordance with the relevant tax treaties. Please keep proper documentation on the transactions before the year 2026 and have them readily available when requested by the tax authorities in order to avoid any possible tax disputes with the competent tax authorities.

Please contact us at the following email : taxinne@taxdaewon.com(Attention to Tae-Yoon Cho, Director of Daewon Tax Accounting Corp. )

To whom it may concern: 

We are Daewon tax accounting firm with 40-year old history, having a strong focus on corporate tax advisory and monthly closing & reporting services for multinational companies. Our core strength lies in helping multinaional companies operate smoothly in the Korean tax landscape, whether you’re entering a new market or expanding your operations in Korea.

Firstly, we support you with local tax compliance. We ensure that your tax filings are accurate, timely, and fully compliant with both domestic regulations and relevant tax treaties.

Secondly, we also support you with cross-border tax advisory. We provide strategic insight on cross-border transactions including permanent establishment issues and transfer pricing issues — all with the goal of optimizing your global tax position while managing compliance risk.

Thirdly, we also support you with monthly closing & reporting. We assist clients with end-to-end processes for monthly closing and reporting, including journal preparation. This is especially helpful for multinational companies needing to consolidate group-level reporting on schedule.

In short, we act as a bridge between your global standards and our local requirements. We’ve supported multinational companies from various industries, and we’re proud to be a long-term trusted partner to many companies operating here.

If you have specific questions about our services or how we can support your operations in Korea, we’d be happy to follow up after this email. Thank you again, and we look forward to working with you.

Best wishes,

Tae

Mobile : 82-10-7754-6347

Email : taxinne@taxdaewon.co.kr 

안녕하세요.

40년 동안 외투법인 및 외국기업을 위해서만 서비스해 온 대원세무법인입니다.

저희 대원세무법인에서는 외국계기업(외투기업, 지점 등) 에 특화한 

1) Monthly Bookkeeping Services

2) Payroll Services 

3) Cross-Border Tax Advisory (incl. P.E and T.P.)

4) Local Tax Compliance (Corporate Income Tax, VAT and WHT)

4) Tax Audit Defense and other ad-hoc servcices 

신용카드 매입세액 환급청구, 근로복지혜택 비과세 등 다양한 서비스를 합리적인 가격으로 제공하고있습니다.

회사에 도움이 될 수 있는 아래 내용 꼭 확인하셔서 연락주시면 감사하겠습니다.

대원세무법인 대표번호  : 02-3016-3800  

담당 세무사   직통번호  : 010-7754-6347

                        이메일 : taxinne@taxdaewon.co.kr

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대원세무법인
사업자등록번호 : 220-81-30937
주소 : 서울특별시 강남구 언주로129길 20 (한국관세사회관 2층)

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