[2024 Tax Revision] Corporate Tax Interim Payment Realization... Immediate Application of Current Year Standards

Corporate Tax Forecast Accuracy to Improve with Tax Law Amendments
Individual-Like Corporate Tax Rate Raised to 19%

The government is pushing for a revision of the tax law that imposes corporate tax based solely on the corporate tax amount during the interim prepayment period to increase the predictability of corporate tax and to reflect the scale realistically. The corporate tax rate for certain small-scale corporations engaged in real estate rental businesses will be raised.

A dense area of office buildings in downtown Seoul. Photo by Younghan Heo younghan@

The government included amendments related to corporate tax interim prepayment in the '2024 Tax Law Amendment' announced on the 25th. Corporate tax interim prepayment is a system that reduces the financial burden that may arise when companies pay taxes in a lump sum on a fiscal year basis. The government has the advantage of securing tax revenue in a balanced manner.

Through this amendment, the government plans to rationalize the calculation method of corporate tax interim prepayment for publicly disclosed business groups. Here, publicly disclosed business groups refer to corporations belonging to publicly disclosed business groups under the Monopoly Regulation and Fair Trade Act.

Previously, publicly disclosed business groups calculated corporate tax interim prepayment based either on the calculated tax amount of the previous fiscal year or on the corporate tax amount during the interim prepayment period. Going forward, it will be calculated solely based on the corporate tax amount during the interim prepayment period. However, corporations of small and medium enterprise scale are excluded from this regulation.

The Ministry of Economy and Finance explained, "There was a problem where the fluctuation range of corporate tax accelerated when corporate performance continuously improved or worsened," adding, "(Companies) naturally pay the lower amount by choosing between the method of provisional settlement and paying half of the previous year’s amount when making interim prepayments."

It added, "For publicly disclosed business groups, provisional settlement will be made mandatory so that if recent performance has improved compared to the previous year, corporate tax will be paid based on this."

The government will also adjust the corporate tax base brackets and rates for small-scale corporations subject to faithful reporting confirmation. Currently, small-scale corporations with a taxable standard of 2 billion KRW or less are subject to a 9% tax rate, and corporations with taxable standards exceeding 2 billion KRW but not exceeding 20 billion KRW are subject to a 19% tax rate. However, going forward, all corporations with taxable standards up to 20 billion KRW will be uniformly subject to a 19% tax rate.

At this time, small-scale corporations whose corporate tax rate is raised from 9% to 19% are those that meet all of the following conditions: ▲ controlling shareholders hold more than 50% equity ▲ real estate rental business is the main business or real estate rental, interest, and dividend income account for 50% or more of sales ▲ fewer than 5 regular employees.

The Ministry of Economy and Finance explained, "The small-scale corporations targeted are a kind of personal-like corporation operated alone or with family," adding, "Among small-scale corporations that take the form of a corporation rather than a personal business, those that meet the requirements will be subject to a 19% tax rate up to 20 billion KRW immediately."

The government plans to apply these corporate tax amendments from fiscal years starting after the first day of next year.