The proposals will require approval from the National Assembly before they can enter into force.
The South Korean Ministry of Economy and Finance released the 2025 tax law amendment proposal, on 31 July 2025, which includes corporate tax hikes, AI investment incentives, and new international tax rules.
The proposals will require approval from the National Assembly before they can enter into force.
Key measures:
Corporate tax Increase
The Ministry of Economy and Finance has proposed increasing the corporate income tax rate range from 9–24% to 10–25%, returning to 2022 levels. The securities transaction tax rate will also be restored to its 2023 rate, rising from 0.15% to 0.20%. These adjustments aim to normalise revenue following recent declines.
Expanded tax credits for artificial intelligence technologies
As part of the 2025 tax reform plan, the South Korean government will expand tax deductions for investments in advanced industries, particularly artificial intelligence (AI).
AI data centres and autonomous AI navigation technologies have been designated as national strategic technologies, making them eligible for higher tax credits of 15–25%.
New AI subfields—including generative AI and low-power computing—will also qualify. The number of commercialisation facilities eligible for tax credits has increased to 61 across eight industries.
Tax support will also be enhanced for companies relocating to non-metropolitan areas or returning from overseas, with longer exemption periods and more flexible restructuring conditions.
Transfer pricing documentation requirements and penalties
Taxpayers seeking refunds related to transfer pricing adjustments must now submit documentation proving that double taxation occurred. Administrative penalties will also be applied to liaison offices of foreign corporations in Korea that fail to meet annual information reporting obligations.
Incentives for reshoring and regional investment
To support the return of companies from overseas and encourage relocation to non-metropolitan areas, the government will extend the period for corporate tax and customs duty exemptions. It will also introduce flexibility in restructuring requirements, allowing partial downsizing instead of full closure.
New rules on international tax and exit tax
The tax reform introduces the Qualified Domestic Minimum Top-Up Tax (QDMTT) to align with Pillar Two of the Global Anti-Base Erosion Model Rules. Additionally, the scope of assets subject to exit tax for Korean residents relocating abroad will be expanded to include shares in foreign companies.
