Korea’s 2026 tax reforms raised corporate and securities taxes, introduced new dividend brackets, tightened cross-border documentation and implemented a Qualified Domestic Minimum Top-Up Tax under Pillar 2 rules.
The Korea (Rep.)’s 2026 tax reforms, enacted following budget-related amendments approved in December 2025, introduce several changes to corporate and individual taxation.
Corporate tax rates are increased by 1% in each of the four brackets, and new brackets are established for the separate taxation of qualifying dividend income received by resident individuals.
Other key measures include:
Cross-border documentation
Companies seeking refunds based on arm’s length price adjustments in controlled transactions must now provide proof that the foreign related party’s taxable income has also been adjusted, preventing double non-taxation.
Dividend capital reserve rules
Dividends paid from Korean companies’ capital reserves are taxable if they exceed certain shareholders’ acquisition costs, impacting major shareholders of listed firms.
Securities transaction tax
The rate rises to 0.20% for both the KOSPI and KOSDAQ markets.
Pillar 2 update
A Qualified Domestic Minimum Top-Up Tax (QDMTT) applies under the revised Pillar 2 global minimum tax rules for reporting fiscal years beginning on or after 1 January 2026.
Expanded dividend scope
Foreign companies’ Korean sourced dividend income now includes dividend equivalents from over-the-counter derivatives transactions.
The updated tax brackets are:
- Up to KRW 20 million: 14%
- Over KRW 20 million and up to KRW 300 million: 20%
- Over KRW 300 million and up to KRW 5 billion: 25%
- Over KRW 5 billion: 30%
Withholding tax procedures
Applications for reduced withholding tax rates under tax treaties must be filed by income payers or withholding agents within two months after the end of the year the income is paid.
Earlier, the National Assembly passed a series of budget-related amendment bills, including changes to the Corporate Tax Act on 5 December 2025.
