South Korea increases corporate income tax rates for FY 2026.
South Korea’s 2026 tax reform raises the corporate income tax rate across all four brackets, effective for fiscal years beginning on or after 1 January 2026. Businesses now face the first interim tax filing since the increase took effect, with the National Tax Service (NTS) setting a deadline of 31 August 2026 for corporations with a December fiscal year-end.
The practical impact lands on this month’s filing, and this article breaks down what to check before the deadline.
New corporate income tax brackets
Each of the four corporate income tax brackets rises by one percentage point under the 2026 reform.
| Taxable income bracket (KRW) | Previous rate | 2026 rate |
|---|---|---|
| Up to 200 million | 9% | 10% |
| 200 million to 20 billion | 19% | 20% |
| 20 billion to 300 billion | 21% | 22% |
| Over 300 billion | 24% | 25% |
The new rates apply to fiscal years beginning on or after 1 January 2026, so calendar year companies are subject to the increase from FY2026 onward. Companies with a non-calendar fiscal year, for example April to March, apply the new rates from the first fiscal year starting on or after that date.
Interim payment deadline falls on 31 August
The NTS has confirmed that corporations with a December fiscal year-end must file and pay interim corporate tax by 31 August 2026. The requirement applies to around 545,000 corporations this year, an increase of 17,000 from the prior year.
Companies calculating the interim payment can choose between two methods:
- The 1/2 method: paying 50% of the prior fiscal year’s assessed tax
- The book-closing method: calculating the payment from actual results for the first half of 2026 and applying the higher 2026 rates to that period, since the increase already applies to the current fiscal year
Around 2,600 corporations belonging to conglomerates designated by the Fair Trade Commission (FTC) must use the book-closing method only.
Two-month extension available for affected SMEs
The NTS is separately extending the payment deadline by two months, to 2 November 2026, for around 40,000 SMEs facing financial pressure from high exchange rates, high oil prices or other recent economic shocks. This extension applies automatically, without requiring an application. Businesses outside that group can still apply for an extension through Hometax (NTS’s online portal) or their local tax office if they are experiencing financial difficulty.
Before the deadline, businesses should determine which of the two methods applies to their filing. Companies defaulting to the 1/2 method need last year’s assessed tax figure on hand and accurate, while those using the book-closing method must close their books for the first half of 2026 and apply the new rates. Either way, businesses should confirm their approach with a tax advisor well ahead of 31 August 2026 to avoid a late filing penalty and leave time to resolve any discrepancies in the underlying figures.
