In this blog post, we will explore the important aspects of bookkeeping and the submission of a statement of payment in relation to income tax in Korea. Keeping of and Entry in Books (Article 160, Income Tax Act) As per the Income Tax Act in Korea, it is mandatory for all business operators to maintain supporting documents to calculate the amount of taxable income. These supporting documents sho..

In this blog post, we will explore penalty taxes and late payment fees related to income tax in Korea. Understanding these penalties is crucial for residents to avoid unnecessary financial burdens. Penalty Tax on Non-filing or Incorrect Filing If a resident in Korea, who is obligated to file an income tax return, fails to do so within the due date or under-reports their income, they will be subj..

In Korea, taxpayers are required to file and pay income tax on their global income by the designated due date for filing income tax returns. Additionally, residents with global income must make interim prepayments of income tax to the relevant authorities. In this blog post, we will explore the key aspects of income tax filing, interim prepayment, and the final return process for global income i..

In Korea, the calculation of global income tax is based on the taxpayer's income and is determined by applying the appropriate tax rates to the tax base. Additionally, taxpayers may be eligible for tax credits, which allow them to deduct specific amounts from their calculated income, subject to meeting certain requirements under the Income Tax Act and the Restriction of Special Taxation Act. Tax..

Foreign Tax Credit allows Korean residents to offset the tax paid or payable on foreign source income in a foreign country against their global income tax amount in the taxation period. This credit can also be included as necessary expenses when calculating the income amount accrued during the period, but this method is applicable only to business income. Scope of Deductibility Foreign source in..

Under the Restriction of Special Taxation Act (Article 126-2), certain individuals in Korea can benefit from income deductions based on the amount spent using credit cards, debit cards, and cash receipts. The deductions apply to residents with wage and salary income, their spouses with an annual income of not more than 1 million won, and their lineal descendants and ascendants with an annual inc..

Global income deductions are an essential aspect of income tax calculations in Korea. In this blog post, we will explore the various types of deductions available for residents with global income, which help reduce their taxable income. These deductions play a crucial role in determining the tax base for global income. Let's delve into the details! Global Income Deduction Overview The tax base f..

In this blog post, we will delve into the special cases concerning the exclusion of expenses related to business-use vehicles from necessary expenses according to Article 33-2 of the Income Tax Act in Korea. We will also explore the scope of business-use vehicles and the calculation of expenses related to them. Additionally, we'll discuss the depreciation of business-use vehicles and how loss fr..

Depreciation costs play a significant role in calculating the necessary expenses for businesses in Korea. Understanding the methods of calculating depreciation and the factors involved is crucial for accurate reporting and complying with tax laws. Methods of Calculating Depreciation Depreciation of fixed assets is determined using the following methods: 1. Original Cost of Fixed Assets For purch..

In this blog post, we will delve into the concept of necessary entertainment expenses for income tax purposes in Korea. Understanding what qualifies as necessary expenses can help businesses optimize their tax deductions while ensuring compliance with the relevant regulations. Necessary Entertainment Expenses According to Article 35 of the Income Tax Act, entertainment expenses related to busine..

When it comes to income tax in Korea, understanding donations and their inclusion in necessary expenses is essential. This article will break down the rules and limits for different types of donations, so you can have a clear understanding of how they affect your taxable income. Designated Donations and Necessary Expenses Under Article 34(2) of the Income Tax Act, designated donations are subjec..

In this blog post, we will delve into the concept of necessary expenses for business income in Korea. Understanding these expenses is crucial for businesses to accurately compute their taxable income. Let's explore the scope and categories of necessary expenses for business income. Scope of Necessary Expense Necessary expenses for business income encompass the total amount of expenditures incurr..

For revenue from lease deposits and similar amounts, a portion known as "deemed rent" is included in the gross revenue. However, there are exceptions for housing leases with certain conditions. If a taxpayer owns three or more houses with the sum of their deposits exceeding 300 million won, the deemed rental income is included in the gross revenue. Deemed rental income where income is calculated..

We will delve into the details of income tax in Korea, focusing on the calculation of the tax base (taxable income) and different types of income. Understanding these concepts is crucial for individuals and businesses operating in Korea. So, let's get started! Calculation of Tax Base (Taxable Income) Taxable income, also known as the tax base, is an essential factor in determining the amount of ..

To understand the rules for calculating income tax in Korea, we need to focus on a few key aspects. The provisions related to the computation of tax base apply to the real income, profit, property, act, or transaction, irrespective of its title or form (Article 14 of the Framework Act on National Taxes). Substance Over Form The Korean tax system emphasizes substance over form. This means that th..