Taxes in South Korea, Part 2: Property, Income, Corporate Tax, and VAT

South Korean Taxes: Ownership and Income

This article discusses South Korea. The examples and institutions below are not guidance for US or other tax systems. Confirm current rules and your circumstances with the Korean tax authorities or a qualified adviser before acting.

Part 1 covered taxes paid when assets move. This installment addresses: 1) taxes on owning real estate (property tax and comprehensive real estate holding tax) and automobiles, which are due even when you simply hold them; and 2) the differences among the three major national taxes that arise when you earn money (income and sales): value-added tax, income tax, and corporate tax.

1. Real Estate Holding Taxes: Property Tax vs. Comprehensive Real Estate Holding Tax

These are taxes imposed simply because you own real estate. The owner as of June 1 each year (the tax base date) pays them.

Key Differences Between Property Tax and Comprehensive Real Estate Holding Tax
Category	Property Tax	Comprehensive Real Estate Holding Tax
Authority (who collects it?)	Local government (local tax)	National government (national tax)
Taxable assets	All real estate, ships, and aircraft	‘High-priced homes’ and ‘non-business land’ exceeding a specified threshold by even one won
Aggregation method	Only properties within the same city/county/district are aggregated, or each property is taxed separately	All real estate nationwide (throughout South Korea) registered in the taxpayer’s name is aggregated
Tax base date	June 1 every year	June 1 every year

The Magic of the Tax Base Date (June 1)

If you plan to sell a home, you must complete the sale and transfer title before June 1 to avoid that year’s property tax and comprehensive real estate holding tax (in practice, the earlier of the final-payment date and the title-transfer registration date is used). Conversely, if you plan to buy a home, purchasing after June 2 is a sensible choice to avoid paying that year’s holding taxes.

2. Automobile Tax (Local Tax)

If you own a vehicle, you pay this tax every year. It is assessed based on engine displacement (cc).

It is imposed not according to a vehicle’s value, but on the logic that “the greater the engine displacement, the greater the impact on environmental pollution and road wear.”
Contradiction: A 100-million-won electric vehicle (such as a Tesla) has no engine displacement and pays only “130,000 won (a flat amount)” under the non-commercial passenger-car standard, whereas an old 20-million-won Sonata (2.0, 2000cc) pays more than 500,000 won. This tax therefore continually raises controversy over regressive treatment of wealth.
If you prepay the entire year’s amount in January each year, you receive a benefit that discounts a certain percentage.

3. Value Added Tax (VAT)

This is the “VAT 10%” printed at the bottom of a receipt when we eat at a restaurant or drink coffee.

Concept: A tax levied at a rate of 10% on newly created value (value added) at each stage of producing and distributing goods.
Indirect tax: The person who eats the meal (the final consumer) bears the cost in practice, but the restaurant owner (the business operator) reports and pays the tax to the tax office. Because the taxpayer and the person responsible for payment differ, it is an indirect tax with low tax resistance.
Exemption: VAT is not added to every item. Items closely tied to ordinary life—basic necessities (unprocessed agricultural, livestock, and fishery products), healthcare, educational services (private academies), and public transportation—are entirely exempt from VAT (zero won).

4. Income Tax and Corporate Tax

These form the core foundation of South Korea’s national tax revenue when individuals and companies earn money.

Income Tax

Concept: A tax collected on income earned by a natural person (individual) during one year. It includes employment income (salary), interest/dividend income, business income, pension income, capital gains, and miscellaneous income.
Tax rate: It uses a progressive structure in which the rate rises as income increases. It starts at 6% and can reach 45% for very high earners (49.5% including local income tax).
Comprehensive income tax is generally reported and paid each May, combining all income from the preceding year.

Corporate Tax

Concept: A tax collected on the net profit (based on net income for the period) earned by a company (corporation), a legal person rather than an individual.
Rate difference: The top income-tax rate approaches 45%, while the top corporate-tax rate is only 24%. Because of this tax difference, when a sole proprietor’s business becomes so successful that they face a tax burden, they may accept the administrative burden and “convert to a corporation” to receive the corporate tax rate.

Check Official Sources

Amounts and standards may be revised. Before filing or applying, confirm the latest information with the official institutions below.

(Checked: 2026-06)