Important Update for Foreign Real Estate Buyers in Korea

In response to the surge in real estate purchases by foreigners in Korea, the government has taken regulatory action. 

Starting August 26, 2025, the entire Seoul Metropolitan City, 7 districts in Incheon Metropolitan City, and 23 cities and counties in Gyeonggi Province have been newly designated as Land Transaction Approval Zones for Foreigners. 

This means that foreign nationals looking to purchase certain residential property within these zones must obtain prior approval from the relevant local municipal office before signing any transaction contract. 

Transactions made without prior approval will be considered invalid and have no legal effect. 

Additionally, key requirements include: 

- Foreign buyers must move into the property within 4 months of receiving approval. 

- They must also reside in the property for at least 2 years following the acquisition. 

<Designated Land Transaction Approval Zones for Foreigners>

	Cities / Counties / Districts
Seoul	All districts of Seoul
Incheon	Jung-gu, Michuhol-gu, Yeonsu-gu, Namdong-gu, Bupyeong-gu, Gyeyang-gu, Seo
Gyeonggi Province	Suwon, Seongnam, Goyang, Yongin, Ansan, Anyang, Bucheon, Gwangmyeong, Pyeongtaek, Gwacheon, Osan, Siheung, Gunpo, Uiwang, Hanam, Gimpo, Hwaseong, Gwangju, Namyangju, Guri, Anseong, Pocheon, Paju

If you have any questions or need assistance with the prior approval process, please feel free to contact us at www.openvisakorea.com. 

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Corporate Taxation in Korea

1. Introduction

Corporate tax, also known as corporate income tax, is a tax imposed on the income earned by a legal entity. It applies to both legal entities and certain entities that are recognized as legal entities for tax purposes.

2. Corporate Taxpayers

There are two types of corporate taxpayers: domestic legal entities and foreign legal entities with income sourced in Korea. Domestic legal entities are considered unlimited taxpayers, meaning they are liable for tax on their worldwide income. On the other hand, foreign legal entities are classified as limited taxpayers and are only required to pay tax on income derived from sources within Korea.

A domestic legal entity is defined as a legal entity that has its headquarters, principal office, or substantive management location in Korea. Conversely, a foreign legal entity is a legal entity whose headquarters or principal office is located in a foreign country, as long as the substantive management of its business is not based in Korea.

3. Income Categories

The income subject to corporate tax for domestic legal entities can be categorized, among other things, as follows: 

(i) Business Income: The taxable income of a domestic legal entity is determined based on the profits generated from transactions that contribute to the net asset growth of the legal entity, as per the net worth increase theory. According to this theory, if a legal entity's net worth has increased during a specific tax period, it is assumed that they have received taxable income, regardless of the source of that income;

(ii) Liquidation Income: When a legal entity undergoes dissolution, the liquidation income refers to the value of the remaining assets after subtracting the total amount of its capital and retained earnings; and,

(iii) Income from Transfer: If a legal entity transfers non-business land or other assets, the law mandates that capital gains tax be paid in addition to the regular corporate tax applicable for each business year.

 

Corporate Tax Rate (2025)

Taxable Income  (KRW)	Marginal Tax Rate
200 million or lower	9%
From over 200 million to 20 billion	19%
From over 20 billion to 300 billion	21%
Over 300 billion	24%

 

4. Local Income Tax

There is an additional tax, known as the local income tax, imposed on corporate income. This local income tax is calculated as 10% of the corporate tax rate. In other words, if the corporate tax rate is, for example, 21%, then the local income tax on corporate income would be 10% of that rate, which would be 2.1%. Therefore, the total tax rate for corporate income, considering both the corporate tax and the local income tax, would be 23.1%.