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Which type of company is mentioning in this Q&A?
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A：
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This Q&A provides a brief description of the maintenance and compliance requirements imposed by the Korea laws and regulations on a private company limited by shares registered in accordance with the Foreign Investment Promotion Act.
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What are the mandatory annual responsibilities of Korea company?
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There are lots of compliances requirements imposed on a company by the Korea laws what mainly including:
1. Annual accounts and audit;
2. Income tax reporting;
3. Payroll and salaries tax; and
4. Social security contributions.
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Q：
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What are the requirements of annual accounts and audit?
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A：
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Korea Companies is required to submit their financial statements when filing their corporate income tax returns. Financial year is a period specified in a company’ Article of Incorporation but it cannot exceed a period of 12 months. Korean Companies with total assets or revenues more than KRW 50 billion are subject to appoint an external audit. Exemptions applied for those companies with total assets or revenues lower than KRW 50 billion who satisfied three or more factors related to total assets, total liabilities, revues, employees, and members.
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What are the requirements of income tax reporting?
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Corporate income tax is imposed on a company’s taxable income. The Korean resident corporations are taxed on their income from the world. Korean non-resident corporations are taxed to the extent of their Korean-source income only. A corporation is only considered as resident in Korea if the corporation has its head or main office, or place of effective operation management in Korea.
Korean companies must file two corporate income tax returns each year. Corporate income tax must also be paid within the filing deadlines. If the tax amount to be paid by a resident corporation is more than KRW10 million, payment period and requirement will be varied.
Quarterly VAT returns must be submitted by all companies detailing all taxable supplies and inputs. The return must be submitted within 25 days after the end of each quarter. VAT liability must also be paid by this deadline.
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What are the requirements of payroll and salaries tax?
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Korea companies which hired employees are obligated to withhold tax on salaries monthly and deduct social security contribution for and on their employees.
Employers need to prepare and submit monthly payroll’s withholding tax statement to the relevant district tax office.
Employers in Korea need to file year-end tax settlement for their employees with Class A salary. An employee's wage can be classified as Class A if it meets certain criteria.
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What are the requirements of social security contributions?
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In Korea, national pension, national health insurance, employment insurance, and worker’s accident compensation insurance are the main types of social security contributions. In general, both the employer and employees should bear the national pension, national health insurance, and employment insurance. For the worker's accident compensation insurance, only the employer is required to bear a certain percentage of salaries.
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FAQ
