Korea’s 2026 Tax Revision Bill: Executive Summary

Korea’s 2026 Tax Revision Bill: Executive Summary

Mark Benton, Foreign Attorney, AHNSE Law Offices (법무법인 안세), as of 2 November 2026

The National Assembly’s Tax Subcommittee begins its review of the Government’s 2026 Tax Revision Bill today. The final text is normally passed with the budget in early December. Until then, every point below remains a proposal.

Key proposals

• CFC threshold. A foreign subsidiary would be treated as low-taxed only where its actual tax burden is below 15 per cent, instead of 17.5 per cent today, from business years beginning on or after 1 January 2027. Many subsidiaries in Singapore and Hong Kong would fall outside the CFC rules.
• Pillar Two side-by-side election. Groups whose ultimate parent is in a qualifying jurisdiction may elect to treat Korean IIR and UTPR top-up tax as zero.
• Foreign QDMTT credit. A qualified domestic minimum top-up tax paid abroad would clearly qualify for the foreign tax credit, so refund claims for earlier years should be considered.
• Valuation of listed shares. Where a share price is presumed to have been held down, the National Tax Service could extend the valuation period, and shares could be valued at up to 1.3 times the ordinary valuation.
• Sale of a business to a third party. Sellers aged 60 or over with 20 years of management would receive a 20 per cent capital gains tax reduction, and qualifying buyers a 10 per cent tax reduction for five years, for transfers from 2028 to 2030.
• Foreign employees. The elective flat income tax rate would rise from 19 to 21 per cent from 1 January 2027.

Practical steps

Groups should model overseas subsidiaries under both CFC thresholds, review foreign QDMTT credits and check whether their parent jurisdiction qualifies for the side-by-side election. Everyone should check the final text after the December vote.

AHNSE Law Offices advises domestic and foreign clients on Korean tax, corporate and M&A matters.