SOUTH KOREA Law and Practice Contributed by: Je-Heum Baik, Chang Hee Lee, Maria Chang and Min Kim, Shin & Kim
unless they earn other types of income enough to necessitate a tax return. Foreign employees may elect to pay a flat tax rate (19% currently) on employment income for a period of up to 20 years, under an ostensibly time-limited rule which has so far been continuously extended over the past 20 years. 3.6 Other Income No specific types of income other than those listed above are subject to special taxation rules in Korea. 4. OECD/G20 Global Tax Reform 4.1 Pillar One – Amount B As of January 2026, Korea has not formally enacted legislation to implement Amount B of Pillar One into its domestic tax law. While Korea has been a frontrun - ner in adopting Pillar Two (the Global Minimum Tax), its approach to Amount B has been subject to active monitoring and cautious alignment with the OECD’s evolving implementation framework. Korea is currently in a “wait and see” phase with respect to the formal adoption of Amount B. The Min - istry of Economy and Finance has indicated its inten - tion to remain aligned with the OECD/G20 Inclusive Framework; however, Amount B was not included in the 2025 or 2026 Tax Law Amendment Proposals. If and when Korea adopts Amount B, it is expected to closely follow the OECD’s “Simplified and Streamlined Approach”, with limited local customisation. 4.2 Pillar One – Amount A Like many other jurisdictions, Korea has not yet moved to ratify or implement Amount A domestically because the global consensus remains stalled. Korea is closely watching the status of implementation of other jurisdictions. Since Amount A requires a “criti - cal mass” of signatures to become effective, Korea is unlikely to take unilateral legislative action until it is certain the global regime will actually launch. 4.3 Pillar Two Korea was an early adopter of Pillar Two, enacting it into law in 2024 and introducing a Qualified Domestic
Minimum Top-up Tax (QDMTT) effective from 1 Janu - ary 2026. 4.4 Specific Features or Deviations of Pillar Two As of 2026, Korea’s global minimum tax rules have been designed to align closely with the OECD Model Rules. Unlike some jurisdictions that directly refer to the OECD Model Rules, Korea redrafted the rules in its own legal language. As a result, the rules have been integrated into Korean tax law. 4.5 Digital Services Tax Korea does not have a specific tax on digital prod - ucts in income taxation. The VAT Act, however, has expanded taxability by imposing the tax on local agents and by expanding the scope of reverse-charge VAT. 5. Anti-Avoidance and Anti-Evasion Measures 5.1 Definition and Identification of Tax Fraud, Evasion, Tax Avoidance and Abusive Schemes Tax fraud or tax evasion is a crime punishable under Punishment of Tax Offenses Act (PTOA), while tax avoidance short of being a crime is subject to admin - istrative penalties and interest charges only. In a nota - ble trend, the National Tax Service (NTS) is increasing - ly co-ordinating with prosecutors to pursue criminal charges, particularly in cases of sophisticated tax evasion. Tax fraud or tax evasion involves active and deceptive conduct to disable or seriously hinder tax assessment or collection. The indicators of “fraud or improper means” under Article 3 of the PTOA include maintain - ing multiple or false sets of accounting records, fabri - cating or using false tax invoices or contracts, inten - tionally destroying or concealing accounting books, hiding assets or income through nominee arrange - ments, and manipulating electronic tax systems or enterprise resource planning software. The penalties are imprisonment of up to three years and fines of up to three times the tax evaded. Other tax crimes include, among others, the concealment of assets to
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