Filing of Interim Corporate Income Tax Return due by August 31, 2023

A resident corporation (and a nonresident corporation having a permanent establishment in Korea) is required to pay interim corporate income tax within 2 months from the end of the first six months of each fiscal year. An interim corporate income tax return must also be filed along with the tax payment. A corporation with the December 31 calendar fiscal year-end must file a 2022 interim corporate income tax return along with the necessary tax payment no later than August 31, 2023.

The interim corporate income tax return can be filed using either (i) the 1/2 method (that is, paying 1/2 of the corporate tax paid in the prior year) or (ii) the book-closing method (by closing the books of accounts of the corporation for the first six-month period and calculate interim corporate tax amount based on the financial results of such first six months). When a corporation had not paid corporate income taxes in the prior year due to tax loss or having no taxable income, only option (ii) above should be applied. However, if a domestic corporation that is classified as a Small and Medium-sized Enterprise (“SME”) in the business year immediately preceding the relevant business year has the computed amount of tax less than KRW 500,000 (i.e., 50% of the previous year’s income tax is less than KRW 500,000), the company is not required to file the interim corporate income tax return.

The calculation formula of interim corporate income tax by using the book-closing method is as follows:

Tax payable = [taxable income for the interim period x 12/6] x tax rates x 6/12

- (tax exemption/withholding taxes paid and taxes assessed for the interim period)

If the interim corporate income tax payable exceeds Won 10 million, such tax can be paid in 2 installments as below. The second installment payment is due within 1 month from the end of the filing due date (2 months in the case of SMEs (defined)).

(Notes)

- 1st installment is due together with filing of the interim tax return within 2 months from the end of the first 6 months (i.e., August 31 for the calendar fiscal year-end).

- 2nd installment is due within 1 month from the end of the filing due date (i.e., September 30 for the calendar fiscal year-end) or within 2 months from the end of the filing due date in case of SMEs (i.e., October 31).

Unlike the annual corporate income tax return, there is no additional local (provincial) income tax payable on interim corporate income tax liability.