South Korea’s Ministry of Finance and Economy published its proposed 2026 tax reform measures on 3 August 2026. The package covers business incentives, individual taxation, VAT, international tax rules and taxpayer compliance.
The proposals include a new domestic production tax credit and expanded tax incentives relating to strategic technologies, research and development, regional investment, small and medium-sized enterprises, venture investment and productive finance.
Additional measures concern household, youth, employment, housing and regional tax incentives, together with changes to real estate taxation and family-business inheritance and succession relief.
Tax and international measures
The reform package also includes:
amendments concerning income tax, corporate tax, VAT, excise duties and securities transactions;
an increase in the special flat income tax rate for foreign workers from 19% to 21%;
a reduction in the controlled foreign corporation low-tax threshold from 17.5% to 15%;
recognition of qualifying domestic minimum top-up taxes (QDMTTs) for foreign tax credit purposes;
implementation of OECD Pillar Two safe-harbour measures; and
revisions to VAT rules concerning cross-border services.
The proposals further contain changes relating to overseas trusts, financial account monitoring, tax evasion, penalties and taxpayer protection.
Source: mofe.go.k
Published on August 28, 2026