- Monthly: payroll withholding and social insurance by the 10th. Quarterly: VAT by the 25th of the month after each quarter.
- Annually, for a calendar-year company: year-end payroll settlement by 10 March, corporate tax return by 31 March, local income tax by 30 April, interim corporate tax by 31 August.
- Shareholders approve the accounts at an ordinary general meeting each year under the Commercial Act.
- Directors’ terms end after three years at most under Article 383; renewals and every other change must be registered within two weeks, or the representative director faces a fine of up to KRW 5 million.
- A company that registers nothing for five years can be deemed dissolved under Article 520-2.
Foreign owners often meet Korean compliance only when something has already gone wrong: a bank asks for a registry extract and the directors’ terms have expired; the tax office sends a penalty notice for a VAT return nobody filed during a quiet quarter; immigration refuses a D-8 extension because the company looks dormant. Each of these has a simple cause — a date that nobody owned.
This guide sets out the recurring obligations of a foreign-owned Jusik Hoesa (주식회사, jusik hoesa) with a calendar financial year, grouped by frequency, with the statute behind each and what happens if it is missed. The calendar widget shows the year month by month. Companies with a different year-end shift the annual dates accordingly.
The year at a glance
| Obligation | Frequency | Deadline (calendar year) | Statute |
|---|---|---|---|
| Payroll withholding and payment statement | Monthly | 10th of the following month | Income Tax Act Art. 128 |
| Social insurance contributions | Monthly | 10th of the following month | Four insurance acts |
| VAT return | Quarterly | 25 Apr, 25 Jul, 25 Oct, 25 Jan | VAT Act Arts. 48–49 |
| Year-end payroll settlement | Annual | Settled with February pay; filed by 10 March | Income Tax Act Art. 137 |
| Corporate tax return | Annual | 31 March | Corporate Tax Act Art. 60 |
| Local income tax return | Annual | 30 April | Local Tax Act |
| Interim corporate tax | Annual | 31 August | Corporate Tax Act Art. 63 |
| Ordinary general meeting | Annual | Usually March, before the tax return | Commercial Act Art. 365 |
| Director re-registration | Every 3 years at most | Within 2 weeks of the term ending | Commercial Act Arts. 317, 383 |
| Registration of any change | As it happens | Within 2 weeks | Commercial Act Art. 317 |
The recurring obligations of a foreign-owned Jusik Hoesa.
Every month: payroll
A company that pays anyone — employees, a salaried director, Korean freelancers — withholds income tax at payment and pays it, with local income tax at one-tenth, by the 10th of the following month under Article 128 of the Income Tax Act. It files a withholding statement each month and simplified payment statements for wages and freelance fees on the schedules set by law. Small employers can apply to pay withholding half-yearly.
Social insurance contributions — national pension, health and long-term care, employment and industrial accident insurance — are calculated by the insurers from the reported wages and paid by the 10th as well. New employees are reported by the 15th of the month after they start; leavers likewise. Our guide to hiring in Korea covers the rates.
A company with no employees and no payments to individuals has nothing to file monthly. The day it pays a director’s salary, it does.
Every quarter: VAT
Every Korean company is a general VAT taxpayer and files four times a year: a preliminary return (예정신고, yejeong singo) for January–March and July–September, and a final return (확정신고, hwakjeong singo) for each half-year, each by the 25th of the following month under Articles 48 and 49 of the VAT Act. Small corporations with previous-period supplies under KRW 150 million receive an assessment notice instead of filing the preliminary return.
A company with no sales still files. A nil return takes minutes; a missing one brings penalties and, eventually, a query whether the business still exists. Electronic tax invoices issued during the quarter must already have been transmitted to the National Tax Service; the return reconciles them. Our guide to Korean VAT explains the system.
A quiet quarter still needs a return. Nil is a number.
Voixa Korea
Every year: tax
The annual cycle for a calendar-year company runs from February to August.
February–March: year-end settlement. The employer recalculates each employee’s income tax for the previous year with their deductions — the year-end settlement (연말정산, yeonmal jeongsan) under Article 137 of the Income Tax Act — refunds or collects the difference with February pay and files the results and annual wage payment statements by 10 March. Health insurance contributions are also settled against actual wages around the same time.
By 31 March: corporate tax. The corporate tax return (법인세 신고, beobinse singo) with the financial statements and tax adjustment statement is filed and the tax paid within three months of year-end under Article 60 of the Corporate Tax Act. Tax above KRW 10 million can be paid partly in instalments. Transfer pricing schedules for transactions with the foreign parent are filed with the return.
By 30 April: local income tax. A separate return to the local government, through WeTax, at one-tenth of the corporate tax.
By 31 August: interim corporate tax. The interim prepayment (중간예납, junggan yenap) of half of last year’s tax, or of tax on the first half’s actual results, under Article 63. First-year companies are exempt.
Our guide to corporate tax rates covers the calculation.
Every year: the shareholders’ meeting
A Jusik Hoesa must hold an ordinary general meeting (정기주주총회, jeonggi juju chonghoe) once a year at a time fixed in the articles under Article 365 of the Commercial Act. The meeting approves the financial statements under Article 449, decides any dividend and deals with director appointments and remuneration. For a calendar-year company it is usually held in March, before the tax return, so that the return is filed on approved accounts.
For a company with a single foreign shareholder this is mostly paperwork: a notice, minutes signed by the chair and a shareholder resolution. Companies with capital under KRW 1 billion can shorten the notice period and, with the consent of all shareholders, hold the meeting without a formal convening procedure or adopt written resolutions under Article 363. The minutes matter: banks, tax offices and immigration ask for them, and dividends paid without approved accounts are unlawful.
Every three years: directors
This is the obligation foreign-owned companies miss most often. Under Article 383(2) of the Commercial Act, a director’s term cannot exceed three years. A statutory auditor’s term ends at the ordinary meeting for the third financial year after appointment. When a term ends, the director must be re-appointed — even the same person — and the re-appointment registered with the court.
Every change in registered matters — directors, representative director, address, business purposes, capital, company name — must be registered within two weeks at the head office under Article 317(4), which applies the rule in Article 183. Late registration is a registration default (등기해태, deunggi haetae): under Article 635, the court imposes an administrative fine of up to KRW 5 million on the representative director personally. Fines for a few weeks’ delay are usually modest; fines for years of neglect are not.
| Change | Register within | Who is fined if late |
|---|---|---|
| Director re-appointed when term ends | 2 weeks | Representative director |
| New director or representative director | 2 weeks | Representative director |
| Registered address moves | 2 weeks at old and new address | Representative director |
| Business purposes added | 2 weeks | Representative director |
| Capital increased | 2 weeks from payment | Representative director |
Common registrable changes. Corresponding updates go to the tax office and, for FDI companies, the foreign investment registration.
Foreign investment companies: the extra layer
A company registered as a foreign investment under the Foreign Investment Promotion Act holds a foreign investment registration certificate. When registered details change — the foreign investor, its shareholding, the company name or address, a capital increase by the foreign investor — the change is reported and the registration amended through the bank or KOTRA. A foreign investor that transfers shares, or a company whose foreign shareholding falls below the FDI threshold, must report it too.
These updates matter beyond paperwork. Korean banks rely on the FDI registration when processing dividend remittances, and immigration checks it at each D-8 extension. An out-of-date certificate is a common reason for a delayed remittance or visa. Our guide to FDI rules explains what the status protects.
Visa holders: the renewal file
Founders on a D-8 visa (기업투자 비자, gieop tuja bija) renew it periodically, and immigration reviews the company each time: registry extract, business registration, financial statements, tax payment certificates, payroll and social insurance records, lease, and evidence that the investment is still in the company. A company that has filed everything on time produces this file in a day. A company with gaps spends weeks repairing them — or the founder leaves Korea while it does. Our guide to D-8 requirements covers the file.
Accounting and audit
Korean companies keep books in Korean under Korean accounting standards and retain them, with supporting evidence, for at least five years for tax purposes. External audit is compulsory only for companies above the thresholds in the Act on External Audit of Stock Companies; most small foreign-owned companies are below them. A statutory auditor is not required for companies with capital under KRW 1 billion.
Intra-group transactions need extra care. Invoices from the foreign parent for goods, services, royalties or management fees must match contracts and be priced at arm’s length under the Adjustment of International Taxes Act. Year-end is the time to check them, not the tax office’s audit three years later. Our accounting service handles bookkeeping, VAT and the annual return in Korean and reports in English.
What happens if you do nothing
Korean penalties are mechanical. A missed VAT return or corporate tax return triggers a 20% non-filing penalty on the tax due, plus late-payment charges by the day, under the Framework Act on National Taxes. Unregistered director changes bring court fines on the representative director. Unpaid social insurance accrues surcharges and can be collected from the company’s bank accounts.
A company that does nothing at all for long enough disappears. Under Article 520-2 of the Commercial Act, a stock company that has registered nothing for five years is notified by the court and, if it does not respond, deemed dissolved; three years after that it is deemed fully liquidated. The tax office may also cancel the business registration of a company that has stopped operating. Reviving a dissolved company is possible within limits but costs far more than keeping it alive — or closing it properly; our guide to closing a Korean company covers that route.
Payments abroad: the forgotten withholding
Foreign-owned companies pay their foreign parents more often than they realise: management fees, licence fees for the brand or software, interest on intra-group loans, reimbursed costs. Royalties and interest paid to a foreign company without a Korean permanent establishment bear Korean withholding at 22% under Article 98 of the Corporate Tax Act, reduced by the tax treaty if the limited tax rate application (제한세율 적용신청서, jehan seyul jeogyong sincheongseo) and a residence certificate are on file before payment. The tax is paid by the 10th of the following month, with a payment statement.
Service fees for genuine services performed abroad are usually business profits of the foreign company and not subject to Korean withholding — but the line between a service and a royalty for know-how is drawn by the substance of the contract, not its title. Review intra-group agreements once a year, and keep the residence certificates current; many expire with the calendar year. Our guide to withholding by country lists treaty rates.
Transfer pricing and the related-party schedules
A Korean company that transacts with its foreign parent files schedules of those transactions with its corporate tax return, and, above the thresholds in the Adjustment of International Taxes Act, a master file and local file documenting its transfer pricing. Most small companies are below the documentation thresholds but still need prices that an arm’s-length test would accept: a distributor earning a modest, stable margin, a service company paid cost plus a mark-up, a licensee paying a royalty in line with the market.
The practical rule is to agree the method at the start of the year, invoice on it monthly or quarterly, and true up before year-end rather than after the return is filed. Year-end adjustments that move income between Korea and the parent after the books are closed attract attention from both the tax office and, for goods, Korea Customs.
Who does what
| Task | Usually done by | Owner’s role |
|---|---|---|
| Bookkeeping, VAT, payroll withholding | Korean accountant (세무사 firm) | Send invoices and approve payments on time |
| Corporate tax and local tax returns | Korean accountant | Approve accounts; confirm intra-group charges |
| AGM minutes, director renewals, registry changes | Corporate secretarial provider or 법무사 | Sign resolutions; keep passport and signature documents current |
| FDI registration updates | Bank or KOTRA, through the provider | Tell the provider before changing shareholders or capital |
| Treaty forms for payments abroad | Accountant with the foreign recipient | Obtain residence certificates from the home tax office |
| D-8 renewal file | Immigration agent or provider | Attend; keep the company’s record clean |
A typical division of labour for a small foreign-owned company.
Most compliance failures happen at the boundaries in this table — the accountant assumes the corporate secretary is renewing directors, the founder assumes the accountant is updating the FDI registration. Put one person in charge of the calendar, and give them this page.
Records and audits
Tax records — books, invoices, contracts, payroll records — are kept for at least five years from the filing deadline, and longer where losses are carried forward or the assessment period is extended. The ordinary assessment period is five years, seven where no return was filed, under Article 26-2 of the Framework Act on National Taxes. Commercial Act records — minutes, shareholder registers, accounting books — are kept for ten years.
Small foreign-owned companies are audited infrequently, but the tax office sends written queries on specific items: foreign payments, related-party pricing, entertainment, large VAT refunds. A company that keeps its calendar answers them from its files in a day.
A year in the life
Take a Seoul Jusik Hoesa owned by a German GmbH, with two employees and a German founder on a D-8 visa as representative director. In January it files its second-half VAT return and pays December withholding. In February it runs the year-end settlement with February pay. In March it holds its ordinary general meeting, approving the accounts and the founder’s pay for the year, files the settlement results by the 10th and the corporate tax return by the 31st, and renews its German residence certificate with the parent so that royalties keep the treaty rate. In April it files its first-quarter VAT and its local income tax. In August it pays the interim corporate tax. In October it files third-quarter VAT, and in November it reviews intra-group pricing and checks that the founder’s three-year director term, which ends next spring, is diarised for re-registration. None of this takes much time. All of it is in the calendar.
Mistakes we see
- Director terms expiring unnoticed, discovered when a bank asks for a registry extract.
- No nil VAT returns in the quarters before trading starts.
- No shareholders’ resolution on directors’ pay, then a tax adjustment.
- Dividends declared without approved accounts.
- A moved office not registered, so court and tax mail goes to the old address.
- FDI registration not updated after a capital increase or share transfer.
- Nobody owning the calendar — the founder assumes the accountant does it, the accountant assumes the founder does.
Korean terms you will meet
Questions readers ask
What does a Korean company have to file every year?
For a calendar-year company: year-end payroll settlement by 10 March, corporate tax return by 31 March, local income tax by 30 April, interim corporate tax by 31 August, plus four VAT returns and monthly payroll filings.
Does a Korean company need an annual general meeting?
Yes. A Jusik Hoesa holds an ordinary general meeting each year to approve the accounts; small companies can simplify the procedure.
How long is a director’s term in Korea?
Up to three years under Article 383 of the Commercial Act. Re-appointment, even of the same person, must be registered.
What is the fine for late registration?
Up to KRW 5 million under Article 635 of the Commercial Act, imposed on the representative director.
Do I file VAT if there were no sales?
Yes. A nil VAT return is still required.
What happens to a company that files nothing?
Penalties accrue, and after five years without any registration a stock company can be deemed dissolved under Article 520-2.
Is an audit required?
Only above the size thresholds of the External Audit Act. Most small foreign-owned companies are below them.
Alexander Baranov
Founder of the BCA Group · cross-border corporate and tax adviser since 2008
Alexander advises foreign founders and groups on company formation, tax structuring and corporate law in more than 40 jurisdictions across Europe, the Gulf, Asia and Latin America. He is the author of nine books on international business and tax and writes regularly for professional finance and tax journals. He works in English, German, Spanish and Russian.
This guide is based on the Korean statutes cited in the text and on our own filings. It is reviewed when the law or official rates change.