kr-income-tax

South Korea Income Tax (종합소득세) -- Self-Employed Skill v2.0

Section 1 -- Quick Reference

Quick Reference Table

Field	Value
Country	South Korea (대한민국)
Tax	Comprehensive Income Tax (종합소득세) + Local Income Tax (지방소득세, 10% surtax)
Currency	KRW only
Tax year	Calendar year (1 January -- 31 December)
Primary legislation	Income Tax Act (소득세법)
Supporting legislation	Local Tax Act (지방세법); Tax Procedures Act (국세기본법)
Tax authority	National Tax Service (국세청, NTS)
Filing portal	Hometax (hometax.go.kr)
Filing deadline	31 May of the following year
Contributor	Open Accountants Community
Validated by	Pending -- requires sign-off by a qualified 세무사 (tax accountant) or 공인회계사 (CPA)
Skill version	2.0

National Tax Rate Table (2025) [T1]

National Tax Rate Table (2025) [T1]

Taxable Income (KRW)	Rate	Deduction Amount (누진공제)
0 -- 14,000,000	6%	0
14,000,001 -- 50,000,000	15%	1,260,000
50,000,001 -- 88,000,000	24%	5,760,000
88,000,001 -- 150,000,000	35%	15,440,000
150,000,001 -- 300,000,000	38%	19,940,000
300,000,001 -- 500,000,000	40%	25,940,000
500,000,001 -- 1,000,000,000	42%	35,940,000
Above 1,000,000,000	45%	65,940,000

• Tax formula — Tax = (Taxable Income x Rate) - Deduction Amount.
• Local Income Tax — Add 10% of national income tax. Total effective rate = national tax x 110%.

Standard Deduction Rates (기준/단순경비율) -- Selected Business Types [T1]

Standard Deduction Rates Table

Business Type (업종)	Simplified Deduction Rate (단순경비율)	Standard Deduction Rate (기준경비율)
IT/software services	~72%	~17%
Design / creative services	~69%	~18%
Consulting / management advice	~67%	~17%
Retail trade	~87%	~10%
Restaurant / food service	~88%	~8%
Professional services (doctors, lawyers)	~65%	~15%
Education / tutoring	~73%	~16%

Exact rates are set annually by NTS. Confirm current rates on Hometax.

Bookkeeping Thresholds [T1]

Bookkeeping Thresholds Table

Revenue Threshold	Required Method
Below KRW 48,000,000 (most service industries)	Simplified bookkeeping (간편장부) permitted
KRW 48,000,000 -- below double-entry threshold	Simplified bookkeeping OR double-entry
Above KRW 75,000,000 (service) / 150,000,000 (manufacturing)	Double-entry bookkeeping (복식부기) required

Conservative Defaults [T1]

Conservative Defaults Table

Ambiguity	Default
Business type unknown	STOP -- business type determines deduction rate
Bookkeeping method unknown	Simplified bookkeeping (간편장부)
Deduction method unclear	Standard deduction rate (기준경비율) -- more conservative
Estimated tax paid unknown	Nil -- will result in penalty calculation
Family deduction eligibility unclear	No deduction until confirmed

Red Flag Thresholds [T1]

Red Flag Thresholds Table

Flag	Threshold
Double-entry bookkeeping required	Revenue > KRW 75,000,000 (services)
Estimated tax (중간예납) required	Prior year tax > KRW 300,000
VAT registration required	Revenue > KRW 48,000,000 (standard)
Tax accountant (세무사) recommended	Revenue > KRW 100,000,000

Section 2 -- Required Inputs and Refusal Catalogue

Required Inputs

Minimum viable: Bank statement for the full calendar year (January--December) in CSV, PDF, or pasted text, plus confirmation of business type (업종 코드) and bookkeeping method.

Recommended: Withholding tax (원천징수) certificates from clients, prior year tax return, estimated tax (중간예납) payment receipts, national health insurance (국민건강보험) and pension (국민연금) payment receipts.

Ideal: Complete books of accounts (간편장부 or 복식부기), all client invoices, expense receipts, asset register, prior year tax assessment (납세고지서).

Refusal Catalogue

• R-KR-1 -- Foreign residents / non-residents — Non-resident taxation of Korean-source income has different rules. Out of scope -- escalate. (R-KR-1)
• R-KR-2 -- Corporations (법인) — Corporations file Corporate Tax (법인세). Out of scope. (R-KR-2)
• R-KR-3 -- Financial income global taxation (금융소득 종합과세) — If interest + dividends exceed KRW 20,000,000, these must be included in comprehensive income. Complex analysis required -- escalate. (R-KR-3)
• R-KR-4 -- Real estate income and capital gains — Real estate rental income and gains on disposal require separate computation under different schedules. Escalate. (R-KR-4)
• R-KR-5 -- Foreign income / DTAA — Cross-border income requires tax treaty analysis. Escalate. (R-KR-5)

Section 3 -- Transaction Pattern Library

This is the deterministic pre-classifier. When a bank statement line matches a pattern, apply the treatment directly. If no pattern matches, fall through to Tier 1 rules in Section 5.

3.1 Income Patterns (Credits -- 입금)

Income Patterns Table

Pattern	Tax Line	Treatment	Notes
타행입금 [client name] / 이체입금	사업소득 (business income)	Gross revenue	Wire transfer from business client
자동이체 입금 [client]	사업소득	Revenue	Auto-transfer standing order from client
카카오페이 입금 / KAKAOPAY	사업소득	Revenue	KakaoTalk Pay settlement -- digital platform
네이버페이 정산 / NAVERPAY	사업소득	Revenue	Naver Pay e-commerce settlement
쿠팡페이 정산 / COUPANG	사업소득	Revenue	Coupang marketplace settlement
토스 입금 / TOSS CREDIT	사업소득	Revenue	Toss digital payment receipt
원천징수 후 입금	사업소득 (gross-up required)	Revenue -- GROSS UP	Client withheld 3.3% (local 0.33%); gross up to invoice amount
급여이체 [employer]	근로소득	NOT business income	Employment salary
이자입금 / 이자수익 [bank]	이자소득	NOT business income	Bank interest -- separate income type
배당금 입금	배당소득	NOT business income	Dividend income
세금환급 국세청	EXCLUDE	Not income	Tax refund
대출금 입금	EXCLUDE	Not income	Loan proceeds

3.2 Expense Patterns (Debits -- 출금)

Expense Patterns Table

Pattern	Tax Category	Treatment	Notes
사무실임대료 / 임차료 [landlord]	임차료 (rent)	Fully deductible	Business premises rent
공과금 / 전기요금 [KEPCO/한국전력]	수도광열비 (utilities)	Business portion deductible	Home office: apportion
도시가스 / 가스요금	수도광열비	Business portion deductible	Apportion if home office
인터넷 요금 [KT/SK브로드밴드/LG유플러스]	통신비 (communications)	Business portion deductible	Mixed use: apportion
휴대폰 요금 [SK텔레콤/KT/LG유플러스]	통신비	Business portion deductible	Mixed use: apportion
교통비 [대중교통/버스/지하철]	여비교통비 (travel)	Deductible if business	T-money/Cashbee transit charges
KTX / SRT [train]	여비교통비	Deductible if business purpose	Keep boarding pass
대한항공 / 아시아나 / 저비용항공사	여비교통비	Deductible if business
접대비 / 식사 [restaurant]	접대비 (entertainment)	Limited deduction	Cap applies; document names, purpose
도서비 [Kyobo/Aladin]	소모품비 (consumables)	Deductible if professional literature
교육훈련비 [Fastcampus/패스트캠퍼스/학원]	교육훈련비	Fully deductible if business-related
Adobe / Microsoft / Google Workspace	소모품비 / 임차료	Deductible if business	Subscription: current expense
Figma / Notion / Slack	소모품비	Deductible	Business SaaS
세무사 수수료	지급수수료 (professional fees)	Fully deductible	Tax accountant fees
법무사 / 변호사 수수료	지급수수료	Deductible if business-related	Legal fees
국민건강보험 / 건보	소득공제 (NOT 필요경비)	EXCLUDE from business expenses	Health insurance = income deduction
국민연금 / 연금보험료	소득공제 (NOT 필요경비)	EXCLUDE from business expenses	Pension = income deduction
종합소득세 납부 / 소득세	EXCLUDE	Tax payment	Not deductible
지방소득세 납부	EXCLUDE	Local tax payment	Not deductible
중간예납 국세청	EXCLUDE	Estimated tax prepayment	Credit against final liability
개인인출 / 본인출금	EXCLUDE	Drawings	Not business expense

3.3 Platform and Digital Payment Patterns

Platform and Digital Payment Patterns Table

Pattern	Treatment	Notes
카카오뱅크 이체 / KakaoBank Transfer	Business income	Confirm client vs personal transfer
토스뱅크 입금 / TossBank Credit	Business income	Digital bank receipt
케이뱅크 이체 / K bank	Business income	Digital bank
네이버파이낸셜 / 네이버페이	Business income	Naver Pay settlement
원천징수 3.3%	Revenue gross-up required	National 3% + local 0.3%; client deducted before paying

3.4 Withholding Tax (원천징수) -- 3.3% Rate

• Withholding gross-up rule — Always gross up to the full invoice amount. The withheld 3.3% is a tax credit on the final return.

Most self-employed Koreans have 3.3% withheld by corporate clients (national 3% + local income tax 0.3%). This appears in bank statements as net amounts.

Example: Client pays KRW 966,700 (net of 3.3% withholding on KRW 1,000,000 invoice). Report gross income KRW 1,000,000; claim KRW 33,300 as withholding tax credit.

Section 4 -- Worked Examples

Example 1 -- Standard Client Wire Transfer

Input line (KB국민은행 Kookmin Bank statement): 2025.03.15 | 타행이체 ABC디자인컴퍼니 | 입금 970,100 | 잔액 4,521,300

Reasoning: Wire transfer from a business client. KRW 970,100 received is likely net of 3% national withholding tax. If the invoice was KRW 1,000,000, client withheld KRW 30,000 (3%) and paid KRW 970,000. The local income tax portion (0.3% = KRW 3,000) was also withheld separately. Total gross income: KRW 1,000,000. Total withholding credit: KRW 33,000.

Classification: 사업소득 KRW 1,000,000 (gross). Withholding credit KRW 33,000.

Example 2 -- Kakao Pay Settlement

Input line (카카오뱅크 KakaoBank statement): 2025-05-10 | 카카오페이 정산 | +350,000 | 잔고 2,840,000

Reasoning: KakaoTalk Pay settlement for goods/services sold. This is a digital platform payout representing revenue earned. Check KakaoPay business dashboard for gross sales vs fees.

Classification: 사업소득 KRW 350,000 (or gross up if platform fees deducted separately).

Example 3 -- National Pension Premium

Input line (신한은행 Shinhan Bank statement): 2025-04-30 | 국민연금보험료 자동이체 | -268,500 | 잔액 1,450,200

Reasoning: National pension premium (국민연금) KRW 268,500. This is NOT a business expense (필요경비). It is an income deduction (소득공제) -- deducted from total income after business income is computed. The full amount paid is deductible as a social insurance premium deduction.

Classification: EXCLUDE from 필요경비. Record as 국민연금 소득공제.

Example 4 -- Estimated Tax Payment

Input line (우리은행 Woori Bank statement): 2025-11-30 | 국세청 중간예납 | -450,000 | 잔액 3,210,000

Reasoning: Estimated tax (중간예납) payment to NTS. This is a prepayment of income tax -- NOT a business expense. Self-employed persons with prior year tax liability > KRW 300,000 must pay an estimated tax instalment in November.

Classification: EXCLUDE. Record as 중간예납 KRW 450,000 (credit against final liability).

Example 5 -- Business Meal (Entertainment)

Input line (하나은행 KEB Hana Bank statement): 2025-07-22 | 음식점 강남ABC식당 | -88,000 | 잔액 2,125,000

Reasoning: Restaurant meal KRW 88,000. Entertainment expenses (접대비) are deductible but subject to annual limits under NTS rules. Document: date, restaurant, purpose, names of attendees. Without documentation, the deduction is disallowed.

Classification: 접대비 KRW 88,000. Deductible if documented. Subject to annual cap.

Example 6 -- Adobe Creative Cloud

Input line (KEB하나은행 statement): 2025-09-01 | ADOBE SYSTEMS | -80,000 | 잔액 3,870,000

Reasoning: Adobe Creative Cloud monthly subscription KRW 80,000. Business software used for design services. Classified as 소모품비 (consumables) -- subscription. Fully deductible as a business expense.

Classification: 소모품비 KRW 80,000. Fully deductible.

Section 5 -- Tier 1 Rules (When Data Is Clear)

5.1 Business Income Computation Methods

• Legislation — Three methods exist, applied based on revenue and bookkeeping. (Income Tax Act (소득세법) Arts. 27-55)

Business Income Computation Methods Table

Method	Who	How
Double-entry (복식부기)	Required above threshold; option for all	Actual revenue minus actual expenses. Most accurate.
Simplified bookkeeping (간편장부)	Available below threshold	Actual revenue minus documented expenses
Standard deduction (기준경비율 / 단순경비율)	No books maintained	Revenue minus major expenses, then multiplied by standard rate

5.2 Tax Computation Flow

• Tax Computation Flow — Total business revenue (총수입금액) Less: Necessary expenses (필요경비) -- actual or standard rate = Business income (사업소득금액) Plus: Other income (근로소득, 이자소득, 배당소득, 연금소득) = Total income (종합소득금액) Less: Income deductions (소득공제) = Taxable income (과세표준) -- round down to 10,000 KRW Apply national rate table = National income tax (산출세액) Less: Tax credits (세액공제) = National income tax due x 1.10 (add local income tax 10%) = Total tax Less: Withholding credits (원천징수) Less: Estimated tax paid (중간예납) = Final tax due / refund

5.3 Income Deductions (소득공제)

Income Deductions Table

Deduction	Amount
Basic deduction (기본공제)	KRW 1,500,000 per person (self, spouse, dependents)
Additional deduction -- elderly (70+)	KRW 1,000,000 per person
Additional deduction -- disabled	KRW 2,000,000 per person
Pension insurance premium (국민연금)	Full amount paid
National health insurance (국민건강보험)	Full amount paid
Employment insurance (고용보험)	Full amount paid

5.4 Tax Credits (세액공제)

Tax Credits Table

Credit	Amount
Standard credit (표준세액공제)	KRW 70,000 (if no other special deductions claimed)
Child tax credit	KRW 150,000 per child (age ≤ 7: KRW 200,000)
Pension savings credit	12% or 15% of pension contributions (up to limits)

5.5 Estimated Tax / Prepayment (중간예납)

• Estimated tax requirements — Required when prior year comprehensive income tax > KRW 300,000. Amount: approximately 50% of prior year tax. Due: 30 November (payment window: 1--30 November). NTS issues a notice (중간예납세액 납부고지서). (Income Tax Act Art. 65)

5.6 Filing Deadlines

Filing Deadlines Table

Item	Deadline
Comprehensive income tax return	31 May of the following year
Payment	31 May (or in instalments with NTS approval)
Estimated tax (중간예납)	30 November of the current year
VAT return (if applicable)	25 January and 25 July (biannual)

5.7 Penalties

Penalties Table

Offence	Penalty
Late filing (무신고)	20% of tax due (or 40% if fraudulent)
Under-reporting (과소신고)	10% of additional tax (or 40% if fraudulent)
Late payment (납부불성실)	0.022% per day (approx. 8% per year)
Failure to keep records	KRW 200,000--2,000,000

Section 6 -- Tier 2 Catalogue (Reviewer Judgement Required)

6.1 Regime / Method Selection

Choosing between actual expenses (복식부기 / 간편장부) and the standard deduction rate (기준경비율) requires comparing actual documented expenses vs the standard deduction rate applied to revenue. For most service businesses with low costs (consulting, IT), actual bookkeeping yields lower taxable income.

Flag for reviewer to compute both and select the lower-tax method.

6.2 Home Office (가사관련비 按分)

Korea allows apportionment of home expenses for self-employed persons working from home. Acceptable basis: floor area ratio. Utilities, internet, and proportionate rent (if renting) are deductible at the business-use percentage.

6.3 Entertainment Expense Cap (접대비)

Entertainment expenses for sole proprietors are capped under NTS guidance. The annual cap depends on the type of business. Document every meal with names, business purpose, and receipts.

6.4 Vehicle Expenses

Korea allows deduction of vehicle expenses for business-use vehicles. For passenger vehicles used for both business and personal purposes, a vehicle usage log (운행기록부) is required.

Flag for reviewer: Confirm vehicle type, business-use percentage, and documentation method.

6.5 Withholding Credit Reconciliation

Self-employed persons often receive net amounts after 3.3% withholding. At year-end, clients must issue a withholding receipt (원천징수영수증). Reconcile bank inflows against withholding receipts to ensure all income is reported gross and all withholding is claimed as credits.

Section 7 -- Excel Working Paper Template

종합소득세 WORKING PAPER -- Tax Year 2025
납세자 (Taxpayer): _______________  사업자번호: ___________
업종 코드 (Business type code): ___________
장부 방법 (Bookkeeping): 복식부기 / 간편장부 / 기준경비율 [circle one]

A. 총수입금액 (GROSS REVENUE)
  A1. Total business revenue (gross, before withholding) ___________

B. 필요경비 (NECESSARY EXPENSES)
  B1. 임차료 (rent)                           ___________
  B2. 수도광열비 (utilities -- business %)    ___________
  B3. 통신비 (communications -- business %)  ___________
  B4. 여비교통비 (travel)                    ___________
  B5. 접대비 (entertainment -- capped)       ___________
  B6. 광고선전비 (advertising)               ___________
  B7. 소모품비 (consumables / SaaS)         ___________
  B8. 감가상각비 (depreciation)             ___________
  B9. 외주비 (subcontracting)               ___________
  B10. 지급수수료 (professional fees)       ___________
  B11. 기타경비 (other expenses)            ___________
  B12. Total 필요경비                        ___________

C. 사업소득금액 (A1 - B12)                   ___________

D. 소득공제 (INCOME DEDUCTIONS)
  D1. 기본공제 (basic deduction)             ___________
  D2. 국민연금 (pension premiums)            ___________
  D3. 국민건강보험 (health insurance)        ___________
  D4. 기타 공제                              ___________
  D5. Total 소득공제                         ___________

E. 과세표준 (C - D5, round down to 10,000)   ___________

F. 산출세액 (national tax per rate table)    ___________

G. 세액공제 (TAX CREDITS)
  G1. 표준세액공제 / other credits           ___________

H. NATIONAL TAX DUE (F - G1)               ___________

I. 지방소득세 (H x 10%)                     ___________

J. TOTAL TAX (H + I)                        ___________

K. 원천징수 공제 (withholding credits 3.3%) ___________

L. 중간예납 (estimated tax paid)            ___________

M. FINAL TAX DUE / REFUND (J - K - L)      ___________

REVIEWER FLAGS:
  [ ] Business type code confirmed?
  [ ] All withholding receipts (원천징수영수증) collected?
  [ ] Estimated tax (중간예납) credited?
  [ ] Pension/health insurance correctly in 소득공제 (not 필요경비)?
  [ ] Entertainment cap applied?
  [ ] Double-entry threshold checked for this business?

Section 8 -- Bank Statement Reading Guide

Korean Bank Statement Formats

Korean Bank Statement Formats Table

Bank	Format	Key Fields
KB국민은행 (Kookmin)	CSV / PDF	거래일, 거래내용, 출금금액, 입금금액, 잔액
신한은행 (Shinhan)	CSV	거래일자, 적요, 출금액, 입금액, 잔액
우리은행 (Woori)	CSV	날짜, 내용, 출금, 입금, 잔액
KEB하나은행 (Hana)	CSV	거래일, 거래내용, 출금(원), 입금(원), 잔액(원)
카카오뱅크 (KakaoBank)	CSV	거래일시, 거래내용, 출금금액, 입금금액, 잔액
토스뱅크 (TossBank)	CSV / App	날짜, 내용, 금액, 잔액
케이뱅크 (K bank)	CSV	거래일, 내용, 출금, 입금, 잔액

Key Korean Banking Terms

Key Korean Banking Terms Table

Korean Term	English	Classification Hint
타행이체 입금	Transfer from another bank	Potential business income
자동이체 입금	Auto-transfer credit	Regular income from client
카드결제	Card payment	Expense
ATM출금 / 자동화기기	ATM withdrawal	Personal -- investigate
세금이체 / 국세청	Tax payment	Tax payment -- exclude
공과금 자동이체	Utility auto-debit	Business or personal expense
이자입금	Interest credit	Other income
중간예납	Estimated tax prepayment	Tax credit
원천징수 후 수령	Received after withholding	Gross up 3.3%

Section 9 -- Onboarding Fallback

If the client provides a bank statement but cannot answer onboarding questions immediately:

1. Classify all wire transfer credits from non-personal accounts as potential 사업소득
2. Assume all client payments are net of 3.3% withholding -- gross up
3. Mark all 국민연금 and 국민건강보험 auto-debits as income deductions (NOT expenses)
4. Apply conservative defaults: simplified bookkeeping, standard deduction rate
5. Flag all large purchases (> KRW 500,000) for review -- potential capital assets

Present these questions:

ONBOARDING QUESTIONS -- SOUTH KOREA 종합소득세
1. What is your main business type (업종)? Do you have an 업종코드?
2. Did you maintain simplified (간편장부) or double-entry (복식부기) books?
3. What is your total gross revenue for 2025 (before 3.3% withholding)?
4. Did any corporate clients withhold 3.3%? If so, do you have withholding receipts (원천징수영수증)?
5. Did you pay estimated tax (중간예납) in November 2025?
6. Marital status and number of dependents?
7. National pension (국민연금) total paid in 2025?
8. National health insurance (국민건강보험) total paid in 2025?
9. Do you use a vehicle for business? If so, do you keep a driving log (운행기록부)?
10. Did you work from a home office? If so, what % of your home is used for business?

Section 10 -- Reference Material

Key Legislation

Key Legislation Table

Topic	Article
Comprehensive income (종합소득)	Income Tax Act Art. 4
Business income (사업소득)	ITA Art. 27
Necessary expenses (필요경비)	ITA Art. 27, 33-35
Income deductions (소득공제)	ITA Art. 50-55
Tax credits (세액공제)	ITA Art. 56-66
Estimated tax (중간예납)	ITA Art. 65
Bookkeeping obligation	ITA Art. 160
Local income tax	Local Tax Act Art. 86-92

Known Gaps / Out of Scope

• Non-resident Korean-source income
• Financial income global taxation (금융소득 종합과세, > KRW 20M)
• Real estate capital gains (양도소득세)
• Corporate income tax (법인세)
• International income / DTAA

Changelog

Changelog Table

Version	Date	Change
2.0	April 2026	Full rewrite to v2.0 structure; Korean bank formats; local platform patterns (KakaoTalk Pay, Naver Pay, Toss); worked examples
1.0	2025	Initial version

Self-Check

• Business type (업종) confirmed? Standard deduction rate varies by type.
• All client payments grossed up from net-of-withholding amounts?
• Local income tax (10%) added to national tax?
• National pension and health insurance in 소득공제, NOT 필요경비?
• Estimated tax (중간예납) credited against final liability?
• Double-entry threshold checked? Revenue > KRW 75M (services) requires 복식부기.

PROHIBITIONS

• NEVER compute income without confirming the business type (업종) -- standard deduction rates differ by industry
• NEVER treat 3.3% withheld amounts as income -- always gross up to invoice amount
• NEVER include national pension or health insurance as business expenses -- they are income deductions (소득공제)
• NEVER omit the 10% local income tax surtax on national income tax
• NEVER allow income tax or local tax payments as deductible expenses
• NEVER advise on non-resident taxation -- escalate
• NEVER present tax calculations as definitive -- always label as estimated and direct client to their 세무사 for confirmation

Disclaimer

This skill and its outputs are provided for informational and computational purposes only and do not constitute tax, legal, or financial advice. Open Accountants and its contributors accept no liability for any errors, omissions, or outcomes arising from the use of this skill. All outputs must be reviewed and signed off by a qualified professional (such as a 세무사, 공인회계사, or equivalent licensed practitioner in South Korea) before filing or acting upon.

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