A resident corporation (and a nonresident corporation having a permanent establishment in Korea) is required to pay interim corporate income taxes 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 the 2016 interim corporate income tax return no later than August 31, 2016.
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 the corporate income taxes in the prior year due to tax loss or having no taxable income, only the option (ii) above should be applied. The calculation formula of interim corporate income taxes by using the book-closing method is as follows:
Taxes payable = [taxable income for interim period Ⅹ12/6]Ⅹtax ratesⅩ6/12
- (tax exemption/withholding taxes paid and taxes assessed for
the interim period)
If the interim corporate income taxes payable exceeds Won 10 million, such taxes 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 defined small and medium corporation).
If total taxes payable is:
Installment payments can be
broken down as below:
Over Won 10 million
~ up to 20 million
Excess over 10 million
Over Won 20 million
50% or more of taxes payable
Remaining 50% balance
● 1st installment is due together with the filing of the interim tax return within 2 months from the end of the first 6 months of each fiscal year (i.e., August 31 for calendar fiscal year-end).
● 2nd installment is due within 1 month from the end of the filing due date
(i.e., September 30 for calendar fiscal year-end).
Unlike the annual corporate income tax return, there is no additional local income tax payable on interim corporate income tax liability.