Important South Korean Tax Reporting Requirements Coming Due (for the fiscal year ended December 31, 2025)
5/26/2026
- Guidance on CbC reporting requirements
The Korean tax authorities have adopted the requirements to comply with the country-by-country (CbC) reporting in line with the recommendations by the Organization for Economic Co-operation and Development (OECD) following the implementation of the new transfer pricing rules requiring multinational companies in Korea to submit local files and master files on their cross-border transactions, which is effective for the fiscal year starting on or after January 1, 2016.
With the adoption of this CbC reporting requirement under the Korean tax law, a Korean taxpayer of a multinational group whose consolidated revenue exceeds the threshold prescribed by the relevant Presidential Enforcement Decree is required to file the CbC reports within twelve months from the fiscal year-end. The CbC reports must include information on a multinational group’s revenue in each country, profit or loss before income tax, amount of tax payment, etc.
With regard to this, the Korean taxpayers (i.e., a Korean ultimate parent company, a taxpayer whose ultimate controlling shareholder is established in a foreign country) are required to submit the application for the information concerning the CbC reporting obligator to the Korean tax authorities within six months from the fiscal year-end (e.g., by June 30, 2026, for the taxpayers having the fiscal year ended December 31, 2025).
Other key points of the government’s guidance include:
1. CbC reporting obligator
Korean ultimate parent company
In the case where the ultimate parent company is a domestic company or a resident of Korea, the CbC reporting obligator is the domestic parent company preparing the consolidated financial statements of a multinational group whose consolidated revenue exceeds KRW 1 trillion during the preceding fiscal year.
Korean affiliate of foreign ultimate controlling shareholder
In the case where the ultimate parent company is a foreign (non-Korean) company or a non-resident of Korea, the CbC reporting obligator is a Korean affiliated company of a multinational group whose consolidated revenue in the preceding fiscal year exceeds the threshold below.
- If there is an obligation to submit a CbC report under the laws and regulations of the country where the foreign ultimate controlling shareholder is established: the threshold prescribed by the laws and regulations
- If there is no obligation to submit a CbC report under the laws and regulations of the country where the foreign ultimate controlling shareholder is established: EUR 750 million (or equivalent)
The Korean affiliate that has submitted ‘the application for the information concerning the CbC reporting obligator’ may not submit a CbC report to Korean tax authorities if any of the following conditions are met:
(1) There is an obligation to submit a CbC report under the laws and regulations of the country where the ultimate parent company is established and that CbC report is exchanged in accordance with the tax treaty with Korea; or
(2) Other Korean affiliates submit CbC report on behalf of the Korean affiliate; or
(3) The foreign ultimate company delegates the obligation of submitting CbC report to an affiliate in a third country and that CbC report is exchanged in accordance with the tax treaty with Korea.
2. Covered scope of entities
A CbC reporting obligator is required to prepare and submit a CbC report for affiliate companies that belong to a multinational group as below.
- Companies included in the consolidated financial statements of the multinational group
- Companies that are subordinate to the ultimate parent company of the multinational group, but excluded from the consolidated financial statements for the reason of size or importance
- Permanent establishments of the companies of the multinational group which prepare separate financial statements.
- Transfer pricing documentation requirements
Under the Korean International Tax Coordination Law (“ITCL”), a taxpayer (excluding a taxpayer who is required to submit a Master File and Local File) that conducts cross-border transactions with overseas foreign related parties (“OSRP”) shall submit the following documents to the Korean tax authorities, within six months from the end of the fiscal year (e.g., by June 30, 2026, for the taxpayers having the fiscal year ended December 31, 2025):
a. Schedules of international transactions (with OSRP) [Form No. 16]
b. Report on the method of the arm’s length price determination [Form No.18, 19, 20]
c. Summary Profit and Loss statement of OSRP [Form No.17]
- Global minimum tax (GloBE Rules) filing requirements
The first regular filing period for Korea’s Global Minimum Tax (“GMT” or “Pillar Two”) for FY2024 began on May 1, 2026. Domestic constituent entities of in-scope multinational enterprise (“MNE”) groups are required to complete the relevant filings and, where applicable, make any related top-up tax payments by June 30, 2026.
The GMT rules were introduced as part of the OECD BEPS 2.0 project and are intended to ensure that MNE groups are subject to a minimum effective tax rate (“ETR”) of 15% on a jurisdictional basis. Korea introduced the GMT regime through amendments to the Korean International Tax Coordination Law (“ITCL”) in 2022, and the rules apply to fiscal years beginning on or after January 1, 2024.
As this marks Korea’s first GMT filing cycle, foreign-invested companies and Korean branches of foreign corporations should review their Korean filing obligations and compliance requirements in advance.
1. Scope of application
The GMT rules apply to constituent entities of MNE groups whose consolidated revenue was at least EUR 750 million in at least two of the four preceding fiscal years. For FY2024, the revenue threshold is tested based on the consolidated revenue of the MNE group for FY2020 through FY2023.
Foreign-invested companies should note the following:
- Korean filing obligations may arise even where the ultimate parent entity (“UPE”) is located outside Korea;
- Korean filing obligations may still apply even if the UPE jurisdiction has not yet implemented Pillar Two rules; and
- Korean branches or permanent establishments (“PEs”) of foreign corporations may also fall within the scope of the rules.
Certain excluded entities, including governmental entities, international organizations, non-profit organizations and pension funds, are outside the scope of the GMT rules.
2. Overview of Korea’s GMT framework
The GMT rules apply in the following order:
① Qualified Domestic Minimum Top-up Tax (“QDMTT”)
② Income Inclusion Rule (“IIR”)
③ Undertaxed Profits Rule (“UTPR”)
For FY2024, Korea applies the IIR. Accordingly, where foreign subsidiaries or foreign branches are subject to an ETR below 15% in a particular jurisdiction, Korean parent entities may be required to report and pay top-up tax in Korea under certain circumstances. In particular, additional review may be required where the Korean entity qualifies as an Intermediate Parent Entity or a Partially-Owned Parent Entity (“POPE”).
3. GMT filing obligations
GMT-related filings in Korea consist of (i) the GloBE Information Return (“GIR”), (ii) the Notification of Foreign Constituent Entity (“GIR Notification”), and (iii) the Top-up Tax Return.
In principle, all Korean constituent entities of an in-scope MNE group are required to file the GIR. However, exemptions may apply where a designated Korean entity files on behalf of the group, or where an overseas constituent entity files the GIR in a jurisdiction that has an effective automatic exchange of information agreement with Korea.
Nevertheless, even where the GIR is filed overseas, Korean constituent entities may still be required to separately submit the GIR Notification in Korea. Accordingly, foreign HQs should separately review Korean local filing obligations regardless of whether a global GIR filing is being made overseas.
Summary of GMT Filing Types and Filing Obligations:
Document type
Requirement details
GloBE Information Return (GIR)
In principle, required for all domestic constituent entities
Submission is waived if:
(A) Another domestic entity files on behalf.
(B) A foreign entity files with a tax authority that has an active automatic information exchange agreement with Korea.
Notification of Foreign Constituent Entity (GIR Notification)
Even if domestic constituent entities qualify for GIR filing exemption (B) above, they are still required to file this notification with the Korean tax authorities by the GIR deadline.
Top-up Tax Return
Any domestic constituent entity with an actual tax liability must submit the Top-up Tax Return.
4. Filing methods
The GIR may only be submitted electronically through the Korean Hometax system, as it is intended for automatic exchange of information between tax authorities. The GIR may be submitted either by uploading an XML file or by directly entering information into the Hometax system.
In contrast, the GIR Notification and the Top-up Tax Return may be submitted either electronically through Hometax or in paper form. The Top-up Tax Return may also be submitted via VSAM file upload.
5. Filing deadline and penalties
For the initial year of application (FY2024), the filing deadline is 18 months from the fiscal year-end. Accordingly, for calendar-year taxpayers, the filing and payment deadline is June 30, 2026. Failure to timely submit the GIR or the GIR Notification, or submission of false information, may result in administrative penalties of up to KRW 100 million.
However, for transitional fiscal years (FY2024 through FY2027), certain penalty relief measures may apply if statutory requirements are satisfied. In addition, certain penalty reduction measures are also available for FY2024.
- Guidance on overseas financial account reporting
Under the ITCL, if Korean resident individuals or domestic companies have financial accounts opened with overseas financial institutions and the total value of such accounts exceeds KRW 500 million on any last day of each month of the relevant year, the Korean residents and domestic companies are required to file a report on their overseas financial accounts to the Korean tax authorities from June 1 to 30 of the following year.
For the purpose of reporting on overseas financial accounts, each of the following persons shall be deemed to hold the relevant foreign financial account:
- Where the actual holder of a foreign financial account is different from the nominal account holder, such as an account not under a real name: The nominal holder and the actual holder
- Where a foreign financial account is an account in joint names: Each joint holder
In the case where Korean resident individuals or domestic companies who are required to report their overseas financial accounts fail to report their financial accounts by the reporting deadline or underreport the relevant amount, an administrative fine shall be imposed in an amount equal to the lesser of:
- KRW 1 billion; and
- 10% of the aggregate of the unreported and underreported amounts for each reportable account
In addition, if the non-reported or underreported amount exceeds KRW 5 billion, the Korean resident individuals or domestic companies that violated reporting requirements can be subject to imprisonment of up to 2 years or a fine equivalent to the amount between 13/100 and 20/100 of the amount of breach of an obligation to report.