Proposed Korean Tax Law Revision for 2027 – Finalized by the Government
The finalized Korean tax reform bill was approved at the Cabinet Meeting on August 27, 2026.
In comparison to the Korean tax reform proposals for 2027 initially announced by the Ministry of Economy and Finance (MOEF), there are significant modifications that are worth noting, as outlined below.
l Retention of the Current Individual Savings Account (ISA) Regime
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Originally Proposed |
Final Government Bill |
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• Contract period - Initial contract period of 3 years - Maximum total contract period of 5 years • Contribution limits - Annual contribution limit of KRW 20 million - Aggregate contribution limit of KRW 100 million - Unused annual contribution limits may not be carried forward • Sunset date - December 31, 2029 |
Current regime retained
- Minimum contract period of 3 years, with no maximum contract period - Unused annual contribution limits may be carried forward - No sunset date
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Reason for revision: To continue supporting individual wealth accumulation.
l Expansion of Support for the Productive Finance ISA
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Originally Proposed |
Final Government Bill |
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• Contract period - Initial contract period of 3 years - Maximum total contract period of 10 years • Contribution limits - Annual contribution limit of KRW 20 million - Aggregate contribution limit of KRW 200 million - Unused annual contribution limits may not be carried forward • Sunset date - December 31, 2029 • Tax benefits - Exemption for interest and dividend income - Additional income deduction equal to 10% of contributions for eligible young subscribers meeting prescribed income requirements • Concurrent participation - Concurrent participation in both a Youth ISA and a Youth Future Savings Account would not be permitted |
Expanded support
- Minimum contract period of 3 years, with no maximum contract period, in line with the general ISA regime - Unused annual contribution limits may be carried forward - No sunset date - Concurrent participation in both a Youth ISA and a Youth Future Savings Account would be permitted
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Reason for revision: To further support individual wealth accumulation and promote the development of Korea’s capital markets.
l Adjustment to the Reinvestment Period for Local Relocation and Special Zone Tax Incentives
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Originally Proposed |
Final Government Bill |
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Companies benefiting from tax incentives for local relocation or entry into a designated special zone would be required to reinvest an amount equal to 30% of the tax benefits received, excluding special rural development tax.
• Reinvestment period - The tax reduction period |
Adjustment to the reinvestment period
• Reinvestment period
From the fiscal year in which the taxpayer commences any of the following activities through the final fiscal year of the tax reduction period: - relocation to a local area; - entry into a designated special zone; - a start-up or establishment of a business site; or - investment in business-use tangible assets |
Reason for revision: To include qualifying investment made before the completion of the local relocation, entry into a special zone, start-up or establishment of a business site in determining compliance with the reinvestment requirement.
l Refinement of Eligibility for the Reduced Withholding Tax Rate on Personal Service Income
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Originally Proposed |
Final Government Bill |
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The withholding tax rate applicable to certain personal service business income would be reduced from 3% to 2%.
However, the current 3% withholding tax rate would continue to apply to insurance salespersons, door-to-door salespersons and beverage delivery salespersons subject to year-end income tax settlement who qualify as simplified bookkeeping taxpayers. |
The current 3% withholding tax rate would continue to apply to insurance salespersons, door-to-door salespersons and beverage delivery salespersons, regardless of whether they qualify as simplified bookkeeping taxpayers.
The proposed reduction of the withholding tax rate from 3% to 2% would otherwise remain unchanged. |
Reason for revision: To rationalize the scope of the exception in consideration of tax compliance costs.