The Constitutional Court of Korea ruled a provision of the Korean Income Tax Act defining the scope of benefits included in “earned income” as constitutional. The Court determined that the provision of the Income Tax Act, which defines earned income as “salaries, wages, remuneration, allowances, bonuses, and benefits of a similar nature received by providing labor,” does not violate the principle of clarity in tax requirements. (2024 HunBa 8384 and 2025Hyun100, etc.). Case Summary Decision of the Korean Constitutional Court on the Clarity of Earned Income Definition
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Can a Foreign Company Doing Business in Korea be Deemed a Domestic Company for Korean Tax Purposes and Taxed on Worldwide Income by the Korean National Tax Services?
If Korea deems a foreign-incorporated company a Domestic Corporation, the company shall be taxed on its worldwide income. The relevant Korean law under which this determination is made is the Corporate Tax Act of Korea (“CTA”). In the typical case, the National Tax Service of Korea designates a foreign-incorporated company as a Domestic Corporation and requests details on overseas earnings to impose tax on the company. Of course, this leads, invariable, to your Korean tax lawyer challenging the determination to the Korean courts. Domestic Company Tax Residency
Continue readingAre Foreign Patents Subject to Taxation in Korea?
Yes. The Korean Supreme Court held that a foreign patent not registered in Korea is subject to taxation if used in a domestic manufacturing process in Korea. The Supreme Court of Korea overturned the lower court’s holding in a lawsuit filed by a U.S. company against a Korean tax office and remanded the case to the Suwon High Court. The case sheds light on the need for carefully drafted agreements with a No Tax Deduction Clause that mandates that all local taxes are the sole responsibility of
Continue readingIPG Legal Expert Opinions on Korean Law for Foreign Courts and Law Firms
As complex cross-border litigation, arbitration, and international transactions continue to increase in Korea, foreign courts and overseas counsel are frequently required to apply or assess Korean law and the Korean legal system. In such cases, accurate and nuanced interpretation of Korean statutes, judicial precedent, and regulatory practice is essential. IPG Legal regularly works with foreign lawyers and courts to provide expert opinions on matters governed by Korean law. We often appear in court and provide legal opinions worldwide. The Role of Korean Law Expert Opinions in Cross-Border
Continue readingCross-Border Estate & Trust Planning for Foreign Residents in Korea and Korean Families with Heirs Abroad
As South Korea continues to attract foreign entrepreneurs, executives, and long-term residents, an increasing number of expatriates and multi-nationality families are discovering that their estate and trust structures, often established under foreign law, do not comply with Korea’s civil-law inheritance system and Korean inheritance and tax laws. When a family member passes, the combination of Korean statutory succession laws, foreign wills, offshore trusts, and cross-border assets can give rise to complex legal conflicts, international tax complexities, and unexpected disputes. Proactive estate planning is therefore essential to prevent
Continue readingKorean Gift Tax Ruling at the Seoul Administrative Court
The Seoul Administrative Court ruled that the Korean National Tax Office violated the Korean Tax Law by basing the appraised value for gift tax purposes on the value of an asset three months after the transaction. Seoul Administrative Court Gift Tax Timing Ruling The Seoul Administrative Court ruled in July 2025 that the Korean National Tax Office’s decision to impose a gift tax on an appraised value calculated several months after a land transaction was a violation of the Korean Tax Law. The Court opined that the
Continue readingPresident Lee Proposes Major Changes to South Korean Prosecution and Budget Drafting Systems
On September 7, 2025, the President Lee Administration announced a plan to overhaul two of the country’s most powerful state functions: prosecution and budget drafting. The proposals, facially, seek to: (i) dismantle the existing prosecution service by splitting investigation and indictment into separate bodies, and (ii) remove budget-drafting authority from the Ministry of Economy and Finance (MOEF) to a newly created independent budget agency. The Lee administration frames this reform as a combination of decentralization and modernization. The Lee Administration claims that this plan is better suited
Continue readingConstitutional Court Upholds Special Tax Rules for Family Business Succession
On July 17, 2025, the Constitutional Court of Korea issued a significant ruling regarding the application of special tax exemptions for family business succession. In a unanimous decision, the Court held that certain provisions of the former Special Tax Treatment Control Act of Korea (Article 30-6, Paragraphs 1 and 2) do not violate the Korean Constitution, reaffirming the government’s authority to provide tax incentives for business succession while setting specific requirements through presidential decrees. The case is one of the many cases at the Constitutional Court upholding
Continue readingKorean Tax Audits: Fine for Failure to Comply with Request for Documents in Tax Audits
Korea implemented a system to fine taxpayers for the failure to comply with a request for documents during an audit at the Korean National Tax Service. With the facial purpose of enhancing the efficiency of the Korean National Tax Service audit procedure, the amendment establishes a fine for failure to comply with requests for documents on or after September 15, 2025. The Korean tax audit process typically begins with the Korean National Tax Service (“NTS”) selecting a business or individual for an audit based on, usually, discrepancies
Continue readingKorean Inheritance Tax Abolition for Spouses of Decedents under Korea’s Inheritance Tax Law
South Korea, as an effective inheritance tax rate, has one of the highest gift and inheritance taxes in the world. IPG Legal works with expats and the families of Korean and foreign nationals on Korean inheritance, gift tax, estate planning, and other complex international estate and family law matters, and many of our clients welcome the proposed revision to Korea’s Inheritance Tax and Gift Tax Act and are hoping that Korea shall move to amend the law to allow more exemptions and exclusions. For other articles on
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