Foreign Firms' South Korean Tax Bills Up Sharply Last Year

by Mary Swire, Tax-News.com, Hong Kong

08 January 2007

The amount of corporate tax paid by foreign companies operating in South Korea more than doubled in respect of 2005 compared with the previous year, according to the National Tax Service (NTS).

The NTS has revealed that foreign companies paid a total of 902.1 billion won (US$909.5 million) in corporate tax last year, up 129% on the previous year's take.

Foreign companies filing tax returns in South Korea for 2005 numbered 1,242. They paid an average of 730 million won in corporate tax, the tax agency said. This compares with an average annual corporate tax bill of 394 million won for 2004.

The increase in the amount of corporate tax paid by foreign firms has also pushed up their overall contribution to the national corporate tax take last year, to 3.4.% from 1.8%.

The combined corporate tax take from domestic and foreign firms reached 26.7 trillion won last year, up almost 25%. The government attributed this increase to the won's appreciation against the US dollar, which pushed up banks' foreign exchange gains and therefore boosted their taxable income.

Meanwhile, the 8,691 foreign individuals who filed a tax return in South Korea last year contributed 67.8 billion won to the national coffers, an increase of 51%.

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