What is this taxes?(Local tax pro rata business portion)

I know that the names of taxes can be quite complicated.

The tax called "Local Tax Pro Rata Business Place Portion" (as per Korean tax law terminology) is a local tax that companies pay every August. 

 

1)Every business should pay this local tax

It's a relatively small amount (50,000 KRW to 200,000 KRW), and the taxes depend on the company's capital amount.

When the capital amount is below 3,000,000,000 KRW (approximately 2,200,000 USD or 2,010,000 EUR), the tax amount is 50,000 KRW. As most SMEs (small and medium-sized enterprises) which are not listed on KOSDAQ or KOSPI in Korea do not require such large capital amounts, your company will likely fall under this 50,000 KRW tax amount.

Criteria	Tax amounts
A corporation whose amount of capital or investment does not exceed three billion won	50,000KRW
A corporation whose amount of capital or investment is more than three billion won but not more than five billion won:	100,000KRW
corporation whose amount of capital or investment exceeds five billion won	200,000KRW
Other corporation	50,000KRW

 

2)There are additional taxes for the space of your office

1)Additional tax for your corporation's floor area

If your office space is more than 330㎡, you should pay 250 KRW per 1㎡.

For example, if your office space is 400㎡ (excluding non-taxable space), you would pay 400 x 250 = 100,000 KRW for your space. Therefore, the total local tax pro rata business portion would be 50,000 KRW + 100,000 KRW = 150,000 KRW.

*It used to seperate with lcoal tax pro rata business portion before, but from

*There are no taxes calculated for the space when the total floor area does not exceed 330 square meters.

2) Local Education tax

Local education tax is added to other taxes. Therefore, the tax base for this tax is usually other local taxes, and the Local Tax Pro Rata Business Portion is no exception.

As a result, 25% is added to the tax amount.

 

3)Let's get back to the tax bill and check each amounts

 

 

• The company's capital amount would be below 3,000,000,000 KRW, so the tax amount is 50,000 KRW.
• The company's floor area would not exceed 330 square meters, so there are no taxes for that.
• The education tax is 25% of the local tax, which amounts to 12,500 KRW (50,000 KRW x 25%).

 

 

 

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G-tax(Seoul, Korea) Tax firm specializing in foreign companies

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