Summary
- Korea’s Ministry of Economy and Finance unveiled its 2026 Tax Reform Plan on 3 August 2026, a package spanning corporate tax, international tax, VAT, customs, employment tax, real estate and business-succession relief.
- For indirect tax, the plan proposes changes to the VAT rules for cross-border services and introduces a new customs compliance programme for eligible importers, alongside a higher flat tax rate for qualifying foreign employees.
- International-tax measures include cutting the CFC low-tax threshold from 17.5% to 15% and granting foreign tax credit relief for qualifying foreign QDMTTs; the proposals go to public consultation before reaching the National Assembly in early September 2026.
Extended article
Korea’s Ministry of Economy and Finance (MoEF/MOFE) released its proposed 2026 Tax Reform Plan on 3 August 2026, a comprehensive package designed to strengthen growth potential, support households and reform the tax system. Headline business measures include a new tax credit for qualifying domestic production in strategic sectors, enhanced incentives for regional investment and R&D, and expanded support for future energy technologies.
For indirect tax and trade, the plan proposes changes to the VAT rules for cross-border services and introduces a new customs compliance programme for eligible importers – a trusted-trader-style mechanism intended to streamline clearance and reduce compliance friction for reliable importers. It also raises the preferential flat tax rate for qualifying foreign employees and revises real estate taxation and family-business inheritance relief.
On the international-tax side, the package incorporates the OECD/G20 Pillar Two Side-by-Side Package into Korea’s global minimum tax rules, allows foreign tax credits for qualified domestic minimum top-up taxes (QDMTTs), reforms treasury-share taxation, and reduces the controlled foreign corporation (CFC) low-tax threshold from 17.5% to 15% to align with the GloBE minimum rate. The proposals are subject to public consultation and Cabinet review and are expected to reach the National Assembly in early September 2026, with most measures taking effect from 1 January 2027 if approved.
Sources: Samil PwC – Tax News Flash (2026.8.4); EY – Korea 2026 tax reform coverage.
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