Overview of Withholding Tax Reports for Korea

In Korea, companies are required to withhold tax on certain types of income payments to their suppliers.

Korean companies pay the supplier invoice net of the withheld amount, issue a withholding certificate for the withheld amount to the supplier, and remit the withheld tax to the proper tax authority.

There are two types of withholding under Korean tax law: Income withholding and Resident withholding. Income withholding comprises Business withholding and General withholding.

• Income withholding: Here are the different types of Income withholding taxes:

  • Business withholding: Withholding on payments for professional services to suppliers, such as lawyers, accountants, and doctors.

  • General withholding: Withholding on all other types of income payments to suppliers, such as interest, dividends, and real estate income payments.

• Resident withholding: A surcharge on the General and Business withholding taxes.

Normal operating expenses, such as purchase transactions between companies, aren't subject to withholding tax.

The Korean Withholding Tax business flow is almost the same as the standard process in the AP module. However, the Korean Withholding Tax system necessitates reporting of additional information with predefined report formats.

Here are the different Korean reports:

• Resident Business Income Withholding Form for Korea

• Resident General Income Withholding Form for Korea

• Nonresident General Income Withholding Form for Korea

• Resident Business Income Withholding Tape for Korea

• Resident General Income Withholding Tape for Korea

• Nonresident Business and General Income Withholding Tape for Korea

• Withholding Tax List Summary

For more information on how to manage withholding tax for Korea and the reporting format requirements, see the related topics.