Don’t Forget to Pay Your Local Income Tax (Business Place Portion) by August 31

Hello everyone,

Here’s an important reminder for all business owners: it’s time to settle the Local Income Tax (Business Place Portion). The deadline is August 31, so be sure to mark your calendars. 🗓️

🧐 What is the Local Income Tax (Business Place Portion)?

This is a local tax imposed on business establishments within a municipality, calculated based on the gross floor area.

Simply put, it reflects a business’s contribution to the local community by virtue of its presence in that area. Both individual and corporate business owners are required to pay.

✅ Who Needs to Pay?

1. Individual Business Owners

• Those with a VAT taxable base of 80 million KRW or more in the previous year.
• For VAT-exempt businesses, the total revenue under the Income Tax Act applies.

2. Corporate Business Owners

• All corporations with a business establishment must pay, regardless of size.

📏 Tax Base

• Assessed as of July 1 each year, based on the business place and its gross floor area.

💰 How is the Tax Calculated?

1. 1. Basic Local Income Tax Individual business owners: 50,000 KRW Corporate business owners: Capital exceeding 5 billion KRW → 200,000 KRW Capital exceeding 3–5 billion KRW → 100,000 KRW Capital 3 billion KRW or less → 50,000 KRW Other corporations: 50,000 KRW
2. 2. Individual business owners: 50,000 KRW
3. 3. Corporate business owners: Capital exceeding 5 billion KRW → 200,000 KRW Capital exceeding 3–5 billion KRW → 100,000 KRW Capital 3 billion KRW or less → 50,000 KRW Other corporations: 50,000 KRW
4. 4. Capital exceeding 5 billion KRW → 200,000 KRW
5. 5. Capital exceeding 3–5 billion KRW → 100,000 KRW
6. 6. Capital 3 billion KRW or less → 50,000 KRW
7. 7. Other corporations: 50,000 KRW
8. 8. Additional Tax on Floor Area For establishments exceeding 330㎡, an additional tax applies: (Excess area × 250 KRW)
9. 9. For establishments exceeding 330㎡, an additional tax applies: (Excess area × 250 KRW)
10. 10. (Excess area × 250 KRW)
11. 11. Local Education Tax 25% of the basic Local Income Tax amount (10% in smaller cities).
12. 12. 25% of the basic Local Income Tax amount (10% in smaller cities).

📝 Example Formula

👉 Basic Tax Amount + Floor Area Tax + Local Education Tax = Final Payable Amount

⚠️ Penalties for Late Filing/Payment

Missing the deadline can result in additional charges:

• Failure to file: 20% of the payable tax
• Underreporting: 10% of the underreported tax
• Late payment: (Unpaid tax × number of delayed days × 0.00022)

Timely payment will help you avoid unnecessary costs.

📮 How to Pay

• A payment notice will be mailed to each business establishment in early August.
• If the floor area on the notice is inaccurate, corrections must be filed online.

✨ Final Note

August may be a busy month, but don’t overlook this important tax obligation. Take a moment to review your payment notice and complete your Local Income Tax (Business Place Portion) filing by August 31. Handling it early will give you peace of mind later. 👍

If you need assistance with tax, accounting, or other business-related matters in Korea, please feel free to reach out to me (alicia.chung@beyul.co.kr) or Beyul Accounting Corporation (Alicia Eunhee Chung, Partner, CPA) anytime.