Corporate tax return due March 31: start preparing in November

This guide is for finance staff, foreign founders and managers of Korean corporations whose business year ends on December 31. The corporate tax return (법인세 신고) is due on March 31 and the local corporate income tax return at the end of April. Start in November, while the accounts can still be corrected.

Why start in November, not February

Many companies see the March 31 deadline and start in February. Collecting closing data and deciding tax adjustments (세무조정, the changes that turn accounting profit into taxable income) then fall in the same month. If data arrives late, there is no time left to decide.

In November the business year has not ended, so it is the last stretch in which you can still correct the accounts. After December 31, you can only explain numbers that are already recorded. Correcting and explaining are different jobs. The return usually gets hard when work starts in February.

The financial statements are made three times

Three versions come out in order: a provisional version (잠정본), a preliminary closing (가결산본) and a final version (확정본). Treating them as one document causes trouble later. A typical case: a provisional figure shared to explain funding is later copied into an application or a contract.

Numbers move between the preliminary and final versions. Depreciation is newly recorded, travel and fee expenses rise, and wrongly recorded items drop out. Keep a reconciliation that breaks this difference down by account, so the explanation does not depend on which version someone saw.

Even if the financial statements show corporate tax expense of ₩0, at the filing stage the estimated corporate tax is recorded as an accrued expense and added to income (익금산입) in the Summary of Income Adjustments (소득금액조정합계표). Net income in the financial statements and taxable income for the business year (각 사업연도 소득금액) therefore differ by the estimate. Do not use the two figures interchangeably.

Month-by-month timeline, November to April

Corporate tax and the special tax for rural development (농어촌특별세) are due at the end of March. Local corporate income tax (법인지방소득세) is due at the end of April. Put them on your tax calendar as separate entries: noted as one item, April is the one that gets missed.

If you claim tax credits, first multiply the tax base (과세표준) by the minimum tax rate (최저한세율) to fix the ceiling on the credits and reductions you can use. Without that ceiling, the application can show amounts you cannot actually receive. For the R&D credit, see R&D tax credit pre-review.

Check provisional payments right before closing. Left alone, they build up deemed interest (인정이자) every year and are treated as a bonus to the CEO (대표 상여).

Track the forms by appendix number

Korean tax forms are numbered appendix forms (별지 서식). Called by name, they get confusing every year; tracked by number, a missing form stands out. A small or medium-sized company with a December year-end usually files roughly this set:

Local income tax is separate. File the local corporate income tax return (법인지방소득세 과세표준 및 세액신고서) on Wetax (위택스), the local tax website.

Common sticking points:

• Some filings have been rejected because forms with different revision dates were mixed. Just before you submit, check that each form is the latest revision.
• For the R&D expense tax credit (연구·인력개발비 세액공제), the application and its annex are one set. In the annex, mark each researcher as dedicated (전담), assistant (보조) or other (기타).
• File the depreciation method and useful life reports within the first business year's filing deadline. If you miss it, the declining-balance method (정률법) and the statutory useful life apply. See depreciation method reports for new companies.
• An asset acquired partway through the year is depreciated by month (월할 상각). Check the acquisition month and recalculate.

If this is your first business year

A company must file even if it did no business in its first year. A statement of explanation (소명서) does not remove that duty. It only supports the point that no tax is payable; the return itself is filed separately. See also filing a corporate tax return with zero revenue.

To show there was no activity, build the case on five points:

• The incorporation registration date and the business registration date come before the start of operations.
• The VAT tax base for the period is ₩0.
• There are no sales or purchase tax invoices for the period.
• The workplace subscriber list of the four social insurances (4대보험: national pension, health, employment and industrial accident insurance) shows the first hire in the following year.
• The main corporate bank account was opened in the following year and is the only transaction account.

Attach the certified copy of the corporate register including cancelled entries (등기사항전부증명서, 말소사항 포함), a copy of the business registration certificate (사업자등록증), the VAT tax base certificate (부가가치세 과세표준증명), the social insurance subscriber list and a copy of the corporate bankbook. Attach them from the first year instead of waiting for the tax office to ask, and there will be less to explain later.

Filing the first return on time matters for one more reason. The standard financial statement certificate, which government support programs and guarantee applications ask for, is issued only after you file. If the return is processed as a late filing (기한후 신고), that filing type is printed on the certificate.

After March 31

• Local corporate income tax is due at the end of April. Before filing, ask your tax agent to confirm in writing whether a separate reduction can be applied for on the local income tax.
• Compare the tax base and the net tax payable (차감납부세액) on the filing receipt (접수증) with the return. Transmission omissions show up on the receipt.
• The standard financial statement certificate can be verified as an original for 90 days by its issue number. Time the issue date to the recipient's schedule.
• If you find an omission, a request for correction (경정청구) remains available within 5 years of the statutory filing deadline.

Checklist

• Explain the differences between the three versions by account.
• Quote net income and taxable income for the business year separately.
• Link disallowed business entertainment expenses to the income addition in the Summary of Income Adjustments.
• Keep the tax credit claim within the minimum tax limit.
• Re-evaluate carried-forward tax credits against projected future tax.
• Use one revision for all appendix forms.
• Check for any remaining provisional payment balance.
• Keep balances by account and by counterparty in the supporting schedules (결산부속명세서).
• Clean up late-issued and unissued tax invoices.
• Put corporate tax (end of March) and local income tax (end of April) on the calendar separately.