Korea to apply global minimum corporate tax rule from 2024

South Korea will apply the global minimum effective corporate tax rate of 15 percent for large businesses starting next year, which will affect about 240 companies including Samsung Electronics Co. and Hyundai Motor Co.

The Ministry of Economy and Finance on Thursday gave a pre-legislation notice about the proposed amendment to the enforcement decrees for the International Tax Adjustment Act related to the implementation of the global minimum corporate tax scheme.

The government plans to receive industry opinions until December 7 before promulgating the revision bill.

Under the global minimum effective corporate rate scheme, if the effective tax rate on income earned overseas by domestic companies is lower than 15 percent, the government will collect the difference.

The key idea of the scheme is to grant additional taxation rights to another country when the effective tax rate of a multinational company in a specific country is lower than 15 percent.

The effective tax rate is taxes subject to adjustment divided by the sum of income adjusted for net income.

The global minimum tax has been introduced to prevent inter-country tax competition by attracting global companies through significant reductions in corporate taxes by each country.

In Korea, the related law was passed in the National Assembly in December last year and is scheduled to be implemented next year.

The application target for the global minimum tax is multinational companies with annual consolidated financial statement sales of more than 750 million euros ($802 million) for two or more of the preceding four business years.

Up to 400 companies under Samsung, Hyundai Motor, SK, LG, Lotte, POSCO, and Hanwha are expected to be subject to the new tax scheme in Korea.