Short answer: a new Korean company chooses its own fiscal year-end in its articles of incorporation, as long as each business year is no longer than 12 months. If you incorporate in November or December 2026 with a 31 December year-end, your first business year may last only a few weeks. It still triggers a VAT return by 25 January 2027 and a full corporate tax return by 31 March 2027.
This guide is for foreign companies planning a Korean subsidiary between now and early 2027. It covers how the first business year works, what a short first year still requires, and how to pick an incorporation date that avoids extra filings. If you are still choosing a structure or preparing documents, start with our Korea company registration guide, which walks through every step from entity choice to bank account.
Key dates at a glance
| Date | What happens |
|---|---|
| 25 Dec 2026 (Fri) | Christmas: public holiday in Korea |
| 1 Jan 2027 (Fri) | New Year’s Day: public holiday |
| 25 Jan 2027 (Mon) | VAT return for July to December 2026, covering any company that started business in that period |
| 6 to 9 Feb 2027 (Sat to Tue) | Seollal (Lunar New Year) holidays, including a substitute holiday |
| 31 Mar 2027 (Wed) | Corporate tax return for a business year that ended on 31 December 2026 |
How does the fiscal year work for a new Korean company?
Under the Corporate Tax Act, a business year is the accounting period set by law or by the company’s articles of incorporation, and it cannot exceed one year. Most Korean companies use the calendar year, but nothing requires it. Many foreign subsidiaries match their parent’s year-end, for example 31 March, so group reporting lines up.
A new company’s first business year starts on the date it is established through registration and ends on the year-end written in its articles. That is why the incorporation date matters so much in the fourth quarter. A company registered on 10 December 2026 with a 31 December year-end has a first business year of about three weeks.
One detail surprises many foreign finance teams: VAT periods do not follow your fiscal year. Korean VAT always runs on fixed calendar periods (January to June and July to December, with quarterly preliminary returns for corporations), whatever year-end you choose.
What does a short first business year still require?
A first year of a few weeks is still a full tax year. The table below shows the obligations for a company incorporated in December 2026 with a 31 December year-end.
| Obligation | What it involves | First deadline |
|---|---|---|
| Business registration (NTS) | Registering with the district tax office for a business registration certificate. You can apply before you start trading. | Within 20 days of commencing business |
| VAT final return | Covers the period from the business start date to 31 December 2026. Required even with no sales. | 25 January 2027 |
| Corporate tax return | Covers the first business year, including a loss or zero revenue. Local income tax is added at 10% of the corporate tax. | 31 March 2027 (three months after year-end) |
| Interim corporate tax | Not required in the year of establishment. The NTS exempts corporations newly established that year. | None for 2026 |
Each of these filings needs a closed set of books. For a company with only a few weeks of activity, that means an accountant closing the first year in January, at the same time as Korea’s busiest VAT season. Our guide to Korea post-registration deadlines maps the rest of the first-year calendar.
Which corporate tax rates apply in 2026?
Korea’s 2026 tax reform, enacted in December 2025, raised each corporate tax bracket by one percentage point for fiscal years beginning on or after 1 January 2026. A business year that starts in late 2026 falls under these rates.
| Taxable income (KRW) | Corporate tax | With 10% local income tax |
|---|---|---|
| Up to 200 million | 10% | 11% |
| 200 million to 20 billion | 20% | 22% |
| 20 billion to 300 billion | 22% | 24.2% |
| Over 300 billion | 25% | 27.5% |
For what the higher rates mean at year-end close, see our Korea corporate tax rate 2026 guide.
December or January: which incorporation date fits you?
| Option | Works well when | Watch out for |
|---|---|---|
| Incorporate in Nov or Dec 2026, 31 Dec year-end | You need a Korean entity to sign contracts, invoice or hire from early January. | A stub first year: an extra VAT return and a full corporate tax return for a few weeks of activity. |
| Incorporate in early Jan 2027, 31 Dec year-end | You can wait a few weeks to start trading in Korea. | You cannot invoice as a Korean company until registration is done, and late-January work runs into the Seollal holidays. |
| Choose a non-December year-end (e.g. 31 March) | Your parent reports on that year-end and wants one aligned group close. | The tax return falls three months after your year-end, while VAT stays on the calendar periods, so your team tracks two calendars. |
There is no single right answer. The cost of a stub year is mainly accounting time, while the cost of waiting is lost weeks of trading. Decide the year-end before the articles of incorporation are drafted, because changing it later means amending the articles and notifying the tax office.
Which holidays slow down late-year incorporation?
Government offices, courts and banks in Korea close on public holidays. Between now and February, three periods matter: Christmas (25 December 2026), New Year’s Day (1 January 2027), and Seollal from 6 to 9 February 2027, following the Korea Aerospace Administration’s official 2027 calendar.
Holidays in your home country matter just as much. Parent company documents usually need notarisation and an apostille abroad, and in many Western countries the second half of December is the slowest time to get them. If you want a December registration, start the document chain in October or early November.
What if you hire staff in the first weeks?
Hiring adds payroll duties from the first salary: income tax withholding, enrolment in the four major social insurances, and a year-end tax settlement for wages paid in 2026, which employers generally complete with February payroll in the following year. A company that hires in December 2026 therefore has its first year-end settlement within weeks of opening. If your first hire can start in January, the first settlement moves a full year later.
Q4 2026 planning checklist
- Choose the fiscal year-end first, then draft the articles of incorporation around it.
- Start parent company documents now, so Western holiday closures do not delay your apostille.
- Pick a target registration window: early to mid-December, or the first half of January before Seollal.
- If your investment is KRW 100 million or more, file the foreign investment notification before remitting capital.
- Book an accountant early for the 25 January VAT return and the 31 March corporate tax return.
- Plan the first hire date with the year-end settlement in mind.
Frequently asked questions
Can a Korean company choose a fiscal year-end other than 31 December?
Yes. The business year is set in the articles of incorporation and can end in any month, as long as no business year is longer than 12 months. Many foreign subsidiaries match their parent’s year-end.
Does a company incorporated in December 2026 need to file a 2026 corporate tax return?
If its year-end is 31 December, yes. Its first business year runs from the registration date to 31 December 2026, and the corporate tax return is due within three months, by 31 March 2027, even with little or no revenue.
Do new Korean companies pay interim corporate tax in their first year?
No. The National Tax Service exempts corporations newly established in the current year from the interim corporate tax prepayment.
What corporate tax rates apply to Korean companies in 2026?
For fiscal years beginning on or after 1 January 2026, the rates are 10% up to KRW 200 million, 20% up to KRW 20 billion, 22% up to KRW 300 billion and 25% above that. Local income tax adds 10% of the corporate tax amount.
When is the first VAT return due for a company that starts business in December 2026?
By 25 January 2027. The return covers the period from the business start date to 31 December 2026 and must be filed even if the company made no sales.
Sources
- Invest KOREA: Corporate tax and VAT periods
- PwC Worldwide Tax Summaries: Korea tax administration
- EY Global Tax News: Korea enacts 2026 tax reform bill
Work with Pearson & Partners Korea
Pearson & Partners Korea helps foreign companies plan their Korean entity around the dates that matter: fiscal year-end, registration timing, first VAT and corporate tax filings, and payroll setup. Reach us at pearsonkorea.com/contactus or on 02-6952-7579. Our office is at WTC Trade Tower, 30F, 511 Yeongdong-daero, Gangnam-gu, Seoul.
Last updated: 20 October 2026. This article is general information, not legal, tax or investment advice. Rules and dates change; confirm current details with a qualified adviser or the relevant authority before acting.
