🏢 Sole Proprietor vs Corporation Tax Comparison

Korean sole proprietor vs corporation tax calculator. Compare comprehensive income tax (6–45%) against corporate tax (10–25%) on the same annual income, and find the break-even point. Rates in force from 1 Jan 2026.

Korean sole proprietor vs corporation tax comparison. One year of tax only, with all income left inside the business — no director salary, no dividends, no social insurance. Rates come from the Corporate Tax Act art. 55 and the Income Tax Act art. 55, both in force from 1 Jan 2026.

Annual income (×10,000 KRW)

Income after expenses — not gross revenue

Personal deductions (×10,000 KRW)

Applies to the sole proprietor only. Default: 1.5M basic deduction

Small company subject to the 20% bracketCorporate Tax Act art. 55(1)2 — no 10% bracket; 20% up to 20bn KRW

Sole proprietor

Income tax + local

20,938,500 KRW

Effective 20.9%

Tax base	98,500,000 KRW
Income tax	19,035,000 KRW
Local tax (10%)	1,903,500 KRW

Corporation

Corporate tax + local

11,000,000 KRW

Effective 11.0%

Tax base	100,000,000 KRW
Corporate tax	10,000,000 KRW
Local tax (10%)	1,000,000 KRW

Corporation pays 9,938,500 KRW less

Break-even: about 29,700,000 KRW of annual income.

What this leaves out

Director salary and dividends. Taking money out triggers another layer of personal tax.
Social insurance. Regional health insurance depends on assets, so it is excluded on both sides.
Tax credits and exemptions, incorporation and bookkeeping costs.

Rate sources

Corporate Tax Act art. 55, in force 1 Jan 2026 — 10% / 20% / 22% / 25%.
Income Tax Act art. 55 — eight brackets from 6% to 45%.
Local income tax is 10% of the calculated tax.

For reference only. Consult a tax professional for your actual filing.

How to Compare Sole Proprietor and Corporation Tax

Enter annual income after expenses
Adjust the personal deduction applied to the sole proprietor
Tick the small-company box if the 20% bracket applies
Compare both tax burdens, effective rates, and the break-even income

💡 Common Examples

Scenario	Input	Result
Income 50M KRW	50M income, 1.5M deduction	Sole 6,616,500 / Corp 5,500,000
Income 100M KRW	100M income, 1.5M deduction	Sole 20,938,500 / Corp 11,000,000
Break-even income	1.5M deduction, ordinary company	About 29.7M KRW/yr

FAQ

Does incorporating really cut taxes?

At the business level, yes — corporate tax is 10% up to 200M KRW while income tax reaches 35% above a tax base of 88M. But money inside the company is not yet the owner's. Taking it out as salary or dividends triggers personal tax again, so the benefit is deferral rather than permanent savings.

Is the "incorporate above 100M revenue" rule right?

The threshold is income after expenses, not revenue, and on tax alone the crossover is far lower — about 29.7M KRW with only the basic deduction. But that assumes all profit stays in the business; incorporation costs and tax on director salary push the practical threshold higher.

Is the 10% bracket always available?

Yes. Corporate Tax Act art. 55(1) has two tables; companies under subparagraph 2 — mainly real-estate rental companies meeting the conditions in art. 60-2(1)1 — pay 20% all the way to 20bn KRW with no 10% bracket.

Why is social insurance excluded?

Regional health insurance for sole proprietors is assessed on assets as well as income, so it cannot be computed from income alone. Including it on one side only would skew the comparison, so it is excluded from both.

Where do the rates come from?

Directly from the statutory text on the Korean Law Information Center: Corporate Tax Act art. 55 (in force 1 Jan 2026) and Income Tax Act art. 55.

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