Entity Setup
Global Minimum Tax (GMT) in Korea: What Multinationals and High-Net-Worth Entities Should Know
Korea’s global minimum tax rules are now active: Pillar Two, QDMTT, and more from Jan 1, 2024-2026. Understand implications for your corporate structure, intercompany transactions, and foreign entities.
By NomadicTax Research Team • 5-8 min read • August 19, 2026
## What is Korea's Global Minimum Tax Regime?
South Korea has implemented the OECD/G20 Inclusive Framework’s **Global Anti-Base Erosion (GloBE)** rules via domestic law under *International Tax Adjustment Act* (국제조세조정에 관한 법률). Key components now effective:
- **Income Inclusion Rule (IIR): from January 1, 2024** ([nts.go.kr](https://www.nts.go.kr/gmt/cm/cntnts/cntntsView.do?cntntsId=239052&mi=41029&utm_source=openai))
- **Undertaxed Payments Rule (UTPR): from January 1, 2025** ([nts.go.kr](https://www.nts.go.kr/webtv/na/ntt/selectNttList.do?bbsId=50850&nttSn=1350916&utm_source=openai))
- **Qualified Domestic Minimum Top-up Tax (QDMTT): from January 1, 2026** ([nts.go.kr](https://www.nts.go.kr/gmt/cm/cntnts/cntntsView.do?cntntsId=239052&mi=41029&utm_source=openai))
## Who Is Affected
- **Multinational enterprise (MNE) groups** with annual consolidated revenues of at least €750 million (approx. 1 trillion KRW). Those with lower size may be indirectly affected through business with large groups. ([nts.go.kr](https://www.nts.go.kr/gmt/cm/cntnts/cntntsView.do?cntntsId=239052&mi=41029&utm_source=openai))
- **Foreign constituent entities** in low tax jurisdictions may trigger top-ups under IIR or UTPR.
- **Domestic companies acting as constituent entities** will need to consider **QDMTT** — paying top-up tax domestically when foreign-earned rates are below 15%.
## Key Rules and Mechanisms
- **Effective Tax Rate (ETR) calculation**: combining covered taxes and income (net profits) across jurisdictions. If ETR < 15%, a top-up tax is due. ([nts.go.kr](https://www.nts.go.kr/nts/na/ntt/selectNttInfo.do?bbsId=1028&mi=2201&nttSn=1349912&utm_source=openai))
- **Real-basis income exclusions**: Certain income such as employee costs or tangible assets receive deductions in calculating minimum base. ([nts.go.kr](https://www.nts.go.kr/nts/na/ntt/selectNttInfo.do?bbsId=1028&mi=2201&nttSn=1349912&utm_source=openai))
- **Safe harbors**: Provisions for compliance extensions or simplified filing early in application, especially for the first reporting years. ([nts.go.kr](https://www.nts.go.kr/nts/na/ntt/selectNttInfo.do?bbsId=1028&mi=2201&nttSn=1349912&utm_source=openai))
- **Foreign tax credits** may be allowed in respect of QDMTT, aligning Korea’s treatment with the international standard. Proposed as part of the 2026 tax revision package. ([english.mofe.go.kr](https://english.mofe.go.kr/?boardCd=N0001&seq=6391&utm_source=openai))
## Practical Implications & Structuring
- **Legal entity planning**: If your holding structure includes multiple Korean constituent entities, you’ll want to centralize or coordinate ETR exposure. Splitting businesses or profit centers may increase risk.
- **Reassess contracts and operations in low tax jurisdictions**: Payments to related parties abroad may trigger UTPR top-ups. Pricing, payments, and profit allocation need review.
- **Review CFC rules (Controlled Foreign Corporations)**: The effective rate threshhold for CFCs is being aligned with the 15% GMT rate. This means criteria for holding foreign subsidiaries and repatriation profits may shift. ([english.mofe.go.kr](https://english.mofe.go.kr/?boardCd=N0001&seq=6391&utm_source=openai))
## What’s Changing in Proposed 2026 Revision Bill
From the Tax Revision Bill introduced August 3, 2026:
- Foreign tax credit rules expanded to include QDMTT.
- Domestic treasury-share taxation updated.
- Adjustments to CFC thresholds to match global minimum tax standards. ([pwc.com](https://www.pwc.com/kr/ko/insights/tax-news-flash/samilpwc_tax-news-flash_260804_en.pdf?utm_source=openai))
## Action Items for Businesses
1. **Map your group’s jurisdictions** and identify ETR exposures across foreign subsidiaries.
2. **Collect data now**: effective tax paid, accounting profits, foreign withholding taxes. A detailed sector schedule will matter.
3. **Monitor proposed bill progress**: most changes are proposed to take effect in 2027. Consider transitional strategies.
4. **Consult international tax counsel** if your supply chain or operations cross many jurisdictions to identify risk of double taxation or unnecessary top-ups.
## Conclusion
Korea’s Global Minimum Tax regime is now largely in force, especially for large MNEs. The upcoming 2026 tax revision bills will further define foreign tax credits, additional compliance burdens, and refine domestic mechanisms. For HNWI or corporations with global exposure, proactive structuring and robust record-keeping will be essential to manage tax liabilities in the evolving landscape.