OCTIS vs individual business vs corporation in South Korea
How the tax, bookkeeping and liability rules differ, and the filing calendar that applies to both.
Last checked · 3 sources
Otty's short answer
At a low tax base an individual business pays less, because Korean income tax runs 6% to 45% on a graduated scale while corporate tax runs 9% to 24%. Above a certain profit the corporation is cheaper, and it limits liability. KOTRA says an individual business that grows may switch to a stock company for tax savings. Both pay 10% VAT and must issue electronic tax invoices.
Side by side
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| What matters | OCTISHong Kong company + OCTIS global plan | Individual business (개인사업자) | Corporation (법인사업자) |
|---|---|---|---|
| Governing law | Inland Revenue Ordinance | Income Tax Act | Corporate Tax Act |
| Tax rate | 8.25% and 16.5% profits tax | 6% to 45% | 9% to 24% |
| Rate at low profit | Two-tier profits tax (8.25% then 16.5%) | Lower tax base is cheaper | 9% up to KRW 200 million |
| Local income tax on top | Not needed for the Hong Kong company; local rules apply if you trade there | Not verified | 10% of corporate tax |
| Financial statements | Audited every year | Only above a size | Every corporation |
| Liability | Limited to unpaid shares | Unlimited, personal | Limited to contribution |
| Who owns the profits | The company first; no tax on dividends paid out | The owner | The company first |
| How to start | Online filing with the Companies Registry; at least 10% below any qualifying quote (Lowest Price Guarantee); government fees included | Business registration at tax office | Court registration, then tax office |
| VAT | No VAT/GST in Hong Kong | 10% domestic sales | 10% domestic sales |
| Electronic tax invoices | Not needed for the Hong Kong company; local rules apply if you trade there | Required for businesses | Required for businesses |
| Corporate tax filing | Profits tax return every year, prepared by OCTIS | Not applicable | Within 3 months after year end |
If you have staff, premises or local sales in this country, its own registration and tax rules still apply. OCTIS can help you arrange them.
Data sources & disclaimer: Comparison data was compiled from publicly available sources — including the competitors' own published pricing and feature pages — captured on 9 November 2026. Figures reflect the typical or advertised pricing at that time and may have changed since; plans, inclusions and prices vary by provider, region and promotion. OCTIS is independent and not affiliated with the named companies; all trademarks belong to their respective owners. This comparison is provided in good faith for general information only and is not professional, legal or financial advice — please verify current details with each provider before deciding.
Which one fits you
OCTIS · Hong Kong company + OCTIS global plan
Choose OCTIS if you want a limited company with the accounts and tax filings handled for you, from anywhere.
Individual business (개인사업자)
Choose an individual business to start fast at low profit, with the least paperwork and no court registration.
Corporation (법인사업자)
Choose a corporation when profit grows, you want limited liability, or you plan to take investors.
What the table does not show
Where the tax crossover sits
KOTRA's guide lists individual income tax at 6% to 45% and corporate tax at 9% to 24%, with 9% on the first KRW 200 million, 19% up to KRW 20 billion, 21% up to KRW 300 billion and 24% above that. Local income tax of 10% of the tax is added for corporations. The guide states only that a corporation has the advantage above a certain tax base, without a figure, so ask a tax accountant to model your numbers.
Duties you cannot skip either way
VAT is reported for two half-year periods with preliminary quarterly reports, due by the 25th of the month after each quarter ends (25 April, 25 July, 25 October and 25 January). The guide puts the domestic VAT rate at 10%. Businesses must issue electronic tax invoices through the National Tax Service's Hometax site or an issuing service, at the time of supply, or face penalties. Ask a Korean tax accountant to model your expected profit against both tax tables.
Liability and who can start
An individual business has no legal separation from the owner, who takes on unlimited liability. A corporation becomes a legal person through court registration, and investors' liability is limited to what they contribute unless the Commercial Act says otherwise. A foreigner who wants to invest in a Korean company enters through the foreign-invested company route, which has its own notification and registration steps.
Where OCTIS fits
OCTIS does not keep books or file tax in Korea. If your Malaysian or Hong Kong company sells into Korea, your Korean tax accountant handles local VAT and tax invoices and OCTIS keeps the home company's books. You can also compare the cost of selling from Malaysia or Hong Kong. Send us your current bill and we come in 10–30% off it.
Frequently asked questions
What is the difference between 개인사업자 and 법인사업자?
An individual business is run by a person under the Income Tax Act with unlimited personal liability. A corporation is a legal person under the Corporate Tax Act with liability limited to what investors contribute.
Which pays less tax in Korea?
At low profit an individual business is usually cheaper. Above a certain profit a corporation is, because income tax reaches 45% and corporate tax is 9% to 24%. KOTRA does not give a break-even figure.
When is VAT due in Korea?
Preliminary and final returns are due by the 25th of the month after each quarter, which means 25 April, 25 July, 25 October and 25 January. The domestic rate is 10%. Use the National Tax Service's Hometax to check the filing dates each year.
Do I have to issue electronic tax invoices?
KOTRA's guide says businesses are obliged to issue them, through Hometax with a digital certificate or an issuing service, at the time of supply.
When must a Korean corporation file corporate tax?
Within three months from the end of the month in which the business year ends, to the tax office with jurisdiction. The tax and local income tax are reported together.
Sources
Checked on the date above. Links open the provider's or regulator's own page.