The South Korean Ministry of Finance and Economy proposed a broad package of corporate and international tax reforms. A central part of the proposed reform is updating Korea’s global minimum tax rules to align with the OECD/G20 Inclusive Framework’s Pillar Two Side-by-Side Package. Additionally, several measures are aimed at strengthening domestic investment and economic activity. However, the proposals are not yet final and will undergo cabinet consultation before being submitted to the National Assembly.

Key Proposed Tax Measures

As part of efforts to make Korea’s system more consistent with the OECD’s Global Anti-Base Erosion (GloBE) Model Rules, the government proposed incorporating the OECD’s new Pillar Two Side-by-Side Package into its domestic global minimum tax rules. To achieve this, the proposal would introduce several new safe harbors.

These would include a Side-by-Side (SbS) safe harbor and an Ultimate Parent Entity (UPE) safe harbor for eligible jurisdictions, as well as safe harbors for substance-based tax incentives (SBTI) and simplified effective tax rate (ETR) calculations. All mechanisms are designed to simplify the application of the global minimum tax and reduce the compliance burden on multinational enterprise groups.

The proposed changes would particularly benefit multinational enterprises (MNEs) in countries that operate minimum tax regimes aligned with the GloBE Rules. If approved, the new safe harbor provisions would apply to GloBE Information Return (GIR) filings and top-up tax return filings made on or after January 1, 2027.

Other proposed tax measures focus on reinforcing future growth engines and regional economic growth, reforming tax incentives and preferential tax regimes, and updating technical and administrative rules and procedures.

Conclusion

Overall, the proposed reforms mark a significant step toward aligning Korea’s corporate tax framework with international Pillar Two standards while promoting strategic domestic production, R&D, and regional investment. The proposals will first undergo cabinet consultation and are expected to be submitted to the National Assembly in early September 2026. If approved, most measures are scheduled to take effect from January 2027.