South Korea to Apply a QDMTT from January 1, 2026

Koreas 2025 Tax Reform Proposal (announced on July 31, 2025), provides that a QDMTT will be applied from January 1, 2026.

The Tax Reform Proposal is high level and much of the detail will be left to Regulations, however, it provides:

-A new Article 73-2 of the International Tax Adjustment Act to apply a QDMTT where a domestic constituent company of a multinational group is taxed at a rate lower than 15%.

The QDMTT tax amount is distributed to each domestic constituent company and taxed.

The calculation of the QDMTT is based on the general GloBE rules ie:

QDMTT = [(15%) – Effective tax rate of domestic constituent companies]
× Excess profit + Additional tax for the current period

The Excess profit is net GloBE income less the substance-based income exclusion.

Regulations are to provide more detail on the on the distribution of the QDMTT to domestic entities, however, the Tax Reform Proposal provides for 2 options:

1.The Statutory Distribution method where the amount is distributed in proportion to the income of each constituent company in the relevant fiscal year

2.A Designated Distribution method based on agreement between domestic constituent companies

It also provides that the QDMTT applies to Stateless entities.

-Amended Articles 63-84 of the International Tax Adjustment Act are to apply the standard GloBE filing and payment deadlines for QDMTT purposes (15 months after the end of the relevant fiscal year (18 months in the transitional year)).

-Amended Article 74 of the International Tax Adjustment Act applies the de minimis exemption for QDMTT purposes.

-Amended Articles 75 and 77 of the International Tax Adjustment Act apply the special rules for minority-owned constituent entities and joint ventures for QDMTT purposes.

-Amended Article 79 of the International Tax Adjustment Act apply the special rules for investment entities for QDMTT purposes.

-Amended Article 80 of the International Tax Adjustment Act applies the Transitional CbCR Safe Harbour for QDMTT purposes.