Direct Tax

Enterprise Income Tax, Personal Income Tax, Property Tax, Inheritance Tax

Indirect Tax

Turnover Tax

Local Tax

City management Tax, Registration and License Tax, Vehicle Tax

Scope of Taxation

* Earnings derived from business activities in North Korea.
* Other incomes earned in North Korea, including interest, income from dividends, proceeds from the lease or sale of fixed assets, proceeds from the transfer of assets, royalties on industrial properties and know-how and management fees.
* Incomes earned through its branches, agencies or subsidiaries established outside North Korea.

Tax Rate

* For foreign investment-business enterprise in other parts of North Korea : 25%
* For foreign investment-business enterprise in the Free Economic and Trade Zone : 14%
* For foreign investment-business enterprise in preferential sectors : 10%

Other incomes such as income from dividends, interest, rent, royalties or other sources in North Korea:

• 20% in other parts of North Korea
• 10% in the Free Economic abd Trade Zone

Tax Incentive

The enterprise income tax not to be paid or to be reduced in the following cases:

·         When a foreign government or an international financial institute grants credit to the North Korean Government or the state bank, or a foreign bank grants a loan under favourable terms and conditions to a North Korean bank or enterprise, incomes from interest payments on such credit or loans to be exempt from income tax.

• Foreign investment-business enterprise in a preferential sphere, and in the production sectors in the Free Economic and Trade Zone to be entitled to full exemption from enterprise income for 3 years after the first profit-making year and to a tax reduction of up to 50% for the following two years, provided it is operated for duration of at least 10 years.
• A foreign investment-business enterprise in service sectors to be entitled to full exemption from enterprise income tax for 1 year after the first profit-making year and to reduction of uo to 50% for the following 2 years, provided it is operated for a period of least 10 years.
• A foreign investment-business enterprise engaged in infrastructure development, such as railways and roads, communication, airports and ports, in the Free Economic and Trade Zone with a total investment for at least 60 million won to be granted full exemption from enterprise income tax for 4 years after the first profit-making year and a deduction of up 50% for following 3 years.

Scope of Taxation

·         Income from remuneration for work

·         Income from dividends

·         Earnings from industrial property, know-how and copyright

·         Income from interest payments

·         Income from lease and other income from rent

·         Proceedsfrom the sale of assets

·         Income from gifts

·         Income from individual enterprise

Tax Rate

* Monthly income which is less than 2,000 won to be exempt from individual income tax
* Monthly income which is more than 2,000 won : 4%-20%
* Income from dividends, Earnings from industrial property, technical know-how and copyright, Income from interest payments and income from rent : 20%
* Income from gifts : 2%-12%
* Proceeds from the sale of assets and Income from individual enterprise : 25%

Scope of Taxation

* Building, vessels ro aircraft owned by a foreign individual in North Korea.
* Buildings owned in the Free Economic and Trade Zone to be exempt for 5 years.

Tax Rate

·         Buildings : 1% of registered value

·         Ships : 1.4% of registered value

·         Aircraft : 1.4% of registered value

Scope of Taxation

* Property in and outside North Korea inherited by a foreign individual resident.
* The remaining value of the property inherited, after all outstanding debts relating to it is settled

Tax Rate

* The value of the property inherited which is less than 200,000 won to be exempt
* The value of the property inherited which is more than 200,000 won : 6% - 30%

Scope of Taxation

·         Product sales revenue in production sectors

·         Goods sales revenues in commercial sectors

·         Revenues from services in service sectors in transport, banking and tourism

Tax Rate

·         Production sector : 1.5-20% of sales revenue, 12-60% on restricted goods such as cigarettes and alcohol

·         Commercial sector : 2% of sales revenue

·         Service sector : 2-4% of service revenue