The first question for sole traders and freelancers at Korea’s May income tax return is: double-entry books or simple books? Income Tax Decree Article 208(5) treats you as a simple-books taxpayer if you started this year or your previous year’s revenue is under your sector’s line — 300 million, 150 million or 75 million won. The same sector groups set the simple expense rate (Art. 143(4)) and tax review report (Art. 133) lines. A checker covers all three.
1. Simple books: new this year, or last year’s revenue under 300m, 150m or 75m won by sector.
2. Personal services such as freelancing: 75 million won for books, 36 million for the simple rate.
3. At or above the line you must keep double-entry books — judged on last year’s revenue.
Sector lines — Decree Art. 208(5)2
| Sector group | Simple books if under | Worth noting (ours) |
|---|---|---|
| (a) Farming, mining, wholesale/retail (excl. brokerage), property trading, others | 300 million won | — |
| (b) Manufacturing, food and lodging, utilities, construction (excl. non-residential), residential development, transport, ICT, finance, brokerage | 150 million won | — |
| (c) Property letting, real estate, professional and technical, business support, education, health and social work, arts and sports, associations, repair and other personal services, household employment | 75 million won | Freelance personal services sit here (our reading) |
Revenue includes increases from assessments and excludes sales of business fixed assets. Very small businesses defined by ministry ordinance use those figures, and professionals under Art. 147-2 are excluded from simple books altogether (proviso).
Checker
Updates as you type. Lines are “under” for books and the simple rate, “or more” for the review. Excludes the professions in Decree Art. 147-2, the ministry’s small-business lines, multiple businesses, and the business-services exception in Art. 133(1).
Same groups, two more lines — Arts. 143(4) and 133
| Sector group | Simple expense rate (under) | Tax review report (or more) |
|---|---|---|
| (a) | 60 million won | 1.5 billion won |
| (b) | 36 million won | 750 million won |
| (c) | 24 million won | 500 million won |
| Personal services (VAT-exempt personal services) | 36 million won (in group (b)) | 500 million won |
The simple expense rate needs new-business status or last year under these lines, and this year under the simple-books line too. Details are in simple expense rate; the review in tax review report.
Where the lines fall — our examples
| Example (freelance personal services) | Result | Worth noting (ours) |
|---|---|---|
| Last year 30m, this year 40m | Simple books and simple rate: yes | Last year under 36m |
| Last year 40m, this year 40m | Simple rate: no | Last year 36m or more → standard rate side |
| Last year 80m | Double-entry | 75m or more |
Checklist
- ☐ Which group is your sector in?
- ☐ Judge on last year’s revenue
- ☐ Started this year: simple books
- ☐ Professionals are excluded from the start
- ☐ This year at the review line: file by 30 June
Questions that remain
What if I keep no books?
Income Tax Act Article 81-5 adds a penalty for businesses (except small ones set by Decree) that don’t keep books; the formula didn’t render, so we haven’t set it out.
Two kinds of business?
Article 208(7) converts revenue for mixed businesses; we didn’t set it out, and the checker takes one sector.
Sources
- Korean law database (law.go.kr) — Income Tax Decree Arts. 133, 143(4), 208(5) — source (current text, effective 1 October 2026, No. 36737; checked 19 October 2026). Simple-books lines and revenue scope, professional exclusion, simple-rate lines and both conditions, review lines.
- Korean law database — Income Tax Act Art. 70-2 (effective 1 July 2026).
- Not read. Art. 208(7) mixed businesses, ministry small-business lines, the Art. 147-2 professions, the Art. 81-5 penalty formula.
- What we added. The “worth noting” column and the Korean everyday gloss.
Where to check further
- NTS Hometax — the book type and rate shown on your filing notice.
Written on 19 October 2026. The content is from the source; the glosses are ours.
