Verified Facts
The tax rates in North Korea range from 5% to 30% for personal income, with a corporate tax rate of 14% and a value-added tax (VAT) rate of 4%, and expats need to understand the country's unique tax system and regulations to navigate their tax obligations.
Tax laws change frequently. Always consult a qualified tax professional for advice specific to your situation. This is a general guide only.
Quick Facts
Tax System Overview
North Korea has a territorial tax system, where individuals and businesses are taxed on their income earned within the country, regardless of their residency status. The tax system is designed to encourage foreign investment and trade, while also generating revenue for the government. The residency rules for tax purposes in North Korea are based on the individual's physical presence in the country, with individuals who spend more than 183 days in a calendar year considered tax residents.
The tax system in North Korea is complex and subject to change, with different tax rates and regulations applying to different types of income and businesses. The government has introduced various incentives to attract foreign investment, including tax holidays and reduced tax rates for certain industries. However, the tax system is also subject to international sanctions and restrictions, which can impact the ability of individuals and businesses to conduct international transactions.
Personal Income Tax
| Income Bracket (KPW) | Tax Rate |
|---|---|
| 0 - 50,000 | 5% |
| 50,001 - 100,000 | 10% |
| 100,001 - 200,000 | 15% |
| 200,001 - 500,000 | 20% |
| 500,001 and above | 30% |
| The personal income tax system in North Korea has a progressive tax rate structure, with higher income earners paying a higher tax rate. Individuals are entitled to deductions and allowances for certain expenses, such as housing and education costs. The tax filing requirements in North Korea are relatively straightforward, with individuals required to file a tax return by the end of March each year. |
Corporate & Business Tax
- The corporate tax rate in North Korea is 14%, which is relatively low compared to other countries in the region.
- Small businesses and start-ups may be eligible for tax incentives, such as reduced tax rates or tax holidays, to encourage entrepreneurship and job creation.
- North Korea has established several free trade zones, which offer preferential tax treatment and other incentives to foreign investors.
- Businesses are required to register with the relevant tax authorities and obtain a tax identification number to conduct business in North Korea.
- Foreign companies operating in North Korea are subject to withholding tax on certain types of income, such as dividends and interest payments.
VAT / Sales Tax
- The standard VAT rate in North Korea is 4%, which applies to most goods and services.
- Certain goods and services, such as basic necessities like food and clothing, are exempt from VAT or subject to a reduced rate of 2%.
- Tourist refund schemes are available for foreign visitors, allowing them to claim a refund of VAT paid on certain purchases.
- Businesses are required to register for a VAT identification number and file regular VAT returns to comply with tax regulations.
For Expats & Foreign Workers
- Expats and foreign workers are considered tax residents in North Korea if they spend more than 183 days in the country in a calendar year.
- North Korea has double taxation treaties with several countries, including China and Russia, to avoid double taxation of income.
- Expats and foreign workers are required to register with the relevant tax authorities and obtain a tax identification number to work in North Korea.
- Social security contributions are mandatory for expats and foreign workers, with the employer and employee each contributing a portion of the employee's salary.
- Expats and foreign workers are subject to remittance rules, which regulate the transfer of funds out of the country.
- Foreign workers may be eligible for tax relief on certain types of income, such as foreign-earned income.
Crypto & Investment Income
- Investment income, such as dividends and interest, is subject to tax in North Korea, with a withholding tax rate of 10% applying to certain types of income.
- Cryptocurrency transactions are subject to tax, with gains from the sale of cryptocurrencies considered taxable income.
- Capital gains tax applies to the sale of assets, such as real estate and securities, with a tax rate of 10% applying to gains.
- Foreign investors are subject to tax on foreign-source income, with the tax rate depending on the type of income and the investor's tax residency status.