Article 55 (Calculation of Necessary Expenses for Business Income)

The necessary expenses corresponding to the gross revenue for each accounting period of business income shall be as prescribed in the following subparagraphs, unless otherwise provided by this Act and this Presidential Decree. <Amended by Presidential Decree No. 14849, Dec. 30, 1995, No. 15607, Dec. 31, 1997, No. 16013, Dec. 31, 1998, No. 17063, Dec. 29, 2000, No. 17495, Dec. 31, 2001, No. 18175, Dec. 30, 2003, No. 19332, Feb. 19, 2005, No. 19924, Feb. 9, 2006, No. 20020, Feb. 28, 2007, No. 20609, Feb. 22, 2008, No. 21193, Dec. 31, 2008, No. 21264, Feb. 4, 2009, No. 21928, Feb. 18, 2010, No. 21989, Mar. 15, 2010, No. 22523, Dec. 30, 2010, No. 23397, Dec. 8, 2011, No. 24371, Feb. 15, 2013, No. 24646, Jun. 28, 2013, No. 25179, Feb. 21, 2014, No. 26124, Feb. 3, 2015, No. 26954, Feb. 17, 2016, No. 27860, Feb. 3, 2017, No. 28541, Feb. 13, 2018, No. 29540, Feb. 11, 2020, No. 30468, Feb. 17, 2021, No. 31259, Feb. 29, 2024, No. 31581, Feb. 28, 2025, No. 31718, Dec. 30, 2025> 1. Purchase price of raw materials for goods or products sold (excluding purchase discounts and rebates) and related expenses. In this case, if goods purchased for non-business purposes are used for business, the purchase price and related expenses at the time of initial purchase by the taxpayer shall apply. 1의2. Expenses related to sales, such as storage costs, packaging costs, transportation costs, sales promotion expenses, and sales commissions for goods or products sold (including sales promotion expenses and sales commissions paid without prior agreement). 2. Book value of real estate at the time of transfer (applicable only to the construction of buildings and real estate development and supply businesses). In this case, if real estate acquired for non-business purposes is used for business, the acquisition price calculated by applying Article 89 to the time of initial acquisition by the taxpayer shall be the book value. 3. Expenses for forestry a. Purchase cost of seedlings and fertilizers b. Planting costs c. Management costs d. Felling costs e. Equipment costs f. Improvement costs g. Costs of selling timber 4. Expenses for sericulture a. Purchase costs b. Rearing costs c. Management costs d. Equipment costs e. Improvement costs f. Selling costs 5. Costs of livestock and poultry a. Fertilized egg costs b. Birthing costs c. Rearing costs d. Equipment costs e. Improvement costs f. Selling costs 6. Wages of employees 6의2. Amounts paid to employees in accordance with the payment standards commonly applied to employees for the purpose of supporting childbirth or child-rearing. 6의3. Amounts equivalent to the benefits received by executives, etc., due to support provided under Article 20 (1) 6 of the Act and Article 38 (3) of this Presidential Decree. 7. Expenses for business assets a. Repair costs for maintaining the condition of business assets (including partially idle facilities belonging to the business). b. Management costs and maintenance costs. c. Rent for business assets. d. Insurance premiums for business assets. 7의2. If a person obligated to keep double-entry bookkeeping under Article 160 (3) of the Act (hereinafter referred to as "person obligated to keep double-entry bookkeeping") includes the transfer price of tangible business assets in gross revenue, the book value at the time of transfer of the tangible business assets (meaning the amount reduced by the amount that does not correspond to the amount used for business among depreciation costs under Article 33-2 (1) of the Act) shall apply. 8. Public and other imposts related to the business (including foreign income tax amounts when tax credits under Article 57 (1) of the Act are not applied). 9. Contributions to funds falling under any of the following categories: a. In-house welfare fund established by the taxpayer under Article 50 of the 「Basic Law on the Employment of Labor」. b. Joint labor welfare fund established by the taxpayer and other businesses under Article 86-2 of the 「Basic Law on the Employment of Labor」. c. In-house labor welfare fund established by the small and medium-sized enterprise cooperating with the taxpayer under Article 8-3 (1) 1 of the 「Act on the Restriction of Special Taxation」, pursuant to Article 50 of the 「Basic Law on the Employment of Labor」. d. Joint labor welfare fund established by small and medium-sized enterprises cooperating with the taxpayer under Article 8-3 (1) 1 of the 「Act on the Restriction of Special Taxation」, pursuant to Article 86-2 of the 「Basic Law on the Employment of Labor」. 10. Contributions paid by a contracting employer to the Construction Workers' Retirement Pension Fund under the 「Act on the Improvement of Employment of Construction Workers, etc.」. 10의2. Contributions to be borne by the employer under the 「Act on Guarantee of Retirement Benefits for Workers」. 10의3. Contributions to be borne by small and medium-sized enterprises under Article 35-3 1 of the 「Act on Special Measures for the Support of Human Resources for Small and Medium-sized Enterprises」. 11. Insurance premiums or contributions borne by the employer under the 「National Health Insurance Act」, the 「Employment Insurance Act」, and the 「Long-Term Care Insurance for the Elderly Act」. 11의2. Insurance premiums borne by the employer themselves as a workplace subscriber under the 「National Health Insurance Act」 and the 「Long-Term Care Insurance for the Elderly Act」. 11의3. Insurance premiums borne as a regional subscriber under the 「National Health Insurance Act」 and the 「Long-Term Care Insurance for the Elderly Act」. 11의4. Insurance premiums borne as an insured person under the 「Employment Insurance Act」 by artists or workers providing labor, or self-employed persons, as defined in Article 2 (1) a and b of the same Act. 11의5. Insurance premiums borne as an insured person under the 「Industrial Accident Compensation Insurance Act」 by workers providing labor or by employers of small and medium-sized enterprises under Article 91-15 or Article 124 (1) of the same Act. 12. Insurance premiums for group pure insurance and group endowment insurance. 13. Interest paid on debt directly used to generate gross revenue. 14. Depreciation of tangible and intangible business assets. 15. Loss on revaluation of assets. 16. Bad debts (including those that cannot be collected from unpaid value-added tax sales amounts for which bad debt tax credits under Article 45 of the 「Value-Added Tax Act」 have not been received). 17. Bonuses paid to the other party according to the quantity or amount of transactions, and other amounts of a similar nature. 18. Costs of goods, products, real estate, and forests purchased that were lost due to disaster, if such costs have been included as necessary expenses when calculating income for the accounting period in which the disaster occurred. 19. Amounts spent for employees, such as workplace sports expenses, workplace cultural expenses, family planning support expenses, and employee dinner expenses. 20. Value of free medical treatment provided based on free treatment vouchers prescribed by the Minister of Health and Welfare. 21. Overseas inspection and training expenses related to business. 22. Operating expenses of special classes for working youth or industrial high schools established under the 「Elementary and Secondary Education Act」. 23. Operating expenses of workplace daycare centers established under the 「Infant Care Act」. 24. Expenses incurred for geological surveys, drilling, or tunnel excavation for mineral prospecting, and development expenses thereof. 24의2. Deleted. 25. Expenses incurred for donating samples, calendars, notebooks, cups, fans, and other similar items for advertising and promotion purposes to an unspecified number of people [In the case of donating items to specific individuals (excluding items with a unit price of 30,000 won or less), the amount shall be limited to 50,000 won per year]. 26. Membership fees paid to an organization formed by business operators that is a juridical person or a cooperative or association registered with the competent authority. 27. Amounts paid temporarily, such as tuition fees, to the bereaved family of an employee after their death, which meet the requirements prescribed by the Minister of Economy and Finance. 28. Expenses of a similar nature to those in subparagraphs 1 to 27, which correspond to the gross revenue.

Among contributions included as necessary expenses under subparagraph 10-2 of paragraph 1, contributions paid by the employer to a retirement pension account shall be fully included as necessary expenses, and contributions paid to a defined benefit retirement pension system shall be limited to the amount remaining after deducting the following amounts in order from the estimated amount under Article 57 (2). If there are two or more contributions, contributions for the retirement pension with the earliest contract shall be included as necessary expenses first. 1. Retirement benefit reserve as of the end of the relevant accounting period. 2. Contributions paid up to the end of the previous accounting period.

If an employer who has included contributions under paragraph 3 as necessary expenses falls under any of the following subparagraphs, the amount prescribed in the respective subparagraph shall be included in the gross revenue when calculating the income for the accounting period in which the reason occurred. <Amended by Presidential Decree No. 15607, Dec. 31, 1997, No. 19332, Feb. 9, 2006, No. 22523, Dec. 30, 2010, No. 23775, Jul. 24, 2012, No. 24371, Feb. 15, 2013> 1. Deleted. 2. In case of termination of an insurance contract or trust contract: The amount attributable to the employer. 3. Deleted. 4. In cases where reserves are attributable to the employer pursuant to any of the subparagraphs of Article 24 of the Enforcement Decree of the 「Act on Guarantee of Retirement Benefits for Workers」: Such reserves.

Bad debts under paragraph 2 shall be necessary expenses for the accounting period to which any of the dates in the subparagraphs of Article 19-2 (3) of the Enforcement Decree of the 「Corporate Tax Act」 belongs. <Newly added by Presidential Decree No. 22523, Dec. 30, 2010>