I. Legal basis

• Decree No. 253/2026/ND-CP
• 2025 Law on Personal Income Tax

II. When are overtime wages exempt from personal income tax?

Pursuant to Clause 8, Article 4 of the 2025 Law on Personal Income Tax, wages for night work, overtime work, and wages paid for unused leave days as prescribed by law are exempt from personal income tax. However, detailed provisions are provided in Article 26 of Decree No. 253/2026/ND-CP promulgated by the Government.

Specifically, in order to qualify for personal income tax exemption, overtime wages must satisfy the following conditions:

• The overtime working hours must fall within the limits prescribed by labor laws (under the 2019 Labor Code).
• The enterprise must prepare a statement clearly specifying the hours worked at night, overtime hours, and the wages paid. Such statements must be retained at the enterprise and presented upon request by the tax authority.
• Where a separate statement is not prepared, the enterprise must substantiate the relevant information through payroll records, timesheets, employment contracts, and other lawful supporting documents.

From 1 January 2026, overtime wages will officially be fully exempt from personal income tax for resident individuals. For non-resident individuals, overtime wages will officially be fully exempt from personal income tax from 1 July 2026.

III. Regulations on overtime working hours under labor laws

Article 107 of the 2019 Labor Code provides that overtime working hours are periods of work performed outside normal working hours. An employer may only require an employee to work overtime when all of the following requirements are fully satisfied:

• The employee’s consent must be obtained.
• Giới hạn hàng ngày: Số giờ làm thêm không quá 50% số giờ làm việc bình thường trong 01 ngày. Nếu áp dụng thời giờ làm việc bình thường theo tuần, tổng số giờ làm việc bình thường và làm thêm không quá 12 giờ/ngày.
• Monthly limit: Overtime working hours must not exceed 40 hours per month.
• Annual limit: Overtime working hours must not exceed 200 hours per year.

IV. Are overtime payments in excess of the statutory limits for employees deductible for corporate income tax purposes?

Pursuant to Clause 23, Article 10 of Decree No. 320/2025/ND-CP, the following provisions specify expenses that are non-deductible when determining taxable income for corporate income tax purposes:

• Expenses that are not commensurate with taxable revenue, except for expenses specified at Point i, Clause 2, Article 9 of this Decree.
• Expenses that fail to satisfy the conditions or requirements concerning the nature of expenses prescribed by specialized laws, including: expenses for overtime work exceeding the time limits prescribed by labor laws; advertising expenses incurred for advertising products, goods, or services prohibited from advertising, or for advertising products, goods, or services that are subject to registration with a competent authority where the enterprise has failed to register such advertising in accordance with law; and expenses serving production or business activities that are inconsistent with or exceed the expenditure limits prescribed by specialized laws.

Accordingly, expenses for overtime work exceeding the time limits prescribed by labor laws are non-deductible when determining taxable income for corporate income tax purposes.

V. About Us, Hankuk Law Firm

■ Hankuk Law Firm – Introduction

The goal of the legal services provided by HANKUK LAW FIRM is to support businesses, investors, and people. Our organization employs skilled Korean lawyers, partners, and professionals to provide legal services to businesses related to corporations and litigation.

To support the startup process, our lawyers and staff provide a wide range of services, including business law consulting, tax and immigration law consulting, real estate services, business consulting, marketing and communications, human resources, product distribution, franchise options, etc. We provide expert advice on every aspect of your business needs.

To protect the legitimate rights and interests of our clients and achieve the best results, we provide legal advice and participate in civil lawsuits related to business, labor, marriage, family, and inheritance.

■ Contact us now

For reliable and effective legal advice, please contact HANKUK LAW FIRM now. We are committed to providing you with the best possible answers and our team of experienced lawyers has extensive knowledge in many legal fields. We are always here to provide the most competent and dedicated support, whether you are dealing with contractual issues, commercial disputes or need guidance on foreign investment. HANKUK LAW FIRM is honored to have assisted hundreds of domestic and international clients in skillfully resolving complex legal issues as their trusted legal partner. Do not let legal issues hinder your success. Let us accompany you towards legal achievement and comfort. For prompt guidance and support to ensure your rights are always maintained at the highest standards, contact HANKUK LAW FIRM now.

■ Contact Hankuk Law Firm:

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