Taxes in North Korea

North Korea finances the state through central and local budget revenues within a socialist planned economy. The 21 March 1974 Law on the Complete Abolition of the Taxation System removed the general tax framework for DPRK citizens. No generally applicable payroll, personal income, property or inheritance tax system for ordinary residents has been evidenced, and no standard national registration, tax-return, refund or audit system for them is publicly established. The main domestic instrument is 국가예산납부금, meaning state-budget payments. State-owned and cooperative institutions, enterprises and organizations transfer defined portions of income or profit to the budget. 거래수입금 is a payment connected with transaction income and can function similarly to a consumption or turnover charge. 국가기업리익금 or 국가기업이득금 is a state-enterprise profit or earnings payment with a function similar to a corporate tax. Other recorded revenue sources include cooperative-organization profit payments, service-fee income, depreciation charges, property-use fees, social-insurance contributions, market-use fees, market-management operating charges and income from property sales or price differences. Transaction-income payments and state-enterprise profit payments have historically dominated reported budget revenue, together accounting for about 85 percent in the available descriptions. Public reporting usually gives year-on-year budget-revenue growth rather than transparent bases or rates for each payment. Reported budget-revenue growth was about 1 percent annually from 2021 to 2023, about 2.7 percent in 2024 and about 2 percent in 2025. These figures describe budget revenue growth, not a general domestic tax rate. The Supreme People's Assembly approves the budget. The Cabinet prepares and implements it, while the Ministry of Finance or the central financial guidance authority directs national finance. Local financial bodies collect local budget revenues, and market-management offices administer market-related charges. Market participants may need market authorization and may pay market-use or management charges. Local household-related burdens have also been reported, including a 4,000 KPW payment in South Pyongan, but such demands are not uniform nationwide and their legal status and enforcement can be unclear. Foreign-invested businesses and foreign individuals follow a different framework under the Foreign-Invested Business and Foreign Individual Tax Law. It covers contractual joint ventures, equity joint ventures, wholly foreign-owned enterprises, foreign enterprises and foreign individuals, including income from DPRK activities and income connected with a foreign branch, agency or subsidiary. Korean compatriots living abroad can be included for DPRK-source income. A tax treaty may change the domestic result where one applies. A covered taxpayer generally registers with the local financial institution within 20 days of establishment, merger, division or dissolution. Accounting records must generally be retained for at least five years. Payments can be made in KPW or another approved currency. Outside Rason, the accessible law provides a 25 percent enterprise-income rate; Rason provides 14 percent, with 10 percent rates available for certain priority sectors. Other income rates are generally 20 percent outside Rason and 10 percent in Rason. Personal work income is listed at 5 to 30 percent, with income below 75,000 KPW exempt under the accessible text. Dividends, interest, rent, royalties and management income are listed at 20 percent; asset sales at 25 percent; donations at 2 to 15 percent; property at 1 to 1.4 percent; inheritance at 6 to 30 percent; turnover at 1 to 15 percent, with luxury goods at 16 to 50 percent; and business tax at 2 to 10 percent. A city-management tax is listed at 1 percent of payroll or of a foreign resident's monthly income, and vehicle tax at 1,500 to 15,000 KPW. Estimated returns and payments are generally due within 15 days after each quarter. Annual returns are due within two months after year-end, with final settlement within three months. Other income is generally reported within 15 days, wage withholding within five days or self-paid within ten days, asset-sale and donation tax quarterly within ten days, and property tax quarterly within 20 days. Vehicle tax is due by the end of February. Late payment penalties are listed at 0.3 percent per day, fines can reach four times the tax, and an appeal or lawsuit is generally subject to a 30-day period. Rason and other economic zones may offer reductions or exemptions for priority sectors, infrastructure, services or reinvestment, subject to conditions concerning investment, sector and operating period. The accessible English tax-law text reflects an amended framework indexed through 2020. Current implementation, treaty practice, foreign-exchange arrangements, banking access and enforcement are only partly verifiable. Domestic state-budget payments, market charges and informal household demands should therefore not be treated as interchangeable with a modern universal income-tax or corporate-tax system.