Enforcement Decree Of The Adjustment Of International Taxes Act


Published: 2013-02-15

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CHAPTER I GENERAL PROVISIONS
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 Article 1 (Purpose)   print
The purpose of this Decree is to provide matters delegated by the Adjustment of International Taxes Act and matters necessary to enforce the said Act. [This Article Wholly Amended by Presidential Decree No. 23600, Feb. 2, 2012]
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 Article 2 (Detailed Standards concerning Special Relationship)   print
(1) The term "special relationship" as referred to in Article 2 (1) 8 of the Adjustment of International Taxes Act (hereinafter referred to as the "Act"), means any of the following relationships:
1. A relationship between a domestic corporation or domestic business place, and a foreign shareholder, under which the person residing or located in a foreign state (including a shareholder and an investor; hereinafter referred to as "foreign shareholder") owns directly or indirectly 50 percent or more of the voting shares (including equities in investment; hereinafter the same shall apply) of the domestic corporation or the foreign corporation having the domestic business place;
2. A relationship between a resident, domestic corporation or domestic business place, and another foreign corporation, under which the resident, domestic corporation, or foreign corporation having the domestic business place owns directly or indirectly 50 percent or more of the voting shares of another foreign corporation;
3. A relationship between a domestic corporation or a domestic business place, and a third party foreign corporation (including a domestic business place of a third party foreign corporation), under which a person, who directly or indirectly owns 50 percent or more of the voting shares of the domestic corporation or the foreign corporation having the domestic business place, also owns directly or indirectly 50 percent or more of the voting shares of the third party foreign corporation;
4. A relationship between a resident, a domestic corporation, or a domestic business place and a nonresident, a foreign corporation or its overseas business place, under which they have common interest in adjusting income through investments in capital between either party and the other party, trades of goods or service, grant of loans, etc., and either party has power to make a decision on the whole or essential part of the other party's business policy by any of the following means:
(a) The representative director or the officers corresponding to the majority of all officers of one corporation shall assume the positions of officers or employees of the other corporation, or shall have assumed the said positions within three years retroactively from the end of the pertinent business year;
(b) One party shall own 50 percent or more of the voting shares of the other party, through an association or a trust;
(c) One party shall depend on the trade with the other party for 50 percent or more of its business activities;
(d) One party shall borrow 50 percent or more of its funds required for business activities from the other party, or shall raise them through a payment guarantee of the other party;
(e) One party shall depend on the intellectual property right provided by the other party for 50 percent or more of its business activities;
5. A relationship between a resident, a domestic corporation, or a domestic business place and a nonresident, a foreign corporation or its overseas business place, under which they have common interest in adjusting income through investments in capital between either party and the other party, trade of goods or service, grant of loans, etc., and where the relationship between one party, the other party, and a third party falls under any of the following items:
(a) A relationship between one party, 50 percent or more of whose voting shares are owned directly or indirectly by a resident, a domestic corporation, or a domestic business place, and the other party who has a relationship set forth in any item of subparagraph 4 with the resident, domestic corporation, or domestic business place;
(b) A relationship between one party, 50 percent or more of whose voting shares are owned directly or indirectly by a nonresident, a foreign corporation, or its overseas business place, and the other party who has a relationship set forth in any item of subparagraph 4 with the nonresident, foreign corporation, or its overseas business place;
(c) A relation between one party, which is an affiliated company of a conglomerate as defined in any of subparagraphs of Article 3 of the Enforcement Decree of the Monopoly Regulation and Fair Trade Act, and the other party, 50 percent or more whose voting shares are owned directly or indirectly by another affiliated company of the said conglomerate;
(d) A relationship between parties to a trade, in cases where a third party has power to make a decision on the whole or essential part of the business policies of both parties by means set forth in any of items of subparagraph 4.
(2) The indirectly-owned ratio of shares provided in paragraph (1) 1 through 3 and 5 shall be calculated according to any of the following classifications:
1. Where one corporation owns 50 percent or more of voting shares of a corporation, which is a shareholder of the other corporation (hereinafter referred to as the "shareholding corporation"), the ratio occupied by the voting shares of the other corporation, which are owned by the shareholding corporation, in the voting shares of the relevant other corporation (hereinafter referred to as "shareholding ratio of the shareholding corporation") shall be the indirectly-owned ratio of one corporation against the other corporation: Provided, That where there exist two or more shareholding corporations, the ratio obtained by summing up that calculated by shareholding corporation shall be the indirectly-owned ratio of one corporation against the other corporation;
2. Where one corporation owns less than 50 percent of voting shares of the shareholding corporation of the other corporation, the ratio obtained by multiplying the relevant owning ratio by shareholding ratio of the shareholding corporation shall be the indirectly-owned ratio of one corporation against the other corporation: Provided, That where there exist two or more shareholding corporations, the ratio obtained by summing up that calculated by shareholding corporation shall be the indirectly-owned ratio of one corporation against the other corporation;
3. The calculation methods under subparagraphs 1 and 2 shall also be applicable mutatis mutandis where there interpose one or more corporations between one corporation and a shareholding corporation of the other corporation, and where these corporations are linked through the share ownership.
[This Article Wholly Amended by Presidential Decree No. 23600, Feb. 2, 2012]
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 Article 3 (Scope of Foreign Controlling Shareholder)   print
(1) The foreign controlling shareholder of a domestic corporation under Article 2 (1) 11 (a) of the Act, shall be any of the following persons as of the end of each business year:
1. A foreign shareholder who directly or indirectly owns 50 percent or more of voting shares of a domestic corporation;
2. A foreign corporation, 50 percent or more of whose voting shares are directly or indirectly owned by a foreign shareholder described in subparagraph 1;
3. A foreign shareholder who has a relationship under Article 2 (1) 4 with a domestic corporation.
(2) The foreign shareholders who control a domestic business place of a foreign corporation under Article 2 (1) 11 (b) of the Act shall be as follows: <Amended by Presidential Decree No. 17832, Dec. 30, 2002>
1. The head office or a branch office (referring to the branch office located overseas; hereinafter the same shall apply) of a foreign corporation having a domestic business place;
2. A foreign shareholder who directly or indirectly owns 50 percent or more of the voting shares of a foreign corporation pursuant to subparagraph 1;
3. A foreign corporation, 50 percent or more of whose voting shares are directly or indirectly owned by a head office under subparagraph 1 or a foreign shareholder under subparagraph 2.
(3) Article 2 (2) shall apply mutatis mutandis to the indirectly-owned ratio of shares described in paragraphs (1) and (2).
[This Article Wholly Amended by Presidential Decree No. 23600, Feb. 2, 2012]
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 Article 3-2 (Applicable Scope of Rejection of Unfair Act and Calculation)   print
The term "gift, etc. of assets prescribed by Presidential Decree" as referred to in the proviso to Article 3 (2) of the Act means any of the following cases:
1. Conveying an asset without consideration (excluding a case of conveying it at a significantly low price) or discharging an obligation;
2. Purchasing assets which do not yield any profit, receiving the contribution of such assets in kind, or bearing expenses for such assets;
3. Bearing contributions by proxy;
4. Other trade of capital which fall under any of the items of Article 88 (1) 8 of the Enforcement Decree of the Corporate Tax Act or under subparagraph 8-2 of the same Article 88 (1).
[This Article Wholly Amended by Presidential Decree No. 23600, Feb. 2, 2012]
CHAPTER II ADJUSTMENT OF TAXATION ON TRADE WITH FOREIGN RELATED PARTY
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 Article 4 (Arm's Length Price Computation Method)   print
(1) In applying the profit sharing method under Article 5 (1) 4 of the Act, each of the following matters shall be taken into consideration:
1. Net trade profits created by both trade parties shall be the amount obtained by deducting the sales cost and sales expenses (referring to the expenses for sales and general administration; hereinafter the same shall apply) from the sales amount created by the transaction with a third party;
2. Reasonable allocation standards shall be measured by each standard under the following items and the level of the importance of such standard for the creation of the net trade profits:
(a) The relative value of the function that the trade parties have performed, measured by taking into account of the assets used and risks borne;
(b) Operating assets. tangible and intangible assets, or used capital;
(c) Expenses spent for or invested in core areas, such as research and development, design and marketing;
(d) Other reasonably measurable allocation standards concerning the creation of the net trade profits, such as increases in sales volume, the number of employees for core areas or input work hours, and store sizes.
3. When the net trade profits are allocated according to the levels of relative contribution, cases of preferentially distributing proper basic incomes of trade parties are preferentially distributed according to trade types shall be included.
4. The levels of relative contribution shall be measured with the allocation standard deemed applicable to the transactions under similar conditions between independent business operators who have no special relationship.
(2) In applying the net trade profit ratio method under Article 5 (1) 5 of the Act, any of the following matters shall be taken into consideration:
1. The ordinary net trade profit ratio shall be calculated based on each of the following matters:
(a) Net trade profit ratio to sales;
(b) Net trade profit ratio to assets;
(c) Net trade profit ratio to sales costs and sales expenses;
(d) Ratio of gross sales profit (referring to the sum of net trade profits and sales expenses; hereinafter the same shall apply) to sales expenses;
(e) Other net trade profit ratios deemed reasonable;
2. Where a resident (including a domestic corporation and a domestic business place; hereafter the same shall apply in this Chapter) has not conducted a trade similar to an international trade between a resident and a foreign related party with an unrelated party, a net profit ratio of the trade under the conditions similar to those of the trade concerned, from any of the following trades, may be used:
(a) Trade between a foreign related party and an unrelated party;
(b) Trade between unrelated third parties.
(3) "Other methods deemed reasonable as prescribed by Presidential Decree" in Article 5 (1) 6 of the Act means the methods (including those prescribed in Article 6-2 (3)) deemed reasonable in light of the substance and practice of trade, other than the computation methods prescribed by the Act. <Amended by Presidential Decree No. 24365, Feb. 15, 2013>
[This Article Wholly Amended by Presidential Decree No. 23600, Feb. 2, 2012]
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 Article 5 (Selection of Arm's Length Price Computation Method)   print
(1) In computing the arm's length price under Article 5 (1) of the Act, the most rational method shall be selected by taking into account any of the following standards : <Amended by Presidential Decree No. 18628, Dec. 31, 2004; Presidential Decree No. 22574, Dec. 30, 2010; Presidential Decree No. 23600, Feb. 2, 2012>
1. Possibility for comparison shall be high between the international trade among the related parties and the trade among the unrelated parties. In such cases, "high possibility for comparison" means any of the following cases:
(a) Where a difference in the compared circumstances has no serious effect upon the compared price or net profit of the trade;
(b) Where a rational adjustment, which is capable of removing a difference due to the relevant effects, is possible, even where the difference in the compared circumstances has a serious effect upon the compared price or net profit;
2. Possibility shall be high for the securing and use of the data to be used;
3. The level of correspondence to the reality shall be high for an assumption on the economic conditions, business environment, etc. established in order to compare the international trades among the related parties with the trades among the unrelated parties;
4. The defects in the data to be used or in the established assumption shall have a little effect on the calculated arm's length price.
5. Conformity between the trade between parties having special relationships and the computation method of the arm's length price shall be high.
(2) In assessing whether a high comparability exists as provided in paragraph (1) 1, matters which may affect prices or profits, such as types and features of goods or services, functions of business activities, risks accompanying trade, assets to be used, contractual terms, economic situations, and business strategies, shall be analyzed as prescribed by Ordinance of the Ministry of Strategy and Finance. <Amended by Presidential Decree No. 22574, Dec. 30, 2010; Presidential Decree No. 23600, Feb. 2, 2012>
(3) In assessing whether a high compatibility exists as provided in paragraph (1) 5, which indicators among the price, profit and net trade profit are easier to measure in a trade between parties having special relationships, whether the factor to discriminate a trade between parties having special relationships is goods or services being dealt with or features of the function being conducted, and the interrelation between the indicators of net trade profits and business activities in a case of applying the net trade profit ratio shall be analyzed as prescribed by Ordinance of the Ministry of Strategy and Finance. <Amended by Presidential Decree No. 22574, Dec. 30, 2010; Presidential Decree No. 23600, Feb. 2, 2012>
(4) Deleted. <by Presidential Decree No. 22574, Dec. 30, 2010>
(5) Where a trade between the unrelated parties shall not be treated as a normal trade because it is fabricated at will by the parties involved, the tax authorities may not select the said trade as a comparable trade. <Newly Inserted by Presidential Decree No. 15196, Dec. 31, 1996; Presidential Decree No. 18628, Dec. 31, 2004> <Amended by Presidential Decree No. 23600, Feb. 2, 2012>
[Title Amended by Presidential Decree No. 23600, Feb. 2, 2012]
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 Article 6 (Supplement, etc. to Arm's Length Price Computation Method)   print
(1) In calculating the arm's length price by selecting the most reasonable method as provided in Article 5 (1), such arm's length price shall be determined through analysis procedures such as the analysis of the business environment of a taxpayer and trade between parties having special relationships, collection of data on comparable in and out trades, selection of the computation method of the arm's length price and computation of the price, profit or net trade profit, selection of comparable trades and reasonable adjustment of differences, as prescribed by Ordinance of the Ministry of Strategy and Finance.
(2) In computing an arm's length price under Article 5 of the Act, if any difference occurs in the price, profit margin, or net trade profit, which is applicable on account of the differences in the factors of comparability analysis pursuant to Article 5 (2), the relevant difference in the price, profit margin, or net trade profit shall be reasonably adjusted.
(3) The method with a resale price under Article 5 (1) 2 of the Act may, where deemed necessary for computing a rational arm's length price, be applied to the service trades and other international trades.
(4) In computing an arm's length price under Article 5 of the Act, the scope of arm's length prices may be computed on the basis of two or more trades between the unrelated parties, and it may be applied to an adjudication of whether the tax adjustment is to be made pursuant to the arm's length prices under Article 4 of the Act.
(5) Where the tax authorities make a tax adjustment under Article 4 of the Act to the trade price deviating from the scope of arm's length price, it shall be based on the average price, median price, mode price and other rational specific prices, which have been computed in trades within the relevant scope of arm's length price.
(6) In computing the arm's length price for an intangible asset, the following elements shall be considered according to its characteristics:
1. The scale of revenues added or expenses reduced which are expected with such an intangible asset;
2. Whether there is a limitation on the exercise of rights therein;
3. Whether it is allowable to convey such an intangible asset to other person or grant a license to reuse it.
(7) The normal interest rate for money transactions applicable to international trade between a resident and a foreign related party shall be an interest rate applicable or deemed as applicable to ordinary monetary transactions between unrelated persons, taking the following matters into consideration. In such cases, monetary transactions between the resident and the foreign related party shall include de facto monetary transactions such as collection of bonds and payment of debts which exceed ordinary periods of collection or payment:
1. Amount of the obligation:
2. Maturity of the obligation:
3. Whether the obligation is secured;
4. Credit rating of the debtor.
(8) In applying the computation method of an arm's length price as provided in Article 5 (1) of the Act, if it is unreasonable to measure the price, profit or net trade profit by individual trade because such individual trade are closely linked or consecutively conducted, the individual trades may be consolidated to be assessed.
(9) In computing the arm's length price as provided in Article 5 (1) of the Act, if it is not reasonable to compute the price, profit or net trade profit with data on the concerning business year alone, since economic environments, business strategies, etc. have affected over a number of years, data of such a number of business years may be used.
[This Article Wholly Amended by Presidential Decree No. 23600, Feb. 2, 2012]
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 Article 6-2 (Arm's Length Price for Service Transactions)   print
(1) Where the price for a transaction of service (referring to business management, financial advising, payment guarantee, computing or technical support, or any other service transaction deemed necessary for the business concerned; hereafter the same shall apply in this Article) between a resident and a foreign related party is the one for the transaction of service that meets all the following requirements, such a price shall be deemed the arm's length price and recognizable as a loss:
1. The service provider shall make an agreement in advance and actually provide such service in accordance with the agreement;
2. The person who has been provided with such service shall expect additional profits or a reduction in expenses;
3. The price for the service provided shall be computed in accordance with Article 5 of the Act and Articles 4 through 6 of this Decree. In such cases, it shall be computed in accordance with the following guidelines, when the cost plus method under Article 5 (1) 3 of the Act or the net trade profit ratio to sales cost and sales expenses under Article 4 (2) 1 (c) of this Decree is applied:
(a) The cost incurred shall include all expenses incurred directly or indirectly in providing the service;
(b) Where the service provider requests a third party to perform all or part of the service vicariously pays the price therefor in a lump sum, and then claims such expenses to the person to whom the service is provided, the service provider shall add an ordinary profit to the cost incurred from the activities that the service provider performs on his/her own in connection with the service: Provided, That the foregoing shall not apply, if deemed reasonable in light of the substance of the service, status of the transaction, and customary practices;
4. There shall be documents prepared and preserved for proving the facts set forth in subparagraphs 1 through 3.
(2) Notwithstanding paragraph (1), it shall not be deemed a service transaction under paragraph (1), where a specially-related party itself performs the same service as the one provided to a person who has the service provided, or where an unrelated person provides the service for other specially-related party; Provided, That in cases where the service provided is temporarily overlapped on any reasonable ground, such as reorganization of the business or organizational structure, restructuring, an effort to reduce errors in making decision on business management, it shall be deemed the service transaction under paragraph (1).
(3) In computing the arm's length price for a service transaction for payment guarantee between a resident and a foreign related party, any of the following methods shall apply: <Newly Inserted by Presidential Decree No. 24365, Feb. 15, 2013>
1. Method of computing the arm's length price based on the expected risks of, and expenses to be incurred by, the guarantor;
2. Method of computing the arm's length price based on the expected benefits of the principal debtor;
3. Method of computing the arm's length price based on the expected risks of, and expenses to be incurred by, the guarantor and the expected benefits of the principal debtor.
(4) Where either of the following amounts is applied by a resident for the price for a service transaction for payment guarantee in the application of paragraph (3), such amount shall be deemed the arm's length price: <Newly Inserted by Presidential Decree No. 24365, Feb. 15, 2013>
1. The amount of fees computed by the relevant financial company based on the difference in interest rates that depend on the existence of a payment guarantee at the time of conclusion of the payment guarantee contract (applicable only to the amount of fees confirmed by a statement on the difference in interest rates prepared by the relevant financial company).
2. The amount of fees computed as prescribed by the Commissioner of the National Tax Service, applying the method of paragraph (3) 2.
(5) Detailed matters concerning the computation of expected risks and expenses, expected benefits, etc. for the purposes of paragraphs (3) and (4) shall be prescribed by Ordinance of the Ministry of Strategy and Finance. <Newly Inserted by Presidential Decree No. 24365, Feb. 15, 2013>
[This Article Wholly Amended by Presidential Decree No. 23600, Feb. 2, 2012]
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 Article 7 (Submission, etc. of Arm's Length Price Computation Method)   print
(1) A resident shall select the most rational computing method of arm's length price in accordance with the criteria under Article 5, and shall submit the selected method and the reasons therefor to the head of a tax office having jurisdiction over the tax payment place at the time of a final return on tax base and tax amount: Provided, That this shall not apply where the amount of international trades during the pertinent business year falls under any of the following subparagraphs:
1. Where the total amount of transactions of goods is less than five billion won and the total amount of transactions of services is less than 500 million won;
2. Where the total amount of transactions of goods for each foreign related party is less than one billion won and the total amount of transactions of services is less than 100 million won.
(2) Where an actual trade price differs from the arm's length price obtained by applying the computing method of arm's length price, a resident may file a return on the tax base and tax amount adjusted by treating the arm's length price as a trade price, and apply for a rectification thereof within any of the following deadlines, along with a written report on trade price adjustment as prescribed by Ordinance of the Ministry of Strategy and Finance. In such cases, Articles 15, 15-2, 16 and 18 shall be applied mutatis mutandis to the income amount so adjusted: <Amended by Presidential Decree No. 24365, Feb. 15, 2013>
1. The deadline for filing a return under Article 70, 70-2, 71, 73 or 74 of the Income Tax Act, or Article 60 (1) or 76-17 (1) of the Corporate Tax Act;
2. The deadline for filing a revised return under Article 45 of the Framework Act on National Taxes;
3. The deadline for filing a request for rectification under Article 45-2 (1) of the Framework Act on National Taxes.
(3) Where a resident is unable to submit the computing method of arm's length price under paragraph (1) due to the reasons falling under any subparagraph in Article 21 at the time of a final return on tax base and tax amount, he/she may file with the head of tax office having jurisdiction over the tax payment place an application for extension of the deadline for submission until 15 days prior to the said deadline, in accordance with the letter of application for the extension as prescribed by Ordinance of the Ministry of Strategy and Finance.
(4) The head of a tax office having jurisdiction over the tax payment place who has received an application under paragraph (3) shall decide upon whether to grant an approval of the extension of deadline for submission within the maximum period of extension of one year and notify the applicant of such decision within seven days from the date of receipt of the application. In such case, if the notification is not made within the seven days, the deadline for submission shall be deemed extended until the time requested by the applicant.
[This Article Wholly Amended by Presidential Decree No. 23600, Feb. 2, 2012]
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 Article 8 (Calculation of Normal Profits)   print
(1) The normal profits of the purchaser pursuant to Article 5 (1) 2 of the Act means the amount calculated by multiplying the sale price of assets, which is charged by the purchaser to an unrelated party, by a sale-basis normal profit ratio. In such cases, the term "a sale-basis normal profit ratio" means the gross profit ratio of sales realized in the trades, whose level of functions performed, assets used and risks assumed are similar to the relevant trade, from among the trades between the purchaser and the unrelated parties.
(2) The normal profits of the seller of asset or the service provider pursuant to Article 5 (1) 3 of the Act means the amount calculated by multiplying the costs under each of the following subparagraphs by a cost-basis normal profit ratio. In such cases, a cost-basis normal profit ratio means, in the trades between the seller of assets or the service provider and the unrelated parties, the ratio of gross sales profits to the costs incurred in the trades whose level of functions performed, assets used and risks assumed are similar to the relevant trade:
1. Costs required for the purchase, construction or manufacture of the relevant property at the arm's length prices by the seller of assets;
2. Costs incurred at the arm's length prices in the course of providing the relevant services by the service provider.
(3) Where the purchaser of assets under Article 5 (1) 2 of the Act, or the seller of assets or the service provider under subparagraph 3 of the same paragraph is unable to compute the pertinent normal profit ratio from the trades with the unrelated parties, the normal profit ratio realized in the trades whose level of functions performed, assets used and risks assumed are similar to the relevant trades from among the third trades between the unrelated parties, may be used as the sale-basis normal profit ratio in paragraph (1) or the cost-basis normal profit ratio in paragraph (2).
[This Article Wholly Amended by Presidential Decree No. 23600, Feb. 2, 2012]
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 Article 9 (Application for Prior Approval, etc. of Arm's Length Price Computation Method)   print
(1) A resident who intends to apply for a prior approval of his/her arm's length price computation method to the Commissioner of the National Tax Service under Article 6 (1) of the Act (hereafter referred to as the "applicant" in this Chapter) shall submit to the said Commissioner four respective copies any of the following documents as to the whole or part of his/her international trades no later than by the end of the first taxable year during the term subject to an application for the arm's length price computation method:
1. A written application for a prior approval of arm's length price computation method as provided by Ordinance of the Ministry of Strategy and Finance, indicating the subject period, the subject international trades, the parties to trades and the arm's length price computation method, etc.;
2. Explanatory data on the business history, business details, organization, and investment relationships, etc. of the parties to trades;
3. Financial statements, copies of tax returns, and copies of contracts for international trade and other accompanying documents of the parties to trades for the latest three years;
4. Any of the following data, concretely explaining the details of the arm's length price computation method applied for:
(a) The methods to assess the comparability, and to adjust the difference by factor, under Articles 5 (2) and 6 (2);
(b) Where the financial statements of enterprises subject to comparison are employed, the difference in the accounting standards employed and the adjustment method therefore;
(c) Where the financial data or cost data by classification of transactions are employed, the criteria for preparing them;
(d) Where two or more trades subject to comparison are employed, the scope deemed to be an arm's length price and its inducing method;
(e) Explanatory data on the conditions or assumptions to form a premise of the arm's length price computation method;
5. Where Article 7 (2) is applied, the explanatory data on how to adjust the difference between the actual trade price and the arm's length price;
6. Where an application is filed for a mutual agreement with the Contracting State for the arm's length price computation method applied for an approval, a written application for commencing the mutual agreement procedures as provided by Ordinance of the Ministry of Strategy and Finance;
7. Other data attesting the propriety of the arm's length price computation method applied for a prior approval.
(2) Where the documents submitted to the competent authority of the Contracting State are different from those submitted under paragraph (1), the documents submitted to the competent authority of the Contracting State shall be additionally submitted.
(3) The period subject to an application for prior approval of the arm's length price computation method shall be the period during which the taxpayer intends to obtain a prior approval of the arm's length price computation method.
(4) An applicant may change the details of application for a prior approval, or withdraw his/her application for a prior approval no later than before acquiring a prior approval of the Commissioner of the National Tax Service. In such cases, when the application is withdrawn, the Commissioner of the National Tax Service shall return to the applicant all data submitted under paragraph (1) or (2).
(5) The Commissioner of the National Tax Service shall not use the data submitted under paragraph (1) or (2) for purposes other than the examination of prior approval and ex post facto management.
[This Article Wholly Amended by Presidential Decree No. 23600, Feb. 2, 2012]
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 Article 10 (Examination of Application for Prior Approval)   print
(1) In examining an application for prior approval, the Commissioner of National Tax Service may refer to the opinion of the head of a tax office having jurisdiction over the tax payment place of the applicant and the director of the regional tax office.
(2) In examining an application for prior approval, the Commissioner of National Tax Service may designate a specialist who is in a neutral relationship with the applicant if the latter consents thereto, and refer to the reviewing opinion of the specialist on the arm's length price computation method applied for. In such cases, the Commissioner of the National Tax Service may, if the applicant consents thereto, have the applicant bear part of the relevant expenses.
(3) The specialist pursuant to the front part of paragraph (2) shall not provide or disclose any information related to an application for prior approval to persons other than the applicant, his/her agents and the Commissioner of the National Tax Service.
[This Article Wholly Amended by Presidential Decree No. 23600, Feb. 2, 2012]
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 Article 11 (Procedures of Prior Approval by Mutual Agreement)   print
(1) Where he/she does not grant a prior approval as he/she deems that the application for prior approval is inappropriate, the Commissioner of National Tax Service shall return to the applicant all data submitted under Article 9 (1) or (2).
(2) Where the applicant applies for commencing the mutual agreement procedures at the time of applying for a prior approval, the Commissioner of National Tax Service shall request the competent authority of the Contracting State to commence the mutual agreement procedures, and notify the applicant of the request.
(3) Where an agreement is made with a Contracting State in the procedures of mutual agreement pursuant to paragraph (2), the Commissioner of the National Tax Service shall notify the applicant of the details of the agreement within 15 days from the day following the completion of mutual agreement procedures. In such cases, the applicant shall submit in writing whether he/she consents thereto to the Commissioner of the National Tax Service within two months from the date of receiving a notification on the details of agreement.
(4) Where the applicant fails to notify the Commissioner of the National Tax Service of whether he/she consents thereto within the term under the later part of paragraph (3), it is deemed that he/she has not consented, and the original application for prior approval is deemed withdrawn by the applicant.
(5) Even if the agreed details under the mutual agreement procedures are not identical with the original content of application for prior approval, it shall be deemed that the applicant has applied for the relevant details from the outset, where the applicant consents to the agreed details under paragraph (3).
(6) Where he/she has received from the applicant a letter of consent to the mutual agreements pursuant to the later part of paragraph (3), the Commissioner of the National Tax Service shall grant a prior approval of the arm's length price computation method within 15 days from the date of receiving the letter, and notify the applicant thereof.
(7) In any of the following cases, the Commissioner of the National Tax Service shall notify the applicant of suspension of the mutual agreement procedures within 15 days:
1. Where the Commissioner of the National Tax Service suspends ex officio the mutual agreement procedures, because the mutual agreement has not been reached within three years from the date of accepting the application for prior approval;
2. Where it is agreed to complete the mutual agreement procedures with a Contracting State, because an agreement under the mutual agreement procedures is impossible to reach.
(8) A resident who has obtained a prior approval of an arm's length price computation method in accordance with paragraph (6) shall file an revised return or an application for rectification pursuant to Article 17 (1). In such cases, Articles 15, 15-2, 16 and 18 shall apply mutatis mutandis to the income amount to be adjusted.
(9) Deleted. <by Presidential Decree No. 17045, Dec. 29, 2000>
[This Article Wholly Amended by Presidential Decree No. 23600, Feb. 2, 2012]
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 Article 11-2 (Procedures for Unilateral Prior Approval)   print
(1) "Such cases as prescribed by Presidential Decree" in the proviso to Article 6 (2) of the Act means any of the following cases:
1. Where a taxpayer fails to request the mutual agreement procedures at the time of applying for prior approval of an arm's length price computation method under Article 9 (1);
2. Where the mutual agreement procedures for an arm's length price computation method are suspended due to the causes falling under any subparagraph of Article 11 (7).
(2) The Commissioner of the National Tax Service may, in a case falling under any subparagraph of paragraph (1), grant a prior approval of the arm's length price computation method without proceeding the mutual agreement procedures (hereinafter referred to as the "unilateral prior approval"). In such cases, the Commissioner of the National Tax Service may, where the mutual agreement procedures are commenced, attach the condition that the unilateral prior approval may be cancelled.
(3) Where a taxpayer intends to obtain an unilateral prior approval as he/she falls under paragraph (1) 2, he/she shall present his/her intention in writing to the Commissioner of the National Tax Service within 15 days from the day on which he/she is notified thereof. In such cases, where the applicant fails to present his/her opinion in writing, the original application for prior approval shall, be deemed withdrawn.
(4) Where the applicant applies for an unilateral prior approval, the Commissioner of the National Tax Service shall decide upon whether to grant a prior approval within two years from the date of application.
(5) Article 11 (1) and (3) through (6) shall apply mutatis mutandis respectively to the return of documents submitted as regards an unilateral prior approval, the notification of details of a decision on prior approval and whether to consent, the withdrawal of an application for prior approval, the validity of modified approval of prior approval, and the notification of prior approval.
(6) A resident who has obtained a prior approval for an arm's length price computation method shall file a revised return or an application for rectification pursuant to Article 17 (2). In such cases, Articles 15, 15-2, 16 and 18 shall apply mutatis mutandis to the income amount to be adjusted.
[This Article Wholly Amended by Presidential Decree No. 23600, Feb. 2, 2012]
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 Article 12 (Submission, etc. of Annual Report)   print
(1) Where a resident has won the prior approval on the arm's length price computation method, he/she shall file an annual report reflecting the details of approval with the head of a tax office having jurisdiction over the tax payment place within the deadline under Article 7 (2) 1, and submit four copies of the annual report containing the matters in the following subparagraphs to the Commissioner of the National Tax Service within six months from the date following the deadline of report, as prescribed in Article 6 (5) of the Act. In such cases, Articles 15, 15-2, 16 and 18 shall apply mutatis mutandis to the income amount to be adjusted:
1. Whether the grounds or assumptions are realized, which form a premise for the arm's length price computation method approved in advance;
2. The arm's length price computed by applying the arm's length price computation method approved in advance, and the relevant computation process;
3. Where the actual trade price differs from the arm's length price, the details of dealing with the relevant difference;
4. Other matters stipulated to be contained in the annual report at the time of a prior approval.
(2) Where any additional data are needed upon reviewing the annual report pursuant to paragraph (1), the Commissioner of the National Tax Service may request the relevant resident to furnish them.
[This Article Wholly Amended by Presidential Decree No. 23600, Feb. 2, 2012]
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 Article 13 (Cancellation, etc. of Prior Approval)   print
(1) "Cases as prescribed by Presidential Decree" in the proviso to Article 6 (4) of the Act means any of the following cases:
1. Where the important portions of data pursuant to Article 9 or 12 are not submitted or falsely prepared;
2. Where the resident fails to comply with the details of prior approval or the conditions thereof;
3. Where the important portions of conditions or assumptions are not realized which form a premise for the arm's length price computation method approved in advance;
4. Where the content of the prior approval has become improper due to the changes in the relevant Acts and subordinate statutes or the tax treaties.
(2) The Commissioner of the National Tax Service may, where it falls under any subparagraph of paragraph (1), cancel or withdraw the prior approval.
(3) A resident may, in the case of falling under paragraph (1) 3 or 4, apply for a change in the details of the original prior approval no later than the deadline for a final return on tax base and tax amount for a taxable year in which the relevant causes occur, with respect to the remaining subject period thereafter including the relevant taxable year. In such cases, Articles 9 through 11, 11-2 and 12 shall apply mutatis mutandis, but the data to be furnished under Article 9 (1) shall be limited to the changed portions.
(4) The Commissioner of the National Tax Service shall, where he/she cancels or withdraws a prior approval, notify the competent authority of a Contracting State, of such facts without delay.
[This Article Wholly Amended by Presidential Decree No. 23600, Feb. 2, 2012]
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 Article 14 (Utilization of Prior Approval, etc. by Contracting State)   print
Where a resident or a foreign related party applies for a prior approval of an arm's length price computation method corresponding to Article 6 of the Act to the competent authorities of a Contracting State, and where it is necessary to commence the mutual agreement procedures with the Republic of Korea, the relevant resident shall without delay apply for the prior approval of such arm's length price computation method under Article 9 to the Commissioner of the National Tax Service.
[This Article Wholly Amended by Presidential Decree No. 23600, Feb. 2, 2012]
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 Article 14-2 (Computation, etc. of Allotted Arm's Length Cost for Joint Development of Intangible Assets, etc.)   print
(1) The intangible asset in Article 6-2 (1) of the Act means any of the following subparagraphs:
1. The one falling under any of the following items:
(a) Patent right under the Patent Act;
(b) Utility model right under the Utility Model Act;
(c) Design right under the Design Protection Act;
(d) Trademark right or service mark right under the Trademark Act;
(e) Copyright under the Copyright Act;
(f) Deleted; <Act No. 21634 Jul. 22, 2009>
2. Any other intangible asset including a plan, a model, knowhow, which can be used as it is or can be conveyed or licensed for use to a third party.
(2) The allotted arm's length cost in Article 6-2 (1) of the Act means an allotted amount applicable or deemed as applicable in an agreement that a resident makes with a foreign unrelated person on the allotment of ordinary cost, expenses, and risks (hereinafter referred to as "cost, etc."), and the cost, etc. for the development of an intangible asset, which shall be allocated in proportion to the expected benefits under Article 14-3 (1) from the intangible asset: Provided, That the price for using the intangible asset and the interest incurred and paid at the time of borrowing the allotted amount shall not be included in the allotted arm's length cost.
(3) The allotted arm's length cost shall be included in losses at the time of computing the taxable income of the resident, only where the resident makes an agreement on the allotted arm's length cost and subsequently bears the allotted cost, etc.
[This Article Wholly Amended by Presidential Decree No. 23600, Feb. 2, 2012]
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 Article 14-3 (Scope and Computation Method of Expected Benefits)   print
(1) Expected benefits in Article 6-2 (2) of the Act means the benefits expected from an intangible asset and falling under any of the following subparagraphs:
1. Cost reduction;
2. Increase in any of the followings caused by making use of the intangible asset:
(a) Sales;
(b) Trade profit;
(c) Quantity consumed, produced, or sold.
(2) Expected benefits shall be computed by applying the benefits under each subparagraph of paragraph (1), which are estimated to be realized after joint development of the intangible asset.
[This Article Wholly Amended by Presidential Decree No. 23600, Feb. 2, 2012]
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 Article 14-4 (Adjustment of Shares of Participants and Allotted Cost, etc. Following Change in Expected Benefits)   print
(1) "Where …… subsequently changed at a rate equivalent to or more than prescribed by Presidential Decree" in Article 6-2 (2) of the Act means the case where the resident's expected benefits out of the total benefits expected originally at the time of making an agreement increase or decrease by at least 20/100 in comparison with the benefits realized after the development of the intangible asset.
(2) Where the share of the residents as a participant is adjusted in accordance with Article 6-2 (2) of the Act, the allotted cost, etc. borne excessively by computing again the total allotted cost, etc. borne by the resident in proportion to the resident's share as adjusted shall be adjusted at the time of calculating the tax base for the business year during which such change occurred.
(3) Where the change in expected benefits under paragraph (1) reoccurs after the allotted cost, etc. was adjusted in accordance with paragraph (2), a report or a request for rectification may be filed no later than the deadline falling under any subparagraph of Article 7 (2). In such cases, Articles 15, 15-2, 16, and 18 shall apply mutatis mutandis to the income so adjusted.
(4) No tax authority shall, when it intends to determine or rectify a resident's tax base or tax amount pursuant to Article 6-2 (2) of the Act, adjust the resident's tax base and tax amount after the lapse of five years from the day immediately following the deadline for filing a return on tax base for the taxable year on which the day when the joint development of an intangible asset is completed falls.
[This Article Wholly Amended by Presidential Decree No. 23600, Feb. 2, 2012]
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 Article 14-5 (Determination, etc. on Tax Base for Price Received from or Paid to Later Participants or Early Withdrawers)   print
With regard to the price received for expected benefits that a person, who newly participates in or withdraws from an agreement on allotment of cost, etc. under Article 14-2 (2), gets through such participation or the price paid for expected benefits that other participants get as a consequence of a participant's early withdrawal from such an agreement, tax authorities may determine or rectify the resident's tax base and tax amount based on the arm's length price, if the price is less than or exceeds the arm's length price.
[This Article Wholly Amended by Presidential Decree No. 23600, Feb. 2, 2012]
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 Article 14-6 (Submission of Statement of Allotted Cost, etc.)   print
(1) A resident who desires to become eligible for the application of Article 14-2 or 14-4 shall submit to the competent tax authority a statement of allotted cost, etc., as prescribed by Ordinance of the Ministry of Strategy and Finance, along with the return under Article 70 or 70-2 of the Income Tax Act, or Article 60 or 76-17 (1) of the Corporate Tax Act. <Amended by Presidential Decree No. 24365, Feb. 15, 2013>
(2) Where a resident is unable to submit the statement of allotted cost, etc. under paragraph (1) for reasons falling under any subparagraph in Article 21 at the time of a final return on tax base and tax amount, he/she may file with the competent tax authority an application for extension of the deadline for submission until 15 days prior to the said deadline, in accordance with an application for the extension as prescribed by Ordinance of the Ministry of Strategy and Finance.
(3) Upon receipt of the application under paragraph (2), the competent tax authority shall decide whether to grant an approval of the extension of deadline for submission within the maximum period of extension of one year and notify the applicant of such decision within seven days from the date of receipt of the application. In such case, if the notification is not made within seven days, the deadline for submission shall be deemed extended until the time requested by the applicant.
[This Article Wholly Amended by Presidential Decree No. 23600, Feb. 2, 2012]
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 Article 15 (Disposition, etc. of Temporary Retention)   print
(1) Tax authorities shall, where they intend to make an income disposition or tax adjustment pursuant to Article 9 of the Act, make a disposition of temporary retention until it is verified that the return under Article 15-2 has been properly done.
(2) Tax authorities shall, where they make a disposition of temporary retention under paragraph (1), give notice of such disposition by serving a notice of disposition of temporary retention prescribed by Ordinance of the Ministry of Strategy and Finance by applying Articles 192 (1) and (4) of the Enforcement Decree of the Income Tax Act mutatis mutandis.
(3) Notwithstanding paragraph (1), in any of the following cases, it shall not be disposed of as temporary retention and shall be disposed of or adjusted as prescribed in the subparagraphs of Article 16 (1):
1. Where the exclusion period expires within four months from the date when the tax base and tax amount have been determined or rectified, as prescribed in Article 4 or 6-2 of the Act;
2. Where a written request for the disposition of transferred income prescribed by Ordinance of the Ministry of Strategy and Finance is filed.
[This Article Wholly Amended by Presidential Decree No. 23600, Feb. 2, 2012]
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 Article 15-2 (Verification, etc. of Return of Amount to be Included in Gains)   print
(1) "Where it is not verified that the amount has been returned as prescribed by Presidential Decree" in Article 9 (1) of the Act means the cases where the documents (referring to a certificate of return of transferred income prescribed by Ordinance of the Ministry of Strategy and Finance) certifying that the amount intended by a foreign related party to return to a domestic corporation out of the amount to be included in the gains as prescribed in Article 4 or 6-2 of the Act plus interests for return calculated in accordance with the following calculation formula were returned have not been submitted to the tax authorities within 90 days from the day when a notice of disposition of temporary retention under Article 15 was received or from the day when a revised return of tax base and tax amount was filed: Provided, That in cases of falling under Article 15 (3), it refers to the cases where the amount to be included in the gains at the time the tax base and tax amount were determined or rectified as prescribed in Article 4 or 6-2 of the Act has not been verified to be returned to a domestic corporation by a foreign related party: Interests for return = amount to be returned × period from the date next to the end of the business year to which the transaction day belongs to the date of return of transferred income × interest rate determined by the Ordinance of the Ministry of Strategy and Finance, considering the prevailing interest rate in the international financial market / 365 (366 for a leap year) <Amended by Presidential Decree No. 24365, Feb. 15, 2013>
(2) Where any of the amount to be included in the gains as prescribed in Article 4 or 6-2 of the Act is returned to a domestic corporation by a foreign related party, the amount (including interests for return for the relevant amount) accrued earlier in the order of accrual of the amount to be included in the gains shall be deemed to be returned. <Newly Inserted by Presidential Decree No. 24365, Feb. 15, 2013>
[This Article Wholly Amended by Presidential Decree No. 23600, Feb. 2, 2012]
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 Article 16 (Disposition, Adjustment, etc. of Amount Not Verified for Return)   print
(1) If the return under Article 15-2 is not verifiable, the amount of which the return has not been verified may be disposed of or adjusted in accordance with any of the following methods:
1. If the foreign related party, who is a party to an international trade, is one of shareholders of the relevant domestic corporation (including cases where the party falls under Article 2 (1) 1), it shall be treated as the dividend imputed to the foreign related party;
2. If the foreign related party, who is a party to an international trade, is a corporation in which the relevant domestic corporation invests (including cases where the party falls under Article 2 (1) 2), it shall be treated as the increase of investment in the foreign related party;
3. If the foreign related party, who is a party to an international trade, is a person other than those under subparagraphs 1 and 2, it shall be treated as the dividend imputed to the foreign related party.
(2) Where tax authorities make disposition or adjustment under paragraph (1), it shall notify the fact by serving a notice of transferred income prescribed by Ordinance of the Ministry of Strategy and Finance within 15 days from the expiry (the day when tax base and tax amount were determined or rectified as prescribed in Article 4 or 6-2 of the Act in the cases falling under Article 15 (3)) of deadline for the submission of a certificate of return of transferred income under Article 15-2 by applying Article 192 (1) and (4) of the Enforcement Decree of the Income Tax Act mutatis mutandis. In such cases, it shall be deemed that the dividend is paid on the day when the notice is delivered.
(3) Where a taxpayer submits a certificate of return of transferred income under Article 15-2 within 90 days from the date he/she receives a notice under paragraph (2) after tax authorities made disposition or adjustment under Article 15 (3), it shall be deemed that no disposition or adjustment under Article 15 (3) was made.
(4) The amount disposed of as retained earning, which was deemed as a loan to a foreign related party under paragraph (1) 3 before May 24, 2006, because it had not been returned by the foreign related party concerned to a domestic corporation may be disposed of by the domestic corporation as dividend under paragraph (1) 3.
[This Article Wholly Amended by Presidential Decree No. 23600, Feb. 2, 2012]
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 Article 17 (Application Procedures, etc. for Special Cases of Income Calculation)   print
(1) A resident who intends to be subject to the adjustment of his/her income amount and final tax amount under Article 10 (1) of the Act, shall file a revised return or an application for rectification (including an application that utilizes the national tax information and communications networks), within two months from the date of receiving a notification under Article 27 (2) of the Act, with the head of a tax office having jurisdiction over the tax payment place by presenting a written application for special cases of income calculation as provided by Ordinance of the Ministry of Strategy and Finance, together with a notice of the conclusion of mutual agreement procedures issued by the Commissioner of the National Tax Service pursuant to Article 42 (2).
(2) Where a resident who has obtained an unilateral prior approval under Article 11-2 (2) intends to be subject to the adjustment of income amount and final tax amount, he/she shall file a revised return or an application for rectification with the head of a tax office having jurisdiction over the tax payment place, under paragraph (5) of the same Article, by presenting a written application for special cases of income calculation as provided by Ordinance of the Ministry of Strategy and Finance, together with a notice issued by the Commissioner of the National Tax Service, within two months from the day on which he/she has received a notice issued by the said Commissioner.
(3) The head of a tax office having jurisdiction over the tax payment place who has received an application for rectification under paragraphs (1) and (2) may rectify the tax base and tax amount within two months from the date of receiving an application for rectification. In such cases, if there is no reason for making a rectification, he/she shall notify it to the person applying for the rectification.
[This Article Wholly Amended by Presidential Decree No. 23600, Feb. 2, 2012]
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 Article 17-2 (Application for Rectification for Adjustment between Arm's Length Price of National Taxes and Tax Prices of Tariffs)   print
A person who intends to file an application for rectification pursuant to Article 10-2 (1) of the Act shall submit (including a submission utilizing the national tax information and communications networks) an application for rectification stating matters under each of the following subparagraphs with relevant evidentiary materials attached:
1. Name, address or dwelling place of the applicant;
2. Tax base and tax amount of the corporate tax or income tax before its rectification;
3. Tax base and tax amount of the corporate tax or income tax after its rectification;
4. Reasons for filing application for rectification;
5. Other necessary matters.
[This Article Newly Inserted by Presidential Decree No. 23600, Feb. 2, 2012]
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 Article 17-3 (Establishment, Operation, etc. of Tax Adjustment Review Committee for International Trade Price)   print
(1) In order to deliberate matters on recommendation for the tax adjustment of international trade price pursuant to Article 10-3 of the Act, a tax adjustment review committee for international trade price (hereinafter referred to as "tax adjustment review committee") shall be established within the Minister of Strategy and Finance.
(2) The tax adjustment review committee shall be comprised of not more than 15 members including one chairperson.
(3) The head of Tax and Customs Office under the Ministry of Strategy and Finance shall be the chairperson and those persons under each of the following subparagraphs shall be the committee members:
1. A person nominated by the chairperson from among the public officials of Grade 3 under the Ministry of Strategy and Finance or from among the public officials belonging to the group of senior executive services;
2. A person recommended by the Commissioner of the National Tax Service from among the public officials of Grade 3 under the National Tax Service or from among the public officials belonging to the group of senior executive services;
3. A person recommended by the Commissioner of Korea Customs Service from among the public officials of Grade 3 under the Korea Customs Service or from among the public officials belonging to the group of senior executive services;
4. A person commissioned by the chairperson from among the attorney-at-laws, certified public accountants or tax accountants having abundant experience of computing arm's length price of national taxes and tax prices of tariffs, or from among university professors who teach tax law or accounting, etc.
(4) The chairperson shall convene committee meetings as the chair of the tax adjustment review committee.
(5) Where the chairperson is unable to carry out his/her responsibilities due to an inevitable reason, a committee member appointed in advance by the chairperson from among the members under paragraph (3) 1 shall act on his/her behalf.
(6) The term of office of the members shall be two years, and the chairperson may rescind commission of the members during their term of office where they are deemed unfit to serve as a committee member due to mental or physical disability, neglect of duties, injury to dignity or other reasons.
(7) Meetings of the tax adjustment review committee shall not be disclosed: Provided, That they may be disclosed where the chairperson deems it necessary to do so.
(8) Each meeting of the tax adjustment review committee shall be comprised of the chairperson and at least seven but not more than ten members who are designated by the chairperson for each meeting, and shall include at least three members under paragraph (3) 4.
(9) Each meeting of the tax adjustment review committee shall be held by attendance of a majority of all the members under paragraph (8) and reaches its resolution on the proposal for adjustment recommendation by the consent of a majority of the members present.
(10) The Minister of Strategy and Finance shall, unless he/she has an extraordinary reason, recommend an adjustment for the relevant tax authorities or the director of a customhouse in accordance with the proposal for adjustment recommendation pursuant to paragraph (9).
(11) A tax authority or the director of a customhouse who has received an adjustment recommendation pursuant to paragraph (10) shall submit, without delay, an implementation plan therefor to the Minister of Strategy and Finance.
(12) Matters necessary for establishment, operation, etc. of the tax adjustment review committee, other than those provided for in paragraphs (1) through (11), shall be determined by Ordinance of the Minister of Strategy and Finance.
[This Article Newly Inserted by Presidential Decree No. 23600, Feb. 2, 2012]
[This Article Effective until June 30, 2017 pursuant to Article 2 of the Addenda of Presidential Decree No. 23600, Feb. 2, 2012]
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 Article 17-4 (Application, etc. for Tax Adjustment on International Trade Price)   print
(1) A taxpayer who intends to file an application for tax adjustment on international trade price pursuant to Article 10-3 (1) of the Act shall submit an application therefor stating matters under each of the following subparagraphs with relevant evidentiary materials attached:
1. Name, address or dwelling place of the applicant;
2. Details of correction/rectification by the director of a customhouse;
3. Reasons for and details of filing an application for tax adjustment;
4. Other necessary matters.
(2) Where a relevant trade for which an application for tax adjustment was filed falls under any of the following subparagraphs, the chairperson pursuant to Article 17-3 (3) (hereafter referred to as "chairperson" in this Article) may not review the relevant trade. In such cases, he/she shall notify it to the taxpayer:
1. With respect to the relevant transaction, where an application for objection, a request for deliberation or a request for judgement pursuant to Article 55 of the Framework Act on National Taxes and Article 119 of the Customs Act or a request for deliberation pursuant to Article 43 of the Board of Audit and Inspection Act is being filed, or an administrative lawsuit under the Administrative Litigation Act is pending;
2. Where a relevant transaction is the one in conformity with the preliminary approval of the arm's length price computation method under Article 6 of the Act and with the preliminary review of the tax price determination method under Article 37 of the Customs Act;
3. With respect to a relevant transaction, where a mutual agreement procedure pursuant to Article 22 of the Act and tax treaties is in progress or finished;
4. With respect to a relevant transaction, where it is deemed difficult to conduct deliberation by the tax adjustment review committee due to the reasons such as the difference in computation methods between the national tax's arm's length price and the tariffs' tax price.
(3) If deliberating details of the application for tax adjustment pursuant to paragraph (1) is deemed inappropriate but capable to be rectified, the chairperson may set a reasonable rectification period and request the application to be rectified. In such cases, the rectification period shall not be included to the adjustment period under Article 10-3 (1) of the Act.
[This Article Newly Inserted by Presidential Decree No. 23600, Feb. 2, 2012]
[This Article Effective until June 30, 2017 pursuant to Article 2 of the Addenda of Presidential Decree No. 23600, Feb. 2, 2012]
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 Article 18 (Method of Tax Adjustment in Special Cases of Income Calculation)   print
(1) Out of the amount of a domestic corporation's income reduced and adjusted in accordance with Article 10 (1) of the Act, the amount that is retained in the corporation without returning to the foreign related party shall be treated as the carried-over profit as provided in subparagraph 2 of Article 18 of the Corporate Tax Act, and shall not be included in the gains of the domestic corporation.
(2) The income amount to be reduced as a result of an adjustment of the income amount of a resident who is not a domestic corporation under Article 10 (1) of the Act, and not returned to a foreign related party shall not be deemed an income amount of the relevant resident.
[This Article Wholly Amended by Presidential Decree No. 23600, Feb. 2, 2012]
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 Article 19 (Scope of Data Requested by Tax Authorities, and Method of Submission)   print
(1) The scope of materials which tax authorities may demand a taxpayer to submit pursuant to Article 11 (2) of the Act shall include the materials concerning the taxpayer or his/her foreign related party, which shall fall under any of the following subparagraphs:
1. Various relevant contract documents concerning the transfer or purchase of assets;
2. Price list of products;
3. Statement of manufacturing costs;
4. Specification of trades by item, distinguishing between the related parties and the unrelated parties;
5. Documents corresponding to subparagraphs 1 through 4, in the cases of the offer of services or other trades;
6. Organizational chart of a corporation and a table of division of office duties;
7. Data for determination of international trade prices;
8. Internal guidelines for pricing among the related parties;
9. Accounting standards and methods relating to the relevant trades;
10. Details of business activities of the parties involved in the relevant trades;
11. Current status of mutual investments with the specially-related parties;
12. Forms or items omitted at the time of returns on the corporate tax and income tax;
13. Materials with which it is possible to grasp the details of a transaction in connection with a service transaction under Article 6-2, as specified by Ordinance of the Ministry of Strategy and Finance;
14. Materials specified further by Ordinance of the Ministry of Strategy and Finance including an agreement on cost allotment in connection with the tax adjustment by the allotted arm's length cost under Article 6-2 of the Act;
15. Other data necessary for computing proper prices.
(2) The data falling under paragraph (1) shall be prepared and submitted in Korean: Provided, That where the tax authorities permit to do so, the data prepared in English maybe submitted.
[This Article Wholly Amended by Presidential Decree No. 23600, Feb. 2, 2012]
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 Article 19-2 (Scope of Provision of Information concerning International Trade)   print
The term "information or data prescribed by Presidential Decree" in Article 11-2 (1) of the Act shall mean any of the following cases:
1. The tax-related information pursuant to Article 116 (1) of the Customs Act;
2. Other data relevant to the determination or rectification of tax prices of tariffs.
[This Article Newly Inserted by Presidential Decree No. 23600, Feb. 2, 2012]
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 Article 20 (Application for Extension of Deadline to Submit Specifications of International Trade, etc. and Notification Thereof)   print
(1) A person who intends to apply for an extension of the deadline for submission pursuant to the provisos to Articles 11 (1) and (3) of the Act shall submit (including a submission by the national tax information and communications networks) to the tax authorities a written application for the extension of the deadline for submission as provided by Ordinance of the Ministry of Strategy and Finance, no later than 15 days before the deadline of data submission.
(2) The tax authorities shall, within 7 days from the date of receiving an application for extending the deadline for submission under paragraph (1), notify the applicant of whether such extension is to be granted. In such cases, where no notification has been given within 7 days, the deadline of submission shall be deemed extended up to the deadline requested for extension.
[This Article Wholly Amended by Presidential Decree No. 23600, Feb. 2, 2012]
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 Article 21 (Causes for Extension of Deadline to Submit Specifications of International Trade, etc.)   print
"Justifiable reasons as prescribed by Presidential Decree" in the proviso to Article 11 (1) of the Act, and "justifiable reasons as prescribed by Presidential Decree" in the proviso to Article 11 (3) and Articles 11 (4) and 12 (1) of the Act mean any of the following cases, respectively:
1. Where a person requested to submit data is unable to submit such data due to a fire, disaster, robbery, etc.;
2. Where a person requested to submit the data is in a serious business crisis, and the submission of data is extremely difficult;
3. Where the relevant books and documents are seized or held provisionally by an agency of authority;
4. Where the closing date of the taxable year of a foreign related party does not arrive yet;
5. Where it is impossible to submit the data within the deadline, as it takes a considerable time to collect and prepare the data;
6. Where it is deemed impossible to submit the data within the deadline, due to the causes corresponding to subparagraphs 1 through 5.
[This Article Wholly Amended by Presidential Decree No. 23600, Feb. 2, 2012]
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 Article 22 Deleted. <by Presidential Decree No. 22574, Dec. 30, 2010>   print
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 Article 23 (Judgment on Negligence, etc. of Taxpayers)   print
(1) When judging whether a taxpayer has been negligent as prescribed in Article 13 (1) 1 of the Act, the taxpayer shall be deemed not to have been negligent, if he/she falls under the following requirements:
1. The taxpayer shall demonstrate the process to have selected the most rational method, from among those as provided in Article 5 (1) of the Act, by means of the documents prepared at the time of the final return on tax base and tax amount;
2. The taxpayer shall actually apply the method selected under subparagraph 1;
3. The taxpayer shall keep and store the data required in connection with the arm's length price computation method under subparagraphs 1 and 2.
(2) The taxpayer who intends to be treated as an exception to the application of additional tax as prescribed in Article 13 (1) 2 of the Act shall keep and retain the data in the following subparagraphs, and upon request by the tax authorities, submit the data retained and kept as such within 30 days from the day on which such request is made:
1. Data describing the outline of business (including the data analyzing the elements that exercise influence over the price of assets and services);
2. Data describing the structures, etc. with foreign related parties and related persons, who can exercise influence over the transfer price;
3. Data in the following items enabling to verify the details how the arm's length price computation method was adopted at the time of filing a return:
(a) Data analyzing and predicting economy, which have served as a basis for selecting the arm's length price computation method at the time of filing a return;
(b) Data describing the numbers of comparative objects used for the computation of arm's length price and the details of adjustment in the course of comparison and appraisal of the numbers;
(c) Data describing the arm's length price computation method that could have been applied as an alternative and the reason why the alternative has not to be selected;
(d) Relevant data, etc. added in order to compute the arm's length price after the expiration of the taxable period until filing a return of income tax or corporate tax.
(3) Whether a taxpayer has determined reasonably under Article 13 (1) 2 of the Act shall be judged in consideration of the requirements in the following subparagraphs:
1. The numbers being the object of comparison, which have been collected at the time of expiration of the taxable period, shall be representative data, and none of the particular numbers being the object of comparison which must be included has been omitted, thus not drawing any results favorable to the taxpayer;
2. The arm's length price computation method has been selected and applied after systematically analyzing the collected data;
3. There shall be an appropriate reason for selecting and applying another arm's length price computation method in cases where there was an arm's length price computation method agreed upon at the prior approval in the previous taxable year, or there was an arm's length price computation method selected in the course of tax audit by the tax authorities.
(4) Where a resident who has obtained a prior approval of the arm's length price computation method under Articles 11 (6) and 11-2 (2) files a revised return on the tax base and tax amount of the corporate tax under Article 17, an additional tax shall not be imposed pursuant to Article 13 of the Act.
(5) Where important data related to the computation method of the arm's length price that has not been available to be confirmed at the time of filing a report is confirmed after the report deadline, an additional tax shall not be imposed pursuant to Article 13 of the Act, if a rectification report for the tax base and tax amount of the corporate tax is filed within 60 days from the time the reporter becomes aware of such fact. In such cases, paragraphs (2) and (3) shall apply mutatis mutandis to the modification report.
[This Article Wholly Amended by Presidential Decree No. 23600, Feb. 2, 2012]
CHAPTER III TAX ADJUSTMENT ON INTEREST PAID TO FOREIGN CONTROLLING SHAREHOLDER
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 Article 24 (Scope of Borrowings)   print
(1) The scope of borrowings under Article 14 (1) of the Act shall be the liabilities which generate the interest and discount fees: Provided, That the amount borrowed in foreign currency by a domestic branch of a foreign bank under the Banking Act upon request of the Government (including the Bank of Korea under the Bank of Korea Act), or the amount deposited by and borrowed from, in foreign currency, the head office or branch office of the relevant foreign bank in order to use it by one of the following methods, shall be excluded:
1. Method to deposit or loan out in foreign currency to a nonresident or a foreign exchange bank under the Foreign Exchange Transactions Act;
2. Method to accept or trade the bonds in foreign currency issued by a nonresident or a foreign exchange bank under the Foreign Exchange Transactions Act.
(2) In applying paragraph (1), where it is unclear that the amount is deposited by or borrowed from, in foreign currency, the head office or branch office of the foreign bank, and where it may be discriminated by the source ratio of funds stated on the balance sheet, etc. for the relevant business year (based on the annual average balance), the amount obtained by calculating under the said ratio shall be treated as the amount borrowed from the head office or branch office. In such cases, the annual average balances may be calculated by day or month.
(3) In applying Article 14 (1) of the Act, where a foreign shareholder under Article 3 (1) 1 and a foreign corporation under subparagraph 2 of the same paragraph are both included in a foreign controlling shareholder, the amount borrowed from the foreign corporation and the amount borrowed from a third party according to the payment guarantee of the foreign corporation (including the cases of substantially guaranteeing payment, such as the provision of security, etc; hereinafter the same shall apply) shall be added to the amount borrowed from the foreign shareholder and the amount borrowed from a third party according to the payment guarantee of the foreign shareholder.
(4) In applying Article 14 of the Act, the amount borrowed by a domestic corporation from a foreign controlling shareholder or from a third party according to the payment guarantee of a foreign controlling shareholder shall be converted by applying the reference exchange rate or arbitrated exchange rate under the Foreign Exchange Transactions Act as of the end of the business year concerned.
(5) Notwithstanding paragraph (4), a domestic corporation engaged in the financial industry (hereinafter referred to as "financial industry") under the Korean Standard Industrial Classification announced by the Commissioner of the Korea National Statistical Office under Article 22 of the Statistics Act may, in converting the amount borrowed, may select and apply any of the following exchange rates. In such cases, the conversion method selected and applied shall be continuously applied at least for five years from the commencing date of the relevant business year:
1. Reference exchange rate or arbitrated exchange rate under the Foreign Exchange Transactions Act as of the end of the business concerned;
2. Daily Reference exchange rate or arbitrated exchange rate under the Foreign Exchange Transactions Act.
[This Article Wholly Amended by Presidential Decree No. 23600, Feb. 2, 2012]
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 Article 25 (Calculation Method of Non-deductible Expenses)   print
(1) The amount deemed not to be included in deductible expenses under Article 14 (1) of the Act shall be the amount of interest and discount fees obtained by summing each result of multiplying respective debts by respective relevant interest rates in order from the highest interest rate (where there exist two or more debts to which the same interest rate is applicable, an order of debts from the latest time shall be applied) among total debts of a domestic corporation from its foreign controlling shareholder, and the limit of such sum shall be the time the accumulated amount of debts from the debt of highest interest rate reaches the exceeded amount accumulated, and where the accumulated amount exceeded, among accumulated amounts of the last debts when the accumulated amount surpasses the accumulated amount exceeded, exceeds the accumulated amount exceeded in its portion shall be excluded. In such case, the accumulated amount exceeded shall be calculated under the following formula;
Accumulated amount exceeded = Accumulated amount of total debts of domestic corporations (including a domestic business place of a foreign corporation; hereinafter the same shall apply in this Chapter) from its foreign controlling shareholder (including a third party providing loans to the domestic corporation under the foreign controlling shareholder's guarantee; hereafter the same shall apply in this Chapter) (accumulated amount of equity investment of foreign controlling shareholder in the domestic corporation x standard multiple (three times or multiples by industry as provided in Article 26))
(2) The scope of interest and discount fees which shall be summed as provided in paragraph (1) shall include every item as all interest incomes generated from the borrowings under Article 24, whose economic substance corresponds to interests, such as a depreciation amount of differences in issuing bond at a discount and a discount charge of a negotiable bill, etc. which a domestic corporation shall pay to the foreign controlling shareholder: Provided, That the interest of construction capital funds shall be excluded from the scope of interests and discount fees.
(3) The equity investment of a foreign controlling shareholder in a domestic corporation pursuant to paragraph (1) and Article 27 (2) means an amount obtained by multiplying an amount which is bigger among the amounts in the following subparagraphs by the ratio (in cases where a foreign shareholder and a foreign corporation of which debts must be added up pursuant to Article 24 (3) are all included in a foreign controlling shareholder, the ratio of the foreign shareholder's paid-in capital shall be deemed to be that of the paid-in capital of the foreign shareholder and the foreign corporation) of the capital paid by the foreign controlling shareholder to the total amount of paid-in capital of the domestic corporation concerned as of the end of the business year concerned: Provided, That in the case of the domestic business place, such amount means the amount that is obtained by deducting the total liabilities from the total assets on the statement of financial position of the business place as of the end of each business year:
1. An amount obtained by deducting the total liabilities (including reserves and excluding the unpaid corporation tax) from the total assets on the statement of financial position as of the end of the relevant business year;
2. The paid-in capital calculated in accordance with the following calculation formula as of the end of the relevant business year:
Amount of capital + (amount in excess of par value of shares issued and gains from capital reduction) - (discount on capital stock and loss arising from capital reduction)
(4) If there is any change in capital due to a merger or division, or increase or reduction of capital during the relevant business year, the sum of multiplied numbers, which are calculated separately into the period starting from the first day of the relevant business year to the day before the date of any change, and the period starting from the date of such change to the last day of the relevant business year, shall be the multiplied amount as referred to in paragraph (3) 1, or the multiplied paid-in capital as referred to in subparagraph 2 of the same paragraph.
(5) In applying paragraph (3), where the foreign controlling shareholder indirectly owns the shares of a domestic corporation, the ratio occupied by the foreign controlling shareholder's paid-in capital in the total paid-in capital shall be calculated by the methods in the following subparagraphs:
1. Where one or more corporations interpose between a foreign controlling shareholder and a domestic corporation by means of a stock ownership, and all of them correspond to the relationship connected in tandem (hereinafter referred to as the "tandem investment relationship"), the ratio of foreign controlling shareholder's paid-in capital in the domestic corporation shall be computed by multiplying all equity ratios in every phase: Provided, That where a foreign shareholder and a foreign corporation whose debts are added up as prescribed in Article 24 (3) are all included in the tandem investment relationship, it shall be computed by applying Article 2 (2) mutatis mutandis. In such cases, the "indirectly-owned ratio" shall be construed as the "ratio of paid-in capital";
2. Where there exist two or more tandem investment relationships between a foreign controlling shareholder and a domestic corporation, the ratio of foreign controlling shareholder's paid-in capital in the domestic corporation shall be computed by adding up all paid-in capital ratios computed in a respective tandem investment relationship.
(6) In applying Article 14 (1) of the Act, the interest on the debt borrowed from a foreign controlling shareholder which is not included in deductible expenses shall be deemed disposed of as dividend under Article 67 of the Corporate Tax Act, and the interest on the debt borrowed from a third party under a payment guarantee of a foreign controlling shareholder which is not included in deductible expenses shall be deemed disposed of as outflow of income under Article 67 of the Corporate Tax Act.
(7) Deleted. <by Presidential Decree No. 22574, Dec. 30, 2010>
[This Article Wholly Amended by Presidential Decree No. 23600, Feb. 2, 2012]
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 Article 26 (Multiples by Industry)   print
The multiple of a loan to apply with respect to equity in investment held by a foreign controlling shareholder shall be six times in accordance with Article 14 (2) of the Act in cases of the financial industry.
[This Article Wholly Amended by Presidential Decree No. 23600, Feb. 2, 2012]
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 Article 27 (Borrowings under Ordinary Conditions)   print
(1) Where a domestic corporation, whose multiplier of borrowings against a foreign controlling shareholder's equity in investment exceeds as much as three times, intends to be subject to the application of Article 14 (3) of the Act, it shall submit any of the following data falling to the competent tax authority within the deadline for filing a return under Article 60 (1) or 76-17 (1) of the Corporate Tax Act: <Amended by Presidential Decree No. 24365, Feb. 15, 2013>
1. Data attesting that the relevant borrowings shall actually not correspond to the capital contribution, when taking account of the interest rate, maturity, payment method, possibility of conversion into capital, priority over other claims, etc.;
2. Data on the multiplier of borrowings against the equity capital of a comparable corporation carrying on the same business type as that of the relevant domestic corporation (hereinafter referred to as the "comparable multiplier"). In such cases, "comparable corporation" means a corporation having a representative nature based on its multiplier of borrowings among domestic corporations having a business size and managerial conditions, etc. similar to those of the relevant domestic corporation.
(2) Where the multiplier of borrowings against a foreign controlling shareholder's equity in investment in a domestic corporation exceeds the comparable multiplier, Article 25 (1) shall apply to the computation method of the non-deductible expense of the domestic corporation. In such cases, "standard multiple" shall be construed as "comparable multiple."
[This Article Wholly Amended by Presidential Decree No. 23600, Feb. 2, 2012]
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 Article 28 (Adjustment of Withholding Tax Amount)   print
A domestic corporation shall, where it has a payable tax amount after offsetting the withholding taxes under Article 14 (4) of the Act, it shall pay the tax amount to the head of the tax office having jurisdiction over the tax payment place no later than the tenth of the month next to that on which the deadline for filing a return under Article 60 (1) or 76-17 (1) of the Corporate Tax Act falls, and where it has a refundable tax amount, it may request the head of the tax office having jurisdiction over the tax payment place to refund the relevant amount. <Amended by Presidential Decree No. 24365, Feb. 15, 2013>
[This Article Wholly Amended by Presidential Decree No. 23600, Feb. 2, 2012]
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 Article 28-2 (Submission of Forms)   print
A domestic corporation which has borrowed funds from a foreign controlling
shareholder (including a payment guarantee) shall submit a specification of adjustment of interests payable to a foreign controlling shareholder and a specification of adjustment of withholding taxes as provided in Ordinance of the Ministry of Strategy and Finance, to the head of the tax office having jurisdiction over the tax payment place at the time of a final return of tax base and tax amount of corporate tax under Article 60 (1) or 76-17 (1) of the Corporate Tax Act. <Amended by Presidential Decree No. 24365, Feb. 15, 2013>
[This Article Wholly Amended by Presidential Decree No. 23600, Feb. 2, 2012]
CHAPTER IV ACCUMULATIVE TAXATION OF RETAINED EARNINGS OF SPECIFIC FOREIGN CORPORATIONS
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 Article 29 (Scope of Corporation's Actually Accrued Income)   print
(1) The scope of a corporation's actually accrued income under Article 17 (1) of the Act shall refer to the net income per books before deducting the corporate tax, which has been computed under the generally accepted accounting principles upon preparation of financial statements in a state or region where the head or main office of the relevant corporation is located (hereafter referred to as the "resident state" in this Chapter): Provided, That where the accounting principles generally accepted in the resident state are remarkably different from the Korean corporate accounting principles, the net income per books before deducting the corporate tax on the financial statements computed by applying the Korean corporate accounting principles shall be deemed the actually accrued income.
(2) The net income per books before deducting the corporate tax under paragraph (1) shall refer to the net income before deducting the taxes imposed on the corporate income computed under the tax laws of the resident state of the relevant foreign corporation, and other taxes incidental to them.
(3) Where the appraised gain or loss (hereafter referred to as "appraised gain or loss" in this Article) in an asset specified by Ordinance of the Ministry of Strategy and Finance has been reflected in the net income per books before deducting the corporate tax pursuant to paragraph (1), such an appraised gain shall be deducted, while the appraised loss in an asset shall be included in the amount, where such an asset is sold or dividends or distribution generated from such an asset is received in the pertinent business year, and there is such appraised gain or loss in the asset before the pertinent business year: Provided, That the appraised gain or loss shall not be added nor subtracted if all or part of the appraised gain or loss was reflected in the relevant resident state at the time of calculating the taxable income of the corporation.
[This Article Wholly Amended by Presidential Decree No. 23600, Feb. 2, 2012]
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 Article 30 (State or Region where Corporation's Tax Burden is 15 percent or less of Actually Accrued Income)   print
For the purpose of Article 17 (1) of the Act, the term "a state or a region in which the tax burden is 15percent or less of the income actually earned by the corporation" means a state or a region in which the taxes imposed on the aggregate of the net income per books before deducting the corporate tax of the relevant corporation for the latest three business years (in the case of the business year when the net income per books before deducting the corporate tax is deficit, the deficit shall not be deemed to exist; hereinafter the same shall apply in this Article) under the tax laws of the said resident state is not more than 15 percent of the aggregate of the net income per books before deducting the corporate tax of the relevant corporation for the latest three business years, including the relevant business year (or it shall be the period until the relevant business year, if the period is less than three business years; hereafter referred to as the "latest three business years" in this Chapter). In such cases, the tax amount actually borne shall include the tax amount on the corporation's actually accrued income paid to states other than the relevant resident state.
[This Article Wholly Amended by Presidential Decree No. 23600, Feb. 2, 2012]
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 Article 30-2 (Scope, etc. of Nonresidents to be Included when Judging Special Relationship)   print
(1) "Nonresident prescribed by Presidential Decree" in Article 17 (1) of the Act means a national or nonresident who has a relationship set forth in subparagraph 20 (a) or (b) of Article 2 of the Framework Act on National Taxes.
(2) Where the percentage of shares indirectly owned by a nonresident under Article 17 (1) of the Act is calculated under Article 2 (2), shares indirectly owned by a nonresident provided under paragraph (1) through the relevant national shall be excluded.
[This Article Newly Inserted by Presidential Decree No. 24365, Feb. 15, 2013]
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 Article 31 (Computation of Distributable Retained Earnings)   print
(1) The retained earnings disputable as of the end of each business year mentioned in Article 17 (1) of the Act shall be the amount obtained by deducting each of the following amounts from the amount derived from adjusting matters provided under Ordinance of the Ministry of Strategy and Finance in the unappropriated surplus earnings (including interim dividends that have accrued from the appropriation of surplus earnings executed in the relevant business year; hereafter the same shall apply in this Article) computed under the generally accepted accounting principles at the time of preparing financial statements in the resident state of the relevant foreign corporation: Provided, That where the accounting principles generally accepted in the resident state are remarkably different from the Korean corporate accounting principles, the amount obtained by deducting each of the following amounts from the amount derived from adjusting matters provided under Ordinance of the Ministry of Strategy and Finance in the unappropriated surplus earnings computed under the Korean corporate accounting principles shall be deemed the distributable retained earnings: <Amended by Presidential Decree No. 24365, Feb. 15, 2013>
1. Dividends of profits (including interim dividends that have accrued from the appropriation of surplus earnings executed in the relevant business year) or distribution of surplus earnings, out of the amount of surplus earnings appropriated in the relevant business year;
2. Bonus, severance pay and any other outflow of incomes, out of the amount of surplus earnings appropriated in the relevant business year;
3. Obligatory reserve or obligatory appropriation of surplus earnings as determined by the Acts and subordinate statutes of the relevant resident State, out of the surplus earnings appropriated in the relevant business year;
4. The amount of surplus earnings set forth in subparagraph 1 that have not been appropriated, out of those already taxed by deeming to have been distributed to the relevant national under Article 17 (1) of the Act before the date the relevant business year commences;
5. The amount of surplus earnings set forth in subparagraphs 1 and 2 that have not been appropriated, out of the surplus earnings (excluding the amount set forth in subparagraph 6) accrued when Article 17 of the Act was not applied;
6. The amount of surplus earnings unattained yet as of the end of the relevant business year, out of the appraised gains set forth in Article 29 (3);
7. Deleted. <by Presidential Decree No. 24365, Feb. 15, 2013>;
8. The amount set forth in Article 34-2.
(2) Where a specific foreign corporation has retained any income distributable, as computed in accordance with paragraph (1), before the enforcement date of the amendment to the Enforcement Decree of the Adjustment of International Taxes Act (Presidential Decree No. 15196) and the amount under paragraph (1) 4 and 5 before the commencement date of the pertinent business year, it shall be deemed that the said amounts have been appropriated preferentially as surplus earnings in the order of the accrual, when the surplus earnings under paragraph (1) 1 and 2 are appropriated. <Amended by Presidential Decree No. 24365, Feb. 15, 2013>
[This Article Wholly Amended by Presidential Decree No. 23600, Feb. 2, 2012]
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 Article 32 (Computation of Amount Deemed to be Dividend)   print
(1) The amount deemed to be a dividend under Article 17 (1) of the Act shall be calculated by multiplying the distributable retained earnings of a specific foreign corporation by a shareholding ratio of relevant national in a specific foreign corporation.
(2) Where one or more corporations interpose between a national and a specific foreign corporation by means of a stock ownership, and all of them are connected in the tandem investment relationship, the shareholding ratio of a national in a specific foreign corporation shall be computed by multiplying all equity ratios in every phase.
(3) Where there exist two or more tandem investment relationships between a national and a specific foreign corporation, the shareholding ratio of a national in a specific foreign corporation shall be computed by summing up all shareholding ratios computed at the respective tandem investment relationship.
(4) Where one or more domestic corporations interpose between a national and a specific foreign corporation by means of a stock ownership in applying paragraph (2), the amount deemed to be a dividend shall not be computed among the nationals.
[This Article Wholly Amended by Presidential Decree No. 23600, Feb. 2, 2012]
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 Article 33 (Conversion of Amount Deemed to be Dividend by Foreign Currency)   print
In applying Article 32, the amount deemed a dividend shall be converted by applying the exchange rate as of the 60th day next to the end of each business year of the relevant specific foreign corporation, but the said exchange rate shall be governed by Ordinance of the Ministry of Strategy and Finance.
[This Article Wholly Amended by Presidential Decree No. 23600, Feb. 2, 2012]
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 Article 34 (Scope, etc. of Related Parties to be Included when Judging Scope of Nationals subject to Assumption of Distribution of Dividends)   print
(1) In applying Article 17 (2) of the Act, Article 2 (2) shall apply mutatis mutandis to the calculation of the indirect share holding ratio. <Amended by Presidential Decree No. 24365, Feb. 15, 2013>
(2) "Person prescribed by Presidential Decree" in the latter part of Article 17 (2) of the Act means a national or a person who has a relationship set forth in subparagraph 20 (a) or (b) of Article 2 of the Framework Act on National Taxes. <Newly Inserted by Presidential Decree No. 24365, Feb. 15, 2013>
[This Article Wholly Amended by Presidential Decree No. 23600, Feb. 2, 2012]
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 Article 34-2 (Computation of Amount Excluded from Scope of Actually Accrued Income)   print
"The amount specified by Presidential Decree" in Article 17 (3) of the Act means the amount obtained by converting an amount computed in accordance with Article 29 (1) through (3) by the reference exchange rate or the arbitrated exchange rate under the Foreign Exchange Transactions Act as of the end of each business year, which shall not exceed 200 million won. In such cases, the amount shall be computed in accordance with the following calculation formula if the pertinent business term is less than one year:
(200 million won ÷ 12) × the number of months of the pertinent business year
[This Article Wholly Amended by Presidential Decree No. 23600, Feb. 2, 2012]
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 Article 35 (Requirements for Decision on Scope of Application)   print
(1) Deleted. <by Presidential Decree No. 24365, Feb. 15, 2013>
(2) "Requirements prescribed by Presidential Decree" in Article 18 (1) 1 of the Act means any of the following requirements: <Amended by Presidential Decree No. 24365, Feb. 15, 2013>
1. The aggregate of the revenue amounts or of the purchase costs generated from the business lines listed in Article 18 (1) 1 of the Act shall exceed 50 percent of the total revenue amount or the total purchase cost: Provided, That it shall be based on the average amount during the latest three business years (where the period falls short of three business years, up to the period of the relevant business year), in case of a wholesale business;
2. The amount of trades with a specially-related party, out of the aggregate of the revenue amount or of the purchase amount generated from the business lines listed in Article 18 (1) 1 of the Act, shall exceed 50 percent of the aggregate of the revenue amount or of the purchase cost generated from the said business lines. In such cases, "domestic corporation" shall be construed as "specific foreign corporation" when Article 2 is applied to a special relationship.
[This Article Wholly Amended by Presidential Decree No. 23600, Feb. 2, 2012]
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 Article 36 (Decision of Primary Business)   print
The primary business pursuant to Article 18 (1) 2 of the Act and the part other than the subparagraphs of Article 18-2 of the Act means the business which generates the revenue amount exceeding 50 percent of the total revenue amount of the relevant specific foreign corporation.
[This Article Wholly Amended by Presidential Decree No. 23600, Feb. 2, 2012]
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 Article 36-2 (Special Cases to Scope of Application to Wholesale Business)   print
"Cases of meeting the requirements prescribed by Presidential Decree" in Article 18 (4) of the Act means cases where the amount of sales to an unrelated party in the same country, etc. under Article 18 (4) of the Act exceeds 50 percent of total sales. In such cases, a "domestic corporation" shall be construed as a "specific foreign corporation" when Article 2 is applied to a special relationship. <Amended by Presidential Decree No. 24365, Feb. 15, 2013>
[This Article Wholly Amended by Presidential Decree No. 23600, Feb. 2, 2012]
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 Article 36-3 (Requirements, etc. for Affiliated Company)   print
(1) "Requirements prescribed by Presidential Decree" in the part other than the subparagraphs of Article 18-2 of the Act means the following requirements: <Amended by Presidential Decree No. 24365, Feb. 15, 2013>
1. The specific foreign corporation shall own more than 40 percent of the total number of its outstanding stocks or total amount of its investment;
2. It shall not be subject to the application of Article 17 (1) of the Act.
(2) "Ratio specified by Presidential Decree" in subparagraph 2 of Article 18-2 of the Act means 90 percent.
[This Article Wholly Amended by Presidential Decree No. 23600, Feb. 2, 2012]
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 Article 36-4 (Request for Rectification)   print
(1) A person who intends to be governed by Article 19 (2) of the Act shall re-compute the tax base and tax amount of income tax or corporate tax for the taxable year for which the deemed dividend was included in gains according to Article 19 (1) of the Act, and shall file a request for rectification concerning the refund of the same amount along with an accompanying statement of the tax credit for the taxes paid in a foreign state prescribed by Ordinance of the Ministry of Strategy and Finance. <Amended by Presidential Decree No. 24365, Feb. 15, 2013>
(2) A person who intends to request the rectification under paragraph (1) may file a request for rectification along with evidencing documents within 45 days from the day on which a foreign government notifies him/her of the determination of the tax amount for the overseas dividend income, if it is impossible to file a request for rectification at the time of filing the return on income tax or corporate tax because of delay in determination and notice of the tax amount for the dividend income by the foreign government, difference in the taxable period, etc.
[This Article Wholly Amended by Presidential Decree No. 23600, Feb. 2, 2012]
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 Article 36-5 (Method to Exclude Actual Dividends from Gross Income)   print
(1) Where a specific foreign corporation has paid dividends actually (including dividends or distributions under any subparagraph of Article 16 (1)of the Corporate Tax Act) to a national, it shall be deemed that the actual dividends have been paid from retained earnings in the order of accrual of the distributable retained earnings.
(2) Where a national has invested in a foreign corporation, and the said foreign corporation (hereinafter referred to as the "intermediate corporation") has in turn invested in a specific foreign corporation, if the intermediate corporation pays dividends actually to the national, such dividends shall be construed as the earnings carried forward under subparagraph 2 of Article 18 of the Corporate Tax Act or the one that does not fall within the dividend income under Article 17 (1) of the Income Tax Act (hereinafter referred to as "carried forward earnings, etc."): Provided, That such carried forward earnings, etc. shall not exceed the amount pursuant to the following calculation formula:
The aggregate amount of (the retained earnings actually paid by a specific foreign corporation, as dividends, to the intermediate corporation (including the dividends or distributions under each subparagraph of Article 16 of the Corporate Tax Act) × the shareholding ratio of the national to the intermediate corporation at the time of actual dividends) - The amount already paid by the intermediate corporation, as dividends, to the national during the bygone business year and thereby deemed as the carried forward earnings, etc.
(3) Where at least two intermediate corporations interpose between the national and the specific foreign corporation, paragraph (2) shall apply to the amount of dividends.
[This Article Wholly Amended by Presidential Decree No. 23600, Feb. 2, 2012]
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 Article 37 (Submission of Taxation Data)   print
(1) A national subject to Articles 17, 18, 18-2, 19 and 20 of the Act shall submit to the head of a tax office having jurisdiction over the tax payment place the related documents, such as financial statements, corporate tax return and supplementary documents, basis for computing distributable retained earnings of the specific foreign corporation, and other documents as prescribed by Ordinance of the Ministry of Strategy and Finance, at the time of final return on tax base and tax amount of corporate tax for respective business years, or of final return on tax base and tax amount of composite income tax for respective taxable years.
(2) A national who has directly or indirectly invested in a foreign corporation setting up the head or main office or the substantial management venue of the business described in Article 18 (2) of the Act in the state or region under Article 30 (applicable only to a national to whom Articles 17, 18, 18-2, 19, and 20 of the Act shall apply), shall submit to the head of a tax office having jurisdiction over the tax payment place a specification of overseas investment as determined by Ordinance of the Ministry of Strategy and Finance at the time of final return on tax base and tax amount of corporate tax for respective business years, or of final return on tax base and tax amount of composite income tax for respective taxable years.
[This Article Wholly Amended by Presidential Decree No. 23600, Feb. 2, 2012]
CHAPTER V SPECIAL CASE OF GIFT TAX ON OVERSEAS GIFT
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 Article 38 (Market Price Computation of Overseas Gift Property)   print
(1) In computing the market price of the gift property pursuant to the purview of Article 21 (2) of the Act, where any of the following values is verified, such value shall be construed as the market price of the relevant gift property:
1. Actual sale price, realized within 6 months before and after the date of donation of a gift property;
2. Appraised value evaluated by an appraisal institution with public confidence within 6 months before and after the date of donation of a gift property;
3. Compensation price for a gift property, fixed through an expropriation, etc. within 6 months before and after the date of donation of a gift property.
(2) "Method as specified by Presidential Decree" in the proviso to Article 21 (2) of the Act means an evaluation of the value of a gift property by applying mutatis mutandis Articles 61 through 65 of the Inheritance Tax and Gift Tax Act: Provided, That where the method of evaluation inappropriate, it shall refer to an evaluation by the land appraisal corporation incorporated pursuant to the Public Notice of Values and Appraisal of Real Estate Act.
(3) The evaluation method pursuant to Article 63 of the Inheritance Tax and Gift Tax Act shall be applied mutatis mutandis to the computation of the value of securities.
[This Article Wholly Amended by Presidential Decree No. 23600, Feb. 2, 2012]
CHAPTER VI MUTUAL AGREEMENT PROCEDURES
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 Article 39 (Application, etc. for Commencement of Mutual Agreement Procedures)   print
(1) Any taxation that does not coincide with the provisions of the tax treaty under Article 22 (1) 2 of the Act shall contain the taxation falling under any of the following subparagraphs:
1. Unjustifiable taxation by a Contracting State, which fails to coincide with the tax laws or the method of tax imposition is in error;
2. Unjustifiable taxation by a Contracting State, which is remarkably inequitable or imposed discriminately.
(2) Any national, resident or domestic corporation intending to apply for the commencement of a mutual agreement pursuant to Article 22 (1) of the Act (hereafter referred to as the "applicant" in this Chapter) shall submit any of the following documents to the Minister of Strategy and Finance or the Commissioner of the National Tax Service:
1. A written application for commencing the mutual agreement procedures as provided by Ordinance of the Ministry of Strategy and Finance;
2. Financial statements and tax returns relevant to an application for commencing the mutual agreement procedures;
3. An appeal, in cases where the applicant or his/her foreign related party files an appeal for dissatisfaction;
4. Deleted. <by Presidential Decree No. 24365, Feb. 15, 2013>
5. Deleted. <by Presidential Decree No. 24365, Feb. 15, 2013>
(3) The Commissioner of the National Tax Service shall, pursuant to Article 22 (3) and (5) of the Act, submit to the Minister of Strategy and Finance a quarterly report on the current status of applications for commencement, and progresses, of the mutual agreement procedures as prescribed by the Minister of Strategy and Finance within 15 days from the expiration of each quarter. In such cases, the aforementioned status of progress shall include the status of progress of the mutual agreement procedures, whose commencement has been requested by the Contracting State.
(4) The Minister of Strategy and Finance or the Commissioner of the National Tax Service shall, upon receipt of an application for commencing the mutual agreement procedures under Article 22 (1) of the Act, review whether to accept the application for commencing the mutual agreement procedures, taking account of any of the following matters:
1. Whether to fall under Article 22 (1) 1 through 3 of the Act;
2. Whether the tax authorities are able to make a rational adjustment by taking necessary measures, without bothering with commencing the mutual agreement procedures.
(5) The Minister of Strategy and Finance or the Commissioner of the National Tax Service may, when it fails to meet the requirements for an application for the mutual agreement procedures as a result of reviews under paragraph (4), request the applicant to supplement it and refile the said application.
(6) The Minister of Strategy and Finance or the Commissioner of the National Tax Service may, where the applicant consents thereto even after receiving an application for commencing the mutual agreement procedures, refrain from requesting a Contracting State to commence the mutual agreement procedures, or discontinue the mutual agreement procedures which have already commenced.
[This Article Wholly Amended by Presidential Decree No. 23600, Feb. 2, 2012]
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 Article 40 (Special Exception to Deferment of Collection, etc.)   print
(1) and (2) Deleted. <by Presidential Decree No. 19650, Aug. 24, 2006>
(3) A person who intends to be subject to an application of special cases of the deferment of tax payment notice, of collection of taxes, or of disposition for arrears under Article 24 (2) and (3) of the Act, shall submit any of the following documents to the head of a tax office having jurisdiction over the tax payment place or the head of a local government:<Amended by Presidential Decree No. 17045, Dec. 29, 2000; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 23600, Feb. 2, 2012>
1. A written application for the special exception to deferment of collection, etc., as provided by Ordinance of the Ministry of Strategy and Finance;
2. A copy of the notification of commencing the mutual agreement procedures issued by the Commissioner of the National Tax Service.
(4) In applying Article 24 (2) and (3) of the Act, the head of a tax office having jurisdiction over the tax payment place or the head of a local government in receipt of an application under paragraph (3) shall not grant to the deferment of tax payment notice, of collection of taxes, or of disposition in the arrears in any of the following cases. In such cases, where the deferment of tax payment notice, of collection of taxes, or of disposition in arrears has been already granted, such deferments shall be canceled without delay, and the tax amount and delinquent taxes related to such deferments shall all be collected in a lump sum:
1. Where the applicant has defaulted on his/her taxes in the past;
2. Where the applicant fails to comply with an obligation to submit the data under Article 11 of the Act;
3. Where there exists a very high possibility of losing a taxation right.
[Title Amended by Presidential Decree No. 23600, Feb. 2, 2012]
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 Article 41 (Calculation Method of Additional Amount Equivalent to Interest)   print
Where any deferment of collection of taxes or of disposition in arrears is granted under Article 24 (5) of the Act, the method of calculating the additional amount equivalent to the interest to be added to the national taxes or local taxes, shall be as follows:
Additional amount equivalent to interest = Relevant national tax or local tax subject to the deferment of collection or of disposition for arrears (where an adjustment is made under the mutual agreement procedures, the relevant adjusted amount) × Number of days until the closing day of mutual agreement from the day arriving later between the day next to the deadline of tax payment, and the commencing day of mutual agreement × the rate provided in Article 27-4 of the Enforcement Decree of the Framework Act on National Taxes.
[This Article Wholly Amended by Presidential Decree No. 23600, Feb. 2, 2012]
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 Article 41-2 (Notification of Fact of Deferring Notifications, etc.)   print
Where any deferment of notification, notification of installed payment, deferment of tax collection, or deferment of disposition for arrears (hereafter referred to as the "deferment of notification, etc." in this Article) is applied on the income tax amount or the corporate tax amount under Article 24 (7) of the Act, the fact of the deferment of notification, etc. shall, when the taxpayer is notified of the deferment of notification, etc., be notified to the head of a local government having jurisdiction over the local taxes to be added to the relevant income tax amount or corporate tax amount, by applying mutatis mutandis Article 24 of the Enforcement Decree of the National Tax Collection Act.
[This Article Wholly Amended by Presidential Decree No. 23600, Feb. 2, 2012]
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 Article 42 (Report on Terms and Conditions Mutually Agreed, and Notice Thereof)   print
(1) The Commissioner of the National Tax Service shall, when the mutual agreement procedures are concluded, submit without delay to the Minister of Strategy and Finance a copy of the mutual agreement under Article 27 (1) of the Act.
(2) A notification of a conclusion of mutual agreement procedures under Article 27 (2) of the Act shall be made by a notification form of the conclusion of mutual agreement procedures as provided by Ordinance of the Ministry of Strategy and Finance.
(3) The heads of tax authorities or of local governments shall, where they have made a tax imposition, revised decision, and taken the measures required under tax laws under Article 27 (3) of the Act, notify the Minister of Strategy and Finance or the Commissioner of the National Tax Service of the said fact, within 15 days from the day next to that on which such measures have been taken.
[This Article Wholly Amended by Presidential Decree No. 23600, Feb. 2, 2012]
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 Article 42-2 (Extended Application, etc. of Terms and Conditions Mutually Agreed)   print
(1) A person who intends to apply for the extended application of the terms and conditions mutually agreed upon in accordance with Article 27-2 (1) of the Act shall file an application with the head of the competent tax authority or local government along with the following documents:
1. Application for the extended application of terms and conditions mutually agreed upon, as prescribed by Ordinance of the Ministry of Strategy and Finance;
2. Documents proving that the requirements under subparagraphs of Article 27-2 (1) of the Act are all met.
(2) "Requirements prescribed by Presidential Decree" in Article 27-2 (1) 3 of the Act means that the ordinary profit or net income rate from the transaction as applied at the time of computing the arm's length price shall be identical.
[This Article Wholly Amended by Presidential Decree No. 23600, Feb. 2, 2012]
CHAPTER VII TAX COOPERATION BETWEEN STATES
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 Article 43 (Procedures for Issuance of Resident Certificate)   print
(1) A person who intends to submit the resident certificate to a Contracting State in order to be subject to the application of limited tax rate in a Contracting State under Article 29 (2) of the Act, shall submit a written application for issuance of the resident certificate as provided in Ordinance of the Ministry of Strategy and Finance to the head of a tax office having jurisdiction over the tax payment place.
(2) The head of a tax office having jurisdiction over the tax payment place shall, upon receipt of an application for issuance of the resident certificate pursuant to paragraph (1), issue the resident certificate prescribed by Ordinance of the Ministry of Strategy and Finance, after confirming the facts thereof: Provided, That where he/she is requested to issue the resident certificate in a form issued by the Contracting State, he/she may issue such certificate as pursuant to a relevant form.
[This Article Wholly Amended by Presidential Decree No. 23600, Feb. 2, 2012]
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 Article 44 (Procedures for Entrustment of Tax Collection)   print
(1) Where the head of a tax office having jurisdiction over the tax payment place or of local government requests, pursuant to Article 30 (1) of the Act, the Commissioner of the National Tax Service to ask the Contracting State to take measures required for a tax collection, he/she shall submit any of the following documents: Provided, That the documents under subparagraphs 2 shall be submitted only if they are collectable in Korea:
1. A written request to entrust the tax collection between the states as provided by Ordinance of the Ministry of Strategy and Finance;
2. Documents concerning the nationality, current status of residence and the status of domestic and overseas property ownership of any of the following persons:
a) A taxpayer;
b) A person jointly and severally liable for tax payment under Article 25 of the Framework Act on National Taxes or Article 44 of the Framework Act on Local Taxes;
(2) The Commissioner of the National Tax Service shall, upon receipt of a request to entrust the tax collection under paragraph (1), decide whether to comply with such request for tax entrustment, after reviewing any of the following matters:
1. The nationality, residence and property ownership of a person liable for tax payment;
2. Current status of the joint and several tax liability and of a security for tax payment;
3. Possibility for losing the taxation rights;
4. Extinctive prescription of taxation right;
5. Other matters necessary for tax collection.
(3) The Commissioner of the National Tax Service shall, where he/she makes a decision on the entrustment of tax collection under paragraph (2), request the competent authority of a Contracting State to collect such tax.
(4) The Commissioner of the National Tax Service shall, upon receipt of a notification of disposition results of entrusted tax collection from a Contracting State, immediately notify the head of tax office having jurisdiction over the tax payment place or of local government of the details of such notification.
[This Article Wholly Amended by Presidential Decree No. 23600, Feb. 2, 2012]
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 Article 45 (Procedures for Entrusted Tax Collection)   print
(1) Upon receipt of an entrustment of tax collection from the competent authority of a Contracting State, the Minister of Strategy and Finance shall delegate the disposition thereof to the Commissioner of the National Tax Service. In such cases, the Commissioner of the National Tax Service shall make a report on the results of such disposition to the Minister of Strategy and Finance.
(2) Where the Commissioner of the National Tax Service is entrusted with tax collection by the competent authority of a Contracting State or is delegated to dispose of the tax collection by the Minister of Strategy and Finance under paragraph (1), he/she shall without delay notify the person subject to tax collection who resides in Korea of the fact of being entrusted with such tax collection. In such cases, the Commissioner of the National Tax Service may demand the said subject person to submit the vindicating data thereof.
(3) The Commissioner of the National Tax Service may require the competent authority of a Contracting State to furnish the data verifying the obligation for tax payment of the person subject to tax payment, such as the court's final judgment, results of appeal for dissatisfaction, etc., related to the entrusted tax collection.
(4) Where the Commissioner of the National Tax Service examines whether he/she cooperates in tax collection for a Contracting State, he/she shall take account of any of the following matters:
1. Documents secured pursuant to paragraphs (2) and (3);
2. Matters provided in each subparagraph of Article 44 (2);
3. Whether a Contracting State cooperates with the Republic of Korea in tax collection, according to the principle of reciprocity.
(5) The Commissioner of the National Tax Service may, if deemed necessary for an examination under paragraph (4), request a Contracting State to make a consultation thereon.
(6) Where the Commissioner of the National Tax Service decides to cooperate with a Contracting State for tax collection, he/she shall without delay instruct the head of tax office having jurisdiction over the tax payment place to collect the relevant tax.
(7) The head of tax office in receipt of an instruction to collect tax under paragraph (6), shall collect the relevant tax under the conditions as provided by the National Tax Collection Act, and report the results thereof to the Commissioner of the National Tax Service. In such cases, any expenses incurred in excess of the regular collection expense in connection with tax collection shall be deducted from the collected tax and paid to the National Treasury, and the details of such calculation shall be reported to the Commissioner of the National Tax Service.
[This Article Wholly Amended by Presidential Decree No. 23600, Feb. 2, 2012]
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 Article 46 (Remittance of Collected Taxes)   print
(1) The Commissioner of the National Tax Service in receipt of the report from the head of tax office under Article 45 (7) shall notify a Contracting State of the results of tax collection under entrustment, together with the details of deductions of collection expenses.
(2) The method of remitting a Contracting State's taxes collected in Korea or the Korean taxes collected in a Contracting State shall be determined by a consultation with the competent authority of the Contracting State.
(3) The Commissioner of the National Tax Service shall, where he/she has received a remittance of Korean taxes collected in a Contracting State, revert such amount to the National Treasury or to the tax income account of a local government.
[This Article Wholly Amended by Presidential Decree No. 23600, Feb. 2, 2012]
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 Article 47 (Exchange of Tax Information and Financial Information)   print
(1) Deleted. <Presidential Decree No. 22040, Feb. 18, 2010>
(2) Where the competent authority requests the offering of financial information pursuant to Article 31 (2) and (3) of the Act, such a request shall be made in accordance with the standard form prescribed in Article 4 (2) of the Act on Real Name Financial Transactions and Confidentiality (hereafter referred to as "request for financial transaction information" in this Article). In such cases, when the personal information of the title holder is unable to be specified at the time of requesting the regular provision of financial information under Article 31 (3) of the Act, the personal information of the title holder may not be entered in the request for financial transaction information. <Amended by Presidential Decree No. 19650, Aug. 24, 2006; Presidential Decree No. 23600, Feb. 2, 2012; Presidential Decree No. 24365, Feb. 15, 2013>
(3) The competent authority shall, where it provides tax or financial information of a specific taxpayer upon request of the competent authority of a Contracting State pursuant to Article 31 (1) or (2) of the Act, notify the relevant taxpayer or his/her agent of the fact that the said tax or financial information has been provided, the details of such information provided, etc. in accordance with the notice of the details of information provided, as prescribed by Ordinance of the Ministry of Strategy and Finance, within 10 days from the date of such provision (where the notification is deferred under paragraph (4), from the date when the deferment period terminates).<Amended by Presidential Decree No. 19650, Aug. 24, 2006; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 23600, Feb. 2, 2012>
(4) When the competent authority receives a written request for the deferment of notification from a Contracting State due to any of the following cases, he/she may defer the notification for the period of deferment requested (if the period of deferment requested due to any cause as referred to in subparagraph 2 or 3 is not less than 6 months, for 6 months), notwithstanding paragraph (3): <Amended by Presidential Decree No. 23600, Feb. 2, 2012>
1. Where such notification is likely to jeopardize the safety of a person's life or body;
2. Where it is evident that such notification is likely to obstruct the fair progress of judicial proceedings, such as the destruction of evidence, a threat to a witness, etc.;
3. Where it is evident that such notification is likely to obstruct or excessively delay the progress of administrative procedures, such as inquiry and examination.
(5) Where the competent authority requests the regular provision of financial information under Article 31 (3) of the Act, a certain period may be fixed in the first request for financial transaction information to substitute for the requests to be made during the relevant period, except for the cases where any change occurs in the content of the request or in the financial company, etc. (referring to any financial company, etc. as defined in subparagraph 1 of Article 2 of the Act on Real Name Financial Transactions and Confidentiality; hereinafter the same shall apply) subject to the request. <Newly Inserted by Presidential Decree No. 24365, Feb. 15, 2013>
(6) A person working for a financial company, etc. that provides financial information under Article 31 (3) of the Act shall submit financial information to the head of the tax office having jurisdiction over the place of tax payment of the relevant financial company, etc. within six months from the date on which the competent authority requests the provision of the relevant financial information (in cases falling under paragraph (5), by the date fixed in the first request for financial information for the regular provision of information) through information and communications networks as defined in subparagraph 18 of Article 2 of the Framework Act on National Taxes or by means of an electronic data storage medium, such as diskette after preparing it by each branch office in accordance with the statement on provision of information prescribed by Ordinance of the Ministry of Strategy and Finance. <Newly Inserted by Presidential Decree No. 24365, Feb. 15, 2013>
[This Article Wholly Amended by Presidential Decree No. 17832, Dec. 30, 2002]
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 Article 48 (Cooperation in Tax Audit)   print
A competent authority may consult with the competent authority of a Contracting State on matters necessary for cooperation in the tax audit between the states, such as the procedure, method and scope, etc. of the cooperation in the tax audit.
[This Article Wholly Amended by Presidential Decree No. 23600, Feb. 2, 2012]
CHAPTER VIII REPORT ON OVERSEAS FINANCIAL ACCOUNT
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 Article 49 (Report, etc. on Overseas Financial Account)   print
(1) "Amount prescribed by Presidential Decree" in the part other than each subparagraph of Article 34 (1) of the Act means one billion won.
(2) "Financial company prescribed by Presidential Decree" in Article 34 (2) of the Act means any financial company, etc. or financial company, etc. similar thereto, among the financial companies, etc. established under any finance-related Acts or subordinate statutes of foreign countries. <Amended by Presidential Decree No. 24365, Feb. 15, 2013>
(3) Deleted. <by Presidential Decree No. 24365, Feb. 15, 2013>
(4) "Methods as prescribed by Presidential Decree" under Article 34 (5) 1 of the Act means the method of calculating the period of residence in accordance with Article 4 (1) and (2) of the Enforcement Decree of the Income Tax Act.
(5) "Person who meets the requirements prescribed by Presidential Decree, including a case where the confirmation of information on his/her overseas financial account becomes available through a report by another person under a joint name, etc." in Article 34 (5) 4 of the Act means a person whose information on all overseas financial accounts becomes available to the head of tax office having jurisdiction over the tax payment place, as anyone among the persons related to the overseas financial account pursuant to Article 34 (4) of the Act submits the information on his/her overseas financial account together under Article 50 (6).
(6) "Institution prescribed by Presidential Decree" in Article 34 (5) 5 of the Act means any of the following persons:
1. An institution related to financial investment business, collective investment organization, collective investment organization appraisal company, bond appraisal company under the Financial Investment Services and Capital Markets Act;
2. A financial holding company under the Financial Holding Companies Act,
3. A foreign exchange agency and foreign exchange brokerage company under the Foreign Exchange Transactions Act;
4. A credit information company under the Use and Protection of Credit Information Act.
[This Article Wholly Amended by Presidential Decree No. 23600, Feb. 2, 2012]
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 Article 50 (Standards, etc. for Determination of Persons Liable to Report)   print
(1) Residents and domestic corporations under Article 34 (1) of the Act shall be determined on the basis of the last day of the year in which they are liable to report.
(2) The remaining balance of the account of a person liable to report under Article 34 (1) of the Act (hereinafter referred to as "person liable to report") as of the last day of each month shall be computed by summing the amounts calculated according to the following classifications as to the assets of each overseas financial account (including all accounts held during the entire period of the relevant year, including those with no transaction history or those closed during the relevant year) held by the person liable to report after converting them respectively at the exchange rates (referring to a daily basic or arbitrated exchange rate under the Foreign Currency Exchange Transactions Act) of the relevant nominal currencies: <Amended by Presidential Decree No. 24365, Feb. 15, 2013>
1. Cash: Remaining balance as of the closing hour of the last day of each relevant month;
2. Stocks listed on the securities exchange under the Financial Investment Services and Capital Markets Act or on the overseas securities exchanges similar thereto, and depository receipts issued on the basis of such stocks: Quantity as of the closing hour of the last date of each relevant month × final price on the last day of each relevant month (final price on the immediately preceding transaction date, if the last day of each relevant month is not a transaction day);
3. Bonds listed on the securities exchange under the Financial Investment Services and Capital Markets Act or on the overseas securities exchange similar thereto: Quantity as of the closing hour of the last day of each relevant month × final price on the last day of each relevant month (final price on the immediately preceding transaction date, if the last day of each relevant month is not a transaction day);
4. Collective investment securities under the Financial Investment Services and Capital Markets Act or foreign collective investment securities similar thereto: Quantity as of the closing hour of the last day of each relevant month × base price on the last day of each relevant month (redemption price as of the last day of each relevant month or base price on the most closest date before the last day of each relevant month, if no base price on the last day of each relevant month exists;
5. Insurance products under the Insurance Business Act or foreign insurance products similar thereto: Amount paid as of the closing hour of the last day of each relevant month;
6. Assets other than those listed in subparagraphs 1 through 5: Quantity as of the closing hour of the last day of each relevant month × market price on the last day of each relevant month (acquisition price, if calculating the market price is impracticable).
(3) A person liable to report shall file a report on his/her overseas financial account with the head of tax office having jurisdiction over the tax payment place by the due date.
(4) An actual owner of an account in Article 34 (4) of the Act refers to a person who manages de facto the relevant account in transactions related to the relevant overseas financial account, regardless of the nominal name of the relevant account in such manner as taking the economic risks, acquiring the interest profit or dividends, or having the right to dispose of the relevant account: Provided, That in any of the following cases, he/she shall not be deemed an actual owner: <Amended by Presidential Decree No. 24365, Feb. 15, 2013>
1. Where the account owner of the relevant overseas financial account is a collective investment scheme under Article 9 (18) of the Financial Investment Services and Capital Markets Act or a collective investment scheme similar thereto established in a foreign country (limited to those registered with the Financial Services Commission under Article 279 (1) of the Financial Investment Services and Capital Markets Act), a person who has invested in the collective investment scheme concerned;
2. Where the account owner of the relevant overseas financial account is an investment broker under Article 8 (3) of the Financial Investment Services and Capital Markets Act or the Korea Securities Depository under Article 294 of the same Act, a person who has invested in the overseas financial asset concerned.
(5) A person related to an overseas financial account as referred to in Article 34 (4) of the Act shall be deemed to have all the amount of the remaining balance of the relevant account respectively.
(6) A person liable to report shall also submit the information on a person related to the overseas financial account in addition to that on himself/herself as provided in the report on overseas financial account under paragraph (3).
[This Article Wholly Amended by Presidential Decree No. 23600, Feb. 2, 2012]
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 Article 50-2 (Filing Revised Return of Overseas Financial Account, and Filing After Deadline)   print
(1) A person who intends to file a revised return of an overseas financial account pursuant to Article 37 (1) of the Act shall submit a letter of revised return of overseas financial account as determined by Ordinance of the Ministry of Strategy and Finance, indicating any of the following matters, to the head of a tax office having jurisdiction over the tax payment place:
1. Information on the overseas financial account reported for the first time;
2. Information on the overseas financial account to be reported with its revised return thereof.
(2) A person who intends to file information on an overseas financial account after its filing deadline pursuant to Article 37 (2) of the Act shall submit a letter of after-deadline return of overseas financial account as determined by Ordinance of the Ministry of Strategy and Finance to the head of a tax office having jurisdiction over the tax payment place.
[This Article Newly Inserted by Presidential Decree No. 23600, Feb. 2, 2012]
CHAPTER IX SUPPLEMENTARY PROVISIONS
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 Article 51 (Standards, etc. for Imposition of Fines for Negligence)   print
(1) Standards for fines for negligence under Article 12 (1) of the Act shall be as follows:
1. Where a person fails to submit or falsely submits all or part of the materials under Article 19 (1) 1 through 5, 7 through 9, 13 and 14: 50 million won;
2. Where a person fails to submit or falsely submits all or part of the materials under Article 19 (1) 6, 10 and 11: 30 million won;
3. Where a person fails to submit or falsely submits all or part of the materials under Article 19 (1) 12: 70 million won.
(2) Standards for imposition of fines under Article 31-3 (1) of the Act shall be as follows:
1. Where a person fails to submit or falsely submits all the financial information requested by a competent authority: 20 million won;
2. Where a person fails to submit part of the financial information requested by a competent authority: 10 million won.
(3) Standards for imposition of fines under Article 35 (1) of the Act shall be as follows:
1. Where the amount failed to be reported or understated does not exceed 2 billion won: four percent of the relevant amount;
2. Where the amount failed to be reported or understated exceeds 2 billion won but does not exceed 5 billion won: 80 million won + seven percent of the amount exceeding 2 billion won out of the relevant amount;
3. Where the amount failed to be reported or understated exceeds 5 billion won: 290 million won + ten percent of the amount exceeding 5 billion won out of the relevant amount.
(4) Fines for negligence computed under paragraphs (1) and (3) may be reduced or increased to the extent of half thereof taking into account of the severity, frequency, motive and consequence, etc. of a violation charged: Provided, That if so increased, the fines for negligence shall not exceed the maximum limit of fines for negligence under Articles 12 (1), 31-3 (1) and 35 (1) of the Act.
(5) Where fines for negligence computed pursuant to paragraphs (3) and (4) fall under any of the following subparagraphs, the amount of the fine shall be determined by applying the mitigation ratio set forth in each of the following subparagraphs:
1. Where a revised reporting was filed pursuant to Article 37 (1) of the Act after the filing deadline (hereafter referred to as "filing deadline" in this Article) prescribed in Article 34 (1) of the Act (excluding the cases where a person has already known the imposition of a fine for negligence by the tax authority and submitted the filing in advance), the ratios in accordance with each of the following items:
(a) Where a revised reporting is filed within six months after its filing deadline: 50/100 of the amount of the fine for negligence concerned;
(b) Where a revised reporting is filed within one year and exceeding six months after its filing deadline: 20/100 of the amount of the fine for negligence concerned;
(c) Where a revised reporting is filed within two years and exceeding one year after its filing deadline: 10/100 of the amount of the fine for negligence concerned.
2. Where an after-deadline reporting was filed pursuant to Article 37 (2) of the Act after the filing deadline (excluding the cases where a person has already known the imposition of a fine for negligence by the tax authority and submitted the filing in advance), the ratios in accordance with each of the following items:
(a) Where an after-deadline reporting was filed within one month after its filing deadline: 50/100 of the amount of the fine for negligence concerned;
(b) Where an after-deadline reporting was filed within six months and exceeding one month after its filing deadline: 20/100 of the amount of the fine for negligence concerned.
(6) When imposing fines for negligence under paragraph (1), a person who has been requested to submit materials fails to submit part of the materials or has caused errors in certain items by a negligible mistake, the tax authority may not impose fines for negligence after receiving supplementary materials, and fines for negligence shall not be imposed on the case where he/she fails to submit the materials referred to in Article 19 (1) 15.
(7) When imposing fines for negligence under paragraph (3), if there exists a reason deemed to be a failure to report caused by a minor mistake including an error in summing the remaining balances of the accounts, fines for negligence may not be imposed, and fines for negligence imposed on the case where more accounts failed to be reported or understated has been found shall be imposed by the amount deducted with the fines already imposed from the fines to be imposed on the basis of the total amount failed to be reported or understated.
[This Article Wholly Amended by Presidential Decree No. 23600, Feb. 2, 2012]
ADDENDA
Article 1 (Enforcement Date)
This Decree shall enter into force on January 1, 1996: Provided, That the provisions of Articles 9 through 14, and 24 through 37 shall enter into force on January 1, 1997, but where the business year commences on January 1, 1997, in applying Article 9 (1), the applicant shall submit the relevant documents within one month after the commencement of the relevant business year.
Article 2 (Applicable cases concerning Income Calculation)
The provisions concerning the incomes in this Decree shall apply from the portion first accruing on and after the enforcement date of this Decree.
Article 3 Omitted.
ADDENDA <Presidential Decree No. 15196, Dec. 31, 1996>
(1) (Enforcement Date) This Decree shall enter into force on January 1, 1997.
(2) (Applicable cases concerning Income Calculation) The provisions concerning the incomes in this Decree shall apply from the portion first accruing on and after the enforcement date of this Decree.
ADDENDA <Presidential Decree No. 15325, Mar. 29, 1997>
(1) (Enforcement Date) This Decree shall enter into force on the date of its promulgation.
(2) (Applicability) This Decree shall apply to the portion of the business year first closed on or after the enforcement date of this Decree.
ADDENDA <Presidential Decree No. 15970, Dec. 31, 1998>
Article 1 (Enforcement Date)
This Decree shall enter into force on January 1, 1999. (Proviso Omitted.)
Articles 2 through 19 Omitted.
ADDENDA <Presidential Decree No. 17045, Dec. 29, 2000>
Article 1 (Enforcement Date)
This Decree shall enter into force on January 1, 2001: Provided, That the amended provisions of Articles 30 (3) and 37 (2) shall enter into force on January 1, 2002.
Article 2 (General Applicability)
This Decree shall apply to the portion of a taxable year first commencing on or after the enforcement date of this Decree.
Article 3 (Applicable cases concerning Detailed Standards for Special Relationship)
The amended provisions of Article 2 (1) 4 (a) shall apply from the cases where an ex-officer or ex-employee of a corporation becomes for the first time the representative director, or an officer, of another corporation on or after the enforcement date of this Decree.
Article 4 (Applicable cases concerning Prior Approval of Arm's Length Price Computation Method)
(1) The amended provisions of Articles 9 (1) through (3), 10 (1), 11 (8),11-2, 13 (1), and 17 shall apply from the portion of applying for approval of an arm's length price computation method first on or after the enforcement date of this Decree.
(2) The amended provisions of Article 23 (2) shall apply from the portion of approval of an arm's length price computation method first on or after the enforcement date of this Decree.
Article 5 (Applicable cases concerning Return of Amounts to be Included in Gross Income)
The amended provisions of Article 16 shall apply from the portion of the final declaration, revised decision, revised return, or revised application with respect to tax base first made on or after the enforcement date of this Decree.
Article 6 (Applicable cases concerning Application for Extension of Time Limit of Submission of Specification, etc. of International Trades)
The amended provisions of Articles 20 (1) and 21 shall apply from the portion of taxable year first reported on or after the enforcement date of this Decree.
Article 7 (Applicable Cases concerning Submission of Forms by Domestic Corporation which Borrowed Funds from Foreign Controlling Shareholder)
The amended provisions of Article 28-2 shall apply from the portion of taxable year first returned on or after the enforcement date of this Decree.
ADDENDA <Presidential Decree No. 17832, Dec. 30, 2002>
Article 1 (Enforcement Date)
This Decree shall enter into force on January 1, 2003.
Article 2 (General Applicability)
This Decree shall apply to the taxable year which begins on or after the enforcement date of this Decree.
Article 3 (Applicable cases concerning Scope, etc. of Special Relationship)
The amended provisions of Article 2 (1) and (2) shall apply to the transaction which is made on or after the enforcement date of this Decree.
Article 4 (Applicable cases concerning Scope of Foreign Controlling Shareholders)
The amended provisions of Article 3 shall apply to the loan which is obtained on or after the enforcement date of this Decree.
Article 5 (Applicable cases concerning Applicable Scope of Rejection of Unfair Act and Calculation)
The amended provisions of Article 3-2 shall apply to the trade which is made on or after the enforcement date of this Decree.
Article 6 (Applicable cases concerning Notice of Amount of Transfer Income, etc.)
The amended provisions of Article 16 (1) 1 and (4) shall apply to the amount of income which is decided upon or revised on or after the enforcement date of this Decree.
Article 7 (Applicable cases concerning Applicable Scope of Tax Haven)
The amended provisions of Article 35 (2) shall apply to the trade which is made on or after the enforcement date of this Decree.
ADDENDUM <Presidential Decree No. 18312, Mar. 17, 2004>
This Decree shall enter into force on the date of its promulgation.
ADDENDA <Presidential Decree No. 18628, Dec. 31, 2004>
(1) (Enforcement Date) This Decree shall enter into force on January 1, 2005.
(2) (Applicability) This Decree shall apply to the portion of a taxable year first commencing on or after the enforcement date of this Decree.
ADDENDA <Presidential Decree No. 18706, Feb. 19, 2005>
Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation. (Proviso Omitted.)
Articles 2 through 16 Omitted.
ADDENDA <Presidential Decree No. 19650, Aug. 24, 2006>
Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation.
Article 2 (General Applicability)
This Decree shall be enforceable to the taxable year on which the enforcement date of this Decree falls and thereafter.
Article 3 (Applicability to Computation Method of Arm's Length Price)
Subparagraph 3 of Article 4, Article 5 (3) and (4) as amended shall be enforceable to the transactions made on or after the enforcement date of this Decree.
Article 4 (Applicable cases concerning Supplementation of Computation Method of Arm's Length Price, etc.)
Article 6 (6) and (7) as amended shall be enforceable to the transactions made on or after the enforcement date of this Decree.
Article 5 (Applicable cases concerning Matters to be Considered in Selection and Application of Computation Method of Arm's Length Price for Service Transaction)
Article 6-2 as amended shall be enforceable to the transactions made on or after the enforcement date of this Decree.
Article 6 (Applicable cases concerning Submission of Computation Method of Arm's Length Price, etc.)
The proviso to Article 7 (1) as amended shall be enforceable to the submission made on or after the enforcement date of this Decree.
Article 7 (Applicable cases concerning Scope of Materials Demanded by Tax Authorities and Method of Submission Thereof)
Article 19 (1) 13 and 14 as amended shall be enforceable to the materials demanded by tax authorities on or after the enforcement date of this Decree.
Article 8 (Applicability to Identification of Tax Havens)
Article 30 (1) as amended shall be enforceable to the states and regions designated and publicly notified on or after the enforcement date of this Decree.
Article 9 (Applicable cases concerning Requirements for Decision on Scope of Application)
The proviso to Article 35 (1) 1 as amended shall be enforceable from the beginning of the business year on which the enforcement date of this Decree falls and thereafter.
Article 10 (Applicable cases concerning Request for Rectification)
Article 36-4 as amended shall be enforceable to the dividends actually distributed to nationals by a specific foreign corporation on or after the enforcement date of this Decree.
Article 11 (Applicability to Non-inclusion of Actual Dividends in Gains)
Article 36-5 (1) and (2) as amended shall be enforceable to the dividends actually paid to nationals by a specific foreign corporation on or after the enforcement date of this Decree.
Article 12 (Applicable cases concerning Exchange of Tax Information and Financial Information)
Article 47 (3) as amended shall be enforceable to the tax information or financial information provided on or after the enforcement date of this Decree.
ADDENDA <Presidential Decree No. 20331, Oct. 23, 2007>
Article 1 (Enforcement Date)
This Decree shall enter into force on October 28, 2007. (Proviso Omitted.)
Articles 2 and 3 Omitted.
ADDENDA <Presidential Decree No. 20494, Dec. 31, 2007>
Article 1 (Enforcement Date)
This Decree shall enter into force on January 1, 2008.
Articles 2 (General Applicability)
This decree shall initially apply from the first taxation of a tax year after this Decree enters into force.
Article 3 (Applicable cases concerning the Methods of Calculation of Additional Amount Equivalent to Interest)
The amended provision of Article 41 shall initially apply from the first calculation of additional amount equivalent to interest, due to the reprieve of collection or the reprieve of disposition for arrears of taxes, after this decree enters into force.
ADDENDA <Presidential Decree No. 20720, Feb. 29, 2008>
Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation. (Proviso Omitted.)
Articles 2 through 8 Omitted.
ADDENDA <Presidential Decree No. 21066, Oct. 7, 2008>
Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation.
Article 2 (General Applicability)
This Decree shall apply from the year of taxation to which the enforcement date of this Decree belongs.
ADDENDA <Presidential Decree No. 21299, Feb. 4, 2009>
Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation.
Article 2 (General Applicability)
This Decree shall apply, commencing from the taxable year to which the effective date of this Decree belongs.
Article 3 (Applicable cases concerning Submission of Arm's Length Price Computation Method)
The amended provisions of Article 7 (1) shall apply, commencing from the portion first submitted after this Decree enters into force.
Article 4 (Applicable cases concerning Disposition and Adjustment of Amount of Which Return has not been Confirmed)
The amended provisions of Article 15 (2),(3), and 16 shall apply, commencing from the portion first disposed of or adjusted after this Decree enters into force.
Article 5 (Applicable cases concerning Verification of Amount to be Included in Gains)
The amended provisions of Article 15-2 shall apply, commencing from the portion first returned after this Decree enters into force.
ADDENDA <Presidential Decree No. 21634, Jul. 22, 2009>
Article 1 (Enforcement Date)
This Decree shall enter into force on July 23, 2009. (Proviso Omitted.)
Articles 2 through 4 Omitted.
ADDENDA <Presidential Decree No. 21939, Dec. 31, 2009>
Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation.
Article 2 (Applicable cases concerning Conversion of Amount Borrowed in Foreign Currency related to Scope of Amount Borrowed)
The amended provisions of Article 24 (5) shall apply commencing from the first taxable year that begins after this Decree enters into force.
ADDENDA <Presidential Decree No. 22040, Feb. 18, 2010>
Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation.
Article 2 (Applicability)
This Decree shall apply commencing from the taxable year to which the enforcement date of this Decree belongs.
ADDENDA <Presidential Decree No. 22394, Sep. 20, 2010>
Article 1 (Enforcement Date)
This Decree shall enter into force on January 1, 2011.
Articles 2 through 13 Omitted.
ADDENDA <Presidential Decree No. 22574, Dec. 30, 2010>
Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation.
Article 2 (General Applicability)
This Decree shall apply to the taxable years on and after this Decree enters into force.
Article 3 (Applicable cases concerning Computation Method of Arm's Length Price, etc.)
The amended provisions of Articles 4 through 6 and 6-2 shall apply to cases of reporting taxable years on and after this Decree enters into force.
Article 4 (Applicable cases concerning Cases not Disposing as Temporary Retention)
The amended provision of Article 15 (3) 2 amended shall apply to cases of submitting a request for disposition of the transferred amount on and afterthis Decree enters into force.
Article 5 (Applicable cases concerning Judgment on Negligence, etc. of Taxpayer)
The amended provisions of Article 23 (5) shall apply to cases of reporting modifications on and after this Decree enters into force.
Article 6 (Applicable cases concerning Calculation Method of Non-deductible Expenses)
The amended provisions of Article 25 (1) and 27 (2) shall apply to cases of not including in deductible expenses on and after this Decree enters into force.
Article 7 (Applicable cases concerning Procedure for Issuance of Resident Certificate)
The amended provisions of Article 43 (2) shall apply to cases of issuing residence certificates on and after this Decree enters into force.
Article 8 (Applicable cases concerning Fines for Negligence)
The amended provisions of Article 51 (1) shall apply to cases of receiving the request for submission of materials on and after this Decree enters into force.
Article 9 (Special Cases concerning Imposition of Fines for Negligence on Overseas Account held in 2010)
In applying the amended provisions of Article 51 (2), fines for negligence of an amount equivalent to 50 percent or less of the amount computed under each subparagraph of Article 51 (2) shall be imposed on the overseas financial accounts held in 2010.
ADDENDA <Presidential Decree No. 23600, Feb. 2, 2012>
Article 1 (Enforcement Date)
This Act shall enter into force on the date of its promulgation: Provided, That the amended provisions of Article 17-2 through 17-4 shall enter into force on July 1, 2012.
Article 2 (Term of the Tax Adjustment Review Committee for International
Trade Price)
The amended provisions of Articles 17-3 and 17-4 concerning the tax
adjustment review committee for international trade price shall be effective until
June 30, 2017.
Article 3 (General Applicable Cases)
This Decree shall enter into force from the taxable year to which the enforcement date of this Decree belongs.
Article 4 (Applicable Cases Concerning Scope of the Relevant Foreign Corporations Not Subject to Retained Earnings-Cumulative Taxation)
The requirements, pursuant to the amended provisions of Article 36-3 (1), concerning the scope of the relevant foreign corporations not subject to the method of cumulative taxation that adds up retained earnings shall begin to apply from the taxable year for which a tax return is filed for the first time after this Decree enters into force.
Article 5 (Applicable Cases Concerning the Limit of Carried Forward Earnings upon Distributing Dividends to Nationals by Intermediate Corporation)
The amended provisions of Article 36-5 (2) shall apply to the taxable year for which a tax return is filed on or after this Decree enters into force.
Article 6 (Applicable Cases Concerning Application, etc. for Commencement of Mutual Agreement Procedures)
The amended provisions of Article 39 (3) shall apply to the case where the application for commencement of a mutual agreement procedure is accepted on or after this Decree enters into force.
Article 7 (Applicable Cases Concerning Provision of Financial Information)
The amended provisions of Article 47 (2) shall apply to the case where a person requests provision of financial information on or after this Decree enters into force.
Article 8 (Applicable Cases Concerning Exemption of Duty to Report Overseas Financial Account)
The amended provisions of Article 50 (4) shall apply to the overseas financial account being possessed in the year 2011.
Article 9 (Applicable Cases Concerning Standard for Imposition of Fines for Negligence Upon Failure to Submit Materials)
The amended provisions of Article 51 (1) shall apply to the case of requesting submission of materials on or after this Decree enters into force.
Article 10 (Applicable Cases Concerning Standard for Imposition of Fines for Negligence Upon Failure to Report Overseas Financial Account)
The amended provisions of Article 51 (3) shall apply to the overseas financial account being possessed in the year 2011.
Article 11 (Applicable Cases Concerning Application of the Ratio of Mitigation of Fines for Negligence Pursuant to After-Deadline Filing, etc. of Overseas Financial Account)
The amended provisions of Article 51 (5) shall apply to the overseas financial accounts that are possessed in the year 2010 and reported after the reporting deadline is lapsed or a revised reporting thereof was filed on or after this Decree enters into force.
Article 12 (Transitional Measures concerning Verification, etc. of Return of Amount to be Included in Gains)
Notwithstanding the amended provision of Article 15-2, with respect to taxable years before the taxable year to which the enforcement date of this Decree belongs, the previous provisions shall apply thereto.
ADDENDA <Presidential Decree No. 24365, Feb. 15, 2013>
Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation.
Article 2 (General Applicability)
This Decree shall apply from the taxable year in which the enforcement date of this Decree falls.
Article 3 (Applicable cases concerning Computation of Arm's Length Price for Service Transactions for Payment Guarantee)
The amended provisions of Article 6-2 (3) through (5) shall apply to any payment guarantee provided on or after this Decree enters into force.
Article 4 (Applicable cases concerning Order of Return of Amount to be Included in Gains)
The amended provisions of Article 15-2 (2) shall apply to any refund of the amount to be included in gains on or after this Decree enters into force.
Article 5 (Applicable cases concerning Application for Commencement of Mutual Agreement Procedures)
The amended provisions of Article 39 (2) shall apply to any application for mutual agreement on or after this Decree enters into force.
Article 6 (Applicable cases concerning Request, etc. for Financial Information)
The amended provisions of Article 47 (2), (5) and (6) shall apply to any request for the offering of financial information on or after this Decree enters into force.
Article 7 (Applicable cases concerning Report on Overseas Financial Accounts)
The amended provisions of Article 50 (2) and (4) 1 shall apply beginning with cases where filing a report on an overseas financial accounts held as of 2013 is required in 2014.