Restriction Of Special Taxation Act

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CHAPTER I GENERAL PROVISIONS

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 Article 1 (Purpose)
 

The purpose of this Act is to contribute to the sound development of national economy by ensuring fair taxation and efficiently implementing tax policy through prescribing matters concerning special cases of taxation, such as tax reduction, tax exemption, heavy taxation, etc., along with matters concerning restriction on such special cases.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

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 Article 2 (Definitions)
 

(1)
The definitions of terms used in this Act shall be as follows:
1.
The term "national" means a resident under the Income Tax Act and a domestic corporation under the Corporate Tax Act;
2.
The term "taxable year" means a taxable period under the Income Tax Act or a business year under the Corporate Tax Act;
3.
The term "tax base return" means the final tax base return under Articles 70 71, 74, and 110 of the Income Tax Act, and the tax base return under Article 60 of the Corporate Tax Act;
4.
The term "gross income" means total income gross income under Article 24 of the Income Tax Act, or revenues under Article 14 of the Corporate Tax Act;
5.
The term "deductible expenses" means necessary expenses under Article 27 of the Income Tax Act, or deductible expenses under Article 14 of the Corporate Tax Act;
6.
The term "taxation carried forward" means that, where an individual transfers his/her fixed assets, etc. used for the purposes of business (hereafter in this subparagraph referred to as "fixed assets, etc. for a previous business") to a corporation as investment in kind, etc., an income tax on such income as derived from the transfer under Article 94 of the Income Tax Act (hereinafter referred to as "capital gains tax") shall not be imposed on the individual transferring these fixed assets, etc., but the corporation acquiring such assets, etc. shall, if it is to transfer these fixed assets, etc. used for the purposes of the business concerned, pay as the corporate tax an amount equivalent to the calculated capital gains tax under Article 104 of the same Act, which is calculated as if no other assets had been transferred during the taxable period which includes the date on which the individual transferred the fixed assets, etc. for a previous business to such corporation;
7.
The term "taxation deferment" means that, where any individual transfers the fixed assets used for his/her business (hereafter referred to as "fixed assets, etc. for the previous business" in this subparagraph) in order to relocate his/her factory, etc. and acquires the fixed assets used for other business (hereafter referred to as "fixed assets, etc. for the new business" in this subparagraph) in use of the transfer value, the capital gains tax shall not be levied on the amount that is calculated by the following formula (in cases where the acquisition value of the fixed assets, etc. for the new business exceeds the transfer value of the fixed assets, etc. for the previous business, the gains from transfer that accrue from the transfer of the fixed assets, etc. for the previous business shall be the ceiling; hereafter in this subparagraph referred to as "deferred amount of taxation") from among the gains from transfer that accrue from the transfer of the fixed assets, etc. for the previous business, but when the fixed assets, etc. for the new business are transferred, an amount that is obtained by subtracting the deferred amount of the taxation from the acquisition value of the fixed assets, etc. for the new business shall be deemed the acquisition value and then the capital gains tax shall be levied thereon:
8.
The term "special taxation" means the reduction of or exemption from tax, such as the application of special tax rates, reduction of or exemption from the amount of tax, tax credit, income deduction, inclusion of reserves in the deductible expenses, etc. where specific conditions are satisfied, as well as heavy taxation, such as inclusion in the gross income or non-inclusion in the deductible expenses, etc. for specific purposes;
9.
The term "Seoul Metropolitan area" means the Seoul Metropolitan area provided for in subparagraph 1 of Article 2 of the Seoul Metropolitan Area Readjustment Planning Act;
10.
The term "overconcentration control region of the Seoul Metropolitan area" means the overconcentration control region provided for in Article 6 (1) 1 of the Seoul Metropolitan Area Readjustment Planning Act.
(2)
Except as otherwise provided for in this Act, the definitions of any terms other than those provided for in paragraph (1) shall be subject to the examples of the same terms as used in such Acts as set forth in Article 3 (1) 1 through 19.
(3)
Except as specifically provided for in this Act, the classification of types of business used in this Act shall be subject to the Korea Standard Industrial Classification publicly announced by the Commissioner of the Statistics Korea under Article 22 of the Statistics Act: Provided, That the types of business that become otherwise ineligible for the special taxation under this Act due to a change in the Korea Standard Industrial Classification shall remain eligible for the special taxation applicable to the relevant types of business under the previous Korea Standard Industrial Classification for the taxable year during which such change in the Korea Standards Industrial Classification occurs and the immediately following taxable year.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

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 Article 3 (Restrictions on Special Taxation)
 

(1)
Special taxation shall be not prescribed by Acts other than this Act, the Framework Act on National Taxes, treaties, and ay of the following Acts:
1.
Income Tax Act;
2.
Corporate Tax Act;
3.
Inheritance Tax and Gift Tax Act;
4.
Value-Added Tax Act;
5.
Individual Consumption Tax Act;
6.
Liquor Tax Act;
7.
Stamp Tax Act;
8.
Securities Transaction Tax Act;
9.
National Tax Collection Act;
10.
Traffic, Energy and Environment Tax Act;
11.
Customs Act;
12.
Restriction of Special Local Taxation Act;
13.
Provisional Import Surtax Act;
14.
Deleted;
15.
Adjustment of International Taxes Act;
16.
Act on Real Name Financial Transactions and Confidentiality;
17.
Deleted;
18.
Education Tax Act;
19.
Act on Special Rural Development Tax;
20.
Deleted;
21.
Inter-Korean Exchange and Cooperation Act;
22.
Deleted; ;
23.
Act on Designation and Management of Free Trade Zones;
24.
Special Act on the Establishment of Jeju Special Self-Governing Province and the Development of Free International City (applicable only to the taxes of the Jeju Special Self-Governing Province);
25.
Gross Real Estate Tax Act.
(2)
No additional penalty tax and capital gains tax shall be included in the scope of taxes to be reduced or exempted as prescribed by this Act, the Framework Act on National Taxes, treaties, and the Acts referred to in the subparagraphs of paragraph (1) unless prescribed otherwise in such Acts or treaties.

CHAPTER II DIRECT NATIONAL TAXES

SECTION 1 Special Taxation for Small or Medium Enterprises

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 Article 4 Deleted.
 

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 Article 5 (Tax Credit for Investments by Small or Medium Enterprises)
 

(1)
In cases where a national operating a small or medium enterprise prescribed by Presidential Decree (hereinafter referred to as "small or medium enterprise") makes investment in the assets falling under any of the following subparagraphs (excluding any investment in the used assets by not later than December 31, 2015, an amount equivalent to 3/100 of the amount of the investment concerned shall be deducted from his/her income tax [limited to the income tax on business income (excluding the income accrued from the rental of a real estate under Article 45 (2) of the Income Tax Act; hereinafter the same shall apply except for Articles 126-2, 126-6 and 132)]or corporate tax for the taxable year whereto belongs the date on which such investment is completed:
1.
Business assets prescribed Presidential Decree including machinery and equipment (hereinafter referred to as "business assets");
2.
Facilities for the point-of-sale data management system under the Distribution Industry Development Act (hereinafter referred to as "facilities for the point-of-sale data management system");
3.
Facilities used in the information protection system under subparagraph 6 of Article 3 of the Framework Act on National Informatization, of which the depreciation period is two years or longer (hereinafter referred to as "facilities for information protection system").
(2)
In cases where the investment as provided for in paragraph (1) is made over two or more taxable years, the provisions of paragraph (1) may, in each taxable year in which such investment is made, apply to the amount invested for the taxable year concerned.
(3)
Such matters as may be necessary for the calculation of invested amounts under paragraph (2) shall be determined by Presidential Decree.
(4)
A national who desires to be eligible for the application of the provisions of paragraphs (1) and (2) shall make an application for tax credit, as prescribed by Presidential Decree.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

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 Article 5-2 (Special Taxation for Supporting Project of Informatization for Small or Medium Enterprises)
 

Where such small or medium enterprisers prescribed by Presidential Decree invest the contribution, etc. for supporting projects of informatization of small or medium enterprises, which is paid no later than December 31, 2015 pursuant to Article 18 of the Act on the Promotion of Technology Innovation of Small and Medium Enterprises, Article 19 of the Industrial Technology Innovation Promotion Act, and Article 44 (1) of the Information and Communications Technology Industry Promotion Act, in any of the following facilities, such contribution, etc. may be included in deductible expenses by applying mutatis mutandis Article 32 of the Income Tax Act and Article 36 of the Corporate Tax Act:
1.
Computers, their peripheral devices, software, telecommunications facilities and other tangible and intangible facilities used for the management of human and material resources of an enterprise including information about purchasing, design, construction works, production, inventory, personnel and business information in an electrical format, of which the depreciation period is two years or longer (hereinafter referred to as "facilities for enterprise resource planning");
2.
Computers, their peripheral devices, software, telecommunications facilities and other tangible and intangible facilities used for demand forecast, contract, providing services, selling merchandise, delivery, settlement of payments, customer management or such in an electronic format, of which the depreciation period is two years or longer (hereinafter referred to as "facilities for electronic commerce");
3.
Any facilities prescribed by Presidential Decree other than those under subparagraphs 1 and 2, but used for informatization of an enterprise.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

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 Article 5-3 Deleted.
 

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 Article 6 (Tax Reduction or Exemption for Small or Medium Start-Up Enterprises, etc.)
 

(1)
Small or medium enterprises established in an area outside the overconcentration control region of the Seoul Metropolitan area (hereinafter referred to as "small or medium start-up enterprises") and a national designated as an operator of business incubator under Article 6 (1) of the Support for Small and Medium Enterprise Establishment Act, on or before December 31, 2015 shall be granted reduction of an amount of tax equivalent to 50/100 of the income tax or corporate tax on income accrued from the relevant business during the period from the taxable year in which income has accrued for the first time from such business (where no income accrued from the relevant business by the taxable year to which the date on which five years pass from the date such business was started belongs, the taxable year to which the date on which five years fall on belongs) through the taxable year that finishes within four years from the beginning of the following taxable year.
(2)
Enterprises prescribed by Presidential Decree from among the venture businesses under Article 2 (1) of the Act on Special Measures for the Promotion of Venture Businesses (hereinafter referred to as "venture business"), which are certified as a venture business no later than December 31, 2015 under Article 25 of the same Act within three years from establishment (hereinafter referred to as "small or medium start-up venture enterprises"), shall be granted reduction of an amount of tax equivalent to 50/100 of the income tax or corporate tax on income occurred from the relevant business during the taxable year to which the date on which income occurred for the first time after such certification (where no income occurred from the relevant business by the taxable year to which the date falling on five years from the certification belongs, the taxable year to which the date falling on five years belongs) belongs and until the taxable year that ends within four years from the beginning of the next taxable year: Provided, That in cases to which paragraph (1) is applicable, such cases shall be excluded, and in cases the certification of venture business has been revoked during the period of reduction, reduction shall not be applicable from the taxable year to which the date of revocation belongs.
(3)
The scope of newly established small or medium enterprises and newly established small or medium venture enterprises shall be small or medium enterprises conducting the types of business under the following subparagraphs:
1.
Mining business;
2.
Manufacturing business;
3.
Construction business;
4.
Restaurant business;
5.
Publishing business;
6.
Video and audio documentary production and distribution business (excluding video watching room operation business);
7.
Broadcasting business;
8.
Telecommunications business;
9.
Computer programming, system integration and management business;
10.
Information service business (excluding business providing news);
11.
Research and development business;
12.
Advertising business;
13.
Other scientific technology service business;
14.
Specialized design business;
15.
Exhibition and event agency business;
16.
Service business related to creation and art (excluding self-supporting artists);
17.
Engineering business prescribed by Presidential Decree (hereinafter referred to as "engineering business");
18.
Logistics industry prescribed by Presidential Decree (hereinafter referred to as "logistics industry");
19.
Business running private institutes teaching vocational technique under the Act on the Establishment and Operation of Private Teaching Institutes and Extracurricular Lessons or running workplace skill development training establishments under the Act on the Development of Workplace Skills of Workers (limited to cases where the workplace skill development training is the principal business);
20.
Tourist accommodation business, international conference business, amusement facilities business under the Tourism Promotion Act and tourist facilities business prescribed by Presidential Decree;
21.
Business running welfare facilities for the aged under the Welfare of the Aged Act;
22.
Industry in wartime under the Act on the Development of Exhibition Industry;
23.
Human resources supply and placement business (including the supply business of agricultural laborers);
24.
Cleaning bossiness of buildings and industrial facilities;
25.
Security and escort business;
26.
Market research and public opinion polling business;
27.
Social welfare service business.
(4)
Where small or medium enterprises, for which the taxable year to which the date of business was started belongs and subsequent three taxable years have not passed, fall under new energy technology small or medium enterprises prescribed by Presidential Decree (hereinafter referred to as "new energy technology small or medium enterprises") no later than December 31, 2015, the amount of tax equivalent to 50/100 of the income tax or corporate tax on income obtained from the relevant business shall be reduced during the period from the taxable year in which income was obtained for the first time from the relevant business (where income has not been obtained from the relevant business by the business year on which five years fall from the date such enterprises fell under the new energy technology small or medium enterprises, the business year to which the date falling on five years belongs) on or after the date such enterprises had fallen under the new energy technology small or medium enterprises through the taxable year that completes within four years from the beginning of the subsequent business year: Provided, That cases to which paragraphs (1) and (2) are applicable shall be excluded, and in cases such enterprises have become not to fall under the new energy technology small or medium enterprises during the period of reduction, such enterprises shall not be granted tax reduction from the taxable year to which the date such enterprises became not to fall under the new energy technology small or medium enterprises belongs.
(5)
When paragraph (4) is applied, the calculation of income accrued from the relevant business shall be prescribed by Presidential Decree.
(6)
In applying paragraphs (1) through (5), such cases falling under any of the following subparagraphs shall not be regarded as the startup of a new business:
1.
Where a previous business is succeeded to by a merger, division, investment in kind, or an acquisition of business or where a business of the same type is carried on through a takeover or purchase of the assets that have been used in the previous business: Provided, That in cases where the assets that are used for the previous business are taken over or purchased to run the same type of business and the ratio of the total value of the relevant assets to the total value of business assets, including land, buildings, machinery, etc., which are prescribed by Presidential Decree, is not more than 50/100 and falls short of the ratio prescribed by Presidential Decree, such cases shall be excluded;
2.
Where a new corporation is founded by converting a business run by a resident into a corporation;
3.
Where a business of the same type as the one before its closure is conducted by starting a business again after its closure;
4.
Where it is difficult to deem that a new business has been started, as it is the case with the expansion of the existing business or addition of another business line, etc.
(7)
Any national who desires to be eligible for the application of paragraphs (1) and (2) shall file an application for tax reduction or exemption as prescribed by Presidential Decree.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

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 Article 7 (Special Tax Reduction or Exemption for Small or Medium Enterprises)
 

(1)
Any of the small or medium enterprises which is engaged in a type of business eligible for reduction or exemption under the following subparagraph 1 shall be allowed the reduction of, or the exemption from, an amount equivalent to the tax amount computed by multiplying the reduction or exemption ratio under subparagraph 2 to the income tax or corporate tax on incomes accruing from the relevant business place for the taxable year ending on or before December 31, 2014: Provided, That in cases where the principle office or the main office of any domestic corporation is located in the Seoul Metropolitan area, all of its business places shall be deemed located in the Seoul Metropolitan area and the tax reduction or exemption ratio pursuant to subparagraph 2 shall apply thereto:
1.
Types of business subject to tax reduction or exemption:
(a)
Crops cultivating business;
(b)
Livestock business;
(c)
Fishery business;
(d)
Mining business;
(e)
Manufacturing business;
(f)
Sewage and waste disposal (including recycling), raw material recycling and environmental restoration business;
(g)
Construction business;
(h)
Wholesale and retail businesses;
(i)
Passenger transport business from among transportation business;
(j)
Publishing business;
(k)
Movie, video and broadcasting program production business, movie, video and broadcasting program production related service business, movie, video and broadcasting program distribution business, audio publishing and original recording business;
(l)
Broadcasting business;
(m)
Telecommunications business;
(n)
Computer programming, system integration and management business;
(o)
Information service business;
(p)
Research and development business;
(q)
Advertising business;
(r)
Other scientific technology service business;
(s)
Packaging and charging business;
(t)
Specialized design business;
(u)
Creation and art related service business (excluding self-supporting artists);
(v)
Entrusted manufacturing business by OEM method prescribed by Presidential Decree;
(w)
Engineering business;
(x)
Logistics Industry;
(y)
Business running private institutes teaching vocational technique under the Act on the Establishment and Operation of Private Teaching Institutes and Extracurricular Lessons;
(z)
Business running an automobile maintenance factory prescribed by Presidential Decree (hereafter referred to as "automobile maintenance factory" in this Article);
(za)
Ship management business under the Marine Transportation Act;
(zb)
Business running a medical institution under the Medical Service Act (excluding clinics, dental clinics and herb clinics; hereafter referred to as "medical service business" in this Article);
(zc)
Tourist business under the Tourism Promotion Act (excluding casinos, tourist amusement restaurants, amusement restaurants for exclusive use of foreigners; hereafter referred to as the "tourist business" in this Article);
(zd)
Business running welfare facilities for the aged under the Welfare of the Aged Act;
(ze)
Industry in wartime under the Act on the Development of Exhibition Industry;
(zf)
Social Welfare service business;
2.
Tax reduction or exemption ratio:
(a)
The business place where a small enterprise prescribed by Presidential Decree (hereafter referred to as a "small enterprise" in this Article) runs the wholesale business, the retail business, the medical service business, the automobile maintenance business and the tourist business (hereafter referred to as the "wholesale business, etc." in this Article): 10/100;
(b)
The business place where a small enterprise runs, with the exception of the wholesale business, etc., the type of business subject to the tax reduction or exemption referred to in subparagraph 1 in the Seoul Metropolitan area: 20/100;
(c)
The business place where a small enterprise runs, with the exception of the wholesale business, etc., the type of business subject to the tax reduction or exemption referred to in subparagraph 1 in an area other than the Seoul Metropolitan area: 30/100;
(d)
The business place where a medium enterprise (hereafter referred to as a "medium enterprise" in this Article) other than small enterprises, runs the wholesale business, etc. in an area other than the Seoul Metropolitan area: 5/100;
(e)
The business place where a medium enterprise runs the knowledge-based business prescribed by Presidential Decree in the Seoul Metropolitan area: 10/100;
(f)
The business place where a medium enterprise runs, with the exception of the wholesale business, etc., the type of business subject to the tax reduction or exemption referred to in subparagraph 1 in an area other than the Seoul Metropolitan area: 15/100.
(2)
Where a medium or medium enterprise operates the petroleum distribution business prescribed by Presidential Decree among the petroleum distribution businesses under the Petroleum and Petroleum Substitute Fuel Business Act by entering into a petroleum product supply contract in accordance with the method prescribed by Presidential Decree with the Korea National Oil Corporation established under the Korea National Oil Corporation Act, it shall be granted reduction of an amount of tax equivalent to 20/100 of the income tax or corporate tax on income accrued until December 31, 2013 from the relevant petroleum distribution business, notwithstanding paragraph (1).
(3)
Any national who intends to be governed by paragraph (1) or (2) shall file an application for tax reduction or exemption as prescribed by Presidential Decree.
[This Article Wholly Amended by Act No. 9924, Jan. 1, 2010]

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 Article 7-2 (Tax Credit to Improve Corporate Payment System including Negotiable Instruments)
 

(1)
Where the amount (hereafter in this Article referred to as "payment amount including bill of exchange, etc.") falling under any of the following subparagraphs is included in the purchase price (including the purchase price that is paid by any national who runs his/her enterprise that is not a small or medium enterprise to any other small or medium enterprise in use of the network loan system; hereafter the same shall apply in this Article) that is paid by any national who runs the small or medium enterprise to any other small or medium enterprise on or before December 31, 2013, an amount that is computed in accordance with paragraph (2) shall be deducted from the income tax (limited to the income tax on the income accruing from the business) or the corporate tax: Provided, That if the deductible amount is in excess of 10/100 of the income tax or the corporate tax for the relevant taxable year, the ceiling of such deductible amount shall be 10/100:
1.
Amount settled by bill of exchange or a written request for the collection of proceeds from sale;
2.
Amount spent by an exclusive-use card for corporate purchase, on which an agreement is concluded to the effect that the time limit for the payment of purchase price to the selling enterprise is within 60 days from the date on which tax invoice, account statement and receipt etc. under the Value-Added Tax Act, the Income Tax Act and the Corporate Tax Act (hereafter referred to as "tax invoice, etc." in this Article) on the relevant transaction are prepared and a credit card business operator is not entitled to exercise the right of recourse against the selling enterprise;
3.
Amount paid by making use of the account receivable collateral loan system, on which an agreement is concluded to the effect that the time limit for repayment of loans extended to the purchasing enterprise is within 60 days from the date on which the tax invoice, etc. are prepared and the relevant financial institution cannot exercise the right of recourse against the selling enterprise;
4.
Amount paid by making use of the purchase loan system, on which an agreement is concluded to the effect that the time limit for the price settlement by the purchasing enterprise is within 60 days from the date on which the tax invoice, etc. are prepared and the relevant financial institution cannot exercise the right of recourse against the selling enterprise;
5.
Amount (limited to the amount loaned to the selling enterprise) paid by making use of the network loan system, on which an agreement is concluded to the effect that the time limit for the price settlement by the purchasing enterprise is within 60 days from the date on which the tax invoice, etc. are prepared and the relevant financial institution exercises the right of recourse against the selling enterprise prior to the date on which the tax invoice, etc. are prepared and the relevant financial institution exercises the right of recourse against the purchasing enterprise after the date on which the tax invoice, etc. are prepared.
(2)
The amount that is deductible pursuant to paragraph (1) shall be an amount obtained by adding the amount referred to in subparagraph 1 to the amount referred to in subparagraph 2 (if the relevant amount is a negative figure, such amount shall be deemed zero):
1.
[Payment amount including bill of exchange, etc. for which the payment deadline, the repayment deadline or the time limit for the price settlement is within 30 days from the date on which the tax invoice, etc. are prepared-amount of promissory note that is settled to pay the purchase price (referring to an amount that is smaller than or the same as the payment amount including bill of exchange, etc., for which the payment deadline, the repayment deadline or the time limit for the price settlement is within 30 days from the date on which the tax invoice, etc. are prepared)]× 5/1,000 (4/1,000 in cases of purchase price paid to small or medium enterprises by nationals who operate an enterprise which is not small or medium enterprises by making use of network loan system);
2.
(Payment amount including bill of exchange, etc. for which the payment deadline, the repayment deadline or the time limit for the price settlement is longer than 30 days but shorter than 60 days from the date on which the tax invoice, etc. are prepared - amount of promissory note that is settled to pay the purchase price (referring to an amount that remains after being subtracted in subparagraph 1))× 15/10,000.
(3)
The definitions of terms used in paragraphs (1) and (2) shall be as follows:
1.
The term "purchase price" means the amount paid by a purchasing enterprise for the goods supplied or the services provided by a selling enterprise in connection with its ordinary business activities consistent with its business objectives;
2.
The term "sale proceeds" means the amount received by a selling enterprise for the goods supplied or the services provided to a purchasing enterprise in connection with its ordinary business activities consistent with its business objectives;
3.
The term "bill of exchange" means a bill issued, in the form of payable at sight, by a selling enterprise for getting the sale proceeds paid, by designating the purchasing enterprise as the drawee and the sale proceeds as the payable amount, pursuant to the terms and forms set forth by the Governor of the Bank of Korea in connection with the loans for financing business purchases;
4.
The term "written request for collection of sale proceeds" means a document prepared in electronic forms and transmitted by a selling enterprise to his/her bank for getting the sale proceeds paid pursuant to the terms and forms set forth by the Governor of the Bank of Korea in connection with the loans for financing business purchases;
5.
The term "exclusive-use card for business purchase" means a credit card or debit card received by a purchasing enterprise from a credit card company under the Specialized Credit Financial Business Act in order to pay the purchase price, which is not usable at any general credit card member shops and is issued for the only purpose of paying the purchase price to the relevant selling enterprise under the contract among the purchasing enterprise, the selling enterprise and the credit card company;
6.
The term "account receivable loan" means a loan in which a selling enterprise pledges accounts receivable owed by a purchasing enterprise as collateral and obtains a loan from a financial institution, and the purchasing enterprise pays back such loan owed by the selling enterprise to the financial institution, which is executed in accordance with the terms and conditions determined by the Governor of the Bank of Korea;
7.
The term "purchase loan system" means the settlement method by which any purchasing enterprise enters into a loan ceiling agreement with any financial institution under which such purchasing enterprise settles the purchase price for selling enterprises using the amount of loans extended by such financial institution by making use of the data processing system and the purchasing enterprise repays loans to the financial institution on or before the date of maturity;
8.
The term "network loan system" means the settlement method by which any selling enterprise enters into a loan ceiling agreement with any financial institution and such selling enterprise gets loans from such financial institution based on the order book of the purchasing enterprise and the purchasing enterprise repays loans to such financial institution by means of electronic settlement.
(4)
A national who desires to be eligible for the application of paragraphs (1) and (2) shall file an application for tax credit, as prescribed by Presidential Decree.
(5)
Necessary matters concerning order books and the procedures for furnishing information pertaining to loans, etc. among purchasing enterprises, financial institutions and selling enterprises in the application of paragraph (1) 5 shall be prescribed by Presidential Decree.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

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 Article 7-3 Deleted.
 

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 Article 8 (Special Cases, etc. of Inclusion in Deductible Expenses for Small or Medium Enterprise Support Facilities)
 

(1)
Where a national donates a facility prescribed by Presidential Decree including an automation facility, which has been used for his/her own business, to a small or medium enterprise or transfers such facility at any price lower than its fair market price under Article 52 (2) of the Corporate Tax Act (hereafter referred to as "market price" in this Article) on or before December 31, 2012, the amount of the following subparagraphs shall be included in his/her deductible expenses, in calculating his/her income for the relevant taxable year:
1.
If he/she donates such facility: The market price of the facility donated;
2.
If he/she transfers such facility at any price lower than the market price: The value calculated by subtracting the transfer price from the market price of the asset transferred (or the book value, if the market price is lower than the book value).
(2)
The amount equivalent to the value of a facility donated to a small or medium enterprise under paragraph (1) may be included in deductible expenses, applying Article 32 of the Income Tax Act and Article 36 of the Corporate Tax Act mutatis mutandis.
(3)
The requirements for small or medium enterprises subject to the application of paragraphs (1) and (2) and other necessary matters shall be prescribed by Presidential Decree.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

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 Article 8-2 (Exclusion from Gross Income of Income Dividend Received from Small or Medium Enterprises in Collaborative Cooperation)
 

The amount of income dividend (limited to that received by stocks with no voting right) which a domestic corporation has received as a result of investment in small or medium enterprises in collaborative cooperation under Article 2 of the Act on the Promotion of Collaborative Cooperation between Large Enterprises and Small-Medium Enterprises by December 31, 2013 shall not be included in the gross income when calculating the amount of income in each business year.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

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 Article 8-3 (Tax Credit when Making Contributions to Funds for Collaborative Cooperation between Large Enterprises and Small or Medium Enterprises)
 

(1)
Where a domestic corporation makes any of the following contributions for win-win cooperation referred to in subparagraph 3 of Article 2 of the Act on the Promotion of Collaborative Cooperation between Large Enterprises and Small-Medium Enterprises by December 31, 2013, an amount equivalent to 7/100 of the relevant contributions shall be deducted from the corporate tax to be paid in the business year in which the date of contribution falls:
1.
Contribution to the Credit Guarantee Fund under the Credit Guarantee Fund Act (hereafter referred to as the "Credit Guarantee Fund" in this Article) or the Korea Technology Credit Guarantee Fund under the Korea Technology Credit Guarantee Fund Act (hereafter referred to as the "Korea Technology Credit Guarantee Fund" in this Article) for the purpose of providing guarantee or supporting loans to small or medium enterprises prescribed by Presidential Decree, such as a commissioned enterprise referred to in subparagraph 6 of Article 2 of the Act on the Promotion of Collaborative Cooperation between Large Enterprises and Small-Medium Enterprises (hereafter referred to as "small or medium enterprises requiring cooperation" in this Article);
2.
Contribution to the Foundation for the Cooperation between Conglomerates and Small and Medium Enterprises established under the Act on the Promotion of Collaborative Cooperation between Large Enterprises and Small-Medium Enterprises (hereafter referred to as the "Cooperation Foundation" in this Article) for purposes prescribed by Presidential Decree which are to support the research, development of human resources, improvement of productivity, launch into overseas markets, reduction in greenhouse gas and energy conservation by small or medium enterprises requiring cooperation.
(2)
The Credit Guarantee Fund Korea, the Technology Credit Guarantee Fund and the Cooperation Foundation shall keep the separate accounting of the relevant contributions subject to tax credit under paragraph (1) from any of the funds.
(3)
Where the Credit Guarantee Fund Korea, the Technology Credit Guarantee Fund or the Cooperation Foundation uses the contributions made under paragraph (1) for purposes other than those stipulated in the same paragraph, it shall pay an amount equivalent to the amount of tax a domestic corporation has received deduction pursuant to paragraph (1) as the corporate tax when filing a tax base turn of the relevant business year.
(4)
A domestic corporation that intends to be eligible for the application of paragraph (1) shall make an application for tax credit, as prescribed by Presidential Decree.
[This Article Newly Inserted by Act No. 10406, Dec. 27, 2010]

SECTION 2 Special Taxation for Research and Human Resources Development

law view

 Article 9 (Inclusion of Reserves for Research and Human Resources Development in Deductible Expenses)
 

(1)
When a national has accumulated reserves for research and human resources development to appropriate them for expenses necessary for research development and human resources development (hereinafter referred to as "research and human resources development") until the taxable year which is completed on or before December 31, 2013, the relevant amount shall be included in deductible expenses when calculating the amount of income within the extent of the amount calculated by multiplying the amount of income of the relevant taxable year (referring to turnover calculated pursuant to corporate accounting standards under Article 43 of the Corporate Tax Act; hereafter the same shall apply in Article 10) by 3/100.
(2)
Reserves for research and human resources development included in the deductible expenses (limited to necessary expenses for independent research and development in case of research and development for the development of new service and service delivery system) pursuant to paragraph (1) shall be included in the gross income according to the following subparagraphs:
1.
For reserves equivalent to the amount used for expenses prescribed by Presidential Decree (hereinafter referred to as "research and human resources development expenses") of the expenses involved in research and human resources development until the completion date of the taxable year to which the date when three years have passed belongs on or after the completion date of the taxable year when the relevant reserves have been included in the deductible expenses, the amount calculated by multiplying the amount given by the reserves divided by 36, by the number of months of the taxable year shall be included in the gross income when the amount of income of each taxable year is calculated from the taxable year to which the date when three years have passed belongs;
2.
If reserves included in the deductible expenses exceed the amount to be included in the gross income pursuant to subparagraph 1, the reserves equivalent to the exceeding part shall be included in the gross income when the amount of income is calculated for the taxable year to which the date when three years have passed belongs on or after the completion date of the taxable year when such reserves have been included in the deductible expenses: Provided, That the amount not used for research and human resources development due to a change in a business plan or such after reserves were included in the deductible expenses may be included in the gross income before the taxable year to which the date when such three years have passed belongs.
(3)
If a reason falling under any of the following subparagraphs arises to any national who has reserves for research and human resources development included in the deductible expenses pursuant to paragraph (1), the total amount of reserves for research and human resources development not included in the gross income shall be included in the gross income when the amount of income of the taxable year, to which the date when such reason arose belongs, is calculated:
1.
When the relevant business has been discontinued;
2.
When a juristic person has been dissolved: Provided, That in cases of dissolution due to merger or split-off (including split-off and merger), where a merged juristic person, a juristic person newly established following split-off or the counterpart of split-off and merger has succeeded to the relevant reserves for research and human resources development, this shall not apply.
(4)
Where reserves for research and human resources development are included in the gross income pursuant to paragraph (2) 2 or (3), with respect to reserves equivalent to the amount not used for research and human resources development from among the relevant reserves, the additional amount equivalent to interest calculated as prescribed by Presidential Decree, shall be paid as the income tax or corporate tax when a report of tax base of the relevant taxable year is made, and the relevant amount of tax shall be deemed to be the amount of tax to be paid pursuant to Article 76 of the Income Tax Act or Article 64 of the Corporate Tax Act.
(5)
The term "research and development" under paragraph (1) means activities to achieve scientific or technical development and to develop new service and service delivery system, "human resources development" means activities educating and training executives or employees employed by a national, and the specific scope thereof shall be prescribed by Presidential Decree.
(6)
Any national who intends to be governed by paragraph (1) shall present a detailed statement of reserves for research and human resources development.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

law view

 Article 10 (Tax Credit for Research and Human Resources Development Expenses)
 

(1)
Where research and human resources development expenses occur to a national in each taxable year, an amount obtained by adding the amounts in the following subparagraphs shall be deducted from income tax (limited to income tax on business income) or corporate tax for the relevant taxable year. In such cases, subparagraphs 1 and 2 shall apply only to the research and human development expenses occurred no later than December 31, 2015:
1.
As for the research and development expenses for new growth engine industry prescribed by Presidential Decree (hereafter referred to as "research and development expenses for new growth engine" in this Article) from among the research and development expenses, an amount obtained by multiplying the research and development expenses for new growth engine occurred in the relevant taxable year by 20/100 (30/100 in cases of small or medium enterprises);
2.
As for the research and development expenses to obtain original technology prescribed by Presidential Decree (hereafter referred to as "research and development expenses for original technology" in this Article) from among the research and development expenses, an amount obtained by multiplying the research and development expenses for original technology occurred in the relevant taxable year by 20/100 (30/100 in cases of small or medium enterprises);
3.
In cases of the research and human development expenses (hereafter referred to as "general research and human development expenses" in this Article) of a national who does not fall under subparagraphs 1 and 2, or has not selected subparagraphs 1 and 2, an amount equivalent to any of the following items that he/she selects: Provided, That an amount falling under item (b) where general research and human resources developments expenses do not incur for four years retroactively from the commencement date of the relevant taxable year or where general research and human resources developments expenses incurred in the immediately preceding taxable year is less than the average annual amount of general research and human development expenses occurred in the four preceding years retroactively from the date on which the relevant taxable year began:
(a)
Where general research and human development expenses occurred in the relevant taxable year exceed the average annual amount of general research and human development expenses occurred in the immediately preceding taxable year, an amount equivalent to 40/100 of such excessive amount (50/100 in cases of small or medium enterprises);
(b)
Amount obtained by multiplying the general research and human development expenses occurred in the relevant taxable year by the rate under the following classifications:
(ⅰ)
In cases of small or medium enterprises: 25/100;
(ⅱ)
Where a small or medium enterprise becomes no longer a small or medium enterprise for the first time, as prescribed by Presidential Decree: Rates under the following classifications:
a.
From the date on which the taxable year during which it becomes no longer a small or medium enterprise for the first time starts to the taxable year which ends within three year thereafter: 15/100;
b.
To the taxable year that ends within two years since the period referred to in a.;
(ⅲ)
Where an enterprise of middle standing prescribed by Presidential Decree does not fall under (ⅱ): 8/100;
(ⅳ)
Cases applicable to neither subitem (ⅰ) nor (ⅱ): The rate under the following arithmetic formula (6/100 shall be the limit):
(2)
The classification and calculation of the annual average of general research and manpower development expenses occurred during four preceding years under paragraph (1) 1 and 2 and other necessary matters shall be prescribed by Presidential Decree.
(3)
A national who desires to be eligible for the application of paragraph (1) shall file an application for tax, as prescribed by Presidential Decree.
(4)
A national who intends to have paragraph (1) 1 and 2 applied shall keep separate accounts of general research and human development expenses, research and development expenses for new growth engine and research and development expenses for original technology, as prescribed by Presidential Decree.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

law view

 Article 10-2 (Special Taxation for Contribution, etc. for Research and Development)
 

(1)
Where a national has been given assets, such as contribution, etc. (hereafter referred to as "research and development contribution, etc." in this Article) by no later than December 31, 2015, for purposes of conducting research and development, etc. in accordance with the Basic Research Promotion and Technology Development Support Act and other Acts prescribed by Presidential Decree and keeps separate accounts of research and development contribution, etc. in a manner prescribed by Presidential Decree, he/she may choose not to include an amount equivalent to the research and development contribution, etc. in gross income, when income for the relevant taxable year is calculated.
(2)
The amount not included in gross income pursuant to paragraph (1) shall be included in gross income according to the methods as set forth in the following subparagraphs:
1.
Where the research and development contribution, etc. is disbursed to meet the research and development expenses concerned: The method of including an amount equivalent to the disbursed amount in gross income, in calculating income for the taxable year to which the date of such disbursement belongs;
2.
Where the research and development contribution, etc. is disbursed to acquire assets used for the research and development concerned: The method of including an amount equivalent to the disbursed amount in gross income in a manner prescribed by Presidential Decree.
(3)
Where a national who has not included an amount equivalent to the research and development contribution, etc. in gross income pursuant to paragraph (1) spends the research and development contribution, etc. for purposes, other than the research and development or his/her business is discontinued or dissolved before the research and development contribution, etc. is spent on the research and development, the amount not spent shall be included in gross income, in calculating income for the taxable year whereto belongs the date on which such cause occurs: Provided, That this shall not include cases where a corporation, etc. that is newly incorporated after a merger or division takes over the amount, and the amount shall be deemed not to be included by the said corporation, etc. in gross income pursuant to paragraph (1).
(4)
With respect to the amount to be included in gross income pursuant to paragraph (3), the latter part of Article 33 (3) shall apply mutatis mutandis.
(5)
In the application of paragraphs (1) through (4), the submission of a specification of the non-inclusion of contributions, etc. for research and development in gross income and other necessary matters shall be prescribed by Presidential Decree.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

law view

 Article 11 (Tax Credit for Investment in Facilities for Research and Manpower Development)
 

(1)
Where a national makes investment in facilities for research and manpower development or facilities for the commercialization of new technology (excluding any investment with used facilities and through leases prescribed by Presidential Decree) no later than December 31, 2015, an amount equivalent to 10/100 of such investment amount shall be allowed to be deducted from his/her income tax (limited to the income tax on business income) or corporate tax for the taxable year whereto belongs the date on which such investment has been completed.
(2)
For the purposes of paragraph (1), the term "facilities for research and manpower development or facilities for the commercialization of new technology" means those falling under any of the following subparagraphs:
1.
Facilities prescribed by Presidential Decree among those for research and experiment;
2.
Facilities prescribed by Presidential Decree among those for vocational training;
3.
Business assets for the commercialization of such new technology prescribed by Presidential Decree.
(3)
Where the investment under paragraph (1) is made over two or more taxable years, paragraph (1) may apply to each amount invested for each taxable year wherein such investment is made.
(4)
Such matters as may be necessary for computing the amount of investment under paragraph (3) shall be determined by Presidential Decree.
(5)
A national who desires to be eligible for paragraph (1) or (3) shall file an application for tax credit, as prescribed by Presidential Decree.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

law view

 Article 12 (Special Taxation for Acquisition Cost of Technology)
 

(1)
Deleted.
(2)
Where small or medium enterprises obtain patent rights, utility models, confidential know-how prescribed by Presidential Decree or technology prescribed by Presidential Decree (hereafter referred to as "patent right, etc." in this Article) no later than December 31, 2015 from a national who has registered for creation of right, possessed, researched and developed patent rights, etc. (excluding cases in which such patent right, etc. have been obtained from a related party prescribed by Presidential Decree), an amount equivalent to 7/100 of the acquisition cost shall be deducted from income tax (limited to the income tax on business income) or corporate tax for the relevant taxable year. In such cases, the deductible amount shall not exceed 10/100 of the income tax or corporate tax for the relevant taxable year.
(3)
A national who intends to have paragraph (2) applied shall file an application for tax credit, as prescribed by Presidential Decree.

law view

 Article 12-2 (Reduction of or Exemption from Corporate Tax, etc. for High-Tech Enterprises, etc. Moving to Special Research and Development Zones)
 

(1)
Where an enterprise located in a special research and development zone pursuant to subparagraph 1 of Article 2 of the Special Act on Promotion of Special Research and Development Zones, which falls under any the following subparagraphs, operates a business prescribed by Presidential Decree, such as biotech industry or information and communications industry, etc. (hereafter referred to as "business subject to reduction or exemption" in this Article) at the place of business (hereafter referred to as "place of business subject to reduction or exemption" in this Article) located in the relevant zone, the income tax or corporate tax shall be reduced or exempted as prescribed in paragraphs (2) through (6):
1.
A high-tech enterprise designated no later than December 31, 2015 pursuant to Article 9 (1) of the Special Act on Promotion of Special Research and Development Zones.;
2.
A research institute-run enterprise registered no later than December 31, 2015 pursuant to Article 9-3 (2) of the Special Act on Promotion of Special Research and Development Zones.
(2)
With respect to the income generated from the business subject to reduction or exemption operated by an enterprise which meets the requirements referred to in paragraph (1), an amount equivalent to 100/100 of the income tax or the corporate tax for the taxable year ending within three years after the beginning of the taxable year in which the first income has been generated from the said business (if no income has been derived from the said business until the taxable year whereto belongs the date on which five years have passed since such designation or registration, it refers to the taxable year whereto belongs the date on which the five years have passed), and an amount equivalent to 50/100 of the income tax or the corporate tax for the taxable year ending within two years thereafter, shall be reduced or exempted, respectively.
(3)
Where the sum of the income tax or corporate tax reduced or exempted during the period of reduction or exemption to which paragraph (2) applies exceed the amount totalling an amount under the following subparagraphs, the amount of tax shall be reduced or exempted up to the ceiling of so totalled amount (hereafter referred to as "reduction or exemption ceiling" in this Article):
1.
50/100 of the cumulative investments prescribed by Presidential Decree;
2.
An amount under the following items whichever the lesser:
(a)
The number of workers at ordinary times of the relevant taxable year at the place of business subject to reduction or exemption x ten million won;
(b)
20/100 of the cumulative investments under subparagraph1.
(4)
When applying the reduction or exemption ceiling to the income tax or corporate tax to be reduced or exempted in each taxable year pursuant to paragraph (2), the amount under paragraph (3) 1 shall be applied first and then the amount under subparagraph 2 of the same paragraph shall be applied.
(5)
Where the number of workers at ordinary times of each taxable year at the place of business subject to reduction or exemption during the period from the end of the taxable year in which tax reduction or exemption was granted through the end of the taxable year to which the date falling on two years from the end of the taxable in which tax reduction or exemption was granted has decreased as compared with the number of workers at ordinary time of taxable year in which tax credit was granted, an enterprise that has its income tax or corporate tax reduced or exempted under the application of paragraph (3) 3 shall pay an amount equivalent to the reduced or exempted amount of tax as the income tax or corporate tax, as prescribed by Presidential Decree.
(6)
The scope of workers at ordinary times, method of calculating the number of workers at ordinary times, other necessary matters when applying paragraphs (3) through (5) shall be prescribed by Presidential Decree.
(7)
Any person who intends to have paragraph (2) applied shall file an application for reduction or exemption, as prescribed by Presidential Decree.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

law view

 Article 13 (Non-Taxation of Gains, etc. from Transfer of Stocks of Small and Medium Business Start-Up Investment Companies, etc.)
 

(1)
No corporate tax shall be imposed on the gains from transfer of stocks or equity shares falling under any of the following subparagraphs:
1.
Stocks or equity shares acquired by a small and medium business start-up investment company (hereinafter referred to as "small and medium business start-up investment company") under the Support for Small and Medium Enterprise Establishment Act from its investment in a business starter (hereinafter referred to as "business starter") under the same Act, a venture business or a company specializing in the start-up of new technology-based businesses under Act on Special Measures for the Promotion of Venture Businesses (limited to a small or medium enterprises under Article 2 of the Framework Act on Small and Medium Enterprises; hereinafter referred to as "company specializing in the start-up of new technology-based businesses") no later than December 31, 2014;
2.
Stocks or equity shares acquired by a financial business operator of new technology projects (hereinafter referred to as "venture capital business operator") under the Specialized Credit Finance Business Act by its investment in a new technology business operator under the Korea Technology Credit Guarantee Fund Act (hereinafter referred to as "new technology business operator"), in a venture business or in a company specializing in the start-up of new technology-based businesses no later than December 31, 2014;
3.
Stocks or equity shares acquired by an small and medium business start-up investment company, a limited-liability company under the Commercial Act pursuant to Article 4-3 (1) 3 of the Act on Special Measures for the Promotion of Venture Businesses (hereinafter referred to as "limited-liability company for investment in venture business") or a venture capital business operator in return for its or his/her investment in a business starter, a new technology business operator, a venture business or a company specializing in the start-up of new technology-based businesses no later than December 31, 2012 through an association (hereinafter referred to as "business start-up investment cooperative, etc.") falling under any of the following items:
(a)
Small and medium business start-up investment cooperative under the Support for Small and Medium Enterprise Establishment Act (hereinafter referred to as "small and medium business start-up investment cooperative");
(b)
Korea Venture Fund under Article 4-3 of the Act on Special Measures for the Promotion of Venture Businesses (hereinafter referred to as "Korea Venture Fund");
(c)
Venture business investment association under the Specialized Credit Finance Business Act (hereinafter referred to as "venture business investment association");
(d)
Specialized components and materials investment association under the Act on Special Measures for the Promotion of Specialized Enterprises, etc. for Component and Material (hereinafter referred to as "specialized components and materials investment association");
(e)
Agriculture and food investment association under the Act on Formation and Operation of Agricultural, Fisheries, and Food Investment Funds (hereinafter referred to as "agriculture and food investment association");
4.
Stocks or equity shares acquired by a corporation prescribed by Presidential Decree as a corporation managing and operating funds or a corporation running a mutual aid business (hereafter referred to as "fund management corporation, etc." in this Article) by its investment in a business starter, a new technology business operator, a venture business, and a company specializing in the start-up of new technology-based businesses through a business start-up investment cooperative, etc. no later than December 31, 2014.
(2)
When paragraph (1) is applied, investment shall be referred to as direct acquisition of stocks or equity shares of a business starter, a new technology business operator, a venture business, or a company specializing in the start-up of new technology-based businesses by a small and medium business start-up investment company, a limited-liability company for investment in venture business, a venture capital business operator or a fund management corporations, etc. directly or through a business start-up investment cooperative. etc. by a method falling under any of the following subparagraphs; however, cases where stocks or equity shares owned by others are acquired by purchase shall be excluded:
1.
Method of paying a share capital at the time of the incorporation of the relevant enterprise;
2.
Method of paying subscription money for new shares issued by the relevant enterprise for the purpose of the increase of its capital within seven years from its incorporation;
3.
Method of acquiring stocks or stakes of the relevant enterprise at the time of the capitalization of its surplus within seven years from its incorporation;
4.
Method of acquiring stocks or stakes of the relevant enterprise at the time of the conversion of its liabilities into capital within seven years from its incorporation.
(3)
No corporate tax shall be imposed on the dividend income received from investment under paragraph (1) 1 through 3 in a business starter, new technology business operator, venture business or company specializing in the start-up of new technology-based businesses by a small and medium business start-up investment company, limited-liability company for investment in venture business or venture capital business operator no later than December 31, 2014.
(4)
Such matters as may be necessary for computing the gains from transfer and dividend income under paragraphs (1) through (3) shall be prescribed by Presidential Decree.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

law view

 Article 14 (Special Taxation for Investment in Business Starters, etc.)
 

(1)
Article 94 (1) 3 of the Income Tax Act shall not apply to the transfer of stocks or stakes falling under any of the following subparagraphs (with respect to the stocks or equity shares falling under subparagraphs 1, 2, 2-2, 3, 4 and 6, it shall be limited to the acquisition thereof by the method falling under any of the subparagraphs of Article 13 (2) ): Provided, That in the case of acquisition of the stocks or stakes falling under subparagraphs 1, 2, 2-2, 2-3, 3, 4, and 6, this shall not apply to the acquisition by purchase of such stocks or equity shares owned by other persons:
1.
Stocks or equity shares acquired by investing in a small and medium business start-up investment company or a specialized credit financing company that has registered only venture capital business under Article 3 (2) of the Specialized Credit Finance Business Act;
2.
Stocks or equity shares acquired by a small and medium business start-up investment cooperative through its investment in a business starter, venture business or company specializing in the start-up of new technology-based businesses;
2-2.
Stocks or equity shares acquired by the Korea Venture Fund through its investment in a business starter, venture business or company specializing in the start-up of new technology-based businesses;
2-3.
Stocks or equity shares acquired by the agriculture and food investment association through its investment in a business starter, venture business or company specializing in the start-up of new technology-based businesses;
3.
Stocks or equity shares acquired by a venture business investment association through its investment in a new technology business operator, venture business or company specializing in the start-up of new technology-based businesses;
4.
Stocks or equity shares prescribed by Presidential Decree, which are acquired by investing in a venture business (including cases of acquisition by investing in a venture business through an association under Article 13 of the Act on Special Measures for the Promotion of Venture Businesses);
5.
Deleted;
6.
Stocks or equity shares acquired by a specialized components and materials investment association through its investment in a business starter, a new technology business operator, venture business or company specializing in the start-up of new technology-based businesses;
7.
Stocks of venture businesses traded by the method under subparagraph 1 (b) of Article 3 of the Securities Transaction Tax Act (limited to those transferred by the persons who are not the large stockholders under Article 94 (1) 3 (a) of the Income Tax Act).
(2)
Deleted.
(3)
Deleted.
(4)
With respect to such income as falling under any of the following subparagraphs, the association concerned shall withhold the income tax from such income when it pays such income to its members or partners:
1.
Dividend income obtained by a small and medium business start-up investment cooperative from its investment in a business starter, venture business or company specializing in the start-up of new technology-based businesses;
1-2.
Dividend income obtained by the Korea Venture Fund from its investment in a business starter, venture business or company specializing in the start-up of new technology-based businesses;
1-3.
Dividend income obtained by the agriculture and food investment association through its investment in a business starter, venture business or company specializing in the start-up of new technology-based businesses;
2.
Dividend income obtained by a venture business investment association from its investment in a new technology business operator, venture business or company specializing in the start-up of new technology-based businesses;
3.
Dividend income obtained by a corporate restructuring association registered in accordance with Article 15 of the Industrial Development Act (referring to the Industrial Development Act before it was wholly amended by Act No. 9584) from its investment in an enterprise subject to restructuring under Article 14 (4) of the same Act;
4.
Dividend income obtained by a specialized components and materials investment association from its investment in a business starter, a new technology business operator, venture business or company specializing in the start-up of new technology-based businesses.
(5)
With respect to such income as attributable to a small and medium business start-up investment cooperative, the Korea Venture Fund, an agriculture and food investment association, a venture business investment association, a corporate restructuring association, or a specialized components and materials investment association, which falls under any subparagraphs of Article 16 (1) of the Income Tax Act or Article 17 (1) 5 of the same Act, the association concerned shall withhold the income tax or corporate tax from such income when it pays such income to its members or partners, notwithstanding the Income Tax Act and the Corporate Tax Act.
(6)
In cases of the income falling under paragraphs (4) and (5), the gross income less expenses disbursed by the association concerned (limited to the expenses relative to gross income) shall be treated as the interest income or dividend income, notwithstanding Article 16 (2) of the Income Tax Act and the main sentence of Article 17 (3) of the same Act.
(7)
Paragraphs (4) through (6) shall apply only to the income derived no later than December 31, 2014.
(8)
Paragraph (1) 1 shall apply only to the stocks or equity shares acquired no later than December 31, 2009, and paragraph (1) 2, 2-2, 2-3, 3, 4, 6 and 7 shall apply only to the stocks and equity shares acquired no later than December 31, 2014.

law view

 Article 15 Deleted.
 

law view

 Article 16 (Income Deduction for Contributions, etc. to Small and Medium Business Start-Up Investment Cooperatives)
 

(1)
Where a resident makes a contribution or investment falling under any of the following subparagraphs, an amount (not exceeding 40/100 of the amount of global income for the relevant taxable year) equivalent to 10/100 (30/100 of the amount of contribution or investment in case of a contribution or investment falling under subparagraph 3 or 4) of the amount of contribution or investment that is made no later than December 31, 2014 shall be deducted from his/her global income for a taxable year he/she chooses from the taxable year whereto belongs the date of such contribution or investment until the taxable year whereto belongs the date on which two years have passed since the contribution or investment: Provided, That this shall not apply in cases where he/she makes contribution or investment in the manner of taking over other persons' contribution shares, investors' equities, or beneficiary certificates:
1.
Where he/she contributes to a small and medium business start-up investment cooperative, the Korea Venture Fund, a venture business investment association or a specialized components and materials investment association;
2.
Where he/she invests in beneficiary certificates issued by a venture business investment trust prescribed by Presidential Decree (hereafter referred to as "venture business investment trust" in this Article);
3.
Where he/she invests the amount that was contributed to an association under Article 13 of the Act on Special Measures for the Promotion of Venture Businesses, in a venture business as prescribed by Presidential Decree;
4.
Where he/she invests in a venture business under the Act on Special Measures for the Promotion of Venture Businesses.
(2)
Where a resident to whom income deduction was allowed under the main sentence of paragraph (1) falls under any of the following subparagraphs prior to the elapse of three years from the date of contribution or investment, the head of tax office having jurisdiction over the area of his/her residence or the withholding agent shall additionally collect an amount of tax on the portion of income deduction that was allowed to the resident as prescribed by Presidential Decree: Provided, That in cases of death of a contributor or investor, or of any cause prescribed by Presidential Decree, this shall not apply:
1.
Where he/she transfers or collects his/her contribution shares as provided for in paragraph (1) 1;
2.
Where he/she transfers or resells beneficiary certificates issued by a venture business investment trust as provided for in paragraph (1) 2;
3.
Where he/she transfers or collects contribution shares or investor's equities as provided for in paragraph (1) 3 and 4.
(3)
Deleted.
(4)
In applying the provisions of paragraphs (1) and (2), the limits and calculation of deductible amounts, application for income deduction, and other necessary matters shall be prescribed by Presidential Decree.

law view

 Article 17 Deleted.
 

law view

 Article 18 (Income Tax Reduction for Foreign Engineers)
 

(1)
A foreign engineer prescribed by Presidential Decree shall be granted tax reduction of an amount equivalent to 50/100 of the income tax on the earned income derived from the offer of services to a national within Korea that was received no later than the month to which the date on which two years pass from the date (applicable only to cases on or before December 31, 2014) on which such foreign engineer began to offer his/her services in Korea belongs.
(2)
A foreign engineer shall be granted tax reduction of an amount equivalent to 50/100 of the income tax on the earned income received in consideration of the offer of high technology prescribed by Presidential Decree to a foreigner invested enterprise that operates a business in Korea, which is granted corporate tax, etc. reduction as prescribed in Article 121-2 (1) 1 in accordance with a contract for the introduction of technology under the Foreign Investment Promotion Act received no later than the month to which the date on which two years pass from the date (applicable only to cases before December 31, 2014) on which such foreign engineer began to offer his/her services to such foreigner invested enterprise belongs.
(3)
When a withholding agent pays earned income for which income tax reduction is granted as prescribed in paragraphs (1) and (2), he/she shall withhold an amount equivalent to 50/100 of the income tax to be collected as prescribed in Article 127 of the Income Tax Act.
(4)
Anyone who intends to have paragraph (1) or (2) applied shall file an application for tax reduction, as prescribed by Presidential Decree.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

law view

 Article 18-2 (Special Taxation for Foreign Workers)
 

(1)
Deleted.
(2)
With respect to income tax on earned income by an executive or employee which is a foreigner (excluding daily employed workers; hereinafter referred to as "foreign workers") which is derived by the offer of their services in Korea no later than December 31, 2014, an amount computed by multiplying the relevant income by 17/100 may be adopted as the amount of such income tax, notwithstanding Article 55 (1) of the Income Tax Act. In such cases, provisions concerning income taxation, such as non-taxation, deduction, reduction or exemption, and tax credit under the Income Tax Act as well as this Act shall not be applicable.
(3)
In applying paragraph (2), the earned income thereunder shall not be added up in the calculation of tax base of global income referred to in Article 14 (2) of the Income Tax Act.
(4)
An withholding agent may withhold an amount obtained by multiplying 17/100 of the relevant earned income when paying the monthly earned income to a foreign worker, notwithstanding Article 134 (1) of the Income Tax Act.
(5)
Any foreign worker who intends to have special taxation under paragraph (2) or (4) applied shall make an application therefor as prescribed by Presidential Decree.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

law view

 Article 19 Deleted.
 

SECTION 3 Special Taxation for International Capital Transactions

law view

 Article 20 (Special Taxation for Introduction of Public Loans)
 

(1)
Taxes to be borne by a lender under subparagraph 10 of Article 2 of the Introduction and Management of Public Loans Act (hereafter in this Article referred to as "lender") in direct connection with the introduction of public loans under subparagraph 6 of Article 2 of the abovementioned Act (hereafter in this Article referred to as "public loans") shall be reduced or exempted under conditions stipulated by a public loan agreement under subparagraph 7 of Article 2 of the abovementioned Act (hereafter in this Article referred to as "public loan agreement").
(2)
The income tax or corporate tax on royalties or service fees paid to any foreigner in connection with the introduction of a public loan shall be reduced or exempted under such terms and conditions as prescribed by the relevant public loan agreement.
(3)
Tax reduction or tax exemption under paragraphs (1) and (2) may be denied if so requested by a lender or technology licensor.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

law view

 Article 21 (Exemption from Corporate Tax, etc. on Interest Income, etc. from International Financial Transactions)
 

(1)
A person who is paid an income falling under any of the following subparagraphs (excluding residents, domestic corporations and domestic business places of foreign corporations) shall be exempted from income tax or corporate tax:
1.
Interest and commission on the foreign currency bonds issued overseas by the State, local governments, or domestic corporations;
2.
Interest and commission paid on the foreign currency liabilities redeemable in foreign currency, which a foreign exchange business handling institution under the Foreign Exchange Transactions Act borrows from a foreign financial institution under such conditions as prescribed by the said Act;
3.
Interest and commission paid on the foreign currency bills or foreign currency deposit certificates issued or sold overseas by financial companies, etc. prescribed by Presidential Decree under the conditions as prescribed by the Foreign Exchange Transactions Act.
(2)
Deleted.
(3)
Any income accrued from an overseas transfer, by a non-resident or a foreign corporation, of the securities prescribed by Presidential Decree that have been issued by the State, local governments or domestic corporations, shall be exempted from the income tax or corporate tax.

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 Article 21-2 (Non-Taxation of Interest Income Tax on Foreign Currency Time Deposits of Non-Residents, etc.)
 

(1)
Where a non-resident or foreign corporation (excluding domestic business places of non-residents or foreign corporations; hereafter referred to as "non-residents, etc." in this Article) opens an account of foreign currency time deposit prescribed by Presidential Decree the contract period of which is not less than one year, on or before December 31, 2015, no income tax or corporate tax shall be imposed on the interest accrued from the relevant deposit during the contract period.
(2)
Where a person who holds an account of the deposit referred to in paragraph (1) terminates the savings contract or withdraws all or part of the savings during the contract period, the foreign exchange business handling institution referred to in Article 21 (1) 2 that deals in the relevant deposit shall additionally collect an amount of tax equivalent to the income tax or corporate tax that has not been imposed as prescribed by Presidential Decree and pay it to the head of the tax office having jurisdiction over the withholding no later than 10th day of the month following the month to which the date of such termination or withdrawal belongs. In such cases, if such amount is not paid within the time limit or underpaid, an amount equivalent to 10/100 of the amount of tax which is not paid or underpaid shall be additionally paid.
(3)
Documents to be submitted at the time of opening an account of foreign currency time deposit by non-residents, etc. and method to be applied when modification or renewal of the saving contract is made, and other necessary matters shall be prescribed by Presidential Decree.
[This Article Newly Inserted by Act No. 11614, Jan. 1, 2013]

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 Article 22 (Exemption from Corporate Tax on Dividend Income from Investment in Overseas Resources Development)
 

(1)
Where a domestic corporation's income for each business year ending on or before December 31, 2015 includes any dividend income from its investment in overseas resources development projects under Presidential Decree as prescribed by the Foreign Exchange Transactions Act (including a resources processing business under the foreign capital inducement conditions set forth by the host country), only the portion of such dividend exempted from the tax of the host country shall be exempted from corporate tax.
(2)
Where paragraph (1) and Article 57 (3) of the Corporate Tax Act are concurrently applicable to such dividend income received by a domestic corporation, only one of them shall be selected and applied thereto.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

law view

 Article 23 Deleted.
 

SECTION 4 Special Taxation for Investment Promotion

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 Article 24 (Tax Credit for Investment, etc. in Productivity Increase Facilities)
 

(1)
Where a national makes an investment in the facilities falling under any of the following subparagraphs (excluding any investment with used items and through leases prescribed by Presidential Decree) no later than December 31, 2014 in order to increase productivity, an amount equivalent to 3/100 of such investment amount (7/100 in cases of a small or medium enterprise) shall be deducted from his/her income tax (limited to the income tax on his/her business income) or corporate tax:
1.
Facilities prescribed by Presidential Decree which belong to those for the improvement and automation of processes;
2.
Equipment prescribed by Presidential Decree which belongs to high-technology equipment;
3.
Deleted;
4.
and 5 Deleted;
6.
Computers and their peripheral devices, software, telecommunications facilities and other tangible and intangible facilities used for the management of the supply chain, including material procurement, production planning, and inventory management, in an electronic format, of which the depreciation period is two years or longer (hereinafter referred to as "facilities for supply chain management system");
7.
Computers and their peripheral devices, software, telecommunications facilities and other tangible and intangible facilities used for the management of customer relationship, including integration and analysis of data on customers and marketing, in an electronic format, of which the depreciation period is two years or longer (hereinafter referred to as "facilities for customer relationship management system");
8.
Computers and their peripheral devices, software, telecommunications facilities, and other tangible and intangible facilities used for the strategic and efficient management of logistics process, including purchasing, management of orders, production, warehouse management, inventory management, and distribution network, of which the depreciation period is two years or longer;
9.
Systems prescribed by Presidential Decree, such as knowledge management system to systematize and share knowledge possessed by the executives and employees hired by nationals.
(2)
Where any small or medium enterprises use, by means of the Internet, facilities falling under paragraph (1) 6 and 7, which are owned by any other person no later than December 31, 2014, in order to increase its productivity, an amount equivalent to 7/100 of their use fees shall be deducted from its income tax (limited to the income tax on business income) or corporate tax.
(3)
Article 11 (1), (3) and (4) shall apply mutatis mutandis to the method of tax credit in accordance with paragraph (1) or (2).
(4)
A national who intends to have paragraphs (1) and (2) applied shall apply for tax credit, as prescribed by Presidential Decree.

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 Article 25 (Tax Credit for Investment, etc. in Safety Facilities)
 

(1)
Where a national makes an investment, no later than December 31, 2014, in the facilities prescribed by Presidential Decree (excluding any investment with used items and through leases prescribed by Presidential Decree) as deemed necessary for the purposes of industrial policies, which belong to the facilities falling under any of the following subparagraphs, an amount equivalent to 3/100 (7/100, where a small or medium enterprise invests in the facilities stipulated in subparagraph 9) of such amount of investment shall be deducted from its income tax (limited to income tax on business income) or corporate tax. In such cases, Article 11 (1), (3) and (4) shall apply mutatis mutandis to the methods of tax credit:
1.
Deleted;
2.
Deleted;
3.
Facilities for a distribution business to be run under the Distribution Industry Development Act;
4.
Facilities installed in a trustee company by a truster company under the Act on the Promotion of Collaborative Cooperation between Large Enterprises and Small-Medium Enterprises;
5.
Industrial disaster prevention facilities;
6.
Mining safety facilities;
7.
Facilities reinforced or expanded by an individual designated as person under priority management under the Emergency Resources Management Act, in order to carry out his/her emergency preparedness duties in compliance with the Government's order to reinforce and expand such facilities;
8.
Facilities for preventing hazardous elements, which are installed by a relevant business operator subject to standards for the priority control of hazardous elements under Article 9 of the Livestock Products Sanitary Control Act or Article 48 of the Food Sanitation Act;
9.
Facilities installed to prevent technology from being illegally transferred;
10.
Facilities installed to develop overseas resources.
(2)
A national who intends to have paragraph (1) applied shall apply for tax credit, as prescribed by Presidential Decree.

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 Article 25-2 (Tax Credit for Investment in Energy-Saving Facilities)
 

(1)
Where a national makes an investment (excluding any investment made with used goods and through leases prescribed by Presidential Decree), no later than December 31, 2013 in the energy-saving facilities prescribed by Presidential Decree, the amount equivalent to 10/100 of the relevant invested amount shall be deducted from the income tax (limited to the income tax on his/her business income) or corporate tax.
(2)
When paragraph (1) is applied, Article 11 (1), (3) and (4) shall apply mutatis mutandis to the methods of tax credit.
(3)
A national who intends to have paragraph (1) applied shall apply for tax credit, as prescribed by Presidential Decree.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

law view

 Article 25-3 (Tax Credit for Investment in Facilities for Environmental Conservation)
 

(1)
Where a national makes an investment (excluding any investment with used goods and through leases prescribed by Presidential Decree) in any facility for environmental conservation prescribed by Presidential Decree no later than December 31, 2013, the amount equivalent to 10/100 of the investment amount shall be deducted from the income tax (limited to the income tax on his/her business income) or the corporate tax. In such cases, Article 11 shall apply mutatis mutandis to the methods of tax credit.
(2)
A national who intends to have paragraph (1) applied shall apply for tax credit, as prescribed by Presidential Decree.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

law view

 Article 25-4 (Tax Credit for Investment in Facilities to Improve Quality Control of Medical Supplies)
 

(1)
Where a national makes an investment (excluding any investment with used goods and through leases prescribed by Presidential Decree) in the facilities to improve the quality control of medical supplies prescribed by Presidential Decree no later than December 31, 2013, an amount equivalent to 7/100 of the amount of investment shall be deducted from the income tax (limited to the income tax on his/her business income) or the corporate tax. In such cases, Article 11 shall apply mutatis mutandis to the methods of tax credit.
(2)
A national who intends to be governed by paragraph (1) shall apply for tax credit, as prescribed by Presidential Decree.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

law view

 Article 26 (Tax Credit for Employment-Creating Investment)
 

(1)
Where a national makes an investment prescribed by Presidential Decree (excluding any investment with used goods and through leases prescribed by Presidential Decree and any investment within the overconcentration control region of the Seoul Metropolitan area; hereafter the same shall apply in this Article) by no later than December 31, 2014 and the number of workers at ordinary times of the relevant taxable year has not decreased as compared with the number of workers at ordinary time of the immediately preceding taxable year, the total sum of the amount calculated according to the classification in the following subparagraphs shall be deducted from the income tax (limited to the income tax on his/her business income) or corporate tax of each taxable year in which the relevant investment is made: Provided, That in the case of a small or medium enterprise, subparagraph 1 shall apply even to the case where the number of workers at ordinary times of the relevant taxable year has decreased as compared with the number of workers at ordinary times of the immediately preceding taxable year. In such cases, the amount of deduction shall be the amount obtained by deducting 10 million won per number of workers at ordinary times decreased from the amount referred to in subparagraph 1, and if the relevant amount is a negative number, it shall be regarded as nil:
1.
Basic amount of deduction: An amount equivalent to 4/100 of the amount of the investment concerned: Provided, That the basic amount of deduction for a person who is not a small or medium enterprise shall be subject to the provisions of the following items:
(a)
An amount equivalent to 2/100 of the amount of the investment concerned, in cases of investment in a growth management region under Article 6 (1) 2 of the Seoul Metropolitan Area Readjustment Planning Act or a nature preservation region under Article 6 (1) 3 of the same Act;
(b)
An amount equivalent to 3/100 of the amount of investment concerned, in cases of investment in a region outside the Seoul Metropolitan area.
2.
Additional amount of deduction: An amount equivalent to 3/100 of the amount of the investment concerned: Provided, That where the relevant amount exceeds the amount obtained by subtracting the amount in item (d) from the total sum of the amount referred to in items (a) through (c) in turn, it shall be deemed that such excess amount is nonexistent:
(a)
Number of graduates from schools prescribed by Presidential Decree which conduct vocational education and training such as high schools operating the tailored curricula directly linked to demand of industrial circles as schools provided in Article 2 of the Elementary and Secondary Education Act from among the workers at ordinary times who have entered into an employment contract for the first time in the relevant taxable year (hereinafter referred to as "high schools tailored to industrial demand, etc.") x twenty million won;
(b)
Number of youth workers from among the workers at ordinary times other than those in item (a) who have entered into an employment contract for the first time in the relevant taxable year x fifteen million won;
(c)
(Number of the workers at ordinary times in the relevant taxable year - number of the workers at ordinary times in the immediately preceding taxable year - number of graduates referred to in item (a) - number of youth workers referred to in item (b) x ten million won;
(d)
Amount of deduction carried forward in the relevant taxable year under Article 144 (3).
(2)
When a domestic corporation is to make an interim prepayment under Article 63 of the Corporate Tax Act (excluding cases of interim prepayment under the proviso to Article 63 (1) of the same Act and paragraph (5) of the same Article) or is to make a consolidated interim prepayment under Article 76-18 of the same Act (excluding cases of interim prepayment under the proviso to Article 76-18 (1) of the same Act and paragraph (3) of the same Article), where it has made an investment to which paragraph (1) is applicable during the period of interim prepayment, it may pay as its interim prepayment an amount obtained by subtracting the amount of tax credit equivalent to such investment during the period of interim prepayment calculated by applying mutatis mutandis paragraph (1) from the amount of tax for interim prepayment. In such cases, "the relevant taxable year" shall be deemed "the period of interim prepayment."
(3)
When a resident is to make an interim prepayment pursuant to Article 65 of the Income Tax Act, where he/she has made an investment to which paragraph (1) is applicable during the period of interim prepayment, such resident may file a tax return of interim prepayment with the head of tax office having jurisdiction over the place of tax payment for an amount obtained by subtracting the amount of tax credit equivalent during the period of interim prepayment calculated by applying mutatis mutandis paragraph (1) to such investment (its ceiling shall be the amount of tax on business income among the amount of tax for interim prepayment) from the amount tax of interim prepayment between November 1 and November 30. In such cases, "the relevant taxable year" shall be deemed "the period of interim prepayment."
(4)
Where a resident has filed a tax return pursuant to paragraph (3), he/she shall be deemed to have filed a tax return under Article 65 (3) of the Income Tax Act and thereby the same Act (excluding the latter part of Article 65 (9)) shall apply thereto.
(5)
Where the amount of tax for interim prepayment paid or filed under paragraph (2) or (3) is less than 50/100 of the minimum amount of tax in the immediately preceding taxable year as computed under Article 132, the amount of tax credit equivalent to such deficiency during the period of interim prepayment shall not be subtracted.
(6)
Where the number of workers at ordinary times of each taxable year during the period from the end of the taxable year in which tax deduction was granted through the end of the taxable year to which the date falling on two years from the end of the taxable in which tax deduction was granted has decreased as compared with the number of workers at ordinary time of taxable year in which tax deduction was granted, a person who is granted the deduction of the income tax or corporate tax pursuant to paragraph (1) or Article 144 (3) shall pay an amount equivalent to the deducted amount of tax as the income tax or corporate tax, as prescribed by Presidential Decree.
(7)
Where the amount of tax credit equivalent to the investment during the period of interim prepayment deducted under paragraphs (2) and (3) exceeds the amount of tax credit equivalent to the investment to which paragraph (1) applies in the relevant taxable year, an amount equivalent to such excess shall be paid as the income tax or corporate tax when filing a tax base of the relevant taxable year.
(8)
The scope of workers at ordinary times and youth workers, the method of computing the number of workers at ordinary times, graduates from high schools tailored to industrial demand, etc. and youth workers, and other necessary matters when applying paragraphs (1) through (3) and (6) or Article 144 (3) shall be prescribed by Presidential Decree.
(9)
A national who intends to have paragraphs (1) through (3) applied shall apply for tax credit, as prescribed by Presidential Decree.
[This Article Wholly Amended by Act No. 10406, Dec. 27, 2010]

law view

 Articles 27 and 27-2 Deleted.
 

law view

 Article 28 Deleted.
 

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 Article 29 (Separate Taxation on Interest Income from Social Infrastructure Bonds)
 

With respect to interest derived from social infrastructure bonds prescribed by Presidential Decree, which mature in seven or more years from the date of issue until the date of final repayment and are issued no later than December 31, 2014, notwithstanding Article 14 of the Income Tax Act, such interest income shall not be included in the tax base of global income when the tax base of global income is calculated, tax rate under Article 129 (1) 1 (d) of the same Act shall apply.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

SECTION 4-2 Special Taxation for Support for Employment

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 Article 29-2 (Tax Deductions for Small or Medium Enterprises having Reinstated Graduates of High Schools Tailored to Industrial Demand, etc. after Performing Their Military Service)
 

(1)
Where a small or medium enterprise has employed a person prescribed by Presidential Decree from among graduates of high schools tailored to industrial demand, etc., if such employee is reinstated no later than December 31, 2017 after performing the military service prescribed by Presidential Decree (applicable only to the cases where reinstatement is made within one year after completing the military service), an amount equivalent to 10/100 of the labor cost prescribed by Presidential Decree and paid to the reinstated person for two years from the date of the reinstatement shall be deducted from the income tax (applicable only to the income tax on the business income) or corporate tax of the relevant taxable year.
(2)
A small or medium enterprise that intends have paragraph (1) applied shall file an application for the tax deduction as prescribed by Presidential Decree.
[This Article Newly Inserted by Act No. 11614, Jan. 1, 2013]

law view

 Article 30 (Income Tax Reduction or Exemption for Youths Employed in Small or Medium Enterprises)
 

(1)
Where youths prescribed by Presidential Decree are employed by small or medium enterprises prescribed by Presidential Decree (including non-profit corporations) and falls under Article 2 of the Framework Act on Small and Medium Enterprises (hereafter referred to as "small or medium enterprises" in this Article) from January 1, 2012 through December 31, 2013, the amount of tax equivalent to 100/100 of income tax shall be reduced or exempted with respect to the income earned from such small or medium enterprises until the month to which the day falling on three years from the date of employment belongs. In such cases, the period of income tax reduction or exemption shall be calculated from the first date of employment on which the income tax is reduced or exempted regardless of whether a person who is granted income tax reduction or exemption is employed by another small or medium enterprise or re-employed by the relevant small or medium enterprise.
(2)
Workers who intend to have paragraph (1) applied shall apply for tax reduction or exemption to the withholding agent, as prescribed by Presidential Decree.
(3)
When withholding agents have received an application for tax reduction or exemption as prescribed in paragraph (3), they shall present a list of workers who have submitted an application to the head of tax office having jurisdiction over the withholding no later than 10th of the month next to the month to which the month such application has been received belongs.
(4)
Where the head of tax office having jurisdiction over the withholding has received a list of workers who applied for tax reduction or exemption as prescribed in paragraph (3) and when it is ascertained that the relevant worker does not meet the requirements in paragraph (1), he/she shall notify the withholding agent of such fact.
(5)
The withholding agent who has been notified that the worker who applied for tax reduction or exemption as prescribed in paragraph (4) does not meet the requirements in paragraph (1) shall withhold an amount obtained by adding the amount obtained by multiplying the sum total of amounts short of the amount of tax that should have been withheld initially by 105/100 to the amount of withholding tax on the earned income for the relevant month when he/she pays earned income on or after the date he/she was notified as such: Provided, That in cases the relevant worker has retired from office, the withholding agent shall notify the head of tax office having jurisdiction over withholding of such fact, as prescribed by Presidential Decree.
(6)
The head of tax office having jurisdiction over the address of the worker who was notified as prescribed in the proviso to paragraph (5) shall impose and collect an amount obtained by multiplying the amount that was collected less than it should have been collected by 105/100 as income tax from such worker.
(7)
In applying paragraph (1), where a person who was employed by a small or medium enterprise on or before December 31, 2011 is re-employed by such relevant small or medium enterprise through an extension of contract period on or after January 1, 2012, the tax reduction or exemption under paragraph (1) shall not apply.
(8)
The procedure for applying for income tax reduction or exemption, documents to be submitted and other necessary matters other than the matters prescribed from paragraphs (1) through (7) shall be prescribed by Presidential Decree.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

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 Article 30-2 (Tax Credit Subsequent to Conversion to Regular Worker)
 

(1)
Where small or medium enterprises convert fixed-term workers and part-time workers under the Act on the Protection, etc. of Fixed-Term and Part-Time Workers, and dispatched workers under the Act on the Protection, etc. of Temporary Agency Workers who were employed as of December 31, 2007 to workers whose labor contract is without fixed period of time or the business owner who has used them directly employs them pursuant to the Act on the Protection, etc. of Temporary Agency Workers by December 31, 2009 (hereafter referred to as "conversion to regular workers" in this Article), an amount obtained by multiplying the number of workers falling under the conversion to regular workers by 300,000 won shall be deducted from income tax (limited to the income tax on business income) or corporate tax of the relevant taxable year.
(2)
Where a person whose income tax or corporate tax has been deducted pursuant to paragraph (1) terminates labor relations with the relevant regular workers before one year passes from the date of conversion to regular workers, he/she shall pay an amount obtained by adding the amount equivalent to interest calculated as prescribed by Presidential Decree to the amount equivalent to the amount of tax deducted at the time when tax base for the taxable year was filed, to which the date when such labor relations terminated belongs, as income tax or corporate tax.
(3)
Small or medium enterprises intending to have paragraph (1) applied shall submit an application for tax credit prescribed by Ordinance of the Ministry of Strategy and Finance together with a tax base return for the relevant taxable year.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

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 Article 30-3 (Special Taxation for Small or Medium Enterprises, etc. Maintaining Employment)
 

(1)
Small or medium enterprises under Article 2 of the Framework Act on Small and Medium Enterprises that meet all the requirements in the following subparagraphs (hereafter referred to as "small or medium enterprises maintaining employment" in this Article) may deduct an amount calculated according to the arithmetic formula in paragraph (2) from the amount of income or the amount of gross income for each business year until the taxable year to which December 31, 2015 belongs:
1.
Where there is any difficulty in management prescribed by Presidential Decree, such as the decrease in the turnover of the relevant taxable year by not less than a fixed ratio compared with that of the preceding taxable year;
2.
Where the number of workers at ordinary time of the relevant taxable year has not decreased above a fixed rate prescribed by Presidential Decree as compared with the number of workers at ordinary time of the immediately preceding taxable year;
3.
Where the total amount of annual income per worker at ordinary time of the relevant taxable year calculated as prescribed by Presidential Decree has decreased as compared that of the immediately preceding taxable year.
(2)
An amount to be deducted pursuant to paragraph (1) shall be calculated according to the following arithmetic formula:
(The total amount of annual income per worker at ordinary time of the immediately preceeding taxable year-the total amount of annual income per worker at ordinary time of the relevant taxable year)×the number of workers at ordinary time of the relevant taxable year×50/100.
(3)
For a worker at ordinary times providing small or medium enterprises maintaining employment with labor, the amount calculated according to the following arithmetic formula can be deducted from the amount of earned income for the relevant taxable year until the taxable year to which December 31, 2015 belongs. In such cases, if the amount to be deducted exceeds 10 million won, such excess amount shall be deemed to be nonexistent:
(The total amount of annual income of the relevant employee at ordinary time of the immediately preceeding taxable year-the total amount of annual income of the relevant employee at ordinary time of the relevant taxable year)×50/100.
(4)
When applying paragraphs (1) through (3), the scope of employee at ordinary time, the total amount of income and other necessary matters shall be prescribed by Presidential Decree.
[This Article Newly Inserted by Act No. 9512, Mar. 25, 2009]

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 Article 30-4 (Tax Credit of Social Insurance Premium for Increased Number of Employees in Small or Medium Enterprises)
 

(1)
Where the number of workers at ordinary time of the relevant taxable year of small or medium enterprises surpasses that of the immediately previous taxable year during the period until the taxable year to which December 31, 2013 belongs, the total sum of the amount in the following subparagraphs shall be deducted from the income tax (limited to income tax on business income) or corporate tax for the relevant taxable year:
1.
Amount equivalent to social insurance premium paid by a user for the increased number of employees who are youth workers at ordinary time: Number of increased employees who are youth workers at ordinary time prescribed by Presidential Decree x amount prescribed by Presidential Decree to be paid by a user as social insurance premium for the increased number of employees who are workers at ordinary time x 100/100;
2.
Amount equivalent to social insurance premium paid by a user for the increased number of employees who are workers at ordinary time other than youths: Number of increased employees who are workers at ordinary time other than youths prescribed by Presidential Decree x amount prescribed by Presidential Decree to be paid by a user as social insurance premium for the increased number of employees who are youth workers at ordinary time other than youths x 50/100.
(2)
Social insurance under paragraph (1) shall mean any of the followings:
1.
National insurance under the National Pension Act;
2.
Employment insurance under the Employment Insurance Act;
3.
Industrial accident compensation insurance under the Industrial Accident Compensation Insurance Act;
4.
National health insurance under the National Health Insurance Act;
5.
Long-term care insurance under the Act on Long-Term Care Insurance for the Aged.
(3)
Small or medium enterprises intending to have paragraph (1) applied, shall submit an application for tax credit and calculation sheet of tax credit prescribed by Ordinance of the Ministry of Strategy and Finance when it files a tax base return for the relevant taxable year.
(4)
In applying paragraph (1), the scope of workers at ordinary time and youth workers at ordinary time and other necessary matters shall be prescribed by Presidential Decree.
[This Article Wholly Amended by Act No. 11133, Dec. 31, 2011]

SECTION 5 Special Taxation for Corporate Restructuring

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 Article 30-5 (Special Taxation for Gift Tax on Start-up Funds)
 

(1)
Where residents aged 18 or older take donations of any property (the ceiling of the taxable value of gift tax shall be three billion won; hereafter referred to as "start-up fund" in this Article), other than those prescribed by Presidential Decree such as land, buildings, etc. from their parents aged 60 or older (including the parents of their father or mother where their father or mother is dead at the time when such donations are made; hereafter the same shall apply in this Article) no later than December 31, 2013 for the purpose of starting small or medium enterprises prescribed by Presidential Decree (hereafter referred to as "small or medium enterprises eligible for start-up fund" in this Article), gift tax shall be imposed by applying the tax rate of 10/100 after deducting 500 million won from the taxable value of gift tax, notwithstanding Articles 53 and 56 of the Inheritance Tax and Gift Tax Act. In such cases, where such residents take donations of start-up funds not less than two times or from each of their parents, an amount obtained by adding each of the taxable value of gift tax shall be applicable.
(2)
Anyone who has taken the donation of the start-up business fund shall commence his/her business within one year from the date on which he/she takes the donation thereof. The cases falling under any of the following subparagraphs shall not be deemed as the start-up business:
1.
Where anyone succeeds the previous business by means of merger, division, investment in kind or acquisition by transfer of the business or runs the same type of business after taking over or purchasing the assets used for the previous business;
2.
Where any resident incorporates a new corporation after converting the business that has been run by him/her into a corporation;
3.
Where anyone runs the same type of business as the previous business after resuming the business after discontinuing the business;
4.
Where it is difficult to deem that a new business is commenced, such as business expansion, business addition, etc. and other cases prescribed by Presidential Decree similar thereto.
(3)
Where anyone who has commenced his/her business pursuant to the provisions of paragraph (2) after taking the donation of the start-up business fund uses a new start-up business fund in connection with the original start-up business after taking the donation of such new startup business fund, the provisions of paragraph (2) 3 and 4 shall not apply to such case.
(4)
Anyone who takes the donation of the start-up business fund shall use all of such start-up business fund for the relevant purpose by the date on which 3 years lapse from the date on which he/she takes the donation of such start-up business fund.
(5)
Anyone who takes donations of start-up fund shall, when he/she commences his/her business pursuant to the provisions of paragraph (2), submit the details of the spending of start-up fund to the head of tax office having jurisdiction over the place where the gift tax is paid on the day set by Presidential Decree. In such cases, where he/she fails to submit the details of the spending of the start-up business fund to the head of the relevant tax office or the details of the spending of the start-up business fund are unclear, an amount that is calculated by multiplying the amount of non-submitted portion or unclear portion by 3/1,000 shall be imposed as additional tax on the failure to submit the details of the spending of the start-up business fund.
(6)
Where the donated start-up business fund falls under any of the following subparagraphs, the gift tax and the inheritance tax shall be levied on the amount that is provided for in each subparagraph pursuant to the Inheritance Tax and Gift Tax Act. In such cases, an amount equivalent to the interest that is calculated as prescribed by Presidential Decree shall be added to the gift tax to be levied:
1.
Where the start-up business is not commenced pursuant to the provisions of paragraph (2) : The start-up business fund;
2.
Where the start-up business fund is used for running any business that does not fall within the categories of small or medium enterprises eligible for the start-up business fund: The start-up business fund spent for the business that does not fall within the categories of small or medium enterprises eligible for the start-up business fund;
3.
Where the newly donated start-up business fund is not spent pursuant to the provisions of paragraph (3) : The start-up business fund that is not spent for the relevant purpose;
4.
Where the start-up business fund has not been all spent for the relevant purpose by the date on which 3 years lapse from the date on such start-up fund is donated pursuant to paragraph (4): The start-up business fund that is not spent for the relevant purpose;
5.
Where the start-up business fund (including the increased value portion that accrues from the start-up business; hereinafter referred to as "start-up business fund, etc.") has been spent for the business purpose other than the relevant business purpose within ten years after the start-up business fund is donated: The start-up business fund, etc. that has been spent for the business purpose other than the relevant business purpose;
6.
Where the business has been discontinued within ten years after the business is commenced and other cases prescribed by Presidential Decree: The start-up fund and other amount prescribed by Presidential Decree.
(7)
In the application of Article 3 (3) of the Inheritance Tax and Gift Tax Act, the start-up business fund shall be deemed the donated property that is added to the inherited property.
(8)
In the application of Article 13 (1) 1 of the Inheritance Tax and Gift Tax Act, the start-up business fund shall be added to the taxable value of the inheritance tax regardless of the period ranging from the date on which the start-up business fund is donated to the date on which the inheritance commences and in the application of subparagraph 3 of Article 24 of the same Act, the start-up business fund shall not be deemed the value of the donated property that is added to the taxable value of the inheritance tax.
(9)
Where Article 28 of the Inheritance Tax and Gift Tax Act are applied to the amount of the gift tax on the start-up business fund, the amount of the gift tax on the start-up business fund shall be deducted from the calculated amount of inheritance tax, notwithstanding paragraph (2) of the same Article. In such cases, where the amount of the gift tax to be deducted exceeds the calculated amount of inheritance tax, the amount of the gift tax equivalent to the difference between them shall not be refunded.
(10)
Where the gift tax is levied on the start-up business fund, the value of other property than the start-up business fund that is donated by the same person (including his/her spouse) shall not be added to the taxable value of the gift tax on the start-up business fund, notwithstanding Article 47 (2) of the Inheritance Tax and Gift Tax Act and even when a return of the tax base of the gift tax on the start-up business fund is filed, the tax credit for return provided for in Article 69 (2) of the same Act and the annual installment payment provided for in Article 71 (1) of the same Act shall not be applied.
(11)
Anyone who intends to make him/her eligible for the application of the provisions of paragraph (1) shall file an application for the special case by the deadline for filing a return of the tax base of the gift tax, as prescribed by Presidential Decree. In such cases, if he/she fails to file the application for the special case by the return deadline, the provisions governing the special case shall not apply to him/her.
(12)
The taxation of the gift tax and the inheritance tax shall be governed by the Inheritance Tax and Gift Tax Act unless the taxation thereof is prescribed otherwise in this Article.
(13)
Article 30-6 shall not apply to the residents to whom paragraph (1) shall apply.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

law view

 Article 30-6 (Special Taxation for Gift Tax on Succession to Family Business)
 

(1)
Where any resident aged 18 or old takes the donation of stocks or equity shares of a family business (the ceiling of the taxable vale of gift tax shall be three billion won; hereafter referred to as "stocks, etc." in this Article) for the purpose of succeeding to the family business from his/her parent aged 60 or older (including a parent of his/her father or mother, in cases where his/her father or mother is dead at the time when such donation is made; hereafter the same shall apply in this Article), who has engaged in the family business under Article 18 (2) 1 of the Inheritance Tax and Gift Tax Act continuously for ten years or longer, on or before December 31, 2013, and succeeds the family business as prescribed by Presidential Decree, the gift tax shall be levied at the tax rate of 10/100 after deducting 500 million won from the taxable value subject to the gift tax, notwithstanding Articles 53 (1) and 56 of the Inheritance Tax and Gift Tax Act: Provided, That this shall not apply where he/she receives donation from the donator of the relevant stocks, etc. and a person falling under the largest stockholder or investor under Article 22 (2) of the Inheritance Tax and Gift Tax Act (excluding a person to whom the relevant stocks, etc. are donated as at the time of succession to the family business) as at the time of succession to the family business after succession to the family business.
(2)
Where the successor to whom stocks, etc. have been donated under paragraph (1) does not succeed to the family business as prescribed by Presidential Decree or where the successor to whom stocks, etc. have been donated and who succeeds to the family business falls under any of the following subparagraphs without justifiable grounds prescribed by Presidential Decree within ten years from the date on which such donation is made, the gift tax shall be levied against the taxable value of the stocks, etc. in accordance with the Inheritance Tax and Gift Tax Act. In such cases, the amount equivalent to an interest calculated as prescribed by Presidential Decree shall be levied in addition to the gift tax:
1.
Where the successor does not engage in the family business or suspends or closes down the family business;
2.
Where the equities of the successor to whom stocks, etc. have been donated are reduced.
(3)
Article 30-5 (7) through (12) shall apply mutatis mutandis to the donation of the stocks, etc. under paragraph (1). In such cases, the term "start-up business fund" shall be construed as "stocks, etc."
(4)
Necessary matters concerning the method of applying special taxation of the gift taxes in cases where Articles 41-3, 41-5, and 42 of the Inheritance Tax and Gift Tax Act shall be applicable, the method of applying the deductible for inheritance of a family business in cases where inheritance proceedings commence after the stocks, etc. were conveyed as a gift pursuant to paragraph (1), and the extent of donors and donees shall be prescribed by Presidential Decree.
(5)
Article 30-5 shall not apply to the residents to whom paragraph (1) shall apply.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

law view

 Article 31 (Taxation Carried Forward, etc. of Capital Gains Tax on Consolidation among Small or Medium Enterprises)
 

(1)
Where small or medium enterprises to be extinguished by consolidation among small or medium enterprises operating the types of business prescribed by Presidential Decree transfer fixed assets for business prescribed by Presidential Decree (hereinafter referred to as "fixed assets for business") to a corporation newly incorporated by consolidation or a corporation surviving such consolidation (hereafter referred to as "consolidated corporation" in this Article), taxation carried forward may apply to such fixed assets for business.
(2)
The scope of and requirements for consolidation between small or medium enterprises subject to the application of paragraph (1) shall be prescribed by Presidential Decree.
(3)
A national who intends to have paragraph (1) applied shall file an application for taxation carried forward, as prescribed by Presidential Decree.
(4)
Where small or medium start-up enterprises, small or medium start-up venture enterprises under Article 6 (1) and (2) or a national subject to tax reduction or tax exemption under Article 64 (1), consolidate as prescribed in paragraph (1) prior to the expiration of the period of tax reduction or tax exemption under Article 6, 64 or 121, the consolidated corporation may be subject to the application of Article 6, 64 or 121 during the remaining period of tax reduction or tax exemption, as prescribed by Presidential Decree: Provided, That the provisions of Article 121 shall apply only to the business assets acquired before the consolidation under paragraph (1).
(5)
Where small or medium enterprises relocating to an area outside the overconcentration control region of the Seoul Metropolitan area under Article 63, or incorporated agricultural companies under Article 68 consolidate as prescribed in paragraph (1) prior to the expiration of the period of tax reduction or tax exemption under Article 63 or 68, the consolidated corporation may be subject to the application of Article 63 or 68 during the remaining period of tax reduction or tax exemption, as prescribed by Presidential Decree.
(6)
Where a national who has a tax credit yet to be granted as prescribed in Article 144 consolidates as prescribed in paragraph (1), the consolidated corporation may succeed to the amount of tax credit yet to be granted of such national and be granted tax credit, as prescribed by Presidential Decree.
(7)
Where a national to whom paragraph (1) has been applied falls under any of the following subparagraphs before the lapse of five years from the date of transfer of fixed assets used for a business, he/she shall pay the tax carried forward under paragraph (1) (referring to the amount that excludes the amount of tax already paid by a consolidated corporation) as the capital gains tax when filing a tax base turn of the taxable year to which the date of occurrence of such ground belongs. In such cases, necessary matters concerning the guidelines for judgement of discontinuation of business and others shall be prescribed by Presidential Decree:
1.
Where the consolidated corporation discontinues the business succeeded from a small or medium enterprise to be extinguished;
2.
Where a national to whom paragraph (1) has been applied disposes of not less than 50/100 of the stocks or equity shares of the consolidated enterprise acquired by consolidation.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

law view

 Article 32 (Taxation Carried Forward of Capital Gains Tax for Conversion into Corporation)
 

(1)
Where a resident converts his/her business into a corporation (excluding a corporation operating a consumptive service business prescribed by Presidential Decree), by making an investment in kind with fixed assets for business, or in accordance with the method of business transfer or takeover prescribed by Presidential Decree, taxation carried forward may apply to such fixed assets for business.
(2)
Paragraph (1) shall apply only to cases in which the capital of the newly-established corporation exceeds the amount prescribed by Presidential Decree.
(3)
Any resident who intends to be governed by paragraph (1) shall apply for the carryover taxation, as prescribed by Presidential Decree.
(4)
Article 31 (4) through (6) shall apply mutatis mutandis to a corporation to be established under paragraph (1).
(5)
Where a corporation established pursuant to paragraph (1) falls under any of the following subparagraphs before the lapse of five years from the date of its establishment, it shall pay the amount of tax carried forward under paragraph (1) (referring to the amount that excludes the amount of tax already paid by the relevant corporation) as the capital gains tax when a resident to whom paragraph (1) has applied files a tax base of the taxable year to which the date of occurrence of such ground belongs. In such cases, necessary matters concerning the guidelines for judgement of discontinuation of business and others shall be prescribed by Presidential Decree:
1.
Where the corporation established pursuant to paragraph (1) discontinues business succeeded from a resident to whom paragraph (1) has been applied;
2.
Where the resident to whom paragraph (1) has been applied disposes of not less than 50/100 of the stocks or equity shares acquired by conversion into a corporation.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

law view

 Article 33 (Special Taxation for Enterprises under Trade Adjustment Assistance whose Business is Converted)
 

(1)
Where those who run small or medium enterprises transfer fixed assets for business that are used directly for the pre-conversion business (hereafter referred to as "fixed assets for the pre-conversion business" in this Article) no later than December 31, 2013 and acquire the fixed assets for business that are used directly for the converted business within one year from the transfer date in order to convert a business that an enterprise under trade adjustment assistance under Article 6 of the Act on Trade Adjustment Assistance following the Free Trade Agreements (hereafter referred to as "enterprise under trade adjustment assistance" in this Article and Article 33-2) has run (hereafter referred to as "pre-conversion business" in this Article) into a business falling under any of the subparagraphs of Article 6 (3) of this Act, with respect to the gains from transfer occurred from the transfer of the fixed assets for the pre-conversion business, they may choose not to include an amount calculated as prescribed by Presidential Decree in the gross income in calculating his/her income amount for the relevant business year. In such cases, not less than the amount obtained by equally dividing the relevant amount shall be included in the gross income during the period of each of three business years from the business year to which the date falling on three years from the end of the business year belongs, to which the transfer date belongs.
(2)
In the application of paragraph (1), any resident may be eligible for tax reduction, tax exemption or deferred taxation according to the methods in the following subparagraphs:
1.
The way of reducing and exempting an amount of tax equivalent to 50/ 100 of the capital gains tax as prescribed by Presidential Decree in cases where the machinery and equipment of the converted business are acquired with the transfer value of the business buildings of the pre-conversion business and the land attached thereto (hereafter referred to as "transfer value of the preconversion business" in this Article);
2.
The way of deferring the taxation as prescribed by Presidential Decree in cases where the business buildings of the converted business and the land attached thereto are acquired with the transfer value of the pre-conversion business.
(3)
Where any national who is eligible for the application of the provisions of paragraphs (1) and (2) does not convert his/her business or discontinues or shuts down his/her converted business within three years from the date on which he/she begins running his/her converted business, he/she shall include an amount calculated as prescribed by Presidential Decree in the gross income when he/she calculates his/her income amount of the business year during which the relevant grounds occur or pay the reduced and exempted amount of tax or amount of taxation-deferred tax as the capital gains tax. In such cases, the corporate tax or the capital gains tax that is added by an amount equivalent to the interest calculated as prescribed by Presidential Decree when he/she files a return of the tax base of the relevant taxable year shall be paid, and the amount of relevant tax shall be deemed the amount of tax that has to be paid pursuant to Article 64 of the Corporate Tax Act and Article 111 of the Income Tax Act.
(4)
In the application of paragraphs (1) through (3), the scope of business conversion and fixed assets for business, submission of application for tax reduction or tax exemption, application for tax deferral and detailed statement of gains on transfer of fixed assets for business, and other necessary matters shall be prescribed by Presidential Decree.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

law view

 Article 33-2 (Tax Reduction or Exemption for Small or Medium Enterprises and Enterprises under Trade Adjustment Assistance whose Business is Converted)
 

(1)
Where any nationals who run small or medium enterprises convert the business that they have continued to run without interruption for at least five years and a business that an enterprise under trade adjustment assistance has run (hereafter referred to as "pre-conversion business" in this Article) into a business falling under any of the subparagraphs of Article 6 (3) (hereafter referred to as "converted business" in this Article) in an area outside the overconcentration control region of the Seoul Metropolitan area (in cases of an enterprise under trade adjustment assistance, including cases of converting its business within the overconcentration control zone of the Seoul Metropolitan area), not later than December 31, 2015 (in cases of the establishment of a new factory, no later than December 31, 2017) according to the following subparagraphs, an amount of tax equivalent to 50/100 of the income tax or corporate tax on incomes derived from the converted business for the taxable year to which the date on which the first income is derived from such business (where no income is derived from the business concerned by the taxable year to which the date falling on five years from the date of business conversion belongs, the taxable year to which the date falling on five years belongs) belongs after the date of converting the business prescribed by Presidential Decree (hereafter referred to as "date of business conversion" in this Article) and also for the subsequent taxable years that end within three years after the beginning of the following taxable year shall be reduced or exempted:
1.
Where they transfer or discontinue the pre-conversion business and convert it into the converted business within one year (in cases of the establishment of a new factory, within three years) after the date of such transfer or discontinuance;
2.
Where they reduce the size of the pre-conversion business and add the converted business, as prescribed by Presidential Decree.
(2)
In the application of paragraph (1) 2, the reduction of and exemption from income tax or corporate tax pursuant to the said paragraph shall not apply to the taxable year prescribed by Presidential Decree during the period in which the income tax or corporate tax is reduced or exempted.
(3)
Where any nationals to whom paragraph (1) were applied do not convert their business or discontinues or shuts down their converted business within three years from the date of the business conversion, they shall pay, as the income tax or corporate tax, the tax amount reduced or exempted at the time of calculating the income amount for the taxable year whereto belongs the date on which such cause occurs.
(4)
Where the income tax or corporate tax reduced or exempted pursuant to paragraph (1) is paid in accordance with paragraph (3), the additional amount equivalent to the interest calculated as prescribed by Presidential Decree shall be paid being added to the income tax or the corporate tax and the relevant tax amount shall be deemed as the tax amount to be paid under Article 76 of the Income Tax Act or Article 64 of the Corporate Tax Act.
(5)
Any national who desires to be eligible for the application of the provisions of paragraph (1) shall file an application for tax reduction, as prescribed by Presidential Decree.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

law view

 Article 34 (Special Taxation for Sale of Assets for Redemption of Financial Liabilities of Enterprises)
 

(1)
Where an enterprise transfers assets, to improve financial structure, according to a financial restructuring plan prescribed by Presidential Decree (limited to those approved by the person prescribed by Presidential Decree; hereafter referred to as "financial restructuring plan" in this Article) which includes details of redeeming liabilities within the period determined by Presidential Decree from the date of transferring assets on or before December 31, 2012 (referring to the date prescribed by Presidential Decree in cases of long-term installment condition, and if there exists unavoidable reasons prescribed by Presidential Decree, it means the date such reason is terminated; hereafter the same shall apply in this Article), the enterprise may pay capital gains tax in installments or not include the same amount in the gross income in the manners falling under the following subparagraphs with regards to the amount equivalent to the amount of liabilities repayment prescribed by Presidential Decree (limited to the amount exceeding the deficit prescribed by Presidential Decree; hereafter referred to as "amount equivalent to the gains from transfer" in this Article) out of the gains from transfer accruing by transferring the relevant assets:
1.
Residents: The manner of paying the capital gains tax for the amount equivalent to the gains from transfer not for the relevant taxable year and for three taxable years after the end of the relevant taxable year but for each of three taxable years following the previous three taxable years in equally divided portions of such amount:
2.
Domestic corporations: The manner of including the amount equivalent to the gains from transfer in its gross income not for the relevant business year and for three business years after the end of the relevant business year but for each of three business years following the previous three business years in equally divided portions of such amount.
(2)
Where an enterprise under the application of paragraph (1) falls under any of the following subparagraphs, it, where it is an individual, shall pay the tax amount not paid and shall include the amount not included in the gross income when calculating the amount of income in the gross income where it is a corporation, as prescribed by Presidential Decree, in the taxable year when relevant causes occur. In such cases, the additional amount equivalent to the interest calculated as prescribed by Presidential Decree shall be paid being added to capital gains tax or corporate tax and the relevant tax amount shall be construed as the tax amount to be paid in accordance with Article 76 of the Income Tax Act or Article 64 of the Corporate Tax Act:
1.
Where liabilities are not redeemed according to a financial restructuring plan;
2.
Where the debt ratio of the enterprise which has transferred assets increases more than the standard debt ratio during the period of within three years after transferring the assets;
3.
Where the relevant business is closed or dissolved within three years from the date of transferring the relevant assets and where a merging corporation, a corporation newly established following split-off or the counterpart of split-off and merger has not succeeded to the relevant business: Provided, That in cases unavoidable causes, such as bankruptcy, etc., prescribed by Presidential Decree exist, the additional amount equivalent to the interest calculated as prescribed by Presidential Decree shall not be added.
(3)
The person who has approved the financial restructuring plan under the part other than the subparagraphs of paragraph (1) shall submit annually, to the head of the tax office having jurisdiction over the place of payment, contents and performance record of the financial restructuring plan, as prescribed by Presidential Decree.
(4)
Time of transfer, mattering regarding contents and approval standard of the financial restructuring plan, scope of liabilities under paragraph (1) and calculation of debt ratio and standard debt ratio, application for reduction of and exemption from tax under paragraph (2) and other necessary matters shall be determined by Presidential Decree.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

law view

 Articles 35 through 36 Deleted.
 

law view

 Article 37 (Special Taxation for Comprehensive Transfer of Assets)
 

(1)
Where a domestic corporation meeting all the requirements in the following subparagraphs (hereinafter referred to as "acquired corporation") transfers most of asset (hereinafter referred to as "comprehensive transfer of asset") to another domestic corporation (hereinafter referred to as "acquiring corporation") as prescribed by Presidential Decree, and goes into liquidation after receiving the stocks or equity shares (hereinafter referred to as "stocks, etc.") of acquiring corporation as compensation, the price of transferring asset may be appraised at book value, as prescribed by Presidential Decree. In such cases, the amount of liquidation income from dissolution under Article 79 of the Corporate Tax Act shall be calculated as prescribed by Presidential Decree:
1.
That it shall be transfer and takeover between domestic corporations that have been operating business for one year or more as of the date of comprehensive transfer of asset;
2.
That the price of stocks, etc. with voting right of acquiring corporation among the sum total (hereinafter referred to as "price of acquisition") of price, etc. of stocks, etc. of acquiring corporation, money and other property that a acquired corporation acquires from a acquiring corporation due to the comprehensive transfer of asset shall be 95/100 or more and such stocks, etc. are distributed, as prescribed by Presidential Decree, and such acquired corporation or stockholders, etc. of acquired corporation prescribed by Presidential Decree shall hold the stocks, etc. until the end of the business year to which the date of comprehensive transfer of asset belongs;
3.
That the acquiring corporation shall keep operating the business succeeded from the merged corporation until the end of business year to which the date of comprehensive transfer of asset belongs.
(2)
Where a domestic corporation dissolves after transferring its asset comprehensively while meeting all the requirements in the subparagraphs of paragraph (1), the amount of deemed dividend under Article 16 (1) 4 of the Corporate Tax Act or deemed dividend under Article 17 (2) 3 of the Income Tax Act received by the stockholders, etc. of acquired corporation due to dissolution shall be calculated, as prescribed by Presidential Decree.
(3)
Where an acquired corporation has handed over its asset at book value by comprehensive transfer of asset meeting all the requirements in the subparagraphs of paragraph (1), the acquiring corporation shall be deemed to have acquired by transfer such asset at book value. In such cases, the difference between book value and price of acquisition by transfer shall be calculated by asset, as prescribed by Presidential Decree.
(4)
Where an acquiring corporation has acquired by transfer the asset of acquired corporation as prescribed in paragraph (3), the amounts that have been included in the gross income or deductible expenses or have not been included in the gross income or deductible expenses, reductions/exemptions or tax deductions under Article 59 of the Corporate Tax Act, other asset and liability, etc. shall be succeeded by the acquiring corporation as prescribed by Presidential Decree when the deficit of acquired corporation under subparagraph 1 of Article 13 of the Corporate Tax Act as of the date of comprehensive transfer of asset is calculated, and when the acquired corporation calculates the amount of income and tax base for each business year. In such cases, the deficit, reductions/exemptions or tax deductions under Article 59 of the Corporate Tax Act, asset, liability, etc. of acquired corporation that the acquiring corporation has succeeded shall be deemed naught when the amount of income of acquired corporation during the business year to which the date of comprehensive transfer of asset belongs and the subsequent business years.
(5)
In cases of comprehensive transfer of asset meeting all the requirements in the subparagraphs of paragraph (1), the deficit of acquiring corporation under subparagraph 1 of Article 13 of the Corporate Tax Act as of the date of comprehensive transfer of asset, and deficit succeeded from acquired corporation, loss on disposal of asset acquired by transfer from acquired corporation, and reductions/exemptions or tax deductions under Article 59 of the Corporate Tax Act succeeded from the acquired corporation shall be deducted or included in the deductible expenses by applying Article 45 of the Corporate Tax Act mutatis mutandis.
(6)
Where any of the cause in the following subparagraphs occur during the period prescribed by Presidential Decree within the extent of three years, the acquiring corporation (including cases in which deficit, etc. have been succeeded as prescribed in paragraph (4)) that has taken over the asset of acquired corporation at book value as prescribed in paragraph (3) shall include the difference (only applicable to cases where the price of takeover is larger than the book value) between book value and price of takeover of asset that has been acquired by transfer, deducted amount among succeed deficit, etc. in the gross income as prescribed by Presidential Decree when the amount of income for the business year to which such cause occurred belongs: Provided, That reductions/exemptions or tax deductions, etc. deducted after being succeeded from the acquired corporation under paragraph (5) shall be dealt with by applying Article 44-3 (3) of the Corporate Tax Act mutatis mutandis.
1.
Where the acquiring corporation discontinues business succeeded from the acquired corporation;
2.
Where the acquired corporation or stockholders, etc. of acquired corporation prescribed by Presidential Decree dispose of stocks, etc. of acquiring corporation acquired due to comprehensive transfer of asset.
(7)
Where unavoidable reasons prescribed by Presidential Decree exist when paragraph (1) 2 and 3 and paragraph (6) 1 and 2 are applied, it shall be deemed that stocks, etc. are held continuously or business is continued.
(8)
The acquired corporation and acquiring corporation that intend to have paragraph (1) or (3) applied shall submit detailed statement of comprehensive transfer of asset, etc. to the head of tax office having jurisdiction over the place of tax payment, as prescribed by Presidential Decree.
(9)
Matters necessary for the period from the comprehensive transfer of asset, calculation of price of takeover, standards for the continuance and discontinuance of succeeded business, calculation of amounts to include in the gross income and deductible expenses, method of inclusion thereof, etc. shall be prescribed by Presidential Decree.
[This Article Newly Inserted by Act No. 10068, Mar. 12, 2010]

law view

 Article 38 (Special Taxation for Comprehensive Exchange and Transfer of Stocks)
 

(1)
Where a domestic corporation meeting all the requirements in the following subparagraphs becomes a wholly owned company of the counterpart corporation of the comprehensive exchange and transfer of stocks (hereafter referred to as "comprehensive exchange, etc. of stocks" in this Article) in accordance with the comprehensive exchange of stocks under Article 360-2 of the Commercial Act or comprehensive transfer of stocks under Article 360-15 of the same Act, capital gains tax or corporate tax on the amount equivalent to the gains from the transfer of stocks occurred to the stockholders of wholly owned company from the comprehensive exchange, etc. of such stocks may be deferred:
1.
That it shall be a comprehensive exchange of stocks between domestic corporations operating business for one year or more as of the date of comprehensive exchange and transfer of stocks;
2.
That the price of stocks among the aggregate of comprehensive exchange and transfer shall be 80/100 or more, and such stocks are distributed, as prescribed by Presidential Decree, and that the stockholders of a wholly owned subsidiary and complete parent company shall hold stocks acquired through the comprehensive exchange, etc. of stocks until the end of the business year to which the date of exchange and transfer belongs where the stockholders of a wholly owned subsidiary receive the payment for exchange and transfer from the complete parent company;
3.
That the wholly owned subsidiary shall keep on operating until the end of the business year to which the date of exchange and transfer belongs.
(2)
Where the stockholders of a wholly owned subsidiary has been granted tax deferral as prescribed in paragraph (1), the complete parent company shall acquire the stocks of a wholly owned company at book value; the complete parent company shall include the difference (only applicable to cases where the market value is larger than the book value) between the book value of stocks of wholly owned subsidiary acquired through the comprehensive exchange, etc. of stocks and the market value as of the date of comprehensive exchange and transfer of stocks, as prescribed by Presidential Decree if any of the following cases occurs within the period prescribed by Presidential Decree within the extent of three years since then:
1.
Where the wholly owned subsidiary discontinues business;
2.
Where the stockholders of complete parent company or wholly owned subsidiary prescribed by Presidential Decree dispose of stocks acquired through the complete exchange, etc. of stocks.
(3)
Where unavoidable reasons exist prescribed by Presidential Decree, such as inevitable disposal, etc. of stocks pursuant to Acts and subordinate statutes when paragraphs (1) 2 and 3, and (2) 1 and 2 are applied, it shall be deemed that stocks are held or business is operated continuously.
(4)
Matters necessary for the calculation of stock transfer gains under the provisions of paragraphs (1) through (3), standards for continuance and discontinuance of business of wholly owned company, calculation of the amount to be included in the gross income and method of inclusion, method of calculating the book value of stocks of wholly owned subsidiary, submission of detailed statement on the comprehensive exchange, etc. of stocks, etc. shall be prescribed by Presidential Decree.
[This Article Newly Inserted by Act No. 10068, Mar. 12, 2010]

law view

 Article 38-2 (Special Taxation for Incorporation, etc. of Holding Companies through Investment In Kind, etc. with Stocks)
 

(1)
Where a Korean stockholder of a domestic corporation incorporates a holding company (including a financial holding company under the Financial Holding Companies Act; hereafter in this Article referred to as "holding company") under the Monopoly Regulation and Fair Trade Act or converts an existing domestic corporation into a holding company through investment in kind with stocks by satisfying all the following requirements by no later than December 31, 2015, the imposition of capital gains tax or corporate tax on an amount equivalent to the gains from transfer occurred from such investment in kind among the value of stocks acquired from the investment in kind may be deferred until the stockholder disposes of the stocks of the relevant holding company, as prescribed by Presidential Decree:
1.
Where a holding company and stockholders prescribed by Presidential Decree among those who has made investment in kind shall hold the stocks acquired from the investment in kind by the date on which the business year in which the date of investment in kind falls ends;
2.
A domestic corporation which has become a subsidiary of the holding company (hereafter referred to as "subsidiary" in this Article) through investment in kind shall continue its business by the date on which the business year in which the date of investment in kind falls ends.
(2)
Where a Korean stockholder of a domestic corporation makes investment in kind with his/her stocks in a domestic corporation that has been converted into a holding company (including a domestic corporation converted into a holding company pursuant to paragraph (1); hereafter in this Article referred to as "converted holding company") by means of investment in kind or corporate split (only applicable to the split meeting the requirements in the subparagraphs of Article 46 (2) of the Corporate Tax Act or Article 47 (1) of the same Act; hereafter in this Article referred to as "split"), or swaps his/her stocks with the treasury stocks of such converted holding company (hereafter referred to as "treasury stock swap" in this Article), no later than December 31, 2015, by satisfying requirements under each subparagraph of paragraph (1) and all the following requirements, the imposition of capital gains tax or corporate tax on an amount equivalent to the gains from transfer occurred from such investment in kind or treasury stock swap among the value of stocks acquired from investment in kind or treasury stock swap may be deferred until such stockholder disposes of the stocks of the relevant holding company, as prescribed by Presidential Decree: Provided, That when applying each subparagraph of paragraph (1), the term "holding company", "subsidiary" and "investment in kind" shall be construed as a "converted holding company", "subsidiary falling short of the equity ratio", and "investment in kind or treasury stock swap", respectively.
1.
It is required that as a corporation the possession percentage of stocks of which by a converted holding company is under the percentage prescribed by the main sentence other than the items of Article 8-2 (2) 2 of the Monopoly Regulation and Fair Trade Act (hereafter in this Article referred to as "subsidiary affiliated by lower stock holding ratio"), stocks of corporations falling under the following items shall be subject to investment in kind or exchange of treasury stocks:
(a)
Another domestic corporation invested by the relevant converted holding company at the time when it becomes a converted holding company;
(b)
A corporation newly established or merged by division of a converted holding company and a corporation continuing to exist after division;
2.
It is required that stocks should be invested in kind or exchanged with the treasury stocks of a converted holding company within two years from the date on which it became a converted holding company;
3.
It is required that, in cases of the treasury stocks exchange, all the stockholders of the subsidiary affiliated by lower stock holding ratio should be allowed to participate in such treasury stock exchange and this fact should be publicly noticed as prescribed by Presidential Decree.
(3)
Where a stockholder of a domestic corporation is granted tax deferral under paragraph (1) or (2), a holding company (including a converted holding company) shall have the value of stocks acquired through investment in kind or treasury stock swap (hereafter referred to as "investment in kinds, etc." in this Article) its book value and shall include the difference (only applicable to cases where the market value is larger than the book value) between the book value of stocks acquired through investment in kinds, etc. and the market value as of the date of investment in kind, etc. in earnings, as prescribed by Presidential Decree, if any of the following cases occurs within the period prescribed by Presidential Decree up to three years since then: Provided, That in cases applicable under subparagraph 2, an amount of the corporate tax to which an amount equivalent to interest calculated, as prescribed by Presidential Decree, shall be added shall be paid:
1.
Where a holding company established or converted under paragraph (1) or a converted holding company is not a holding company any longer: Provided, That this shall not apply to such cases prescribed by Presidential Decree where it is not a holding company any longer due to an amendment to the Acts and subordinate statutes governing the standards for holding companies, such as the Monopoly Regulation and Fair Trade Act, etc.;
2.
Where a converted holding company holds the stocks of a subsidiary falling short of the equity ratio at the level lower than the ratio prescribed in the main sentence of the part other than the items of Article 8-2 (2) 2 of the Monopoly Regulation and Fair Trade Act until the date which falls on two years from the date next to the date on which the abovementioned company was converted into a holding company;
3.
Where a subsidiary (including a subsidiary falling short of the equity ratio) closes its business;
4.
Where stockholders prescribed by Presidential Decree, among holding companies (including converted holding companies) or stockholders who have made investment in kinds, etc. dispose of stocks acquired through investment in kind, etc.
(4)
Where a stockholder who has been granted income tax deferral or corporate tax deferral following the transfer of his/her stocks to a financial holding company (hereafter in this paragraph referred to as "intermediary holding company") controlled by another financial holding company or the swap of his/her stocks with those of an intermediary holding company as prescribed in paragraph (1) swaps the stocks of the intermediary holding company which he/she has received in compensation for such stock swap or stock transfer with the stocks of the financial holding company controlling the intermediary holding company no later than December 31, 2015, he/she may be again granted capital gains tax deferral or corporate tax deferral which has been granted initially until he/she transfers the stocks of the financial holding company received in compensation for stock swap notwithstanding paragraph (1).
(5)
Where unavoidable causes prescribed by Presidential Decree exist when applying each subparagraph of paragraph (1) (including cases where each subparagraph of paragraph (1) is applied mutatis mutandis in paragraph (2) ) and paragraph (3) 3 and 4, it shall be deemed that stocks are held or the business continues.
(6)
In applying paragraphs (1) through (5), matters necessary for the calculation of the gains from transfer, standards for the continuance and closure of the business of a subsidiary, submission of the detailed statement of the investment in kind, etc. shall be prescribed by Presidential Decree.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

law view

 Article 38-3 (Special Taxation for Investment in Kind with Stocks, etc. of Foreign Affiliated Company by Domestic Corporation)
 

(1)
Where a domestic corporation, which has continued to run its business without interruption for not less than five years, establishes a new foreign corporation by investing in kind the stocks or equities (hereafter in this Article referred to as "stocks, etc.") of a foreign affiliated company (referring to a foreign corporation in which a domestic corporation contributes not less than 20/100 of the total issued stocks or total contribution amount as of the date of investment in kind; hereafter in this Article the same shall apply), or invests in kind in a foreign corporation already established, not later than December 31, 2015, as regards the amount equivalent to the transferred margin of the stocks, etc. of a foreign affiliated company accruing from such investment in kind, the amount computed by multiplying the amount, which is obtained by dividing such amount by 36, by the number of months in the relevant business year shall be included in gross income in calculating the income amount for respective business year, from the business year whereto belongs the day on which four years elapse since the relevant transfer date.
(2)
Where a domestic corporation, which has invested in kind the stocks, etc. of a foreign affiliated company under paragraph (1), transfers the stocks, etc. acquired through an investment in kind before including the entire amount of transfer margin of relevant stocks, etc., the amount calculated by the methods prescribed by Presidential Decree, which is the amount equivalent to the rate of transferred stocks, etc. among the amount that has not yet been included in gross income, shall be included in gross income, and where a domestic corporation or a foreign corporation that has been invested in kind the stocks, etc. of a foreign affiliated company by the former, closes the business or is dissolved, the entire amount of that which has not yet been included in gross income shall be included in gross income in calculating the income amount for the business year whereto belongs the date on which the relevant causes have occurred: Provided, That this shall not apply to cases falling under any of the following subparagraphs:
1.
Where a corporation falling under any of the following items, which comes into existence due to merger or split-off, succeeds to the stocks, etc. acquired through the investment in kind of the relevant domestic corporation:
(a)
Merging corporation;
(b)
Corporation newly established following split-off;
(c)
Counterpart corporation of split-off and merger;
2.
Where a domestic corporation invests in kind the stocks, etc. of a foreign corporation, which has been acquired through an investment in kind of the stocks, etc. of a foreign affiliated company, in another foreign corporation within one month.
(3)
Any domestic corporation which intends to be subject to an application of paragraph (1) shall submit a specification of transfer margin from an investment in kind of the stocks, etc. to the head of the tax office having jurisdiction over the place of tax payment, as prescribed by Presidential Decree.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

law view

 Article 39 (Special Taxation for Takeover or Payment of Liabilities)
 

(1)
Where stockholders or investors of a domestic corporation (limited to a corporation; hereafter referred to as "stockholders, etc." in this Article) take over or pay liabilities of the relevant corporation and requirements falling under any of the following subparagraphs are satisfied, the amount the stockholders, etc. have taken over or paid from among the relevant corporation's liabilities shall be included in deductible expenses with the application of the ceiling prescribed by Presidential Decree when calculating the income amount of the relevant stockholders, etc. in the relevant year:
1.
To transfer stocks or shares possessed or invested by dominant stockholders. investors or related parties (hereafter referred to as "dominant stockholders, etc." in this Article) of the relevant domestic corporation by December 31, 2012 pursuant to the financial restructuring plan prescribed by Presidential Decree (limited to those approved by the person prescribed by Presidential Decree; hereafter referred to as "financial restructuring plan" in this Article) to persons who are not the related parties prescribed by Presidential Decree;
2.
To submit a corporation liquidation plan to the head of the tax office having jurisdiction over the place of payment of the relevant domestic corporation under conditions prescribed by Presidential Decree and complete liquidation of the relevant domestic corporation by December 31, 2013.
(2)
When the corporation whose liabilities were reduced through take over or payment of liabilities under paragraph (1) (hereafter referred to as "corporation subject to transfer, etc." in this Article) calculates the income amount, it shall include the reduced amount of liabilities (limited to the amount exceeding the deficit carried forward prescribed by Presidential Decree; hereafter referred to as "reduced amount of liabilities" in this Article) in its gross income not for the relevant business year and for three business years after the end of the relevant business year but for each of three business years following the previous three business years in equally divided portions or more of such amount: Provided, That the reduced amount of liabilities shall be included in the gross income when calculating the income amount of the business year whereto the date of dissolution belongs in cases of a corporation subject to transfer, etc. falling under requirements of paragraph (1) 2.
(3)
Where the corporation subject to transfer, etc. which is subject to paragraph (2) when applying paragraphs (1) and (2) falls under any of the following subparagraphs, the amount not included in the gross income as prescribed by Presidential Decree when calculating the income amount of a corporation subject to transfer, etc. in the taxable year when the relevant cause has arisen shall be included in the gross income. In such cases, the amount of corporate tax that has been reduced or exempted for the stockholders, etc. under paragraph (1) and the additional amount equivalent to the interest calculated as prescribed by Presidential Decree shall be paid by being added to the corporate tax and the relevant tax amount shall be construed as the tax amount to be paid under Article 64 of the Corporate Tax Act:
1.
Where the debt ratio of the corporation subject to transfer, etc. increases more than the standard debt ratio during the period of not more than three years after takeover or payment of liabilities (limited to corporations subject to transfer, etc. falling under paragraph (1) 1);
2.
Where the relevant business is abolished or dissolved within three years from the date of taking-over and paying liabilities and where a corporation newly established through division or the counterpart corporation of division or merger has not succeeded to the relevant business (limited to corporations subject to transfer, etc. falling under paragraph (1) 1): Provided, That where unavoidable causes, such as bankruptcy, etc., prescribed by Presidential Decree exist, the amount of corporate tax the stockholders, etc. are reduced or exempted from under paragraph (1) and the additional amount equivalent to the interest calculated as prescribed by Presidential Decree shall not be added;
3.
Cases failing to meeting requirements of paragraph (1) 1 or2.
(4)
Where deficits in assets of the corporation subject to transfer, etc. are included in the gross income and they are disposed of under Article 67 of the Corporate Tax Act in taking over or transferring a corporation under paragraph (1) 1, the income tax shall be not withheld from the amount disposed thereof for the relevant corporation subject to transfer, etc. notwithstanding the Income Tax Act.
(5)
Profits other stockholders, etc. of the relevant corporation make as a corporation's liabilities are taken over or paid under paragraph (1) shall not be regarded as donation under the Inheritance Tax and Gift Tax Act: Provided, That the same shall not apply to the related parties prescribed by Presidential Decree of stockholders, etc. who have taken over or paid liabilities.
(6)
The person who has approved a financial restructuring plan under paragraph (1) 1 shall submit annually, to the head of the tax office having jurisdiction over the place of payment, contents and performance record of the financial restructuring plan, as prescribed by Presidential Decree.
(7)
In applying provisions of paragraphs (1) through (6), the scope of liabilities, contents and approval standard of the financial restructuring plan, the scope of dominant stockholders, etc., requirements of deficits in assets and methods of report, submission of specifications about corporation takeover or transfer, submission of corporation liquidation plan, application for tax reduction or tax exemption and other necessary matters shall be prescribed by Presidential Decree.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

law view

 Article 40 (Special Taxation on Corporate Tax, etc. following Transfer of Assets by Stockholders, etc.)
 

(1)
Where a domestic corporation receives assets from the stockholders, etc. or investors (hereafter referred to as "stockholders, etc." in this Article) for free on or before December 31, 2015 by satisfying the requirements of the following subparagraphs, the relevant value of assets (limited to the amount exceeding the deficit prescribed by Presidential Decree) when calculating the income amount of the relevant business year shall be included in its gross income not for the three business years after the end of the business year to which the date when the assets have been donated belongs, but for each of three business years following the previous three business years in equally divided portions of such amount:
1.
The stockholder, etc. shall donate assets and the corporation shall redeem liabilities according to the financial restructuring plan prescribed by Presidential Decree (limited to those approved by the person prescribed by Presidential Decree; hereafter referred to as "financial restructuring plan" in this Article);
2.
The financial restructuring plan shall include contents describing that the corporation will use the entire amount of transfer proceeds (referring to using the entire amount to redeem liabilities on the date following that on which such causes disappear where any inevitable cause prescribed by Presidential Decree exists) to redeem liabilities to financial institutions prescribed by Presidential Decree (hereafter referred to as "financial institutions" in this Article and Article 44) by the deadline prescribed by Presidential Decree within the duration from the date the corporation received money to December 31, 2015 in cases of money and by the deadline prescribed by Presidential Decree within the duration from the date the relevant assets are transferred (referring to the date prescribed by Presidential Decree in cases of conditions of long-term installment) to December 31, 2015 in cases of assets other than money.
(2)
In cases of stockholders, etc. which have donated assets under paragraph (1) (limited to corporations), the amount determined by Presidential Decree from among the value of assets donated (referring to book value of assets) shall be included in deductible expenses when calculating the income amount of the relevant business year.
(3)
Where stockholders, etc. transfer assets possessed by themselves and donate the transfer proceeds thereof to the relevant corporation on or before December 31, 2015 when stockholders, etc. donate assets to a corporation, the capital gains tax can be reduced or exempted or the same amount may not be included in the gross income in the manners falling under the following subparagraphs for the amount equivalent to donation proceeds prescribed by Presidential Decree (hereafter referred to as "amount equivalent to gains from transfer" in this Article) from among gains from transfer accruing by transferring the relevant assets:
1.
Residents: Method of reducing or exempting an amount of tax equivalent to 100/100 of the capital gains tax on the amount equivalent to the gains from transfer;
2.
Domestic corporations: Method of not including the amount equivalent to gains from transfer in the gross income when calculating the income amount of the relevant business year.
(4)
Where a corporation granted donation of assets under paragraph (1) falls under any of the following subparagraphs, the amount not included in the gross income under paragraph (1) as prescribed by Presidential Decree when calculating the income amount of the business year when the relevant cause has arisen shall be included in the gross income. In such cases, the amount of tax reduced or exempted under paragraphs (2) and (3) shall be levied being added to the amount of corporate tax to be paid by the relevant corporation:
1.
Where liabilities are not redeemed according to the financial restructuring plan;
2.
Where the debt ratio of the relevant corporation increases more than the standard debt ratio during the period of not more than three years after redemption of liabilities;
3.
Where the relevant business is abolished or dissolved within three years from the date of assets donation under paragraph (1) and where a corporation newly established through division or the counterpart corporation of division or merger has not succeeded to the relevant business: Provided, That where unavoidable causes prescribed by Presidential Decree, such as bankruptcy, etc. exist, the amount of tax reduced or exempted under paragraphs (2) and (3) shall not be levied being added to the amount of corporate tax to be paid by the relevant corporation.
(5)
The additional amount equivalent to the interest calculated as prescribed by Presidential Decree shall be added to the amount of tax to be paid by a corporation under paragraph (4) and the relevant amount of tax shall be regarded as the tax amount to be paid under Article 64 of the Corporate Tax Act: Provided, That the same shall not apply to the cases falling under the proviso to paragraph (4) 3.
(6)
Profits other stockholders, etc. of the relevant corporation make as the corporation receives assets for free from the stockholders, etc. under paragraph (1) shall not be regarded as donation under the Inheritance Tax and Gift Tax Act: Provided, That the same shall not apply to the related parties of stockholders, etc. who have donated assets.
(7)
The person who has approved a financial restructuring plan under paragraph (1) 1 shall submit annually, to the head of the tax office having jurisdiction over the place of payment, contents and performance record of the financial restructuring plan under conditions prescribed by Presidential Decree.
(8)
In applying paragraphs (1) through (7), the time of transfer, matters regarding contents and approval standard of the financial restructuring plan, calculation of debt ratio and standard debt ratio, scope of the related parties, application for tax reduction or tax exemption and other necessary issues shall be determined by Presidential Decree.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

law view

 Article 41 Deleted.
 

law view

 Article 41-2 Deleted.
 

law view

 Article 42 Deleted.
 

law view

 Article 43 (Reduction or Exemption, etc. of Capital Gains Tax on Acquisitor of Real Estate Subject to Restructuring)
 

(1)
Where any person who has acquired on or before December 31, 1999 the real estate eligible for reduction or exemption from the capital gains tax under Article 40 (1) (hereafter in this Article, referred to as "real estate subject to restructuring") transfers the relevant real estate within five years from the date of its acquisition, the tax amount equivalent to 50/100 of the capital gains tax on the income accruing from such transfer shall be reduced or exempted, and where he/she transfers the relevant real estate subject to restructuring after the lapse of five years from the date of its acquisition, the amount equivalent to 50/100 of the capital gains accruing for five years from the date of acquisition of the relevant real estate subject to restructuring shall be subtracted from his/her income amount subject to the taxation of the capital gains tax.
(2)
Any person who intends to be eligible for the application of paragraph (1) shall file an application for reduction or exemption, as prescribed by Presidential Decree.
(3)
The confirmation of real estate subject to restructuring, and the calculation of capital gains amount accruing for five years from the date of its acquisition under paragraph (1), and other necessary matters shall be prescribed by Presidential Decree.

law view

 Article 43-2 Deleted.
 

law view

 Article 44 (Special Taxation on Gains from Debt Exemption of Corporation following Financial Restructuring Plan, etc.)
 

(1)
Where any domestic corporation is exempted from a part of its debts owed to a financial institution no later than December 31, 2015 and falls under any of the following subparagraphs, the amount equivalent to the debts from which it was exempted (limited to an amount exceeding the deficit determined by Presidential Decree; hereafter referred to as "gains from debt exemption" in this Article) when calculating the income amount shall be added to its gross income not for the relevant business year and for three business years after the end of the relevant business year but for each of three business years following the previous three business years in equally divided portions of such amount:
1.
Where a corporation for which a decision has been made to authorize the rehabilitation plan under the Debtor Rehabilitation and Bankruptcy Act shall be exempted from a part of debts owed to a financial institution and the amount of debts to be exempted shall be included in the decision thereof;
2.
Where an enterprise having insolvency sign which has entered into an agreement to implement the management normalization plan under the Corporate Restructuring Promotion Act shall be exempted from a part of debts owed to a creditor financial institution under the same Act and the amount of debts to be exempted shall be included in the agreement and shall be exempted from a part of debts concerning a counter-creditor's exercise of bond purchase claim under Article 20 of the same Act;
3.
Where a domestic corporation is exempted from debts under the agreements between financial institutions retaining bonds as prescribed by Presidential Decree;
4.
Other cases prescribed by Presidential Decree, where a domestic corporation is exempted from debt under the relevant Acts.
(2)
Where any company entering into an agreement under the Corporate Restructuring Investment Companies Act is exempted from a part of debts in the process of having its debt converted into investment shares by the corporate restructuring investment company, such gains from debt exemption shall be included in the gross income by applying mutatis mutandis of paragraph (1).
(3)
Where any corporation exempted from its debts under paragraph (1) discontinues its business or is dissolved before the gains from debt exemption are fully included in its gross income, the total amount not included in its gross income shall be added to the gross income in calculating its income for the business year whereto belongs the date on which any of such causes occurs.
(4)
Financial institutions and creditor financial institutions provided for in the Corporate Restructuring Promotion Act (excluding any corporate restructuring investment company provided for in the Corporate Restructuring Investment Company Act) that have exempted a corporation from debts under paragraph (1) shall include the amount equivalent to debts so exempted in deductible expenses in computing their incomes for the relevant business year.
(5)
In applying the provisions of paragraphs (1) through (4), matters concerning the submission of a specification of debts exemption, application for tax reduction and other necessary matters shall be prescribed by Presidential Decree.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

law view

 Article 45 (Special Taxation for Reduction of Capital)
 

(1)
Where a domestic corporation receives stocks or investment shares (hereafter referred to as "stock, etc." in this Article) of the relevant corporation from stockholders or investors (hereafter referred to as "stockholders, etc." in this Article) for free under the financial restructuring plan determined by Presidential Decree (limited to those approved by the person prescribed by Presidential Decree; hereafter referred to as "financial restructuring plan" in this Article) and retires them on or before December 31, 2012, the value of relevant stocks, etc. (limited to the amount exceeding the deficit prescribed by Presidential Decree) shall not be added to the gross income when calculating the income of the relevant business year.
(2)
Article 52 of the Corporate Tax Act shall not be applicable to stockholders, etc. who have donated stocks, etc. under paragraph (1) (limited to a corporation) and in cases where such stockholders, etc. have donated the entire stocks, etc. that they have possessed, the value of the relevant stocks, etc. (referring to the book value) shall be added to deductible expense when computing the income of the relevant business year.
(3)
Profits other stockholders, etc. of the relevant corporation make as the corporation receives stocks, etc. for free from the stockholders, etc. and retires them under paragraph (1) shall not be regarded as donation under the Inheritance Tax and Gift Tax Act or the gross income under the Corporate Tax Act: Provided, That the same shall not apply to the related persons of stockholders, etc. who have donated stocks, etc.
(4)
In applying paragraphs (1) through (3), contents and approval standard of a financial restructuring plan, the scope of the related persons, application for tax reduction and other necessary matters shall be prescribed by Presidential Decree.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

law view

 Article 45-2 (Special Taxation for Corporate Split for Restructuring of Public Institutions)
 

Where a domestic corporation (hereinafter referred to as "public institution") designated as public institution under Article 4 of the Act on the Management of Public Institutions conducts a split-off prescribed by Presidential Decree as prescribed in Articles 530-2 through 530-11 of the Commercial Act no later than December 31, 2010 for restructuring, such as privatization, etc., and such split-off meets the requirements prescribed by Presidential Decree, provisions concerning split-off of this Act, the Corporate Tax Act and Value-Added Tax Act shall apply to such split-off deeming to be meeting the requirements in the subparagraphs of Article 46 (1) of the Corporate Tax Act.
[This Article Newly Inserted by Act No. 9921, Jan. 1, 2010]

law view

 Article 46 (Special Taxation for Exchange of Stocks, etc. between Enterprises)
 

(1)
Where controlling stockholders, investors and related parties thereof (hereafter referred to as "controlling stockholders, etc." in this Article) of a domestic corporation (hereafter referred to as "corporation subject to exchange" in this Article) transfer all of their stocks in possession or equity shares (hereafter referred to as "stocks, etc." in this Article) on or before December 31, 2012 pursuant to a financial restructuring plan prescribed by Presidential Decree (limited to those approved by the person prescribed by Presidential Decree; hereafter referred to as "financial restructuring plan" in this Article) and takes over stocks, etc. of other domestic corporations (hereafter referred to as "exchange or takeover corporation" in this Article), who are not related parties prescribed by Presidential Decree of the corporation subject to exchange, depending on the holding ratio thereof by a method falling under any of the following subparagraphs, capital gains tax or corporate tax on an amount equivalent to the gains from transfer (including gains from transfer occurring to an exchange or takeover corporation and controlling stockholders, etc. of the said corporation) occurred by transferring stocks, etc. may be deferred until stocks, etc. taken over, as prescribed by Presidential Decree, are disposed of (including inheritance or donation):
1.
Method of taking over stocks, etc. that the exchange or takeover corporation already possesses or newly issues;
2.
Method of taking over all of holding stocks, etc. owned by the controlling stockholders, etc. of the exchange or takeover corporation [limited to cases where the corporation subject to exchange and the exchange or takeover corporation belongs to a different enterprise group (referring to those falling under subparagraph 3 of Article 2 of the Monopoly Regulation and Fair Trade Act; hereafter the same shall apply in this Article)].
(2)
Where deficits in assets of the relevant corporation occurring in transferring/taking over a corporation subject to exchange under paragraph (1) 2 are added to the gross income and disposed of under Article 67 of the Corporate Tax Act, the relevant corporation shall be exempted from withholding the income tax for the amount disposed of notwithstanding the Income Tax Act.
(3)
Where the stockholders, etc. of the corporation subject to exchange which has transferred stocks, etc. under paragraph (1) 2 falls under any of the following subparagraphs, they shall pay the tax not paid in the taxable year when the relevant cause arises or add the amount included in the deductible expense when computing the income amount to the gross income. In such cases, the additional amount equivalent to the interest calculated as prescribed by Presidential Decree shall be added and paid as the capital gains tax or the corporate tax and the relevant amount of tax shall be regarded as the tax amount to be paid under Article 64 of the Corporate Tax Act or Article 76 of the Income Tax Act:
1.
Where a corporation running the same type of business as that of the corporation subject to exchange belongs to the enterprise group to which the corporation subject to exchange belonged within three years after the ending date of the business year when stocks, etc. have been transferred;
2.
Where the controlling stockholders, etc. hold stocks, etc. of the corporation subject to exchange again within three years after the ending date of the business year when stocks, etc. have been transferred.
(4)
Where a domestic corporation exchanges all of the stocks, etc. acquired through split-off under Article 47 of the Corporate Tax Act or investment in kind under Article 47-2 of the same Act with the stocks, etc. of another corporation, the amount on which taxation has been deferred after having been included in the deductible expenses, which is equivalent to the gains from transfer of assets at the time of investment in kind or split-off may be given deferral once again, as prescribed by Presidential Decree.
(5)
The person who has approved the financial restructuring plan of a corporation subject to exchange which has transferred stocks, etc. under paragraph (1) 2 shall submit annually, to the head of the tax office having jurisdiction over the place of payment, contents and performance records of the financial restructuring plan, as prescribed by Presidential Decree.
(6)
In applying paragraphs (1) through (5), the scope of controlling stockholders, etc., transfer/takeover method of stocks, etc., calculation of gains from transfer subject to inclusion in deductible expense, contents and approval standard of a financial restructuring plan, submission of specification regarding transfer/takeover of stocks, etc., the scope of debt, application for tax reduction and other necessary matters shall be prescribed by Presidential Decree.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

law view

 Article 46-2 (Special Taxation for Corporate Stock Exchange, etc. for Strategic Alliance with Venture Business)
 

(1)
Where a stockholder (referring to a stockholder who holds not less than 10/100 of the total number of stocks that are issued by the relevant corporation; hereafter in this Article the same shall apply) of a corporation, that is a joint-stock company, (hereafter in this Article referred to as "affiliated corporation") exchanges stocks of affiliated corporation with the treasury stocks of a venture business (excluding listed corporations under the Financial Investment Services and Capital Markets Act; hereafter in this Article the same shall apply) or receives stocks which are newly issued by the venture business and whose value is equivalent to investment amount, in return for his/her investment in kind no later than December 31, 2009, after meeting the requirements set forth in the following subparagraphs, the taxation of a capital gains tax on the margin accruing from the exchange or acquisition of the new stocks may, as prescribed by Presidential Decree, be allowed to be deferred stocks until the stockholder concerned disposes of stocks of venture business acquired by the exchange of his/her own stocks with the treasury stocks or the investment in kind (hereafter in this Article referred to as "stock exchange, etc."):
1.
It is required that a plan for strategic alliance between the venture business and the affiliated corporation should be worked out as prescribed by Presidential Decree and that stock exchange, etc. should be made according to such plan;
2.
It is required that a stockholder and his/her related party determined by Presidential Decree of the affiliated corporation should not be in any special relationship prescribed by Presidential Decree with the largest stockholder prescribed by Presidential Decree of the venture business;
3.
It is required that the affiliated corporation and the venture business should conclude a contract stipulating that the stocks acquired by the stockholder of the affiliated corporation through stock exchange, etc. and the stocks acquired by the venture business through stock exchange, etc. must be held for not less than one year, respectively.
(2)
Where the stockholder of the affiliated corporation who was allowed to defer capital gains tax under paragraph (1) violates the provisions of paragraph (1) 3, he/she shall, as prescribed by Presidential Decree, pay the capital gains tax that was allowed to be deferred.
(3)
Any person who desires to be allowed to defer capital gains tax under paragraph (1) shall apply therefor, as prescribed by Presidential Decree.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

law view

 Article 46-3 (Special Taxation for Corporate Stock Exchange, etc. for Strategic Partnership of Logistics Enterprises)
 

(1)
Where a stockholder (referring to the stockholder who holds not less than 10/100 of the total number of stocks that are issued by the relevant corporation; hereafter in this Article the same shall apply) of any small or medium corporation (hereafter in this Article referred to as "partnership logistics corporation") that runs the logistics business exchanges his/her own stocks with the treasury stocks of any other small or medium corporation (excluding any listed corporation and any KOSDAQ-listed corporation under the Financial Investment Services and Capital Markets Act; hereafter in this Article referred to as "partnership counterpart logistics corporation") that runs the logistics business or receives stocks which are newly issued by the partnership counterpart logistics corporation in return for his/her investment in kind on or before December 31, 2009 after meeting the requirements falling under each of the following subparagraphs, the taxation of capital gains tax on the gains from transfer accruing from such exchange or the acquisition of new stocks may be deferred by the time when the relevant stockholder disposes of the stocks of the partnership counterpart logistics corporation, which he/she acquires by means of stock exchange or investment in kind (hereafter in this Article referred to as "stock exchange, etc."), as prescribed by Presidential Decree:
1.
It is required that the strategic partnership program should be facilitated between the partnership logistics corporation and the partnership counterpart logistics corporation and their stocks should be exchanged according to such strategic partnership program, as prescribed by Presidential Decree;
2.
It is required that any stockholder of the partnership logistics corporation or anyone who is specially related with the relevant stockholder should not be a related person of the largest stockholder of the partnership counterpart logistics corporation;
3.
It is required that the partnership logistics corporation and the partnership counterpart logistics corporation enter into an agreement that any stockholder of the partnership logistics corporation should hold any stock that is acquired through the stock exchange, etc. and the partnership counterpart logistics corporation should hold any stock that is acquired through the stock exchange, etc. for not less than one year.
(2)
In the application of paragraph (1), matters concerning the scope of the logistics business, the scope of the largest stockholder and the scope of the specially related person shall be determined by Presidential Decree.
(3)
Article 46-2 (2) and (3) shall apply mutatis mutandis to the special taxation for the stock exchange, etc. for the strategic partnership of logistics corporations. In such cases, "affiliated corporation" shall be deemed "partnership logistics corporation."
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

law view

 Article 46-4 (Special Taxation of Corporate Tax on Margins Accruing from Transfer of Self-Logistics Facilities)
 

(1)
With respect to an amount equivalent to the gains from transfer that occur from the transfer of the self-logistics facilities prescribed by Presidential Decree (hereafter referred to as "self-logistics facilities" in this Article) on or before December 31, 2013, which is derived by a domestic corporation falling under a small or medium enterprise that has continued to run its business without interruption for not less than one year, the amount calculated pursuant to Presidential Decree shall not be required to be included in the gross income in calculating its income for the business year concerned. In such cases, not less than the amount obtained by equally dividing the relevant amount shall be included in the gross income during the period of each of three business years from the business year whereto belongs the date on which three years lapse after the end of the business year to which the transfer date belongs.
(2)
Where any domestic corporation to whom the provisions of paragraph (1) were applied discontinues or shuts down its business within three years from the date on which the self-logistics facilities were transferred or fails to satisfy the requirements that fall under any of the following subparagraphs, it shall include the amount calculated pursuant to Presidential Decree in the gross income at the time of calculating the income amount for the business year whereto belongs the date on which such cause occurs. In such cases, with respect to the amount to be included in the gross income, the latter part of Article 33 (3) shall apply mutatis mutandis:
1.
It is required that the logistics expenses (hereafter referred to as "third party logistics expenses" in this Article and Article 104-14) disbursed to persons other than the related parties provided for in Article 52 (1) of the Corporate Tax Act out of the distribution expenses defrayed during respective business years for the period fixed by Presidential Decree after the self-logistics facilities are transferred be not less than 70/100 of the total distribution expenses;
2.
It is required that the third party logistics expenses disbursed during respective business years for the period fixed by Presidential Decree be not less than an amount obtained by multiplying the gains from transfer that occur from the transfer of the self-logistics facilities by the rates referred to in items (a) and (b) :
(a)
Tax rate provided for in Article 55 of the Corporate Tax Act;
(b)
Interest rate prescribed by Presidential Decree in consideration of the interest rates to which the financial institutions apply.
(3)
In the application of paragraphs (1) and (2), the scope of logistics expenses, the submission of a specification of the transfer margin, and other necessary matters shall be prescribed by Presidential Decree.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

law view

 Article 46-5 (Special Taxation on Division of Logistics Business)
 

Where a domestic corporation is merged with a corporation specialized in logistics prescribed by Presidential Decree (hereafter referred to as "logistics-specialized corporation" in this Article) after dividing the section of logistics business on or before December 31, 2009, which meets all the requirements of the following subparagraphs, and a corporation that is newly incorporated after such division or a counterpart corporation of the merger through division appraises and succeeds to the assets of the divided corporation or the extinguished counterpart corporation of the merger through division, an amount equivalent to the gains from transfer that occur from the division appraisal of the relevant assets in the value of the assets acquired by succession (limited to the assets prescribed by Presidential Decree) may be included in the deductible expenses at the time of calculating the income amount of the business year whereto belongs the date on which the division is registered pursuant to the main sentence of Article 46 (1) of the Corporate Tax Act other than each subparagraph: Provided, That this shall not apply to cases where the divided corporation, the corporation that is newly incorporated after such division or the counterpart corporation of the merger through division falls under any such related party as provided for in Article 52 (1) of the Corporate Tax Act:
1.
That the split-off shall be the one conducted as prescribed by Presidential Decree by the domestic corporation that has continued to operate its business for not less than one year as of the date of registration of split-off;
2.
That the domestic corporation falls under Article 46 (1) 2 and 3 of the Corporate Tax Act.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

law view

 Article 46-6 (Special Taxation for Succession to Deficits Carried Forward following Merger of Logistics Corporations)
 

Where a corporation which is engaged in the logistics industry (hereafter referred to as "logistics corporation" in this Article) is merged with any other logistics corporation on or before December 31, 2009, which meets all the requirements of the following subparagraphs, the deficits of the corporation that is to extinguish following merger (hereinafter referred to as "merged corporation") provided for in subparagraph 1 of Article 13 of the Corporate Tax Act as of the date on which the merger is registered may be deducted in calculating the tax base for each business year of the merging corporation pursuant to Article 45 of the abovementioned Act within the scope of the amount determined by Presidential Decree:
1.
It is required that the corporation meet all the requirements referred to in subparagraphs of Article 44 (1) of the Corporate Tax Act;
2.
It is required that the merging corporation succeed to the assets of the merged corporation in its book value;
3.
It is required that the stocks or equities received by the stockholders, employees, or investors of the merged corporation be not less than 3/100 of the total number of stocks issued by, or the total amount of owner' equity in, the merging corporation as of the date when the merging corporation makes the merger registration;
4.
It is required that the corporation fall under Article 45 (1) 3 of the Corporate Tax Act.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

law view

 Articles 47 and 47-2 Deleted.
 

law view

 Article 47-3 (Special Taxation for Succession to Deficit Carried Forward following Merger with Venture Businesses)
 

Where a corporation (including a venture business) merges with a venture business no later than December 31, 2012 while meeting the requirements listed in the subparagraphs of Article 44 (2) of the Corporate Tax Act (in such cases, in applying subparagraph 1 of the same paragraph, where one year has passed since a venture business acquired asset or paid expenses for the purpose of implementing projects, such as research, development, etc., such venture business shall be deemed to have been operated continuously for not less than one year), the deficit under subparagraph 1 of Article 13 of the Corporate Tax Act of the merged corporation as of the registration date of merger may be deducted when the tax base for each business year of the merging corporation is calculated in accordance with Article 45 of the same Act within the limit of amount prescribed by Presidential Decree.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

SECTION 6 Special Taxation for Restructuring Financial Institutions

law view

 Article 47-4 (Special Taxation for Transfer of Redundant Assets as Result of Merger of Enterprises Running Medicine Manufacturing Business)
 

(1)
Where any assets become redundant as a result of a merger (including a merger through division) between domestic corporations that runs medicine manufacturing business prescribed by Presidential Decree on or before December 31, 2015 and any merger corporation transfers the redundant assets within one year from the date on which its merger register is effected and acquires new fixed assets for business with the transfer price by the end of the business year whereto belongs the date on which the redundant assets are transferred (in cases where the period ranging from the date on which the merger register is effected to the end of the business year whereto belongs the date on which the redundant assets are transferred is not more than one year, referring to the date on which one year expires), with respect to the gains from transfer that occur from the transfer of the relevant redundant assets (including the gains from transfer that occur from the merger appraisal of the relevant redundant assets and the gains from transfer that occur from the division appraisal of the relevant redundant assets), an amount calculated as prescribed by Presidential Decree may not be included in the gross income in the calculation of its amount of income for the relevant business year. In such cases, not less than the amount obtained by equally dividing the relevant amount shall be included in the gross income during the period of each of three business years from the business year whereto belongs the date on which three years lapse after the last day of the business year to which the transfer date belongs.
(2)
Where any domestic corporation that is subject to the application of paragraph (1) fails to acquire new fixed assets for business within the deadline provided for in the same paragraph and discontinues or shuts down the relevant business within three years from the date on which the merger register is effected, the amount calculated as prescribed by Presidential Decree shall be included in the gross income in the calculation of the amount of income of the business year to which the date on which the relevant grounds occur belongs. In such cases, the latter part of Article 33 (3) shall apply mutatis mutandis to the amount that is included in the gross income.
(3)
In the application of paragraph (1), the scope of the redundant assets, the scope of the fixed assets for business, the submission of the details of the gains from transfer and other necessary matters shall be prescribed by Presidential Decree.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

law view

 Article 48 (Special Taxation for Reserves for Structural Improvement)
 

(1)
Where the Korea Federation of Saving Banks under Article 25 of the Mutual Savings Banks Act (hereafter referred to as the "Korea Federation of Savings Banks" in this Article) accumulates the reserves for structural improvement prescribed by Presidential Decree (hereafter referred to as "reserves for structural improvement" in this Article) for the purpose of using them for structural improvement projects of mutual savings banks, such as take-over of insolvent mutual savings banks (referring to take-over under subparagraph 4 of Article 2 of the Act on the Structural Improvement of the Financial Industry), increase of capital, etc. (hereafter referred to as "structural improvement projects" in this Article) no later than the business year to which June 30, 2013 belongs, the amount equivalent to the reserves thereof shall be included in the deductible expense when computing the income of the relevant business year.
(2)
Where the Korea Federation of Saving Banks appropriates the interest accruing through operation of the reserves for structural improvement for the reserve for loss compensation in order to compensate for the losses arising from structural improvement projects no later than the business year to which June 30, 2013 belongs, the relevant amount shall be included in the deductible expense when computing the income of the relevant business year.
(3)
Where any losses arise from structural improvement projects, the Korea Federation of Saving Banks shall offset such losses by the reserves for loss compensation in good order of appropriation.
(4)
Where there is the balance of the reserve remaining after appropriation under paragraph (3) by the ending date of the business year to which the date 5 years elapse belongs since the ending date of the business year when the reserve for loss compensation shall be included in the deductible expense, the Korea Federation of Saving Banks shall include the amount in the gross income when computing the income of the business year to which the date 5 years elapse belongs.
(5)
Where causes falling under any of the following subparagraphs occur, the Korea Federation of Saving Banks shall add the amount included in the deductible expense under paragraphs (1) and (2) to the gross income in the manners prescribed by Presidential Decree:
1.
Where the reserves for structural improvement are abolished;
2.
Where a part of the reserves for structural improvement is transferred to other accounts of the Korea Federation of Saving Banks from the account for the reserves for structural improvement;
3.
Where the Korea Federation of Saving Banks dissolved.
(6)
Where the Korea Federation of Saving Banks intends to have paragraphs (1) and (2) applied, it shall submit a specification of the reserves for loss compensation to the head of the tax office having jurisdiction over the place of payment.
(7)
Where the Korea Federation of Saving Banks accumulates the reserves for structural improvement, it shall keep separate accounting of the reserves for structural improvement from other accounts of the Korea Federation of Savings Banks under Article 113 of the Corporate Tax Act.
(8)
In applying paragraphs (1), (2) and (6), submission of a specification of reserves for loss compensation and other necessary issues shall be determined by Presidential Decree.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

law view

 Article 49 Deleted.
 

law view

 Articles 50 and 51 Deleted.
 

law view

 Article 52 (Special Taxation of Corporate Tax on Takeover of Assets or Debts by Financial Institutions)
 

Where any financial institution under subparagraph 1 of Article 2 of the Act on the Structural Improvement of the Financial Industry (hereafter referred to as "underwriting financial institution" in this Article) takes over the debts that exceed the value of assets of an insolvent financial institution (hereinafter referred to as "insolvent financial institution") under subparagraph 3 of Article 2 of the same Act, by not later than December 31, 2015, pursuant to an order for a contract transfer among the timely corrective measures in accordance with Article 10 of the same Act (hereafter referred to as "timely corrective measures" in Articles 117, 119 and 120) or a decision on a contract transfer under Article 14 (2) of the same Act (hereinafter referred to as "decision on contract transfer" in Articles 117, 119 and 120) and satisfies requirements of the following subparagraphs, it shall include in its deductible expenses the values of transferred debts that exceed the values of transferred assets (hereafter referred to as "net debts" in this Article), in calculating its income for the relevant business year:
1.
It is required that the underwriting financial institution should be compensated for the amount equivalent to the net debts by the Korea Deposit Insurance Corporation under Article 3 of the Depositor Protection Act (hereinafter referred to as the "Korea Deposit Insurance Corporation");
2.
It is required that the value of assets and debts transferred to the underwriting financial institution should be the value confirmed by the Governor of the Financial Supervisory Service.

law view

 Article 52-2 Deleted.
 

law view

 Article 53 Deleted.
 

law view

 Articles 54 and 55 Deleted.
 

law view

 Article 55-2(Special Taxation for Self-Managed Real Estate Investment Company, etc.)
 

(1)
and (2) Deleted.
(3)
Deleted.
(4)
Where any self-managed real estate investment company provided for in subparagraph 1 (a) of Article 2 of the Real Estate Investment Company Act (hereafter referred to as "self-managed real estate investment company" in this Article) builds new housing units below the size prescribed by Presidential Decree (hereinafter referred to as "national housing units"), or carries on lease business by purchasing national housing units which have never been occupied by any tenants at the time of their acquisition, by not later than December, 31, 2009, it shall be allowed to deduct an amount equivalent to the 50/100 of the income amount that has been derived from the lease of the national housing units from its income amount for the business year wherein the first income was derived from such lease business (in cases where there was no income derived from the lease business by not later than the business year whereto belongs the date on which five years lapse after the beginning date of the business, it refers to the business year whereto belongs the date on which the five years lapse) and for each of five business years from the beginning date of the business year following the business year concerned.
(5)
Where any self-managed real estate investment company builds new house whose size is smaller than the one prescribed by Presidential Decree, or conducts a lease business by purchasing a house whose size is smaller than the one prescribed by Presidential Decree which have never been occupied by any tenant at the time of their acquisition before December, 31, 2015 the amount equivalent to the 100/100 of income, which has been accrued by leasing the relevant house until the business year when the first income was accrued from such lease business (in case no income is accrued from the business until the day on which five years lapse after the commencement date of the business, referring to the business year in which the date of the fifth year from the commencement date of the business is included) and until the business year in which five years lapses from the commencement date of the next business year, shall be deducted from income of each business year.
(6)
Where any self-managed real estate investment company that intends to be eligible for application of paragraphs (4) and (5) concurrently conducts the business subject to tax deduction and any other businesses, it shall keep separate accounts pursuant to Article 113 of the Corporate Tax Act.
(7)
In applying paragraphs (4) and (5), such matters as may be necessary for the calculation of the amount of income deduction, application for income deduction, etc. shall be prescribed by Presidential Decree.
[This Article Newly Inserted by Act No. 6501, Aug. 14, 2001]

law view

 Article 56 Deleted.
 

law view

 Article 57 (Business Year for Profit and Loss Derived from Investments in Securities Market Stabilization Fund, etc.)
 

With respect to the business year whereto belongs profits derived, and losses incurred, by a corporation from investing, not later than December 31, 2004, in an association determined by Presidential Decree which has been organized for the purposes of the stabilization of the securities market or the investment trust market through investment, etc. in the listed securities, the business year whereto belongs the date on which the association concerned has such profits and losses actually shared by such corporation shall, notwithstanding Article 40 of the Corporate Tax Act, become the business year whereto belongs such profits and losses.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

SECTION 7 Special Taxation for Balanced Regional Development

law view

 Articles 58 and 59 Deleted.
 

law view

 Article 60 (Special Taxation for Corporate Tax on Relocating Factories Outside Large Cities)
 

(1)
Deleted.
(2)
Where any domestic corporation which runs its business with its factory and facilities installed in a large city prescribed by Presidential Decree (hereinafter referred to as "large city") re-locates (excluding the case of re-locating the factory outside of the Seoul Metropolitan area into the Seoul Metropolitan area) the site and buildings of such factory on or before December 31, 2014 in order to re-locate such factory to outside of the large city (hereafter referred to as "rural area" in this Article), an amount computed as prescribed by Presidential Decree within the limits of the gains from transfer accruing from such transfer less the carryover deficits under subparagraph 1 of Article 13 of the Corporate Tax Act as of the end of the business year immediately preceding the year whereto belongs the date of transfer, may not be added to its gross income in calculating its income for the relevant business year. In such cases, the relevant amount that exceeds the equally divided amount shall be included in the gross income during the period of five business years from the business year whereto belongs the date on which five years lapse after the date on which the business year to which the transfer date belongs comes to an end.
(3)
A domestic corporation intending to have paragraph (2) applied, shall have the same type of business conducted in the factory before its relocation as that conducted in the factory after its relocation based on the classification prescribed by Presidential Decree.
(4)
Where a domestic corporation subject to paragraph (2) fails to commence a business by acquiring a local factory prescribed by Presidential Decree or discontinues its business, or is dissolved before such entire amount not included in gross income is fully added to its gross income, the amount calculated as prescribed by Presidential Decree from among the amount not added to its gross income in calculating the income for the business year whereto belongs the date on which such cause occurs shall be added to its gross income. In such cases, the latter part of Article 33 (3) shall apply mutatis mutandis to the amount added to its gross income (excluding any amount added to its gross income, when such corporation discontinues its business or is dissolved due to a merger or a division and a merger through division).
(5)
Deleted.
(6)
Any domestic corporation which intends to be governed by paragraph (2) shall submit to the head of a tax office having jurisdiction over the place of tax payment a detailed statement of transfer margin of land or buildings (hereinafter referred to as "land, etc.") as prescribed by Presidential Decree.

law view

 Article 61 (Special Taxation for Corporate Tax on Transfer Margin following Relocation of Corporation's Head Office to Outside of Overconcentration Control Zone of Seoul Metropolitan Area)
 

(1)
and (2) Deleted.
(3)
Where any corporation whose headquarters or principal office is located in the overconcentration control region of the Seoul Metropolitan area transfers the site and buildings of the headquarters or principal offices in question on or before December 31, 2014 in order to relocate this headquarters or principal offices to outside of the overconcentration control region of the Seoul Metropolitan area, an amount computed as prescribed by Presidential Decree within the limits of the margin gained from such transfer less the carryover deficits under subparagraph 1 of Article 13 of the Corporate Tax Act as of the end of the business year immediately preceding the year whereto belongs the date of transfer, may not be added to its gross income in calculating the income for the relevant business year. In such cases, the relevant amount that exceeds the equally divided amount shall be included in the gross income during the period of five business years from the business year whereto belongs the date on which five years lapse after the date on which the business year to which the transfer date belongs comes to an end.
(4)
Deleted.
(5)
Where a corporation subject to paragraph (3) falls under any of the following subparagraphs before such entire amount as not included in gross income is fully added to its gross income, the amount calculated as prescribed by Presidential Decree from among the amount not added to its gross income in calculating the income for the business year whereto belongs the date on which such cause occurs shall be added to its gross income. In such cases, the latter part of Article 33 (3) shall apply mutatis mutandis to the amount added to its gross income (excluding any amount added to its gross income as such corporation discontinues its business or is dissolved due to a merger or a division and a merger through division):
1.
Where it does not fall under cases where its headquarters or principal office has been relocated to an area other than the overconcentration control region of the Seoul Metropolitan area as prescribed by Presidential Decree;
2.
Where it has located offices in excess of the standards prescribed by Presidential Decree in the overconcentration control region of the Seoul Metropolitan area;
3.
Where it has spent the proceeds from the disposal of site and building of the headquarters or principal office in the overconcentration control region of the Seoul Metropolitan area for purposes other than those prescribed by Presidential Decree;
4.
Where it discontinues its business or is dissolved.
(6)
Any domestic corporation which intends to be eligible for the application of paragraph (3) shall submit to the head of the tax office having jurisdiction over the place of tax payment a specification, etc. of transfer margin of land, etc., as prescribed by Presidential Decree.

law view

 Article 62 (Reduction of or Exemption from Corporate Tax, etc. for Relocation of Public Institutions to Innovation Cities)
 

(1)
With respect to the gains from transfer accruing from the transfer of any of the previous real estates prescribed by Presidential Decree among the those referred to in subparagraph 6 of Article 2 of the Special Act on the Construction and Support of Innovation Cities Following Relocation of Public Agencies (hereafter referred to as "previous real estate" in this Article) by December 31, 2015 by a relocated public agency under subparagraph 2 of Article 2 of the same Act (hereafter referred to as "relocated public agency" in this Article) in order to relocate its headquarter or principal office (hereafter referred to as "head office" in this Article) to the innovation cities under subparagraph 3 of Article 2 of the same Act, an amount computed as prescribed by Presidential Decree within the limits of the margin gained from such transfer less the carryover deficits under subparagraph 1 of Article 13 of the Corporate Tax Act as of the end of the business year immediately preceding the year whereto belongs the date of transfer, may not be added to its gross income in calculating the income for the relevant business year. In such cases, the relevant amount that exceeds the equally divided amount shall be included in the gross income during the period of five business years from the business year whereto belongs the date on which five years lapse after the date on which the business year to which the transfer date belongs comes to an end.
(2)
Article 61 (5) shall apply mutatis mutandis to a domestic corporation subject to paragraph (1) as prescribed by Presidential Decree. In such cases, "an area other than the overconcentration control region of the Seoul Metropolitan area" shall be deemed "innovation city", "the overconcentration control region of the Seoul Metropolitan area" shall be deemed the Seoul Metropolitan area" and "site and building of the headquarters or principal office in the overconcentration control region of the Seoul Metropolitan area" shall be deemed "previous real estate."
(3)
Any domestic corporation which intends to be eligible for the application of paragraph (1) shall submit to the head of the tax office having jurisdiction over the place of tax payment a specification, etc. of transfer margin of land, etc., as prescribed by Presidential Decree.
(4)
Where a relocated public agency whose headquarter is in the growth management region under Article 6 (1) 2 of the Seoul Metropolitan Area Readjustment Planning Act (hereafter referred to as "growth management region" in this Article) relocates its headquarter to the innovation city by December 31, 2015, as for the income equivalent to an amount computed by multiplying the amount under item (a) by the smaller of ratio referred to in item (b) or (c) by each taxable year, the full amount of corporate tax on the income under subparagraphs 1 through 3 for the taxable year to which the date of relocation belongs and the taxable years that end within two years from the beginning of the following taxable year shall be reduced, and an amount of tax equivalent to 50/100 of the corporate tax for the taxable years that end within two years thereafter shall be reduced:
1.
Amount obtained by subtracting the gains from transfer accruing from any land or building or the right to acquire real estate or income prescribed by Presidential Decree from the tax base for the taxable year concerned;
2.
Percentage occupied by the total amount of wages paid for the taxable year concerned to the employees working at the relocated head office after relocation for their work among the total annual amount of wages paid to the entire employees of the corporation for their work;
3.
Percentage occupied by the number of employees working at the relocated head office in the relevant taxable year among the total number of employees working in the entire corporation.
(5)
When paragraph (4) is applied, the number of employees working at the relocated head office means the number of employees obtained by subtracting the annual average number of employees at ordinary time who work at the head office in the taxable year whereto belongs the date on which three years retroactively lapse from the relocation date from the annual average number (referring to the number of employees obtained by adding up the number of employees as of the end of every month and dividing the added number of employees by the number of relevant months, and excluding the number of employees who move into the head office after having worked at the head office in the area other than the Seoul Metropolitan area after the taxable year to which the date on which two years retroactively lapse from the relocation date belongs) of employees at ordinary time who work at the head office (hereafter referred to as "relocated head office" in this Article) that is relocated to the innovation city, and the term "number of employees working in the entire corporation" means the annual average number of employees at ordinary time working in the entire corporation.
(6)
When paragraph (4) is applied, where the percentage occupied by the number of executives prescribed by Presidential Decree (hereafter referred to as "executives" in this Article) working at the relocated head office among the total number of executives working at the head office within the Seoul Metropolitan area and at the relocated head office falls short of 50/100, it shall not be granted corporate tax reduction or exemption in accordance with paragraph (4) beginning from the relevant taxable year.
(7)
Where a relocated public agency which has been given corporate tax reduction or exemption as prescribed in paragraph (4) falls under any of the following subparagraphs, an amount of tax computed as prescribed by Presidential Decree shall be paid as corporate tax at the time of the filing of its tax base return for the taxable year in which such cause occurs:
1.
Where the agency closes its business, or it is dissolved, within three years from the date on which it has started business after relocating its head officer to the innovation city;
2.
The cases prescribed by Presidential Decree, such as failure of the agency to start business after relocating its head office to the innovation city;
3.
Where the agency has its head office, maintains an office, the size of which is larger than the standards prescribed by Presidential Decree in the Seoul Metropolitan area;
4.
Where the percentage occupied by the number of executives working at the relocated head office among the total number of executives working at the head office within the Seoul Metropolitan area and at the relocated head office falls short of 50/100.
(8)
In cases where the amount of corporate tax reduced or exempted under paragraph (4) is paid under paragraph (7), the provisions concerning the amount equivalent to the interest under Article 33-2 (4) shall be applied mutatis mutandis.
(9)
In applying paragraphs (4) through (6), the method of calculating a period, scope of salaries, applications for tax reduction or exemption, and other necessary matters shall be prescribed by Presidential Decree
[This Article Wholly Amended by Act No. 11133, Dec. 31, 2011]

law view

 Article 63 (Tax Reduction or Exemption for Small or Medium Enterprises Relocated Outside Overconcentration Control Zone of Seoul Metropolitan Area)
 

(1)
In cases where a small or medium enterprise (limited to a national) which has continued to run its business with its factory and facilities in the overconcentration control zone of the Seoul Metropolitan area for not less than two years relocates the entire factory and facilities to an area outside the overconcentration control zone of the Seoul Metropolitan area as prescribed by Presidential Decree and starts its business there on or before December 31, 2014 (if its headquarters or principal office is located in the overconcentration control zone of the Seoul Metropolitan area, only applicable to the cases where the relevant headquarters or principal office concerned is relocated as well), a tax amount equivalent to 100/100 of income tax or corporate tax on the income derived from the factory after relocation for the taxable year whereto belongs the date of such relocation and for the taxable years ending within six years (four years, if it is relocated to the growth management region under Article 6 (1) 2 of the Seoul Metropolitan Area Readjustment Planning Act, nature preservation region under Article (1) 3 of the same Act, a Metropolitan City located in an area other than the Seoul Metropolitan area, or an area prescribed by Presidential Decree) from the commencing date of the following taxable year, and a tax amount equivalent to 50/100 of income tax or corporate tax on the income derived from the factory after relocation for the taxable years ending within three years thereafter (two years thereafter, f it is relocated to the growth management region under Article 6 (1) 2 of the Seoul Metropolitan Area Readjustment Planning Act, nature preservation region under Article (1) 3 of the same Act, a Metropolitan City located in an area other than the Seoul Metropolitan area, or an area prescribed by Presidential Decree) shall be reduced or exempted.
(2)
In cases where a small or medium enterprise subject to an application of reduction or exemption under paragraph (1) falls under any of the following subparagraphs, it shall pay, as its income tax or corporate tax, the amount of tax calculated as prescribed by Presidential Decree at the time of a tax base return for the taxable year wherein the relevant causes have occurred:
1.
Where a business is discontinued or a corporation is dissolved within three years from the date of commencing the business by relocating the factory: Provided, That this shall not apply to cases where it has been caused by a merger, division or merger through division;
2.
Where it does not fall under the case where the business is started by relocating its factory to an area outside the overconcentration control zone of the Seoul Metropolitan area as prescribed by Presidential Decree;
3.
Where a factory which produces the same products as those produced at the factory relocated pursuant to paragraph (1), or its head office is installed within the overconcentration control zone of the Seoul Metropolitan area during the period subject to reduction or exemption under paragraph (1).
(3)
Where the amount of income tax or corporate tax reduced or exempted under paragraph (1) is paid under paragraph (2), the provisions concerning the amount equivalent to the interest under Article 33-2 (4) shall be applied mutatis mutandis.
(4)
Any person who intends to be eligible for the application of paragraph (1) shall file an application for the reduction or exemption, as prescribed by Presidential Decree.
(5)
A small or medium corporation intending to have paragraph (1) applied, shall have the same type of business conducted in the factory before its relocation as that conducted in the factory after its relocation based on the classification prescribed by Presidential Decree.

law view

 Article 63-2 (Reduction of or Exemption from Corporate Tax, etc. for Relocation of Factories and Head Offices to Areas Outside Seoul Metropolitan Area)
 

(1)
Any corporation meeting the requirements in the following subparagraphs (hereafter referred to as "corporation relocating to provinces" in this Article) may be granted corporate tax reduction or exemption as prescribed in paragraphs (2) through (4) : Provided, That in cases of corporations operating real estate business, construction business and consumptive service business prescribed by Presidential Decree, this shall not apply thereto:
1.
That it shall be a corporation which has been operating a business equipped with factory facilities continuously for three years or more in the overconcentration control region of the Seoul Metropolitan area, or has been having a head office or principal business place (hereafter referred to as "head office" in this Article) continuously for three years or more within the overconcentration control region of the Seoul Metropolitan area;
2.
That it shall relocate its entire factory facilities or head office to an area outside the Seoul Metropolitan area and start business therein as prescribed by Presidential Decree no later than December 31, 2014 (in cases of relocation of factory facilities to another Metropolitan City, applicable only to an industrial complex under the Industrial Sites and Development Act; hereafter the same shall apply in this Article) or that it shall build a new factory or head office in an area outside the Seoul Metropolitan area and start business no later than December 31, 2017 (applicable only to cases in which it acquires a site for factory or head office no later than December 31, 2011, and submits a relocation plan when filing a tax base return for the taxable year to which December 31, 2011 belongs).
(2)
As for a corporation relocating to provinces, the full amount of corporate tax on the income under subparagraphs 1 through 3 for the taxable year to which the date of relocation belongs and the taxable years that end within six years (four years in cases of relocation to Metropolitan City located outside the Seoul Metropolitan area or to other areas prescribed by Presidential Decree) from the beginning of the following taxable year shall be reduced, and an amount of tax equivalent to 50/100 of the corporate tax for the taxable years that end within three years thereafter (two years in cases of relocation to Metropolitan City located outside of Seoul Metropolitan area or to other areas prescribed by Presidential Decree) shall be reduced:
1.
If the factory is relocated, income derived from the source of the factory concerned;
2.
If the head office is relocated, income equivalent to an amount computed by multiplying the amount under item (a) by the smaller of ratio referred to in item (b) or (c) by each taxable year:
(a)
Amount obtained by subtracting the gains from transfer accruing from any land or building or the right to acquire real estate or income prescribed by Presidential Decree from the tax base for the taxable year concerned;
(b)
Percentage occupied by the total amount of wages paid for the taxable year concerned to the employees working at the relocated head office after relocation for their work among the total annual amount of wages paid to the entire employees of the corporation for their work;
(c)
Percentage occupied by the number of employees working at the relocated head office in the relevant taxable year among the total number of employees working in the entire corporation;
3.
If the factory and head office are relocated together, income equivalent to the amount computed by summing up the incomes of subparagraphs 1 and 2: Provided, That it shall be within the limits of the total amount of income for the taxable year concerned.
(3)
When paragraph (2) 2 is applied, the term "number of employees working at the relocated head office" means the number of employees obtained by subtracting the annual average number of employees at ordinary time who work at the head office in the taxable year whereto belongs the date on which three years retroactively lapse from the relocation date from the annual average number (referring to the number of employees obtained by adding up the number of employees as of the end of every month and dividing the added number of employees by the number of relevant months, and excluding the number of employees who move into the head office after having worked at the head office in the area other than the Seoul Metropolitan area after the taxable year to which the date on which two years retroactively lapse from the relocation date belongs) of employees at ordinary time who work at the head office (hereafter referred to as "relocated head office" in this Article) that is relocated to an area other than the Seoul Metropolitan area, and the term "number of employees working in the entire corporation" means the annual average number of employees at ordinary time working in the entire corporation.
(4)
Where a corporation falls under any of the following subparagraphs during the period of corporate tax reduction or exemption when paragraph (2) 2 is applied, it shall not be granted corporate tax reduction or exemption in accordance with paragraph (2) beginning from the relevant taxable year:
1.
Deleted;
2.
Where the percentage occupied by the number of executives prescribed by Presidential Decree (hereafter referred to as "executives" in this Article) working at the relocated head office among the total number of executives working at the head office within the Seoul Metropolitan area and at the relocated head office falls short of 50/100.
(5)
Article 60 (2), (4) and (6), or 61 (3), (5) and (6) shall apply mutatis mutandis to the corporate tax on the gains from transfer accruing from the transfer of the factory or head office within the overconcentration control region of the Seoul Metropolitan area by a corporation relocating to provinces.
(6)
A parcel of land annexed to the building site of a factory owned (including a parcel of land of which the ownership is transferred due to a merger, division, division and merger) by a corporation relocating to provinces (limited to the relocation of its factory) before it relocates shall be deemed to be entitled to the application of Article 182 (1) 3 (a) of the Local Tax Act for five years, beginning on the relocation date of the factory, if the parcel of land is entitled to the application of Article 106 (1) 3 (a) of the Local Tax Act as of the relocation date: Provided, That the same shall not apply when the corporation discontinues the relevant business after commencing the operation of the relocated factory.
(7)
Where a corporation relocating to provinces which has been given corporate tax reduction or exemption as prescribed in paragraph (2) falls under any of the following subparagraphs, an amount of tax computed as prescribed by Presidential Decree shall be paid as corporate tax at the time of the filing of its tax base return for the taxable year in which such cause occurs:
1.
Where the corporation closes its business, or it is dissolved, within three years from the date on which it has started business after relocating its factory or head office: Provided, That the same shall not apply to cases where it is brought about by a merger, division, or division and merger;
2.
Where the corporation fails to relocate its factory or head office to an area outside the Seoul Metropolitan area and start business as prescribed by Presidential Decree;
3.
Where the corporation sets up in the Seoul Metropolitan area its head office or a factory producing the same products as those produced at the factory relocated under paragraph (1) ;
4.
Deleted;
5.
Where the corporation, which has relocated its head office, maintains an office, the size of which is larger than the standards prescribed by Presidential Decree in the Seoul Metropolitan area;
6.
Where such relocated head office falls under paragraph (4) 2.
(8)
The provisions concerning an additional amount equivalent to interest as referred to in Article 33-2 (4) shall apply mutatis mutandis to cases where the amount of corporate tax for which reduction or exemption was allowed under paragraph (2) is paid pursuant to paragraph (7).
(9)
Where a corporation relocating to provinces, to which Article 106 (1) 3 (a) of the Local Tax Act has been applied for five years from the date of relocation pursuant to paragraph (6) in relation to a parcel of the land annexed to the building site of the factory before it relocates, falls under any of paragraph (7) 1 through 3, the property tax and the gross real estate tax together with the interest added thereto shall be levied additionally, as prescribed by Presidential Decree.
(10)
Where a corporation relocating to provinces that intends to have paragraph (1), (2), (5) or (6) applied shall have the same type of business conducted in the factory before its relocation as that in the factory after its relocation based on the classification prescribed by Presidential Decree.
(11)
In applying paragraphs (1) through (5) and (7), the method of calculating a period, scope of salaries, applications for tax reduction or exemption, and other necessary matters shall be prescribed by Presidential Decree.
[This Article Newly Inserted by Act No. 6045, Dec. 28, 1999]

law view

 Article 63-3 Deleted.
 

law view

 Article 64 (Tax Reduction or Exemption for Enterprises, etc. Located in Agro-Industrial Complex)
 

(1)
The income tax or corporate tax on any income accruing from the relevant business operated by any person falling under any of the following subparagraphs shall be reduced or exempted, by applying mutatis mutandis Article 6 (1):
1.
Any national operating a project for developing the income sources of agricultural and fishing villages, after moving to an agro-industrial complex prescribed by Presidential Decree no later than December 31, 2015 from among those under the Industrial Sites and Development Act;
2.
A small or medium enterprise operating a business after moving to the development promotion districts pursuant to Articles 9 and 50 of the Balanced Regional Development and Support for Local Small and Medium Enterprises Act (hereafter in this subparagraph referred to as "development promotion districts") and to a district or area prescribed by Presidential Decree in terms of the areas for special support for local small or medium enterprises, no later than December 31, 2015 (including a national operating a tourist accommodations business and comprehensive resort business in compliance with the Tourism Promotion Act, and a livestock business, in cases where such national is selected as a development project operator and locating in an abandoned mines-neighboring area in accordance with the Special Act on the Assistance to the Development of Abandoned Mine Areas, from among the development promotion districts).
(2)
Any person who wishes to be subject to the application of paragraph (1) shall apply for tax reduction or exemption, as prescribed by Presidential Decree.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

law view

 Article 65 Deleted.
 

law view

 Article 66 (Exemption, etc. from Corporate Tax for Agricultural Partnership Corporations, etc.)
 

(1)
For an agricultural partnership corporation under the Act on Fostering and Supporting Agricultural and Fisheries Enterprises (hereinafter referred to as "agricultural partnership corporation"), total amount of income accruing from the crops cultivating business (hereinafter referred to as "agricultural income") and the amount within the extent prescribed by Presidential Decree out of the income other than the agricultural income shall be exempted from the corporate tax until the taxable year ending on or before December 31, 2015.
(2)
Of the total amount of dividends that a member of the agricultural partnership corporation receives from the agricultural partnership corporation no later than December 31, 2015, the entire amount of dividend derived from agricultural income and an amount of dividend derived from incomes other than the agricultural income, shall be allowed to be exempted from the income tax within the limits determined by Presidential Decree. In such cases, the calculation of the dividend derived from agricultural income and the dividend derived from incomes other than agricultural income shall be governed by the provisions of Presidential Decree.
(3)
Notwithstanding the provisions of Article 129 of the Income Tax Act, the rate of withholding tax on an income received no later than December 31, 2015 as dividend other than the amount exempted from income tax as prescribed in paragraph (2) out of the total amount of dividends paid by the agricultural partnership corporation to its members, shall be 5/100; thereupon, pro rata income of local income tax shall not be imposed; such dividend shall not be added to the global income in calculating the tax base of global income under Article 14 (2) of the Income Tax Act.
(4)
Any income derived by an agricultural personnel prescribed by Presidential Decree from the contribution of farmland or grassland pursuant to the Grassland Act (hereinafter referred to as "grassland") to the agricultural partnership corporation as an investment in kind on or before December 31, 2015 shall be exempted from the capital gains tax.
(5)
Where any person exempted from the capital gains tax under paragraph (4) transfers his/her contribution shares to another person within three years from the date of the equity investment, the amount calculated as prescribed by Presidential Decree shall be paid as the capital gains tax at the time when he/she has filed the tax base return for the taxable year whereto belongs the date of such transfer: Provided, That this shall not apply to cases prescribed by Presidential Decree.
(6)
An amount equivalent to interest calculated as prescribed by Presidential Decree, shall be added when the capital gains tax exempted under the provision of paragraph (4) is paid under the provisions of main sentence of paragraph (5).
(7)
Where agricultural personnel prescribed by Presidential Decree make an investment in kind in an agricultural partnership corporation with real estate (excluding farmland and grassland referred to in paragraph (4) ) that is used directly for the business of growing crops, stock breeding and forestry prescribed in subparagraph 1 (a) of Article 3 of the Framework Act on Agriculture on or before December 31, 2015, they shall be eligible for the application of taxation carried forward.
(8)
Anyone who intends to be eligible for the application referred to in paragraphs (1), (2), (4) and (7) shall file an application therefor, as prescribed by Presidential Decree.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

law view

 Article 67 (Exemption, etc. from Corporate Tax for Fishery Partnership Corporations, etc.)
 

(1)
For a fishery partnership corporation stipulated in the Act on Fostering and Supporting Agricultural and Fisheries Enterprises (hereinafter referred to as "fishery partnership corporation"), an amount of its income for each business year no later than the taxable year ending on or before December 31, 2015, shall be allowed to be exempted from corporate tax within the limits determined by Presidential Decree.
(2)
Of the dividend that a partner of the fishery partnership corporation receives from the fishery partnership corporation no later than December 31, 2015, an amount within the limit prescribed by Presidential Decree shall be exempted from income tax.
(3)
Notwithstanding Article 129 of the Income Tax Act, the rate of withholding tax on an income received no later than December 31, 2015 as dividend other than the amount exempted from income tax as prescribed in paragraph (2), out of the total amount of dividend paid by the fishery partnership corporation to its partners, shall be 5/100; thereupon, pro rata income of local income tax shall not be imposed; such dividend shall not be added to the global income in calculating the tax base of global income in accordance with the provisions of Article 14 (2) of the Income Tax Act.
(4)
Income derived from investment in kind with land, etc. for fishery prescribed by Presidential Decree in a fishery partnership corporation and in a fishing corporation under the Act on Fostering and Supporting Agricultural and Fisheries Enterprises made by fishery personnel prescribed by Presidential Decree on or before December 31, 2015 shall be exempted from capital gains tax.
(5)
Where a person who has been exempted from capital gains tax as prescribed in paragraph (4) transfers his/her equity shares to another person within three years from the date of the equity investment, an amount calculated as prescribed by Presidential Decree shall be paid as capital gains tax at the time when he/she files a tax base return for the taxable year to which the date of such transfer belongs: Provided, That in cases prescribed by Presidential Decree, this shall not apply thereto.
(6)
Article 66 (6) and (8) shall apply mutatis mutandis with respect to application for tax exemption under paragraphs (1), (2) and (4), and the payment of the tax amount under the main sentence of paragraph (5).
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

law view

 Article 68 (Corporate Tax Exemption, etc. for Incorporated Agricultural Companies)
 

(1)
For an incorporated agricultural companies provided for in the Act on Fostering and Supporting Agricultural and Fisheries Enterprises (hereinafter referred to as "incorporated agricultural companies"), corporate tax on agricultural income shall be exempted, and corporate tax on income prescribed by Presidential Decree other than agricultural income shall be reduced or exempted by applying Article 6 (1) of the Corporate Tax Act mutatis mutandis no later than the taxable year ending on or before December 31, 2015.
(2)
Income derived from investment in kind with farmland or grassland in an incorporated agricultural company (limited to cases meeting the requirements for agricultural corporate body provided for in the Farmland Act) made by an agricultural personnel prescribed by Presidential Decree on or before December 31, 2015 shall be exempted from capital gains tax. In such cases, the provisions of Article 66 (5) through (8) shall apply mutatis mutandis.
(3)
Where agricultural personnel prescribed by Presidential Decree make an investment in kind in an incorporated agricultural company with real estate (excluding farmland and grassland referred to in paragraph (2)) that is used directly for the business of growing crops, stock breeding and forestry prescribed in subparagraph 1 (a) of Article 3 of the Framework Act on Agriculture on or before December 31, 2015, they shall be eligible for the application of taxation carried forward.
(4)
Income tax on the full amount of dividends derived from agricultural income among the dividends received by a resident no later than December 31, 2015, who has invested in an incorporated agricultural company shall be exempted; dividend income derived from income prescribed by Presidential Decree of the income other than agricultural income shall not be added to the global income in calculating the tax base of global income in accordance with the provisions of Article 14 (2) of the Income Tax Act. In such cases, the amount of dividend income derived from agricultural income and the amount of dividend income derived from income prescribed by Presidential Decree of the income other than agricultural income shall be calculated, as prescribed by Presidential Decree.
(5)
Anyone who intends to be eligible for the application of paragraphs (1), (3) and (4) shall file an application therefor as prescribed by Presidential Decree.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

law view

 Article 69 (Capital Gains Tax Reduction or Exemption for Self-Cultivating Farmland)
 

(1)
With respect to income derived from the transfer of land prescribed by Presidential Decree from among the land that has been directly cultivated by a method prescribed by Presidential Decree by a resident prescribed by Presidential Decree who resides at a place where farmland is located for not less than eight years (for not less than three years where farmland subject to the directly paid subsidy for the transfer of management prescribed by Presidential Decree is transferred to the Korea Rural Community Corporation under the Korea Rural Community Corporation and Farmland Management Fund Act or a corporation prescribed by Presidential Decree whose main business line is agriculture (hereafter referred to as "agricultural corporation" in this Article) no later than December 31, 2015), an amount of tax equivalent to 100/100 of the capital gains tax shall be reduced: Provided, That where the land in question is incorporated into the residential area, commercial area or industrial area under the National Land Planning and Utilization Act (hereafter in this Article referred to as "residential area, etc."), or is designated as reserved land substitution as land other than farmland prior to the disposal of land substitution under the Urban Development Act and other Acts, as much as the amount of income prescribed by Presidential Decree which has been earned not later than the date of incorporation into the residential area, etc., or date of the designation of reserved land substitution shall be eligible for tax reduction of an amount of tax equivalent to 100/100 of capital gains tax.
(2)
Where an agricultural corporation transfers the land in question within three years from the date of the acquisition of such land, or where such causes prescribed by Presidential Decree have occurred, the relevant corporation shall pay as corporate tax the amount equivalent to the tax amount exempted under the provisions of paragraph (1) at the time of filing its tax base return for the taxable year in which such causes occur.
(3)
Any person who desires to be eligible for the application of paragraph (1) shall apply for tax reduction or exemption as prescribed by Presidential Decree.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

law view

 Article 69-2 (Reduction of or Exemption from Capital Gains Tax on Site for Livestock Stables)
 

(1)
The amount equivalent to 100/100 of capital gains tax shall be reduced from the tax on income earned by a resident prescribed by Presidential Decree, who lives in an area where a stable used for breeding livestock and land annexed thereto (hereafter referred to as "site for livestock stables" in this Article) are located, through the transfer of the site for livestock stables (with the limit of 990 square meters per person) prescribed by Presidential Decree that has been directly used for breeding livestock by a method prescribed by Presidential Decree for at least eight years by December 31, 2014 for the purpose of business closure: Provided, That where the relevant land is incorporated into a residential area, commercial area or industrial area under the National Land Planning and Utilization Act (hereafter referred to as "residential area, etc." in this Article), or where the land is designated as land reserved for land substitution for a site, other than one for livestock stables prior to a disposition of land substitution pursuant to the Urban Development Act and other Acts, the amount equivalent to 100/100 of capital gains tax shall be reduced from the tax on the amount of income prescribed by Presidential Decree which has been earned by the date on which such site is incorporated into the residential area, etc. or is designated as the land reserved for land substitution.
(2)
Where a resident whose capital gains tax has been reduced pursuant to paragraph (1) re-starts a livestock business within five years after transferring the relevant site for livestock stables, the amount of reduced tax shall be additionally levied: Provided, That this shall not apply to cases such as inheritance prescribed by Presidential Decree.
(3)
A person who intends to be eligible for application of paragraph (1) shall apply for tax reduction or exemption, as prescribed by Presidential Decree.
(4)
In applying the provisions under paragraphs (1) through (3), the holding period of a site for livestock stables, the scope of business closure, the method of calculating the amount of reduced or exempted tax, and other necessary matters shall be prescribed by Presidential Decree.
[This Article Newly Inserted by Act No. 10901, Jul. 25, 2011]

law view

 Article 70 (Capital Gains Tax Reduction or Exemption for Substitute Land for Farmland)
 

(1)
An amount of tax equivalent to 100/100 of the capital gains tax on the income accrued from the exchange of land cultivated directly by a method prescribed by Presidential Decree by a resident prescribed by Presidential Decree residing in the location of farmland of agricultural income tax for farmland falling under the cases prescribed by Presidential Decree due to need of cultivation shall be reduced: Provided, That in cases the land in question has been incorporated into the residential area, commercial area or industrial area under the National Land Planning and Utilization Act (hereafter referred to as "residential area, etc." in this Article), or has been designated as land reserved for replotting other than as farmland prior to the disposition of replotting under the Urban Development Act or other Acts, capital gains tax only on income prescribed by Presidential Decree, which has been earned no later than the date of incorporation into residential area, etc., or the date of designation of land reserved for replotting shall be exempted.
(2)
Paragraph (1) shall not apply where any land that is transferred or acquired pursuant to paragraph (1) is included in the residental area, etc. under the National Land Planning and Utilization Act and is prescribed by Presidential Decree as land reserved for replotting other than as farmland prior to the disposition of replotting is taken pursuant to the Urban Development Act and other Acts.
(3)
Anyone who intends to be granted reduction or exemption as prescribed in paragraph (1) shall file an application for reduction or exemption, as prescribed by Presidential Decree.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

law view

 Article 71 (Gift Tax Reduction or Exemption for Farmland, etc. Presented to Farming Offspring)
 

(1)
Where farmland, grassland, or forest land (including equities acquired from the contributions of the farmland, grassland, or forest land to an agricultural partnership corporation as an investment in kind; hereafter in this Article referred to as "farmland, etc.") that have been directly cultivated by a method prescribed by Presidential Decree by a resident prescribed by Presidential Decree (hereafter in this Article referred to as "self-cultivating farmer") who resides in the location of the farmland, etc., which meets all the requirements set forth in the following subparagraphs, is given to his/her lineal descendants prescribed by Presidential Decree (hereafter in this Article referred to as "farming offspring"), on or before December 31, 2014, who resides in the location of and directly cultivates the farmland, etc., an amount of tax equivalent to 100/100 of the gift tax on the value of the farmland, etc. shall be reduced:
1.
Farmland, etc. falling under any of the following items:
(a)
Farmland: The self-cultivated farmland, the are of which is not more than 29,700㎡;
(b)
Grassland: The grassland provided for in the Grassland Act, the are of which is not more than 148,500㎡;
(c)
Forest land: The forest land (including seed-gathering forest and forest protection zone under Article 7 of the Forest Protection Act; hereafter in this item the same shall apply) whose management plan is authorized or which is designated as a special forest project zone and newly afforested for not less than five years pursuant to the Forest Resources Creation and Management Act as part of the preserved mountainous district under the Management of Mountainous Districts Act, the are of which is not more than 297,000㎡: Provided, That in cases of a forest land afforested for not less than 20 years, its area shall be extended to not more than 990,000㎡, including the forest land which is afforested for not less than five years, whose area is not more than 297,000㎡;
2.
Farmland, etc. which is located outside of the residential area, commercial area and industrial area under Article 36 of the National Land Planning and Utilization Act;
3.
Farmland, etc. which are located outside of the area for housing site development under the Housing Site Development Promotion Act or other areas prescribed by Presidential Decree as development project zone.
(2)
Where farmland, etc. on which gift tax has been reduced as prescribed in paragraph (1) is transferred within five years from the date when such farmland, etc. was presented without any justifiable reasons prescribed by Presidential Decree, such as the death of farming offspring, etc., or the farming offspring discontinues to directly cultivate the relevant farmland, etc. without any justifiable reason prescribed by Presidential Decree, such as disease, school attendance, etc., an amount equivalent to the gift tax on such farmland, etc. that is reduced or exempted shall be immediately collected.
(3)
Where the capital gains tax is reduced or exempted pursuant to paragraph (1), due to its transfer, its acquisition time shall be deemed the day on which the self-cultivating farmer has acquired the farmland, etc., and the expenses involved, the expenses required at the time of the acquisition of the farmland, etc. by the self-cultivating farmer, notwithstanding the provisions of the Income Tax Act.
(4)
Where the tax amount reduced or exempted pursuant to paragraph (1) is collected in accordance with paragraph (2), Article 66 (6) shall apply mutatis mutandis.
(5)
In the application of the provisions of Article 3 (2) of the Inheritance Tax and Gift Tax Act, the farmland, etc. on which the gift tax is reduced or exempted pursuant to paragraph (1) shall neither be deemed the donated property that is added to the inherited property, nor be included in the value of the donated property that is added to the taxable value of the inheritance tax in accordance with Article 13 (1) of the abovementioned Act.
(6)
The farmland, etc. on which the gift tax is reduced or exempted pursuant to paragraph (1) shall not be included in the value of the property donated by the self-cultivating farmer (including his/her spouse) and added up within ten years before the date of such donation pursuant to Article 47 (2) of the Inheritance Tax and Gift Tax Act.
(7)
A farming offspring who intends to be granted gift tax reduction or exemption pursuant to paragraph (1) shall file an application for tax reduction or exemption by the deadline for filing a return of the tax base of the gift tax, as prescribed by Presidential Decree.
(8)
In the application of paragraphs (1) through (7), the methods of calculating the period of holding and the value of acquisition of the farmland, etc. on which the gift tax is reduced or exempted and other necessary matters shall be prescribed by Presidential Decree.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

SECTION 8 Special Taxation for Support of Public Service Projects

law view

 Article 72 (Special Taxation of Corporate Tax on Association Corporation, etc.)
 

(1)
The corporate tax on incomes for each business year of a corporation falling under any of the following subparagraphs (hereafter in this Article referred to as the "taxation on the current net income") shall, notwithstanding the provisions of Articles 13 and 55 of the Corporate Tax Act, be levied until the business year ending on or before December 31, 2014 by applying the tax rate of 9/100 to the total amount computed by adding the amount of donation (limited to donation related to its profit-making business) which has not been added to deductible expenses under Article 24 of the Corporate Tax Act and the amount of non-deductible expenses prescribed by Presidential Decree, such as entertainment expenses (limited to expenses related to its profit-making business) which have not been added to deductible expenses under Article 25 of the same Act, to the current net income on its closing financial statements of the corporation concerned (referring to the current net income before the deduction of corporate tax, etc.): Provided, That if the corporation concerned waives the application of taxation on the current net income as prescribed by Presidential Decree, the taxation on the current net income shall not be applied for each business year coming thereafter:
1.
Credit unions established under the Credit Unions Act, and community credit cooperatives established under the Community Credit Cooperatives Act;
2.
Cooperatives and cooperative joint business corporations established and incorporated pursuant to the Agricultural Cooperatives Act;
3.
Deleted;
4.
Fisheries cooperatives established under the Fisheries Cooperatives Act (including fishery village cooperatives);
5.
Cooperatives, business cooperatives, and the national federation of cooperatives established under the Small and Medium Enterprise Cooperatives Act;
6.
Forestry cooperatives and cooperative joint business corporations established under the Forestry Cooperatives Act (including forestry village cooperatives) ;
7.
Tobacco producers cooperatives established under the Tobacco Producers Cooperatives Act;
8.
Consumer cooperatives established under the Consumer Cooperatives Act.
(2)
The provisions of Articles 5 through 14, 22 through 25, 25-2 through 25-4, 26, 29-2, 30-2, 30-4, 31 (4) through (6), 32 (4), 33, 33-2, 63, 63-2, 63-3, 64, 66 through 68, 94, 102, 104-14, and 104-15 shall not apply to the corporations under subparagraphs of paragraph (1) (excluding the corporations that have waived the application of the taxation on the current net income pursuant to the proviso to the part other than subparagraphs of paragraph (1)).
(3)
Deleted.
(4)
In the application of paragraph (1), where a cooperative under subparagraph 4 of the same paragraph and a forestry cooperative under subparagraph 6 of the same paragraph are supported with funds (referring to any support provided in such way as to repay funds after depositing such funds loaned by the mutual financing depositors protection fund without any interest under the Act on the Structural Improvement of Fisheries Cooperatives, in the National Federation of Fisheries Cooperatives, or under the Act on the Structural Improvement of Forestry Cooperatives, in the National Forestry Cooperatives Federation and being paid the interest on a regular basis) for the improvement of financial structure, not later than December 31, 2010, pursuant to Article 7 (1) 3 of the Act on Structural Improvement of Fisheries Cooperatives and Article 7 (1) 3 of the Act on Structural Improvement of Forestry Cooperatives and performs the accounting of such funds by classification as prescribed by Ordinance of the Ministry of Strategy and Finance, the interest that accrues from the deposit of such funds needs not be deemed the income when calculating its current net income. In such cases, when the cooperative disburses the interest and adds the amount of such interest to the item of expenses (when disbursed for the acquisition of assets, referring to appropriation in the depreciation cost or the book value at the time of such disbursement), the amount of such interest shall not be deemed expenses.
(5)
In applying paragraph (1), where an assignee-union or assignee-community credit cooperative under Article 86-4 (2) of the Credit Unions Act or Article 80-2 (2) of the Community Credit Cooperatives Act (hereafter referred to as "assignee-union, etc." in this Article) from among the credit unions and community credit cooperatives provided for in subparagraph (1) of the same paragraph has received funding (referring to the support which is provided in a way that the fund is borrowed free of interest from the fund for protection of depositors or the reserve for protection of depositors, deposited in the National Credit Union Federation of Korea or the Korean Federation of Community Credit Cooperatives, and redeemed after receiving interest periodically) for the fulfillment of transfer of a contract pursuant to Article 86-4 (3) of the Credit Unions Act or Article 80-2 (3) of the Community Credit Cooperatives Act no later than December 31, 2015 and such fund is accounted separately as prescribed by Ordinance of the Ministry of Strategy and Finance, the interest accrued from the deposit of such fund may not be regarded as income in computing current net income. In such cases, where the relevant assignee-union, etc. paid the amount of the interest and has accounted it as an expense (referring to accounting at book value as at the time of depreciation or disposal, if it has been disbursed for the acquisition of assets), such amount of interest shall not be construed as the expense.
(6)
Necessary matters concerning the calculation, etc. of the amounts of the donation and entertainment expenses of the association corporations, etc. under paragraph (1), which have not been included in deductible expenses, shall be determined by Presidential Decree.

law view

 Article 72-2 Deleted.
 

law view

 Article 73 Deleted.
 

law view

 Article 74 (Special Cases of Inclusion of Reserves for Business Proper to Specific Purpose in Deductible Expenses)
 

(1)
Where Article 29 of the Corporate Tax Act applies to a corporation falling under any of the following subparagraphs no later than the business year ending on or before December 31, 2014, notwithstanding paragraph (1) 4 of the same Article, the income derived from profit-making businesses of the relevant corporation (in cases of subparagraphs 4 and 5, only applicable to the relevant businesses and profit-making businesses being conducted for users in the relevant institutions) may be included in the deductible expenses as reserves for its business with a proper purpose:
1.
Educational foundations falling under any of the following items:
(a)
Educational foundations under the Private School Act;
(b)
Industry academic cooperation foundations under the Industrial Education and Industry-Academia-Research Cooperation Promotion Act;
(c)
Non-profit corporations under Article 32 of the Civil Act which operate lifelong educational facilities in the form of cyber-university under the Lifelong Education Act;
(d)
Seoul National University, national university corporation and its development fund under the Act on the Establishment and Management of Seoul National University;
(e)
Ulsan National Institute of Science and Technology under the Act on the Establishment and Management of Ulsan National Institute of Science and Technology;
(f)
Incheon National University, national university corporation and its development fund under the Act on the Establishment and Management of Incheon National University;
2.
Social welfare foundations under the Social Welfare Services Act;
3.
A corporation falling under any of the following items:
(a)
National university-affiliated hospitals under the Act on the Establishment of National University-Affiliated Hospitals and national university-affiliated dental hospitals under the Act on the Establishment of National University-Affiliated Hospitals ;
(b)
The Seoul National University Hospital under the Establishment of Seoul National University Hospital Act;
(c)
The Seoul National University Dental Hospital under the Establishment of Seoul National University Dental Hospital Act;
(d)
The National Cancer Center under the National Cancer Center Act;
(e)
Local medical centers under the Act on the Establishment and Operation of Local Medical Centers;
(f)
Hospitals that are operated by the Korean National Red Cross pursuant to the Organization of the Korean National Red Cross Act;
(g)
The National Medical Center under the Act on the Establishment and Operation of National Medical Center;
4.
Foundations operating libraries registered under the Libraries Act;
5.
Foundations operating museums or art galleries registered under the Museum and Art Gallery Support Act;
6.
Foundations prescribed by Presidential Decree as cultural and arts organizations permitted or authorized by the Government;
7.
Organizing committees for the following international events;
(a)
The Organizing Committee for Expo 2012 Yeosu Korea established under the Special Act on Support to and Ex-Post Facto Utilization of the Expo Yeosu Korea (hereinafter referred to as the "Organizing Committee for Expo 2012 Yeosu Korea");
(b)
The Organizing Committee for the 2013 World Rowing Championships Chungju (hereinafter referred to as "Organizing Committee for the 2013 World Rowing Championships Chungju"), the Organizing Committee for the Asian Games-Incheon 2014 (hereinafter referred to as "Organizing Committee for the Asian Games-Incheon 2014"), the Organizing Committee for the Asian Para Games-Incheon 2014 (hereinafter referred as "Organizing Committee for the Asian Para Games-Incheon 2014"), and the Organizing Committee for the 2015 Gwangju Summer Universiade (hereinafter referred to as "Organizing Committee for the 2015 Gwangju Summer Universiade") established under the Act on Assistance to the 13th IAAF World Championships in Athletics-Daegu 2011, the 2013 World Rowing Championships Chungju, the Asian Games-Incheon 2014, the Asian Para Games-Incheon 2014, and the 2015 Gwangju Summer Universiade;
(c)
The Organizing Committee for the 2018 PyeongChang Olympic and Paralympic Winter Games established under the Special Act on Support for the 2018 PyeongChang Olympic and Pasralympic Winter Games (hereinafter referred to as "Organizing Committee for the 2018 PyeongChang Olympic and Paralympic Winter Games");
(d)
The Organizing Committee for the Special Olympics World Winter Games PyeongChang 2013 established under the Act on Assistance to Special Olympics World Winter Games PyeongChang 2013 (hereinafter referred to as "Organizing Committee for the Special Olympics World Winter Games PyeongChang 2013");
(e)
The Organizing Committee for the 2010 Formula 1 Korean Grand Prix established under the Act on Assistance to the 2010 Formula 1 Korean Grand Prix (hereinafter referred to as "Organizing Committee for the 2010 Formula 1 Korean Grand Prix");
8.
A corporation established under the Act on the Establishment and Operation of Public-Service Corporations which has disbursed the amount not less than 80/100 as scholarship of the amount disbursed for business proper to specific purpose or designated contributions for the relevant taxable year.
(2)
In applying Article 29 of the Corporate Tax Act to a corporation falling under any of the following subparagraphs by not later than the business year ending on or before December 31, 2011, an amount prescribed by Presidential Decree out of income derived from a profit-making business of the corporation concerned may be allowed to be included in its deductible expenses as reserves for business proper to its specific purpose:
1.
National Agricultural Cooperative Federation established under the Agricultural Cooperatives Act;
2.
National Federation of Fisheries Cooperatives established under the Fisheries Cooperatives Act;
3.
National Forestry Cooperatives Federation established under the Forestry Cooperatives Act.
(3)
Where a non-profit corporation prescribed by Presidential Decree from among the corporations which manage and operate the Funds established under Acts set forth in the attached Table 2 of the State Finance Act derives an income from the transfer of the stocks of any listed corporation under the Financial Investment Services and Capital Markets Act, which have been acquired through payments of the relevant Funds, no later than the business year ending on or before December 31, 2009, the entire amount of such income may, notwithstanding Article 29 (1) 4 of the Corporate Tax Act, be included in its deductible expenses as reserves for business with a proper purpose.
(4)
A non-profit domestic corporation (excluding a non-profit domestic corporation to which paragraph (1) is applicable) which runs the medical business by opening a medical institution referred to in Article 3 (2) 1 or 3 of the Medical Service Act at areas prescribed by Presidential Decree, in consideration of population, etc. excluding the overconcentration control region of the Seoul Metropolitan area of metropolitan areas may include an amount equivalent to 80/100 of earning accrued from its for-profit businesses in deductible expenses as the reserve for the proper purpose business when applying Article 29 of the Corporate Tax Act until the business year that ends on or before December 31, 2014.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

law view

 Article 75 Deleted.
 

law view

 Article 76 (Special Cases, etc. of Inclusion of Political Funds in Deductible Expenses)
 

(1)
With respect to political funds donated by a resident to a political party (including its supporters' association under the Political Fund Act and the election commissions) under the same Act, 100,000 won or less shall be deducted, by 100/110 of the donated amount, from his/her income tax amount for the relevant taxable year wherein it has been disbursed, and the amount which is in excess of 100,000 won, if any, shall be either deducted from his/her income amount, or added to his/her deductible expenses within the scope of the income amount less the carryover deficits, in calculating his/her income amount.
(2)
The inheritance tax or the gift tax shall not be imposed on the political funds donated under paragraph (1).
(3)
With respect to any political fund other than the political funds referred to in paragraph (1), anyone who takes the donation of such political fund shall be deemed to have succeeded to such political fund or have been given such political fund, and the inheritance tax or the gift tax shall be levied on him/her, notwithstanding the provisions of subparagraph 4 of Article 12 and subparagraph 3 of Article 46 of the Inheritance Tax and Gift Tax Act and other tax-related Acts.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

law view

 Article 77 (Reduction of or Exemption from Capital Gains Tax on Land, etc. for Public Service Projects)
 

(1)
An amount of tax equivalent to 20/100 (25/100 in cases a portion of the transfer price of land, etc. is paid in the bonds prescribed by Presidential Decree, or 40/100 (50/100 in cases of bonds with maturity of five years or more) in cases of income derived from purchase by mutual agreement or expropriation under Acts prescribed by Presidential Decree, such as the Act on the Construction of Bogeumjari Housing, etc. and a special agreement is made to keep the bonds until maturity of three years or more in a manner prescribed by Presidential Decree) of capital gains tax on the income shall be reduced, which fall under any of the following subparagraphs and is derived on or before December 31, 2015 from the transfer of land, etc. acquired within two years retroactively from the public announcement date of project approval (the date of transfer, where transfer is implemented before the public announcement date of project approval) granted for the area for public project wherein the land, etc. in question is located:
1.
Income derived from the transfer to a person implementing public a service project of such land, etc. as necessary for the public project to which the Act on Acquisition of and Compensation for Land, etc. for Public Works applies;
2.
Income derived from the transfer to a person implementing the public service project under the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents of such land, etc. as located in the area for maintenance and improvement under the same Act (excluding such area for maintenance and improvement as unaccompanied by infrastructure for maintenance and improvement);
3.
Income derived from the expropriation of land, etc. under the Act on Acquisition of and Compensation for Land, etc. for Public Works and other Acts.
(2)
Where a resident transfers the land, etc. held for at least two years by him/her (referring to land, etc. necessary for the public service projects under paragraph (1) 1 or land, etc. within an area for maintenance and improvement under subparagraph 2 of the same paragraph; hereafter the same shall apply in this paragraph) to the implementer of a public service project under paragraph (1) 1 and a project implementer (hereafter referred to as "project implementer" in this Article) before being designated as a project implementer under subparagraph 2 of the same paragraph (hereafter referred to as "project implementer before designation" in this paragraph) on or before December 2015 and files the tax base return (including a preliminary return) of the taxable period in which the date of transferring the relevant land, etc. falls, and the project implementer before designation is designated as the project implementer within five years from the date on which the land, etc. is transferred, the capital gains tax under paragraph (1) may be reduced or exempted, as prescribed by Presidential Decree. In such cases, the calculation of the capital gains tax to be reduced or exempted shall be governed by the applicable Act as at the time of transfer, although the reduction or exemption rate, etc is changed.
(3)
Where a person executing the public work project concerned falls under any of the following subparagraphs, he/she shall pay an amount equivalent to the tax amount reduced or exempted under paragraph (1) or (2) as income tax or corporate tax at the time of his/her tax base return for the taxable year in which such case occurs:
1.
Where a person executing the public work project under paragraph (1) 1 fails to undertake the public works within three years from the date on which he/she obtained authorization, etc. for the implementation of the works;
2.
Where a person executing public work project under paragraph (1) 2 fails to obtain authorization for the implementation of the works, or to complete such works, under the Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents within the time limit prescribed by Presidential Decree.
(4)
Where a person, who had made a special contract to keep the relevant bonds until maturity as prescribed in paragraph (1) and had an amount of tax equivalent to 40/100 (50/100 in cases of bonds with maturity of five years or more) of capital gains tax reduced or exempted, has breached such special agreement, an amount equivalent to 15/100 (25/100 in cases of bonds with maturity of five years or more) of capital gains tax out of the amount of reduced or exempted tax shall be levied immediately.
(5)
The provisions concerning an additional amount equivalent to the interest as referred to in Article 33-2 (4) shall apply mutatis mutandis to cases where the tax amount reduced or exempted under paragraph (1) 1 or 2 or paragraph (2) is paid under paragraph (3), and Article 66 (6) shall apply mutatis mutandis to cases where the tax amount reduced or exempted under paragraph (1) is levied under paragraph (4).
(6)
When a project implementer intends to be granted tax reduction or exemption as prescribed in paragraph (1) 1 or 2, he/she shall apply for reduction or exemption as prescribed by Presidential Decree.
(7)
Any person who desires to be granted reduction or exemption under paragraph (1) 3 shall apply for reduction or exemption, as prescribed by Presidential Decree.
(8)
In the application of paragraphs (1) and (4), the terms and conditions of the special agreement to keep related bonds until maturity, method of notifying the National Tax Service of breach where such special agreement has been breached, and other necessary matters shall be prescribed by Presidential Decree.
(9)
Where paragraphs (1) and (2) is appled, with respect to land, etc. inherited or donated to which Article 97 (4) of the Income Tax Act is applicable, the date when an ancestor or donator acquired the relevant land, etc. shall be deemed the date of acquisition of the relevant land, etc.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

law view

 Article 77-2 (Special Taxation for Capital Gains Tax on Compensation by Substitute Land)
 

(1)
Where a resident who transferred a parcel of land acquired at least two years, counting retroactively, before the public announcement date of project approval under the Act on the Acquisition of Land, etc. for Public Works and the Compensation Therefor (the date of transfer, where transfer is implemented before the public announcement date of project approval) due to the execution of the public project and to whom another parcel of land developed as a result of the execution of the public project is conveyed as part of the transfer price of the land (hereafter referred to as "compensation by substitute land" in this Article) under the proviso to Article 63 (1) of the same Act except subparagraphs, on or before December 31, 2015, the margin gained from such transfer may be entitled to the deferment of the capital gains tax, as prescribed by Presidential Decree.
(2)
Paragraph (1) shall apply only to cases where the executor of the relevant public project notifies the National Tax Service of the details of the compensation by substitute land in the manner prescribed by Presidential Decree.
(3)
If any resident who has the taxation of capital gains tax deferred under paragraph (1) falls under any of the following subparagraphs, he/she shall pay the amount of the capital gains tax deferred and the interest added up thereto as prescribed by Presidential Decree:
1.
If the compensation agreed to be paid by substitute land is paid in cash or any other cause prescribed by Presidential Decree occurs;
2.
If the ownership transfer registration of the land acquired through the compensation by substitute land does not show that the cause of the registration is the substitution of land.
(4)
Any person who desires to have the taxation under paragraph (1) deferred shall file an application prescribed by Presidential Decree.
(5)
In applying paragraphs (1) through (3), the requirements and method of compensation by substitute land, the grounds and method of the payment of the tax amount deferred, and other necessary matters shall be prescribed by Presidential Decree.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

law view

 Article 77-3 (Capital Gains Tax Reduction or Exemption for Land, etc. subject to Purchase Following Designation of Areas of Restricted Development)
 

(1)
Any income derived from transfer of the relevant land, etc. in the areas of restricted development designated under Article 3 of the Act on Special Measures for Designation and Management of Development Restriction Zones (hereafter referred to as "areas of restricted development" in this Article) through claim for purchase of land under Article 17 of the same Act or purchase by consultation under Article 20 of the same Act no later than December 31, 2014 shall be reduced of and exempted from the amount of tax under the following subparagraphs:
1.
Land, etc. owned by a resident prescribed by Presidential Decree residing in the location of the relevant land, etc. from the date of acquisition to the date of claim for purchase or the date of purchase by consultation after he/she acquired the relevant land, etc. prior to the date of designation of the areas of restricted development: An amount of tax equivalent to 50/100 of the capital gains tax;
2.
Land, etc. owned by a resident prescribed by Presidential Decree residing in the location of the relevant land, etc. from the date of acquisition to the date of claim for purchase or the date of purchase by consultation after he/she acquired the relevant land, etc. 20 years prior to the date of claim for purchase or the date of purchase by consultation: An amount of tax equivalent to 30/100 of the capital gains tax.
(2)
Any income derived from transfer of the relevant land, etc., which is excluded from areas of restricted development, through purchase by consultation or expropriation under the Act on Acquisition of and Compensation for Land, etc. for Public Works and other Acts, no later than December 31, 2014 shall be reduced of or exempted from taxes falling under each of the following subparagraphs: Provided, That this shall be limited to cases where the approval on project is publicly notified in accordance with the Act on Acquisition of and Compensation for Land, etc. for Public Works and other Acts within one year (five years when the relevant area is designated as areas prescribed by Presidential Decree, such as designation of free economic zones under the Act on Designation and Management of Free Economic Zones, prior to the cancellation of designation of areas of restricted development) from the date of cancellation of the designation of areas of restricted development:
1.
Land, etc. owned by a resident prescribed by Presidential Decree residing in the location of the relevant land, etc. from the date of acquisition to the public announcement date of project approval after he/she has acquired the relevant land, etc. prior to the date of designation of areas of restricted development: An amount of tax equivalent to 50/100 of the capital gains tax;
2.
Land, etc. owned by a resident prescribed by Presidential Decree residing in the location of the relevant land, etc. from the date of acquisition to the public announcement date of project approval after he/she has acquired the relevant land, etc. 20 years before the public announcement date of project approval: An amount of tax equivalent to 30/100 of the capital gains tax.
(3)
When paragraphs (1) and (2) are applied, with respect to land, etc. inherited, the date when an ancestor acquired the relevant land, etc. shall be deemed the date of acquisition of the relevant land, etc.
(4)
When paragraphs (1) and (2) are applied, application for reduction or exemption, calculation of the period of residence, and other necessary matters shall be prescribed by Presidential Decree.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

law view

 Articles 78 through 81 Deleted.
 

law view

 Article 81-2 Deleted.
 

law view

 Article 82 Deleted.
 

law view

 Articles 83 through 85 Deleted.
 

law view

 Article 85-2 (Special Taxation for Relocation of Factories in Areas Subject to Development Plans of Multifunctional Administrative City and Innovation Cities to Rural Areas)
 

(1)
Where any national who runs business with his/her factory and facilities installed within the area subject to the planned development of the Multifunctional Administrative City under the Special Act on the Construction of a Multifunctional Administrative City in Yeongi-Gongju Area for Follow-up Measure of New Administrative Capital or an area subject to the development plan of an innovation city under the Special Act on the Construction and Support of Innovation Cities Following Relocation of Public Agencies (hereafter referred to as "multifunctional administrative city, etc." in this Article) transfers the site and buildings of such factory to any project operator under the same Act, no later than December 31, 2012, in order to relocate such factory to an area outside the multifunctional administrative city, etc. prescribed by Presidential Decree (hereafter referred to as "rural area" in this Article), he/she may choose not to include an amount equivalent to the gains from transfer accruing from such transfer in the gross income, or may be granted tax deferral, in a way falling under the following subparagraphs:
1.
Domestic corporation: The way that it shall not include the amount calculated as prescribed by Presidential Decree in the gross income when the amount of income of the relevant business year is calculated. In such cases, not less than the amount obtained by equally dividing the relevant amount shall be included in the gross income during the period of each of five business years from the business year whereto belongs the date on which five years lapse after the end of the business year to which the transfer date belongs;
2.
Resident: The way that he/she shall be eligible for the deferment of the taxation as prescribed by Presidential Decree.
(2)
Where any national to whom paragraph (1) was applied fails to relocate his/her factory to a rural area or discontinues or shuts down his/her business within three years from the date on which his/her factory is transferred, as prescribed by Presidential Decree, he/she shall include the amount calculated as prescribed by Presidential Decree, in the gross income, when he/she calculates his/her income amount for the business year whereto belongs the date on which the relevant ground occurs, or shall pay the taxation-deferred tax amount as the capital gains tax. In such cases, with respect to the amount to be included in the gross income or paid as the capital gains tax, the latter part of Article 33 (3) shall apply mutatis mutandis.
(3)
Where a national who has been conducting a business with factory facilities in multifunctional administrative city, etc. moves to a rural area and starts business there, with respect to the income accruing from the previous business, an amount of tax equivalent to 50/100 of the income tax or corporate tax for the income accruing from the previous business in the taxable year to which the date when the first income accrued after the date of movement belongs (in cases where no income accrues from the relevant business until the taxable year to which the date when five years have passed from the date of movement belongs, the taxable year to which the date when five years have passed belongs) and until the taxable year which expires within three years from the commencement date of the following taxable year, shall be reduced and exempted.
(4)
In the application of paragraphs (1) and (2), the submission of a specification of the transfer margins and other necessary matters shall be prescribed by Presidential Decree.
(5)
Any national who intends to be governed by paragraph (3) shall present an application for tax reduction prescribed by Ordinance of the Ministry of Strategy and Finance together with a report of tax base of the relevant taxable year.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

law view

 Article 85-3 (Special Taxation for Corporate Tax on Investment in Kind, etc. with Land Located in Enterprise City Development Project District, etc.)
 

(1)
Domestic corporations may be granted tax deferral of an amount equivalent to any of the following subparagraphs until they dispose of stocks acquired through investment in kind by including such amount in the deductible expenses as prescribed by Presidential Decree when the amount of income for the relevant taxable year is calculated:
1.
Gains from transfer accrued from investment in kind in an enterprise prescribed by Presidential Decree that takes exclusive charge of enterprise city development projects under subparagraph 3 of Article 2 of the Special Act on the Development of Enterprise Cities (hereafter referred to as "enterprise taking exclusive charge of enterprise city development projects" in this Article) with land located in the enterprise city development project district no later than December 31, 2015;
2.
Gains from transfer accrued from investment in kind in an enterprise that takes exclusive charge of development projects for the development promotion districts of underdeveloped areas under subparagraph 4 of Article 2 of the Special Act on the Promotion of Development Investments in Underdeveloped Areas (hereafter referred to as "enterprise taking exclusive charge of development projects for the development promotion districts of underdeveloped areas" in this Article) with land located in the development promotion districts of underdeveloped areas no later than December 31, 2015.
(2)
Where a domestic corporation that has been granted corporate tax deferral pursuant to paragraph (1) purchases developed land in lots from an enterprise taking exclusive charge of enterprise city development projects or enterprise taking exclusive charge of development projects for the development promotion districts of underdeveloped area and pays the price of such purchase with stocks acquired through investment in kind, the corporate tax which has been granted deferral in the beginning shall not be levied notwithstanding the provisions of paragraph (1), and the imposition of the corporate tax may be again deferred, as prescribed by Presidential Decree, until the land purchased in lots is transferred.
(3)
Where a domestic corporation includes the amount equivalent to the gains from transfer in the deductible expenses pursuant to paragraph (1) and thereafter the enterprise taking exclusive charge of enterprise city development projects or enterprise taking exclusive charge of development projects for the development promotion districts of underdeveloped area that has received the investment in kind with land closes business or dissolves, it shall include the total amount of those which are not added to the gross income, in the gross income, when it calculates its amount of income for the business year to which the date on which such cause occurred belongs.
(4)
Where a domestic corporation acquires stocks by investment in an enterprise that takes exclusive charge of the enterprise city development project with subsidies from the Tourism Promotion and Development Fund under Article 5 (3) 4 of the Tourism Promotion and Development Fund Act not later than December 31, 2015, the relevant stocks may be deemed assets used for business under Article 36 (1) of the Corporate Tax Act and be included in the deductible expenses by applying the same Article mutatis mutandis.
(5)
In applying paragraphs (1) and (2), the calculation of transfer margin subject to an inclusion in deductible expenses, the methods of taxation deferment, the submission of a specification of investment in kind, and other necessary matters shall be prescribed by Presidential Decree.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

law view

 Article 85-4 (Special Taxation for Corporate Tax on Investment in Kind with Land for Free Economic Zone Development Projects)
 

(1)
Where a development project operator (limited to any foreign investment enterprise referred to in Article 2 (1) 6 of the Foreign Investment Promotion Act) under Article 8-3 (1) and (2) of the Special Act on Designation and Management of Free Economic Zones makes investment in kind with land in possession in a domestic corporation prescribed by Presidential Decree by no later than December 31, 2014, an amount equivalent to the transfer margin accruing from such investment of land in kind may be included in the deductible expenses, under the conditions as prescribed by Presidential Decree, in calculating its income amount for the relevant business year, and thereby may be subject to taxation deferment until the development project operator disposes of the stocks acquired by such investment in kind.
(2)
Where a domestic corporation includes the amount equivalent to the transfer margin in deductible expenses pursuant to paragraph (1) and thereafter the domestic enterprise that has received the investment of land in kind discontinues or shuts down its business, it shall include the total amount of which is not included in gross income, in the gross income, when it calculates its income amount for the business year whereto belongs the date on which the relevant ground occurs.
(3)
In applying paragraph (1), the calculation of transfer margin subject to an inclusion in deductible expenses, the methods of taxation deferment, the submission of a specification of investment in kind, and other necessary matters shall be prescribed by Presidential Decree.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

law view

 Article 85-5 (Special Taxation on Margins Accruing from Transfer of Land, etc. for Child Care Centers)
 

(1)
Where a person who operates workplace nursery facilities under the Infant Care Act (hereafter in this Article referred to as "previous nursery facilities") transfers the previous nursery facilities on or before December 31, 2009 and then acquires new workplace child care centers (hereafter referred to as "new child care centers" in this Article) within one year from the date of such transfer, he/she may choose not to include an amount equivalent to the transfer margins accruing from the transfer of such previous child care centers in the gross income, or may be eligible for the deferment of the taxation, in the way falling under each of the following subparagraphs:
1.
Corporation: The way that it shall not include the amount calculated as prescribed by Presidential Decree in the gross income when the income amount for the relevant business year is calculated. In such cases, not less than the amount obtained by equally dividing the relevant amount shall be included in the gross income during the period of each of three business years from the business year whereto belongs the date on which three years lapse after the end of the business year to which the transfer date belongs;
2.
Individual: The way that he/she shall be eligible for the deferment of the taxation as prescribed by Presidential Decree.
(2)
Where any person to whom paragraph (1) was applied fails to acquire new child care centers or shuts down his/her new child care centers within three years from the commencement date of operating the new child care centers, he/she shall include the amount that is calculated as prescribed by Presidential Decree, in the gross income, when he/she calculates his/her income amount for the business year whereto belongs the date on which the relevant ground occurs, or shall pay the deferred amount of tax as the capital gains tax. In such cases, with respect to the amount to be included in the gross income or paid as the capital gains tax, the latter part of Article 33 (3) shall apply mutatis mutandis.
(3)
In the application of paragraphs (1) and (2), the scope of child care centers, the submission of a specification of the transfer margins, an application for taxation deferment, and a specification of the inclusion of the equally divided amounts in the gross income, and other necessary matters shall be prescribed by Presidential Decree.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

law view

 Article 85-6 (Reduction or Exemption of Corporate Tax, etc. for Social Enterprises and Standard Workplaces for Disabled Persons)
 

(1)
Any national accredited as a social enterprise no later than December 31, 2013 as prescribed in subparagraph 1 of Article 2 of the Social Enterprise Promotion Act shall be granted tax reduction or exemption equivalent to 50/100 of corporate tax or income tax on the income accrued from the relevant business for the taxable year in which income occurred from such business for the first time (the taxable year to which the date falling on five years from the date of accreditation belongs, where such business fails to generate any income until the taxable year to which the date falling on five years from the date of accreditation belongs) and for the taxable years that end within four years from the commencement date of the immediately following taxable year.
(2)
Any national accredited as a standard workplace for disabled persons under subparagraph 8 of Article 2 of the Employment Promotion and Vocational Rehabilitation of Disabled Persons Act by no later than December 31, 2013 shall be granted tax reduction or exemption equivalent to 50/100 of the corporate tax or income tax on the income accrued from the relevant business for the taxable year in which income occurred from such business for the first time (the taxable year to which the date falling on five years from the date of accreditation belongs, where such business fails to generate any income until the taxable year to which the date falling on five years from the date of accreditation belongs) and for the taxable years that end within four years from the commencement date of the immediately following taxable year.
(3)
Where the accreditation of a social enterprise has been revoked pursuant to Article 18 of the Social Enterprise Promotion Act because it falls under any of the following subparagraphs during the period of tax reduction when applying paragraph (1), corporate tax or income tax under paragraph (1) shall not be reduced from the relevant taxable year:
1.
It has obtained authentication by deceit or other unjust means;
2.
It has failed to meet the requirements for authentication under Article 8 of the Social Enterprise Promotion Act.
(4)
Where the relevant standard workplace for disabled persons falls under any of the following cases during the period of tax reduction or exemption in the application of paragraph (2), it cannot have the reduction or exemption of the corporate tax or income tax under paragraph (2) from the relevant taxable year:
1.
Where it receives a loan or subsidy under Article 21 or 22 of the Employment Promotion and Vocational Rehabilitation of Disabled Persons Act in false or other illegal means;
2.
Where the business operator fails to use a loan or subsidy granted under Article 21 or 22 of the Employment Promotion and Vocational Rehabilitation of Disabled Persons Act for purposes provided for in the same provisons;
3.
Where it becomes not in compliance with the standards under subparagraph 8 of Article 2 of the Employment Promotion and Vocational Rehabilitation of Disabled Persons Act.
(5)
Where any national who has been reduced of or exempted from the tax amount pursuant to paragraphs (1) and (2) falls under paragraph (3) 1 or (4) 1, he/she shall pay the tax amount reduced and exempted at the time of filing a tax base return for the taxable year when such reason has arisen, with an additional amount calculated by applying the provisions on the additional amount equivalent to interest from among those under Article 33-2 (4) as the corporate tax or income tax.
(6)
Any person who intends to be governed by paragraphs (1) and (2) shall file an application for reduction or exemption, as prescribed by Presidential Decree.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

law view

 Article 85-7 (Special Taxation for Relocation of Factories due to Expropriation, etc. for Public Service Projects)
 

(1)
Where the site and buildings of a factory that has been operated within the area subject to a plan for public service projects for two years or more (including land possessed for five years or more retroactively from the public announcement date of project approval, which is for a factory operated for one year or more as of the date of transfer where such factory has been operated less than two years retroactively from the public announcement date of project approval), counting retroactively from the public announcement date of project approval (referring to the date of transfer where such site and buildings are transferred before the public announcement date of project approval; hereafter the same shall apply in this Article) are transferred to the implementer of a public service project no later than December 31, 2015 due to the implementation of a public service project pursuant to the Act on Acquisition of and Compensation for Land, etc. for Public Works in order to relocate such factory to an area prescribed by Presidential Decree located outside the area subject to a plan for public service project (including such area subject to a plan for public service projects where land within the area subject to a plan for public service projects that has been created due to the implementation of public service projects is used as the site of factory after acquiring it directly from the implementer of public service project), an amount equivalent to the gains from transfer accrued from such transfer (including cases of transferring part of the site of factory) of site and buildings of the factory may not be included in the gross income or capital gains tax on such gains from transfer may be paid in installments by a method falling under any of the following subparagraphs:
1.
Domestic corporation: Method whereby the amount calculated as prescribed by Presidential Decree is not to be included in the gross income when the amount of income for the relevant business year is calculated. In such cases, not less than the amount obtained by equally dividing the relevant amount shall be included in the gross income during the period of three business years from the business year to which the date falling on three years belongs, which is counted from the end of the business year to which the transfer date belongs;
2.
Resident: Method whereby capital gains tax calculated as prescribed by Presidential Decree is not to be deemed capital gains tax payable by the time limit for final capital gains tax return for the relevant year to which the transfer date belongs. In such cases, not less than the amount obtained by equally dividing the amount of relevant tax shall be paid during the period of three years from the date falling on three years from the end of the time limit for final capital gains tax return for the relevant year to which the transfer date belongs.
(2)
Where any national who benefited from the application of paragraph (1) does not relocate the factory as prescribed by Presidential Decree or closes down or dissolves the related business within three years from the transfer date of the factory, the amount calculated by the formula prescribed by Presidential Decree shall be included in the gross income at the time of calculating the income for the business year to which belongs the date such event occurs or pay the tax amount allowed to pay installments as the capital gains tax. In such cases, the latter part of Article 33 (3) shall apply mutatis mutandis to the amount to be included in the gross income or the tax amount payable.
(3)
Where paragraphs (1) and (2) are applied, matters necessary for the presentation of a detailed statement of gains from transfer, etc. shall be prescribed by Presidential Decree.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

law view

 Article 85-8 (Special Taxation for Relocation of Factory of Small or Medium Enterprises)
 

(1)
An amount of money equivalent to gains from transfer accruing from transfer of the site and buildings of a factory no later than December 31, 2014 by small or medium enterprises which have been conducting a business with factory facilities for more than ten years to move the relevant factory to the area other than the areas prescribed by Presidential Decree needs not be included in the gross income or the capital gains tax may be paid in installments by methods of the following subparagraphs:
1.
Domestic corporation: Method whereby the amount calculated as prescribed by Presidential Decree is not to be included in the gross income when the amount of income for the relevant business year is calculated. In such cases, not less than the amount obtained by equally dividing the relevant amount shall be included in the gross income during the period of two business years from the business year to which the date falling on two years belongs, which is counted from the end of the business year to which the transfer date belongs;
2.
Resident: Method whereby capital gains tax calculated as prescribed by Presidential Decree is not to be deemed capital gains tax payable by the time limit for final capital gains tax return for the relevant year to which the transfer date belongs. In such cases, not less than the amount obtained by equally dividing the amount of relevant tax shall be paid during the period of two years from the date falling on two years from the end of the time limit for final capital gains tax return for the relevant year to which the transfer date belongs.
(2)
Where any national who is governed by paragraph (1) fails to relocate a factory as prescribed by Presidential Decree, or closes down or dissolves the relevant business within three years from the transfer date of the relevant factory, when calculating the amount of income of the business year to which the date when the relevant reason has arisen belongs, the amount calculated as prescribed by Presidential Decree shall be included in the gross income or the tax amount to be paid in installments shall be paid as the capital gains tax. In such cases, the latter part of Article 33 (3) shall apply mutatis mutandis to the amount to be included in the gross income or the tax amount to be paid.
(3)
Where paragraphs (1) and (2) are applied, matters necessary for the presentation of a detailed statement of gains from transfer, etc. shall be prescribed by Presidential Decree.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

law view

 Article 85-9 (Special Taxation for Relocation of Logistics Facilities due to Expropriation, etc. for Public Service Projects)
 

(1)
Where the site or buildings of logistics facilities (hereafter referred to as "logistics facilities" in this Article) are transferred to the implementer of public service project no later than December 31, 2015 in order to relocate such logistics facilities prescribed by Presidential Decree and used for five years or more retroactively from the public announcement date of project approval (the date of transfer in cases of transfer before the public notification of project approval) to an area prescribed by Presidential Decree due to the implementation of public service project pursuant to the Act on Acquisition of and Compensation for Land, etc. for Public Works, the amount equivalent to the gains from transfer accrued from such transfer of site or buildings of logistics facilities may not be included in the gross income or capital gains tax on such gains from transfer may be paid in installments by a method according to the classifications in the following subparagraphs:
1.
Domestic corporation: Method whereby the amount calculated as prescribed by Presidential Decree is not to be included in the gross income when the amount of income for the relevant business year is calculated. In such cases, not less than the amount obtained by equally dividing the relevant amount shall be included in the gross income during the period of three business years from the business year to which the date falling on three years belongs, which is counted from the end of the business year to which the transfer date belongs;
2.
Resident: Method whereby capital gains tax calculated as prescribed by Presidential Decree is to be paid in installments. In such cases, not less than the amount obtained by equally dividing the amount of relevant tax shall be paid during the period of three years from the date falling on three years from the end of the time limit for final capital gains tax return for the relevant year to which the transfer date belongs.
(2)
Where any national to whom paragraph (1) has been applied fails to relocate logistics facilities as prescribed by Presidential Decree, or closes down or dissolves the relevant business within three years from the transfer date of the relevant logistics facilities, the amount calculated as prescribed by Presidential Decree shall be included in the gross income or the amount of tax to be paid in installments shall be paid as capital gains tax when the amount of income for the business year to which the date when the relevant reason occurred belongs. In such cases, the latter part of Article 33 (3) shall apply mutatis mutandis to the amount to be included in the gross income or the amount of tax to be paid.
(3)
Where paragraphs (1) and (2) are applied, matters necessary for the presentation of a detailed statement of gains from transfer, etc. shall be prescribed by Presidential Decree.
[This Article Newly Inserted by Act No. 9921, Jan. 1, 2010]

law view

 Article 85-10 (Capital Gains Tax Reduction for Mountainous Areas Transferred to State)
 

(1)
Where a national transfers mountainous areas under the Management of Mountainous Districts Act which have been possessed for two years or more to the State on or before December 31, 2014 as prescribed in Article 18 of the State Forest Administration and Management Act, an amount of tax equivalent to 20/100 of capital gains tax on the income accrued from such transfer shall be reduced.
(2)
Those who intend to have paragraph (1) applied shall apply for reduction, as prescribed by Presidential Decree.
[This Article Newly Inserted by Act No. 9921, Jan. 1, 2010]

SECTION 9 Special Taxation for Support of Savings

law view

 Article 86 Deleted.
 

law view

 Article 86-2 Deleted.
 

law view

 Article 86-3 (Income Deduction, etc. for Mutual Aid Fund for Small Enterprises and Small Enterprisers)
 

(1)
With respect to any mutual aid fund deposit prescribed by Presidential Decree which a resident has paid after joining the mutual aid fund for small enterprises and small enterprisers under Article 115 of the Small and Medium Enterprise Cooperatives Act (hereafter referred to as "mutual aid fund for small enterprises and small enterprisers" in this Article), the smaller of the mutual aid deposits paid for the relevant year and three million won shall be deducted from his/her global income amount for the relevant year.
(2)
Incomes accruing from the mutual aid fund for small enterprises and small enterprisers under paragraph (1) shall be considered to have accrued at the time when the person who has joined the mutual aid fund for small enterprises and small enterprisers is actually paid such incomes.
(3)
With respect to incomes accruing from the mutual aid fund for small enterprises and small enterprisers under paragraph (1), the income tax shall be imposed by regarding them as the interest income under Article 16 (1) of the Income Tax Act.
(4)
Where a contract for mutual aid fund for small enterprises and small enterprisers has terminated before any cause prescribed by Presidential Decree occurs, such as business closure, etc., income tax shall be imposed on the amount computed according to the following arithmetic formula, by treating it as miscellaneous incomes under Article 21 of the Income Tax Act: Provided, That where the contract is terminated due to any cause prescribed by Presidential Decree, such as emigration, the provisions of paragraph (3) shall apply:
Miscellaneous incomes = Amount refunded upon termination - Cumulative total of the amounts paid in excess of the amount of actual income deduction.
(5)
Where a contract for mutual aid fund for small enterprises and small enterprisers has terminated within five years from the date of joining such mutual aid fund, the Korea Federation of Small and Medium Business under the Small and Medium Enterprise Cooperatives Act (hereafter referred to as "Korea Federation of Small and Medium Business" in this Article) shall additionally collect an additional tax for termination calculated by multiplying the amount paid each year (such amount shall not exceed three million won) by 2/100 and the income tax under paragraph (4) from the relevant amount of refund and pay them to the head of tax office having jurisdiction over the tax withholding, not later than the 10th of the month following that whereto belongs the date of such termination: Provided, That where the contract is terminated due to any cause prescribed by Presidential Decree such as emigration, etc., the additional tax for termination shall not be imposed.
(6)
Where the tax amount payable under paragraph (5) is not paid within the time limit or is underpaid, the Korea Federation of Small and Medium Business shall pay an amount equivalent to 10/100 of such unpaid or underpaid tax amount in addition to the payable tax amount.
(7)
The income tax under paragraph (4) and the additional tax for termination under paragraph (5) shall not exceed a refund that the person who has joined the mutual aid for small enterprises and small commercial and industrial businessmen receives as a result of the termination of the mutual aid contract for small enterprises and small commercial and industrial businessmen.
(8)
Necessary matters regarding the methods, procedures, etc. for the deduction of incomes of the persons who have joined the mutual aid for small enterprises and small commercial and industrial businessmen shall be prescribed by Presidential Decree.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

law view

 Article 87 (Non-Taxation, etc. for Long-term Savings for Housing Purchase, etc.)
 

(1)
An income tax shall not be imposed on interest income and dividend income derived from the savings account opened for the purchase of a housing unit (hereafter referred to as "long-term savings for housing purchase" in this Article) on or before December 31, 2009, if the account meets the following requirements:
1.
A person who can open the account as a resident of 18 years of age or older, shall fall under any of the following items at the time of opening such account:
(a)
The head of a household prescribed by Presidential Decree (hereafter in this Article referred to as a "household") who does not own a house;
(b)
The head of a household who owns only one house, the standard market value of which under Article 99 (1) of the Income Tax Act does not exceed 50 million won, or the size of which does not exceed the size prescribed by Presidential Decree (hereafter referred to as a "house of national housing size" in this Article) and the standard market value thereof under Article 99 (1) of the Income Tax Act (hereafter referred to as the "standard market price" in this Article) does not exceed 300 million won;
2.
Requirements prescribed by Presidential Decree, including the limit on installment savings and the contract period, shall be satisfied.
(2)
Where a resident who has his/her earned income (excluding daily-paid workers) as the head of a household that has not owned any house during the taxable year has deposited an amount to any of the following savings during the relevant taxable year, an amount equivalent to 40/100 of such savings (where the amount exceeds one million and two hundred thousand won, the amount in excess shall be deemed nil; and in the case of collective savings for subscription of housing under subparagraph 2, only the amount paid after the taxable year for which the none-homeowner certificate has been submitted under paragraph (3) shall apply) shall be deducted from the earned income for the relevant taxable year: Provided, That the amount deposited in the relevant taxable year shall not be deducted where the account is closed ahead of the agreed date due to causes other than wining the draw for the acquisition of a house:
1.
The subscription savings under the Housing Act;
2.
The collective savings for subscription for house under the Housing Act.
(3)
A person who intends to be eligible for the income deduction for the amount deposited in the collective savings for subscription for house pursuant to paragraph (2) shall submit the document prescribed by Presidential Decree which certifies he/she is the head of a household with no house owned (hereafter referred to as "none-homeowner certificate") to the institution dealing in the relevant savings.
(4)
If the aggregate of the amounts deducted in accordance with paragraph (2) above and Article 52 (4) of the Income Tax Act exceeds three million won in a year or if the aggregate of the amounts deducted in accordance with paragraph (2) above and Article 52 (4) and (5) of the Income Tax Act exceeds five million won (15 million won when long-term house mortgage borrowing under Article 52 (5) of the Income Tax Act meets the requirements prescribed by Presidential Decree) in a year, such excess amount shall not be deducted from the earned income for the pertinent year. In such cases, it shall be determined as of the end of the pertinent taxable year whether or not the account holder is the head of a household.
(5)
If a person who signed a contract on the long-term savings for housing purchase withdraws the principal, interest, or such from the account or terminates the contract within seven years from the contract date of the savings account, the financial institution handling the relevant savings account shall additionally collect the tax amount reduced or exempted on the ground that the income tax is not levied on such interest income and dividends income: Provided, That the same shall not apply in cases where the savings contract is terminated because of the account holder's death or emigration to a foreign country or any other reason prescribed by Presidential Decree.
(6)
Where a person who has benefited from the deduction of the amount of deposit of the collective savings for subscription for house from his/her income falls under any of the following cases, the institution dealing in the relevant savings shall additionally collect an amount (hereafter referred to as "additional tax" in this Article) calculated by multiplying the accumulated total of amount deposited after the taxable year for which he/she has submitted a none-homeowner certificate (such amount shall not exceed one million two hundred thousand won) by 6/100 from the amount of the relevant savings at the time such savings are terminated and pay it to the head of tax office having jurisdiction over the tax withholding no later than the 10th of the month following the month to which the date of termination belongs: Provided, That where a person for whom the amount of income has been deducted verifies the fact that the amount of tax reduced or exempted due to the relevant income deduction falls short of the additional tax, an amount equivalent to the tax amount actually reduced or exempted shall be collected additionally:
1.
Where he/she terminates the savings contract before the lapse of five years from the date of opening the savings account: Provided, That the same shall not apply in cases where the savings contract is terminated due to the account holder's death or emigration to a foreign country or any other reason prescribed by Presidential Decree;
2.
Where he/she has successfully subscribed for draw for acquisition of a house that exceeds national housing scale and is constructed with the approval for project plan under the Housing Act.
(7)
Where the amount of additional tax provided for in paragraphs (5) and (6) is not paid within the time limit or underpaid, the institution dealing in the savings shall pay an amount equivalent to 10/100 of such unpaid or underpaid tax to the head of tax office having jurisdiction over withholding in addition to the amount of the additional tax.
(8)
The identification and management of the persons eligible for the long-term savings for housing purchase shall be conducted in accordance with the following subparagraphs:
1.
The Commissioner of the National Tax Service shall examine whether an account holder of the long-term savings for housing purchase meets the requirements under subparagraphs of paragraph (1) at the time when he/she opens the account and notify the financial institution handling the savings account of the result within the period of time prescribed by Presidential Decree;
2.
The Commissioner of the National Tax Service shall examine whether an account holder of the long-term savings for housing purchase meets all the requirements under subparagraphs of paragraph (1) (excluding the requirement that the standard market price shall be 300 million won or less) as of the end of the taxable year on which the seventh anniversary of the contract date of the long-term savings for housing purchase falls and as of the end of every third taxable year after the afore-mentioned taxable year, and shall notify the financial institution handling the account of the result. In this case, the savings account shall be deemed as terminated as of the date on which the notice is delivered if the person does not fall under any subparagraph of paragraph (1) (excluding the requirement that the standard market price shall be 300 million won or less), but the provisions of paragraphs (5) and (7) shall not apply.
(9)
The identification and management of the persons eligible for the long-term savings for housing purchase shall be conducted in accordance with the following subparagraphs:
1.
Each institutions dealing in the savings shall submit the list of persons having submitted the none-homeowner certificates to the Minister of Land, Transport and Maritime Affairs by no later than January 5 of the following year;
2.
The Minister of Land, Transport and Maritime Affairs shall confirm whether those who have submitted none-homeowner certificates are the heads of households that have not owned any houses during the taxable year and notify the result thereof to the Commissioner of the National Tax Service by no later than March 31 of the following year.
(10)
The procedure for opening and termination of an account of the long-term savings for housing purchase, the procedure for income deduction, and other necessary matters shall be prescribed by Presidential Decree.
[This Article Wholly Amended by Act No. 9924, Jan. 1, 2010]

law view

 Article 87-2 (Non-Taxation on Lump-Sum Savings of Farming and Fishing Households)
 

Where farmers or fishers have opened a lump-sum savings account under the Act on Raising Lump-Sum Saving of Farming and Fishing Households no later than December 31, 2014, income tax, gift tax or inheritance tax shall not be imposed on the interest income and bounty on savings that the relevant farmers, fishers or their descendants receive on the completion of the period of savings contract or for reasons falling under any of the following subparagraphs:
1.
Where such farmers or fishers die;
2.
Where such farmers or fishers emigrate to a foreign country;
3.
Where a natural calamity or a cause prescribed by Presidential Decree occurs.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

law view

 Article 87-3 (Tax Deduction on Long-term Securities Savings)
 

(1)
In case where a resident has paid a deposit after opening the saving account satisfying each requirement under any of the following subparagraphs not later than March 31, 2002 (limited to an opening an account in a financial institution handling the savings falling under any item of subparagraph 1; and hereinafter referred to as the "long-term securities savings"), the amount corresponding to 5/100 for the deposited amount for the relevant taxable year, and to 7/100 for the deposited amount for the immediately preceding year, shall be deducted from the computed tax amount from global income for the relevant taxable year:
1.
It shall be the savings corresponding to any of the following items:
(a)
Securities savings under Article 50 of the Securities and Exchange Act;
(b)
Securities investment trust savings established by a truster company under the Securities Investment Trust Business Act;
(c)
Trust savings established by a financial institution licensed for a trust business under the Trust Business Act;
(d)
Savings for acquiring the stocks issued by a securities investment company under the Securities Investment Company Act;
2.
It shall be the savings retaining not less than 70/100 of the stocks corresponding to any of the following items (excluding the stocks of securities investment companies):
(a)
Stocks listed on the securities market under the Securities and Exchange Act;
(b)
Stocks registered as the object of trade on the Association brokerage market under the Securities and Exchange Act;
3.
It shall be the savings of deferment forms whose principal per head is not more than 50 million won when the savings falling under any item of subparagraph 1 are added thereto;
4.
The savings shall be maintained for not less than 1 year from the payment date of deposits (2 years, where the tax deduction is granted over 2 taxable years).
(2)
The income tax shall not be levied on the interest income or dividend income accrued from the long-term securities savings: Provided, That this shall not apply to the interest income or dividend income accrued after an elapse of 2 years from the payment date of deposits (3 years, where the savings are maintained for not less than 2 years).
(3)
The tax deduction and non-taxation on the long-term securities savings shall be applied by savings account.
(4)
The trade turnover ratio of the long-term securities savings shall be within 4 times of that as prescribed by Presidential Decree.
(5)
The ratio of stock retaining under paragraph (1) 2 shall refer to the ratio of the entire stock assessment value (based on the closing price on every day) against the assessment value of payment amount of deposits or that of the gross amount of savings opened, whose average for each year is not less than 70/100, and the ratio under the same subparagraph shall be deemed to have been met, in case where the assessment value of the payment amount of deposits falls short of the payment amount of deposits, or that of the gross amount of savings opened falls short of the gross amount of savings opened due to a low quote of stocks for 2 months from the payment date of deposits or from the date of opening the savings, and under the status of not less than 70/100 of the stock retaining ratio.
(6)
Where the person who has opened the long-term securities savings terminates the savings (including the case where he/she withdraws the deposits or transfers the right thereof; hereafter in this paragraph, the same shall apply) before the period under paragraph (1) 4 arrives from the payment date of deposits, or where he/she retains the stocks falling short of the ratio under paragraph (1) 2, or where he/she exceeds the trade turnover ratio under paragraph (4), the withholding agent shall collect the tax amount falling under any of the following subparagraphs, and pay it to the head of tax office in charge of withholding taxes not later than the date of terminating the savings contract or the 10th of the month next to that whereto belongs the expiration date of the period under paragraph (1) 4 (hereafter in this paragraph, referred to as the "terminating date, etc."): Provided, That this shall not be applicable in the cases where the savings opener dies or emigrates overseas and under other inevitable causes as prescribed by Presidential Decree, or where the savings have been maintained not less than 1 year, to the portion subjected to the tax deduction and non-taxation for 1 year from the payment date of deposits:
1.
Tax amount calculated by applying the tax rate under Article 129 of the Income Tax Act;
2.
The amount equivalent to 5/100 of the paid amount of deposits for the year immediately preceding that whereto belongs the terminating date, etc., and to 7/100 of the paid amount of deposits of the year preceding the year immediately preceding that whereto belongs the terminating date, etc.: Provided, That where it is attested that the deducted tax amount falls short of 5/100 or 7/100, such deducted amount shall be the limit.
(7)
The person opening the long-term securities savings who intends to be subject to the tax deduction under paragraph (1) shall obtain certificates of payment of long-term securities savings necessary for being subject to tax deduction from the institutions handling such savings, and submit them to the withholding agent or the head of the tax office having jurisdiction over the place of residence at the time of year-end settlement of earned income taxes or filing of a final return on tax base for global income.
(8)
Where such institution handling the savings fails to pay the tax amount under paragraph (6) within the deadline, or pays it in short of payable tax amount, the relevant institution handling the savings shall pay the tax amount to the head of the tax office in charge of tax withholding together with the additional amount equivalent to 10/100 of the unpaid or insufficient tax amount.
(9)
Matters necessary for the non-taxation and tax deduction, etc. on the long-term securities savings shall be prescribed by Presidential Decree.
[This Article Newly Inserted by Act No. 6519, Nov. 21, 2001]

law view

 Article 87-4 Deleted.
 

law view

 Article 87-5 (Special Taxation for Stockholders of Ship Investment Companies)
 

(1)
Deleted.
(2)
Notwithstanding Article 129 of the Income tax Act, the tax rate of 5/100 shall be applied to the dividends that are paid by any ship investment company under subparagraph 1 of Article 2 of the Ship Investment Company Act (hereinafter referred to as "ship investment company") to a resident on or before December 31, 2013 with respect to the stocks in his/her possession by ship investment company with par values not exceeding 100 million won. In such cases, the dividend income of the stocks possessed (in cases where the par value exceeds 100 million won, such exceeding stocks possessed shall be included) shall not be included in global income in calculating global income tax base under Article 14 (2) of the Income Tax Act.
(3)
Where stock certificates of a ship investment company have been deposited in an investment trader or an investment broker, if a ship investment company intends to pay the dividend income, it shall, immediately after the resolution of dividend, notify an investment trader or an investment broker of a detailed statement of the income subject to separate taxation under paragraph (2) classified by stockholder, investment trader or investment broker directly or through the Korea Securities Depository under Article 294 of the Financial Investment Services and Capital Markets Act (hereinafter referred to as "Korea Securities Depository"), and the investment trader or investment broker notified shall withhold according to the details notified.
(4)
If the stocks of a ship investment company are not deposited in an investment trader or an investment broker, the ship investment company shall divide the dividends to each stockholder into the income subject to the separate taxation under the former part of paragraph (2) and the income subject to the separate taxation under Article 129 of the Income Tax Act directly or through its stock transfer agency to collect the withholding tax accordingly.
(5)
Where the withholding agent under paragraphs (3) and (4) pays the dividends of the ship investment company concerned directly, he/she shall submit to the head of the tax office having jurisdiction over the withholding tax a detailed statement of the separate taxation of the ship investment company as prescribed by Ordinance of the Ministry of Strategy and Finance the end of the month immediately following the end of the quarter on which the payment date of the dividends falls.
[This Article Newly Inserted by Act No. 7003, Dec. 30, 2003]

law view

 Article 87-6 (Special Taxation for Dividend Income from Collective Investment Securities Such as Collective Real Estate Fund, etc.)
 

(1)
Notwithstanding Article 129 of the Income Tax Act, the tax rate of 5/100 shall be applied to dividend income paid to a resident by any real estate fund under the Financial Investment Services and Capital Markets Act or real estate investment company under the Real Estate Investment Company Act (hereafter referred to as "real estate fund, etc." in this Article) that invests its assets not less than the rate prescribed by Presidential Decree of its total assets in a rental house prescribed by Presidential Decree on or before December 31, 2014 with respect to the stocks or beneficiary certificates (hereafter referred to as "collective investment securities" in this Article) in his/her possession with the total par value of each real estate fund, etc. not exceeding 300 million won. In such cases, dividend income from the collective investment securities (where the total par value exceeds 300 million won, such exceeding collective investment securities shall be included) shall not be included in global income in calculating global income tax base under Article 14 (2) of the Income Tax Act.
(2)
Where the collective investment securities of a real estate fund, etc. are deposited with an investment trader or investment broker, the real estate fund, etc. shall notify an investment trader or investment broker to whom a holder of collective investment securities entrusts the purchase and sale of a detailed statement of income subject to separate taxation under paragraph (1) classified by holder of collective investment securities, investment trader or investment broker, directly or through the Korea Securities Depository, immediately after deciding to pay the dividend income, and the investment trader or investment broker in receipt of notification shall withhold the tax as notified.
(3)
If the collective investment securities of a real estate fund, etc. are not deposited with an investment trader or investment broker, the real estate fund, etc. shall withhold the tax after classifying the income subject to separate taxation by holder of collective investment securities, directly or through its transfer agency.
(4)
Where a withholding agent under paragraphs (2) and (3) pays the dividend income from the real estate fund, etc. directly, he/she shall submit a detailed statement of the separate taxation of the real estate fund, etc. that is prescribed by Ordinance of the Ministry of Strategy and Finance to the head of the tax office having jurisdiction over the withholding tax by the end of the month immediately following the end of the quarter in which the payment date of the dividend income arrives.
[This Article Newly Inserted by Act No. 10631, May 19, 2011]

law view

 Article 88 Deleted.
 

law view

 Article 88-2 (Non-Taxation, etc. on Livelihood Savings of Aged or Disabled Persons)
 

(1)
Where any of the following residents opens a savings account prescribed by Presidential Decree of which the principal of savings per person is not more than 30 million won (hereafter referred to as "livelihood savings" in this Article) no later than December 31, 2014, income tax shall not be imposed on interest income or the dividend income accruing from the relevant savings:
1.
Any aged man of 60 years of age or over who is a resident;
2.
Any disabled person who is registered in accordance with Article 32 of the Act on Welfare of Persons with Disabilities;
3.
Any person who has rendered a distinguished service to independence and is registered under Article 6 of the Act on the Honorable Treatment of Persons of Distinguished Services to Independence, his/her bereaved family or his/her family;
4.
Any wounded person who is registered in accordance with Article 6 of the Act on the Honorable Treatment and Support of Persons, etc. of Distinguished Services to the State;
5.
Any recipient under subparagraph 2 of Article 2 of the National Basic Living Security Act;
6.
Any patient who suffers from aftereffects of defoliants under subparagraph 3 of Article 2 of the Act on Assistance, etc. to Patients Suffering from Actual or Potential Aftereffects of Defoliants;
7.
Any wounded person of the 5ㆍ18 Democratization Movement under subparagraph 2 of Article 4 of the Act on the Honorable Treatment of Persons of Distinguished Services to the 5ㆍ18 Democratization Movement.
(2)
Deleted.
(3)
Matters necessary for the conclusion of a livelihood savings contract and non-taxation of the income tax, etc. shall be prescribed by Presidential Decree.
[This Article Newly Inserted by Act No. 6273, Oct. 21, 2000]

law view

 Article 88-3 Deleted.
 

law view

 Article 88-4 (Special Taxation for Members, etc. of Employee Stock Ownership Association)
 

(1)
Where the members of an employee stock ownership association under the Framework Act on Labor Welfare (hereinafter referred to as "members of an employee stock ownership association") make an investment in the employee stock ownership association under the same Act (hereinafter referred to as "employee stock ownership association") in order to acquire the stocks of their own company, the amount of investment of the relevant year and four million won, whichever is smaller, shall be allowed to be deducted from the amounts of their earned income for the year concerned.
(2)
The income tax shall not be imposed on income derived from the funds of the employee stock ownership association under Article 36 of the Framework Act on Labor Welfare or from the stocks of their own company retained by the employee stock ownership association.
(3)
Where members of an employee stock ownership association make contributions to the relevant corporation as prescribed in Article 36 (1) of the Framework Act on Labor Welfare or receive stocks of their own company which have been acquired through purchase of stocks at the securities market, etc. under the Financial Investment Services and Capital Markets Act, income tax shall not be imposed.
(4)
Notwithstanding the provisions of paragraph (3), in cases where the stocks of their own company alloted by the employee stock ownership association to its members are contributed by the corporation concerned or acquired with contributions by such corporation, income tax shall be imposed on the portion of their stocks exceeding the limits set by Presidential Decree. In such cases, when the stocks of their own company alloted pursuant to Article 37 of the Framework Act on Labor Welfare are collected by the employee stock ownership association from its members and thereby there is an amount to be deducted from their earned income for the taxable period which has already passed, the members concerned may deduct the amount from their earned income at the time of the year-end settlement of their earned income for the taxable period whereto belongs the date of such collection.
(5)
Where the member of an employee stock ownership association withdraws his/her shares of stock of their own company allotted by the employee stock ownership association, an amount calculated as prescribed by Presidential Decree (hereafter in this Article referred to as "withdrawn amount") with respect to the withdrawn stocks of their own company less the stocks of their own company falling under the following subparagraphs (hereafter in this Article referred to as "withdrawn stocks that are taxable") shall be construed as the earned income under Article 20 of the Income Tax Act and thereby the income tax shall be imposed on such amount. In such cases, the date on which such stocks of their own company are withdrawn shall be treated as the time of the earning of such income, and the corporation concerned shall withhold as a tax an amount computed by applying the tax rate under Article 55 (1) of the Income Tax Act to the withdrawn amount:
1.
Stocks of their own company acquired with the amount of investment which has been granted income deduction under paragraph (1) ;
2.
Stocks of their own company under the fore part of paragraph (4) ;
3.
Stocks of their own company given gratuitously to the members of the employee stock ownership association through the incorporation of surplus into capital.
(6)
Where the member of an employee stock ownership association withdraws any amount from the withdrawn stocks that are taxable, the income tax shall not be levied on the amount falling under any of the following subparagraphs according to the period during which the stock of their own company are held. In such cases, the period of holding the stock of their own company shall be the period from the day following the last day of the period during which the stocks are to be compulsorily deposited in the employee stock ownership association member's account opened with a securities finance company under the Financial Investment Services and Capital Markets Act (hereafter in this Article referred to as "securities finance company") to the date of withdrawal:
1.
An amount equivalent to 50/100 of the withdrawn amount in cases where the withdrawn stocks that are taxable are held for the period ranging from not less than two years to less than four years;
2.
An amount equivalent to 75/100 of the withdrawn amount in cases where the withdrawn stocks that are taxable are held for not less than four years.
(7)
Where the member of an employee stock ownership association withdraws contributions without spending them on the purchase of stock of their own company, such amount (excluding contributions which were not deducted from any income under paragraph (1) ) shall be included in the withdrawn amount in accordance with paragraph (5).
(8)
Where members of an employee stock ownership association make investments in the employee stock ownership association and acquire stocks of their own company through such association, the imposition of income tax on the difference between the acquisition price of such stocks and the market price thereof shall be pursuant to the following subparagraphs:
1.
Where the amount of investment is four million won or less, tax shall not be imposed on the relevant difference;
2.
Where the amount of investment exceeds four million won and the acquisition price of stocks of their own company acquired with such excess amount is lower than the price prescribed by Presidential Decree (hereafter referred to as "standard price" in this paragraph), tax shall be imposed on the difference between the relevant acquisition price and standard price regarding the difference as earned income.
(9)
With respect to any dividend income that is deposited in a securities finance company by the members of an employee stock ownership association after acquiring such dividend income through the employee stock ownership association, no income tax shall be levied on the dividend income if the following requirements are met: Provided, That in cases where the dividend income is withdrawn within one year from the deposit date, such dividend income that is paid on or before the deposit date shall be deemed the relevant dividend income that is paid on the date of deposit, and the income tax shall be levied thereon:
1.
It is required to be confirmed by a stock depository certificate issued by a securities finance company that the stocks of their own company held by the members of an employee stock ownership association are deposited in such securities finance company as of the base date on which the dividend is paid;
2.
It is required that the members of an employee stock ownership association be minority stockholders (hereafter referred to as "minority stockholder" in this Article) prescribed by Presidential Decree;
3.
It is required that the total amount of the face value of the treasury shares that are held by each of the members of the employee stock ownership association be not more than 18 million won.
(10)
With respect to the dividend income accruing from the treasury stocks that are held by workers who acquire equities in accordance with Articles 21-2, 107 (2), 112 (2), 112-10 (2) and 147 of the Agricultural Cooperatives Act and Articles 22-2, 108, 113 and 147 of the Fisheries Cooperatives Act, no income tax shall be levied thereon if the following requirements are met: Provided, That where the treasury shares are not held for not less than one year from the date on which they are acquired, the dividend income that is paid before the relevant grounds occur shall be deemed the relevant dividend income that is paid on the date on which the relevant grounds occur, and the income tax shall be levied thereon:
1.
It is required that the workers be minority stockholders;
2.
It is required that the total amount of face value of the treasury shares that are held by each worker be not more than 18 million won.
(11)
The withholding agent shall furnish a detailed statement of nontaxation on the dividend income paid to the members of an employee stock ownership association and the workers pursuant to paragraphs (9) and (10) to the head of tax office having jurisdiction over withholding taxes, under the conditions as prescribed by Presidential Decree.
(12)
Such matters as may be necessary concerning income deduction for contributions of the members of the employee stock ownership association, non-taxation on dividend, taxation on the withdrawn stocks of their own company, calculation of the period for which stocks of their own company have been held, keeping records of treasury stocks, etc. shall be prescribed by Presidential Decree.
(13)
A donation made to an employee stock ownership association (excluding donations made by the members of an employee stock ownership association) shall be allowed either to be deducted from the amount of global income for the taxable year concerned (within the limits of an amount computed by multiplying 30/100 by the amount of global income less the donations under Article 34 (2) of the Income Tax Act) or to be included in deductible expenses within the limits of an amount computed by multiplying 30/ 100 by the amount of income less a carryover deficit in calculating income for the taxable year concerned.
(14)
Where the member of an employee stock ownership association withdraws his/her holding stocks of their own company on the ground of his/her retirement and transfers them to the employee stock ownership association, if the following requirements are met, Article 94 (1) 3 of the Income Tax Act shall not apply thereto. In such cases, when the transfer margins exceed 30 million won, the same shall not apply to such excess amount:
1.
It is required that the member of the employee stock ownership association hold the stocks of their own company, which he/she has acquired through the employee stock ownership association, for not less than one year;
2.
It is required that the member of the employee stock ownership association have deposited the stocks of their own company, which he/she holds, for not less than one year in a securities finance company as of the date of their transfer;
3.
It is required that the total amount of the face value of the stocks of their own company, which are held by the members of the employee stock ownership association, be not more than 18 million won.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

law view

 Article 88-5 (Special Taxation for Capital Investments in Cooperatives, etc.)
 

No income tax shall be imposed on dividends (limited to those paid no later than December 31, 2015) accrued from investment prescribed by Presidential Decree not exceeding ten million won for each person in the financial institution which has farmers, fishermen, and other residents having mutual ties as its partners, members, etc. as well as on dividends (limited to those paid not later than December 31, 2015) the partners, members, etc. receive from such financial institution in proportion to the record of receiving services from such financial institution.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

law view

 Article 88-6 (Tax Credit for Employee Stock Savings)
 

(1)
In cases where a resident having an earned income has paid a deposit amount not later than December 31, 2001 by opening a savings account with the maximum savings principal of 30 million won or less per capita (limited to one account per capita; hereinafter referred to as the "employee stock savings") which falls under any of the following subparagraphs, the amount equivalent to 5/100 of a deposit amount to the employee stock savings paid in the relevant fiscal year shall be deducted from his/her calculated global income tax for the relevant taxable year (to the utmost limit of his/her calculated global income tax on relevant earned income):
1.
Securities investment savings under Article 50 of the Securities and Exchange Act;
2.
Securities investment trust savings established by any truster company under the Securities Investment Trust Business Act;
3.
Savings for acquiring stocks issued by the securities investment companies under the Securities Investment Company Act;
4.
Trust savings accounts established by financial institutions that are licensed for the trust business under the Trust Business Act.
(2)
No income tax shall be imposed on the interest and dividend incomes accruing from the employee stock savings.
(3)
Savings period of the employee stock savings shall be from not less than one year (referring to one year from the date on which the last installment is deposited in cases of installment savings forms; hereafter in this Article the same shall apply) to not more than three years, and the provisions of paragraph (2) shall not apply to the income accruing after the lapse of three years from the date of contracting the savings account.
(4)
The average of daily stock holding ratio of the employee stock savings shall be higher than those under the following subparagraphs. In such cases, the stock holding ratio shall be the amount calculated by dividing the evaluated value of stocks held (referring to the amount evaluated on the basis of the closing prices; hereafter in this paragraph the same shall apply) by the total evaluated value of the relevant savings, and in cases where any losses are incurred on the deposited or invested principal, it may be considered to hold the stocks corresponding to the ratio falling under any of the following subparagraphs:
1.
30/100 in cases of savings under paragraph (1) 1;
2.
50/100 in cases of savings under paragraph (1) 2 through 4.
(5)
Where the whole or part of the principal, interest, dividend, or stocks are withdrawn from the employee stock savings account, the relevant savings account shall be considered to have been terminated: Provided, That in cases of paragraph (1) 2 and 3, if the account is transferred to another account of securities investment trust or to stocks of another securities investment company that are sold by the identical selling company, it shall not be considered to have been terminated.
(6)
Where any person fails to satisfy the requirements subject to paragraph (4) at the employee stock savings account within one year from the relevant savings deposit date (referring to the date of establishing the account, in cases of paragraph (1) 2 through 4; hereinafter the same shall apply), or where a holder of an employee stock savings account terminates his/her account within the period of less than one year from the date of paying the relevant deposit amount, the financial institution handling the employee stock savings account (hereinafter referred to as the "savings institution") shall additionally collect the amount obtained by multiplying the amount paid during the preceding year by 5/100 (if it is evidenced that the tax amount deducted in the preceding year falls below 5/100 of the savings amount paid in the preceding year, the tax amount deducted in the preceding year) and the amount obtained by multiplying the interest income and dividend income paid within one year by the rate as stipulated in Article 129 (1) 1 (c) of the Income Tax Act (hereafter in this Article referred to as the "tax amount additionally collected for termination"), and pay them to the head of tax office having jurisdiction over withholding taxes, by not later than the 10th of the month next to that whereto belongs the date on which one year elapses from the date of paying deposit amount, or the date of terminating such savings account: Provided, That this shall not apply to cases where the account is terminated by an inevitable cause as prescribed by Presidential Decree, such as the death or overseas emigration of the account holder.
(7)
Deleted.
(8)
Any employee who intends to be subject to the tax amount deduction under paragraph (1) shall obtain the employee stock savings deposit certificate indicating the savings deposit amount for the relevant fiscal year, that is required for tax deduction, from the savings institution, and submit it to the withholding agent or the head of the tax office having jurisdiction over his/her domicile, at the time of filing the year-end settlement of his/her earned income or the final return of his/her global income tax base.
(9)
Any savings institution shall, where it has collected the tax amount additionally collected for termination under paragraph (6), notify in writing the account holder of its details.
(10)
Where any savings institution fails to pay the tax amount additionally collected for termination under paragraph (6) within the time limit, or underpays the payable tax amount, the relevant savings institution shall pay an additional tax amount corresponding to 10/100 of the unpaid or insufficient tax amount to the head of the tax office having jurisdiction over withholding taxes.
(11)
The provisions of paragraphs (1) through (10) shall apply to cases where a holder of an employee stock savings account intends to deposit additionally for one year or more the amount elapsing one year or more from the date of deposit, which is paid during the preceding year, by treating the same as the employee stock savings which are newly deposited in the relevant fiscal year. In such cases, the account holder shall furnish the savings institution with an application for extension of savings account period as prescribed by Ordinance of the Ministry of Strategy and Finance.
(12)
Matters necessary for the tax deduction, non-taxation of income tax, etc. for the employee stock savings shall be prescribed by Presidential Decree.
[This Article Newly Inserted by Act No. 6297, Dec. 29, 2000]

law view

 Article 89 (Special Taxation for Tax-Favored Comprehensive Savings)
 

(1)
Where a resident opens a savings account, no later than December 31, 2014, which satisfies all the requirements falling under the following subparagraphs (hereinafter referred to as "tax-favored comprehensive savings"), the rate of withholding tax which applies to interest income and dividend income accrued from the relevant savings shall be 9/100, notwithstanding Article 129 of the Income Tax Act, and interest income and dividend income accrued from such savings shall not be included in global income in calculating the global income tax base notwithstanding Article 14 of the Income Tax Act, and the pro rata income of local income tax under the Local Tax Act shall not be imposed on such interest income and dividend income:
1.
It is required that an account holder apply for tax credit when he/she opens an account of installment savings or deferred savings (including collective investment securities savings, mutual aid, insurance, savings in securities and savings in bonds prescribed by Presidential Decree) managed by a financial company, etc. falling under any of the items of subparagraph 1 of Article 2 of the Act on Real Name Financial Transactions and Confidentiality (hereafter referred to as "financial company, etc." in this Article);
2.
It is required that the contract period be not less than one year;
3.
It is required that the total amount of contract for the tax-favored comprehensive savings opened at all financial companies, etc. should not exceed an amount falling under any of the following items: Provided, That the interest and dividend, etc. accruing from the tax-favored comprehensive savings that are transferred to principal shall be deemed the tax-favored comprehensive savings, but they shall not be included in calculation of the limit per capita of the total contracted amount:
(a)
A person who is aged 20 years or more: Ten million won per capita;
(b)
A person who falls under any subparagraph of Article 88-2 (1) : 30 million won per capita.
(2)
through (6) Deleted.
(7)
Where an account holder terminates or withdraws his/her tax-favored comprehensive savings, or transfers the right thereto, within one year from its contract date, the relevant withholding agent shall withhold the difference between the tax amount withheld at source by applying the part, other than the subparagraphs of paragraph (1) and the tax amount calculated under Article 129 of the Income Tax Act: Provided, That in cases unavoidable reasons prescribed by Presidential Decree exist, such as death of an account holder, emigration, etc., this shall not apply.
(8)
The method of calculating the total of the tax-favored comprehensive savings contracts, the method of their operation and management and other necessary matters shall be prescribed by Presidential Decree.
[This Article Wholly Amended by Act No. 6045, Dec. 28, 1999]

law view

 Article 89-2 (Submission, etc. of Tax-Favored Savings Data)
 

(1)
The financial institutions, etc. dealing in any of the following savings (hereafter referred to as "tax-favored savings handling institution" in this Article) shall immediately notify the agency prescribed by Presidential Decree (hereinafter referred to as "tax-favored savings data collection agency") of the name and resident registration number of each depositor; conclusion, termination, and transfer of rights pertaining to savings contract; other matters concerning contract modifications by types of savings [including the amount paid for insurance coverage, deductibles, refund upon termination, and early withdrawal of the savings insurance referred to in subparagraph 2 (hereafter referred to as insurance coverage, etc." in this Article); hereinafter referred to as "tax-favored savings data"]by means of electrical communications media, such as computers:
1.
Long-term savings for housing purchase, livelihood savings, investment, tax-favored comprehensive savings, deposits in cooperatives, etc., long-term stock savings, long-term corporate debenture savings, green savings, and asset-building savings under Articles 87, 88-2, 88-5, 89, 89-3, 91-9, 91-10, 91-13 and 91-14;
2.
Savings insurance under Article 16 (1) 9 of the Income Tax Act;
3.
Savings to create a sizable sum of money for farming and fishing households under the Act on Raising Lump-Sum Saving of Farming and Fishing Households;
4.
Pension accounts under Article 20-3 (1) 2 of the Income Tax Act.
(2)
A tax-favored savings handling institution shall notify the tax-favored savings data collection agency, no later than the 20th day of the month after the end of each quarter of year, of the amount of deposits and amount paid for insurance coverage, etc. by types of savings.
(3)
The Commissioner of the National Tax Service may demand an inquiry about or perusal of depositors' tax-favored savings data, or demand the submission of such data, from the tax-favored savings data collection agency.
(4)
A tax-favored savings handling institution may ask the tax-favored savings data collection agency for the total of contract amounts and amount paid for insurance coverage, etc. for the tax-favored savings accounts opened by a depositor to other tax-favored savings handling institutions (including the beneficiaries in cases of trust, and the insured and beneficiaries in cases of insurance; hereafter the same shall apply in this Article) and may, upon receipt of a written request or consent of a depositor, inquire about the details of the total of contract amounts and amount paid for insurance coverage, etc. and inform the depositor thereabout.
(5)
The tax-favored savings data concentration center shall immediately deal with or process the tax-favored savings data notified by the tax-favored savings handling institutions, and build an information network on the contract amounts and amount paid for insurance coverage, etc. of tax-favored savings and details thereof by type of savings and by depositor; thus shall comply with any request or inquiry under paragraph (3) or (4).
(6)
The tax-favored savings data collection agency shall preserve the tax-favored savings data for three years after the year in which individual tax-favored savings contracts have been terminated; persons engaged in either the tax-favored savings handling institutions or the tax-favored savings data collection agency (hereafter referred to as "persons engaged in financial institutions, etc." in this Article) shall not be allowed to provide or divulge to another person any information or data related to the tax-favored savings of depositors (hereafter in this Article referred to as "data, etc.") without a written request or consent of the depositor concerned; likewise nobody shall request the persons engaged in financial institutions, etc. to provide the data, etc.: Provided, That such cases under paragraph (3) of this Article and each subparagraph of Article 4 (1) of the Act on Real Name Financial Transactions and Confidentiality shall be excluded therefrom.
[This Article Wholly Amended by Act No. 6538, Dec. 29, 2001]

law view

 Article 89-3 (Lower Rate of Tax on Deposits in Cooperatives, etc.)
 

(1)
With respect to such deposits prescribed by Presidential Decree (limited to a deposit not exceeding 30 million won for each person; hereinafter referred to as the "deposits in the cooperative, etc.") in a cooperative, etc. which have farmers, fishermen, and other residents having mutual ties as partners, members, etc., which are made by residents who are aged 20 years or more at the time of deposit, no income tax shall be imposed on an interest income derived from such deposits in the cooperative, etc. for the period ranging from January 1, 2007 to December 31, 2015; the tax rate of 5/100 shall, notwithstanding Article 129 of the Income Tax Act, apply to the interest income derived from such deposits in the cooperative, etc. for the period ranging from January 1, 2016 to December 31, 2016; such interest income shall neither be included in the calculation of the global income tax base pursuant to Article 14 (2) of the Income Tax Act nor be subject to the imposition of pro rata income of local income tax under the Local Tax Act.
(2)
With respect to an interest income derived from deposits in the cooperative, etc. on or after January 1, 2017, the tax rate of 9/100 shall apply, notwithstanding the provisions of Article 129 of the Income Tax Act, and such income shall neither be included in the calculation of the global income tax base pursuant to Article 14 (2) of the same Act nor be subject to the imposition of pro rata income of local income tax resident tax under the Local Tax Act.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

law view

 Article 90 Deleted.
 

law view

 Article 90-2 (Penalty Tax on Failure to Furnish Tax-favored Data)
 

(1)
Where anyone who is liable to furnish the tax-favored data and notify the tax-favored savings data in accordance with the provisions of Articles 87-5 (5), 87-6 (4), 88-4 (11), 89-2 (1), 91-4 (4), 91-6 (4), and 91-11 (3) fails to furnish the relevant tax-favored data and to notify the relevant tax-favored savings data within the period fixed under each relevant Article (in cases of Article 89-2 (1), 15 days from the date on which the grounds of notification occur) or the furnished tax-favored data or the notified tax-favored savings data fall under the grounds of ambiguity that are prescribed by Presidential Decree, 2,000 won per contracted or terminated case of such failure and such ambiguity shall be added to the payable tax.
(2)
In applying paragraph (1), the tax amount equivalent to 50/100 of additional tax shall be mitigated in cases where such data are submitted or notified by the end of the month following the month to which the closing date of the period for submission of the tax-favored data or notification of the tax-favored savings data belongs.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

law view

 Article 91 Deleted;
 

law view

 Article 91-2 (Special Taxation for Collective Investment Schemes)
 

Where collective investment schemes (limited to those meeting the requirements in Article 17 (1) 5 of the Income Tax Act) under the Financial Investment Services and Capital Markets Act are collective investment securities (hereafter referred to as "collective investment securities" in this Article) under Article 9 (21) of the Financial Investment Services and Capital Markets Act and repurchase collective investment securities of their own, the transfer of collective investment securities to the relevant collective investment schemes by investors shall not be deemed transfer under the Income Tax Act and Securities Transaction Tax Act.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

law view

 Article 91-3 Deleted.
 

law view

 Article 91-4 Deleted.
 

law view

 Article 91-5 Deleted.
 

law view

 Article 91-6 (Special Taxation on Dividend Income of Stocks of Overseas Resources Development Investment Company, etc.)
 

(1)
With regard to the dividend income received by the residents possessing the stocks of an overseas resources development investment company and a specialized overseas resources development investment company under Article 13 of the Overseas Resources Development Business Act (hereinafter referred to as "overseas resources development investment company, etc.") from the overseas resources development investment company, etc., on or before December 31, 2014, it shall not be added up in the calculation of global income tax base under Article 14 (2) of the Income Tax Act. In such cases, with regard to the dividend income of the possessed stocks whose aggregate amount of face values is not more than 300 million won by overseas resources development investment company, etc., the withholding tax rate shall be 5/100 by December 31, 2014.
(2)
If an overseas resources development investment company, etc. whose stocks are deposited in an investment trader or an investment broker intends to distribute its dividend income, it shall, after it adopts a resolution on distribution of dividend income, notify the statement of non-taxable income and income subject to separate taxation under paragraph (1), as prepared for each stockholder and each securities company, to each securities company to which stockholders commission to sell or purchase the stocks, directly or through the Korea Securities Depository, and an investment trader or an investment broker shall, upon receiving such notice, carry out the process of non-taxation or collect the withholding tax accordingly.
(3)
If the stocks of an overseas resources development investment company, etc. are not deposited in an investment trader or an investment broker, the overseas resources development investment company, etc. shall divide the dividend income to each stockholder into the non-taxable income and the income subject to separate taxation, and shall collect the withholding tax, directly or through its stock transfer agency.
(4)
When the withholding agent under paragraphs (2) and (3) pays the dividend income of an overseas resources development investment company, etc. directly, he/she shall submit to the head of the tax office having jurisdiction over the withholding tax, a statement of non-taxable income and income subject to separate taxation on the dividend income of the overseas resources development investment company, etc. as prescribed by Ordinance of the Ministry of Strategy and Finance no later than the end of the month immediately following the end of the quarter on which the payment date of the dividend income falls.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

law view

 Article 91-7 (Special Taxation for High-Yield High-Risk Investment Trusts, etc.)
 

(1)
Where a resident opens an account, no later than December 31, 2009, in the investment trust, etc. prescribed by Presidential Decree into which bonds, etc. prescribed by Presidential Decree are incorporated at a percentage higher than certain percentage (hereinafter referred to as "high-yield, high-risk investment trust, etc."), with regard to the interest income or dividend income paid by the investment trust, etc. in which the investment amount per capita is not more than 100 million won, the tax rate of 5/100 shall apply, notwithstanding the provisions of Article 129 of the Income Tax Act, and it shall not be added up in the calculation of global income tax base under Article 14 (2) of the Income Tax Act.
(2)
Where a person prescribed by Presidential Decree, who is a non-resident without any domestic place of business under Article 120 of the Income Tax Act or a foreign corporation without any domestic place of business under Article 94 of the Corporate Tax Act, opens an account, no later than December 31, 2009, in the high-yield, high-risk investment trust, etc., with regard to the dividend income paid by the investment trust, etc., the tax rate of 5/100 shall apply, notwithstanding the provisions of Article 156 of the Income Tax Act and Article 98 of the Corporate Tax Act: Provided, That with respect to an amount equivalent to the ratio prescribed by Presidential Decree to a foreign corporation's stocks or equity shares held by the national (excluding the person who has acquired permanent residentship, or a stay permit which can be substituted for permanent residentship, of a foreign country in which he/she resides) or corporation of the Republic of Korea (hereafter referred to as "national, etc. of the Republic of Korea" in this paragraph), Article 156 of the Income Tax Act and Article 98 of the Corporate Tax Act shall apply.
(3)
The contract period of the high-yield high-risk investment trust, etc. shall be for one year or more but for three years or less, and the provisions of paragraphs (1) and (2) shall not apply to the income accruing after the elapse of three years from the date of concluding the contract.
(4)
Where the person who has subscribed to the high-yield high-risk investment trust, etc. cancels or redeems the high-yield high-risk investment trust, etc. or transfers his/her right to such trust, etc. within one year from the date of concluding the contract, the withholding agent shall withhold at source the tax amount which is calculated by applying the tax rate under Articles 129 and 156 of the Income Tax Act and Article 98 of the Corporate Tax Act: Provided, That in cases such subscriber has died or emigrated to a foreign country, or unavoidable reasons prescribed by Presidential Decree exist, this shall not apply.
(5)
The methods of subscribing to the high-yield high-risk investment trust, etc., the methods of calculating the holding ratio and other necessary matters shall be prescribed by Presidential Decree.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

law view

 Article 91-8 (Special Taxation on Collective Investment Scheme for Public Donation)
 

(1)
The income tax shall not be levied until December 31, 2010 on the amount calculated by the formula prescribed by Presidential Decree out of the donations under subparagraph 2 made from the dividend income distributed to a resident by a collective investment scheme (hereinafter referred to as a "collective investment scheme for public donation") that satisfies all the following requirements. In such cases, global income deduction or inclusion of necessary expenses under Article 73 and 88-4 (13) of this Act and Article 34 and 52 (6) of the Income Tax Act shall not apply:
1.
It shall be a collective investment scheme under the Financial Investment Services and Capital Markets Act;
2.
It shall contribute all or part of its profit as the donations under Article 73 (1) of this Act or Article 34 (1) and (2) of the Income Tax Act.
(2)
The withholding agent responsible for the dividend income derived from a collective investment scheme for public donation under paragraph (1) shall submit to the head of the tax office having jurisdiction over the withholding tax, a statement of non-taxable dividend income from the investment trust for public donation as prescribed by Ordinance of the Ministry of Strategy and Finance not later than the end of the month immediately following the end of the quarter in which the dividend income is distributed.
[This Article Newly Inserted by Act No. 8827, Dec. 31, 2007]

law view

 Article 91-9 (Deduction, etc. of Income from Long-Term Stock-Type Savings)
 

(1)
Where a resident has paid savings after opening a savings deposit (hereinafter referred to as "long-term stock-type savings") which satisfies all the requirements of the following subparagraphs not later than December 31, 2009, an amount calculated by multiplying the amount paid in the relevant taxable year by deduction rates in the subparagraphs of paragraph (2) shall be deducted from the total amount of income of the relevant taxable year (limited to the total amount of income of the relevant taxable year):
1.
It shall be savings for acquisition of stocks or beneficiary certificates of an investment company or an investment trust under the Financial Investment Services and Capital Markets Act (excluding special account of an insurance company under Article 251 of the same Act) investing not less than 60/100 of the total assets in stocks which are issued and traded in Korea (limited to stocks listed in the securities market under Financial Investment Services and Capital Markets Act);
2.
The term of contract of a savings deposit shall be not less than three years, and its principal, interest, dividend, stocks or profit-making securities shall not be withdrawn within three years from the opening date of the savings deposit account;
3.
It shall be an installment savings deposit which shall be paid within three million won by quarter per capita (referring to the total amount of long-term stock-type savings deposits in all the financial institutions). In such cases, installments after the relevant quarter shall not be paid in advance or installments before the relevant quarter shall not be paid afterward.
(2)
Rates of income deduction of long-term stock-type savings shall be as the following subparagraphs:
1.
An amount paid up to 12 months including the month to which the opening date of a saving deposit account belongs (excluding an amount paid on or before the opening date of the account): 20/100;
2.
An amount paid from 13th month to 24th month: 10/100;
3.
An amount paid from 25th month to 36th month: 5/100.
(3)
The income tax shall not be imposed on the interest income and dividend income accruing from an amount paid after the opening of a long-term stock-type savings deposit account: Provided, That this shall not apply in cases where the income accrues after three years have passed from the opening date of a savings deposit account.
(4)
Where a resident has opened several accounts of long-term stock-type savings deposit, the total amount paid in all the accounts shall not exceed the amounts under the following subparagraphs:
1.
An amount paid up to 12 months including the month to which the opening date of a savings deposit account belongs (excluding an amount paid on or before the opening date of the account): 12 million won;
2.
An amount paid from 13th month to 24th month: 12 million won;
3.
An amount paid from 25th month to 36th month: 12 million won.
(5)
Where the whole or part of principal, interest, dividend, stocks or profit-making securities or such has been withdrawn, it shall be deemed that the relevant contract has been terminated.
(6)
Where any person who has opened a long-term stock-type savings deposit account terminates a contract within the period of three years from the opening date of the relevant savings deposit account, a financial institution dealing in long-term stock-type savings (hereafter in this Article referred to as "institution dealing in savings") shall additionally collect the total amount obtained by adding up amounts under the following subparagraphs (hereafter referred to in this Article as "additional collection tax amount by termination") and pay it to the head of a tax office controlling withholding no later than 10th of the following month of the month to which the termination date of a savings contract belongs: Provided, that this shall not apply in cases where it has been terminated by any unavoidable reasons prescribed by Presidential Decree, such as death, emigration overseas or such:
1.
A tax amount reduced and exempted because the income tax has not been imposed on the interest income and dividend income;
2.
The total amount obtained by adding up amounts under the following items on the basis of the termination date of a savings contract: Provided, That in cases where any person who has received deduction from his/her income proves that the amount reduced and exempted by the relevant income deduction is less than the amount referred to in the main sentence in the part other than the subparagraphs, an amount equivalent to the tax amount actually reduced and exempted shall be additionally collected:
(a)
An amount having multiplied an amount paid falling under paragraph (2) 1 by 5/100;
(b)
An amount having multiplied an amount paid falling under paragraph (2) 2 by 24/1,000;
(c)
An amount having multiplied an amount paid falling under paragraph (2) 3 by 12/1,000.
(7)
Any resident who intends to receive deduction from his/her income pursuant to paragraph (1) shall, when he/she makes a year-end settlement of an amount of earned income tax, etc. or a final report on tax base of the total income, present a certificate of payment of long-term stock-type savings issued by an institution dealing in the savings, the amount of savings paid in the relevant year specified therein necessary for receiving deduction from the income, to a person responsible for withholding or the head of a tax office having jurisdiction over a place of domicile.
(8)
Where an institution dealing in the savings has collected an additional collection tax amount by termination pursuant to paragraph (6), it shall notify a person who has opened such a savings deposit account of its details in writing.
(9)
Where an institution dealing in the savings has failed to pay an additional collection tax amount by termination under paragraph (6) within the payment period or has paid an amount that falls short of the amount required, the relevant institution dealing in the savings shall pay tax amount to which an amount equivalent to 10/100 of the amount unpaid or amount come short has been added up to the head of a tax office controlling withholding.
(10)
In cases of savings which are subject to the application of Articles 87 and Article 20-3 (1) 2 of the Income Tax Act, deduction from the income under paragraph (1) shall not apply.
(11)
When paragraph (1) 1 is applied, everyday possession rate from the establishment date of an investment company or an investment trust shall be not less than 60/100 of the total amount of assets: Provided, That this shall not apply to the cases prescribed by Presidential Decree.
(12)
Where a resident renews an existing contract as long-term stock-type savings satisfying the requirements under paragraph (1), it shall be deemed that he/she has newly opened a long-term stock-type savings deposit account on the date of contract renewal.
(13)
Matters necessary for deduction of the income from long-term stock-type savings, non-taxation of the income tax or such shall be prescribed by Presidential Decree.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

law view

 Article 91-10 (Non-Taxation on Long-Term Corporate Debenture-Type Savings)
 

(1)
No income tax shall be imposed on the interest income or dividend income accruing from the amount paid no later than December 31, 2009 by any resident who opened a savings deposit account (hereafter referred to in this Article as "long-term corporate debenture-type savings") satisfying all the requirements under the following subparagraphs: Provided, That this shall not apply where the income accrues after three years from the opening date of the savings deposit account:
1.
It shall be savings for acquisition of stocks or profit-making securities (limited to the acquisition of stocks or profit-making securities by method of subscription under Article 9 (7) of the same Act or by method of sale under paragraph (9) of the same Article of the same Act) of an investment company or an investment trust (excluding special accounts of an insurance company under Article 251 of the Financial Investment Services and Capital Markets Act) under the same Act investing in debentures or corporate bills prescribed by Presidential Decree issued and traded in Korea not less than 60/100 of the total amount of assets;
2.
The term of contract of savings shall be not less than three years and its principal, interest, dividend, stocks or profit-making securities or such shall not be withdrawn within three years;
3.
It shall be deferred savings paid within 50 million won per capita (referring to the total amount of long-term corporate debenture-type savings in all the financial institutions).
(2)
Where the whole or part of principal, interest, dividend, stocks or profit-making securities or such has been withdrawn from the account of long-term corporate debenture-type savings, it shall be deemed that the relevant contract has been terminated.
(3)
Where any person who has opened a long-term corporate debenture-type savings deposit account terminates the contract within three years from the opening date of the savings deposit account, a financial institution dealing in long-term corporate debenture-type savings (hereafter referred to in this Article as "institution dealing in savings") shall additionally collect the tax amount reduced and exempted because the income tax has not been imposed on the interest income and dividend income and pay it to the head of a tax office controlling withholding no later than 10th of the following month of the month to which the termination date of a savings contract belongs: Provided, That this shall not apply in cases where a saving contract has been terminated by any unavoidable reason prescribed by Presidential Decree, such as death, overseas emigration or such.
(4)
Where an institution dealing in savings has additionally collected the tax amount reduced and exempted pursuant to paragraph (3), it shall notify a person who has opened a savings deposit account of its details in writing.
(5)
Where an institution dealing in savings has failed to pay the tax amount additionally collected pursuant to paragraph (3) within the period fixed or has paid tax amount below the amount required, the relevant institution dealing in savings shall pay an additional tax amount corresponding to 10/100 of the unpaid or insufficient tax amount to the head of a tax office controlling withholding.
(6)
When paragraph (1) 1 is applied, the average possession rate of every three months from the establishment date of an investment company or an investment trust (referring to the rate obtained by dividing the total of everyday rate of the appraised amount of corporate debentures or corporate bills accounting for in the appraised amount of an investment company or an investment trust for three months by the total days of the same period) shall be not less than 60/100 of the total amount of assets: Provided, That this shall not apply in cases prescribed by Presidential Decree.
(7)
Where a resident renews an existing contract as long-term corporate debenture-type savings satisfying the requirements under paragraph (1), it shall be deemed that he/she has newly opened a long-term corporate debenture-type savings deposit account on the date of contract renewal. In such cases, the amount to be converted into long-term corporate debenture-type savings from among the amount paid before the date of contract renewal shall be determined and such contract shall be renewed.
(8)
Matters necessary for non-taxation, etc. of the income tax of long-term corporate debenture-type savings shall be prescribed by Presidential Decree.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

law view

 Article 91-11 (Special Taxation for Investment Trust, etc. of Houses Unsold in Lots)
 

(1)
Where a resident or a non-resident having no domestic place of business under Article 120 of the Income Tax Act opens an account in an investment trust, investment company, and real estate investment company prescribed by Presidential Decree (hereafter referred to as "investment trust, etc. of houses unsold in lots" in this Article) as established for the purpose of making a direct or indirect investment in houses unsold in lots prescribed by Presidential Decree (hereafter referred to as "houses unsold in lots" in this Article) no later than December 31, 2009, any dividend income derived from up to 100 million won of invested amount for each grade of the relevant investment trust of unsold housing from among the dividend incomes distributed on or before December 31, 2012 shall be exempted from the income tax. In such cases, when the invested amount exceeds 100 million won, any dividend income derived from the exceeding amount shall not be added to the global income tax base under Article 14 (2) of the Income Tax Act.
(2)
Where it is unlikely to distribute dividend incomes no later than December 31, 2012 due to delay of the disposal of houses unsold in lots as prescribed by Presidential Decree, paragraph (1) shall apply to the dividend incomes distributed no later than December 31, 2013.
(3)
Where a withholding agent withholds dividend incomes distributed by investment trust, etc. of houses unsold in lots, the withholding agent shall submit detailed statements of non-taxation and separate taxation on the dividend incomes of investment trust, etc. of houses unsold in lots prescribed by Ordinance of the Ministry of Strategy and Finance to the head of the tax office having jurisdiction over the place of tax payment by the last day of the next month after the end of the quarter to which the date for distributing such dividend incomes belongs.
(4)
Methods of opening an account for investment trust, etc. of houses unsold in lots and other necessary matters shall be prescribed by Presidential Decree.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

law view

 Article 91-12 (Special Taxation on Investment Trusts, etc. for Exclusive Use of Overseas Koreans)
 

(1)
From among the dividend income received on or before December 31, 2012 after any overseas Korean prescribed by Presidential Decree having no domestic place of business under Article 120 of the Income Tax Act opens an account for investment trusts and investment companies for exclusive use of overseas Koreans prescribed by Presidential Decree (hereafter referred to as "investment trusts, etc. for exclusive use of overseas Koreans" in this Article) no later than December 31, 2010, for the dividend income accruing from the investment up to 100 million won per relevant investment trusts, etc. for exclusive use of overseas Koreans, the income tax shall not be levied notwithstanding Article 156 (1) 3 of the Income Tax Act and in cases where the investments exceed 100 million won, the tax rate of 5/100 shall be applied to the dividend income accruing from such exceeding amount.
(2)
Where any account holder of investment trusts, etc. for exclusive use of overseas Koreans redeems the investment trusts, etc. for exclusive use of overseas Koreans or transfers the right thereof within 1 year from the date of entering into a contract, a withholding agent shall withhold the tax according to the following subparagraphs notwithstanding paragraph (1) : Provided, That in cases where an account holder dies or other inevitable causes prescribed by Presidential Decree arise, the same shall not apply:
1.
Where the closing date does not come during the period from the date of entering into a contract to the date of redemption or stock transfer: Withhold at source at the tax rate under Article 156 (1) 3 of the Income Tax Act;
2.
Where the closing date belongs to the period from the date of entering into a contract to the date of redemption or stock transfer and the interest divided on the same closing date shall be exempted from taxation under paragraph (1) or there are taxes withheld at the tax rate of 5/100: Withhold the difference between the taxes under paragraph (1) and the taxes under Article 156 (1) 3 of the Income Tax Act additionally.
(3)
Requirements of overseas Koreans and investment trusts, etc. for exclusive use of overseas Koreans, documents to be submitted when opening an account and other necessary issues shall be determined by Presidential Decree.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

law view

 Article 91-13 (Special Taxation for Green Savings)
 

(1)
Where a resident has invested in an investment fund or investment company (hereafter referred to as "green investment fund, etc." in this Article) no later than December 31, 2014, income tax shall not be imposed on the dividend income accrued from the relevant green investment trust, etc.: Provided, That in cases of income accrued after the expiration of contract period, this shall not apply:
1.
That it shall invest (including loan) 40/100 or more of the total amount of asset in assets relating to green industry;
2.
That the contract period shall be between three and five years, and that the withdrawal of principal or returns and the transfer thereof to third party on or before the expiration of contract period shall not exist;
3.
That the payment limit per person shall be within 30 million won (referring to the sum total of green investment trusts, etc. that the relevant resident has entered).
(2)
Where a resident opens a deposit account meeting all the requirements in the following subparagraphs (hereafter referred to as "green deposit" in this Article) no later than December 31, 2014, income tax shall not be imposed on the interest income from such deposit: Provided, That in cases of interest accrued after the expiration of contract period of green deposit, this shall not apply:
1.
That it shall be a deposit handled by a corporation operating banking business under the Banking Act or by a communications agency under the Postal Savings and Insurance Act, whereby the corporation or communications agency shall invest (including loan) not less than 40/100 of the fund raised through deposit in assets relating to green industry (accounting of asset management statement, etc. shall be carried out separately as prescribed by Presidential Decree);
2.
That the contract period shall be between three and five years, and that the withdrawal of principal or interest and the transfer thereof before the expiration of contract period shall not exist;
3.
That the limit of deposit per person shall be within 20 million won (referring to the sum total of green deposits. that the relevant resident has opened).
(3)
Income tax shall not be imposed on the interest income accrued from purchased bonds meeting all the requirements in the following subparagraphs (hereafter referred to as "green bond" in this Article), which were issued no later than December 31, 2014:
1.
That it shall be a bond issued by a corporation operating banking business under the Banking Act, whereby the corporation that has issued such bond shall invest (including loan) not less than 40/100 of the fund raised through deposit in assets relating to green industry (accounting of asset management statement, etc. shall be carried out separately as prescribed by Presidential Decree);
2.
That is shall be a bond with maturity between three and five years, which shall not be redeemed before maturity or be transferred to a third party;
3.
That the limit of purchase per person shall be within 30 million won (referring to the sum total of green bonds that the relevant resident has opened).
(4)
Where a resident who has entered a green investment fund, etc. withdraws part or all of the principal or returns, or transfers them to a third party, the financial company, etc. handling such green investment trust, etc. shall collect as a supplement the amount of tax reduced or exempted because income tax has not been imposed on the dividend income, and pay such amount of tax to the head of tax office having jurisdiction over withholding no later than 10th of the month next to the month to which the date of withdrawal or transfer belongs: Provided, That in cases it is due to unavoidable reasons prescribed by Presidential Decree, such as death, emigration, etc., this shall not apply.
(5)
Where a resident who has opened a green deposit account withdraws part or all of the principal or interest, or transfers it, the financial company, etc. handling such green deposit shall collect as a supplement the amount of tax reduced or exempted because income tax has not been imposed on the interest income, and pay such amount of tax to the head of tax office having jurisdiction over withholding no later than 10th of the month next to the month to which the date of withdrawal or transfer belongs: Provided, That in cases it is due to unavoidable reasons prescribed by Presidential Decree, such as death, emigration, etc., this shall not apply.
(6)
Where financial companies, etc. (hereafter referred to as "savings handling institutions" in this Article) handling green investment trust, etc. and green deposit have collected the amount of tax as a supplement as prescribed in paragraphs (4) and (5), they shall notify the relevant investor or deposit holder of the details in writing.
(7)
Where savings handling institutions have failed to pay the amount of tax to collect as a supplement as prescribed in paragraphs (4) and (5) by the time limit of payment, or have paid an amount less than the amount of tax to pay, the savings handling institutions shall pay an amount equivalent to 10/100 of the amount of tax that has not been paid or has been paid insufficiently.
(8)
Where green investment fund, etc., green deposit and green bond (hereafter referred to as "green savings" in this Article) fail to meet the requirements in paragraph (1) 1, (2) 1 or (3) 1 after a resident has been granted reduction of or exemption from income tax as prescribed in paragraphs (1) through (3), the relevant savings handling institution or the relevant corporation issuing green bonds shall pay an amount equivalent to the income tax on the interest income or dividend income of the relevant green savings that has not been taxed to the head of tax office having jurisdiction over withholding, as prescribed by Presidential Decree.
(9)
The method of calculating investment ratio of green industry related asset, ex post facto management, etc. concerning special taxation for green savings and other necessary matters shall be prescribed by Presidential Decree.
[This Article Newly Inserted by Act No. 9921, Jan. 1, 2010]

law view

 Article 91-14 (Non-Taxation on Asset-Building Savings)
 

(1)
Where a resident opens a savings account that meets all the requirements in the following subparagraphs (hereafter referred to as "asset-building savings" in this Article) no later than December 31, 2015, the income tax shall not be imposed on interest income and dividend income generated from the relevant savings:
1.
The person who opens an account of asset-building savings shall be a resident falling under any of the following items as at the time he/she opens the account:
(a)
That his/her gross wage during the immediately preceding taxable period shall not exceed 50 million won (limited to the cases where he/she has earned income only or global income that is not to be added to the earned income or tax base of global income, during immediately preceding taxable period);
(b)
That his/her global income added to the tax base of global income during the immediately preceding taxable period shall not exceed 35 million won (limited to the cases where he/she has earned income or business income during immediately preceding taxable period), if he/she does not fall under item (a);
2.
That the type of savings shall be installment savings handled by financial companies, etc. falling under any item of subparagraph 1 of Article 2 of the Act on Real Name Financial Transactions and Confidentiality (hereafter referred to as "financial companies, etc." in this Article), which is transacted through a passbook that contains a mark showing it is for the asset-building savings whereon income tax is not taxable;
3.
That the contract period of the asset-building savings shall be seven years, and no principal, interest, etc. shall be withdrawn on or before the expiration date of the contract, nor the contract shall be transferred to any third person.
4.
That the amount of deposit to be made in a quarter shall be up to three million won per person (referring to the total amount of all asset-building savings accounts held by the relevant resident).
(2)
An account holder of asset-building savings may extend the contract period of the relevant savings only for once up to three years at the time seven years lapse from the day when he/she contracted such asset-building savings for the first time. In such cases, no income tax shall be imposed on the interest income and dividend income accrued from the relevant savings until the expiration of extended contract period.
(3)
Where a resident who has contracted asset-building savings withdraws the principal, interest, etc. from the relevant savings account, terminates the relevant contract or transfers it to a third person, the financial companies, etc. that deals in such savings (hereafter referred to as "institution dealing in savings" in this Article) shall additionally collect the amount of tax which has been reduced or exempted due to non-imposition of income tax on the interest income and dividend income: Provided, That the same shall not apply in cases where the savings contract is terminated due to the account holder's death or emigration to a foreign country or any other ground prescribed by Presidential Decree.
(4)
Where an institution dealing in savings collects the additional tax pursuant to paragraph (3), it shall notify the details thereof in writing to the account holder.
(5)
Where an institution dealing in savings fails to pay the additional tax provided for in paragraph (3) within the time limit or underpays it, it shall pay an additional amount equivalent to 10/100 of the amount of tax unpaid or underpaid to the head of tax office having jurisdiction over the tax withholding.
(6)
The Commissioner of National Tax Service shall confirm whether a person who opens an account of asset-building savings fulfills the requirements provided for in paragraph (1) 1 at the time of opening such account and notify the result thereof to the relevant institution dealing in savings.
(7)
Where an institution dealing in savings is notified that an account holder of asset-building savings has failed to fulfil the requirements provided for in paragraph (1) 1, such asset-building savings shall be deemed terminated on the date of such notification, and the relevant institution dealing in savings shall notify such fact to the account holder of asset-building savings. In such cases, paragraphs (3) through (5) shall not apply.
(8)
Procedure for opening an account of asset-building savings, matters concerning the confirmation and management of persons eligible for savings contract, termination, and other necessary matters shall be prescribed by Presidential Decree.
[This Article Newly Inserted by Act No. 11614, Jan. 1, 2013]

SECTION 10 Special Taxation for Stabilization of National Living

law view

 Article 92 Deleted.
 

law view

 Article 93 Deleted.
 

law view

 Article 94 (Tax Credit for Investment in Facilities for Promotion of Workers' Welfare)
 

(1)
If a national prescribed by Presidential Decree acquires (including a new construction, extension, renovation or purchase; hereafter the same shall apply in this Article) facilities falling under any of the following subparagraphs no later than December 31, 2015 in order to promote the welfare of his/her employees, such as residential stability, etc., an amount equivalent to 7/100 (10/100 for facilities referred to in subparagraph 1 or 2 which are unsold housing prescribed by Presidential Decree in areas outside the Seoul Metropolitan area, and facilities referred to in subparagraph 3 are acquired) of the price for the acquisition of the facilities concerned (excluding the price for the purchase of the land attached to such facilities) shall be deducted from his/her income tax (limited to the income tax on business income) or corporate tax for the taxable year whereto belongs the date of acquisition:
1.
National housing to be rented to such employees as having no houses (excluding the executives who are equity investors);
2.
Dormitory for employees;
3.
Child care centers in a workplace under the Infant Care Act;
4.
Facilities prescribed by Presidential Decree as those for the promotion of convenience of disabled persons, aged persons, or pregnant women;
5.
Facilities prescribed by Presidential Decree as those for the rest or health training of employees.
(2)
Matters necessary for the calculation of the tax credit, in cases where national housing under paragraph (1) 1 is acquired together with other houses, or where a dormitory under paragraph (1) 2 is acquired together with other buildings, shall be prescribed by Presidential Decree.
(3)
Any national who intends to benefit from paragraph (1) shall apply for the tax credit, as prescribed by Presidential Decree.
(4)
Where any person for whom the income tax or corporate tax was deducted under paragraphs (1) and (2) diverts the relevant assets to other purposes within three years from the date of work completion or of purchase of the relevant assets, he/she shall pay as the income tax or corporate tax such amounts obtained by adding the additional amount equivalent to the interests calculated as prescribed by Presidential Decree, to the amount equivalent to the tax-deduction amount on the relevant assets, at the time of filing tax base return for taxable year whereto belongs the date of such diversion; the relevant tax amount shall be regarded as the tax amount to be paid under Article 76 of the Income Tax Act or Article 64 of the Corporate Tax Act.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

law view

 Article 95 Deleted.
 

law view

 Article 96 Deleted.
 

law view

 Article 97 (Capital Gains Tax Reduction or Exemption for Long-Term Rental Houses)
 

(1)
If a resident prescribed by Presidential Decree transfers national housing falling under any of the following subparagraphs (including the land appurtenant thereto which is not larger than twice the total floor area of the relevant building) after the lease for not less than five years since its commencement on or before December 31, 2000, the tax amount equivalent to 50/100 shall be reduced or exempted: Provided, That in cases of a rental house rented for five years or more from among the constructed rental housing under the Rental Housing Act, and of a rental house (only applicable to a house that has not been occupied at the time of its acquisition) rented for five or more years from acquisition and commencement of rent after January 1, 1995 from among the purchased rental housing under the same Act, and of a rental house rented for ten or more years, capital gains tax shall be exempted:
1.
Houses newly built during the period from January 1, 1986 to December 31, 2000;
2.
Multi-unit houses newly built on or before December 31, 1985 that had not been occupied as of January 1, 1986.
(2)
In applying Article 89 (1) 3 of the Income Tax Act, a rental house shall not be regarded as a house owned by the relevant resident.
(3)
Any person who intends to have capital gains tax reduced or exempted as prescribed in paragraph (1) shall make a report on the matters concerning the rental house and apply for tax reduction or exemption, as prescribed by Presidential Decree.
(4)
The calculation of the rental period for a rental house under paragraph (1) and other necessary matters shall be prescribed by Presidential Decree.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

law view

 Article 97-2 (Special Cases of Capital Gains Tax Reduction or Exemption for Newly-Built Rental Houses)
 

(1)
Where a resident prescribed by Presidential Decree transfers a national housing falling under any of the following subparagraphs (including the appurtenant land not exceeding twice the total floor area of the relevant building) after renting it for not less than five years, capital gains tax on the income accrued from the transfer of the relevant house (hereafter in this Article referred to as "newly-built rental house") shall be exempted:
1.
A newly-built rental house under the Rental Housing Act, falling under any of the following items:
(a)
A house newly built between August 20, 1999 to December 31, 2001;
(b)
A multi-unit house newly built on or before August 19, 1999 that has not been occupied as of August 20, 1999;
2.
From among the purchased rental houses under the Rental Housing Act which fall under any of the following items, a rental house acquired on or after August 20, 1999 (limited to cases where a sales contract is concluded and a down payment is made during the period from August 20, 1999 to December 31, 2001) and its lease is commenced (limited to a house which has not been occupied at the time of acquisition):
(a)
A house newly built on or after August 20, 1999;
(b)
A house falling under subparagraph 1 (b).
(2)
Article 97 (2) through (4) shall apply mutatis mutandis to a newly-built rental house.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

law view

 Article 98 (Special Taxation for Houses Unsold in Lots)
 

(1)
Where a resident has acquired a unit of national housing unsold in lots prescribed by Presidential Decree (hereafter in this Article referred to as "houses unsold in lots"), during the period from November 1, 1995 to December 31, 1997 (including cases where a sales contract is concluded and a down payment is made no later than December 31, 1997), and transfers it after holding and renting it for five or more years, he/she may, as regards any income accruing from the transfer of relevant house, select one of the methods falling under the following subparagraphs as applicable thereto:
1.
Method of calculating the tax base and amount of capital gains tax pursuant to Articles 92 and 93 of the Income Tax Act, and paying the capital gains tax accordingly. In such cases, the capital gains tax rate shall be 20/100, notwithstanding Article 104 (1) of the said Act;
2.
Method of calculating the tax base and amount of global income tax pursuant to Articles 14 and 15 of the Income Tax Act, and paying the global income tax accordingly. In such cases, the provisions of Article 19 (2) of the Income Tax Act shall apply mutatis mutandis to the calculation of the amount of income accrued from the transfer of relevant house.
(2)
In applying paragraph (1), the matters necessary for the special taxation on the houses unsold in lots, such as the judgement of one house for one household under the provisions of Article 89 (1) 3 of the Income Tax Act, or an application for the special taxation, etc., shall be prescribed by Presidential Decree.
(3)
Where a resident has acquired national housing unsold in lots prescribed by Presidential Decree, during the period from March 1, 1998 to December 31, 1998 (including cases where a sales contract is concluded and a down payment is made no later than December 31, 1998), and transfers it after holding and renting it for five years or more, the provisions of paragraph (1) shall apply mutatis mutandis to any income accruing from the transfer of relevant house.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

law view

 Article 98-2 (Special Taxation on Capital Gains Tax for Acquisition of Local Houses Unsold in Lots)
 

(1)
Notwithstanding the main sentence other than the Tables in Article 95 (2) of the Income Tax Act and Article 104 (1) 2 through 7 of the same Act, the provisions of the following subparagraphs shall apply to the long-term possession special deductible amount and tax rate for the income accruing from the transfer of houses unsold in lots prescribed by Presidential Decree and located outside the Seoul Metropolitan area (hereafter referred to as "local houses unsold in lots" in this Article), acquired (including cases where a sales contract has been concluded and an earnest money has been paid by December 31, 2010) by a resident for the period from November 3, 2008 to December 31, 2010:
1.
Long-term possession special deductible amount: An amount calculated by multiplying the gains from transfer by the deductible rates by period of possession under attached Table 2 in Article 95 (2) of the Income tax Act;
2.
Tax rate: A tax rate under Article 104 (1) 1 of the Income tax Act.
(2)
Articles 55-2 (1) 2 and 95-2 of the Corporate Tax Act shall not apply to the income of a corporation accrued from the transfer of local houses unsold in lot: Provided, That in cases of unregistered transfer, this shall not apply.
(3)
The calculated amount of global income tax on the income accrued from the transfer of local houses unsold in lots of a resident operating real estate transaction business shall be the calculated amount of global income tax under Article 55 (1) of the Income Tax Act, notwithstanding Article 64 (1) of the same Act.
(4)
When Articles 89 (1) 3 and 104 (1) 4 through 7 of the Income Tax Act are applied, a local house unsold in lots which is governed by paragraph (1) shall not be deemed a house owned by the relevant resident.
(5)
When paragraphs (1) through (4) are applied, a final report of tax base and other necessary matters shall be prescribed by Presidential Decree.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

law view

 Article 98-3 (Special Taxation for Capital Gains Tax on Purchasers of Houses Unsold in Lots)
 

(1)
Where a resident or a non-resident having no domestic place of business under Article 120 of the Income Tax Act enters into a sales contract of a house unsold in lots prescribed by Presidential Decree (hereafter referred to as "houses unsold in lots" in this Article) as located in the areas outside Seoul Special Metropolitan City (excluding designated areas under Article 104-2 of the Income Tax Act) with the relevant project entity who supplies houses pursuant to Article 38 of the Housing Act (in cases where a project entity supplies not more than 20 houses, including the relevant housing builder) for the first time and then acquires it during the period falling under the following subparagraphs (including cases where a resident enters into a sales contract and then pays contract deposit no later than February 11, 2010), a tax amount equivalent to 100/100 (in cases of areas located in the metropolitan overpopulation control area, 60/100) of the capital gains tax with respect to any income accrued from transfer of such house within five years from the date of acquisition shall be reduced or exempted, and if the house unsold in lots is transferred five years after the date of acquisition, the capital gains amount derived for five years since the date of acquisition (in cases of areas located in the metropolitan overpopulation control area, an amount equivalent to 60/100 of the transfer tax income) shall be deducted from the income subject to the capital gains tax of the relevant house. In such cases, when the amount reduced or exempted exceeds the income subject to the capital gains tax, the exceeding amount shall be deemed to be nonexistent:
1.
In cases of residents: Period from February 12, 2009 to February 11, 2010;
2.
In cases of non-residents: Period from March 16, 2009 to February 11, 2010.
(2)
When applying paragraph (1), a house built by the resident himself/herself whose construction is commenced (in cases where the date of commencement is uncertain, it shall be based on the date on which an application for commencement is submitted) and for which the approval for use or inspection for use (including approval for temporary use) has been obtained from February 12, 2009 to February 11, 2010 shall not be included: Provided, That the same shall not apply to cases falling under each of the following subparagraphs:
1.
A house acquired by a member of rearrangement project association conducting housing redevelopment projects or housing reconstruction projects under the Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents according to the relevant management and disposal plans;
2.
A house which has been demolished and then reconstructed due to loss by fire, collapse, worn-out, etc. while residing or owning.
(3)
When applying the provisions of Articles 89 (1) 3 and 104 (1) 4 through 7 of the Income Tax Act, the houses governed by paragraphs (1) and (2) shall not be deemed to be a house owned by the relevant resident.
(4)
Notwithstanding Articles 95 (2) and 104 (1) 2 through 7 of the Income Tax Act, the provisions under each of the following subparagraphs shall apply to the long-term possession special deductible amount and tax rate for the income derived from transferring the houses governed by paragraphs (1) and (2) :
1.
Long-term possession special deductible amount: An amount calculated by multiplying the gains from transfer by the deductible rates for each period of possession under Table 1 in Article 95 (2) of the Income Tax Act (Table 2 in cases falling under the proviso to paragraph (2) of the same Article);
2.
Tax rate: A tax rate under Article 104 (1) 1 of the Income tax Act.
(5)
Where paragraphs (1) and (2) are applied, the computation of capital gains tax with respect to any income accrued from transfer of such house within five years since the date of acquisition and other necessary matters shall be prescribed by Presidential Decree.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

law view

 Article 98-4 (Special Taxation for Capital Gains Tax on Acquisition of Houses by Non-Residents)
 

Where a non-resident having no domestic place of business under Article 120 of the Income Tax Act acquires (including cases where a purchase contract is concluded no later than February 11, 2010 and the contract deposit is paid) a house other than that unsold in lots under Article 98-3 (1) during the period from March 16, 2009 to February 11, 2010 and transfers it, the tax amount equivalent to 10/100 of the capital gains tax on the income accruing from such transfer shall be exempted.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

law view

 Article 98-5 (Special Taxation for Capital Gains Tax on Acquisitors of Houses Unsold in Lots Located in Areas outside Seoul Metropolitan Area)
 

(1)
Where a resident or a non-resident without a domestic place of business under Article 120 of the Income Tax Act transfers a house within five years from the acquisition date, which was a house unsold in lots prescribed by Presidential Decree (hereafter referred to as "house unsold in lots" in this Article) located in an area outside the Seoul Metropolitan area as of February 11, 2010 and has been acquired (including cases in which a sales contract is made and earnest money is paid no later than April 30, 2011) after making a sales contract thereof for the first time with the relevant business entity, etc. who supply houses as prescribed in Article 38 of the Housing Act no later than April 30, 2011, the amount of tax calculated by multiplying the capital gains tax on the income from such transfer by the reduction rate according to the discount rate of selling price (referring to the selling price notified in the public announcement of invitation of occupants under the Housing Act; hereafter the same shall apply in this Article) in the following subparagraphs shall be reduced from the capital gains tax; where it is transferred five years after five years from the acquisition date of the relevant house unsold in lots, an amount calculated by multiplying the amount of capital gains accrued for five years from the acquisition date of the relevant house unsold in lots by the reduction rate according to the discount rate of selling price in the following subparagraphs shall be deducted from the amount of taxable income subject to the imposition of capital gains tax on the relevant house unsold in lot. In such cases, where the amount to deduct exceeds the amount of taxable income subject to the imposition of tax, such excess amount shall be deemed naught:
1.
Where the discount rate of selling price is 10/100 or less: 60/100;
2.
Where the discount rate of selling price exceeds 10/100 but less than 20/100: 80/100;
3.
Where the discount rate of selling price exceeds 20/100: 100/100
(2)
Where Article 89 (1) 3 of the Income Tax Act and Article 104 (1) 4 through 7 of the same Act is applied, a house unsold in lots to which paragraph (1) applies shall not be deemed a house possessed by the relevant resident.
(3)
Notwithstanding Articles 95 (2) and 104 (1) 2 through 7 of the Income Tax Act, special deduction for long-term possession and tax rate in the following subparagraphs shall apply:
1.
Special deduction for long-term possession: Amount obtained by multiplying the gains from transfer by the deduction rate by period of possession under the attached Table 1 (where it falls under the proviso to the same paragraph, Table 2) of Article 95 (2) of the Income Tax Act;
2.
Tax rate: Tax rate under Article 104 (1) 1 of the Income Tax Act.
(4)
When paragraph (1) is applied, the calculation of capital gains accrued for five years from the date of acquisition of a house unsold in lot, method of calculating discount rate of selling price and other necessary matters shall be prescribed by Presidential Decree.
[This Article Newly Inserted by Act No. 10285, May 14, 2010]

law view

 Article 98-6 (Special Taxation for Capital Gains Tax on Acquisitors of Unsold Houses after Completion)
 

(1)
Where a resident or a non-resident without a domestic place of business under Article 120 of the Income Tax Act (hereafter referred to as "non-resident" in this Article) transfers a house falling under any of the following cases, the amount of tax equivalent to 50/100 of capital gains tax shall be deducted (limited to a house satisfying the requirement referred to in subparagraph 1) from capital gains tax on income accrued from the transfer of the house within five years from the date of acquisition, while the amount equivalent to 50/100 of the amount of capital gains that has been accrued for five years since the acquisition date of the house shall be subtracted from the amount of the taxable income subject to capital gains tax on the house if such transfer is made five years after the date of acquisition. In such cases, if the amount to be deducted exceeds the amount of the taxable income, such excess amount shall be deemed nil:
1.
An unsold house after completion prescribed by Presidential Decree (hereinafter referred to as "unsold house after completion" in this Article) which a project operator who supplies housing pursuant to Article 38 of the Housing Act or other business operators prescribed by Presidential Decree (hereafter referred to as "project entity, etc." in this Article) has leased for at least two years by entering into a lease contract by no later than December 31, 2011 and which a resident or non-resident has acquired after entering into the first purchase contract with the relevant project entity, etc.;
2.
An unsold house after completion that a resident or non-resident acquired by entering into the first purchase contract with a project entity, etc. and has leased for at least five years (limited to cases where a resident or non-resident enters into a lease contract no later than December 31, 2011 after completing business registration under Article 168 of the Income Tax Act and the registration of rental business operator under Article 6 of the Rental Housing Act).
(2)
Where Article 89 (1) 3 of the Income Tax Act and Article 104 (1) 4 through 7 of the same Act is applied, a house governed by paragraph (1) shall not be deemed a house possessed by the relevant resident.
(3)
Notwithstanding Articles 95 (2) and 104 (1) 2 through 7 of the Income Tax Act, special deductions for long-term possession and tax rate in the following subparagraphs shall apply to income accrued from transfer of a house governed by paragraph (1) :
1.
Special deductions for long-term possession: Amount calculated by multiplying the gains from transfer by the deduction rate per period of possession specified in Table 1 (Table 2 if it falls under the proviso to the same paragraph) of Article 95 (2) of the Income Tax Act;
2.
Tax rate: Tax rate under Article 104 (1) 1 of the Income Tax Act.
(4)
In applying paragraph (1), the calculation of the amount of capital gains, procedures of verifying an unsold house after completion, lease period and other necessary matters shall be prescribed by Presidential Decree.
[This Article Newly Inserted by Act No. 10631, May 19, 2011]

law view

 Article 98-7 (Special Taxation of Capital Gains Tax for Acquisitors of Houses Unsold in Lots)
 

(1)
Where a national enters into a sales contract of a house unsold in lots prescribed by Presidential Decree as of September 24, 2012 the acquisition value of which does not exceed 900 million won (hereafter referred to "house unsold in lots" in this Article) for the first time with the relevant project entity who supplies houses under Article 38 of the Housing Act or any other project implementer prescribed by Presidential Decree (limited to cases where a down payment is made) or acquires a house through such contract during the period from September 24, 2012 to December 31, 2012, a tax amount equivalent to 100/100 of the capital gains tax with respect to any income accrued from transfer of such house within five years from the date of acquisition shall be reduced or exempted, and if the relevant house unsold in lots is transferred five years after the date of acquisition, the capital gains amount derived for five years since the date of acquisition shall be deducted from the income subject to the capital gains tax of such house. In such cases, when the amount deducted exceeds the income subject to taxation, the amount in excess shall be deemed nonexistent.
(2)
In applying the provisions of Articles 89 (1) 3 and 104 (1) 4 through 7 of the Income Tax, the houses unsold in lots to which paragraph (1) applies shall not be regarded as a house owned by the relevant resident.
(3)
Matters concerning the calculation of the capital gains accrued for five years from the date of the acquisition of a house unsold in lots and other necessary matters for the application of paragraph (1) shall be prescribed by Presidential Decree.
[Newly Inserted by Act No. 11486, Oct. 2, 2010]

law view

 Article 99 (Reduction of or Exemption from Capital Gains Tax for Purchasers of Newly-Built Houses)
 

(1)
In cases where a resident (excluding any housing developer) has acquired a newly-built house falling under any of the following subparagraphs (including the appurtenant land less than twice the total floor area of relevant building; hereafter in this Article the same shall apply) and transfers it within five years from the date of its acquisition, the tax amount equivalent to 100/100 of capital gains tax on the income amount accruing from such transfer shall be exempted, and where he/she transfers the relevant newly-built house after the elapse of five years from the date of its acquisition, the amount of capital gains accrued during years from the date of acquisition of such newly-built house shall be deducted from his/her capital gains amount subject to the levy of capital gains tax: Provided, That this shall not apply to cases where such newly-built house corresponds to an expensive house that is excluded from the non-taxable objects for the capital gains tax pursuant to Article 89 (1) 3 of the Income Tax Act:
1.
A house which is constructed by himself/herself (including any house acquired by a housing cooperative's member under the Housing Act, or a cooperative for maintenance and improvement projects' member under the Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents) and for which the approval for use or inspection for use (including approval for temporary use) has been obtained during the period from May 22, 1998 to June 30, 1999 (it shall be from May 22, 1998 to December 31, 1999 in cases of national housing; hereafter in this Article referred to as the "newly-built house acquisition period");
2.
A house acquired from a housing developer by a person who first concludes a sales contract and makes a down payment within the newly-built house acquisition period (including a house prescribed by Presidential Decree that has been acquired through a housing cooperative under the Housing Act, or a cooperative for maintenance and improvement projects under the Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents): Provided, That a house that has been occupied by another person as of the date of a sales contract, or a house that falls under any reason prescribed by Presidential Decree during the newly-built house acquisition period shall be excluded.
(2)
In applying the provisions of Article 89 (1) 3 of the Income Tax Act, a newly-built house subject to paragraph (1) shall not be regarded as a house owned by the resident only in cases where the relevant resident holding the newly-built house and any other house transfers the other house except the newly-built house by not later than December 31, 2007.
(3)
Any person who intends to be eligible for the application of paragraph (1) shall file an application for tax reduction or exemption as prescribed by Presidential Decree.
(4)
The calculation of capital gains amount accruing for five years from the date of acquisition of a newly-built house under paragraph (1) or other necessary matters shall be prescribed by Presidential Decree.

law view

 Article 99-2 Deleted.
 

law view

 Article 99-3 (Special Taxation for Capital Gains Tax on Purchasers of Newly-built Houses)
 

(1)
Where a resident (excluding a housing developer) has acquired a newly-built house falling under any of the following subparagraphs (including the land appurtenant to the relevant house, of which size is equal to or smaller than twice the total floor area of relevant building; hereafter in this Article the same shall apply) which is located at an area other than the area prescribed by Presidential Decree wherein the price of real estate rises sharply or is likely to rise sharply, in view of the inflation of the national consumer prices and of the national trade prices of housing, and transfers it within five years from its acquisition, the capital gains tax on the income accrued from such transfer shall be exempted, and where he/she transfers the relevant newly-built house after the elapse of five years from its acquisition, the amount of capital gains accrued for five years from the date of its acquisition shall be deducted from the income amount subject to the levy of capital gains tax: Provided, That this shall not apply where the relevant newly-built house corresponds to an expensive house that is excluded from the non-taxable objects for capital gains tax under the provisions of Article 89 (1) 3 of the Income Tax Act:
1.
In cases of a newly-built house acquired from a housing developer: A newly-built house acquired by a person who has first concluded a sales contract with a housing developer and paid a down payment (including a house prescribed by Presidential Decree that is acquired through a housing cooperative under the Housing Act, or a cooperative for maintenance and improvement projects under the Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents) within the period from May 23, 2001 to June 30, 2003 (hereafter in this Article referred to as "newly-built house acquisition period"): Provided, That any house that has been occupied as of the date of sales contract, or that has been subject to the causes prescribed by Presidential Decree during the newly-built house acquisition period shall be excluded;
2.
In cases of a newly-built house constructed by himself/herself (including a house that is acquired, through a housing cooperative under the Housing Act, or a cooperative for maintenance and improvement projects under the Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents, by a member thereof prescribed by Presidential Decree): A newly-built house for which the approval for use or inspection for use (including the approval for temporary use) has been obtained during the newly-built house acquisition period.
(2)
In applying Article 89 (1) 3 of the Income Tax Act, a newly-built house subject to paragraph (1) shall not be considered a house owned by the resident only in cases where the relevant resident holding the newly-built house and any other house transfers the other house except the newly-built house no later than December 31, 2007.
(3)
A person who intends to be eligible for the application of paragraph (1) shall apply for reduction or exemption, as prescribed by Presidential Decree.
(4)
In applying paragraph (1), the calculation of the capital gains amount accruing for five years from the acquisition date of a newly-built house and other necessary matters shall be prescribed by Presidential Decree.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

law view

 Article 99-4 (Special Taxation of Capital Gains Tax for Acquisitors of Houses, etc. in Agricultural and Fishing Villages)
 

(1)
In cases a household prescribed by Presidential Decree that is made up of a resident and his/her spouse (hereafter in this Article referred to as "household") acquires a house falling under any of the following subparagraphs (hereafter in this Article referred to as "house in agricultural and fishing villages") in the period from August 1, 2003 (January 1, 2009 for a house in one's native place) to December 31, 2014 (hereafter in this Article referred to as "period for acquisition of a house, etc. in agricultural and fishing villages") and owns it for not less than three years and thereafter transfers another house the same household has owned before acquisition of such house in agricultural and fishing villages (hereafter referred to as "ordinary house" in this Article), the relevant house in agricultural and fishing villages shall not be deemed a house owned by the relevant one household, and thereby Article 89 (1) 3 of the Income Tax Act shall apply to such case:
1.
A house satisfying all of the following requirements:
(a)
It shall be located in Eup/Myeon under Articles 3 (3) and (4) of the Local Autonomy Act at the time of acquisition, as areas except an area falling under any of the following:
(ⅰ)
Seoul Metropolitan area: Provided, That areas prescribed by Presidential Decree shall be excluded from border areas under Article 2 of the Border Area Support Act in consideration of price trends of real estate;
(ⅱ)
Urban area under Article 6 of the National Land Planning and Utilization Act and permitted zone under Article 117 of the same Act;
(ⅲ)
Designated area under Article 104-2 (1) of the Income Tax Act;
(ⅳ)
Other areas prescribed by Presidential Decree, such as tourist facilities complex, etc., because the price stabilization of real estate is deemed necessary;
(b)
Its lot area shall be not more than 660 square meters and its floor area shall be within the standards prescribed by Presidential Decree;
(c)
The total amount of the price of a house and land annexed thereto (referring to the standard market price under Article 99 of the Income Tax Act) shall not exceed 200 million won at the time of acquisition of the relevant house;
2.
A house satisfying all of the following requirements (hereafter in this Article referred to as "house in native place"):
(a)
It shall be a house located in one's native place prescribed by Presidential Decree;
(b)
It shall be located in a Si area prescribed by Presidential Decree in consideration of population, etc. at the time of acquisition (excluding the following areas);
(ⅰ)
Seoul Metropolitan area;
(ⅱ)
Designated area under Article 104-2 (1) of the Income Tax Act;
(ⅲ)
Other areas, such as tourist facilities complex, etc., prescribed by Presidential Decree because the price stabilization of real estate is deemed necessary;
(c)
Its lot area shall be not more than 660 square meters and its floor area shall be within the standards prescribed by Presidential Decree;
(d)
The total amount of the price of a house and land annexed thereto (referring to the standard market price under Article 99 of the Income Tax Act) shall not exceed 200 million won at the time of acquisition of the relevant house.
(2)
Deleted.
(3)
Where both the house, etc. in agricultural and fishing villages that a household acquires and the ordinary house that it has owned are located at the same Eup/Myeon in terms of the administrative zone or at Eup/Myeon bordering thereon, paragraph (1) shall not apply.
(4)
Paragraph (1) shall also apply even if a household transfers the ordinary house before fulfilling such requirements that the house, etc. in agricultural and fishing villages be owned for three or more years as referred to in paragraph (1).
(5)
Where a household that was subject to the application of the special cases of capital gains tax under paragraph (4) fails to own the house, etc. in agricultural and fishing villages for not less than three years, the tax amount calculated as prescribed by Presidential Decree which a person eligible for the application of the special taxation would have paid if he/she had not been allowed such application of the special taxation shall be paid as capital gains tax at the time of the filing of tax base return for the taxable year in which the household fails to own such house: Provided, That the same shall not apply if there is any unavoidable reason prescribed by Presidential Decree, such as an expropriation under the Act on the Acquisition of Land, etc. for Public Works and the Compensation Therefor.
(6)
Any person who intends to be governed by special taxation under paragraphs (1) and (4) shall apply for such special taxation, as prescribed by Presidential Decree.
(7)
Such matters as may be necessary concerning the lot area of a house in agricultural and fishing villages, etc., method of assessment of its acquisition price, calculation of the holding period of its ownership, and criteria for decision on whether a house meets requirements for the house in agricultural and fishing villages, etc. shall be prescribed by Presidential Decree.
[This Article Newly Inserted by Act No. 7003, Dec. 30, 2003]

law view

 Article 99-5 (Special Cases of Extinction of Liability of Small Private Enterprises to Pay Tax for which Disposition of Deficit Was Issued)
 

(1)
Pursuant to the application of a resident meeting all the requirements in the following subparagraphs, the head of tax office may extinguish the liability to pay an amount within the limit of five million won per person for which extinctive prescription of authority to collect national tax has not been completed from among the global income tax, value-added tax, and special tax for agricultural and fishing villages, surcharge and expenses for disposition on default added to the global income tax and value-added tax (hereinafter referred to as "amount of tax for which disposition of deficit was issued") of the relevant resident, for which disposition of deficit was issued on or before December 31, 2011. In such cases, the limit shall be applied to the total including the amount of tax for which disposition of deficit was issued for which liability to pay has been extinguished:
1.
Person whose average amount of total business income (referring to the total amount of income converted into one year in cases of the amount of income for the taxable year of which taxable period is below one year) during three immediately preceding taxable years including the taxable year to which the last date of cessation of business of the relevant resident is below the amount prescribed by Presidential Decree;
2.
Person who closes his/her business before December 31, 2011, and has been working three months or more as of the date (hereafter referred to as "date of application") when he/she applies for the extinguishment of liability to pay after applying for business registration at the tax office to start a new business between January 1, 2010 and December 31, 2012, or being employed between January 1, 2010 and December 31, 2012;
3.
Person who has not been punished or has not been issued disposition with regard to the Punishment of Tax Evaders Act, or does not stand trial within five years immediately before the date of application;
4.
Person against whom investigation into violation of the Punishment of Tax Evaders Act is not underway as of the date of application.
(2)
Where a resident intends to have the liability to pay the amount of tax for which disposition of deficit was issued extinguished as prescribed in paragraph (1), he/she shall apply for the extinguishment of liability to pay the amount of tax for which disposition of deficit was issued to the head of tax office having jurisdiction over the amount of tax for which disposition of deficit was issued between January 1, 2010 and December 31, 2013, as prescribed by Presidential Decree.
(3)
The head of tax office who has received an application for the extinguishment of liability to pay the amount of tax for which disposition of deficit was issued as prescribed in paragraph (2) shall determine whether to extinguish the liability to pay within two months from the date of application after deliberation of the National Tax Arrears Settlement Committee under Article 87 of the National Tax Collection Act. In such cases, when the head of tax has determined to extinguish the liability of the relevant resident to pay the amount of tax for which disposition of deficit was issued, such liability to pay the relevant amount of tax for which disposition of deficit was issued shall be deemed to have been extinguished on the date of application.
(4)
When the head of tax office finds that other collectible property existed at the time when the disposition of deficit was issued even after he/she has determined to extinguish the liability to pay the amount of tax for which disposition of deficit was issued as prescribed in paragraph (1), he/she shall, without delay, cancel the disposition of deficit and the extinguishment of liability to pay for an amount equivalent to the value of such property, and issue disposition on default.
(5)
Where property, etc. (hereafter referred to as "property, etc." in this Article) which were acquired or accrued after disposition of deficit and have been found before the date of application exist, the head of tax office may issue disposition on default.
(6)
Where property, etc. of a resident which were acquired or accrued after disposition of deficit and have been found after the date of application exist, the head of tax office shall not issue disposition on default on the property, etc. of the relevant resident for an amount for which liability to pay extinguished as prescribed in paragraph (1).
(7)
Where the liability to pay tax on part of the amount from among the amount of tax of a resident for which disposition of deficit was issued, the order of priority of extinguishment shall be in the order of national tax, surcharge and expenses for disposition on default by case.
(8)
Other necessary matters, such as the method of applying for the extinguishment of liability to pay the amount of tax for which disposition of deficit was issued, etc. shall be prescribed by Presidential Decree.
[This Article Newly Inserted by Act No. 9921, Jan. 1, 2010]

law view

 Article 100 (Special Taxation for Assistance in Stability of Employees' Housing Situation)
 

Where an employer as referred to in subparagraph 10 of Article 2 of the Korea Housing Finance Corporation Act (hereafter in this Article referred to as "employer") assists his/her employees who do not have their own houses, no later than December 31, 2009, with the funds required for the acquisition or rent of houses of which sizes are not larger than those of the national housing units provided for in the Housing Act, subsidy prescribed by Presidential Decree from among such subsidy shall be included in the deductible expenses, and no income tax shall be imposed on such assisted funds that the employees with no houses of their own receive from their employer.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

SECTION 10-2 Special Taxation for Encouragement of Labor

law view

 Article 100-2 (Earned Income Tax Credit)
 

In order to heighten low-income workers' willingness to work and supplement their income, labor encouragement subsidy shall be determined and refunded, applying the earned income tax credit system provided for in Articles 100-3 through 100-13.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

law view

 Article 100-3 (Eligibility for Application for Labor Encouragement Subsidy)
 

(1)
Residents prescribed by Presidential Decree who have business income under Article 19 of the Income Tax Act, or who have earned income under Article 20 of the same Act in the taxable period of income tax and meet all the requirements in the following subparagraphs may file an application for labor encouragement subsidy for the taxable period of the relevant income tax:
1.
That such residents shall have spouse or dependent children under Article 100-4 (1) (hereafter referred to as "dependent children" in this Section) or is not less than 60 years of age as of the closing date of the relevant taxable period:
(a)
That they shall be residents' children or adopted children living together, who are prescribed by Presidential Decree: Provided, That in cases such children do not have parents or their parents are unable to support such children, which are prescribed by Presidential Decree, residents' grandsons, granddaughters or siblings shall be included;
(b)
That they shall be under the age of 18: Provided, That in cases they are disabled persons prescribed by Presidential Decree, they shall not be subject to the age limit;
(c)
That their total amount of annual income shall not exceed one million won;
2.
That the total amount of annual income prescribed by Presidential Decree of each resident (including spouse thereof; hereafter the same shall apply in this Article) shall be not more than the amount based on total income in item (a) determined according to the number of dependent children (hereafter referred to as "amount based on total income" in this Section): Provided, That where the period during which workers prescribed by Presidential Decree work during the taxable period of income tax is less than twelve months (the period not more than one month shall be deemed one month), notwithstanding item (a), the amount calculated according to the formula in item (b) (if such amount exceeds the amount based on total income, it shall be deemed that there is no such excess) shall be deemed the amount based on total income;
(a)
Amount based on total income:
(b)
Amount based on total income according to item (a) x (number of months during which work is done for the taxable period of income tax/12) x 130/100:
3.
That no member of one household prescribed by Presidential Decree (hereafter referred to as "household member" in this Section) including residents (hereafter referred to as "one household" in this Section) shall own a house;
4.
That the total amount of property prescribed by Presidential Decree, such as land, buildings, automobiles, deposits, etc., which are held by household members including residents, shall be not more than one hundred million won.
(2)
Notwithstanding paragraph (1), the resident who falls under any of the following subparagraphs shall not file an application for the earned income tax credit:
1.
A person who has been provided with all or part of the assistances specified in Article 7 (1) 1 or 2 of the National Basic Living Security Act during the period from March 1 to March 31 of the year to which the date of the application for labor encouragement subsidy belongs;
2.
A person who has not been a Korean national during the period of imposition of the relevant income tax: Provided, That this shall not include a person who is married to a person having the nationality of the Republic of Korea;
3.
A person who is a dependent child of another resident during the period for imposition of the relevant income tax.
(3)
The determination on whether a person falls under spouse referred to in paragraph (1) 1 shall depend upon the situation as of the end of the taxable period of the relevant income tax: Provided, That where a spouse dies before the end of taxable period of the relevant income tax, it shall depend upon the situation as of the day preceding the date of his/her death.
(4)
When paragraph (1) 3 is applied, in cases where any member of a household owns a house the standard market value of which is 60 million won or less under Article 99 of the Income Tax Act, it shall be deemed that he/she does not own a house.
(5)
The base date of holding a house and property pursuant to paragraph (1) 3 and 4, the methods of their evaluation, and other necessary matters shall be prescribed by Presidential Decree.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

law view

 Article 100-4 (Requirements of Dependent Children and Time of Determination Thereof)
 

(1)
Dependent children mean the person who meet the following requirements:
1.
That they shall be residents' children or adopted children living together, who are prescribed by Presidential Decree: Provided, That in cases such children do not have parents or their parents are unable to support such children, which are prescribed by Presidential Decree, residents' grandsons, granddaughters or siblings shall be included;
2.
That they shall be under the age of 18: Provided, That in cases they are disabled persons prescribed by Presidential Decree, they shall not be subject to the age limit;
3.
That their total amount of annual income shall not exceed one million won;
4.
That they shall be the family members who live together under the resident registration record and physically live together with the resident at his/her domicile or temporary domicile: Provided, That this shall not apply to his/her lineal descendants.
(2)
Even though a resident or his/her dependent child who is not his/her lineal descendant leaves temporarily his/her original domicile or temporary domicile, to enter school or receive any medical treatment for a disease, or under any circumstances of service or business, he/she shall be considered as a person living together as referred to in paragraph (1) 4.
(3)
The determination on whether a person falls under a dependent child shall depend upon the situation as of the end of the taxable period of the relevant income tax in the relevant year: Provided, That with respect to a person who is dead, or whose handicap is healed, before the end of the taxable period of the relevant income tax, it shall depend upon the situation as of the day preceding the day of death or healing.
(4)
Where a day on which a dependent child is under the age of 18 belongs to the taxable period of the relevant income tax, he/she shall be deemed to be under the age of 18, notwithstanding the provisions of the main sentence of paragraph (3).
(5)
Where a dependent child of a resident falls under a dependent child of another resident at the same time, he/she shall be deemed to be a dependent child of either resident.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

law view

 Article 100-5 (Calculation of Labor Encouragement Subsidy)
 

(1)
Labor encouragement subsidy shall be calculated according to the classification in the following subparagraphs, based on the amount of income prescribed by Presidential Decree under the subparagraphs of Article 19 (1) of the Income Tax Act and the amount of income under the subparagraphs of Article 20 (1) of the same Act (excluding non-taxable income and earned income or business income prescribed by Presidential Decree; hereafter referred to as "gross amount of wages" in this Section). In such cases, when the amount of labor encouragement subsidy is not more than 15,000 won, it shall be deemed that the labor encouragement subsidy is nil:
1.
Where there are no independent children: Amount calculated according to the classification in the following items:
2.
Where there is one independent child: Amount calculated according to the classification in the following items:
3.
Where there are two independent children: Amount calculated according to the classification in the following items:
4.
Where there are three or more independent children: Amount calculated according to the classification in the following items:
(2)
In the application of paragraph (1), when the spouse of a resident (excluding a non-resident; hereafter the same shall apply in this paragraph) has an earned income, the gross amount of wages shall be calculated by adding, to the gross amount of wages of the principal income earner prescribed by Presidential Decree from among the relevant resident and the resident's spouse (hereafter referred to as the "principal income earner" in this Section), the gross amount of wages of the principal income earner's spouse.
(3)
Notwithstanding the provisions of paragraph (1), labor encouragement subsidy shall be calculated by applying the table of calculating labor encouragement subsidy prescribed by Presidential Decree by the range of the gross amount of wages.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

law view

 Article 100-6 (Application, etc. for Labor Encouragement Subsidy)
 

(1)
Any resident (in cases of falling under Article 100-5 (2), referring to the resident who is the principal income earner) who intends to receive labor encouragement subsidy shall file an application for labor encouragement subsidy stating the matters under the following subparagraphs, with the head of the tax office having jurisdiction over the place wherein tax is paid, accompanied by the documentary evidence prescribed by Presidential Decree as necessary for examining the eligibility for application for labor encouragement subsidy, in the period for a final return on tax base of global income pursuant to Article 70 or 74 of the Income Tax Act:
1.
Qualifications for application;
2.
Amount of labor encouragement subsidy calculated pursuant to Article 100-5.
(2)
In the application of paragraph (1), in cases of the resident's death, his/her inheritor may file an application for labor encouragement subsidy to be paid to the resident. In such cases, it shall be deemed that a resident has made an application for labor encouragement subsidy.
(3)
In the application of paragraph (1), when a principal income earner's spouse has filed an application for labor encouragement subsidy, such application shall be deemed to have been filed by a resident who is the principal income earner.
(4)
In the application of paragraph (1), when two or more residents of one household have filed applications for labor encouragement subsidy, such applications shall be deemed to have been filed by one resident prescribed by Presidential Decree.
(5)
Paragraph (1) shall apply only in cases where a resident has filed both a final return on tax base of global income (including a final return on tax base of global income filed by the resident's spouse) and an application for labor encouragement subsidy under paragraph (1) during the period of final return on tax base of global income pursuant to Article 70 or 74 of the Income Tax Act.: Provided, That in cases a person who failed to file a final return on tax base of global income during the period of final return on tax base of global income has filed a final return on tax base of global income no later than the date of determination of labor encouragement subsidy under Article 100-7 (including a final return on tax base of global income of the spouse thereof), a final return on tax base of global income has been filed during the period of final return on tax base of global income under Article 70 or 74 of the Income Tax Act.
(6)
When a person who has failed to file a final return on tax base of global income pursuant to Article 73 of the Income Tax Act makes an application for labor encouragement subsidy under paragraph (1), a final return on tax base of global income pursuant to Article 70 or 74 of the Income Tax Act shall be deemed to be filed in the application of this Section.
(7)
When a daily-paid worker referred to in Article 14 (3) 2 of the Income Tax Act makes an application for labor encouragement subsidy under paragraph (1) in relation to his/her wages, a final return on tax base of global income pursuant to Article 70 or 74 of the Income Tax Act shall be deemed to be filed in the application of this Section, notwithstanding the provisions of Article 14 (3) of the Income Tax Act.
(8)
The head of the tax office having jurisdiction over the place of tax payment may take necessary measures such as guidance on application for labor encouragement subsidy by using data for taxation such as statement of payment under Article 164 of the Income Tax Act.
(9)
The guidance on application for and procedure for application for labor encouragement subsidy, the application form, and the matters concerning the submission of materials for examination of eligibility for application, and other necessary matters shall be prescribed by Presidential Decree.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

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 Article 100-7 (Determination of Labor Encouragement Subsidy)
 

(1)
The head of the tax office having jurisdiction over the place of tax payment shall, upon receipt of an application for labor encouragement subsidy pursuant to Article 100-6 (1), determine labor encouragement subsidy, as prescribed by Presidential Decree, within three months after the elapse of the deadline for filing a final return on tax base of global income pursuant to Article 70 or 74 of the Income Tax Act: Provided, That where it is hard to determine labor encouragement subsidy within three months due to any cause prescribed by Presidential Decree, the period of determination of labor encouragement subsidy may be extended within the limit of one month.
(2)
The labor encouragement subsidy determined pursuant to paragraph (1) shall be deemed to be the amount of income tax already paid, in the relevant year, by a person who has filed an application for labor encouragement subsidy (hereinafter referred to as the "applicant") pursuant to Article 100-6 (1).
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

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 Article 100-8 (Refund, etc. of Labor Encouragement Subsidy)
 

(1)
Where labor encouragement subsidy determined pursuant to Article 100-7 and the amount of income tax already paid in the relevant year (excluding the labor encouragement subsidy determined pursuant to Article 100-7; hereafter in this paragraph the same shall apply) exceeds the amount of income tax payable in the relevant year, the head of the tax office having jurisdiction over the place of tax payment shall refund the excess, and in cases where there is no income tax amount payable in the relevant year, shall refund both the amount of labor encouragement subsidy and the amount of income tax already paid in the relevant year, as the amount of refundable tax, applying Article 51 of the Framework Act on National Taxes mutatis mutandis.
(2)
With respect to the tax amount to be refunded pursuant to paragraph (1) (if the tax amount to be refunded exceeds the grant for the encouragement of labor determined pursuant to Article 100-7, the excess shall be excluded), the provisions of Article 52 of the Framework Act on National Taxes shall not apply.
(3)
The head of the tax office having jurisdiction over the place of tax payment shall, upon determination of labor encouragement subsidy, notify the applicant of such determination within 30 days from the date on which such determination is rendered and refund the amount of tax to be refunded, if any, within the said period, as prescribed by Presidential Decree.
(4)
The methods of calculation, and the procedures of refund, of the refundable tax amount, and other necessary matters shall be prescribed by Presidential Decree.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

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 Article 100-9 (Restriction on Refund of Labor Encouragement Subsidy)
 

(1)
Where an applicant (including the inheritor referred to in Article 100-6 (2) ; hereafter in this paragraph, the same shall apply) has filed an application falsely stating, willfully or by gross negligence, the matters relating to the requirements for application for labor encouragement subsidy falling under any of the following subparagraphs, the head of the tax office having jurisdiction over the place wherein tax is paid shall not refund (including the cases of deduction from the tax amount to be paid; hereafter in this Section the same shall apply) grants for the encouragement of labor to the applicant for two years (for five years, if he/she has filed a false application in any deceitful or other wrongful manner) from the year whereto belongs the date on which such fact is ascertained (from the next year, if the labor encouragement subsidy is refunded pursuant to Article 100-8 in the year whereto belongs the date on which such fact is ascertained):
1.
Matters on requirements for application for labor encouragement subsidy under Article 100-3 (1) and (2);
2.
Gross amount of wages, etc. for calculation of labor encouragement subsidy under Article 100-5 (1) and (2).
(2)
The provisions of paragraph (1) shall also apply to the person who has solicited the applicant to file an application falsely stating the matters relating to the requirements for application for labor encouragement subsidy pursuant to paragraph (1).
(3)
The head of the tax office having jurisdiction over the place wherein tax is paid shall notify the person subject to restriction on the refund of labor encouragement subsidy pursuant to paragraph (1) or (2) of the reasons why and the period when the refund of the grant for the encouragement of labor is restricted, as prescribed by Presidential Decree.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

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 Article 100-10 (Correction, etc. of Labor Encouragement Subsidy)
 

(1)
The head of the tax office having jurisdiction over the place of tax payment shall correct labor encouragement subsidy if there is any omission or error in the determination of the labor encouragement subsidy pursuant to Article 100-7 (1).
(2)
Where the labor encouragement subsidy requested by a applicant exceeds the labor encouragement subsidy pursuant to Article 100-7, the provisions of Article 47-3 of the Framework Act on National Taxes shall not apply.
(3)
Where the amount of labor encouragement subsidy pursuant to Article 100-7 is reduced due to any correction under paragraph (1), and thereby the tax amount paid by the applicant falls short of the tax amount to be paid or the tax amount refunded to the applicant exceeds the amount of tax to be refunded, an amount calculated by applying the following formula shall be added to the amount of income tax to be paid or deducted from the amount of income tax refunded in excess:
The shortage of the tax amount or the tax amount refunded in excess × The period from the next day of the time limit of application or the day of refund through the day of notification of tax payment × The interest rate prescribed by Presidential Decree in consideration of the interest rates, etc. that the financial institutions apply to overdue loans.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

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 Article 100-11 (Confirmation and Investigation of Applicants, etc.)
 

A public official who is engaged in the duties of determination, etc. of grants for the encouragement of labor may confirm necessary matters concerning the application qualifications for labor encouragement subsidy, the determination of labor encouragement subsidy, etc. with respect to a person falling under any of the following subparagraphs, and investigate the books, documents and other articles concerned or order their submission:
1.
An applicant (including the inheritor referred to in Article 100-6 (2) ), his/her dependent children, and his/her household members referred to in Article 100-3 (1) 3;
2.
A person responsible for withholding under Article 127 of the Income Tax Act;
3.
A person responsible for presentation of a detailed statement of payment under Article 164 of the Income Tax Act.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

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 Article 100-12 (Inquiry into Financial Transaction Information)
 

(1)
Where the head of a tax office having jurisdiction over the place for tax payment needs to verify the details of the financial transactions conducted by the applicant and his/her dependent children (including the household members referred to in Article 100-3 (1) 3) to determine or correct the labor encouragement subsidy, the Commissioner of the National Tax Service (including the Commissioner of the competent Regional Tax Office; hereafter the same shall apply in this Article) may request the head of the relevant financial company, etc. to submit data relating to the details of financial transactions in the form of a document or through the information and communications networks under subparagraph 18 of Article 2 of the Framework Act on National Taxes (hereafter referred to as "information and communications networks" in this Article) as prescribed by Presidential Decree, notwithstanding Article 4 of the Act on Real Name Financial Transactions and Confidentiality, and the head of the financial company, etc. shall transmit such data through the information and communications networks or submit them by means of electronic record media including diskettes and magnetic tapes.
(2)
The Commissioner of the National Tax Service shall neither use data submitted pursuant to paragraph (1) for any purpose, other than provided for in paragraph (1) nor provide them to any other agency.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

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 Article 100-13 (Request for Data)
 

The Commissioner of the National Tax Service may request a State agency, a local government or any other organization or institution prescribed by Presidential Decree to provide him/her with such data specified by Presidential Decree as necessary for examining the eligibility for application for labor encouragement subsidy under Article 100-3 (1) and (2) and guiding on application for labor encouragement subsidy under Article 100-6 (8) such as certificate of family relationship. In such cases, the person so requested shall provide him/her with such data, unless any justifiable ground exists.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

SECTION 10-3 Special Taxation for Partnership Firms

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 Article 100-14 (Definitions)
 

The definitions of the terms used in this Section shall be as follows:
1.
The term "partnership firm" means an organization established by two or more persons who invest money, an asset, labor, or any other resource to run it as a joint business and share the income or loss incurred while running the joint business;
2.
The term "partner" means to a resident, non-resident, domestic corporation, or foreign corporation who has invested in a partnership firm;
3.
The term "allocation" means an action to imputing the income, deficit, or similar of a partnership firm to the partners' income, deficit, or similar, regardless of whether or not any asset is actually distributed, at the end of each taxable year;
4.
The term "income or deficit of a partnership firm by partner groups" means the income or deficit for the pertinent taxable year as calculated in accordance with the Income Tax Act or the Corporate Tax Act by classifying partners into four groups of residents, non-residents, domestic corporations, and foreign corporations (hereinafter referred to as "partner groups") and treating each group of a partnership firm as a single resident, non-resident, domestic corporation, or foreign corporation;
5.
The term "allocation rate of income or loss for each partner group" means the rate calculated by summing up the rates of income or loss allocated to all partners who belong to a partner group;
6.
The term "amount of income or deficit allocable to a partner group" means the amount calculated by multiplying the amount of income or deficit of a partnership firm for partner groups by the allocation rate of income or loss for each partner group;
7.
The term "value of equity shares" means a book value of equity shares in a partnership firm held by partners for the purpose of taxation, which shall serve as the basis in computation of taxable income at the time of transferring the equity shares in the partnership firm or distributing assets of the partnership firm;
8.
The term "distribution" means an act of actually conveying an asset of a partnership firm to its partners.
[This Article Newly Inserted by Act No. 8827, Dec. 31, 2007]

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 Article 100-15 (Scope of Application)
 

(1)
A partnership firm and its partners shall be eligible for the special taxation under the provisions of this Section (hereafter referred to as "special taxation for partnership firms" in this Section), if such firm is an organization falling under any of the following subparagraphs and files an application for eligibility pursuant to Article 100-17: Provided, That a partner of a partnership firm may not be eligible, as a partnership firm, for the special taxation for partnership firms, if the partner itself has benefitted from the special taxation for partnership firms:
1.
An association under the Civil Act (excluding an investment association under Article 9 (18) 5 of the Financial Investment Services and Capital Markets Act);
2.
A partnership firm and an undisclosed association under the Commercial Act (excluding an undisclosed investment association under Article 9 (18) 6 of the Financial Investment Services and Capital Markets Act);
3.
An unlimited partnership company and a limited partnership company under the Commercial Act (excluding an investment limited partnership company under Article 9 (18) 4 of the Financial Investment Services and Capital Markets Act, which is not a private equity fund under subparagraph 7 of the same paragraph);
4.
An organization prescribed by Presidential Decree as the one similar to any organization of subparagraphs 1 through 3 or as an organization engaging mainly in providing a human resources service.
(2)
As to the partnership firms eligible for the special taxation for partnership firms and their partners, the provisions of this Section shall apply prior to the provisions of respective tax-related Acts.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

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 Article 100-16 (Duties of Partnership Firms and Partners to Pay Taxes)
 

(1)
Notwithstanding the provisions of Article 2 (1) of the Income Tax Act and Article 2 (1) and (2) of the Corporate Tax Act, partnership firms shall be exempted from the income tax or the corporate tax on the incomes under Article 3 of the Income Tax Act and each subparagraph of Article 3 (1) of the Corporate Tax Act.
(2)
Partners shall have the duty to pay the income tax or the corporate tax on the partnership firm's income as allocated in accordance with Article 100-18.
(3)
Where a domestic corporation is governed by the special provisons on taxation for partnership firms, the relevant domestic corporation (hereinafter referred to as a "corporation converted into a partnership firm") shall be liable to pay the amount calculated by applying the tax rate under Article 55 (1) of the Corporate Tax Act to the tax base calculated as prescribed by Presidential Decree based on the amount of the liquidation income by dissolution under Article 79 (1) of the Corporate Tax Act as corporate tax (hereinafter referred to as "corporate tax on quasi-liquidation income).
(4)
A corporation converted into a partnership firm shall report the tax base and tax amount of corporate tax on quasi-liquidation income to the head of a tax office having jurisdiction over a place of tax payment by the date when three months has passed after the completion date of the preceding business year of the first business year governed by the special provisions on taxation for partnership firms.
(5)
A corporation converted into a partnership firm shall pay the tax amount of corporate tax on quasi-liquidation income in equal amount or higher for three years from the deadline of report under paragraph (4).
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

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 Article 100-17 (Application for Eligibility for or Waiver of Special Taxation for Partnership Firms)
 

(1)
A firm shall, if it desires to become eligible for the special taxation for partnership firms, file an application with the head of the competent tax office prescribed by Presidential Decree.
(2)
A partnership firm eligible for the special taxation for partnership firms may waive such special taxation prescribed by Presidential Decree: Provided, That it shall not waive the special taxation for partnership firms during the period of time between the taxable year in which it benefits from the special taxation initially and the taxable year that ends within four years from the first day of the taxable year immediately following the aforementioned first taxable year.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

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 Article 100-18 (Calculation and Allocation of Income, etc. of Partnership Firms)
 

(1)
The income or deficit subject to allocation to each partner group shall be allocated to each partner of the partner group in proportion to the allocation rate of profit or loss among the partners at the end of each taxable year: Provided, That in cases of a partner prescribed by Presidential Decree who has invested in the partnership firm but has not participated in its management (hereafter referred to as a "passive partner" in this Section), no deficit may be allocated to such partner, however, an amount obtained after deducting the deficit that has not been allocated from the amount of allocable income as prescribed by Presidential Decree when the amount of income is allocated to such passive partner in each taxable year finishing within ten years from the end of the relevant taxable year.
(2)
The deficit allocated to each partner under paragraph (1) may not exceed the value of equity shares held by each partner as of the end of the pertinent taxable year of the partnership firm. In such cases, the portion of deficit exceeding the value of equity shares held by a partner shall be carried over to and allocated over the taxable years that end within ten years after the first day of the taxable year immediately following the pertinent taxable year prescribed by Presidential Decree.
(3)
Each partner shall, when he/she calculates the tax base of the income tax or the corporate tax for the taxable year to which the ending date of taxable year of the partnership firm belongs, regard the income or deficit allocated to him/her under paragraph (1) as the gross income or deductible expenses classified by Presidential Decree: Provided, That in the case of a passive partner (excluding any passive partner prescribed by Presidential Decree in whose case no tax shall be imposed on the income allocated by pensions, funds, etc. generated in a country with which the Republic of Korea has entered into a tax treaty among the passive partners of collective investment schemes defined in Article 9 (18) of the Financial Investment Services and Capital Markets Act), the allocated income shall be considered as the income under Articles 17 (1), subparagraph 2 of Article 119 of the Income Tax Act and subparagraph 2 of Article 93 of the Corporate Tax Act.
(4)
The amounts relating to a partnership firm as specified in the following subparagraphs shall be allocated to each partner in proportion to the allocation rate of income or loss among partners at the end of each taxable year: Provided, That the amount under subparagraph 4 shall be allocated only to the partners that are domestic corporations or foreign corporations:
1.
Tax credits and tax amounts reduced or exempted under the Corporate Tax Act and this Act;
2.
Tax amounts withheld under Article 73 of the Corporate Tax Act for the income generated by the partnership firm;
3.
Additional taxes under Article 76 of the Corporate Tax Act and Article 100-25 of this Act;
4.
The corporate tax for the capital gains of land, etc. under Article 55-2 of the Corporate Tax Act.
(5)
Each partner shall, when he/she files a return on the income tax or the corporate tax for the taxable year to which the ending date of taxable year of the partnership firm belongs to pay the tax, deduct the amounts under paragraph (4) 1 and 2 out of the amount allocated under paragraph (4) from the income tax or the corporate tax of the partner, and shall add the amounts under subparagraphs 3 and 4 of the same paragraph to the income tax or the corporate tax of the partner.
(6)
The matters concerning the determination of the allocation rate of income or loss and the calculation of income, deficit, etc. of a partnership firm, and other necessary matters shall be prescribed by Presidential Decree.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

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 Article 100-19 (Transactions between Partnership Firm and Its Partners)
 

(1)
Where a partner makes a transaction with his/her partnership firm as a third party, not as a partner, both the partnership firm and the partner shall include the profits or losses incurred from the transaction in the gross income or the deductible expenses in calculating the income for the pertinent taxable year.
(2)
If it is found that a partnership firm or a partner, to whom paragraph (1) shall apply, understates the income dishonestly, the head of the tax office having jurisdiction over the tax payment place may apply Article 52 of the Corporate Tax Act mutatis mutandis to the calculation of the income in question. In such cases, the partnership firm and the partner shall be regarded as related party as defined in paragraph (1) of the said Article.
(3)
The criteria for judgment on the transactions made as a third party, the scope of inclusion in gross income and deductible expenses, and other necessary matters shall be prescribed by Presidential Decree.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

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 Article 100-20 (Adjustment of Value of Equity Shares)
 

(1)
If a partner receives dividends distributed from the income of his/her partnership firm or if any event prescribed by Presidential Decree occurs, the value of equity shares held by the partner shall be adjusted and raised higher accordingly.
(2)
If a partner receives an asset distributed by his/her partnership firm or if any event prescribed by Presidential Decree occurs, the value of equity shares held by the partner shall be adjusted and reduced accordingly.
(3)
The adjustable amount of equity shares, the order of adjustment, and other necessary matters shall be prescribed by Presidential Decree.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

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 Article 100-21 (Transfer of Equity Shares in Partnership Firms)
 

(1)
Where a partner transfers his/her equity shares in his/her partnership firm to other persons, the income derived from the transfer of the equity shares shall be regarded as the one derived from the transfer of an asset (referring to the asset under subparagraph 9 (b) of Article 119 of the Income Tax Act in the case the relevant partner is a non-resident, and the asset under subparagraph 7 (b) or 9 (a) of Article 93 of the Corporate Tax Act in case it is a foreign corporation) under Article 94 (1) 3 or 4 (b) of the Income Tax Act and thus the capital gains tax or the corporate tax shall be levied on such income pursuant to the Income Tax Act or the Corporate Tax Act.
(2)
The method of calculating the capital gains of equity shares and other necessary matters shall be prescribed by Presidential Decree.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

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 Article 100-22 (Distribution of Assets of Partnership Firms)
 

(1)
In cases where a partner receives assets distributed by his/her partnership firm and the market value of the distributed assets exceeds the value of stakes held by the partner on the date of distribution, the excessive amount shall be regarded as the income under Article 17 (1) of the Income Tax Act in calculating his/her income for the taxable year to which the date of distribution belongs.
(2)
In cases where a partner receives assets distributed by his/her partnership firm as a consequence of such cause specified by Presidential Decree such as the dissolution of partnership firm, etc. and the market value of the distributed assets does not reach the value of stakes held by the partner, the deficient amount shall be regarded as a loss incurred in the transfer of assets under Article 94 (1) 3 or 4 (c) of the Income Tax Act in calculating his/her income for the taxable year to which the date of distribution belongs.
(3)
An amount equivalent to the value of stakes of the relevant partner on the date of distribution from among the market value of assets distributed by a partnership firm in cases under paragraphs (1) and (2) shall not be included in the gross income when calculating the tax base of income tax or corporate tax of the taxable year to which the date of distribution of the relevant partner belongs.
[This Article Newly Inserted by Act No. 8827, Dec. 31, 2007]

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 Article 100-23 (Reporting on Details of Calculation and Allocation of Income of Partnership Firms)
 

(1)
Every partnership firm shall report the details of calculation and allocation of its income for the pertinent taxable year to the head of the competent tax office, as prescribed by Presidential Decree, no later than the fifteenth day of the third month from the end of the month to which the ending date of the taxable year belongs.
(2)
Paragraph (1) shall also apply to the partnership firms that has no income generated or deficit incurred during the respective taxable year.
(3)
A partnership firm shall notify its respective partners of the reported details concerning the relevant partner when filing a report pursuant to paragraph (1).
[This Article Newly Inserted by Act No. 8827, Dec. 31, 2007]

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 Article 100-24 (Withholding Taxes from Non-resident or Foreign Corporation Partners)
 

(1)
A partnership firm shall collect the income tax or the corporate tax equivalent to the amount calculated by the following tax rates on the income distributed to the partner that is a non-resident or a foreign corporation, and shall pay it to the head of the tax office having jurisdiction over the place of tax payment by the time limit for filing a return under Article 100-23 (1) (or the tenth day of the month immediately following the month in which the income is distributed or the time limit under Article 100-23 (1), whichever is earlier, in cases where an amount for which the return under Article 100-23 has not been filed is distributed):
1.
Tax rates under Article 156 (1) 3 of the Income Tax Act and Article 98 (1) 3 of the Corporate Tax Act in cases of a passive partner: Provided, That where the proviso to paragraph (3) or the main sentence of Article 100-18 (3) is applied, tax rates under the subparagraphs of Article 156 (1) of the Income Tax Act and the subparagraphs of Article 98 (1) of the Corporate Tax Act;
2.
The highest tax rate of the tax rates under the following items in cases of a partner other than a passive partner:
(a)
If a partner is a non-resident: The tax rate under Article 55 of the Income Tax Act;
(b)
If a partner is a foreign corporation: The tax rate under Article 55 of the Corporate Tax Act.
(2)
Every partnership firm that withholds taxes in accordance with paragraph (1) shall submit a statement of payments in accordance with Article 164-2 of the Income Tax Act and Article 120-2 of the Corporate Tax Act. In such cases, such income shall be deemed as the one that the partnership firm has paid to the partner that is either a non-resident or a foreign corporation, at the time of filing a return under Article 100-23 (or at the time of distributing it, in cases where an amount for which a return under Article 100-23 has not been filed is distributed).
(3)
The proviso to Article 100-18 (3) shall apply to the classification of income distributed to a passive partner: Provided, That when it is deemed that a passive partner has reduced the income tax or corporate tax unjustly by his/her having been distributed the income through a partnership firm not by having been paid the income directly, the classification of income under the proviso to Article 100-18 (3) shall not apply, but the classification of income under Article 119 of the Income Tax Act or Article 93 of the Corporate Tax Act shall apply based on the income received by a partnership firm.
(4)
A non-resident who has income under paragraph (1) 2 and a partner who is a foreign corporation shall make a final report of tax base of the income tax by applying mutatis mutandis the provisons of Articles 121 through 125 of the Income Tax Act or a report of tax base of the corporate tax by applying mutatis mutandis Articles 91, 92, 95, 95-2 and 97: Provided, That in cases where a partnership firm has withheld and paid the income tax or corporate tax pursuant to paragraph (1), it needs not make a final report of tax base or a report of tax base.
(5)
Where the income classified by application of the proviso to paragraph (3) or the main sentence of Article 100-18 (3) to a passive partner is the income under subparagraph 3 of Article 119 of the Income Tax Act, subparagraph 3 of Article 93 of the Corporate Tax Act or that under subparagraph 9 of Article 119 of the Income Tax Act, subparagraph 7 of Article 93 of the Corporate Tax Act, it shall not be withheld with tax rates under the proviso to paragraph (1) 1 but shall comply with the methods under the following subparagraphs:
1.
In cases of the income under subparagraph 3 of Article 119 of the Income Tax Act or subparagraph 3 of Article 93 of the Corporate Tax Act: Method for a partner to make a report and pay by applying paragraph (4) mutatis mutandis;
2.
In cases of the income under subparagraph 9 of Article 119 of the Income Tax Act or subparagraph 7 of Article 93 of the Corporate Tax Act: Method for a partnership firm to withhold with tax rates under paragraph (1) 1 and a partner to make a report and pay by applying paragraph (4) mutatis mutandis.
(6)
When applying paragraphs (1) 2 and (4), a place where a partnership firm conducts a business shall be deemed a domestic place of business of a non-resident or a partner who is a foreign corporation.
(7)
Articles 156-2 through 156-5 of the Income Tax Act, Articles 98-3 through 98-5 of the Corporate Tax Act and Article 29 of the Adjustment of International Taxes Act shall apply mutatis mutandis to the application method of withholding under paragraph (1) 1, (3) and (5) 2.
(8)
Where a non-resident or a partner who is a foreign corporation has a domestic place of business (excluding cases where it is deemed as a domestic place of business pursuant to paragraph (6) ; hereafter the same shall apply in this paragraph) under Article 120 of the Income Tax Act or Article 94 of the Corporate Tax Act and the income distributed to a partner is that reverting to the domestic place of business, the provisions under paragraphs (1) through (7) shall not apply to the income, and the relevant tax amount shall be reported and paid after adding it up to tax base of the domestic place of business.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

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 Article 100-25 (Additional Tax)
 

(1)
If a partnership firm fails to file a return under Article 100-23 (1) or files a return with an amount of income less than the one that should be reported fairly, the head of the competent tax office shall levy the amounts of the following subparagraphs as an additional tax. In such cases, the method of calculating the income that shall be reported fairly shall be prescribed by Presidential Decree:
1.
If no return has been filed: 4/100 of the income that shall be reported fairly;
2.
If the return filed states an amount of income less than the one that shall be reported fairly: 2/100 of the understated amount of income.
(2)
If a partnership firm fails to pay a tax that it has already withheld or is obligated to withhold under Article 100-24 by the time limit or pays tax amount less than the one that it owes to pay, the head of the competent tax office shall levy the greater amount of those of the following subparagraphs (which shall not exceed 10/100 of the tax amount not paid or the one paid less) as the additional tax:
1.
Tax amount not paid or paid less × Period from the date following the time limit for payment to the date of voluntary payment or the date of notice of payment demand × Interest rate prescribed by Presidential Decree, reflecting the interest rate that financial institutions apply to overdue loans;
2.
5/100 of the tax amount not paid or paid less.
[This Article Newly Inserted by Act No. 8827, Dec. 31, 2007]

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 Article 100-26 (Provisions Applicable Mutatis Mutandis)
 

In cases of partnership firms that are not corporations, with regard to the matters prescribed by Presidential Decree, including the taxable year, tax payment place, business registration, tax credits, tax reduction, tax exemption, withholding, additional tax, corporate tax on the capital gains from land, etc., such partnership firms shall be deemed a single domestic corporation and the relevant provisions of the Corporate Tax Act and this Act shall apply mutatis mutandis to such partnership firms.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

SECTION 10-4 Deleted.

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 Article 100-27 (Refund Money for Oil Prices)
 

In order to relieve a burden caused by high oil prices, refund money for oil prices under Articles 100-28 through 100-34 shall be paid to labor income earners or business income earners by method of refund of the income tax.
[This Article Newly Inserted by Act No. 9131, Sep. 26, 2008]

SECTION 11 Special Taxation for Other Direct National Taxes

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 Article 101 (Special Case of Application of Additional Appraisal to Largest Shareholders, etc. of Small or Medium Enterprises)
 

In the application of Article 63 of the Inheritance Tax and Gift Tax Act, in cases where shares or equities of the largest shareholder or largest investor under Article 63 (3) of the same Act and those of the shareholder or investor who has a special relationship with the former are inherited or gifted on or before December 31, 2014, such shares and such equities shall be based on the values that are appraised in accordance with the provisions of Article 63 (1) 1 and (2) of the same Act, notwithstanding the provisions of Article 63 (3) of the same Act.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

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 Article 102 (Reduction of or Exemption from Tax on Income from Forest Development)
 

(1)
As for the income accrued no later than December 31, 2015 from the deforestation or transfer of a forest newly-afforested by a national according to a forest management plan or a project for special forest business zone under the Forest Resources Creation and Management Act (including any designated development projects in a designated development area provided for in Article 2 of the Addenda of the amended Forestry Act, Act No. 4206, which is the designated development area designated by the previous Forestry Act prior to the enforcement of the amended Forestry Act), or a seed-collection forest, forest protection area under Article 7 of the Forest Protection Act which he/she has afforested for 10 years or more, an amount of tax equivalent to 50/100 of income tax or corporate tax shall be reduced.
(2)
Any person who intends to have paragraph (1) applied shall apply for reduction, as prescribed by Presidential Decree.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

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 Article 103 Deleted.
 

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 Article 104 Deleted.
 

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 Article 104-2 (Assistance to Fishermen Affected by Fishery Treaties)
 

(1)
No income tax or corporate tax shall be levied on the subsidies falling under any of the following subparagraphs which are paid not later than December 31, 2009:
1.
Subsidies granted under Article 4 (1) of the Special Act on Assistance to Fisherman, etc. and Development of Fisheries following the Conclusion of Fisheries Agreement to the fishermen, etc. under the same Act (hereafter referred to as "fishermen, etc." in this Article);
2.
Unemployment subsidies granted to fishing vessel crews under Article 5 (1) of the Special Act on Assistance to Fisherman, etc. and Development of Fisheries following the Conclusion of Fisheries Agreement.
(2)
Subsidies granted to the fishermen, etc. for renovation of their fishing vessels and gears and fishing operation expenses, not later than December 31, 2009, pursuant to Article 4 (3) of the Special Act on Assistance to Fisherman, etc. and Development of Fisheries following the Conclusion of Fisheries Agreement (hereafter referred to as "fishery subsidies" in this paragraph) shall not be included in the gross income in calculating their income amount, and any disbursement of the relevant fishery subsidies or any depreciation of business assets acquired with the fishery subsidies shall not be added to the deductible expenses.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

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 Article 104-3 (Special Cases of Taxation on Companies for Purpose of Capital Expansion)
 

(1)
Where a corporation designated by the Minister of Strategy and Finance (hereafter referred to as "company for the purpose of capital expansion" in this Article), which is a corporation established to support capital expansion of financial institutions prescribed by Presidential Decree, appropriates the reserves for loss compensation for deductible expense by the business year ending on or before December 31, 2014 in order to compensate for losses occurring from raising or investing funds in the manners prescribed by Presidential Decree, the relevant amount within the extent of the smaller amount from among that calculated according to the following subparagraphs shall be added to the deductible expenses when computing the income of the relevant business year:
1.
100/100 of the amount of income before the reserves for loss compensation are added to the deductible expenses during the relevant business year;
2.
The amount subtracting the balance of the reserves for loss compensation from the investment prescribed by Presidential Decree as of the ending date of the relevant business year: Provided, That where the relevant amount is negative, the amount shall be regarded as zero.
(2)
The corporation which has appropriated the reserves for loss compensation for deductible expenses under paragraph (1) shall offset any losses first by the reserves for loss compensation already appropriated for deductible expenses if any losses occur.
(3)
The balance of the reserves remaining after offsetting them under paragraph (2) by the ending date of the business year to which the date five years elapse belongs since the ending date of the business year when such reserves as the reserves for loss compensation included in deductible expenses under paragraph (1) are added to deductible expenses shall be included in the gross income when computing the amount of income of the business year to which the date five years elapse belongs.
(4)
Where causes falling under any of the following subparagraphs arise in companies for the purpose of capital expansion, the entire amount of the reserves for loss compensation not included in the gross income when computing the amount of income of the taxable year to which the date such cause has arisen belongs shall be added to the gross income:
1.
Where the relevant business is abolished;
2.
Where a corporation is dissolved.
(5)
Any person who intends to have paragraph (1) applied shall submit, to the head of the tax office having jurisdiction over the place of tax payment, a specification regarding the reserves for loss compensation, as prescribed by Presidential Decree.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

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 Article 104-4 (Special Taxation for Income Tax, etc. on Electronic Over-the-Counter Transactions)
 

(1)
Stocks traded by means of intermediation or proxy under Article 78 (1) of the Financial Investment Services and Capital Markets Act shall be deemed to be traded on the securities market, and Article 94 of the Income Tax Act shall apply thereto.
(2)
Listed stocks from among the stocks traded as prescribed in Article 78 (1) of the Financial Investment Services and Capital Markets Act shall be deemed to be traded on the securities market, and Article 8 of the Securities Transaction Tax Act and Article 5 (1) 5 of the Act on Special Rural Development Tax shall apply thereto.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

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 Article 104-5 (Tax Credit for Payment Records)
 

(1)
Where anyone who is liable to submit payment records or other documents, which are prescribed by Presidential Decree, substituting for such payment records pursuant to Articles 164 and 164-2 of the Income Tax Act and Articles 120 and 120-2 of the Corporate Tax Act (excluding any payment records on interest income and dividend income, and other document substituting for such payment records; hereafter referred to as "payment records, etc." in this Article) directly submits payment records, etc. by making use of the national tax information and communications networks provided for in subparagraph 19 of Article 2 of the Framework Act on National Taxes (hereafter referred to as "national tax information and communications networks" in this Article), an amount prescribed by Presidential Decree, considering how many times such payment records, etc. have been submitted, etc., shall be deducted from the amount of income tax payable or corporate tax payable of which tax base and amount of tax are filed for the first time after the lapse of the deadline for submission of payment records, etc.
(2)
Where any certified tax accountant provided for in the Certified Tax Accountant Act (including any certified public accountant registered under Article 20-2 (1) provided for in the Certified Tax Accountant Act, any tax accounting corporation provided for in the same Act and any accounting corporation provided for in the Certified Public Accountant Act; hereafter the same shall apply in this paragraph) submits payment records, etc. by making use of the national tax information and communications networks on behalf of a person who is liable to submit such payment records, etc. under paragraph (1), an amount prescribed by Presidential Decree, considering how many times such payment records, etc. have been submitted, etc., shall be deducted from the amount of income tax or corporate tax to be paid by such certified tax accountant of which tax base and amount of tax are filed for the first time after the lapse of the deadline for submission of payment records, etc.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

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 Article 104-6 Deleted.
 

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 Article 104-7 (Special Taxation for Urban Improvement Work Association)
 

(1)
With respect to the urban reconstruction association authorized to be formed before June 30, 2003 under Article 44 (1) of the Housing Construction Promotion Act (referring to the Act prior to its amendment by Act No. 6852) and registered as a corporation under Article 18 of the Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents (hereafter in this Article, referred to as "urban conversion and improvement work association"), the Income Tax Act shall, notwithstanding Article 2 of the Corporate Tax Act, apply by treating such association and its members as the place of joint business and the cooperators of business respectively under Articles 87 (1) and 43 (3) of the Income Tax Act: Provided, That the same shall not apply to the next year of the relevant business year where the urban conversion and improvement work association files the tax base and tax amount of its income for the business year concerned with the head of the tax office having jurisdiction over the place of tax payment in accordance with Article 60 of the Corporate Tax Act.
(2)
With respect to the association formed pursuant to Article 18 of the Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents (including the urban conversion and improvement work association; hereafter in this Article, referred to as "urban improvement work association"), the Corporate Tax Act (excluding Article 29 of the same Act) shall, notwithstanding Article 1 of the Corporate Tax Act, apply by treating such association as a nonprofit domestic corporation until the business year ending before December 31, 2013. In such cases, the urban conversion and improvement work association shall be only applicable in cases where it has been reported under the proviso to paragraph (1).
(3)
With respect to the lots and buildings (limited to those constructed by the execution of the urban improvement work concerned; hereafter in this Article, the same shall apply) which are, according to the prescribed management and disposition schedule, provided by the urban improvement work association to its members in return for their previous land, after such urban improvement work has been completed under the Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents, the provision of such lots and buildings shall not be treated as the supply of goods under Article 6 of the Value-Added Tax Act.
(4)
Where the urban improvement work association has transferred to other persons the rights of ownership of all the lots and buildings constructed by such urban improvement work according to the prescribed management and disposition schedule and has alloted or delivered to other persons even the residual properties without paying national taxes along with additional charges or expenses for disposition on default, those persons to whom such residual properties were alloted or delivered shall, only if there is no sufficient amount collectable even by a disposition on default with respect to the urban improvement work association, bear the secondary taxpayer's responsibility for the lacking portion of the total amount to be collected. In such cases, the secondary taxpayer's responsibility shall be limited to as much as the price of such residual properties alloted or delivered to them.
(5)
In applying paragraph (2), such matters as may be necessary concerning the scope of the works, etc. excluded from the application of taxable income under Article 3 of the Corporate Tax Act with respect to the urban improvement work association shall be determined by Presidential Decree.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

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 Article 104-8 (Tax Credit for Electronic Return)
 

(1)
Where a taxpayer directly files a tax base return of income tax or corporate tax prescribed by Presidential Decree by means of electronic return under Article 5-2 of the Framework Act on National Taxes (hereafter referred to as "electronic return" in this Article), an amount prescribed by Presidential Decree shall be deducted from the amount of tax payable. In such cases, where the amount of tax payable is a negative number, it shall be deemed nonexistent.
(2)
Where a taxpayer directly files a value-added tax return prescribed by Presidential Decree by means of electronic return, an amount prescribed by Presidential Decree shall be either deducted from the relevant tax payable or added to the refundable amount: Provided, That in cases of general taxable persons under Article 3 (4) of the Value-Added Tax Act who do not have an amount of sales tax or purchase tax, the provisions in the main sentence shall not apply thereto; in cases of simplified taxable persons under Article 25 of the Value-Added Tax Act, when the deductible amount of tax exceeds an amount obtained by adding or subtracting the amount provided for in Articles 26 (3), 26-2 and 26-3 of the same Act to or from the amount of tax payable, such excess amount shall be deemed nonexistent.
(3)
Where any certified tax accountant provided for in the Certified Tax Accountant Act (including any certified public accountant registered under Article 20-2 (1) of the Certified Tax Accountant Act, any tax accounting corporation provided for in the same Act and any accounting corporation provided for in the Certified Public Accountant Act; hereafter the same shall apply in this paragraph) has filed a income tax return or corporate tax return by means of electronic return during the immediately preceding taxable year on behalf of a taxpayer, an amount under paragraph (1) shall be deducted from the amount of income tax or corporate tax to be paid by the relevant certified tax accountant; where he/she has filed a value-added tax return during the period of immediately preceding taxable year, an amount under paragraph (2) shall be deducted from the amount of value-added tax to be paid by the relevant tax accountant. In such cases, the limit of annual deduction shall be prescribed by Presidential Decree.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

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 Article 104-9 (Inclusion of Reserve Funds for Participation in EXPO 2012 Yeosu Korea in Deductible Expenses)
 

(1)
Where a domestic corporation (including domestic corporations that are the subcontractors of such domestic corporation; hereafter the same shall apply in this Article) that entered into a contract for participation in the projects prescribed by Presidential Decree with the Organizing Committee for the EXPO 2012 Yeosu Korea (hereafter referred to as "contract for participation in EXPO" in this Article) has appropriated reserve funds for participation for the deductible expenses for each business year ending before December 31, 2011, such amount shall be included in the deductible expenses when the amount of income for the relevant business year is calculated.
(2)
When a domestic corporation that appropriated reserve funds for participation for deductible expenses as prescribed in paragraph (1) have disbursed expenses prescribed by Presidential Decree in order to participate in the EXPO 2012 Yeosu, it shall, first of all, offset such expenses by the reserve funds for participation already appropriated as deductible expenses.
(3)
The reserve funds for participation appropriated for deductible expenses as prescribed in paragraph (1) shall be included in the gross income in accordance with the following subparagraphs:
1.
As for reserve funds for participation equivalent to the amount disbursed no later than December 31, 2012 in order to acquire fixed asset for business for installation in the district where the EXPO grounds under subparagraph 6 of Article 2 of the Special Act on the Commemoration of and Follow-up on the Expo 2012 Yeosu Korea are to be created, an amount obtained by dividing such reserve funds for participation by 36, which is then multiplied by the number of months of the relevant business years shall be included in the gross income;
2.
When reserve funds for participation included in the deductible expenses as prescribed in paragraph (1) exceeds the sum total of the amount offset as prescribed in paragraph (2) and the amount to be included in the gross income as prescribed in subparagraph 1, such excess amount shall be included in the gross income when the amount of income for the business year to which December 31, 2012 belongs: Provided, That in cases of an amount that is not to be used for participation in the EXPO 2012 Yeosu because project plans have been changed after reserve funds for participation was included in the deductible expenses, such amount may be included in the gross income before the business year to which December 31, 2012 belongs arrives.
(4)
When a cause falling under any of the following subparagraphs occurs, a domestic corporation that has included reserve funds for participation in the deductible expenses as prescribed in paragraph (1) shall include the total amount of reserve funds for participation that have not been included in the gross income in the gross income when it calculates the amount of income for the business year to which the date when such cause occurs belongs:
1.
When a contract for participation in the EXPO 2012 Yeosu or subcontract is cancelled;
2.
When the relevant business is closed;
3.
When such corporation dissolves: Provided, That in cases such corporation has dissolved due to merger and hands over the amount in the relevant account of reserve funds for participation to a corporation incorporated following merger or a corporation that survives such merger, such cases shall be excluded.
(5)
Where reserve funds for participation is included in the gross income as prescribed in the main sentence of paragraph (3) 2 or paragraph (4), a surcharge equivalent to interest calculated as prescribed by Presidential Decree shall be collected after adding it to the corporate tax; Provided, That in cases such corporation closes business or dissolves after the EXPO 2012 Yeosu is over, this shall not apply to the amount that has not been included in the gross income from among the amounts falling under paragraph (3) 1.
(6)
A domestic corporation that intends to have paragraph (1) applied shall submit a detailed statement of reserve funds to the tax office having jurisdiction over the place of tax payment, as prescribed by Presidential Decree.
[This Article Newly Inserted by Act No. 9921, Jan. 1, 2010]

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 Article 104-10 (Special Cases of Calculating Tax Base of Corporate Tax for Shipping Enterprises)
 

(1)
The tax base of the corporate tax for shipping enterprises that run the ocean-going shipping business prescribed by the Marine Transportation Act (hereafter in this Article referred to as "shipping enterprises") and meet the requirements prescribed by Presidential Decree from among domestic corporations may be an amount obtained by adding up the amount that is computed according to the following methods, not later than December 31, 2014:
1.
With respect to the income related with ocean-going shipping activities, which is prescribed by Presidential Decree (hereafter in this Article referred to as "shipping income"), the total amount of individual ship standard profit (hereafter in this Article referred to as "standard ship profit") that is computed by applying the following formula, notwithstanding the provisions of Articles 13 through 54 of the Corporate Tax Act:
2.
With respect to the income other than shipping income (hereafter in this Article referred to as "non-shipping income"), an amount that is computed in accordance with Articles 13 through 54 of the Corporate Tax Act.
(2)
Any corporation that intends to make it applicable to the special case of computing the tax base for shipping enterprises referred to in paragraph (1) (hereafter in this Article referred to as "special case of computing the tax base") shall file an application for the application of the special case of computing the tax base under conditions prescribed by Presidential Decree and the corporation is required to keep it subject to the application of the special case of computing the tax base for five consecutive business years from the business year to which the special case of computing the tax base is applicable (hereinafter referred to as "period for the application of the special case of computing the tax base"): Provided, That any shipping enterprises under application of special cases of computation of tax base may renounce the application of special cases of computation of tax base as prescribed by Presidential Decree by the business year to which December 31, 2010 belongs.
(3)
In the application of paragraph (1), any loss incurred by non-shipping income shall not be aggregated into the standard ship profit, and spacial taxation, such as non-taxation, tax exemption, tax reduction, tax exemption, tax credit or income deduction, etc. prescribed in this Act, by the Framework Act on National Taxes, by treaties and by Acts prescribed in the subparagraphs of Article 3 (1) shall not apply to shipping income.
(4)
Where any income withheld at source pursuant to Article 73 of the Corporate Tax Act is included in the shipping income, the amount of the withholding tax on such income shall not be deducted from the computed tax amount as the tax already paid in the Corporate Tax Act.
(5)
The deficit carried over that accrues prior to the application of the special case of computing the tax base shall not be deducted from the amount referred to in paragraph (1).
(6)
Where any corporation subject to the application of the special case of computing the tax base has failed to meet the requirements referred to in paragraph (1) for not less than two business years during the period for the application of the special case of computing the tax base, such corporation shall be excluded from the application of the special case of computing the tax base, starting with the business year during which such failure occurs twice, for the remaining period during which the special case of computing the tax base is applied and then for the next five business years.
(7)
Where any domestic corporation subject to the application of the special case of computing the tax base makes an interim tax prepayment pursuant to Article 63 (5) of the Corporate Tax Act, the tax base for such interim tax prepayment shall be an amount computed pursuant to paragraphs (1) through (5) and the provisions of Article 63 (5) 1 and 2 of the same Act shall apply only to the part related to non-shipping income.
(8)
In the application of paragraph (1), one navigation-day profit per ton shall be determined by Presidential Decree within the scope of not exceeding 30 won per ton of ship taking into account the tonnage of ship, the income of shipping enterprises, the payment records of the corporate tax and the examples of foreign operations, etc.
(9)
The method of computing the standard individual ship profit, including the number of navigation days, the usage rate, etc., the method of computing the income of each business year to which the special case of computing the tax base is not applicable but the Corporate Tax Act is applicable, the method of performing separate accounting, and other matters concerning the application of the special case of computing the tax base, etc. shall be prescribed by Presidential Decree.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

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 Article 104-11 (Special Cases concerning Investment in and Contribution to Credit Rehabilitation Services Companies by Financial Institutions)
 

(1)
Where a financial institution receives back its residual property from a Non-performing Loan Resolution Fund no later than December 31, 2009 in accordance with the proviso to Article 2 (5) of the Addenda of the Act on the Efficient Disposal of Non-performing Assets, etc. of Financial Institutions and the Establishment of Korea Asset Management Corporation (Act No. 5371) and then intends to acquire stocks by investing it in a corporation prescribed by the Minister of Strategy and Finance as having purposes of supporting rehabilitation of the financially marginalized (hereafter referred to as "credit rehabilitation services company" in this Article) until the end of the next business year of the business year to which the date of receiving such refund belongs, the amount to be invested from among the refund amount shall be included in deductible expenses when calculating the income amount in the business year to which the date of receiving such refund belongs. In such cases, the amount shall be appropriated to advanced depreciation allowance of the relevant stocks.
(2)
The advanced depreciation allowance appropriated pursuant to paragraph (1) shall be included of in the gross income in whole in the business year to which the date when the relevant stocks are disposed of (in cases where there is any stock acquired through other methods other than the stocks acquired using the refund amount under paragraph (1), it shall be deemed that the stocks acquired using the refund amount under paragraph (1) have been disposed of earlier than others) or the relevant corporation is dissolved belongs, but, in cases of partial disposal of stocks, an amount calculated based on the following formula shall be included in the gross income:
(3)
Where a financial institution which has included the amount to be invested pursuant to paragraph (1) in the deductible expenses fails to make contributions, or closes or dissolves its business, the amount failed to be contributed shall be included in the gross income when calculating the income amount of the business year to which the date when such reason occurs belongs, and in such cases, Article 9 (4) shall apply mutatis mutandis to the amount to be paid as corporate tax: Provided, That in cases of merger or corporate split, in which a merging corporation, split-off corporation or a counterpart corporation of split-off and merger (hereafter referred to as "merging corporation, etc." in this paragraph) succeeds to such amount, such cases shall be excluded; in such cases, such amount shall be deemed to have been included in the deductible expenses by the merging corporation, etc. pursuant to paragraph (1).
(4)
A financial institution which intends to be governed by paragraph (1) shall submit a tax base return on corporate tax of the relevant taxable year to the head of the tax office having jurisdiction over the place of tax payment, accompanying with plans for contribution of refund amount from a non-performing loan resolution fund.
(5)
Where a financial institution makes a contribution to a credit rehabilitation services company no later than December 31, 2015 to assist in credit guarantee for the financially marginalized, the amount of contribution may be included in the deductible expenses of the relevant financial institution when the amount of income for the relevant business year is calculated.
(6)
A financial institution which desires to be eligible for the application of paragraph (5) shall submit a statement of contribution to credit rehabilitation services company prescribed by Ordinance of the Ministry of Strategy and Finance together with the tax base return for the relevant business year to the head of the tax office having jurisdiction over the place of tax payment.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

law view

 Article 104-12 (Special Taxation for Credit Rehabilitation Services Companies)
 

(1)
When a corporation conducting businesses, such as the purchase of defaulted debts, readjustment of interest rate, maturity, etc. thereof, payment guarantee to reduce financial expenses from high interest, etc. for persons who are restricted in loan transactions by financial companies, etc. because of low credit rating, weak economic power, etc. which is designated by the Minister of Strategy and Finance (hereafter referred to as "credit rehabilitation services company" in this Article) has appropriated loss compensation reserve as deductible expenses in each business year ending before December 31, 2015, such amount shall be included in the deductible expenses when the amount of income for the relevant business year is calculated.
(2)
When loss has incurred to a corporation that included loss compensation reserve in the deductible expenses as prescribed in paragraph (1), it shall, first of all, offset such loss by the loss compensation reserve already included in the deductible expenses.
(3)
The balance of loss compensation reserve remaining after it was offset as prescribed in paragraph (2) no later than the end of the business year to which the date falling on five years from the end of the business year in which such reserve was included in the deductible expenses as prescribed in paragraph (1) belongs shall be included in the gross income when the amount of income for the business year to which the date falling on five years belongs.
(4)
Where a cause falling under any of the following subparagraphs has occurred to a credit rehabilitation services company, it shall include in the gross income the total amount of loss compensation reserve that has not been included in the gross income when calculating the amount of income for the taxable year to which such cause occurred belongs:
1.
Where it closes the relevant business;
2.
Where the corporation dissolves.
(5)
Those who intend to have paragraph (1) applied shall submit a detailed statement on loss compensation reserve, as prescribed by Presidential Decree.
[This Article Newly Inserted by Act No. 9921, Jan. 1, 2010]

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 Article 104-13 (Special Taxation of Gross Real Estate Tax for Confucian Schools and Religious Organizations)
 

(1)
Where there is a house or a parcel of land (hereafter referred to as "subject house or land" in this Article) owned by an individual Confucian school or an individual religious organization prescribed by Presidential Decree (hereafter referred to as "individual organization" in this Article) and registered in the name of a Confucian school foundation under the Properties of Confucian Schools Act or a religious organization prescribed by Presidential Decree (hereafter referred to as the "Confucian school foundation, etc." in this Article), to which the individual organization belongs, without an intention to evade a tax among the houses or parcels of land owned by such individual organization, the individual organization that actually owns the subject house or land may be regarded as the person who owes the duty to pay the property tax for the portions of both house and land as of the tax base date and thus may file a return on the gross real estate tax for such property, notwithstanding Articles 7 (1) and 12 (1) of the Gross Real Estate Tax Act. In such cases, the subject house or land shall be deemed as owned by the individual organization only for the purposes of taxation of the gross real estate tax.
(2)
Where an individual organization files a return on the gross real estate tax under paragraph (1), the Confucian school foundation, etc. shall have the duty to pay the gross real estate tax jointly with the individual organization within the limit of the officially announced value of the subject house or land.
(3)
Where an individual organization files a return on the gross real estate tax under paragraph (1), it shall be deemed that the Confucian school foundation, etc. does not own the subject house or land in filing a return on the gross real estate tax.
(4)
The methods of calculation, filing a return, and payment of the gross real estate tax under paragraph (1) and other necessary matters shall be prescribed by Presidential Decree.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

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 Article 104-14 (Tax Credit for Third Party Logistics Expense)
 

(1)
Where the third party distribution expense out of the logistics expense spent by a national who engages in a manufacturing business and satisfies all the following requirements for each taxable year until the taxable year that ends on or before December 31, 2015 exceeds the third party logistics expense spent for the immediately preceding taxable year, the income tax (limited to the income tax levied on business income) or the corporate tax shall be reduced by an amount equivalent to 3/100 of the excess amount: Provided, That the tax credit shall not exceed 10/100, in cases where the reduced amount exceeds 10/ 100 of the income tax or the corporate tax for the pertinent taxable year:
1.
The third party logistics expense spent for each taxable year shall be 30/100 or more of the logistics expense spent for each taxable year;
2.
The ratio of the third party logistics expense to the logistics expense spent for the pertinent taxable year shall not be lower than the ratio for the immediately preceeding taxable year.
(2)
Where the third party logistics expense disbursed in the relevant taxable year exceeds 30/100 of the logistics expenses disbursed in the relevant taxable year when the third party logistics expense disbursed in the immediately preceding taxable year is below 30/100 of the logistics expenses disbursed in the immediately preceding taxable year or nonexistent, notwithstanding paragraph (1), an amount equivalent to 3/100 of such excess amount shall be deducted from the income tax (limited to the income tax levied on business income) or corporate tax: Provided, That in cases the amount of deduction exceeds 10/100 of income tax or corporate tax for the relevant taxable year, 10/100 shall be the limit.
(3)
A national who desires to become eligible for the special credit under paragraphs (1) and (2) shall file an application for the tax credit as prescribed by Presidential Decree.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

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 Article 104-15 (Special Taxation for Investment in Development of Overseas Resources)
 

(1)
Where a business operator specializing in the development of overseas resources under subparagraph 5 of Article 2 of the Overseas Resources Development Business Act (hereafter referred to as "overseas resources development business operator" in this Article) makes any of the following investments or contributions on or before December 31, 2013 in order to develop mineral resources, the income tax (limited to the income tax levied on business income) or the corporate tax shall be reduced by an amount equivalent to 3/100 of the invested or contributed amount: Provided, That the same shall not apply where such investment or contribution is made through acquiring invested assets or equity shares of a national or a foreign affiliated company of a national (referring to a foreign corporation of which a national directly invests in 100/100 of total outstanding stocks or contributes to 100/100 of total equity capital; hereafter the same shall apply in this Article):
1.
Investment for acquiring a mining concession and a mining right by lease;
2.
Investment for acquiring a mining concession or a mining right, which involves contributions prescribed by Presidential Decree to a foreign corporation;
3.
Direct overseas investment in a foreign affiliated company of a national, which is prescribed by Presidential Decree pursuant to Article 3 (1) 18 (a) of the Foreign Exchange Transactions Act: Provided, That the same shall apply only in cases where the foreign affiliated company of the national acquires a mining concession or a mining right by lease in the manner set forth in subparagraphs 1 and2.
(2)
Where a person who has had the tax deduction pursuant to the main sentence other than the subparagraphs of paragraph (1) falls under any of the following subparagraphs, he/she shall pay the income tax or the corporate tax with an amount equivalent to the reduced tax amount and an additional amount equivalent to the interest for the tax credit given for the relevant investment or contributions, as calculated by a formula prescribed by Presidential Decree, at the time of tax base return for the taxable year to which the date when such reason has arisen belongs. In such cases, the tax amount shall be deemed as the one payable under Article 76 of the Income Tax Act or Article 64 of the Corporate Tax Act:
1.
Where assets invested or stakes invested under the subparagraphs of paragraph (1) are transferred or withdrawn before five years have passed from the date of investment or date of contribution;
2.
Where a mining right or a mining right by lease is not acquired until the date when three years have passed from the date of investment or the date of contribution.
(3)
A person who desires to become eligible for the special taxation under paragraph (1) shall file an application for the tax credit as prescribed by Presidential Decree.
(4)
Where an overseas resources development business operator acquired stocks or equity shares as a direct overseas investment under Article 3 (1) 18 of the Foreign Exchange Transactions Act with a subsidy granted pursuant to the Act on the Special Accounts for Energy and Resources-related Projects, such stocks or equity shares shall be deemed as business assets under Article 36 (1) of the Corporate Tax Act and may be included in the deductible expenses, applying the same Article mutatis mutandis.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

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 Article 104-16 (Special Taxation for Financial Soundness of Universities and Colleges)
 

(1)
Where an educational foundation under the Higher Education Act transfers any of its primary assets for profit-making prescribed by Presidential Decree (hereinafter referred to as "primary assets for profit-making") to someone else on or before December 31, 2013 and acquires another primary assets for profit-making within one year from the date of transfer, an amount calculated by the formula prescribed by Presidential Decree out of the gains from transfer gained from the transfer of the previously-owned primary assets for profit-making may not be included in the gross income in calculating its income for the pertinent business year. In such cases, an amount not less than the amount obtained by equally dividing the relevant amount shall be included in the gross income over a period of three business years, beginning from the business year to which the date falling on three years from the end of the business year to which the date such transfer was made belongs.
(2)
Where an educational foundation benefited from the special taxation under paragraph (1) but has not acquired another primary asset for profit-making, an amount calculated by Presidential Decree shall be included in the gross income in calculating its income for the business year in which such cause occurred. In such cases, the latter part of Article 33 (3) shall apply mutatis mutandis to the amount that shall be included in the gross income.
(3)
In the application of paragraphs (1) and (2), the matters concerning the submission of a statement of gains from transfer and other necessary matters shall be prescribed by Presidential Decree.
(4)
An amount contributed by a corporation, which was established by an educational foundation under the Higher Education Act by contributing not less than 50/100 of the total number of issued stocks, to the educational foundation on or before December 31, 2013 (hereafter referred to as "contribution to the educational foundation" in this paragraph), shall be included in the deductible expenses within the limit of an amount calculated by subtracting the amount of subparagraph 2 from that of subparagraph 1:
1.
The amount of income for the pertinent business year (referring to the amount of income before the donation under Article 24 of the Corporate Tax Act is included in the deductible expenses);
2.
The aggregate of deficits under subparagraph 1 of Article 13 of the Corporate Tax Act and the aggregate of the donations (excluding contribution to the educational foundation) under Article 24 of the same Act.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

law view

 Article 104-17 (Special Cases for Inclusion in Deductible Expenses at Time of Contribution of Dormant Deposit of Financial Institutions)
 

(1)
In cases where a financial institution contributes dormant deposit to the Microfinance Foundation pursuant to Article 21 of the Establishment. etc. of Microfinance Foundation Act by December 31, 2008, such amount of contributions shall be included in deductible expenses when calculating the amount of income in the relevant taxable year.
(2)
A financial institution who intends to be governed by paragraph (1) shall submit a detailed statement of contributions of dormant deposit prescribed by Ordinance of the Ministry of Strategy and Finance together with report of tax base of the corporate tax in the relevant taxable year.
[This Article Newly Inserted by Act No. 9131, Sep. 26, 2008]

law view

 Article 104-18 (Deduction of Tax Amount on Educational Expenses, etc. for Specific University or College)
 

(1)
Where a school under Article 2 of the Higher Education Act (hereafter in this Article referred to as "univeristy or college") establishes and operates vocational education and training curricula or a department according to a contract with a national pursuant to Article 8 of the Industrial Education and Industry-Academia-Research Cooperation Promotion Act and the relevant national pays expenses (hereafter in this Article referred to as "specific educational expenses") as its operation expenses by December 31, 2013, Article 10 shall apply mutatis mutandis. In such cases, "general research and human resources development expenses" shall be deemed "specific educational expenses".
(2)
Where a national contribute to a university, college or high schools tailored to industrial demand, etc. the facilities for research and human resources development prescribed by Presidential Decree by December 31, 2013, Article 11 shall apply mutatis mutandis.
(3)
When applying paragraphs (1) and (2), in cases where a national pays or contributes to a university or college located in Seoul Metropolitan area, it shall be deemed that he/she has paid or contributed an amount multiplied by 50/100 of the relevant amount.
(4)
Where a national who has entered into a prior employment contract, etc. prescribed by Presidential Decree with a high school tailored to industrial demand, etc. conducts vocational education and training to enrolled students in the relevant high school tailored to industrial demand, etc. and pays them expenses prescribed by Presidential Decree such as field training allowance (hereafter referred to as "field training allowance, etc." in this Article) by December 31, 2013, Article 10 shall apply mutatis mutandis. In such cases, "general research and human development expenses" shall be deemed "field training allowance, etc."
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

law view

 Article 104-19 (Special Provisions concerning Taxation for Land Acquired by Housing Construction Business Operator)
 

(1)
The land for which a business plan is to be approved under the Housing Act within five years from the date of its acquisition from among the land acquired by any of the following business operators (hereafter referred to as "housing construction business operator" in this Article) for construction of housing (including the land of a person who acquires the status of housing construction business operator before the tax base date of the gross real estate tax after acquiring the land) shall not be construed as being included in the scope of land subject to adding to tax base under Article 13 (1) of the Gross Real Estate Tax Act:
1.
A housing construction project operator registered as the housing construction project operator under the Housing Act;
2.
A housing association under Article 32 of the Housing Act and a project entity who is the employer;
3.
A project implementer under Articles 7 through 9 of the Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents;
4.
A corporation under Article 51-2 (1) 9 of the Corporate Tax Act.
(2)
Any person who intends to be governed by paragraph (1) shall make a report of the present status of possession of land to the head of a tax office having jurisdiction over the place of tax payment from September 16 to September 30 of the relevant year, as prescribed by Presidential Decree.
(3)
Where a housing construction business operator has failed to obtain approval for a business plan under the Housing Act for housing construction under the same Act within five years from the date when he/she has acquired land pursuant to paragraph (1), a gross real estate tax amount and an additional amount equivalent to interest shall be additionally collected, as prescribed by Presidential Decree.
[This Article Newly Inserted by Act No. 9272, Dec. 26, 2008]

law view

 Article 104-20 (Special Taxation for Capital Gains Tax following Execution of Industrial Complex Development Projects)
 

(1)
With regard to execution of an industrial complex development project pursuant to the Industrial Sites and Development Act, in cases where a resettled resident under Article 36 of the same Act (limited to persons who have resided in a residential building provided for the relevant project for at least 2 years retroactively from the approval date of the detail design for the relevant project) transfers the housing site for resettlement parceled out as resettlement measures (limited to cases of parcelling-out price of 100 million won or less) no later than December 31, 2012, the tax rate under Article 104 (1) 1 of the Income Tax Act shall be applied to the income accruing from such transfer notwithstanding Article 104 (1) 2 and 3 of the same Act.
(2)
Any person who intends to have special taxation under paragraph (1) applied shall submit, to the head of the tax office having jurisdiction over the place of tax payment, the documents listed in the following subparagraphs along with a tax base return (including preliminary return) of the taxable year to which the date transferring the relevant housing site for resettlement belongs:
1.
Any documents verifying that a resettled resident has been living in the residential building provided for the relevant project for at least 2 years;
2.
A copy of parceling-out contract of the housing site for resettlement concluded with a project executor.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

law view

 Article 104-21 (Special Taxation for Corporate Tax on Consolidation of Korea National Housing Corporation and Korea Land Corporation)
 

(1)
Where the Korea Land and Housing Corporation is established following consolidation under Article 7 of Addenda of the Korea Land and Housing Corporation Act, an amount equivalent to the deemed dividend or distributed amount under Article 16 (1) 5 of the Corporate Tax Act of the stockholders, etc. of the Korea National Housing Corporation and the Korea Land Corporation may be included in the deductible expenses when the amount of income for the business year to which the date of consolidation registration belongs, as prescribed by Presidential Decree. In such cases, matters necessary for the calculation of the amount to be included in the deductible expenses and gross income, and method of inclusion thereof, detailed statement of deemed amount of dividend or distributed amount, etc. shall be prescribed by Presidential Decree.
(2)
Where the Korea Land and Housing Corporation is established following consolidation under Article 7 of Addenda of the Korea Land and Housing Corporation Act, and even where it falls under the cases that the stockholders, etc. of the Korea National Housing Corporation and the Korea Land Corporation have shared profit with other stockholders, etc. who are related parties in the process of consolidation by evaluating the stocks, etc. at a price lower than the market value, Article 52 of the same Act shall not apply to the stockholders, etc. who have shared profit, and such profit received by the other stockholders, etc. shall not be deemed gross income under Article 15 of the Corporate Tax Act.
(3)
Notwithstanding Article 49 of the Corporate Tax Act, the Korea Land and Housing Corporation established following consolidation under Article 7 of Addenda of Act No. 9706, the Korea Land and Housing Corporation Act shall succeed to the amount that has not been included in the gross income or deductible expenses when the amount of income and tax base for each business year of the Korea National Housing Corporation and the Korea Land Corporation dissolved as prescribed in the same Article is calculated.
[This Article Newly Inserted by Act No. 9921, Jan. 1, 2010]

law view

 Article 104-22 (Special Taxation for Establishment and Operation of Corporate Sport Teams)
 

(1)
Where a domestic corporation establishes a sport team for any event prescribed by Presidential Decree (hereafter referred to as "sport team" in this Article) by no later than December 31, 2013, an amount equivalent to 10/100 of the expenses prescribed by Presidential Decree among the expenses incurred in operating the relevant sport team shall be deducted from the corporate tax for the business year in which the date of establishment falls and until the business year that ends within two years from the commencement date of the immediately following business year.
(2)
A domestic corporation who intends to have paragraph (1) applied shall file an application, as prescribed by Presidential Decree.
(3)
Where a domestic corporation to which paragraph (1) is applicable dissolves its sport team within three years from the date of establishment, or fails to satisfy the requirements prescribed by Presidential Decree concerning the composition, etc. of a team, it shall pay an amount obtained by adding the amount of the deducted tax under paragraph (1) to an amount equivalent to interest computed, as prescribed by Presidential Decree, as the corporate tax when filing a tax base return of the relevant business year.
[This Article Newly Inserted by Act No. 10406, Dec. 27, 2010]

law view

 Article 104-23 (Exclusion of Transferred Amount to Bad Debt Allowances from Gross Incomes in Cases of Domestic Corporations, etc. Subject to Application of International Accounting Standards)
 

(1)
Where a domestic corporation or a foreign corporation having a domestic place of business under Article 94 of the Corporate Tax Act (hereafter referred to as "domestic corporation, etc." in this Article) first applies the accounting standards referred to in Article 13 (1) 1 of the Act on External Audit of Stock Companies (hereafter referred to as "International Accounting Standards" in this Article) prior to the business year in which December 31, 2013 falls, it may not include an amount less an amount under subparagraph 2 from an amount under subparagraph 1 when calculating the amount of income accrued in the relevant business year:
1.
The balance of bad debt allowances in the immediately preceding business year that need to be included in the gross income pursuant to Article 34 (4) of the Corporate Tax Act;
2.
An amount of bad debt allowances included in deductible expenses of the relevant business year pursuant to Article 34 (1) of the Corporate Tax Act.
(2)
An amount not included in the gross income under paragraph (1) shall offset a difference if an amount to be included in deductible expenses under Article 34 (1) of the Corporate Tax Act in the immediately following business year is larger than that to be included in the gross income under paragraph (4) of the same Article, and the balance after such offset shall be included in the gross income when computing the amount of income to accrue in the first-commencing business year since January 1, 2014.
(3)
A domestic corporation, etc. that intends to have paragraph (1) applied shall submit an application for non-inclusion of bad debt allowances in the gross income determined by the Ordinance of the Ministry of Strategy and Finance with the head of the tax office having jurisdiction over the place of tax payment when filing a tax base return of the business year in which the International Accounting Standards first apply.
[This Article Newly Inserted by Act No. 10406, Dec. 27, 2010]

law view

 Article 104-24 (Tax Reduction or Exemption for Overseas Korean Enterprises on their Return to Korea)
 

(1)
Where a person, including Korean nationals, prescribed by Presidential Decree, falls under any of the following cases and starts a business or establishes a new place of business in the Republic of Korea (excluding the Seoul Metropolitan area; the same shall apply in this Article and Article 118-2) by not later than December 31, 2015, the income tax or corporate tax shall be reduced or exempted pursuant to paragraph (2) or (3):
1.
Where he/she relocates his/her place of business which has been running overseas for at least two years to the Republic of Korea as Prescribed by Presidential Decree;
2.
Where he/she, having no place of business in the Republic of Korea, moves his/her place of business which has been running overseas for at least two years back to the Republic of Korea, partially downsizing or maintaining current scale.
(2)
In cases falling under paragraph (1) 1, an amount of tax equivalent to 100/100 of the income tax or corporate tax on the income to be accrued in the place of business after such relocation shall be reduced or exempted in the taxable year in which the date of relocation falls, and taxable years that end within four years for the commencement date of the next taxable year; and an amount of tax equivalent to 50/100 of the income tax or corporate tax on the income shall be reduced or exempted in the taxable years that end within two years since then.
(3)
In cases falling under paragraph (1) 2, an amount of tax equivalent to 100/100 of the income tax or corporate tax on the income to be accrued in the place of business after such moving back shall be reduced or exempted in the taxable year in which the date of moving back falls, and taxable years that end within two years for the commencement date of the next taxable year; and an amount of tax equivalent to 50/100 of the income tax or corporate tax on the income shall be reduced or exempted in the taxable years that end within two years since then.
(4)
Where a national who has his/her income tax or corporate tax reduced or exempted under paragraph (1) falls under any of the following cases, he/she shall pay the amount of tax computed, as prescribed by Presidential Decree, as the income tax or corporate tax when filing a tax base return of the taxable year in which such cause occurs:
1.
Where he/she closes his/her business or dissolves the corporation within three years from the date on which the business is opened by relocating or moving back the place of business: Provided, That this shall not apply to the cases of merger, divestiture, or merger after divestiture;
2.
Where he/she fails to open a business by relocating or moving back the place of business into the Republic of Korea, as prescribed by Presidential Decree.
(5)
Article 33-2 (4) shall apply mutatis mutandis to an additional amount equivalent to interest when paying the amount of the income tax or corporate tax reduced or exempted under paragraph (1) pursuant to paragraph (4).
(6)
Matters concerning the application for reduction or exemption of an amount of tax and other necessary matters when applying paragraphs (1) through (5) shall be prescribed by Presidential Decree.
[This Article Newly Inserted by Act No. 10406, Dec. 27, 2010]

law view

 Article 104-25 (Tax Credit for Electronic Commerce of Petroleum Products)
 

(1)
Where any national supplies petroleum products under subparagraph 2 of Article 2 of the Petroleum and Petroleum Substitute Fuel Business Act no later than December 31, 2013 by using electronic payment network prescribed by Presidential Decree, an amount equivalent to 5/1,000 of the relevant supply price (referring to the supply price under Article 13 (1) of the Value-Added Tax Act) shall be reduced or exempted from the income tax (limited to the income tax on business income) or corporate tax in the taxable year to which the date of supply (referring to the transaction time under Article 9 of the Value-Added Tax Act) belongs: Provided, That where deductions exceed 10/100 of the income tax or the corporate tax for the relevant taxable year, such excess amount shall be deemed nonexistent.
(2)
A national who desires to be eligible for the application of paragraph shall make an application for tax credit, as prescribed by Presidential Decree.
[This Article Newly Inserted by Act No. 11133, Dec. 31, 2011]

CHAPTER III INDIRECT NATIONAL TAXES

law view

 Article 105 (Application of Zero Rating to Value-Added Tax)
 

(1)
A zero tax rate shall, as prescribed by Presidential Decree, apply to the value-added tax on the provision of goods or services falling under any of the following subparagraphs. In such cases, subparagraphs 3 and 3-2 shall apply only to goods or services provided no later than December 31, 2015, and subparagraphs 5 and 6, only to those provided no later than December 31, 2014:
1.
Supplies of the defense industry (including those used for operational purposes by the police) under the Defense Acquisition Program Act that are furnished by defense contractors designated under the abovementioned Act, the test products produced and supplied by an individual designated as a person under priority management under the Emergency Resources Management Act, and services provided through the mobilization of resources;
2.
Petroleum products supplied to the military units and organizations established under the Act on the Organization of National Armed Forces (excluding petroleum products supplied to golf course and other similar facilities prescribed by Presidential Decree under subparagraph 1 of Article 2 of the Military Welfare Fund Act);
3.
Urban railway construction services that are furnished directly to the person falling under any of the following items:
(a)
The State or local governments;
(b)
The Urban Railroad Corporation subject to the application of the Urban Railroad Act (limited to cases where urban railroads can be constructed under Municipal Ordinance of a local government);
(c)
The Korea Rail Network Authority under the Korea Rail Network Authority Act;
(d)
Any project operator under subparagraph 7 of Article 2 of the Act on Public-Private Partnerships in Infrastructure;
3-2.
Infrastructure facilities and construction services that are installed and rendered by any project entity under subparagraph 7 of Article 2 of the Act on Public-Private Partnerships in Infrastructure to the State or any local government in a manner under subparagraphs 1 through 3 of Article 4 of the same Act in order that such entity intends to run the business on which the value-added tax is levied;
4.
Protection appliances for disabled persons, special information and communication devices for disabled persons, and the special applications software, which are prescribed by Presidential Decree which is necessary for the use of information and communication devices by disabled persons;
5.
Machinery or materials for agriculture, livestock industry, or forestry which are supplied to farmers and persons engaged in forestry determined by Presidential Decree (including those supplied by cooperatives and their federation established under the Agricultural Cooperatives Act, the Tobacco Producers Cooperatives Act, or the Forestry Cooperatives Act) and which fall under any of the following items:
(a)
Fertilizers under the Fertilizer Control Act as determined by Presidential Decree;
(b)
Agricultural chemicals under the Agrochemicals Control Act as determined by Presidential Decree;
(c)
Farming machines as determined by Presidential Decree which may supplement insufficient manpower in agricultural villages and contribute to the increase of agricultural productivity;
(d)
Machinery and materials for livestock industry as determined by Presidential Decree which may supplement insufficient livestock industry manpower and contribute to improvement in the productivity of livestock industry;
(e)
Animal feed under the Control of Livestock and Fish Feed Act (excluding the animal feed exempted from the value-added tax under Article 12 of the Value-Added Tax Act);
(f)
Machinery and materials for forestry as determined by Presidential Decree which may contribute to the protection and promotion of development of forests;
(g)
Machinery and materials used to produce environment-friendly farm commodities provided for in the Environment-Friendly Agriculture Fosterage Act, which are prescribed by Presidential Decree;
6.
Fishing machinery and materials falling under any of the following items which are designed to be used in both coastal or inshore fishing and inland water fishing and supplied to fishermen determined by Presidential Decree (including those supplied by cooperatives and fishing village mutual savings clubs established under the Fisheries Cooperatives Act, and by cooperatives and their federation established under the Agricultural Cooperatives Act):
(a)
Feed under the Control of Livestock and Fish Feed Act (excluding the feed exempted from the value-added tax under Article 12 of the Value-Added Tax Act);
(b)
Other items as determined by Presidential Decree.
(2)
Where any person other than the farmers referred to in other portions than each item of paragraph (1) 5, has been provided with the machinery and materials and animal feed for the livestock industry under items (d) and (e) of the same subparagraph (hereafter in this paragraph referred to as "machinery and materials for the livestock industry, etc.") under unjustifiable application of the zero tax rate to the value-added tax, the head of competent tax office shall additionally collect from the person provided with such machinery and materials for the livestock industry, etc. the value-added tax amount equivalent to 10/100 of the supply price of such machinery and materials for the livestock industry, etc. and the additional tax equivalent to 10/00 of such tax amount.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

law view

 Article 105-2 (Special Cases for Refund of Value-Added Tax on Machinery and Materials for Farming or Fishing Industry)
 

(1)
The head of tax office falling under any of the following subparagraphs (hereafter in this Article referred to as "head of competent tax office") may, with respect to the machinery and materials purchased by the farmers and fishermen as prescribed by Presidential Decree (hereafter in this Article referred to as "farmers and fishermen") for using in the farming or fishing industry (limited to the machinery and materials to be bought from the general taxable persons under Article 3 (4) of the Value-Added Tax Act) or to be directly imported as prescribed by Presidential Decree, refund the amount of value-added tax charged at the time of purchasing or importing the machinery and materials to the relevant farmers or fishermen, as prescribed by Presidential Decree:
1.
Where an application for refund is made through an agent for refund under paragraph (3), the head of tax office having jurisdiction over the business place of the agent for refund;
2.
In other cases than subparagraph 1, the head of tax office having jurisdiction over the business place of the relevant farmers or fishermen.
(2)
The general taxable persons providing the machinery and materials under paragraph (1) shall, notwithstanding the provisions of Article 32 of the Value-Added Tax Act, issue a tax invoice when the farmers and fishermen who purchase the relevant machinery and materials request such issuance.
(3)
Any farmers and fishermen who intend to receive the refund under paragraph (1) shall file an application for refund through persons falling under any of the following subparagraphs (hereafter in this Article referred to as "agent for refund"): Provided, That those as prescribed by Presidential Decree may file an application for refund directly with the head of tax office having jurisdiction over the business place:
1.
Cooperatives under the Agricultural Cooperatives Act;
2.
Cooperatives under the Fisheries Cooperatives Act;
3.
Tobacco producers cooperatives under the Tobacco Producers Cooperatives Act.
(4)
The agent for refund shall, where a person applying for refund falls under any of the following subparagraphs, notify the head of competent tax office thereof:
1.
Where deemed that he/she is not a farmer or fisherman;
2.
Where deemed that an application for refund is made by false or other illegal methods when taking account of the cultivated area or the size of facilities of a farmer or fisherman.
(5)
The head of competent tax office shall, where a person who has received a refund of value-added tax under paragraph (1) falls under any of the following subparagraphs, additionally collect as the value-added tax the relevant refunded value-added tax and the additional amount equivalent to the interest as calculated, as prescribed by Presidential Decree:
1.
Where farmers and fishermen fail to use the machinery and materials for which the value-added tax amount has been refunded under paragraph (1) for the original purposes or transfer them to other people than the farmers or fishermen;
2.
Where farmers and fishermen have received a refund of value-added tax with a tax invoice falling under any of the following items:
(a)
A tax invoice issued without any provision of goods;
(b)
A tax invoice issued in the name of other business place than that of providing the goods;
(c)
A tax invoice issued after the taxable period whereto belongs the period for providing the goods;
(d)
A tax invoice amended at will by the relevant farmers or fishermen which has been justifiably issued;
(e)
Other tax invoices as prescribed by Presidential Decree indicating differently from the fact;
3.
Where persons who do not correspond to farmers or fishermen have received a refund of value-added tax under paragraph (1).
(6)
The head of the competent tax office shall, where paragraph (5) 3 are applied as an agent for refund fails to notify under paragraph (4), collect from the relevant agent for refund the amount equivalent to 10/100 of refunded tax amount as a penalty tax.
(7)
No farmer or fisherman shall, where he/she falls under any of the following subparagraphs, be entitled to receive a refund under paragraph (1) for two years from the date of notifying the additional tax amount satisfying the relevant requirements:
1.
Where any value-added tax has been additionally collected for three or more times within the latest two years under paragraph (5) ;
2.
Where the total amount of additionally collected tax amounts under paragraph (5) is not less than two million won, which exceeds the amount, as prescribed by Presidential Decree.
(8)
The agent for refund may, in relation to the proxy of refund of value-added tax, collect the amount prescribed by Presidential Decree as the fees from persons receiving the refund in order to appropriate it for the preparation and submission of a written application for refund, keeping the ledger for refund management, distribution of refunded money, etc.
(9)
Matters necessary for the refund procedures, documents to be submitted, etc. in applying paragraphs (1) through (8) shall be prescribed by Presidential Decree.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

law view

 Article 106 (Exemption, etc. from Value-Added Tax)
 

(1)
The value-added tax on the provision of goods or services falling under any of the following subparagraphs shall be exempted. In such cases, subparagraphs 1 through 3, 9, 9-3 and 12 shall apply only to the portion that is supplied on or before December 31, 2015, subparagraphs 4-2, 9-2 and 11 shall apply only to the portion that is supplied on or before December 31, 2014 and subparagraph 8 shall apply only to the portion for which an implementation agreement is concluded on or before December 31, 2014:
1.
Petroleum products supplied directly to the National Federation of Fisheries Cooperatives established under the Fisheries Cooperatives Act in order to be used for such independent power generation for the remote island areas as verified by the Minister of Knowledge Economy (including an agency given the delegation of authority under Article 98 of the Electric Utility Act) to which the electricity business operator under Article 2 of the same Act is unable to supply electricity or finds it difficult to supply electricity for a considerable period;
2.
Food services (limited to meals) provided by the operator of a place of business prescribed by Presidential Decree, such as factories, mines, construction sites, and the places similar thereto, or of a school under Article 2 of the Elementary and Secondary Education Act or Article 2 of the Higher Education Act (hereafter referred to as "place of business, etc." in this subparagraph) through direct operation of a dining hall within the premises of the place of business, etc., for the purpose of the welfare of its employees or students; or food services (limited to meals) supplied by a school meal supplier entrusted by the head of a school falling under any subparagraph of Article 4 of the School Meals Act directly to the school concerned in a manner of the entrusted meal service under Article 15 of the same Act. In such cases, such matters as may be necessary concerning the exemption from the value-added tax on entrusted meal service, such as the certification of the supply price of entrusted meal service, etc. shall be prescribed by Presidential Decree;
3.
Management of agriculture or fisheries, and services for farming or fishing operation, executed vicariously, which are prescribed by Presidential Decree;
4.
National housing prescribed by Presidential Decree and services for the construction thereof (including the remodelling services prescribed by Presidential Decree);
4-2.
General management services, security services and cleaning services prescribed by Presidential Decree supplied to housing other than national housing from among the apartment housing under subparagraph 2 of Article 2 of the Housing Act by a main body of management under subparagraph 14 of Article 2 of the Housing Act (excluding item (a) of the same subparagraph; hereafter in this Article referred to as "main body of management"), a corporation that obtained permission of security services business under Article 4 (1) of the Security Services Industry Act (hereafter in this Article referred to as "security services business operator") or a person who has made a report of sanitary management services business pursuant to Article 3 (1) of the Public Health Control Act (hereafter in this Article referred to as "cleaning business operator);
4-3.
General management services, security services and cleaning services prescribed by Presidential Decree supplied to national housing from among the apartment housing under subparagraph 2 of Article 2 of the Housing Act by a main body of management, a security services business operator or a cleaning services business operator;
4-4.
General management services, security services and cleaning services prescribed by Presidential Decree supplied by the custodian, operator, security business operator or cleaning business operator of a welfare house for the aged under Article 32 (1) 3 of the Welfare of the Aged Act (hereafter referred to as "welfare house for the aged" in this subparagraph) to the welfare house for the aged not more than the size of the national housing under the Housing Act;
5.
Deleted;
6.
Goods and services prescribed by Presidential Decree which are supplied by an organization performing governmental affairs prescribed by Presidential Decree on behalf of the Government;
7.
Railroad facilities under subparagraph 2 of Article 3 of the Framework Act on the Development of Railroad Industry (hereafter in this subparagraph referred to as "railroad facilities") which the Korea Rail Network Authority under the Korea Rail Network Authority Act reverts to the State and then supplies the State by means of granting its right to manage such railroad facilities pursuant to Article 26 of the same Act;
8.
A right to management and operation of facilities provided by a school in relation to the school facilities (limited to the school facilities prescribed by Presidential Decree among those defined under Article 2 of the Higher Education Act) built by applying mutatis mutandis the method prescribed in subparagraph 1 of Article 4 of the Act on Public-Private Partnerships in Infrastructure and held by a person recommended by either the Minister of Education, Science and Technology or his/her designee, and services provided by the person so recommended, using such school facilities;
9.
Buses supplied for the purposes of urban bus transportation and village shuttle service under the Passenger Transport Service Act and the Enforcement Decree of the same Act, which use natural gas as their fuel;
9-2.
Electric buses meeting the following requirements:
(a)
Motor vehicles meeting the requirements in each item of subparagraph 2 of Article 2 of the Act on Promotion of Development and Distribution of Environment-Friendly Motor Vehicles as electric motor vehicles under subparagraph 3 of Article 2 of the same Act;
(b)
Buses supplied for transportation business of intra-city bus and shuttle bus under the Passenger Transport Service Act and its Enforcement Decree;
9-3.
Motor vehicles supplied to simplified taxable persons under Article 25 (1) of the Value-Added Tax Act for use as owner-driver taxies for passenger transport business under the Passenger Transport Service Act and the Enforcement Decree of the same Act;
10.
Items used for the treatment of rare diseases among the items under subparagraphs 4 and 5 of Article 91 of the Customs Act and which are prescribed by Presidential Decree;
11.
Diapers and powdered milk for infants (excluding those exempt from value-added tax pursuant to Article 12 of the Value-Added Tax Act);
12.
Wooden pallets among forest products provided for in subparagraph 7 of Article 2 of the Forest Resources Creation and Management Act.
(2)
Import of goods falling under any of the following subparagraphs shall be exempted from value-added tax. In such cases, subparagraphs 15, 17 and 18 shall apply only to goods import declaration of which is filed no later than December 31, 2013; subparagraphs 9 and 12 shall apply only to goods import declaration of which is filed no later than December 31, 2014; subparagraph 13 shall apply only to goods import declaration of which is filed no later than December 31, 2015; subparagraph 16 shall apply only to goods import declaration of which is filed no later than December 31, 2016; and subparagraph 19 shall apply only to goods import declaration of which is filed no later than December 31, 2018:
1.
Anthracite coal;
2.
Deleted;
3.
Ships to be used for taxable businesses;
4.
Bonded warehouse construction articles under the Customs Act to be used for taxable businesses;
5.
and 6. Deleted;
7.
and 8. Deleted;
9.
Machinery and materials used for agricultural or livestock industry directly imported by farmers under Article 105 (1) 5, and machinery and materials used for fishing industry directly imported by fishermen under Article 105 (1) 6, which are determined by Presidential Decree;
10.
Deleted;
11.
Deleted;
12.
Goods to be used by the Organizing Committee for the Asian Games-Incheon 2014, the Organizing Committee for the Asian Para Games-Incheon 2014 or the local government for the manufacture and construction of athletic facilities and for the athletic management of the 17th Asian Games and the 13th Asian Para Games to be held in 2014, which are difficult to manufacture in Korea;
13.
Goods to be used by the Organizing Committee for the 2015 Gwangju Summer Universiade or the local government for the manufacture and construction of athletic facilities and for the athletic management of the 28th Summer Universiade to be held in 2015, which are difficult to manufacture in Korea;
14.
Deleted. ;
15.
Goods to be used by the Organizing Committee for the Special Olympics World Winter Games PyeongChang 2013 or a local government for the manufacture and construction of athletic facilities and for the athletic management of the 10th Special Olympics World Winter Games PyeongChang to be held in 2013 under the Act on Assistance to Special Olympics World Winter Games PyeongChang 2013, which are difficult to manufacture in Korea;
16.
Goods to be used by the Organizing Committee for the 2010 Formula 1 Korean Grand Prix or a local government for the manufacture and construction of athletic facilities and for the athletic management of the Formula 1 Korean Grand Prix to be held under the Act on Assistance to the 2010 Formula 1 Korean Grand Prix, which are difficult to manufacture in Korea;
17.
Goods to be used by the Organizing Committee for the 2013 World Rowing Championships Chungju or a local government for the manufacture and construction of athletic facilities and for the athletic management of the 2013 World Rowing Championships Chungju to be held in 2013, which are difficult to manufacture in Korea;
18.
Goods to be used by the Organizing Committee for the Asian Games-Incheon 2014 or a local government for the manufacture and construction of athletic facilities and for the athletic management of the Asian Indoor and Martial Arts Games Incheon 2013 to be held in Incheon in 2013 as a test event of the 17th Asian Games to be held in 2014, which are difficult to manufacture in Korea;
19.
Goods to be used by the Organizing Committee for the 2018 PyeongChang Olympic and Paralympic Winter Games or a local government for the manufacture and construction of athletic facilities and for the athletic management of the 2018 PyeongChang Olympic and Paralympic Winter Games, which are difficult to manufacture in Korea;
(3)
and (4) Deleted.
(5)
Article 25 (1) 1 of the Value-Added Tax Act shall not apply to the private taxicab business, the delivery and individual trucking business, the road trucking business, the barbering business, the beauty art business and other businesses prescribed by Presidential Decree as similar thereto, to which the simplified taxation of the value-added tax is applied.

law view

 Article 106-2 (Reduction of or Exemption, etc. from Value-Added Tax, etc. on Petroleum Products for Agriculture, Forestry, Fisheries, and Coastal Passenger Ships)
 

(1)
Among the following petroleum products (referring to the petroleum products under the Petroleum and Petroleum Substitute Fuel Business Act; hereafter referred to as "tax-free petroleum" in this Article), value-added tax on the supplies delivered on or before December 31, 2015 and individual consumption tax, the traffic, energy and environment tax, education tax, and automobile tax with respect to driving of automobile (hereafter referred to as "automobile tax" in this Article) on the supplies released from a manufacturing place or a bonded area on or before the afore-stated date shall be reduced or exempted as prescribed by Presidential Decree:
1.
Petroleum products required by a farmer, forestry personnel, or fisher specified by Presidential Decree (hereafter referred to as "farmer, forester, or fisherman" in this Article) for the purposes of agriculture, forestry, or fisheries, which are prescribed by Presidential Decree;
2.
Petroleum products supplied directly to the Korea Shipping Association established pursuant to the Korea Shipping Association Act for the use in passenger ships (excluding passenger ships used for tourism business under Article 2 of the Tourism Promotion Act) operating on coastal waters.
(2)
Where certain petroleum products delivered to a petroleum distributor (hereafter referred to as "petroleum distributor" in this Article) prescribed by Presidential Decree, including a gas station, with value-added tax, individual consumption tax, traffic, energy and environment tax, education tax, and automobile tax already levied thereon and supplied to a farmer, forester, or fisher falls under any of subparagraphs of paragraph (1), a petroleum distributor may file an application under the conditions as prescribed by Presidential Decree to receive the refund of the tax amount otherwise exempted or have the tax amount payable or collectible reduced by the amount.
(3)
A farmer, forester, or fisherman who desires to have tax-free petroleum supplied shall file a report on the current status of agricultural machines, forestry machines, fishery machines, or ships and facilities prescribed by Presidential Decree in possession (hereafter referred to as "agricultural machines, etc." in this Article) and the fact that the person has engaged in agriculture, forestry, or fisheries, under the conditions as prescribed by Presidential Decree, with a cooperative under the Agricultural Cooperatives Act, a cooperative under the Forestry Cooperatives Act, or a cooperative under the Fisheries Cooperatives Act (hereafter referred to as "cooperative acting as an institution responsible for control of tax-free petroleum" in this Article), and shall also file a report on a change within 30 days from the day on which any change occurs, if any change in the reported matters occurs, such as the acquisition or transfer of an agricultural machine, etc., death of the farmer, forester, or fisher, and giving up the agricultural, forestry, or fishery business.
(4)
A farmer, forester, or fisher who desires to have tax-free petroleum supplied shall obtain a card for purchasing tax-free petroleum or a delivery order prescribed by Presidential Decree from a cooperative acting as an institution responsible for control of tax-free petroleum (hereafter referred to as "tax-free petroleum purchase cards, etc." in this Article).
(5)
A farmer, forester, or fisher who intends to use tax-free petroleum for agricultural machines, etc. shall comply with the following provisions:
1.
Where any agricultural machine, fishery machine or ship specified by Presidential Decree is used, a device prescribed by Presidential Decree shall be installed thereon to check consumption level, etc. and documents prescribed by Presidential Decree stating consumption level, etc. shall be submitted;
2.
Where any agricultural machine, fishery machine, or facility for agriculture or fishery specified by Presidential Decree is used, the documents prescribed by Presidential Decree shall be submitted to check the outcome of production and other matters.
(6)
Every cooperative acting as an institution responsible for control of tax-free petroleum shall issue tax-free petroleum purchase cards, etc., taking into consideration the current status of agricultural machines, etc. possessed by farmers, foresters, or fishers, and the business size of agriculture, forestry, or fisheries.
(7)
The National Agriculture Cooperative Federation under the Agricultural Cooperatives Act, the National Forestry Cooperatives Federation under the Forestry Cooperatives Act, and the National Federation of Fisheries Cooperatives (hereafter referred to as "national federations acting as institutions responsible for control of tax-free petroleum" in this Article) may, if necessary for carrying out the control of tax-free petroleum efficiently and preventing illegal distribution, designate petroleum distributors who are allowed to sell tax-free petroleum to farmers, foresters, or fishers, upon receiving an application from each petroleum distributor, as prescribed by Presidential Decree.
(8)
The national federations and cooperatives acting as institutions responsible for control of tax-free petroleum (hereafter referred to as "institutions responsible for tax-free petroleum" in this Article) may disclose the details of tax-free petroleum supplied to farmers, foresters, and fishers through their Internet homepages.
(9)
If it is discovered that a farmer, forester, or fisher to whom tax-free petroleum had been supplied by a tax-free petroleum purchase cards, etc. issued under paragraph (4) used it for any purpose other than agriculture, forestry, or fishery, the head of the competent tax office shall collect the aggregate of the amounts calculated according to the following subparagraphs from such person as a penalty:
1.
The tax amount reduced or exempted from value-added tax, individual consumption tax, traffic, energy and environment tax, education tax, and the automobile tax;
2.
The additional tax equivalent to 40/100 of the reduced or exempted tax amount under subparagraph1.
(10)
A farmer, forester, or fisher (including the spouse and lineal ascendants and descendants who engage in production activities and make a living jointly and together with the farmer, forester, or fisher) shall, if he/she falls under any of the following subparagraphs, be banned from using tax-free petroleum for two years (by the date on which an additional tax is paid if additional tax calculated under paragraph (9) is not paid by the date on which two years lapse) from the date on which the relevant facts are known to an institution responsible for control of tax-free petroleum:
1.
If he/she files a report under paragraph (3) by falsity or in any other fraudulent way or fails to file a report on a change;
2.
If he/she transfers a tax-free petroleum purchase card, etc. issued under paragraph (4) or the petroleum products supplied by such tax-free petroleum purchase card, etc. to other persons;
3.
If any cause exists to impose the reduced or exempted tax amount additionally pursuant to paragraph (9).
(11)
The head of the competent tax office shall, if a cooperative acting as an institution responsible for control of tax-free petroleum falls under subparagraph 1, levy on the cooperative an amount equivalent to 40/100 of the amount of tax reduced from value-added tax, individual consumption tax, traffic, energy and environment tax, education tax, and automobile tax on the petroleum products as additional tax or shall, if such cooperative falls under subparagraph 2, levy on the cooperative an amount equivalent to 20/100 of the amount of tax reduced from value-added tax, individual consumption tax, traffic, energy and environment tax, education tax, and driving tax on the petroleum products as additional tax:
1.
If it issues a tax-free petroleum purchase card, etc. by false or in a fraudulent way;
2.
If it mistakenly issues a tax-free petroleum purchase card, etc. to a farmer, forester, or fisher without examining the relevant documentary evidence or due to poor management or issues a tax-free petroleum purchase card, etc. to any person who is not a farmer, forester, or fisher.
(12)
Where any person who is not a farmer, forester, or fisher has been issued a tax-free petroleum purchase card, etc. pursuant to paragraph (4) or has taken over the petroleum products supplied to a farmer, forester, or fisherman by a tax-free petroleum purchase card, etc., or a tax amount to be repaid or deducted which a petroleum sales business operator has applied for pursuant to paragraph (2) exceeds the amount of tax to be repaid or deducted which he/she is to apply for, the head of the competent tax office shall collect an amount calculated according to the following subparagraphs from such person as a penalty:
1.
The aggregate of amounts calculated according to the following items, in cases where the person has a tax-free petroleum purchase card, etc. issued from a cooperative acting as an institution responsible for control of tax-free petroleum or acquires a tax-free petroleum purchase card, etc. from a farmer, forester, or fisherman:
(a)
An amount equivalent to the tax amount reduced or exempted from value-added tax, individual consumption tax, traffic, energy and environment tax, education tax, and automobile tax payable, if the person has the petroleum products supplied by the tax-free petroleum purchase card, etc. at the time of issuance or acquisition of such card, etc.;
(b)
The additional tax amounting to 40/100 of the tax amount reduced or exempted under item (a) ;
2.
The aggregate of amounts calculated according to the following items, in cases where the person acquires the petroleum products supplied to a farmer, forester, or fisherman by a tax-free petroleum purchase card, etc.:
(a)
The amount of tax reduced or exempted from the value-added tax, the individual consumption tax, the traffic, energy and environment tax, and the automobile tax on the petroleum products;
(b)
The additional tax amounting to 40/100 of the amount of tax reduce or exempted under item (a) ;
3.
Where a tax amount to be repaid or deducted which a petroleum sales business operator has applied for pursuant to paragraph (2) exceeds the amount of tax to be repaid or deducted which he/she is to apply for, the total amount obtained by adding up amounts under the following items: Provided, That item (b) shall only apply in cases where an application is made by an unjust method:
(a)
A tax amount reduced of or exempted from value-added tax, individual consumption tax and automobile tax for the relevant petroleum products;
(b)
An additional tax amount equivalent to 40/100 of a tax amount reduced or exempted pursuant to item (a).
(13)
Where any cause exists to levy reduced or exempted tax under paragraph (12) additionally on a petroleum distributor, any national federation acting as an institution responsible for control of tax-free petroleum concerned may revoke the designation of the petroleum distributor, under which the distribution of tax-free petroleum was allowed, and the petroleum distributor whose designation is revoked shall be banned from distributing tax-free petroleum for five years from the revocation date of the designation.
(14)
Paragraph (13) shall apply to a person who has the relationship in the following subparagraphs with a petroleum distributor to whom a cause to collect the reduced or exempted tax as a penalty has occurred as prescribed in paragraph (12) : Provided, That in cases the person who has taken over petroleum products or the corporation has verified that it did not have a knowledge of the fact that a cause to collect the reduced or exempted tax as a penalty had occurred to the previous petroleum distributor, this shall not apply:
1.
Where such petroleum distributor dies, successor thereof;
2.
Where such petroleum distributor has transferred the whole of petroleum distribution business, the person who takes over such business;
3.
Where such petroleum distributor who is a corporation merges with another petroleum distributor, the corporation that survives such merger or the corporation established following such merger.
(15)
The annual maximum quantity of each petroleum product under paragraph (1) 1 shall be determined by the Minister of Strategy and Finance, upon receipt of the application by the Minister for Food, Agriculture, Forestry and Fisheries or the Minister of the Korea Forest Service, as prescribe by Presidential Decree.
(16)
Every national federation acting as an institution responsible for control of tax-free petroleum shall ensure to issue tax-free petroleum purchase cards, etc. under paragraph (4) and control the use of them within the limit of the annual maximum quantity of petroleum products under paragraph (15) (hereafter referred to as "annual maximum quantity of tax-free petroleum products" in this paragraph), and the head of the competent tax office shall, if the tax-free petroleum purchase cards, etc. so issued have caused the supply of the petroleum products under paragraph (1) 1 to exceed the annual maximum quantity of tax-free petroleum products, assume that the petroleum products that exceed the annual maximum quantity of tax-free petroleum products have been supplied to any national federation acting as an institution responsible for control of tax-free petroleum products, and shall levy the tax amount reduced or exempted from value-added tax, individual consumption tax, traffic, energy and environment tax, education tax, and automobile tax on the national federation acting as an institution responsible for control of tax-free petroleum products.
(17)
Any cooperative under the Agricultural Cooperatives Act may charge an amount prescribed by Presidential Decree, as a fee, on persons to whom tax-free petroleum purchase cards, etc. are issued to appropriate the fee for the expenses required for issuing tax-free petroleum purchase cards, etc., keeping control books, electronic processing, and other process in connection with the supply of tax-free petroleum products to farmers or fisherman.
(18)
When a cooperative acting as an institution responsible for control of tax-free petroleum products discovers that a cause to collect as a penalty the reduced or exempted tax or additional tax under paragraphs (9), (11), and (12) has occurred, it shall immediately suspend the issuance and use of tax-free petroleum purchase cards, etc., and shall notify the head of the competent tax office of the fact without delay.
(19)
The head of the competent tax office shall, whenever he/she becomes aware that a cause exists to levy the tax amount reduced or exempted under paragraphs (9) through (14), notify the cooperative acting as an institution responsible for control of tax-free petroleum products of the fact without delay.
(20)
Each institution responsible for control of tax-free petroleum products may request administrative agencies, etc. to furnish it with informative data concerning death, giving up farming, or any other event in order to efficiently carry on the affairs relating to the control of tax-free petroleum products, and the administrative agencies, etc. shall, upon receiving such request, provide the institution responsible for control of tax-free petroleum products with such informative data, unless any justifiable ground exists to the contrary.
(21)
Necessary matters concerning the procedure for supply and control of tax-free petroleum under paragraphs (1) through (20), the method of issuance and use of tax-free petroleum purchase cards, etc., and the procedure for levying the reduced or exempted tax amount, an amount equivalent to the reduced or exempted tax amount, and the additional tax shall be prescribed by Presidential Decree.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

law view

 Article 106-3 (Special Taxation for Value-Added Tax on Gold Bullion)
 

(1)
The value-added tax shall be exempted until December 31, 2013 pursuant to the classifications under paragraph (3) for the supply of gold bullion falling under any of the following subparagraphs (hereafter referred to as "tax-free gold bullion" in this Article), which are bullion with the form, purity, etc. prescribed by Presidential Decree (hereafter referred to as "gold bullion" in this Article):
1.
Gold bullion supplied by the wholesalers and refiners of gold bullion prescribed by Presidential Decree (hereafter referred to as "gold bullion wholesalers, etc." in this Article) to the gold craftsmen, etc. prescribed by Presidential Decree (hereafter referred to as "gold craftsmen, etc." in this Article) who have received tax-free recommendation from a person prescribed by Presidential Decree (hereafter referred to as "recommender of trading the tax-free gold bullion" in this Article);
2.
Gold bullion supplied by the gold bullion wholesalers, etc. and the financial institutions prescribed by Presidential Decree (hereafter referred to as "financial institutions" in this Article) to the financial institutions having received tax-free recommendation from any recommender of trading the tax-free gold bullion or gold bullion supplied by the financial institutions pursuant to the consumption loan for gold bullion, or those refunded to them;
3.
Gold bullion supplied by transaction of exchange-traded derivatives traded in the derivatives market under the Financial Investment Services and Capital Markets Act (hereinafter referred to as "transaction of exchange-traded derivatives"): Provided, That the same shall not apply to cases where any person other than the gold craftsmen, etc. (including the financial institutions) takes over the actual objects of gold bullion;
4.
Gold bullion supplied by a financial institution to gold craftsmen, etc. having received tax-free recommendation from any recommender of trading tax-free gold bullion.
(2)
The value-added tax shall be exempted until December 31, 2013 for the gold bullions imported by the gold craftsmen, etc. and financial institutions upon receipt of tax-free import recommendation from a person prescribed by Presidential Decree (hereafter referred to as "recommender of importing the tax-free gold bullions" in this Article).
(3)
Special cases in the Value-Added Tax Act shall apply to the tax-free gold bullions under paragraph (1), pursuant to the provisions falling under any of the following subparagraphs:
1.
Article 12 of the Value-Added Tax Act shall apply mutatis mutandis to cases where the financial institutions supply the tax-free gold bullions;
2.
Where an entrepreneur other than the financial institution supplies the tax-free gold bullions, the Value-Added Tax Act shall apply to the relevant entrepreneur by regarding him/her as the taxable entrepreneur for value-added tax. In such cases, the input tax amount of value-added tax which has been borne by the relevant entrepreneur at the time of purchasing the relevant gold bullions in connection with supply of the tax-free gold bullions, shall not be regarded as the input tax amount deductible under Article 17 of the Value-Added Tax Act, but such input tax amount of value-added tax may be subject to deduction as has been borne in connection with the purchase of the tax-free gold bullions refined and supplied by the gold bullion refiners from among the gold bullion wholesalers, etc., and of the tax-free gold bullions refunded by the relevant entrepreneur to the financial institution under the consumption loan for gold bullion under paragraph (1) 2.
(4)
The collecting agent of value-added tax prescribed by Presidential Decree (hereafter referred to as "value-added tax collecting agent" in this Article) shall, in any of the following cases, collect the value-added tax from the person subject to collection of value-added tax prescribed by Presidential Decree (hereafter referred to as "person subject to collection of value-added tax" in this Article) at the time of supply as prescribed by Presidential Decree, and pay it to the head of the tax office having jurisdiction over the business place, the Bank of Korea, or postal offices no later than the end of the month next to that whereto belongs the date of collection as prescribed by Presidential Decree:
1.
Where the financial institution fails to receive any refund of gold bullions supplied under the consumption loan for gold bullion;
2.
Where any person other than the gold craftsmen, etc. (including financial institutions) takes over the actual objects of gold bullions, in cases of transaction of exchange-traded derivatives of gold bullions.
(5)
In applying paragraph (4), the value-added tax collecting agent shall deliver a receipt for collecting value-added tax on gold bullions at the time of collecting the value-added tax, as prescribed by Presidential Decree.
(6)
Where any person who has made a tax-free import of gold bullions under paragraph (2) for the purpose, etc. of supplying the gold bullions to the gold craftsmen, etc. under paragraph (1) fails to supply the relevant imported gold bullions for the relevant purpose, the director of the competent customs office shall collect the value-added tax related to the import from the importer, and deliver a tax invoice: Provided, That the same shall not apply to cases prescribed by Presidential Decree.
(7)
Any person who has made a tax-free supply (excluding the supply by a person who has transacted exchange-traded derivatives through a financial investment business entity under Article 8 of the Financial Investment Services and Capital Markets Act) or import of gold bullions under paragraphs (1) and (2), a recommender of trading the tax-free gold bullions, a recommender of importing the tax-free gold bullions, and financial institutions, shall file a report with the head of the competent tax office having jurisdiction over the business place on the details of trades of the tax-free gold bullions (including trading exchange-traded derivatives of gold bullions through a financial investment business entity; hereafter in this Article the same shall apply), and the details of recommendations no later than the end of the month next to that ending each quarter as prescribed by Presidential Decree, shall record on the books by classifying the details of trading the tax-free gold bullions, those of imports, and those of recommendations for tax exemption, and shall keep the aforementioned books for five years from the end of business year whereto belongs the date of supplying the tax-free gold bullions, date of imports, and date of recommendations.
(8)
The amounts collected by the head of the tax office having jurisdiction over the business place or the director of the competent customs office pursuant to the classifications listed in each of the following subparagraphs, shall be deemed to have been collected as the value-added tax by referring to the practices of collecting the national taxes:
1.
Where the gold bullions recommended for tax exemption from the recommender of trading the tax-free gold bullions under paragraph (1) 1 are supplied to other person than the recommended persons, the amount equivalent to 10/100 of the value-added tax amount on the relevant gold bullions shall be collected as an additional tax;
2.
Where the gold bullion are supplied under paragraph (1) 2, if it falls under any of the following items, the amount equivalent to 10/100 of the value-added tax amount on the relevant gold bullions shall be collected an additional tax:
(a)
Where the gold bullion wholesalers, etc. and financial institutions supply the gold bullions recommended for tax exemption by the recommender of trading the tax-free gold bullions to other person than the recommended financial institutions;
(b)
Where, when an entrepreneur redeems the gold bullions borrowed under the consumption loan for gold bullion, the gold bullions are supplied to other person than the financial institution from which they have been borrowed;
3.
Where the value-added tax collecting agent liable to collect and pay the value-added tax under paragraph (4) has failed to collect and pay the value-added tax from the person subjected to collection of such tax, such amount shall be collected as obtained by adding the amount equivalent to 10/100 of unpaid tax amount to the said tax amount;
4.
As the person who has made the tax-free import of the gold bullions under paragraph (2) for the purpose of supplying the gold bullions to the gold bullion craftsmen, etc. under paragraph (1) has failed to supply the relevant gold bullions for relevant purposes, where the director of the competent customs office collects the value-added tax under paragraph (6), such amount shall be collected as obtained by adding the amount equivalent to 10/100 of unpaid tax amount to the said tax amount;
5.
Where any person who is liable to faithfully perform the obligation to report, record on books, manage and keep the details, etc. of trading the tax-free gold bullions under paragraph (7) has failed to do so, the amount fixed under each of the following items shall be collected as the additional tax. In such cases, the provisions of item (b) shall apply to cases where it falls simultaneously under items (a) and (b) :
(a)
Where the books under paragraph (7) have not been kept or recorded, or the trading amount and recommended amount of the tax-free gold bullions pursuant to the kept or recorded books fall short of the trading amount and recommended amount to be recorded on the books, the amount equivalent to 1/100 of such insufficient trading amount and recommended amount of the tax-free gold bullions (5/1,000 in cases of the recommender of trading the tax-free gold bullions, or the recommender of importing the tax-free gold bullions);
(b)
Where the details of trading and recommendation of the tax-free gold bullions are not reported under paragraph (7) to the head of tax office having jurisdiction over the business place, or they fall short of the trading amount and recommended amount of the tax-free gold bullions to be reported, the amount equivalent to 1/ 100 of such unreported or insufficient trading amount and recommended amount of the tax-free gold bullions (5/1,000 in cases of the recommender of trading the tax-free gold bullions, or the recommender of importing the tax-free gold bullions).
(9)
Any portion of the value-added taxes collected under paragraph (4) from a general taxable person for value-added tax, or any portion for which a tax invoice has been delivered under paragraph (6), may be subject to a deduction as an input tax amount by applying mutatis mutandis Article 17 of the Value-Added Tax Act.
(10)
Where a financial institution fails to obtain a redemption of the gold bullions supplied under the consumption loan for gold bullion, if the person failing to redeem the relevant gold bullions falls under the causes prescribed by Presidential Decree, no value-added tax shall be collected, notwithstanding the provisions of paragraph (4).
(11)
The head of the competent tax office may, if it is deemed necessary to preserve value-added tax, request gold bullion wholesalers, etc. and gold craftsmen, etc. prescribed by Presidential Decree to furnish security.
(12)
In the application of paragraphs (1) through (11), necessary matters concerning methods of and procedures for exempting gold bullions from taxes, the delivery of tax invoices, additional collection, collection, return, post management, the amount of a security for the tax payment of gold bullions, the period of such security, the time for offering the security for the tax payment, the procedures therefor and the revocation thereof shall be prescribed by Presidential Decree.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

law view

 Article 106-4 (Special Taxation for Payment of Value-Added Tax by Purchasers of Gold-related Products)
 

(1)
Any business operator who intends to supply gold bullions or gold-related products prescribed by Presidential Decree (hereafter referred to as "gold-related products" in this Article) or to be supplied with such gold bullions or gold-related products (hereafter referred to as "gold business operator" in this Article) or any business operator who intends to import gold-related products shall open an account for gold transactions as prescribed by Presidential Decree (hereafter referred to as a "gold trading account" in this Article).
(2)
Notwithstanding Article 15 of the Value-Added Tax Act, the value-added tax shall not be levied on any gold-related product supplied by a gold business operator to another gold business operator.
(3)
A gold business operator to whom another gold business operator supplies a gold-related product shall pay the amount of subparagraph 1 to the supplying business operator and the amount of subparagraph 2 to the person designated by Presidential Decree respectively through a gold trading account: Provided, That in cases where the value of gold-related products is settled by methods prescribed by Presidential Decree, such as a loan of corporate purchase fund, etc., only an amount under subparagraph 2 shall be paid on account:
1.
The price for the gold-related product;
2.
The amount calculated by applying the tax rate under Article 14 of the Value-Added Tax Act to the tax base under Article 13 of the aforementioned Act (hereafter referred to as "value-added tax amount" in this Article).
(4)
Notwithstanding Article 19-2 of the Value-Added Tax Act, value-added tax for import of gold-related products may be paid by methods prescribed by Presidential Decree by making use of an account for transaction of gold.
(5)
Paragraphs (3) and (4) shall not apply in cases where the value-added tax is exempted pursuant to Article 106-3.
(6)
If a gold business operator to which a gold-related product is supplied fails to pay the value-added tax amount under paragraph (3) 2, the tax amount stated in the tax invoice, which is issued and delivered by another gold business operator who supplied the gold-related product, shall not be deemed as the tax amount for purchasing deductible from the tax amount for sales, notwithstanding Article 17 of the Value-Added Tax Act.
(7)
Where the payment for a gold-related product is settled between gold business operators without using a gold trading account under paragraph (3), an amount equivalent to 20/100 of the price for the gold-related product shall be levied on both the gold business operator who supplies the product and the gold business operator to whom the product is supplied as an additional tax.
(8)
If a gold business operator who has a gold-related product supplied fails to pay the value-added tax amount under paragraph (3), the head of the competent tax office shall levy on the gold business operator an amount calculated by multiplying the value-added tax by the interest rate prescribed by Presidential Decree for the period of time from the day immediately following the day on which the gold-related product is supplied to the day on which the value-added tax amount is paid (which shall not exceed the time limit for filing a tax base return under Articles 18, 19, and 27 of the Value-Added Tax Act) in addition to the value-added tax amount.
(9)
The value-added tax amount paid by the business operator supplied under paragraph (3) may be either deducted from the tax amount payable by the gold business operator who supplies the gold-related product or added to the refundable tax amount.
(10)
If the ratio of output supplies of gold-related products supplied by a gold business operator for the pertinent preliminary and final return periods to the input supplies of those are equivalent to or lower than the ratio prescribed by Presidential Decree, the head of the competent tax office may hold off the refund: Provided, That the same shall not apply to any of the following cases:
1.
Where the refundable amount is equivalent to or less than the amount prescribed by Presidential Decree;
2.
Where it is prescribed by Presidential Decree as those where default on tax payment, tax evasion, etc. is deemed not likely to occur.
(11)
The scope of gold business operators who are obligated to use a gold trading account, the method of depositing in a gold trading account, the disposal of the value-added tax amounts deposited, and other matters necessary for implementation of the purchaser payment system under paragraphs (1) through (10) shall be prescribed by Presidential Decree.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

law view

 Article 106-5 (Special Taxation for Deduction of Deemed Input Tax for Aged Gold)
 

(1)
Where a business operator who engages in collecting secondhand gold products prescribed by Presidential Decree (hereinafter referred to as "aged gold") acquires aged gold from consumers and other persons prescribed by Presidential Decree to supply them to other business operators on or before December 31, 2013, an amount calculated by multiplying the acquisition price for such aged gold by 3/100 may be subtracted, as an input tax amount, from the output tax amount under Article 17 (1) of the Value-Added Tax Act.
(2)
The acquisition price of aged gold under paragraph (1) shall not exceed the amount calculated by multiplying the tax base of value-added tax relating to the aged gold supplied by a business operator who has collected aged gold during the relevant taxable year by 80/100. In such cases, where input tax credit for aged gold has been already granted at the time of filing a preliminary return under Article 18 of the Value-Added Tax Act and the time of filing a return for refund under Article 24 (2) of the same Act, such tax credit shall be settled at the time of filing the final return under Article 19 of the same Act.
(3)
The tax credit for input supplies under paragraph (1) shall not apply if there is no payable tax amount calculated according to the Value-Added Tax Act.
(4)
In the application of the provisions of paragraphs (1) through (3), the scope of business operators who engage in collecting aged gold, the method of applying the tax credit for input supplies, and other necessary matters shall be prescribed by Presidential Decree.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

law view

 Article 106-6 (Submission of Statement of Transactions of Gold Bullions, etc.)
 

(1)
Gold bullions refiners prescribed by Presidential Decree shall submit a statement on production and release of gold bullions prescribed by Presidential Decree, as accompanying document attached to the tax base return form at the time of filing a tax base return for the value-added tax under Articles 18, 19, and 27 of the Value-Added Tax Act.
(2)
The director of customs office shall, whenever a gold-related product prescribed by Presidential Decree is imported, submit the details of the relevant import declaration to the head of the tax office having jurisdiction over the importer's place of business no later than the end of the month following the month in which the import declaration is filed.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

law view

 Article 106-7 (Mitigation of Value-Added Tax for General Taxicab Business Operators)
 

(1)
Tax relief for 90/100 of the amount of value-added tax shall be offered to general taxicab business operators under the Passenger Transport Service Act and its Enforcement Decree (hereafter referred to as "general taxicab business operator" in this Article) up to the taxable period ending on or before December 31, 2013.
(2)
General taxicab business operators shall pay in cash the total amount of tax relief under paragraph (1) to the general taxicab drivers under the Passenger Transport Service Act(hereafter referred to as "general taxicab drivers" in this Article) within one month from the end of the deadline for final return and payment of value-added tax to which tax relief has been granted as prescribed by the Minister of Land, Transport and Maritime Affairs. In such cases, the general taxicab business operators shall notify the general taxicab drivers that the cash being paid is the value-added tax relief.
(3)
Where the Minister of Land, Transport and Maritime Affairs has confirmed that a general taxicab business operator did not pay the amount of tax relief under paragraph (1) within six months from the end of the deadline for final return and payment of value-added tax to which tax relief was granted, he/she shall immediately notify (hereafter referred to as "notice on nonpayment" in this paragraph) the Commissioner of the National Tax Service or the head of tax office having jurisdiction over such general taxicab business operator, and the Commissioner of the National Tax Service or the head of tax office having jurisdiction over such general taxicab business operator who has received the notice on nonpayment shall collect the amount calculated in accordance with the following subparagraphs as a penalty:
1.
Where the general taxicab business operators have paid the outstanding amount of tax relief under paragraph (2) (hereafter referred to as "amount of tax relief" in this paragraph) by the date on which the notice on nonpayment is sent (excluding the cases of paying such amount after the end of the taxable period to which the time limit for return and payment of value-added tax to which tax relief has been granted belongs): Total sum of the amounts calculated in accordance with the following items:
(a)
Amount equivalent to interest on the amount equivalent to the amount of tax relief, which is calculated in accordance with the following arithmetic formula:
(b)
Penalty tax falling under 20/100 of the amount equivalent to the amount of tax relief;
2.
Where general taxicab business operators have not paid the amount of taxi relief until the date on which the notice on nonpayment is sent: Total sum of the amounts calculated in accordance with the following items:
(a)
Amount equivalent to the amount of tax relief;
(b)
Amount equivalent to interest on the amount equivalent to the amount of tax relief, which is calculated in accordance with the following arithmetic formula;
(c)
Penalty tax falling under 40/100 of the amount equivalent to the amount of tax relief;
3.
Deleted.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

law view

 Article 106-8 (Tax Credit of Value-Added Tax for Issuance of Certificate of Origin)
 

(1)
Where a small or medium enterprise supplies the exported goods to which zero rating applies under Article 11 (1) 1 of the Value-Added Tax Act (hereafter referred to as "exported goods" in this paragraph) and issues a tax invoice under Article 16 of the same Act and a certificate of origin under Act on Special Cases of the Customs Act for the Implementation of Free Trade Agreements to a person who is supplied such exported goods no later than December 31, 2013 in the taxable year to which the relevant date of supply belongs (referring to a taxable year under Article 3 of the Value-Added Tax Act), an amount prescribed by Presidential Decree according to the number of issued certificates of origin (hereafter referred to as "deductible tax amount" in this Article) may be deducted from the payable valued-added tax amount for the relevant taxable year. In such cases, the certificate of origin subject to the tax credit shall be limited to the certificate of origin for the exported goods for which the total sum of the supply price under Article 13 of the Value-Added Tax Act exceeds an amount prescribed by Presidential Decree in excess of 10 million won or more.
(2)
In applying paragraph (1), the deductible tax amount shall be limited to an amount prescribed by Presidential Decree and where the deductible tax amount exceeds the payable tax amount prior to the deduction of such amount [referring to the amount calculated by adding or subtracting the amount to be subtracted or to be added under this Act, the Value-Added Tax Act and the Framework Act on National Taxes (excluding the additional tax under Article 22 of the Value-Added Tax Act and Articles 47-2 through 47-4 of the Framework Act on National Taxes) and where such calculated amount is a negative figure, such amount shall be deemed zero], such excess amount shall be nonexistent.
(3)
A small or medium enterprise which desires to be eligible for the tax credit under paragraph (1) shall submit a statement of deduction of tax amount for the issuance of certificate of origin prescribed by Ordinance of the Ministry of Strategy and Finance at the time of filing under Articles 18 and 19 of the Value-Added Tax Act.
[This Article Wholly Amended by Act No. 11133, Dec. 31, 2011]

law view

 Article 107 (Special Cases concerning Indirect Taxes on Foreign Business Operators, etc.)
 

(1)
With respect to the goods that foreign tourists, etc. purchase from business operators prescribed by Presidential Decree in order to take out of Korea, the zero rating of the value-added tax may apply, or the amount of the value-added tax on the relevant goods may be refunded under the conditions as prescribed by Presidential Decree.
(2)
With respect to the goods that foreign tourists, etc. purchase at the shops prescribed by Presidential Decree in order to take out of Korea, the individual consumption tax may be exempted, or the individual consumption tax on the relevant goods may be refunded under the conditions as prescribed by Presidential Decree.
(3)
Where the goods exempted from the value-added tax or the individual consumption tax (including the application of the zero rating of the value-added tax) or subject to the refund thereof under paragraphs (1) and (2) are not taken out of Korea, the value-added tax or the individual consumption tax shall be collected under the conditions as prescribed by Presidential Decree.
(4)
In applying paragraphs (1) through (3), the scope of foreign tourists, etc., the scope of the subject goods, the procedure for purchase and sale, refund of the tax amount, and other necessary matters shall be prescribed by Presidential Decree.
(5)
The Commissioner of the National Tax Service, the Commissioner of the competent Regional Tax Office, or the head of the competent tax office may, if deemed necessary for preventing unlawful transactions, give a necessary order to the business operators under paragraph (1) or the shops under paragraph (2), under the conditions as prescribed by Presidential Decree.
(6)
If a foreign corporation or non-resident that has no business place in Korea, but operates a business in a foreign country (hereafter referred to as "foreign businessman" in this Article), purchases or receives the provision of the goods or services falling under any of the following subparagraphs for its business in Korea, the value-added tax on such goods or services may be refunded to the relevant foreign businessman as prescribed by Presidential Decree: Provided, That this shall not apply to cases where the refunded amount to the relevant foreign businessman for one calendar year is less than the amount prescribed by Presidential Decree:
1.
Food and lodging services;
2.
Advertisement services;
3.
Other goods or services prescribed by Presidential Decree.
(7)
Any value-added tax imposed on goods or services (excluding any goods or services subject to Article 11 of the Value-Added Tax Act) that are purchased at or furnished by duty-free shops prescribed by Presidential Decree by or to foreign diplomats stationed in Korea and other persons corresponding to them who are prescribed by Presidential Decree (hereafter referred to as "diplomats, etc." in this Article) may be refunded to such diplomats, etc. within the limit of one million won per year, as prescribed by Presidential Decree.
(8)
The refund of the value-added tax under paragraph (6) or (7) shall be allowable only when the relevant foreign country makes the same refunds to Korean businessmen, diplomats or diplomatic missions.
(9)
Any value-added tax imposed on goods or services that are furnished to foreign participants and international organizations of EXPO 2012 Yeosu Korea in connection with the manufacture, installation, disassembly and operation of EXPO exhibition facilities may be refunded by applying mutatis mutandis paragraph (6): Provided, That paragraph (8) shall not apply.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

law view

 Article 108 (Special Cases concerning Deduction of Input Tax Amount of Value-Added Tax on Recycled Waste Resources, etc.)
 

(1)
Where a businessman who collects the waste resources and used goods for recycling purposes acquires any waste resources and used goods from the State, local governments or other persons prescribed by Presidential Decree, and manufactures or processes, or supplies them, by not later than December 31, 2009, an amount calculated by multiplying the acquired value of the recycled waste resources by 6/100, and an amount calculated by multiplying the acquired value of the used goods by 10/110 may be deducted, as his/her input tax amount, from his/her output tax amount under Article 17 (1) of the Value-Added Tax Act.
(2)
In applying the provisions of paragraph (1), where a businessman who collects the waste resources for recycling purposes is subject to the special case of deduction of the input tax amount of the value-added tax on such waste resources, the input tax amount calculated within the limit of the amount computed by subtracting the input value of such waste resources (excluding the input value of the businessman's fixed business assets) purchased with receiving a tax invoice from the amount obtained by multiplying the tax base of the value-added tax on such waste resources supplied by the businessman during the relevant taxable period at the time of filing the final return of the value-added tax by 80/100 (90/100 in cases of the waste resources acquired by not later than December 31, 2007) may be deducted from the output tax amount. In such cases, an amount, if any, already deducted as the input tax amount of such waste resources at the time of filing the preliminary return under Article 18 of the Value-Added Tax Act and the return of refund under Article 24 (2) of the said Act shall be adjusted at the time of filing the final return under Article 19 of the said Act.
(3)
In applying the provisions of paragraphs (1) and (2), the scope of businessmen collecting the waste resources and used goods for recycling, the scope of the waste resources and used goods for recycling, method of deducting the input tax amount, and other necessary matters shall be prescribed by Presidential Decree.

law view

 Article 108-2 Deleted.
 

law view

 Article 109 (Reduction of or Exemption from Individual Consumption Tax on Environment-Friendly Automobiles)
 

(1)
Individual consumption tax shall be reduced and exempted for automobiles satisfying the requirements of the items of subparagraph 2 of Article 2 of the Act on Promotion of Development and Distribution of Environment-Friendly Motor Vehicles as hybrid automobiles under subparagraph 5 of Article 2 of the same Act.
(2)
An amount of reduction of and exemption from the individual consumption tax under paragraph (1) shall be as the following subparagraphs:
1.
The total amount of the individual consumption tax in cases where the amount of the individual consumption tax is not more than one million won;
2.
One million won in cases where the amount of the individual consumption tax exceeds one million won.
(3)
Paragraph (1) shall apply to automobiles only which are taken out of a place of manufacturing or a bonded area from July 1, 2009 to December 31, 2015.
(4)
Individual consumption tax shall be reduced and exempted for automobiles satisfying the requirements of the items of subparagraph 2 of Article 2 of the Act on Promotion of Development and Distribution of Environment-Friendly Motor Vehicles as electric motor vehicles under subparagraph 3 of Article 2 of the same Act.
(5)
An amount of reduction of and exemption from the individual consumption tax under paragraph (4) shall be as the following subparagraphs:
1.
The total amount of the individual consumption tax in cases where the amount of the individual consumption tax is not more than two million won;
2.
Two million won in cases where the amount of the individual consumption tax exceeds two million won.
(6)
Paragraph (4) shall apply to automobiles only which are taken out of a place of manufacturing or a bonded area from January 1, 2012 to December 31, 2014.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

law view

 Article 109-2 (Reduction of Individual Consumption Tax for Replacement of Deteriorated Cars)
 

(1)
Where any person (including any corporation) who possesses (based on the date of registration; hereafter the same shall apply in this Article) a passenger automobile, an automobile for passengers and freight, a freight automobile or a special automobile (excluding used cars any person registered himself/herself as a automobile transaction business under the Automobile Management Act has acquired for sale and purchase; hereafter referred to as "deteriorated cars" in this Article) newly registered on or before December 31, 1999 under the Automobile Management Act as of April 12, 2009 scraps or transfers the deteriorated car on or after April 13, 2009 and newly registers (limited to cases where registration is made from May 1, 2009 to December 31, 2009; hereafter the same shall apply in this Article) a passenger automobile (limited to new automobiles; hereafter refereed to as "new automobiles" in this Article) under the title of himself/herself within 2 months before and after the cancellation registration date of the deteriorated car or the registration date of transfer, 70/100 of the tax amount calculated in accordance with Article 1 (2) 3 of the Individual Consumption Tax Act (referring to the tax amount with no application of paragraph (7) of the same Article) shall be reduced or exempted from such tax. In such cases, the individual consumption tax shall be reduced or exempted with limitation to 1 new automobile per deteriorated car.
(2)
Where the amount of reduction per car under paragraph (1) exceeds one million won, one million won shall be reduced.
(3)
Where any person failing to meet requirements under paragraph (1) is reduced or exempted from the individual consumption tax, the head of the competent tax office or the head the competent customs office shall charge a taxpayer under Article 3 of the Individual Consumption Tax Act the sum of the amount calculated according to each of the following subparagraphs: Provided, That in cases falling under the causes prescribed by Presidential Decree, a new car buyer shall be deemed a taxpayer under Article 3 of the Individual Consumption Tax Act:
1.
The tax amount reduced or exempted under paragraphs (1) and (2) (referring to the tax amount reduced or exempted for all new cars in cases where taxes are reduced or exempted for 2 or more cars per 1 deteriorated car);
2.
Additional tax equivalent to 10/100 of the tax amount reduced or exempted under subparagraph 1 (referring to the amount equivalent to 40/100 of the tax reduced or exempted in cases where taxes are reduced or exempted for 2 or more cars per 1 deteriorated car).
(4)
Where inevitable causes prescribed by Presidential Decree exist, paragraph (3) may not be applied.
(5)
Necessary issues regarding a procedure of applying for reduction, checking and submission of evidences and tax amount reduced or exempted, collection of additional tax, etc. under paragraphs (1) through (3) shall be prescribed by Presidential Decree.
(6)
Paragraphs (1) through (5) shall not be applicable to passenger automobiles to which Article 1 (7) of the Individual Consumption Tax Act is applied.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

law view

 Article 109-3 (Exemption from Individual Consumption Tax on Goods for EXPO 2012 Yeosu Korea)
 

(1)
Goods acquired by the Organizing Committee for the EXPO 2012 Yeosu Korea participants in the EXPO prescribed by Presidential Decree (hereafter referred to as "EXPO participants" in this Article) to use for the manufacture and construction of direct facilities for EXPO under subparagraph 2 of Article 2 of the Special Act on the Commemoration of and Follow-up on the Expo 2012 Yeosu Korea, and for the operation of EXPO, which are difficult to manufacture in Korea shall be exempted from individual consumption tax.
(2)
When a EXPO participant transfers gratuitously the articles of exhibit prescribed by Presidential Decree to the EXPO management entity prescribed by Presidential Decree after the EXPO 2012 Yeosu Korea is over, such articles shall be exempted from individual consumption tax.
[This Article Newly Inserted by Act No. 9921, Jan. 1, 2010]

law view

 Article 110 (Exemption from Individual Consumption Tax on Passenger Cars for Diplomats, etc.)
 

(1)
Any domestic passenger car purchased by a diplomat stationed in Korea who is prescribed by Presidential Decree, and any similar car purchased for business, on the recommendation by the competent Minister, by a foreign non-government assistance organization registered under the agreement, shall be exempted from the individual consumption tax.
(2)
Any national who intends to take a domestic passenger car under paragraph (1) out of the manufacturing place shall obtain approval of the head of the competent tax office, as prescribed by Presidential Decree.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

law view

 Article 111 (Exemption from Individual Consumption Tax or Traffic, Energy and Environment Tax on Petroleum Products)
 

(1)
Petroleum products falling under any of the following subparagraphs shall be exempted from the individual consumption tax or the traffic, energy and environment tax. In cases of petroleum products falling under subparagraph 2, the same shall apply only to those products shipped out of the manufacturing place or the bonded area no later than December 31, 2012:
1.
Petroleum products under Article 105 (1) 2;
2.
Petroleum products under Article 106 (1) 1.
(2)
The portion of biodiesel mixed with a kind of fuel, which can be used as a substitute for the petroleum products publicly notified by the Minister of Knowledge Economy pursuant to Article 29 (2) 6 of the Petroleum and Petroleum Substitute Fuel Business Act and which is released from a manufacturing place or a bonded area on or before December 31, 2010, shall be exempted from the traffic, energy and environment tax.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

law view

 Article 111-2 (Special Cases concerning Refund of Traffic, Energy and Environment Tax and Individual Consumption Tax Imposed on Fuel of City Cars)
 

(1)
Where a person, who owns a car with engine displacement below 1,000 cc prescribed by Presidential Decree which is a car for passengers or for passengers riding together (hereafter in this Article referred to as "city car") under Article 3 of the Motor Vehicle Management Act and meets all of the following subparagraphs, purchases oil provided for in paragraph (3) (hereafter in this Article referred to as "oil") to use it as fuel for the relevant car on or before December 31, 2014, the head of the tax office having jurisdiction over the place of business of a credit card company referred to in paragraph (5) (hereafter in this Article referred to as "head of competent tax office") may refund the tax amount under paragraph (3) from among the traffic, energy and environment tax and individual consumption tax imposed on the relevant fuel:
1.
Where the total number of the passenger automobiles or the automobiles for passengers riding together owned by the owner of the relevant compact car and his/her family members living together as listed in the resident registration card is one respectively;
2.
Where the owner of the relevant compact car is not a handicapped person or a person of distinguished services to the State who is eligible for the benefits from the support project under Article 3 (1) 10-2 of the Enforcement Decree of the Act on the Special Accounts for Energy and Resources-related Projects.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

law view

 Article 111-3 (Reduction or Exemption of Individual Consumption Tax, etc. on Taxi Fuel)
 

(1)
Butane from among petroleum gases provided for in Article 1 (2) 4 (f) of the Individual Consumption Tax Act (hereafter in this Article referred to as "LPG") that is supplied to automobiles for general taxicab business or private taxicab business under Article 3 (2) of the Passenger Transport Service Act and subparagraph 2 (c) and (d) of Article 3 of the Enforcement Decree of the Passenger Transport Service Act on or before December 31, 2015 shall be exempted from the individual consumption tax per kilogram and 40 won per kilogram among the sum of the education tax.
(2)
Any general taxicab business operator and any private taxicab business operator (in this Article referred to as "taxicab business operator") who intend to be eligible for the reduction or exemption from individual consumption tax and education tax pursuant to paragraph (1) shall get an oil purchase card for tax exemption (hereafter in this Article referred to as "tax-free oil purchase card for a taxi") issued by the credit card company, provided for in subparagraph 2-2 of Article 2 of the Specialized Credit Finance Business Act, that is designated by the Commissioner of the National Tax Service (hereafter in this Article referred to as "credit card company"), as prescribed by Presidential Decree.
(3)
Where any taxicab business operator who has got a tax-free oil purchase card for a taxi purchases LPG with the relevant card, the credit card company may receive the refund of the tax amount reduced or exempted under paragraph (1) or the deduction from the payable tax amount by submitting an application for refund of exempted tax amount for the relevant LPG to the head of competent tax office.
(4)
Where any person who has got a tax-free oil purchase card for a taxi is no taxicab business operator anymore, he/she shall immediately return the tax-free oil purchase card for a taxi to the credit card company. In such cases, the credit card company shall without delay notify the Commissioner of the National Tax Service of such fact.
(5)
Where any taxicab business operator uses LPG purchased with his/her tax-free oil purchase card for a taxi for other purpose than the taxicab business, the head of the tax office having jurisdiction over his/her domicile shall collect the aggregate of the amounts calculated according to each of the following subparagraphs from the taxicab business operator:
1.
The tax amount reduced or exempted for LPG used for other purpose than the taxicab business;
2.
The additional tax amount equivalent to 40/100 of the tax amount reduced or exempted under subparagraph 1.
(6)
Where a taxicab business operator uses LPG purchased with a tax-free oil purchase card for a taxi for other purpose than the taxicab business or transfers his/her tax-free oil purchase card for a taxi to any other person, the Commissioner of the National Tax Service or the credit card company shall exclude him/her from the list of persons eligible to get a tax-free oil purchase card for a taxi from the date when he/she or it becomes aware of such fact.
(7)
Where a credit card company receives excessive refund of tax reduction or exemption under paragraph (1) or excessive tax credit by false or other unlawful means, the head of competent tax office under paragraph (3) shall collect the aggregate of the amount of excessively refunded tax and the amount of additional tax equivalent to 40/100 of such amount of excessively refunded tax from the credit card company.
(8)
The head of the tax office having jurisdiction over the domicile of any person falling under any of the following subparagraphs shall collect the aggregate of the amount of reduced or exempted tax calculated by applying mutatis mutandis paragraph (5) and the additional tax equivalent to 40/100 of such amount of reduced or exempted tax:
1.
A person who had acquired a tax-free oil purchase card for a taxi from a taxicab business operator and used it;
2.
A person, other than taxicab businessmen, who had been issued a tax-free oil purchase card for a taxi and used it;
3.
A person who has used a tax-free oil purchase card for a taxi even after he/she was no taxicab business operator anymore.
(9)
The Commissioner of the National Tax Service may request the related administrative agencies, etc. to offer data necessary for the efficient administration of taxicab businessmen to the Commissioner or the credit card company, and the related administrative agencies, etc. so requested shall comply with such request unless there exist any justifiable grounds to the contrary.
(10)
Matters necessary for procedures for refund and documents for submission pursuant to paragraphs (1) through (9) shall be prescribed by Presidential Decree.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

law view

 Article 111-4 (Special Cases concerning Refund of Individual Consumption Tax, etc. on Fuel of Motor Vehicles for Diplomats, etc.)
 

(1)
Where a foreign diplomatic mission, foreign diplomats, etc. in the Republic of Korea prescribed by Presidential Decree (hereafter referred to as "persons eligible for refund") purchases petroleum products for use in a motor vehicle of a person eligible for refund by using an oil purchase card prescribed in paragraph (2), a credit card company under paragraph (2) may receive the refund of the amounts of individual consumption tax imposed on the relevant petroleum products, traffic, energy and environment tax, education tax and motor vehicle tax and value-added tax pertaining to the operation of a motor vehicle or have them deducted from the tax amount to be refunded or paid by filing an application for the refund of the tax amount, as prescribed by Presidential Decree. In such cases, the tax exemption under Article 16 (1) 3 of the Individual Consumption Tax Act or Article 14 (1) of the Traffic, Energy and Environment Tax Act or the zero tax rate under Article 11 (1) 4 of the Value-Added Tax Act shall not apply to the relevant petroleum products.
(2)
A person eligible for refund under paragraph (1) shall get an oil purchase card for refund (hereafter referred to as "oil purchase card" in this Article) issued by the credit card company provided for in subparagraph 2-2 of the Article 2 of the Specialized Credit Finance Business Act that is designated by the Commissioner of the National Tax Service (hereafter referred to as "credit card business operator" in this Article) as prescribed by Presidential Decree.
(3)
In the case of a person falling under any of the following subparagraphs, the amount of the refunded tax shall be collected from him/her as prescribed by Presidential Decree: Provided, That in cases falling under subparagraph 2, the additional tax in the amount equivalent to 40/100 of the amount of the refunded tax shall be collected in addition to the refunded tax:
1.
Where a person eligible for refund uses the petroleum products purchased with an oil purchase card for the purposes other than the fuel of the his/her motor vehicle;
2.
Where a person who is not the one eligible for refund purchases petroleum products by being issued or transferred an oil purchase card.
(4)
Where a credit card company receives an excessive amount of tax refund provided for in paragraph (1) or has the tax amount excessively deducted in a false or other unjust manner, the head of the tax office having jurisdiction over the place of business of such credit card company shall collect an additional tax in the amount equivalent to 40/100 of the excessive amount of tax refund or deduction in addition to such excessive amount of tax refund or deduction.
(5)
The Commissioner of the National Tax Service may request administrative agencies, etc. concerned to provide necessary data for the efficient management of persons eligible for refund to the Commissioner of the National Tax Service or credit card companies, and the relevant administrative agencies, etc. so requested shall comply with it unless any justifiable reason exists.
(6)
The procedure for refund, documents to be submitted and other necessary matters when applying paragraphs (1) through (5) shall be prescribed by Presidential Decree.
[This Article Newly Inserted by Act No. 11614, Jan. 1, 2013]

law view

 Articles 112 and 112-2 Deleted.
 

law view

 Article 113 (Procedures, etc. for Reduction of or Exemption from Individual Consumption Tax and Traffic, Energy and Environment Tax)
 

(1)
If the petroleum products under Article 106-2 (1) 2 and the goods under Articles 110 and 111 are not used for the original purpose or are transferred within five years from the date of carrying them into Korea as tax-free goods (including cases where taxes are reduced or exempted; hereafter referred to as "tax exemption" in this Article), the amount of exempted tax shall be collected.
(2)
If the petroleum products on which the individual consumption tax or the traffic, energy and environment tax is levied become eligible for tax exemption under Article 106-2 (1) 2 or 111, the relevant amount of tax to be exempted may be refunded, or deducted from the amount of tax to be paid or collected.
(3)
The Individual Consumption Tax Act or the Traffic, Energy and Environment Tax Act shall apply mutatis mutandis, depending on the relevant goods, to the tax exemption procedures for the individual consumption tax or the traffic, energy and environment tax under Articles 106-2 (1) 2, 110 and 111 (including the dispositions in cases where the tax exemption procedures are not implemented), to the procedures for collecting the amount of tax under paragraph (1), and to the procedure for the refund or tax credit under paragraph (2).
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

law view

 Article 113-2 (Integrated Management of Supply of Tax-Free Petroleum, etc.)
 

(1)
For the purpose of the integrated management of details of supply, etc. of the following petroleum products (referring to the petroleum and petroleum products under the Petroleum and Petroleum Substitute Fuel Business Act; hereafter referred to as "tax-free petroleum, etc." in this Article), the Commissioner of the National Tax Service shall construct a computerized system:
1.
Petroleum products under Article 106-2 (1);
2.
Petroleum products under Article 111 (1);
3.
Petroleum products used for motor vehicles under Article 16 (1) 3 of the Individual Consumption Tax Act and Article 14 (1) of the Traffic, Energy and Environment Tax Act;
4.
Petroleum products used for vessels in international navigation or deep-sea fishery vessels under Article 18 (1) 9 of the Individual Consumption Tax Act and Article 15 (1) 3 of the Traffic, Energy and Environment Tax Act.
(2)
If necessary for the construction and operation of a computerized system under paragraph (1), the Commissioner of the National Tax Service may request the institutions, organizations, etc. prescribed by Presidential Decree to provide information or data prescribed by Presidential Decree, such as details of supply, etc. of tax-free petroleum, etc. In such cases, any person who receives such request shall comply with it unless any justifiable reason exits.
(3)
Method of submission of information or data under paragraph (2), frequency of such submission and other necessary matters shall be prescribed by Presidential Decree.
[This Article Newly Inserted by Act No. 11614, Jan. 1, 2013]

law view

 Article 114 (Exemption from Individual Consumption Tax and Liquor Tax on Goods Sold to Military Personnel, etc.)
 

(1)
Goods (limited to those manufactured domestically) sold to the military personnel, military civilian employees, and awardees of the order of military merit Taegeuk and Ulji, who are prescribed by Presidential Decree, at stores operated directly by the military authorities, shall be exempted from the individual consumption tax and the liquor tax.
(2)
The Minister of National Defense shall determine the ceiling of tax exemption by item every year in consultation with the Minister of Strategy and Finance no later than December 31 of the preceding year.
(3)
Any goods exempted from tax under paragraph (1) shall carry the marking that they are tax-free goods on themselves or their packages and containers under the conditions as stipulated by the Commissioner of the National Tax Service.
(4)
An amount equivalent to the amount of liquor tax on liquors to be used as raw materials for manufacturing the liquors that are exempted from taxes under paragraph (1), shall be refunded or deducted, but Article 35 (3) of the Liquor Tax Act shall apply mutatis mutandis thereto.
(5)
Matters necessary for the scope of goods subject to tax exemption, procedures for tax exemption, and collection thereof under paragraph (1) shall be prescribed by Presidential Decree.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

law view

 Article 115 (Exemption from Liquor Tax)
 

(1)
Any liquor which a person operating an entertainment restaurant exclusive for foreign military personnel stationed in Korea and foreign seafarers, from among the tourist-use facility businesses under the Tourism Promotion Act, provides at the relevant restaurant, shall be exempted from the liquor tax.
(2)
An amount equivalent to the amount of liquor tax on liquors to be used as raw materials for manufacturing the liquors exempted from taxes under paragraph (1) shall be refunded or deducted, but Article 35 (3) of the Liquor Tax Act shall apply mutatis mutandis thereto.
(3)
Article 31 of the Liquor Tax Act shall apply mutatis mutandis to the procedures for exempting the liquor tax under paragraph (1).
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

law view

 Article 116 (Exemption from Stamp Tax)
 

(1)
Documents falling under any of the following subparagraphs shall be exempted from stamp tax:
1.
through 4. Deleted;
5.
Consumption loan deeds or contracts on bills prepared by the respective copartners (including members or the members of fishing village cooperatives) of the credit associations established under the Credit Unions Act, community credit funds established under the Community Credit Cooperatives Act, agricultural cooperatives established under the Agricultural Cooperatives Act, cooperative associations and fishing village cooperatives established under the Fisheries Cooperatives Act, tobacco producers cooperative associations established under the Tobacco Producers Cooperatives Act, and forestry cooperatives established under the Forestry Cooperatives Act, in order to obtain loans from the relevant cooperatives (including fishing village cooperatives) or their Federations (including the Nonghyup Bank under the Agricultural Cooperatives Act): Provided, That the same shall not apply where the total amount of loans extended to the same person exceeds 50 million won;
6.
Children's deposit passbooks and copartners' deposit or installment savings certificates and passbooks (including the members of fishing village cooperatives under the Fisheries Cooperatives Act) which are prepared by the credit associations established under the Credit Unions Act, community credit funds established under the Community Credit Cooperatives Act, agricultural cooperatives established under the Agricultural Cooperatives Act, cooperative associations and fishing village cooperatives established under the Fisheries Cooperatives Act, tobacco producers cooperative associations established under the Tobacco Producers Cooperatives Act, and forestry cooperatives established under the Forestry Cooperatives Act;
7.
Certificates or documents attesting the establishment, transfer, alteration or termination of property rights due to the rural and fishing villages rearrangement projects implemented pursuant to the Rearrangement of Agricultural and Fishing Village Act; the farmland bank projects, such as the sale and purchase, letting and leasing, exchange, division and consolidation of farmland, etc. implemented pursuant to Article 10 (1) of the Korea Rural Community Corporation and Farmland Management Fund Act; the rural and fishing villages settlement zone projects implemented pursuant to the Act on the Special Measures for Development of Agricultural and Fishing Villages; the expansion of scale of farming and fish farming projects, such as purchase and lease of farmland, etc. which are supported pursuant to Article 5 of the Special Act on the Support of Farmers and Fishermen following the Conclusion of Free Trade Agreement;
8.
Deleted;
9.
Documents prepared in order to obtain rural village housing improvement loans, or to purchase housing construction materials on credit from the agricultural cooperatives established under the Agricultural Cooperatives Act;
10.
Deleted;
11.
Documents prepared in connection with farmland development projects implemented under the Public Waters Reclamation Act;
12.
through 14. Deleted;
15.
Deleted;
16.
Deleted;
17.
Deleted;
18.
Deleted;
19.
Certificates, passbooks, contracts, etc. prepared by a business founder under the Support for Small and Medium Enterprise Establishment Act (limited to those who have founded a business of such category under Article 3 of the same Act) in order to obtain loans from a financial institution prescribed by Presidential Decree within two years from the date of foundation in connection with the business concerned;
20.
and 21. Deleted. ;
22.
Documents prepared by the Organizing Committee for the Asian Games-Incheon 2014 and the Organizing Committee for the Asian Para Games-Incheon 2014;
23.
Documents prepared by the Organizing Committee for the 2015 Gwangju Summer Universiade;
24.
Deleted;
25.
Documents prepared by the Organizing Committee for the Special Olympics World Winter Games PyeongChang 2013;
26.
Documents prepared by the Organizing Committee for the 2010 Formula 1 Korean Grand Prix;
27.
Documents prepared by the Organizing Committee for the 2013 World Rowing Championships Chungju;
28.
Documents prepared by the Organizing Committee for the 2018 PyeongChang Olympic and Paralympic Winter Games.
(2)
With respect to the period of the exemption of stamp tax under subparagraphs of paragraph (1), following provisions shall apply:
1.
Subparagraphs 25 and 27 shall apply only to the taxation document prepared no later than December 31, 2013;
2.
Subparagraph 22 shall apply only to the taxation documents prepared no later than December 31, 2014;
3.
Subparagraphs 5 through 7, 9, 11, 19 and 23 shall apply only to the taxation documents prepared no later than December 31, 2015;
4.
Subparagraph 26 shall apply only to the taxation documents prepared no later than December 31, 2016;
5.
Subparagraph 28 shall apply only to the taxation documents prepared no later than December 31, 2018.

law view

 Article 117 (Exemption from Securities Transaction Tax)
 

(1)
The cases falling under any of the following subparagraphs shall be exempted from securities transaction tax:
1.
Where a small or medium enterprise start-up investment company or a small or medium enterprise start-up investment association transfers stock certificates or stakes acquired by making direct investments in a business founder or a venture business;
2.
Where a new technology business financier or a new technology business investment association transfers stock certificates or stakes acquired by making direct investments in a new technology business operator;
2-2.
Where an agriculture and food investment association transfers stocks or stakes acquired by making investments in a business starter or a venture business;
2-3.
Where the Korea Venture Business Investment Association transfers stock certificates or stakes acquired by making investments in a business founder or a venture business;
3.
through5. Deleted;
6.
Where a foreign corporation established with the aim of investment in stocks transfers stock certificates that it has acquired with permission, etc. of the Minister of Strategy and Finance for investment in stocks in Korea pursuant to the Foreign Exchange Transactions Act or the Financial Investment Services and Capital Markets Act, through securities market (hereafter referred to as "securities market" in this Article) under the Financial Investment Services and Capital Markets Act or electronic securities intermediation (hereafter referred to as "electronic securities intermediation transaction" in this Article) under Article 78 of the same Act;
7.
Where an insolvent financial institution, or an insolvent cooperative under subparagraph 3 of Article 2 of the Act on the Structural Improvement of Agricultural Cooperatives or a cooperative in danger of insolvency under subparagraph 4 of Article 2 of the same Act (hereinafter referred to as "insolvent agricultural cooperative") transfers stock certificates or equity shares in possession through the timely corrective measures (including timely corrective measures under Article 4 of the Act on the Structural Improvement of Agricultural Cooperatives; hereafter in this subparagraph, the same shall apply) or through a decision to transfer a contract, or where a financial institution, or cooperative or its National Federation under subparagraphs 1 and 2 of Article 2 of the Act on the Structural Improvement of Agricultural Cooperatives retransfers such stock certificates or equity shares, which it has acquired by such transfer;
7-2.
Where an insolvent cooperative association under subparagraph 3 of Article 2 of the Act on the Structural Improvement of Fisheries Cooperatives or a cooperative association in danger of insolvency under subparagraph 4 of Article 2 of the same Act (hereinafter referred to as "insolvent fisheries cooperative") transfers stock certificates or equity shares in possession through timely corrective measures (including timely corrective measures under Article 4 of the same Act; hereafter in this subparagraph, the same shall apply) or through a decision to transfer a contract, or where a cooperative or National Federation under subparagraphs 1 and 2 of Article 2 of the same Act retransfers such stock certificates or equity shares, which it has acquired by such transfer;
7-3.
Where an insolvent cooperative under subparagraph 3 of Article 2 of the Structural Improvement of Forestry Cooperatives Act or an insolvent alarming cooperative under subparagraph 4 of the same Article (hereinafter referred to as "insolvent forestry cooperative") transfers stock certificates or stakes in its possession pursuant to timely corrective measures (including timely corrective measures under Article 4 of the same Act; hereafter the same shall apply in this subparagraph) or through a decision to transfer a contract and where a cooperative or its National Federation under subparagraphs 1 and 2 of Article 2 of the same Act re-transfers stock certificates or stakes after it has taken over stock certificates or stakes from an insolvent forestry cooperative pursuant to timely corrective measures or through a decision to transfer a contract;
8.
Where the Korea Deposit Insurance Corporation or a reorganization financing institution under Article 36-3 of the Depositor Protection Act (hereinafter referred to as "reorganization financing institution") transfers stock certificates or stakes acquired through the conversion into investment of non-performance claims taken over from financial institutions falling under any of the following items or acquired directly from financial institutions in order to perform problem-solving services, etc. in aid of insolvent financial institutions pursuant to Article 18 (1) 4 or 36-5 (1) of the Depositor Protection Act:
(a)
An insolvent financial institution under subparagraph 5 of Article 2 of the Depositor Protection Act;
(b)
A financial institution in danger of insolvency under subparagraph 5-2 of Article 2 of the Depositor Protection Act;
(c)
A financial institution provided with fund assistance under Article 38 of the Depositor Protection Act;
9.
Where the Korea Asset Management Corporation established under the Act on the Efficient Disposal of Non-Performing Assets, etc. of Financial Companies and the Establishment of Korea Asset Management Corporation (hereinafter referred to as the "Korea Asset Management Corporation") transfers stock certificates or stakes acquired through the conversion into investment of non-performance claims taken over from an insolvent financial institution or acquired directly from an insolvent financial institution in order to perform problem-solving services in aid of insolvent financial institutions;
10.
Deleted;
11.
and 12. Deleted;
13.
Where stock certificates are transferred under Article 46 (1) ;
14.
Where stocks are transferred for the purposes of establishment of a new corporation under Article 47-2 of the Corporate Tax Act, merger meeting the requirements in the subparagraphs of Article 44 (2) or paragraph (3) of the same Act, corporate split meeting the requirements in the subparagraphs of Article 46 (1) or Article 47 (1) of the same Act, comprehensive transfer of asset meeting all the requirements in the subparagraphs of Article 37 (1), or comprehensive exchange and transfer of stocks meeting all the requirements in the subparagraphs of Article 38 (1) ;
15.
Deleted;
16.
Where the stockholders of a financial institution, etc. or a financial institution under Article 2 (1) 1 of the Financial Holding Companies Act and stockholders of a company which has close relations with financial business or a financial holding company under the same Act (hereinafter referred to as "financial holding company") transfers or exchanges stocks pursuant to Article 38-2;
17.
Deleted;
18.
Deleted;
19.
Where the Mutual Financing Depositors Protection Fund and the agricultural cooperative's property management company established under the Act on the Structural Improvement of Agricultural Cooperatives, transfer stock certificates or equity shares acquired through the conversion into investment of the non-performance claims taken over from an insolvent agricultural cooperative or acquired directly from an insolvent agricultural cooperative in order to perform problem-solving services in aid of the insolvent agricultural cooperative;
19-2.
Where the Mutual Financing Depositors Protection Fund under the Act on the Structural Improvement of Fisheries Cooperatives transfers stock certificates or equity shares acquired through the conversion into investment of the non-performance claims taken over from an insolvent fisheries cooperative association or acquired directly from an insolvent fisheries cooperative association in order to perform problem-solving services in aid of the insolvent fisheries cooperative association;
19-3.
Where the Mutual Financial Depositors Protection Fund under the Act on the Structural Improvement of Forestry Cooperatives transfers stock certificates or stakes acquired by conversion of insolvent credit which it had taken over from an insolvent forestry cooperative to perform affairs of liquidating such insolvent forestry cooperative into investment or acquired directly;
20.
Where a company for the purpose of capital expansion under Article 104-3 (1) transfers the stock certificates after it has taken over them from financial institutions under the same paragraph;
21.
Where stock certificates are transferred through securities market or electronic securities intermediation transaction in order to reflect changes in the components of an index that an exchange-traded fund under Article 234 (1) of the Financial Investment Services and Capital Markets Act is tracking.
22.
Where the Nonghyup Financial Group under the Agricultural Cooperatives Act transfers the stocks or equity share invested in kind by the Korea Finance Corporation established under the Korea Finance Corporation Act to a subsidiary of Nonghyup Financial Group, such as the Nonghyup Bank, under Article 3 of the Addenda to the Agricultural Cooperatives Act partially amended by Act No. 10522.
(2)
Paragraph (1) shall, in cases of the following subparagraphs, apply only to such stocks or equities as traded by transfer, withdrawal, incorporation, investment in kind, transfer of stocks, or exchange of stocks not later than the deadline specified in such subparagraphs:
1.
Paragraph (1) 1, 2, 2-2, 2-3, and 16: December 31, 2014;
2.
Paragraph (1) 16: December 31, 2015;
3.
Deleted;
4.
Deleted.
(3)
Deleted.
(4)
Any person who intends to be eligible for the application of paragraph (1) shall apply for tax exemption, as prescribed by Presidential Decree.

law view

 Article 118 (Reduction of Customs Duties)
 

(1)
Customs duties may be reduced for the articles that are difficult to be produced in Korea from among those falling under any of the following subparagraphs:
1.
Goods imported no later than December 31, 2013 for the construction of high-speed railroads;
2.
Deleted;
3.
Machinery and materials for the manufacture of new and renewable energy and for the utilization thereof pursuant to the provisions of subparagraph 1 of Article 2 of the Act on the Promotion of the Development and Use of New and Renewable Sources of Energy (including machinery and tools used for the manufacture of the such machinery and materials), which are imported no later than December 31, 2013;
4.
and 5. Deleted;
6.
and 7. Deleted;
8.
and 9. Deleted;
10.
and 11. Deleted;
12.
Deleted;
13.
Goods imported by the Organizing Committee for the Asian Games-Incheon 2014, the Organizing Committee for the Asian Para Games-Incheon 2014, local governments under Article 3 of the Act on Assistance to the IAAF World championships Daegu 2011, the 2013 World Rowing Championships Chungju, the 17th 2014 Incheon Asian Games, the 2014 Incheon Asian Para Games, and the 2015 Gwangju Summer Universiad or construction contractors of facilities related to the same Games for the manufacture and construction of facilities related to the Games and for management of the Games under Article 2 of the same Act (including machinery and materials for scientific training of athletes participating in the same Games);
14.
Goods imported by the Organizing Committee for the 2015 Gwangju Summer Universiade under Article 3 of the Act on Assistance to the 13th IAAF World Championships in Athletics-Daegu 2011, 2013 World Rowing Championships Chungju, Asian Games-Incheon 2014, Asian Para Games-Incheon 2014, and 2015 Gwangju Summer Universiade, local government or construction contractor of facilities related to the same Games for the manufacture and construction of facilities related to the Games and for management of the Games under Article 2 of the same Act (including machinery and materials for scientific training of athletes participating in the same Games);
15.
Deleted;
16.
Goods imported by the Organizing Committee for the Special Olympics World Winter Games PyeongChang 2013, local government or construction contractor of facilities related to the same Games for the manufacture and construction of facilities related to the Games and for management of the Games under Article 2 of the Act on Assistance to Special Olympics World Winter Games PyeongChang 2013 (including machinery and materials for scientific training of athletes participating in the same Games);
17.
Goods imported by the Organizing Committee for the 2010 Formula 1 Korean Grand Prix, local government or construction contractor of facilities related to the same Games for management of the Games under the Act on Assistance to the 2010 Formula 1 Korean Grand Prix or the manufacture and construction of facilities related to the Games under Article 18 (1) of the same Act.
18.
Goods imported by the Organizing Committee for the 2013 World Rowing Championships Chungju and local governments under Article 3 of the Act on Assistance to the IAAF World championships Daegu 2011, the 2013 World Rowing Championships Chungju, the 17th 2014 Incheon Asian Games, the 2014 Incheon Asian Para Games, and the 2015 Gwangju Summer Universiad or construction contractors of facilities related to the same Games for the manufacture and construction of facilities related to the Games and for management of the Games under Article 2 of the same Act (including machinery and materials for scientific training of athletes participating in the same Games);
19.
Goods imported by the Organizing Committee for the 2018 PyeongChang Olympic and Paralympic Winter Games and local governments under Article 5 of the Special Act on Support for the 2018 PyeongChang Olympic and Paralympic Winter Games or construction contractors of facilities related to the same Games for the manufacture and construction of facilities related to the Games and for management of the Games under Article 2 of the same Act (including machinery and materials for scientific training of athletes participating in the same Games).
(2)
The articles eligible for the reduction of customs duties under paragraph (1) and the reduction rates thereof shall be determined by Ordinance of the Ministry of Strategy and Finance.
(3)
Where the articles for which customs duties were reduced under paragraph (1) are used for other purposes than those specified in subparagraphs of paragraph (1) during such period as fixed by the Commissioner of the Korea Customs Service within three years from the date on which their import declaration was accepted (including cases where such articles have failed to be used for the relevant purposes throughout the period as fixed by the Commissioner of the Korea Customs Service), or where such articles are transferred to a person who is to use them for other purposes than the original purposes, the reduced customs duties shall be collected forthwith from such person who abused them for other purposes or such person who transferred them; however, if such customs duties are not collectible from the transferor, they shall be collected forthwith from the transferee: Provided, That the same shall not apply in cases where such articles were destroyed due to the occurrence of natural disasters or by such other causes as may be unavoidable or were exterminated with the approval of the director of the customshouse in advance.
(4)
The proviso to Article 103 (1) of the Customs Act shall not apply to cases in which customs duties are collected as prescribed in paragraph (3).

law view

 Article 118-2 (Reduction or Exemption of Customs Duties for Overseas Korean Enterprises on their Return to Korea)
 

(1)
Where a person, including Korean nationals, prescribed by Presidential Decree referred to in Article 104-24 (1), files an import report on capital goods prescribed by Presidential Decree by not later than December 31, 2015 to start a business or establish a new place of business or to expand it in the Republic of Korea meeting all the following requirements, customs duties on such capital goods may be reduced or exempted pursuant to paragraph (2):
1.
That his/her business entity shall be a small or medium enterprise which intends to relocate or moves back its place of business under Article 104-24 (1) 1 or 2;
2.
That the category of business operated before and after the relocation or move-back of its place of business shall be identical based on the subdivision of the Korea Standard Industrial Classification.
(2)
The rate of reduction or exemption of customs duties on capital goods under paragraph (1) shall be as follows:
1.
In cases falling under Article 104-24 (1) 1: 100/100 of the customs duties on capital goods imported: Provided, That where aggregate amount of customs duties (referring to the amount aggregated in the order of imports of capital goods) to be reduced or exempted exceeds 200 million won, the amount in excess shall not be reduced or exempted;
2.
In cases falling under Article 104-2 (1) 2: 50/100 of the customs duties on capital goods imported: Provided, That where aggregate amount of customs duties (referring to the amount aggregated in the order of imports of capital goods) to be reduced or exempted exceeds 100 million won, the amount in excess shall not be reduced or exempted.
(3)
Where a person for whom customs duties are reduced or exempted pursuant to paragraph (1) falls under any of the following cases, he/she shall pay the reduced or exempted customs duties, as prescribed by Presidential Decree:
1.
Where the person for whom customs duties are reduced or exempted pursuant to paragraph (1) closes the relevant business or the relevant corporation becomes dissolved;
2.
Where he/she fails to commence the business by relocating or moving back his/her place of business to the Republic of Korea as prescribed by Presidential Decree;
3.
Where he/she disposes of, transfer or leases the capital goods imported with benefit of reduction or exemption of customs duties within three years from the date of receipt of the import report under the Customs Act.
(4)
Procedure for reduction or exemption, documents to be submitted and other necessary matters when applying paragraphs (1) through (3) shall be prescribed by Presidential Decree.
[This Article Newly Inserted by Act No. 11614, Jan. 1, 2013]

CHAPTER IV LOCAL TAXES

law view

 Article 119 (Exemption, etc. from Registration and License Tax)
 

(1)
Any of the following registration shall be exempted from registration and license tax (in cases under subparagraph 3, 50/100 of such tax shall be reduced or exempted) until December 31, 2014. In such cases, the tax rate under Article 28 (2) and (3) of the Local Tax Act shall not apply:
1.
Registration of the investment in kind under the State Property Act;
2.
Where a corporation prescribed by Presidential Decree which belongs to the corporations established under a special Act is reorganized as a company under the Commercial Act due to amendment or abrogation of the relevant special Act, the registration of the establishment of such corporation;
3.
Any of the following registration made when a special purpose company referred to in subparagraph 5 of Article 2 of the Asset-Backed Securitization Act (including a foreign corporation specialized in the business of asset-backed securitization; hereinafter referred to as "special purpose company") takes over assets for asset-backed securitization from an asset holder under subparagraph 2 of Article 2 of the said Act or from another special purpose company, or manages, operates, or disposes of the assets that were taken over, according to an asset-backed securitization plan registered under Article 3 of the same Act:
(a)
Registration for the transfer of mortgages;
(b)
Registration or provisional registration concerning an application for auction, provisional seizure, or provisional disposition;
4.
Registration made when the Korea Deposit Insurance Corporation makes investment under Articles 8, 11 and 12 of the Act on the Structural Improvement of the Financial Industry;
5.
Any of the following registration made when the Korea Housing Finance Corporation under the Korea Housing Finance Corporation Act (hereinafter referred to as the "Korea Housing Finance Corporation") takes over housing mortgage credits from financial companies, etc., or manages, operates, or disposes of the housing mortgage credits that were taken over, according to a credit-backed securitization plan registered under Article 23 of the said Act:
(a)
Registration for the transfer of mortgages;
(b)
Registration or provisional registration concerning an application for auction, provisional seizure, or provisional disposition;
6.
Registration made when a financial holding company takes the transfer of stocks or makes stock-swap under Article 38 or 38-2;
(2)
Any of the following registration shall be exempted from registration and license tax:
1.
Registration of incorporation of a small or medium start-up enterprise to be established on or before December 31, 2014 [including cases in which it increases its capital or contributions within four years from the establishment date of business (referring to the date of certification as a start-up venture enterprise in cases of a small or medium start-up venture enterprise; hereinafter the same shall apply)];
2.
Registration made by a small or medium start-up enterprise due to a change of the domicile of a corporation or the domicile of the representative director within four years from the establishment date of business, in cases of establishment on or before December 31, 2014;
3.
Registration of the incorporation within one year from the date on which a small or medium enterprise has been certified as a venture enterprise no later than December 31, 2014 in the process of starting business pursuant to Article 2-2 (1) 2 (c) of the Act on Special Measures for the Promotion of Venture Businesses.
(3)
Where an investment company, ship investment company under the Financial Investment Services and Capital Markets Act, a corporate restructuring investment company under the Corporate Restructuring Investment Companies Act, a real estate investment company under the Real Estate Investment Company Act (excluding self-administered real estate investment companies under the same Act), a special purpose corporation under Article 17 (1) 2 of the Rental Housing Act, a company falling under Article 51-2 (1) 9 of the Corporate Tax Act (hereafter referred to as "project financial investment company" in Article 120 (4)), a private equity fund or special purpose company under the Financial Investment Services and Capital Markets Act, or a company specialized in the cultural industry under the Framework Act on the Promotion of Cultural Industries registers its incorporation (including cases in which it increases its capital or investment within five years after incorporation) by no later than December 31, 2014, tax rates under Article 28 (2) and (3) of the Local Tax Act shall not apply to such registration.
[This Article Wholly Amended by Act No. 10406, Dec. 27, 2010]

law view

 Article 120 (Exemption, etc. from Acquisition Tax)
 

(1)
Where any of the following properties are acquired no later than December 31, 2014, acquisition tax thereon shall be exempted (in the cases falling under subparagraphs 9 and 17, reduction or exemption of 50/100 thereof shall be granted). In such cases, tax rates provided for in the main sentence of Article 13 (2) and (5) of the Local Tax Act shall not apply:
1.
Property invested in kind under the State Property Act;
2.
Business property which are taken over by a corporation formed by, or surviving consolidation between the small or medium enterprises under Article 31;
3.
Business property acquired by a corporation prescribed by Presidential Decree, among corporations established under a special Act, in the course of its re-organization as a company under the Commercial Act due to amendment or abrogation of the relevant special Act;
4.
Property acquired by the Korea Asset Management Corporation (only applicable to the property prescribed by Presidential Decree);
5.
Property acquired through investment in kind under Article 47-2 of the Corporate Tax Act: Provided, That in cases a cause referred to in the subparagraphs of Article 47-2 (3) of the Corporate Tax Act occurs (excluding cases falling under the proviso to the part, other than the subparagraphs of the same paragraph), the reduced or exempted acquisition tax shall be additionally collected;
6.
Property acquired through corporate split meeting the requirements referred to in subparagraphs of Article 46 (2) of the Corporate Tax Act (Article 47 (1) of the same Act, in cases of spin-off): Provided, That in cases a cause referred to in the subparagraphs of Article 46-3 (3) of the Corporate Tax Act (Article 47 (3) of the same Act, in cases of spin-off) occurs (excluding cases falling under the proviso to the part, other than subparagraphs of the same paragraph), reduced or exempted acquisition tax shall be additionally collected;
7.
Property acquired through an asset exchange under Article 50 of the Corporate Tax Act;
8.
Property taken over by a financial institution under subparagraph 1 of Article 2 of the Act on the Structural Improvement of the Financial Industry, the Korea Asset Management Corporation, the Korea Deposit Insurance Corporation, or a reorganization financing institution from an insolvent financial institution subject to timely corrective measures (limited to an order for business transfer or contract transfer) or a decision on contract transfer;
9.
Real estate acquired by a special purpose company from an asset holder under subparagraph 2 of Article 2 of the Asset-Backed Securitization Act or another special purpose company pursuant to the asset-backed securitization plan registered under Article 3 of the said Act;
10.
Housing acquired by the Korea Housing Finance Corporation by exercising a mortgage against a financial company, etc. pursuant to credit-backed securitization plan registered under Article 23 of the Korea Housing Finance Corporation Act;
11.
Property acquired by the Savings Deposit Insurance Corporation or a reorganization financing institution (only applicable to the property prescribed by Presidential Decree);
12.
Property acquired by an agricultural cooperative's property management company under the Act on the Structural Improvement of Agricultural Cooperatives (only applicable to the property prescribed by Presidential Decree);
13.
Property taken over by the cooperatives under the Agricultural Cooperatives Act, the mutual financing depositors protection fund, and the agricultural cooperative's property management company under the Act on the Structural Improvement of Agricultural Cooperatives, from insolvent agricultural cooperatives subject to timely corrective measures (limited to an order for business transfer or contract transfer) or a decision on contract transfer;
14.
Property acquired by the mutual financing depositors protection fund under the Act on the Structural Improvement of Agricultural Cooperatives (only applicable to the property prescribed by Presidential Decree);
15.
Property acquired by the cooperative association under the Fisheries Cooperatives Act and the mutual financing depositors protection fund under the Act on the Structural Improvement of Fisheries Cooperatives from insolvent fisheries cooperatives subject to timely corrective measures (limited to an order for business transfer or contract transfer) or a decision on contract transfer;
16.
Property acquired by the mutual financing depositors protection fund under the Act on the Structural Improvement of Fisheries Cooperatives (only applicable to the property prescribed by Presidential Decree);
17.
Property acquired by the Korea Asset Management Corporation from a corporation and its affiliated companies which seek to reorganize their structure or improve their financial structure through merger, conversion, consolidation, etc. (hereafter referred to as "restructuring companies" in this subparagraph) under Article 26 (1) 7 of the Act on the Efficient Disposal of Non-Performing Assets, etc. of Financial Companies and the Establishment of Korea Asset Management Corporation (only applicable to the property sold by a restructuring companies for the purpose of structural reorganization or improvement of their financial structure);
18.
Property acquired through the comprehensive transfer of the asset meeting all the requirements referred to in the subparagraphs of Article 37 (1) : Provided, That in cases a cause referred to in the subparagraphs of Article 37 (6) occurs (excluding cases falling under paragraph (7) of the same Article), reduced or exempted acquisition tax shall be additionally collected.
(2)
Where the property taken over by merger prescribed by Presidential Decree is acquired no later than December 31, 2014, acquisition tax calculated under Article 15 (1) of the Local Tax Act shall be exempted: Provided, That where the relevant property is applicable to the proviso to Article 15 (1) 3 of the Local Tax Act, the acquisition tax calculated after subtracting the following amounts shall be exempted:
1.
Acquired property pursuant to Article 13 (1) of the Local Tax Act: An amount calculated by applying 300/100 among the standard heavy taxation rates under the same Article (hereinafter referred to as "standard heavy taxation rates");
2.
Acquired property pursuant to Article 13 (5) of the Local Tax Act: An amount by applying 500/100, among the standard heavy taxation rates.
(3)
Business property acquired by any small or medium start-up enterprises or any small or medium start-up venture enterprises to be established no later than December 31, 2014 in order to operate the business concerned within four years from the date of starting such business shall be exempted from the acquisition tax: Provided, That if the relevant property is not used directly for the relevant business, is used for other purpose or is disposed of (including its lease; hereafter the same shall apply in this paragraph) without any justifiable grounds within two years from the date on which the property is acquired or if the relevant property is not used directly for the relevant business, is used for other purpose or is disposed of without any justifiable grounds for two years from the date on which the property is first used, the amount of tax exempted therefrom shall be additionally collected.
(4)
Where any of the following real estates (excluding any real estate falling under any subparagraph of Article 13 (5) of the Local Tax Act) are acquired no later than December 31, 2014, an amount of tax equivalent to 30/100 (50/100 in cases falling under subparagraph 3) of acquisition tax shall be reduced or exempted. In such cases, tax rates provided for in the main sentence of Article 13 (2) and (3) of the Local Tax Act shall not apply:
1.
Any real estate acquired by a real estate investment company under the Real Estate Investment Company Act;
2.
Any real estate acquired as the collective investment property of a real estate collective investment scheme under the Financial Investment Services and Capital Markets Act;
3.
Any real estate acquired by a project financial investment company.
(5)
Business property acquired through the investment in kind or the business transfer or takeover pursuant to Article 32 shall be exempted from acquisition tax: Provided, That if such business is closed, or such property is disposed of (including their lease) within two years from the date of acquisition without such justifiable reasons prescribed by Presidential Decree, the amount of tax reduced or exempted shall be additionally collected.
(6)
Article 7 (5) of the Local Tax Act shall not apply to an oligopolistic stockholder if a stockholder falls under an oligopoly stockholder under subparagraph 2 of Article 47 of the Framework on Local Taxes until December 31, 2014 by any of the following reasons:
1.
Where a stockholder acquires stocks or equity shares from an insolvent financial institution through a takeover by a third party, an order for contract transfer, or a decision on contract transfer under Article 10 of the Act on the Structural Improvement of the Financial Industry;
2.
Where a financial institution acquires stocks or equity shares of a corporation through the conversion of its loans to a corporation into equity investments;
3.
Where a corporation becomes a holding company under the Monopoly Regulation and Fair Trade Act (including a financial holding company) or a holding company acquires stocks of its subsidiary under the same Act or the Financial Holding Companies Act;
4.
Where the Savings Deposit Insurance Corporation or a reorganization financing institution acquires stocks or equity shares pursuant to Articles 36-5 (1), and 38 of the Depositor Protection Act;
5.
Where the Korea Asset Management Corporation acquires stocks or equity shares through the conversion into equity investment of the claims taken over pursuant to Article 26 (1) 1 of the Act on the Efficient Disposal of Non-Performing Assets, etc. of Financial Companies and the Establishment of Korea Asset Management Corporation;
6.
Where the agricultural cooperative's asset management company under the Act on the Structural Improvement of Agricultural Cooperatives acquires stocks or equity shares through the conversion into investment of the non-performing assets taken over under subparagraph 3 (c) of Article 30 of the same Act;
7.
Where stocks of a wholly owned company are acquired through the comprehensive exchange and transfer of stocks meeting all the requirements referred to in the subparagraphs of Article 38 (1) : Provided, That in cases falling under Article 38 (2) (excluding cases falling under paragraph (3) of the same Article), reduced or exempted acquisition tax shall be additionally collected.
[This Article Wholly Amended by Act No. 10406, Dec. 27, 2010]

law view

 Article 120-2 (Reduction or Exemption of Acquisition Tax and Registration Tax for Replacement of Deteriorated Cars)
 

(1)
In cases where any person (including a corporation) who possesses (based on the date of registration; hereafter the same shall apply in this Article) a passenger automobile, an automobile for passengers and freight, a freight automobile or a special automobile (excluding used cars any person registered himself/herself as a automobile transaction business under the Motor Vehicle Management Act has acquired for sale and purchase; hereafter referred to as "deteriorated cars" in this Article) newly registered on or before December 31, 1999 under the Motor Vehicle Management Act as of April 12, 2009 scraps or transfers the deteriorated car on or after April 13, 2009 and newly registers a passenger automobile, an automobile for passengers and freight, a freight automobile or a special automobile (limited to new automobiles which are not newly registered as those carried out from the manufacturing plant or import thereof reported; hereafter the same shall apply in this Article) under the title of himself/herself within 2 months from the cancellation registration date of the deteriorated car or the registration date of transfer, the tax equivalent to 70/100 of acquisition tax and registration tax calculated under Articles 112 and 132-2 of the Local Tax Act shall be reduced or exempted from such taxes respectively. In such cases, the acquisition tax and registration tax shall be reduced or exempted with limitation to 1 new automobile per 1 deteriorated car.
(2)
In cases where the taxes reduced or exempted from the acquisition tax exceeds 280 thousand won and those reduced or exempted from the registration tax exceeds 700 thousand won from among the amount reduced or exempted per 1 car under paragraph (1), 280 thousand won and 700 thousand shall be reduced or exempted respectively.
(3)
In cases where any person failing to meet requirements under paragraph (1) is reduced or exempted from the acquisition tax and registration tax, the taxes reduced or exempted shall be additionally collected.
(4)
Provisions of paragraphs (1) through (3) shall not be applicable to passenger automobiles to which Article 1 (7) of the Individual Consumption Tax Act is applied.
[This Article Newly Inserted by Act No. 9671, May 21, 2009]

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 Article 121 (Reduction of or Exemption from Property Tax)
 

With respect to any business property owned by any small or medium start-up enterprises or any small or medium start-up venture enterprises to be established no later than December 31, 2014, which is used directly for the relevant business (in cases of any land attached to a building, the portion of such land that is within the standard size for a factory site prescribed by Presidential Decree or that is within the applicable multiplication rate by an area for a special purpose prescribed by Presidential Decree), an amount of tax equivalent to 50/100 of the property tax (referring to an amount of tax imposed pursuant to Article 111 of the Local Tax Act; hereinafter the same shall apply) shall be reduced or exempted for five years from the date of starting business.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

CHAPTER V SPECIAL CASES CONCERNING TAXATION FOR FOREIGNERS' INVESTMENT, ETC.

law view

 Article 121-2 (Reduction of or Exemption from Corporate Tax, etc. for Foreigners' Investment)
 

(1)
A foreigner's investment to carry on any of the following businesses (referring to the foreigner's investment under Article 2 (1) 4 of the Foreign Investment Promotion Act; hereafter in this Chapter, the same shall apply), which meets the standards prescribed by Presidential Decree, shall be eligible for the reduction of or exemption from each of corporate tax, income tax, acquisition tax, and property tax under paragraphs (2) through (5) and (12):
1.
Any business falling under any of the following items determined through the deliberation of the foreign investment committee under Article 27 of the Foreign Investment Promotion Act as a business that is vital to the strengthening of the international competitiveness of domestic industries:
(a)
Business of industrial support service: Service business with high value-added and high effectiveness of supporting development of other industry by supporting the manufacturing business, etc.;
(b)
Business accompanying a high-level technology: Business accompanying technology the level of development of which is low or which is not developed in Korea;
2.
Businesses undergoing deliberation and resolution of the committees under the following items as businesses which are conducted by foreign investment enterprises moving into the foreign investment zone under Article 18 (1) 2 of the Foreign Investment Promotion Act and businesses which are conducted by foreign investment enterprises from among the businesses under subparagraph 2-2, Article 121-8 (1) or 121-9 (1) 1:
(a)
In cases of business under subparagraph 2-2, the Free Economic Zones Committee under Article 25 of the Special Act on Designation and Management of Free Economic Zones;
(b)
In cases of business under Article 121-8 (1), the Jeju Special Self-Governing Province Supporting Committee under Article 7 of the Special Act on the Establishment of Jeju Special Self-Governing Province and the Development of Free International City;
(c)
In cases of business under Article 121-9 (1) 1, the Jeju Free International Cities Master Plan Council under Article 226 of the Special Act on the Establishment of Jeju Special Self-Governing Province and the Development of Free International City;
2-2.
Business that is run by a foreign-capital invested company located in a free economic zone as referred to in subparagraph 1 of Article 2 of the Special Act on Designation and Management of Free Economic Zones;
2-3.
Business that is run by a foreign-capital invested company which is a free economic zone development project entity under Article 8-3 (1) and (2) of the Special Act on Designation and Management of Free Economic Zones;
2-4.
Business that is run by a foreign-capital invested company designated as an entity of the project for the development of Jeju investment promotion zone in accordance with Article 217 of the Special Act on the Establishment of Jeju Special Self-Governing Province and the Development of Free International City;
2-5.
Business that is run by any foreign-capital invested company located in the foreign investment area under Article 18 (1) 1 of the Foreign Investment Promotion Act;
2-6.
Business that is run by any foreign-capital invested company located in any enterprise city development zone under subparagraph 2 of Article 2 of the Special Act on the Development of Enterprise Cities (hereinafter referred to as "enterprise city development zone");
2-7.
Business that is run by any foreign-capital invested company designated as an entity of the enterprise city development project (hereinafter referred to as "entity of the enterprise city development project") in accordance with Article 10 (1) of the Special Act on the Development of Enterprise Cities and that implements the enterprise city development project under subparagraph 3 of Article 2 of the same Act;
3.
Business prescribed by Presidential Decree to which a tax reduction or exemption is inevitably allowed in order to attract foreigners' investment.
(2)
The reduction of or exemption from corporate tax or income tax on the foreign-capital invested company under Article 2 (1) 6 of the Foreign Investment Promotion Act (hereafter in this Chapter, referred to as "foreign-capital invested company") shall be applicable only to income derived by carrying on a business eligible for reduction or exemption under paragraph (1); however, for the taxable years ending within five years from the beginning date of the taxable year wherein income has been derived from such business for the first time since the date of the commencement of such business (when no income accrues from the relevant business by the taxable year to which the date falling on five years from the start of business belongs, the taxable year to which the date falling on five years from the start of business belongs), the foreign-capital invested company shall be allowed an exemption from the total of an amount (hereafter in this paragraph and paragraph (12) 1 and 2 and Article 121-4 (4), referred to as "amount of tax subject to reduction or exemption") obtained by multiplying an amount equivalent to corporate tax or income tax on such business income (referring to the amount obtained by multiplying the gross computed amount of tax by a percentage of the gross tax base which is represented by such income derived by carrying on the business falling under any subparagraphs of paragraph (1) ) by the ratio of the foreigner's investment (referring to the rate of foreign investment calculated as prescribed by Presidential Decree taking into account the kinds of stocks issued by the foreign-capital invested company; hereafter in this Chapter, the same shall apply); for the taxable year ending within two years thereafter, an amount of tax equivalent to 50/100 of the amount of tax subject to reduction or exemption shall be reduced: Provided, That in cases of income derived from the operation of a business eligible for reduction or exemption under paragraph (1) 2-2 through 2-7 and 3, the total amount of tax subject to reduction or exemption shall be exempted during the taxable years ending within three years from the taxable year in which income accrued from the operation of such business for the first time since the date of starting such business (when no income accrues from the relevant business by the taxable year to which the date falling on five years from the commencement of the business belongs, the taxable year to which the date on which five years lapse belongs), and an amount of tax equivalent to 50/100 of the amount of tax subject to reduction or exemption shall be reduced during the taxable years ending within two years thereafter. In such cases, where a foreign-capital invested company is merged during the period of tax reduction or exemption with a domestic corporation (excluding any other foreign-capital invested company under the application of the period of tax reduction or exemption) and thereby the ratio of foreigner's investment in the relevant merged decreases, the ratio of foreigner's investment in the foreign-capital invested company before the merger shall be applied in computing the amount of tax subject to reduction or exemption.
(3)
The corporate tax or income tax on dividend or distributed amount (hereafter referred to as "dividend, etc." in this Article) derived from stocks or equities (hereafter in this Chapter, referred to as "stocks, etc.") acquired by a foreign investor under Article 2 (1) 5 of the Foreign Investment Promotion Act (hereafter in this Chapter, referred to as "foreign investor") shall be reduced or exempted in proportion to a percentage of the gross income for each taxable year of the relevant foreign-capital invested company which is represented by income derived from its operation of the business eligible for reduction of or exemption from corporate tax or income tax under paragraph (1), as prescribed by Presidential Decree; however, for a period for which the total amount of tax subject to reduction of or exemption from corporate tax or income tax is exempted under paragraph (2), he/she shall be allowed an exemption from the total amount of tax, and for a period for which an amount of tax equivalent to 50/100 of the amount of tax subject to reduction of or exemption from corporate tax or income tax is reduced under paragraph (2), he/she shall be granted reduction of 50/100 of an amount equivalent to the amount of tax.
(4)
With respect to acquisition tax, and property tax on the property acquired and held by a foreign-capital invested company in order to carry on a reported business, an amount of such tax shall be reduced or a specified amount shall be deducted from its tax base in such manner as set forth in the following subparagraphs: Provided, That where a local government extends the period of reduction, exemption, or deduction up to 15 years or increases the rate of reduction, exemption or deduction within the extended period under the conditions as prescribed by municipal ordinance as referred to in Article 4 of the Restriction of Special Local Taxation Act, such reduction, exemption, or deduction shall, notwithstanding subparagraphs 1 and 2, be governed by such extended period or increased rate:
1.
As for acquisition tax, registration tax, or property tax, a foreign-capital invested company shall, within five years from the date of the starting of business, be allowed an exemption from the total of an amount (hereafter in this paragraph, paragraphs (5) and (12) 3 and 4, referred to as "amount of tax subject to reduction or exemption") obtained by multiplying a computed amount of tax on the properties concerned by the ratio of foreigner's investment and an amount of tax equivalent to the 50/100 of the amount of tax subject to reduction or exemption shall be reduced within two years thereafter: Provided, That with respect to acquisition tax, registration tax, and property tax on the properties acquired and held in order to carry on a business eligible for reduction or exemption under paragraph (1) 2-2 through 2-7 and 3, the foreign-capital invested company shall, within three years from the date of the starting of business, be allowed an exemption from the total of the amount of tax subject to reduction or exemption; within two years thereafter, it shall be allowed a reduction of an amount of tax equivalent to 50/100 of the amount of tax subject to reduction or exemption;
2.
As for property tax on land, a foreign-capital invested company shall be allowed to deduct from tax base the total of an amount (hereafter in this paragraph, paragraphs (5) and (12) 3 and 4, referred to as "amount subject to deduction") obtained by multiplying a tax base on the properties by the ratio of foreigner's investment for five years from the date of the starting of business; for two years thereafter, an amount equivalent to the 50/100 of the amount subject to deduction shall be deducted from the tax base: Provided, That with respect to property tax on the land acquired and held in order to carry on a business eligible for reduction or exemption under paragraph (1) 2-2 through 2-7 and 3, the foreign-capital invested company shall, for three years from the date of the starting of business, be allowed to deduct the total of the amount subject to deduction from the tax base; for two years thereafter, an amount equivalent to the 50/100 of the amount subject to deduction shall be deducted from the tax base.
(5)
If a foreign-capital invested company acquires and holds a property before the date of the starting of business in order to carry on any business falling under each subparagraph of paragraph (1), notwithstanding paragraph (4), it shall be allowed a reduction of or exemption from acquisition tax, and property tax on such properties, or a specified amount shall be deducted from its tax base, in such manner as set forth in the following subparagraphs: Provided, That where a local government extends the period of reduction, exemption, or deduction by up to 15 years or increases the rate of reduction, exemption or deduction by up to the period extended as prescribed by Municipal Ordinance under Article 4 of the Restriction of Special Local Taxation Act, such reduction, exemption or deduction shall, notwithstanding subparagraphs 2 and 3, be governed by such extended period or increased rate:
1.
For acquisition tax on the property acquired after the date on which a decision on tax reduction or exemption under paragraph (8) was notified, the total amount of tax subject to reduction or exemption shall be exempted;
2.
For property tax for five years from the date of the acquisition of such properties, the total amount of tax subject to reduction or exemption shall be exempted, and for two years thereafter, the amount equivalent to 50/100 of the amount of tax subject to reduction or exemption shall be reduced: Provided, That with respect to property tax on the properties acquired and held in order to carry on a business eligible for reduction or exemption under paragraph (1) 2-2 through 2-7 and 3, the foreign-capital invested company shall, for three years from the date of the acquisition of the properties, be allowed an exemption from the total of the amount of tax subject to reduction or exemption; for two years thereafter, it shall be allowed a reduction of the amount equivalent to 50/100 of the amount of tax subject to reduction or exemption;
3.
For the property tax on land, the entire amount subject to deduction for five years from the date of acquiring the relevant property, and the amount equivalent to 50/100 of the amount subject to deduction for two years thereafter, shall be deducted from the tax base: Provided, That for the property tax on the land acquired and held in order to carry on a business eligible for reduction or exemption under paragraph (1) 2-2 through 2-7 and 3, the entire amount subject to deduction for three years from the date of the acquisition of the relevant properties, and the amount equivalent to 50/100 of the amount subject to deduction for two years thereafter shall be deducted from the tax base.
(6)
Any foreign investor or a foreign-capital invested company that intends to be subject to the tax reduction or exemption under paragraphs (2) through (5) and (12) shall make an application for tax reduction or exemption to the Minister of Strategy and Finance no later than the closing date of the taxable year whereto belongs the date of commencing the business of relevant foreign-capital invested company: Provided, That, where any foreign investor or foreign-capital invested company alters the business contents subject to a decision on tax reduction or exemption under paragraph (8) and intends to have any reduction or exemption applied to the modified business, he/she or it shall make an application for modification of contents of tax reduction or exemption to the Minister of Strategy and Finance not later than the date on which two years elapse from the date on which the causes for the relevant modification occur, and where a decision on modification of the contents of tax reduction or exemption is made thereon, the content of relevant decision on modification shall apply only to the remainder of the original reduction or exemption period.
(7)
A foreigner (referring to "foreigner" under Article 2 (1) 1 of the Foreign Investment Promotion Act), foreign investor or foreign-capital invested company may request the Minister of Strategy and Finance to confirm whether a business intended to run is subject to tax reduction or exemption under paragraph (1), before making a report under Article 5 (1) of the Foreign Investment Promotion Act.
(8)
The Minister of Strategy and Finance shall, upon receipt of an application for tax reduction or exemption, or for modification of contents of tax reduction or exemption under paragraph (6), or a request for prior confirmation under paragraph (7), decide on whether the amount of tax can be reduced or exempted, the contents of reduction or exemption can be modified, or the business can be subject to the tax reduction or exemption in consultation with the competent Minister, and shall notify the applicant accordingly: Provided, That he/she shall consult with the head of local government having jurisdiction over the relevant business place about the reduction or exemption of the acquisition tax and property tax under paragraphs (4), (5) and (12) 3 and4.
(9)
Paragraphs (2) through (5) and (12) shall not apply to the foreigner's investment under Article 2 (1) 8 (g) of the Foreign Investment Promotion Act, or Article 6 of the same Act.
(10)
Where a foreign investor or foreign-capital invested company obtains a decision on reduction or exemption under paragraph (8) by applying for reduction or exemption after an expiry of the time limit for application for reduction or exemption under paragraph (6), paragraphs (1) through (5) and (12) shall apply only to the taxable year whereto belongs the date of such application, and to the remainder of reduction or exemption period thereafter. In such cases, where there exists any amount of tax already paid prior to a decision on reduction or exemption under paragraph (8), the relevant amount of tax shall not be refunded.
(11)
In applying the provisions of this Article through Article 121-4, in cases of a foreigner's investment falling under any of the following cases, an amount equivalent to the holding ratio of stocks, etc. or an amount equivalent to the loan calculated as prescribed by Presidential Decree shall not be construed as eligible for tax reduction or exemption:
1.
Where a Korean national (excluding a person permanently residing overseas who has obtained a permanent residentship or similar sojourn permit corresponding to the permanent residentship in his/her residence country) or a domestic corporation (hereafter referred to as "Korean national, etc.") owns directly or indirectly not less than 10/100 of the voting stocks, etc. of a foreign corporation or foreign enterprise (hereafter referred to as "foreign corporation, etc." in this paragraph) and such foreign corporation, etc. makes a foreigner's investment;
2.
Where a foreigner invested enterprise or a Korean national, etc. holding stocks, etc. with voting rights of such foreigner invested enterprise (limited to the cases where at least 10/100 of the stocks, etc. with voting rights are held) is loaning money to the foreign investor.
(12)
With respect to foreign investment falling under a method prescribed by Presidential Decree, such as takeover of business, etc. among the foreign investment in the business prescribed in paragraph (1) 1, corporate tax, income tax, acquisition tax and property tax shall be respectively reduced or exempted as prescribed in the following subparagraphs, notwithstanding the period of reduction or exemption, period of deduction, rate of reduction or exemption and rate of deduction under paragraphs (2) through (5) : Provided, That in applying subparagraphs 3 and 4, where the local government extends the reduction or exemption period or deduction period by up to ten years under the conditions as determined by municipal ordinance under Article 4 of the Restriction of Special Local Taxation Act, or elevates the reduction or exemption ratio or deduction ratio within the extended period, it shall be governed by such period and ratio, notwithstanding subparagraphs 3 and 4:
1.
The reduction of or exemption from corporate tax and income tax on a foreign-capital invested company shall be applicable only to the income accruing from carrying on the business subject to reduction or exemption under paragraph (1) 1, but 50/100 of the amount of tax subject to the reduction or exemption for the taxable year ending within three years from the beginning date of the taxable year wherein income has been derived from such business for the first time (when no income accrues from the relevant business by the taxable year whereto belongs the date on which five years lapse from the date on which the business commences, the taxable year to which the date on which five years lapse belongs), and 30/100 of the amount of tax subject to reduction or exemption for the taxable year ending within two years thereafter, shall be respectively reduced or exempted;
2.
Corporate tax or income tax on dividend, etc. accruing from the stocks acquired by foreign investors shall be reduced or exempted pursuant to the ratio of revenues of the foreign-capital invested company accrued from carrying on business subject to reduction or exemption of corporate tax or income tax under paragraph (1) 1 to the revenues for each taxable year of the said company in accordance with the method prescribed by Presidential Decree; however, for the period wherein the amount of tax equivalent to 50/100 of the amount of tax subject to reduction or exemption of corporate tax or income tax is reduced under subparagraph 1, the amount of tax equivalent to 50/100 shall be reduced; for the period wherein the amount of tax equivalent to 30/100 of the amount of tax subject to reduction or exemption of corporate tax or income tax is reduced under subparagraph 1, the amount of tax equivalent to 30/100 shall be reduced;
3.
For the acquisition tax and property tax on the properties acquired and retained for carrying on business under paragraph (1) 1 by the foreign-capital invested company, the said tax amount shall be reduced or exempted or a specified amount shall be deducted from its tax base according to the classifications falling under each of the following items:
(a)
For acquisition tax and property tax, 50/100 of the amount of tax subject to reduction or exemption for three years from the date of commencing business, and 30/100 of the amount of tax subject to reduction or exemption for two years thereafter, shall be respectively reduced;
(b)
For the property tax on land, 50/100 of the amount subject to deduction for three years from the date of commencing the business, and 30/100 of the amount subject to deduction for two years thereafter, shall be respectively deducted from the tax base;
4.
For acquisition tax and property tax on any property acquired and retained by the foreign-capital invested company prior to the date of commencing business for the purpose of using them in such business as provided for in paragraph (1) 1, the said amount of tax shall be reduced or exempted or a specified amount shall be deducted from its tax base pursuant to the classifications falling under each of the following items:
(a)
For acquisition tax on the property acquired after the date of receiving a decision of tax reduction or exemption under paragraph (8), 50/100 of the amount of tax subject to reduction or exemption shall be reduced;
(b)
For property tax, 50/100 of the amount of tax subject to reduction or exemption for three years from the date of acquiring the relevant property, and 30/100 of the amount of tax subject to reduction or exemption for two years thereafter, shall be respectively reduced;
(c)
For property tax on land, 50/100 of the amount subject to deduction for three years from the date of acquiring the relevant property, and 30/100 of the amount subject to deduction for two years thereafter, shall be respectively deducted from the tax base.
(13)
Where the initial investment (including capital increase) is not made by the date on which three years lapse from the date on which the first notice concerning the decision on the tax reduction or exemption is served after reporting the foreign investment, the effect of the decision on tax reduction or exemption provided for in paragraph (8) shall be made invalid.
(14)
Where the sum of the reduced or exempted income tax or corporate tax during the period of reduction or exemption to which paragraphs (2) and (12) 1 are applicable exceeds the sum of the following amounts, the ceiling on the tax reduction or exemption (hereafter referred to as "reduction or exemption ceiling" in this Article) shall be such sum:
1.
A ceiling based on the amount of investment which is an amount under the following classifications:
(a)
In cases under paragraph (1) 1 or 2: 70/100 of the cumulative foreign investments prescribed by Presidential Decree (hereafter referred to as "cumulative foreign investments" in this paragraph);
(b)
In cases under paragraph (1) 2-2 through 2-7, subparagraph 3 and paragraph 12 (1) : 50/100 of the cumulative foreign investments;
2.
A ceiling based on employment which is the lesser between the following amounts:
(a)
Number of workers at ordinary times at the relevant foreign investment enterprise in the relevant taxable year × ten million won;
(b)
20/100 of the cumulative foreign investments.
(15)
When applying the reduction or exemption ceiling to income tax or corporate tax to be reduced or exempted in each taxable year pursuant to paragraphs (2) and (12) 1, an amount under paragraph 14 (1) shall be first applied and then an amount under subparagraph 2 of the same paragraph shall be applied.
(16)
Where the number of workers at ordinary times of each taxable year during the period from the end of the taxable year in which tax reduction or exemption was granted through the end of the taxable year to which the date falling on two years from the end of the taxable in which tax reduction or exemption was granted has decreased as compared with the number of workers at ordinary time of taxable year in which tax reduction or exemption was granted, a foreign investment enterprise which is granted the reduction or exemption of its income tax or corporate tax under paragraph (14) 2 shall pay an amount equivalent to the reduced or exempted amount of tax as income tax or corporate tax, as prescribed by Presidential Decree.
(17)
The scope of workers at ordinary times, method of calculating the number of workers at ordinary times, and other necessary matters when applying paragraphs (14) and (16) shall be prescribed by Presidential Decree.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

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 Article 121-3 (Exemption from Customs Duties, etc.)
 

(1)
Of the following capital goods which are needed for the use of the businesses as set forth in Article 121-2 (1) 1 and 2 (referring to "capital goods" under Article 2 (1) 9 of the Foreign Investment Promotion Act; hereafter the same shall apply in this Chapter), those as determined by Presidential Decree, which are imported in accordance with the contents as reported under Article 5 (1) of the Foreign Investment Promotion Act, shall be exempted from customs duties, individual consumption tax, and value-added tax thereon:
1.
Capital goods that a foreign-capital invested company brings in with a foreign or domestic means of payment it has obtained as equity investment from a foreign investor;
2.
Capital goods that a foreign investor brings in as objects for investment purposes falling under Article 2 (1) 8 of the Foreign Investment Promotion Act (hereafter referred to as "objects for investment purposes" in this Chapter).
(2)
Of the capital goods prescribed by Presidential Decree which are needed for the use of the businesses as set forth in Article 121-2 (1) 2-2 through 2-5 and 3, which are imported according to their contents as reported under Article 5 (1) of the Foreign Investment Promotion Act, shall be exempted from customs duties thereon.
(3)
Where a foreign investor or a foreign-capital invested company intends to be eligible for the exemption from customs duties, individual consumption tax, and value-added tax under paragraph (1) or the exemption from customs duties under paragraph (2), he/she or it shall make an application for tax exemption under the conditions as prescribed by Ordinance of the Ministry of Strategy and Finance.
(4)
Paragraph (1) shall not apply to cases of a foreigner's investment under Article 6 of the Foreign Investment Promotion Act.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

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 Article 121-4 (Tax Reduction or Exemption for Capital Increase)
 

(1)
Where a foreign-capital invested company increases its capital, the provisions of Articles 121-2 and 121-3 shall apply mutatis mutandis to the tax reduction or exemption for the portion of relevant capital increase: Provided, That the consultation with the competent Minister or the head of the local government under Article 121-2 (8) may be omitted for an application for tax reduction or exemption that meets the standards prescribed by Presidential Decree.
(2)
As regards the stocks, etc. falling under any of the followings, the reduction or exemption shall be made during the remainder of their reduction or exemption period and by the ratio of reduction or exemption for the relevant remaining period, in conformity with the examples of reduction or exemption for the stocks, etc. which form a ground for such occurrences:
1.
Stocks, etc. acquired by a foreign investor due to the capitalization of a reserve, a reserve for revaluation under Article 7 (1) 1 of the Foreign Investment Promotion Act or the reserves under other Acts or subordinate statutes;
2.
Stocks, etc. acquired by investing fruits (limited to stocks, etc.) resulted from the stocks, etc. acquired by a foreign investor under Article 7 (1) 4 of the Foreign Investment Promotion Act.
(3)
In applying paragraph (1), the date of commencing a business shall be the date on which a modified registration on the capital increase is filed.
(4)
In calculating the tax amount to be reduced or exempted for a foreign-capital invested company under paragraph (1), where there is any cause prescribed by Presidential Decree including the cases where such foreign-capital invested company continues using the fixed assets for business purposes of the business whose period of tax reduction or exemption under Article 121-2 expires in the business which is subject to tax reduction or exemption for the portion of capital increase under paragraph (1) (hereafter referred to as "business for the portion of capital increase" in this paragraph), the amount calculated in accordance with the following arithmetic formula shall be the tax amount to be reduced or exempted for the business for the portion of capital increase:
The tax amount to be reduced or exempted × the value of the fixed assets, for the business newly acquired or installed after the day on which a modified registration is completed/the total value of the fixed assets for the business of the business for the portion of capital increase
(5)
Notwithstanding paragraph (1), in case where any foreign-capital invested company increases its capital within the scope of the reported foreign investment amount that is confirmed when the decision on the tax reduction or exemption is made prior to the date on which three years lapse from the date on which the first notice concerning the decision on the tax reduction or exemption is served after reporting the foreign investments, even if no application is filed for reducing or exempting the tax pursuant to the provisions of Article 121-2 (6), the foreign-capital invested company shall be deemed eligible for the decision on the tax reduction or exemption provided for in Article 121-2 (8) for the portion of the increased capital.
(6)
The scope of workers at ordinary times, method of calculating the number of workers at ordinary times, and other necessary matters when applying mutatis mutandis Article 121-2 to the tax reduction or exemption on the portion of capital increase under paragraph (1)
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

law view

 Article 121-5 (Additional Collection, etc. of Reduced or Exempted Tax from Foreigners' Investment)
 

(1)
When a tax base return is filed for the taxable year to which the date a reason falling under any of the following subparagraphs occurred belongs, a foreign investor or foreign-capital invested company which has been granted the reduction of or exemption from corporate tax or income tax as prescribed in Article 121-2 (2) and (12) shall pay an amount obtained by adding an additional charge equivalent to intcerest calculated as prescribed by Presidential Decree to the amount of tax calculated as prescribed by Presidential Decree as income tax or corporate tax, and such amount of tax shall be deemed the amount of tax to be paid as prescribed in Article 76 of the Income Tax Act or Article 64 of the Corporate Tax Act:
1.
Where a registration is revoked under Articleclose 21 (3) of the Foreign Investment Promotion Act;
2.
Where the standards for tax reduction and exemption under the part other than the subparagraphs of Article 121-2 (1) are not satisfied;
3.
Where a person, who has received a corrective order under Article 28 (5) of the Foreign Investment Promotion Act as he/she failed to implement the contents of reports, fails to comply with it;
4.
Where a foreign investor transfers the stocks, etc. which he/she owns under this Act to a national or a corporation of the Republic of Korea;
5.
Where the relevant foreign-capital invested company closes down its business;
6.
Where the payment of investments, acquisition of long-term loans under Article 2 (1) 4 (b) of the Foreign Investment Promotion Act or employment of workers conducted by a foreign-capital invested enterprise engaged in a business other than that listed in Article 121-2 (1) 1 within five years (three years for standards for tax reduction and exemption relating to employment) from the day a report on foreign investment was filed fall short of the standards for tax reduction and exemption under Article 121-2 (1).
(2)
The director of customs office or the head of tax office shall additionally collect the customs duties, individual consumption tax and value-added tax that have been exempted under Article 121-3, under the conditions as prescribed by Presidential Decree, in any case of the following subparagraphs:
1.
Where a registration is revoked as prescribed by the Foreign Investment Promotion Act;
2.
Where the subject matter of investment is used for other purpose than the reported ones or disposed of;
3.
Where a foreign investor transfers the stocks, etc. which he/she owns under this Act to a national or a corporation of the Republic of Korea;
4.
Where the relevant foreign-invested enterprise closes down its business;
5.
Where the payment of investments, acquisition of long-term loans under Article 2 (1) 4 (b) of the Foreign Investment Promotion Act or employment of workers conducted by a foreign-capital invested enterprise engaged in a business other than that listed in Article 121-2 (1) 1 within five years (three years for standards for tax reduction and exemption relating to employment) from the day a report on foreign investment was filed fall short of the standards for tax reduction and exemption under Article 121-2 (1).
(3)
The head of local government shall, as prescribed by Presidential Decree, additionally collect the acquisition tax and property tax that have been reduced or exempted under Article 121-2 (4), (5) and (12), in cases of the following subparagraphs. In such cases, the tax amount equivalent to the amount commensurate with the relevant insufficient ratio shall be collected additionally, in cases of subparagraph 1:
1.
Where the ratio of the stocks, etc. of foreign investors falls short of the ratio of the stocks, etc, at the time of reduction or exemption, after the taxes have been reduced or exempted under Article 121-2 (5) and (12) ;
2.
Where a foreign investor transfers the stocks, etc. which he/she owns under this Act to a national or a corporation of the Republic of Korea after the taxes are reduced or exempted under Article 121-2 (4) and (12) ;
3.
Where a registration is revoked as prescribed by the Foreign Investment Promotion Act;
4.
Where the relevant foreign-invested enterprise closes down its business;
5.
Where the payment of investments, acquisition of long-term loans under Article 2 (1) 4 (b) of the Foreign Investment Promotion Act or employment of workers conducted by a foreign-capital invested enterprise engaged in a business other than that listed in Article 121-2 (1) 1 within five years (three years for standards for tax reduction and exemption relating to employment) from the day a report on foreign investment was filed fall short of the standards for tax reduction and exemption under Article 121-2 (1).
(4)
The scope of tax amount to be additionally collected under paragraphs (1) through (3), the method of application in cases falling under a number of grounds for additional tax collection and other necessary matters shall be prescribed by Presidential Decree.
(5)
Where it falls under any of the followings subparagraphs, notwithstanding the provisions of paragraphs (1) through (3), the amount of reduced or exempted tax may not be collected as a penalty as prescribed by Presidential Decree:
1.
Where the registration of a foreign-invested enterprise is revoked as it is dissolved by a merger;
2.
Where any capital goods, that were imported with their customs duties, etc. exempted under Article 121-3 and have been used, become unusable for their original purposes due to a natural disaster or other unavoidable causes, or depreciation, technological advancement, and other fluctuations in economic conditions, and are used for other purposes than original ones or disposed of under the approval of the Minister of Strategy and Finance;
3.
Where a foreign-invested enterprise transfers the stocks, etc. to a national or a corporation of the Republic of Korea in order to make itself publicly held under the Financial Investment Services and Capital Markets Act;
4.
Where the purpose of tax reduction or exemption is deemed to have been achieved, which is prescribed by Presidential Decree.
(6)
Where a foreigner invested enterprise which has received a decision for tax reduction or exemption under Article 121-2 (8) falls under any subparagraph of paragraph (1) (excluding subparagraph 4), paragraph (2) (excluding subparagraphs 2 ad 3) or paragraph (3) (excluding subparagraphs 1 and 2), the reduction or exemption under Articles 121-2 through 121-4 shall not apply for the relevant taxable year and remaining period for reduction or exemption, as prescribed by Presidential Decree.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

law view

 Article 121-6 (Exemption from Tax on Technical License Royalties)
 

(1)
Where an agreement meeting the standards prescribed by Presidential Decree has been concluded, which imports a high level technology vital to strengthening the international competitiveness of the domestic industry, the corporate tax or income tax on royalties for such technical license that the licenser receives under the details of relevant agreement shall be exempted for five years from the date (limited to cases where the said date is not later than December 31, 2009) on which such royalties are agreed to be paid for the first time under such agreement.
(2)
Where the licenser who provides the technology under a technology license agreement intends to be eligible for the tax exemption under paragraph (1), he/she shall make an application for exemption to the Minister of Strategy and Finance as determined by Ordinance of the Ministry of Strategy and Finance.
(3)
Where the licenser who provides the technology under a technology license agreement obtains a confirmation of tax exemption under paragraphs (1) and (2) by applying for exemption after the time limit for application for tax exemption under paragraph (2) expires, the provisions of paragraph (1) shall apply only to the taxable year wherein the relevant application is filed and the remainder of exemption period thereafter. In such cases, where there exists any tax amount already paid by the licenser providing the technology under a technology license agreement prior to receiving the confirmation of exemption under paragraphs (1) and (2), the relevant tax amount shall not be refunded.
[This Article Newly Inserted by Act No. 5982, May 24, 1999]

law view

 Article 121-7 (Delegation, etc. of Authority)
 

The Minister of Strategy and Finance may, under the conditions as prescribed by Presidential Decree, delegate or entrust part of his/her authority under the provisions of this Chapter to the Commissioner of the National Tax Service, Commissioner of Korea Customs Service, and other heads of institutions related to foreigner's investment as prescribed by Presidential Decree.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

CHAPTER V-2 SPECIAL TAXATION FOR FOSTERING JEJU FREE INTERNATIONAL CITY

law view

 Article 121-8 (Reduction of or Exemption from Corporate Tax, etc. for Enterprises Located in Jeju High-Tech Science and Technology Complex)
 

(1)
Where enterprises relocated to the Jeju high-tech science and technology complex (hereafter referred to as the "Jeju high-tech science and technology complex" in this Chapter) no later than December 31, 2015, which is designated under Article 216 of the Special Act on the Establishment of Jeju Special Self-Governing Province and the Development of Free International City, operate businesses prescribed by Presidential Decree, such as biotech industry or information and communications industry (hereafter referred to as "business subject to tax reduction or exemption" in this Article), with respect to the income generated from the business subject to tax reduction or exemption, a tax amount equivalent to 100/100 of the corporate tax or the income tax for the taxable year ending within three years from the date of commencing the taxable year in which the first income has been generated from the said business after the date of commencing the business (if the first income has not been generated from the aforementioned business no later than the taxable year whereto belongs the date on which five years have passed since the date of commencing the business, it refers to the taxable year whereto belongs the date on which the five years have passed), and an amount equivalent to 50/100 of the corporate tax or the income tax for the taxable year ending within two years thereafter, shall be reduced or exempted, respectively.
(2)
Where the sum of the reduced or exempted income tax or corporate tax during the period of reduction or exemption to which paragraph (1) is applicable exceeds the sum of the following amounts, the ceiling on the tax reduction or exemption (hereafter referred to as "reduction or exemption ceiling" in this Article) shall be such sum:
1.
50/100 of the cumulative investments prescribed by Presidential Decree;
2.
An amount under the following items, whichever is the lesser:
(a)
Number of workers at ordinary times at places of business in the Jeju high-tech science and technology complex in the relevant taxable year (hereafter referred to as "places of business subject to tax reduction or exemption" in this Article) x ten million won;
(b)
20/100 of the cumulative investments under subparagraph1.
(3)
When applying the reduction or exemption ceiling to the income tax or corporate tax to be reduced or exempted in each taxable year pursuant to paragraph (1), an amount under paragraph 2 (1) shall be first applied and then an amount under subparagraph 2 of the same paragraph shall be applied.
(4)
Where the number of workers at ordinary times of each taxable year during the period from the end of the taxable year in which tax reduction or exemption was granted through the end of the taxable year to which the date falling on two years from the end of the taxable in which tax reduction or exemption was granted has decreased as compared with the number of workers at ordinary time of taxable year in which tax reduction or exemption was granted, an enterprise which is granted the reduction or exemption of its income tax or corporate tax under paragraph (2) 2 shall pay an amount equivalent to the reduced or exempted amount of tax as the income tax or corporate tax, as prescribed by Presidential Decree.
(5)
The scope of workers at ordinary times, method of calculating the number of workers at ordinary times, and other necessary matters when applying paragraphs (2) and (4) shall be prescribed by Presidential Decree.
(6)
Any person who intends to be subject to paragraph (1) shall file an application for reduction or exemption as prescribed by Presidential Decree.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

law view

 Article 121-9 (Reduction of or Exemption from Corporate Tax, etc. for Enterprises Located in Jeju Investment Promotion Zone or Jeju Free Trade Zone)
 

(1)
With respect to investment that meets the standards prescribed by Presidential Decree as investment to conduct a business falling under any of the following subparagraphs (hereafter in this Article, Articles 121-11 and 121-12 referred to as "business subject to tax reduction and exemption"), the corporate tax, income tax, acquisition tax and property tax shall be reduced or exempted pursuant to paragraphs (2) through (7) :
1.
Businesses which are conducted at a place of business in the relevant area by enterprises moving, no later than December 31, 2015, into the Jeju Investment Promotion Zone (hereafter in this Chapter referred to as the "Jeju Investment Promotion Zone") designated pursuant to Article 217 of the Special Act on the Establishment of Jeju Special Self-Governing Province and the Development of Free International City;
2.
Businesses which are conducted at a place of business in the relevant area by enterprises moving, no later than December 31, 2015, into the Free Trade Zone to be designated in Jeju Special Self-Governing Province pursuant to Article 4 of the Act on Designation and Management of Free Trade Zone (hereafter in this Chapter referred to as the "Jeju Free Trade Zone");
3.
Development projects the planning, finance, design, construction, marketing, lease, sale in lots or such, which are collectively performed by the development project entity of the Jeju Investment Promotion Zone to develop the Jeju Investment Promotion Zone.
(2)
With respect to the income earned from a business subject to tax reduction or exemption falling under any of the subparagraphs of paragraph (1), in the taxable year which expires within three years from the commencement date of the taxable year (the taxable year to which the date when five years have passed belongs when no income has been earned until the taxable year to which the date when five years have passed from the commencement date of business belongs) when the first income is generated from the relevant business subject to tax reduction and exemption after the commencement date of business, in cases of paragraph (1) 1 and 2, a tax amount equivalent to 100/100 of the corporate tax or income tax, in cases of paragraph (1) 3, a tax amount equivalent to 50/100 of the corporate tax or income tax shall be reduced or exempted respectively, and in the taxable year which expires within the next two years, in cases of paragraph (1) 1 and 2, a tax amount equivalent to 50/100 of the corporate tax or income tax, in cases of paragraph (1) 3, a tax amount equivalent to 25/100 of the corporate tax or income tax shall be reduced or exempted, respectively.
(3)
With respect to the property acquired or retained in order to conduct a business subject to tax reduction or exemption under paragraph (1) 1 and 2, the acquisition tax and property tax shall be reduced or exempted or a specific amount shall be deducted from the relevant tax base pursuant to classifications under any of the following subparagraphs: Provided, That if the period of reduction, exemption or deduction has been extended up to ten years, or the rate of reduction, exemption or deduction has been elevated, as stipulated by Municipal Ordinance of local government, it shall be based on such period and rate:
1.
The total amount of tax shall be reduced or exempted in cases of the acquisition tax;
2.
The total amount of tax for three years from the date of commencing the business, and the tax amount equivalent to 50/100 for two years thereafter, shall be reduced or exempted in cases of the property tax;
3.
Amount equivalent to the whole tax base of the relevant property for three years from date of commencing the business, and an amount equivalent to 50/100 for two years thereafter, shall be deducted from the tax base respectively, in cases of the property tax on land.
(4)
Where the sum of the reduced or exempted income tax or corporate tax during the period of reduction or exemption to which paragraph (2) is applicable exceeds the sum of the following amounts, the ceiling on the tax reduction or exemption (hereafter referred to as "reduction or exemption ceiling" in this Article) shall be such sum:
1.
50/100 of the cumulative investments prescribed by Presidential Decree;
2.
An amount under the following items, whichever is the lesser:
(a)
Number of workers at ordinary times at a place of business under each subparagraph of paragraph (1) in the relevant taxable year (hereafter referred to as "place of business subject to tax reduction or exemption" in this Article) x ten million won;
(b)
20/100 of the cumulative investments under subparagraph1.
(5)
When applying the reduction or exemption ceiling to the income tax or corporate tax to be reduced or exempted in each taxable year pursuant to paragraph (2), an amount under paragraph 4 (1) shall be first applied and then an amount under subparagraph 2 of the same paragraph shall be applied.
(6)
Where the number of workers at ordinary times of each taxable year during the period from the end of the taxable year in which tax reduction or exemption was granted through the end of the taxable year to which the date falling on two years from the end of the taxable in which tax reduction or exemption was granted has decreased as compared with the number of workers at ordinary time of taxable year in which tax reduction or exemption was granted, an enterprise which is granted the reduction or exemption of its income tax or corporate tax under paragraph (4) 2 shall pay an amount equivalent to the reduced or exempted amount of tax as the income tax or corporate tax, as prescribed by Presidential Decree.
(7)
The scope of workers at ordinary times, method of calculating the number of workers at ordinary times, and other necessary matters when applying paragraphs (4) and (6) shall be prescribed by Presidential Decree.
(8)
Any person who intends to be subject to an application of paragraph (2) shall file an application therefor under the conditions as prescribed by Presidential Decree, and Article 98 of the Restrictions of Special Local Taxation Act shall apply mutatis mutandis to the application for reduction or exemption of the local tax under paragraph (3).
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

law view

 Article 121-10 (Exemption from Customs Duties on Imported Goods of Companies Located in Jeju High-tech Science and Technology Complex)
 

(1)
With respect to the goods prescribed by Presidential Decree from among those to be imported by the companies located in the Jeju high-tech science and technology complex, no later than December 31, 2015, for the use in its research and development, the customs duties thereon shall be exempted.
(2)
Article 118 (3) and (4) shall apply mutatis mutandis to the goods subject to an exemption from customs duties under paragraph (1).
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

law view

 Article 121-11 (Exemption from Customs Duties on Imported Goods of Companies Located in Jeju Investment Promotion Zone)
 

(1)
With respect to the goods prescribed by Presidential Decree from among the capital goods to be imported by the companies located in the Jeju investment promotion zone, no later than December 31, 2015, for the direct use in the business subject to tax reduction or exemption (referring to the capital goods provided for in Article 2 (1) 9 of the Foreign Investment Promotion Act, and excluding those for repair or replacement), the customs duties thereon shall be exempted: Provided, That except for the goods to be imported by the foreign investors or foreign-invested enterprises for the purpose of foreign investment pursuant to the Foreign Investment Promotion Act, they shall be limited to the goods which are difficult to be produced in Korea.
(2)
Article 118 (3) and (4) shall apply mutatis mutandis to the goods subjected to an exemption from customs duties under paragraph (1).
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

law view

 Article 121-12 (Additional Collection of Reduced or Exempted Tax Amount on Companies Located in Jeju Investment Promotion Zone or Jeju Free Trade Zone)
 

(1)
The head of the tax office, the director of the customs office or the head of local government shall additionally collect the corporate tax, income tax, acquisition tax, registration tax and customs duties which have been reduced or exempted under Article 121-9 or 121-11, in cases falling under any of the following subparagraphs, as prescribed by Presidential Decree: Provided, That subparagraphs 4 and 5 shall apply only to cases of additional collection of acquisition tax:
1.
Where the designation of the Jeju investment promotion zone has been terminated pursuant to Article 218 of the Special Act on the Establishment of Jeju Special Self-Governing Province and the Development of Free International City;
2.
Where a permit for location has been revoked pursuant to Article 15 of the Act on Designation and Management of Free Trade Zones;
3.
Where a company located in the relevant Jeju investment promotion zone or Jeju free trade zone has discontinued its business;
4.
Where it fails to obtain designation as the Jeju investment promotion zone under Article 217 of the Special Act on the Establishment of Jeju Special Self-Governing Province and the Development of Free International City within three years from the date of acquiring the business property without any justifiable grounds prescribed by Presidential Decree;
5.
Where the business property have not been directly used for the business subject to reduction or exemption or sold within three years from the date of commencing the business without any justifiable grounds prescribed by Presidential Decree
6.
Where any investment satisfying the standards for tax reduction and exemption referred to in Article 121-9 (1) is not made within two years since the date on which the taxable year in which the first income accrues from the relevant business subject to tax reduction or exemption ends (where no income accrues from the relevant business by the taxable year in which the date on which three years lapse from the date on which the business commences, the taxable year in which the date on which three years lapse falls).
(2)
Article 121-9 (2) shall not apply to the relevant taxable year and the remaining period of reduction or exemption in cases falling under paragraph (1) 6.
(3)
Scope of tax amounts to be additionally collected pursuant to paragraph (1) shall be prescribed by Presidential Decree.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

law view

 Article 121-13 (Special Cases concerning Indirect Tax, etc. on Duty-free Shops for Travellers in Jeju-do)
 

(1)
Where travellers in Jeju-do as prescribed by Presidential Decree (hereafter referred to as "Jeju-do travellers" in this Article) purchase the goods prescribed by Presidential Decree (hereafter referred to as "duty-free goods" in this Article) at the sales place of duty-free goods under Article 177 of the Special Act on the Establishment of Jeju Special Self-Governing Province and the Development of Free International City (hereafter referred to as "designated duty-free shops" in this Article), and carry them out to other areas than Jeju-do, the value-added tax, individual consumption tax, liquor tax, customs duties and tobacco consumption tax (hereafter referred to as"value-added tax, etc." in this Article) shall be exempted (referring to applying zero rating in cases of value-added tax; hereafter the same shall apply in this Article).
(2)
Designated duty-free shops shall be deemed to be the bonded sales place licensed under Article 174 of the Customs Act. In such cases, the duty-free goods to be carried out to other areas than Jeju-do under the provisions of paragraph (1) may be sold at the relevant bonded sales place, notwithstanding Article 196 (1) of the Customs Act.
(3)
The value-added tax, individual consumption tax, liquor tax and tobacco consumption tax shall be exempted under the conditions as prescribed by Presidential Decree in cases where an entrepreneur supplies duty-free goods to designated duty-free shops.
(4)
Duty-free goods to be sold at designated duty-free shops shall be those whose sales price is equivalent to US$ 400 and is not more than the price prescribed by Presidential Decree.
(5)
Limit of the amount of duty-free goods to be bought by Jeju-do travellers at designated duty-free shops shall be equivalent to US$ 400 per time, as prescribed by Presidential Decree, and such goods may be purchased up to six times a year.
(6)
Purchased amount and price by kind of duty-free goods, sales procedures for duty-free goods, exemption procedures for value-added tax, etc. on duty-free goods, control procedures for non-carried-out goods, collection of the reduced or exempted tax amount due to unjustifiable purchase of duty-free goods, restriction on utilization of the designated duty-free shops, and other necessary matters for exemption of value-added tax, etc., shall be prescribed by Presidential Decree.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

law view

 Article 121-14 (Special Cases concerning Individual Consumption Tax, etc. on Golf Courses in Jeju Special Self-Governing Province)
 

(1)
No individual consumption tax shall be imposed on entry (limited to entry made no later than December 31, 2015) into golf courses located in Jeju Special Self-Governing Province, notwithstanding Article 1 (3) 4 of the Individual Consumption Tax Act.
(2)
Deleted.
(3)
The Governor of Jeju Special Self-Governing Province shall take necessary measures as prescribed by Presidential Decree so that the special taxation for golf courses located in Jeju Special Self-Governing Province under paragraph (1) may contribute to the promotion of tourism in the Jeju Free International City.
[This Article Newly Inserted by Act No. 6689, Apr. 20, 2002]

law view

 Article 121-15 (Reduction of or Exemption from Local Tax on Registration of International Vessels)
 

(1)
With respect to a vessel to be acquired, no later than December 31, 2015, for a registration as an international vessel pursuant to Article 4 of the International Ship Registration Act, which falls under any of the following subparagraphs, the acquisition tax calculated by reducing 20/1,000 of the acquisition tax rate stipulated in Article 12 (1) 1 of the Local Tax Act shall be imposed and local education tax thereon shall be exempted: Provided, That where it fails to register as an international vessel within six months from the date of vessel acquisition, the reduced acquisition tax and the exempted local education tax shall be additionally collected:
1.
Vessels having the special shipping registration zone under Article 221 (1) of the Special Act on the Establishment of Jeju Special Self-Governing Province and the Development of Free International City as her port of shipment;
2.
Foreign vessels prescribed by Presidential Decree.
(2)
With regard to the vessels registered as an international vessel which makes the special shipping registration zone under paragraph (1) 1 as their port of shipment as of the tax base date which arrives on or before December 31, 2015, the property tax and the local resource and facility tax under Article 146 (2) of the Local Tax Act thereon shall be exempted.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

law view

 Article 121-16 (Reduction of or Exemption from Local Tax on Jeju Free International City Development Center)
 

(1)
With respect to the real estate to be acquired, no later than December 31, 2015, by the Jeju Free International City Development Center established under Article 261 of the Special Act on the Establishment of Jeju Special Self-Governing Province and the Development of Free International City (hereafter referred to as the "Development Center" in this Article) in order to carry on the business under Article 265 of the same Act (including cases where the Development Center makes a lease; hereafter the same shall apply in this Article), the acquisition tax thereon shall be exempted, and with respect to the real estate to be used in such business as of the tax base date which arrives on or before December 31, 2015, the property tax (including an imposed amount under Article 112 of the Local Tax Act) and the local resource and facility tax under Article 146 (2) of the Local Tax Act thereon shall be exempted, and with respect to the Development Center, the business place tax thereon shall be exempted.
(2)
With regard to the incorporation registration of the Development Center, the registration and license tax thereon shall be exempted.
(3)
With respect to the reduction or exemption of local taxes under paragraph (1) and (2), the rate of reduction or exemption may be determined by municipal ordinance pursuant to Article 4 of the Restriction of Special Local Taxation Act within the limit up to 100/100.
(4)
Matters concerning the additional collection of local taxes reduced or exempted under paragraph (1) and (2) may be determined by municipal ordinance pursuant to Article 4 of the Restriction of Special Local Taxation Act.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

CHAPTER V-3 SPECIAL TAXATION FOR DEVELOPMENT OF ENTERPRISE CITIES AND PROMOTION OF UNDERDEVELOPED AREAS, ETC.

law view

 Article 121-17 (Reduction of or Exemption from Corporate Tax, etc. for Start-up Enterprises, etc. Located in Enterprise City Development Zones, etc.)
 

(1)
The corporate tax, the income tax, the acquisition tax and the property tax shall be reduced or exempted for the investment that is made to run the business falling under any of the following subparagraphs (hereafter referred to as "business subject to the tax reduction or exemption" in this Chapter) and for which the type of the business and the amount of the investment meet the standards prescribed by Presidential Decree under the conditions provided for in paragraphs (2) through (8): Provided, That no acquisition tax or the property tax shall be reduced or exempted in the cases falling under subparagraph 5 and 6:
1.
Business operated in the place of business by an enterprise which started business or established a place of business (excluding cases in which existing place of business is relocated) in an enterprise city development zone no later than December 31, 2015;
2.
Business operated by an enterprise city development project entity who implements such project pursuant to subparagraph 3 of Article 2 of the Special Act on the Development of Enterprise Cities;
3.
Business operated by an enterprise in a place of business located in a district, which is founded in a development facilitation district in the underdeveloped area designated as prescribed in Article 8 (1) of the Special Act on the Promotion of Development Investments in Underdeveloped Areas or in an investment facilitation district in the underdeveloped area designated as prescribed in Article 21 (1) of the same Act or establishes a place of business (excluding cases in which existing place of business is relocated) no later than December 31, 2015;
4.
Project conducted by an implementer of development project designated as prescribed in Article 13 (1) of the Special Act on the Promotion of Development Investments in Underdeveloped Areas, which is a development project of development facilitation district in the underdeveloped area designated as prescribed in Article 8 (1) of the same Act;
5.
Business operated by an enterprise which starts a business or establishes a place of business (excluding relocation of existing place of business) no later than December 31, 2015 within the district designated and publicly notified under Article 28 (1) of the Special Act on Support to and Ex-Post Facto Utilization of the Expo Yeosu Korea for the creation of the EXPO grounds;
6.
Business operated by a project implementer designated under Article 30 of the Special Act on Support to and Ex-Post Facto Utilization of the Expo Yeosu Korea for ex-post facto utilization of the EXPO.
(2)
With respect to any income accruing from the business subject to the tax reduction or exemption of the enterprise falling under paragraph (1), a tax amount equivalent to 100/100 of the corporate tax or the income tax in cases of paragraph (1) 1, 3 and 5 and a tax amount equivalent to 50/100 of the corporate tax or the income tax in the case of paragraph (1) 2, 4 and 6 shall be reduced and exempted for the taxable year ending within three years from the date of commencing the taxable year (when no income accrues from the relevant business by the taxable year whereto belongs the date on which five years have passed from the date on which the business commences, the taxable year whereto belongs the date on which the five years have passed) during which the income first accrues from the relevant business subject to the tax reduction or exemption after the starting of business, and a tax amount equivalent to 50/100 of the corporate tax or the income tax in cases of paragraph (1) 1, 3 and 5 and a tax amount equivalent to 25/100 of the corporate tax or the income tax in the case of paragraph (1) 2, 4 and 6 shall be reduced or exempted for the taxable year ending within two years thereafter.
(3)
With respect to the acquisition tax and the property tax on the property that is acquired and held in order to run the business subject to the tax reduction or exemption referred to in paragraph (1), local governments may prescribe the tax reduction or exemption ratio, the deduction ratio, the tax reduction or exemption period and the deduction period within the scope of 15 years in their respective Municipal Ordinances after obtaining permission therefor from the Minister of Public Administration and Security in accordance with Article 4 of the Restriction of Special Local Taxation Act.
(4)
Where the sum of the reduced or exempted income tax or corporate tax during the period of reduction or exemption to which paragraph (2) is applicable exceeds the sum of the following amounts, the ceiling on the tax reduction or exemption (hereafter referred to as "reduction or exemption ceiling" in this Article) shall be such sum:
1.
50/100 of the cumulative investments prescribed by Presidential Decree;
2.
An amount under the following items, whichever is the lesser:
(a)
Number of workers at ordinary times at a place of business where a business falling under any subparagraphs of paragraph (1) is run in the relevant taxable year (hereafter referred to as "place of business subject to tax reduction or exemption" in this Article) x ten million won;
(b)
20/100 of the cumulative investments under subparagraph1.
(5)
When applying the reduction or exemption ceiling to the income tax or corporate tax to be reduced or exempted in each taxable year pursuant to paragraph (2), an amount under paragraph 4 (1) shall be first applied and then an amount under subparagraph 2 of the same paragraph shall be applied.
(6)
Where the number of workers at ordinary times of each taxable year during the period from the end of the taxable year in which tax reduction or exemption was granted through the end of the taxable year to which the date falling on two years from the end of the taxable in which tax reduction or exemption was granted has decreased as compared with the number of workers at ordinary time of taxable year in which tax reduction or exemption was granted, an enterprise which is granted the reduction or exemption of its income tax or corporate tax under paragraph (4) 2 shall pay an amount equivalent to the reduced or exempted amount of tax as the income tax or corporate tax, as prescribed by Presidential Decree.
(7)
The scope of workers at ordinary times, method of calculating the number of workers at ordinary times, and other necessary matters when applying paragraphs (4) and (6) shall be prescribed by Presidential Decree.
(8)
Article 6 (6) shall apply mutatis mutandis to the scope of establishment of business in the application of paragraphs (1) through (7).
(9)
Anyone who intends to be eligible for the application of paragraph (2) shall file an application for the tax reduction or exemption under the conditions as prescribed by Presidential Decree and Article 98 of the Restriction of Special Local Taxation Act shall apply mutatis mutandis to the reduction or exemption or deduction application for the local tax referred to in paragraph (3).
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

law view

 Article 121-18 (Reduction of and Exemption from Individual Consumption Tax for Golf Courses in Tourism-Leisure-Type Enterprise Cities)
 

(1)
The individual consumption tax shall not be levied on the entry (limited to entry made no later than December 31, 2015) into golf courses that are opened in tourism-leisure-type enterprise cities (hereafter referred to as "tourism-leisure-type enterprise cities" in this Article) provided for in subparagraph 1 (c) of Article 2 of the Special Act on the Development of Enterprise Cities, notwithstanding Article 1 (3) 4 of the Individual Consumption Tax Act.
(2)
The Metropolitan City Mayor and the head of Si or Gun (excluding the head of Gun located in the area under the jurisdiction of the Metropolitan City) having jurisdiction over the tourism-leisure-type enterprise cities shall take necessary measures to get the special taxation for golf courses located in tourism-leisure-type enterprise cities referred to in paragraph (1) to serve to the activation of tourism in such tourism-leisure-type enterprise cities, as prescribed by Presidential Decree.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

law view

 Article 121-19 (Additional Collection, etc. of Reduced or Exempted Tax Amount)
 

(1)
The head of the tax office shall, in cases falling under any of the following subparagraphs, additionally collect the corporate tax or the income tax that is reduced or exempted pursuant to Article 121-17, as prescribed by Presidential Decree:
1.
Where the designation of any enterprise city development zone is canceled pursuant to Article 7 of the Special Act on the Development of Enterprise Cities;
2.
Where the designation of development facilitation district in the underdeveloped area is cancelled as prescribed in Article 11 (1) of the Special Act on the Promotion of Development Investments in Underdeveloped Areas, or the designation of investment facilitation district in the underdeveloped area is cancelled as prescribed in Article 21 (4) of the same Act;
3.
Where no investment meeting the standards for the tax reduction or exemption provided for in the provisions of Article 121-17 (1) is made within two years from the end of the taxable year (when no income accrues from the relevant business by the taxable year whereto belongs the date on which three years have lapsed from the date on which the business commences, the taxable year whereto belongs the date on which the three years have lapsed) during which first income accrues from the relevant business subject to the tax reduction or exemption;
4.
Where an enterprise located in an enterprise city development zone discontinues its business, or closes newly established place of business;
5.
Where an enterprise which has started business in the development facilitation district in the underdeveloped area designated as prescribed in Article 8 (1) of the Special Act on the Promotion of Development Investments in Underdeveloped Areas or in the investment facilitation district in the underdeveloped area as prescribed in Article 21 (1) of the same Act discontinues its business or closes newly established place of business;
6.
Where an enterprise which has started business in the district designated and publicly notified under Article 28 (1) of the Special Act on Support to and Ex-Post Facto Utilization of the Expo Yeosu Korea for the creation of the EXPO ground discontinues its business or closes newly established place of business;
(2)
Where any enterprise falls under paragraph (1) 3, Article 121-17 (2) shall not apply thereto during the relevant taxable year and the remaining tax reduction or exemption period.
(3)
The additional collection of the acquisition tax and the property tax may be prescribed by Municipal Ordinances in accordance with Article 4 of the Restriction of Special Local Taxation Act.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

CHAPTER V-4 SPECIAL TAXATION FOR SUPPORT TO ASIAN CULTURAL HUB CITY

law view

 Article 121-20 (Reduction of or Exemption, etc. from Corporate Tax, etc. for Enterprises Moving into Investment Promotion Zone for Asian Cultural Hub City)
 

(1)
For the investment, the category of business and investment amount of which meet the standards prescribed by Presidential Decree as the investment to conduct a business in the investment promotion zone by an enterprise moving into the investment promotion zone under Article 16 of the Special Act on the Development of an Asian Cultural Hub City, no later than December 31, 2015, the corporate tax, income tax, acquisition tax and property tax shall be reduced and exempted, respectively, pursuant to paragraphs (2) through (7).
(2)
For the income accrued from a business subject to tax reduction and exemption under paragraph (1), a tax amount equivalent to 100/100 of the corporate tax or income tax of the taxable year expiring within three years from the commencement date of the taxable year (the taxable year to which the date when five years have passed belongs when no income has been earned until the taxable year to which the date when five years have passed from the commencement date of business belongs) when the first income accrued from the relevant business subject to tax reduction and exemption after the commencement date of the business and an amount equivalent to 50/100 of the corporate tax or income tax of the taxable year expiring within the next two years shall be reduced and exempted.
(3)
For the acquisition tax and property tax for the property acquired and possessed to conduct a business subject to tax reduction or exemption under paragraph (1), a local government may prescribe rates of tax reduction or exemption, rates of deduction, a period for tax reduction or exemption and a period for deduction within the extent of 15 years pursuant to Article 4 of the Restriction of Special Local Taxation Act.
(4)
Where the sum of the reduced or exempted income tax or corporate tax during the period of reduction or exemption to which paragraph (2) is applicable exceeds the sum of the following amounts, the ceiling on the tax reduction or exemption (hereafter referred to as "reduction or exemption ceiling" in this Article) shall be such sum:
1.
50/100 of the cumulative investments prescribed by Presidential Decree;
2.
An amount under the following items, whichever is the lesser:
(a)
Number of workers at ordinary times at a place of business within the investment promotion zone under paragraph (1) in the relevant taxable year (hereafter referred to as "place of business subject to tax reduction or exemption" in this Article) x ten million won;
(b)
20/100 of the cumulative investments under subparagraph1.
(5)
When applying the reduction or exemption ceiling to the income tax or corporate tax to be reduced or exempted in each taxable year pursuant to paragraph (2), an amount under paragraph 4 (1) shall be first applied and then an amount under subparagraph 2 of the same paragraph shall be applied.
(6)
Where the number of workers at ordinary times of each taxable year during the period from the end of the taxable year in which tax reduction or exemption was granted through the end of the taxable year to which the date falling on two years from the end of the taxable in which tax reduction or exemption was granted has decreased as compared with the number of workers at ordinary time of taxable year in which tax reduction or exemption was granted, an enterprise which is granted the reduction or exemption of its income tax or corporate tax under paragraph (4) 2 shall pay an amount equivalent to the reduced or exempted amount of tax as the income tax or corporate tax, as prescribed by Presidential Decree.
(7)
The scope of workers at ordinary times, method of calculating the number of workers at ordinary times, and other necessary matters when applying paragraphs (4) and (6) shall be prescribed by Presidential Decree.
(8)
Where any investment satisfying the standards for tax reduction and exemption referred to in paragraph (1) is not made within two years since the date on which the taxable year in which the first income accrues from the relevant business subject to tax reduction or exemption ends (where no income accrues from the relevant business by the taxable year in which the date on which three years lapse from the date on which the business commences, the taxable year in which the date on which three years lapse falls), the head of the competent tax office shall additionally collect the corporate tax or income tax that have been reduced or exempted under paragraphs (1) through (7), as prescribed by Presidential Decree.
(9)
Paragraph (2) shall not apply to the relevant taxable year and the remaining period of reduction or exemption in cases falling under paragraph (8).
(10)
The additional collection of the acquisition tax and the property tax may be set forth by municipal ordinance pursuant to Article 4 of the Restriction of Special Local Taxation Act.
(11)
Any person who intends to be eligible for tax reduction of or exemption from the corporate tax or income tax pursuant to paragraph (2) shall apply for such reduction or exemption as prescribed by Presidential Decree, and shall apply Article 98 of the Restriction of Special Local Taxation Act mutatis mutandis to an application for reduction or exemption or deduction of local taxes under paragraph (3).
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

CHAPTER V-5 SPECIAL TAXATION FOR CREATION AND DEVELOPMENT OF FINANCIAL HUB

law view

 Article 121-21 (Reduction of or Exemption, etc. from Corporate Tax, etc. on Enterprises, etc. Founded in Financial Hubs)
 

(1)
Where an enterprise is founded or a place of business is established in the financial hub (excluding financial hubs located in the overconcentration control region of the Seoul Metropolitan area) designated as prescribed in Article 5 (5) of the Act on the Creation and Development of Financial Hubs no later than December 31, 2015 and operates financial business or insurance business (hereafter referred to as "business subject to tax reduction or exemption" in this Article) meeting the requirements prescribed by Presidential Decree in the place of business located in such zone, corporate tax, income tax, acquisition tax, registration tax and property tax shall be reduced or exempted respectively.
(2)
As for income accrued from the business subject to reduction or exemption in the place of business located in the zone of financial hub under paragraph (1), an amount of tax equivalent to 100/100 of the corporate tax or income tax for the taxable year ending within three years from the starting date of the taxable year in which income accrued from the relevant business subject to reduction or exemption after the date when business was started shall be reduced, and an amount of tax equivalent to 50/100 of the corporate tax or income tax equivalent to 50/100 of the corporate tax or income tax for the taxable year ending within two years thereafter shall be reduced.
(3)
As for acquisition tax, registration tax and property tax on the property acquired and possessed in order to operate a business subject to reduction or exemption under paragraph (1), local governments may make an Municipal Ordinance with the permission of the Minister of Administration and Security as prescribed in Article 9 of the Local Tax Act, which prescribes the rate of reduction or exemption, deduction rate, period of reduction or exemption and period of deduction.
(4)
Where the sum of the reduced or exempted income tax or corporate tax during the period of reduction or exemption to which paragraph (2) is applicable exceeds the sum of the following amounts, the ceiling on the tax reduction or exemption (hereafter referred to as "reduction or exemption ceiling" in this Article) shall be such sum:
1.
50/100 of the cumulative investments prescribed by Presidential Decree;
2.
An amount under the following items, whichever is the lesser:
(a)
Number of workers at ordinary times at a place of business subject to tax reduction or exemption in the relevant taxable year x ten million won;
(b)
20/100 of the cumulative investments under subparagraph 1.
(5)
When applying the reduction or exemption ceiling to the income tax or corporate tax to be reduced or exempted in each taxable year pursuant to paragraph (2), an amount under paragraph 4 (1) shall be first applied and then an amount under subparagraph 2 of the same paragraph shall be applied.
(6)
Where the number of workers at ordinary times of each taxable year during the period from the end of the taxable year in which tax reduction or exemption was granted through the end of the taxable year to which the date falling on two years from the end of the taxable in which tax reduction or exemption was granted has decreased as compared with the number of workers at ordinary time of taxable year in which tax reduction or exemption was granted, an enterprise which is granted the reduction or exemption of its income tax or corporate tax under paragraph (4) 2 shall pay an amount equivalent to the reduced or exempted amount of tax as the income tax or corporate tax, as prescribed by Presidential Decree.
(7)
The scope of workers at ordinary times, method of calculating the number of workers at ordinary times, and other necessary matters when applying paragraphs (4) and (6) shall be prescribed by Presidential Decree.
(8)
Where any investment satisfying the standards for tax reduction and exemption referred to in paragraph (1) is not made within two years since the date on which the taxable year in which the first income accrues from the relevant business subject to tax reduction or exemption ends (where no income accrues from the relevant business by the taxable year in which the date on which three years lapse from the date on which the business commences, the taxable year in which the date on which three years lapse falls), the head of the competent tax office shall additionally collect the corporate tax or income tax that have been reduced or exempted under paragraphs (1) through (7), as prescribed by Presidential Decree.
(9)
Paragraph (2) shall not apply to the relevant taxable year and the remaining period of reduction or exemption in cases falling under paragraph (8).
(10)
The additional collection of the acquisition tax and the property tax may be set forth by municipal ordinance pursuant to Article 4 of the Restriction of Special Local Taxation Act.
(11)
Any person who intends to have corporate tax or income tax reduced as prescribed in paragraph (2) shall file an application for reduction as prescribed by Presidential Decree, and Article 98 of the Restriction of Special Local Taxation Tax Act shall apply mutatis mutandis to the application for reduction or deduction of local tax under paragraph (3).
[This Article Newly Inserted by Act No. 10285, May 14, 2010]

CHAPTER V-6 SPECIAL TAXATION FOR SUPPORT OF HIGH-TECH MEDICAL COMPLEXES

law view

 Article 121-22 (Reduction of or Exemption, etc. from Corporate Tax, etc. on Enterprises, etc. Moving into High-Tech Medical Complexes)
 

(1)
Where an enterprise that has moved into a high-tech medical complex designated under Article 6 of the Special Act on the Designation and Support of High-Tech Medical Complexes no later than December 31, 2013 conducts business prescribed by Presidential Decree such as health and medical technology business (hereafter referred to as "business subject to exemption or reduction" in this Article) at a place of business located at such high-tech medical complex (hereafter referred to as "place of business subject to reduction or exemption in this Article), the income tax or the corporate tax shall be reduced and exempted pursuant to paragraphs (2) through (6).
(2)
With respect to the income generated from the business subject to reduction or exemption operated by a place of business subject to reduction or exemption referred to in paragraph (1), an amount equivalent to 100/100 of the income tax or the corporate tax for the taxable year ending within three years after the beginning of the taxable year in which the first income has been generated from the said business (if no income has been derived from the said business not later than the taxable year whereto belongs the date on which five years have passed since the commencement date of the business, it refers to the taxable year whereto belongs the date on which the five years have passed), and an amount equivalent to 50/100 of the income tax or the corporate tax for the taxable year ending within two years thereafter, shall be reduced or exempted, respectively.
(3)
Where the sum of the income tax or corporate tax reduced or exempted during the period of reduction or exemption to which paragraph (2) applies exceeds the amount totalling an amount under the following subparagraphs, the amount of tax shall be reduced or exempted up to the ceiling of so totalled amount (hereafter referred to as "reduction or exemption ceiling" in this Article):
1.
50/100 of the cumulative investments prescribed by Presidential Decree;
2.
An amount under the following items whichever the lesser:
(a)
The number of workers at ordinary times of the relevant taxable year at the place of business subject to reduction or exemption x ten million won;
(b)
20/100 of the cumulative investments under subparagraph1.
(4)
When applying the reduction or exemption ceiling to the income tax or corporate tax to be reduced or exempted in each taxable year under paragraph (2), the amount under paragraph (3) 1 shall be applied first and then the amount under subparagraph 2 of the same paragraph shall be applied.
(5)
Where the number of workers at ordinary times of each taxable year at the place of business subject to reduction or exemption during the period from the end of the taxable year in which tax reduction or exemption was granted through the end of the taxable year to which the date falling on two years from the end of the taxable year in which tax reduction or exemption was granted has decreased as compared with the number of workers at ordinary time of taxable year in which tax credit was granted, an enterprise that has its income tax or corporate tax reduced or exempted shall pay an amount equivalent to the reduced or exempted amount of tax as the income tax or corporate tax, as prescribed by Presidential Decree.
(6)
The scope of workers at ordinary times, method of calculating the number of workers at ordinary times, and other necessary matters when applying paragraphs (3) through (5) shall be prescribed by Presidential Decree.
(7)
Any person who intends to have paragraph (2) applied shall file an application for reduction or exemption, as prescribed by Presidential Decree.
[This Article Newly Inserted by Act No. 11133, Dec. 31, 2011]

CHAPTER V-7 SPECIAL TAXATION FOR SUPPORT OF RESTRUCTURING OF NATIONAL AGRICULTURAL COOPERATIVE FEDERATION

law view

 Article 121-23 (Special Cases for Tax Credit for Split, etc. of National Agricultural Cooperative Federation)
 

(1)
Where the National Agricultural Cooperative Federation under the Agricultural Cooperatives Act (hereafter referred to as the "National Agricultural Cooperative Federation" in this Article) is split in accordance with the provisions from Article 134-2 through 134-5 of the Agricultural Cooperatives Act no later than June 30, 2012, such split shall be deemed to have satisfied the requirements under Article 47 (1) of the Corporate Tax Act and this Act and the provisions on the split under the Corporate Income Tax shall apply thereto and it shall not be deemed a supply of the goods under Article 6 of the Value-Added Tax Act.
(2)
Where the agricultural financial holding company under Article 134-3 of the Agricultural Cooperatives Act (hereafter referred to as "agricultural financial holding company" in this Article) conducts comprehensive exchange of stocks under Article 360-2 of the Commercial Act no later than June 30, 2012, it shall be deemed to satisfy the requirements in Article 38 (1) 1.
(3)
Where Article 29 of the Corporate Tax Act applies to the National Agricultural Cooperative Federation until the business year ending before December 31, 2013, the reserves for the business proper to specific purpose may be included in the deductible expenses within the scope of the total sum of the following amounts:
1.
Amount of income under Article 29 (1) 1 and (2) of the Corporate Tax Act;
2.
Amount calculated by multiplying the amount of income generated from the use fees of names imposed to a corporation using the name of the national agricultural cooperative under Article 159-2 of the Agricultural Cooperatives Act by the rate prescribed by Ordinance of the Ministry of Strategy and Finance after the Minister of Strategy and Finance and the Minister for Food, Agriculture, Forestry and Fisheries have consulted within the scope from 70/100 through 100/100;
3.
Amount calculated by multiplying the income generated from the profit-making business by 50/100 other than the amount referred to in subparagraphs 1 and 2.
(4)
In applying Article 29 of the Corporate Tax Act until the business year ending before December 31, 2013, where the National Agricultural Cooperative Federation has included the amount prescribed by Presidential Decree such as the amount of dividends to be paid to its members under Article 68 of the Agricultural Cooperatives Act as reserves for business proper to specific purpose in a statement of tax adjustment, it shall be deemed to have included such amount in deductible expenses and have spent or used in the business proper to specific business.
(5)
Article 52 of the Corporate Tax Act shall not apply until the taxable year ending before December 31, 2013 to the use fees for using the name spent by a corporation that uses the name of the agricultural cooperatives under Article 159-2 of the Agricultural Cooperatives Act.
(6)
Valued-added tax shall not be imposed on the service of using names provided by the National Agricultural Cooperative Federation under Article 159-2 of the Agricultural Cooperatives Act no later than December 31, 2013.
(7)
Valued-added tax shall not be imposed on the computer related service provided by the National Agricultural Cooperative Federation to a corporation under Articles 134-2 through 134-5 of the Agricultural Cooperatives Act no later than December 31, 2013.
(8)
In calculating the tax base for educational tax of Nonghyup life insurance and Nonghyup indemnity insurance (hereafter referred to as "Nonghyup insurance" in this paragraph) under Article 134-5 (1) of the Agricultural Cooperatives Act, the amount of income generated from a contract for mutual benefit entered into prior to the establishment of Nonghyup insurance shall be excluded from the amount of income.
[This Article Newly Inserted by Act No. 11133, Dec. 31, 2011]

CHAPTER VI OTHER SPECIAL TAXATION

SECTION 1 Special Taxation for Legalization of Tax Base

law view

 Article 122 Deleted.
 

law view

 Article 122-2 Deleted.
 

law view

 Article 122-3 (Deduction of Medical Expenses, etc. for Faithful Business Operators)
 

(1)
Where a faithful business operator (limited to only those who have business income) under Article 52 (9) of the Income Tax Act who meets all the requirements in the following subparagraphs or a business operator subject to verification of the faithful reporting under Article 70-2 (1) of the Income Tax Act who submits a written verification of the faithful reporting has disbursed medical expenses and educational expenses (hereafter referred to as "medical expenses, etc." in this Article) under Article 52 (2) and (3) (excluding subparagraph 2 (c) of the same paragraph) of the Income Tax Act by no later than the taxable year to which December 31, 2015 belongs, such disbursed amount shall be deducted from the amount of business income for the relevant taxable year. In such cases, where deductions, such as medical expenses, etc. exceed the amount of relevant business income, such excess amount shall be deemed nonexistent:
1.
The person shall apply the double-entry bookkeeping system in accordance with Article 160 (1) of the Income Tax Act in keeping, and making entries in, account books, calculating his/her income, and filing a return (excluding the pertinent taxable period, in cases where it is decided to make an estimated assessment pursuant to the proviso to Article 80 (3) of the Income Tax Act);
2.
The person shall file a return with his/her revenue for the relevant taxable period in excess of the amount of annual average revenue during the immediately preceding three taxable periods: Provided, That the same shall not apply in cases where the revenue has increased due to a cause prescribed by Presidential Decree, including the relocation of place of business, and change of business type;
3.
The person shall be the one who has engaged in the business without interruption for at least three years as of the beginning of the pertinent taxable period;
4.
The person shall meet the requirements prescribed by Presidential Decree, considering the past records of default on national taxes, punishment for tax criminal cases, breaches of a duty to issue and receive tax invoices, account statements, etc., and omission of income amount.
(2)
The deductible medical expenses under paragraph (1) shall be calculated by applying Article 52 (2) of the Income Tax Act mutatis mutandis. In such cases, the term "amount of gross salary" in Article 52 (2) 1 and 2 of the Income Tax Act shall be deemed "amount of business income."
(3)
If a business operator who has benefits from the deduction under paragraph (1) falls under any of the following subparagraphs, the tax amount equivalent to the deducted amount shall be additionally levied in full amount:
1.
If the revenue understated for the pertinent taxable period amounts to 20/100 or more of the amount rectified later (including cases corrected by filing a return for correction);
2.
If the necessary expenses overstated at the time of calculating the business income for the pertinent taxable period amounts to 20/100 or more of the necessary expenses rectified later (including cases corrected by filing a return for correction).
(4)
A business operator on whom a tax amount was levied additionally pursuant to paragraph (3) shall not be entitled to the deduction of medical expenses, etc. for three taxable periods from the following taxable period in which such tax amount was additionally levied.
(5)
Necessary matters concerning the criteria for determination on whether a person meets the requirements under items of paragraph (1) 1 and the procedure for application for deduction shall be prescribed by Presidential Decree, in addition to paragraphs (1) through (4).
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

law view

 Article 123 Deleted.
 

law view

 Article 124 Deleted.
 

law view

 Article 125 Deleted.
 

law view

 Article 126 Deleted.
 

law view

 Article 126-2 (Income Deduction for Amount Spent on Credit Cards, etc.)
 

(1)
Where the annual aggregate (excluding any amount spent overseas) of the amounts falling under any of the following subparagraphs (hereafter referred to as "amount spent on credit cards, etc." in this Article) which are paid by a resident having earned income (excluding day laborers; hereafter the same shall apply in this Article) for goods or services he/she has been supplied no later than December 31, 2014 from a corporation (including a domestic place of business of a foreign corporation) or from a business operator under Article 1-2 (1) 5 of the Income Tax Act (including the domestic place of business of a non-resident) exceeds 25/100 (hereafter referred to as "minimum amount used" in this Article) of the total amount of wage for the relevant taxable year under Article 20 (2) of the Income Tax Act, an amount (hereafter referred to as "deduction from income for credit cards, etc." in this Article) calculated by applying the arithmetic formula in paragraph (2) shall be deducted from the amount of earned income for the relevant taxable year:
1.
Amount spent on credit cards under Article 2 of the Specialized Credit Finance Business Act for goods or services;
2.
Amount stated in a Cash Receipt as provided for in Article 126-3 (including the fact of cash transaction confirmed pursuant to Article 126-5; hereafter referred to as "Cash Receipt" in this Article);
3.
Deleted. ;
4.
Amount paid for goods or services using a debit card or prepaid card (limited to those of which identity is verifiable in accordance with Presidential Decree; hereafter referred to as "registered prepaid card" in this Article) under Article 2 of the Specialized Credit Financial Business Act, or electronic debit payments, electronic prepaid instruments (limited to those of which the identity of holder can be confirmed in accordance with Presidential Decree; hereafter referred to as "registered electronic prepaid instrument" in this Article), or electronic cash (limited to those of which the identity of holder can be confirmed in accordance with Presidential Decree; hereafter referred to as "registered electronic cash" in this Article) under Article 2 of the Electronic Financial Transactions Act.
(2)
Deductions from income for credit cards, etc. shall be the amount calculated by subtracting the amount referred to in subparagraph 5 from the total sum of the amounts from subparagraphs 1 through 4 (its maximum amount shall be the amount which is lesser of three million won a year and the amount equivalent to 20/100 of the total amount of salary in the relevant taxable year and the amount which exceeds such maximum amount shall be referred to as "amount in excess of maximum amount" in this paragraph): Provided, That where there is an amount in excess of maximum amount, the amount which is lesser of the amount in excess of maximum amount and the total sum of the amounts referred to in subparagraphs 1 and 2 (annual limit of the amount referred to in paragraphs 1 and 2 shall be one million won respectively) shall be added to deductions from income for credit cards, etc.
1.
Total sum of the amounts referred to in paragraph (1) 1, 2 and 4 which are paid for the goods or service provided by a corporation or business operator (excluding a corporation or business operator prescribed by Presidential Decree) within the traditional markets under subparagraph 1 of Article 2 of the Special Act on the Promotion of Traditional markets and Shopping Districts and the area of the traditional markers prescribed by Presidential Decree (hereafter referred to as "amount spent in traditional markets" in this paragraph) x 30/100;
2.
Total sum of the amounts referred to in paragraph (1) 1, 2 and 4 which are paid corresponding to the cost for using mass transit under the Act on the Support and Promotion of Utilization of Mass Transit System Act (hereafter referred to as "amount spent in mass transit" in this paragraph) x 30/100;
3.
Amount referred to in paragraph (1) 2 and 4 (excluding the amount included in the amount spent in traditional markets and mass transit; hereafter referred to as "amount spent on debit cards) x 30/100;
4.
Amount calculated by subtracting the amount used in traditional markets, mass transit and the amount spent on debit cards from the total sum of the amounts spent on credit cards, etc. (hereafter referred to as "amount spent on credit cards" in this paragraph) x 15/100;
5.
Amount falling under any of the following items:
(a)
Where the minimum amount used is lesser than or same as the amount spent on credit cards: Minimum amount used x 15/100;
(b)
Where the minimum amount used is larger than the amount spent on credit cards: Amount spent on credit cards: Minimum amount used x 15/100 + (minimum amount used - amount spent on credit cards) x 30/100.
(3)
In applying paragraph (1), the amount spent on credit cards, etc. by a spouse, lineal ascendants or lineal descendents (including such spouse's lineal ascendants) of a resident having earned income, who are prescribed by Presidential Decree, may be added to the deduction from income for credit cards, etc. of such resident.
(4)
If the amount spent on credit cards, etc. falls under any of the following subparagraphs, such amount shall not be added to the amount spent on credit cards, etc. in applying the provisions of paragraph (1) :
1.
Where it falls under the expenses relating to business income, or where it falls under the expenses of a corporation;
2.
Where it falls under the abnormal use of credit cards, debit cards, electronic debit payments, registered prepaid cards, registered electronic prepaid instruments, registered electronic cash or Cash Receipts prescribed by Presidential Decree, such as feigning sale of goods or supply of services, etc.;
3.
Where a newly-delivered automobile is purchased using credit cards, debit cards, electronic debit payments, registered prepaid cards, registered electronic prepaid payments, registered electronic cash, or Cash Receipts on or after December 1, 2002;
4.
Other cases prescribed by Presidential Decree.
(5)
In applying paragraph (4) 2, where the withholding agent under Article 127 (7) of the Income Tax Act pays the amount of tax short of the amount of tax to be withheld at source due to reasons prescribed by Presidential Decree, the additional tax under Article 47-5 (1) of the Framework Act on National Taxes shall not be imposed.
(6)
The Commissioner of the National Tax Service may order credit card companies under Article 2 of the Specialized Credit Finance Business Act, electronic financial business operator and subsidiary electronic financial business operator under Article 2 of the Electronic Financial Transactions Act to deal with matters necessary for the income deduction on the amount using credit cards, etc., such as the notification of amounts using credit cards, etc.
(7)
Any person who intends to be subject to paragraph (1) shall make an application for the income deduction, as prescribed by Presidential Decree.
(8)
The amount drawn on credit cards, etc. shall be the aggregate of the amounts used, recorded, or paid off during the pertinent taxable period.
(9)
Necessary matters for the method of verifying the amounts drawn on credit cards, etc. and deductible from income, the procedure for collecting data related to an income deduction and other matters necessary for an income deduction for the amounts drawn on credit cards, etc. shall be prescribed by Presidential Decree.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

law view

 Article 126-3 (Special Taxation for Cash Receipt Service Operators and Cash Receipt Merchants)
 

(1)
A Cash Receipt service operator who is granted approval for providing Cash Receipt service by the Commissioner of the National Tax Service as prescribed by Presidential Decree as a business operator who is provided with the system which can approve and transmit Cash Receipt settlement by wire (hereafter referred to as "Cash Receipt service operator" in this Article) may be offered tax deduction from the amount of the value-added tax to be paid for the relevant taxable period, or may be given back as part of the refunded tax amount, up to the amount prescribed by Presidential Decree according to the number of installed Cash Receipt issuing machines prescribed by Presidential Decree, the number of cases of Cash Receipt account settlement of the operators who have Cash Receipt issuing machines connected with credit card terminals, etc. (hereafter referred to as a "Cash Receipt merchant" in this Article), and the number of detailed statements of payment submitted in the manner under the latter part of Article 164 (3) of the Income Tax Act.
(2)
A Cash Receipt merchant under paragraph (1) who issues Cash Receipts under paragraph (4) (limited to the ones for less than 5,000 won for each transaction, and referring to the ones approved for issuance through the telephone network) until December 31, 2013 shall be entitled to the tax credit equivalent to the amount calculated by multiplying the number of Cash Receipts issued during the pertinent taxable period by the amount prescribed by Presidential Decree (hereafter referred to as "tax credit amount" in this Article) for the income tax calculated for the pertinent taxable period. In such cases, the tax credit amount shall not exceed the calculated income tax amount.
(3)
A Cash Receipt service operator shall forward the Commissioner of the National Tax Service the details of cash settlement, such as the date and amount of trading, the identity of the traders and the personal information on Cash Receipt merchants, under the conditions as prescribed by Presidential Decree.
(4)
"Cash Receipt" in paragraph (1) means receipts which, in cases of cash settlement, a Cash Receipt merchant issues the person who is supplied with goods or service by means of Cash Receipt issuing machines in exchange for the supply of such goods or service, stating the details of the settlement, such as the date, amount, etc. of the trading.
(5)
The Commissioner of the National Tax Service may, if necessary to give tax deduction to the persons receiving Cash Receipts or otherwise to operate the Cash Receipt system, ask the providers and users of credit information under Article 2 of the Use and Protection of Credit Information Act to furnish their names and resident registration numbers and other information prescribed by Presidential Decree, under Article 14 of the said Act.
(6)
The issuance methods and forms of Cash Receipts, the methods and procedures of tax credit under paragraph (2), and other necessary matters for the operation of the Cash Receipt system shall be prescribed by Presidential Decree.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

law view

 Article 126-4 (Special Cases of Input Tax Deduction Based on Purchaser-Issued Tax Invoices)
 

(1)
Notwithstanding the provisions of Article 16 of the Value-Added Tax Act, in cases where a business operator prescribed by Presidential Decree who is registered as a person liable for tax payment fails to issue a tax invoice at the time of delivery of tax invoice pursuant to Article 16 of the Value-Added Tax Act in exchange for the supply of goods or services, the person who is supplied with such goods or services may issue a tax invoice (hereinafter referred to as "purchaser-issued tax invoice") subject to a confirmation by the head of competent tax office, as prescribed by Presidential Decree.
(2)
The value-added tax amount stated on the purchaser-issued tax invoice issued pursuant to paragraph (1) shall be deemed the deductible input tax amount in accordance with Articles 17 (1) and 26 (3) of the Value-Added Tax Act, as prescribed by Presidential Decree.
(3)
Other than those under paragraphs (1) and (2), the objects and methods of issuance of purchaser-issued tax invoices and other necessary matters shall be prescribed by Presidential Decree.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

law view

 Article 126-5 (Confirmation, etc. of Cash Transactions)
 

(1)
Where the person who receives goods or services supplied by a business operator prescribed by Presidential Decree fails to be issued a Cash Receipt referred to in Article 126-3 (3) in spite of the cash settlement of the price thereof, he/she shall be deemed to be issued a Cash Receipt in accordance with Article 126-3 (3) when obtaining to the confirmation of such cash transaction from the head of the competent tax office under the conditions as prescribed by Presidential Decree.
(2)
Where a Cash Receipt is deemed to be issued in accordance with paragraph (1), the relevant amount shall not be subject to the tax credit for the use of credit cards, etc. pursuant to Article 32-2 (1) of the Value-Added Tax Act with respect to the business operator who has failed to issue such Cash Receipt.
(3)
Other than those under paragraphs (1) and (2), the report of cash transaction, the methods of the confirmation thereof, and other necessary matters shall be prescribed by Presidential Decree.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

law view

 Article 126-6 (Tax Deduction for Expenses Incurred in Verifying Faithful Reporting)
 

(1)
Where a business operator subject to verification of faithful reporting pursuant to Article 70-2 (1) of the Income Tax Act submits a written verification of faithful reporting, the amount equivalent to 60/100 of the expenses directly incurred in verifying his/her faithful reporting shall be deducted from income tax [applicable only to income tax on business income (including the income incurred in a real estate leasing business under Article 45 (2) of the Income Tax Act)]of the relevant taxable year: Provided, That a ceiling on the deductible tax amount shall be prescribed by Presidential Decree within one million won.
(2)
Where a business operator subject to paragraph (1) understates the amount of business income in the relevant taxable year and the amount of the understated business income is not less than 10/100 of the amount of the rectified business income (including cases corrected by filing a return for correction), the full amount of deducted tax under paragraph (1) shall be levied.
(3)
A business operator on whom an amount of tax is additionally levied pursuant to paragraph (2) is not entitled to tax deduction for expenses incurred in verifying the faithful reporting for three taxable years from the taxable year following that in which the date of additional levy falls.
(4)
A person who intends to be eligible for application of paragraph (1) shall apply for tax deduction, as prescribed by Presidential Decree.
[This Article Newly Inserted by Act No. 10631, May 19, 2011]

SECTION 2 Restriction, etc. of Special Taxation

law view

 Article 127 (Elimination of Overlapping Support)
 

(1)
Deleted.
(2)
Where Articles 5, 11, 24, 25, 25-2 through 25-4, 26, 94 and 104-18 (2) are all applicable to the assets invested by a national under this Act and Articles 26 and 30-4 are all applicable in the same taxable year, he/she may select only one of them as applicable.
(3)
In applying Articles 5, 11, 24, 25, 25-2 through 25-4, 26, 30-4, 94, 104-14, 104-15 and 104-18 (2) if the income tax or the corporate tax is reduced or exempted pursuant to Article 121-2 or 121-4 for any national in the same taxable year, an amount obtained by multiplying the deductible tax amount pursuant to the relevant provisions by the rate of the stocks or stakes owned by a national investor among the total issued stocks or stakes of the relevant enterprise shall be deducted.
(4)
Where a national is, in the same taxable year, eligible both for the reduction or exemption of income tax or corporate tax under Articles 6, 7, 12-2, 31 (4) and (5), 32 (4), 33-2, 62 (4), 63, 63-2 (2), 64, 66 through 68, 85-6 (1) and (2), 104-24 (1), 121-8, 121-9 (2), 121-17 (2), 121-20 (2), 121-21 (2) and 121-22 (2) and for the deduction of income tax or corporate tax under Articles 5, 8-3, 11, 24, 25, 25-2 through 25-4, 26, 30-4, 94, 104-14, 104-15, 104-18 (2), 104-22 and 104-25, he/she may select only one of them as applicable.
(5)
Where two or more provisions from among the provisions concerning reduction or exemption of income tax or corporate tax pursuant to Articles 6, 7, 12-2, 31 (4) and (5), 32 (4), 33-2, 62 (4), 63, 63-2 (2), 64, 85-6 (1) and (2), 104-24 (1), 121-8, 121-9 (2), 121-17 (2), 121-20 (2), 121-21 (2), and Article 121-22 (2), 121-2 or 121-4 are applicable to the same business place of a national in the same taxable year, he/she may select only one of them as applicable.
(6)
Where two or more provisions from among the provisions concerning reduction or exemption of acquisition tax and property tax pursuant to Article 120 (3), 121, 121-2, 121-4, 121-9 (3), 121-17 (3), 121-20 (3) or 121-21 (3) are applicable to the same business place of a national in the same taxable year, he/she may select only one of them as applicable.
(7)
Where two or more provisions for reduction or exemption of the capital gains tax are concurrently applicable to a resident's transfer of land, etc., only one provision for reduction or exemption selected by the resident shall apply: Provided, That, where part of land, etc. is subject to the application of specific provisions for reduction or exemption, the remaining parts of such land, etc. may be subject to the application of other provisions for reduction or exemption.
(8)
A resident who transfers land, etc. to someone else and consequently to whom Articles 77 and 85-7 shall be applicable at the same time may select one of them as applicable.
(9)
A resident who transfers a house to someone else and consequently to whom Articles 98-2 and 98-3 shall be applicable at the same time may select one of them as applicable.
(10)
When applying paragraphs (3) and (4), if a separate accounting is done between the business subject to the reduction or exemption and any other business and the provisions on deduction is applied to such other business, the relevant tax reduction or exemption shall not fall under overlapping support.

law view

 Article 128 (Exclusion from Reduction and Exemption in Case of Estimated Taxation, etc.)
 

(1)
Articles 5, 7-2, 10, 11, 12 (2), 24, 25, 25-2 through 25-4, 26, 29-2, 30-2, 30-4, 94, 104-14, 104-15, 104-18 and 104-25 shall not apply to cases where any tax amount is estimated pursuant to the proviso to Article 80 (3) of the Income Tax Act or the proviso to Article 66 (3) of the Corporate Tax Act: Provided, That even when a tax amount is estimated, Articles 5 and 26 (limited to cases where the documentary evidences for investments are submitted) shall apply only to residents.
(2)
Articles 6, 7, 12-2, 31 (4) and (5), 33-2, 62-4, 63, 63-2 (2), 64, 66 through 68, 102, 104-24 (1), 121-8, 121-9 (2), 121-17 (2), 121-20 (2), 121-21 (2) and 121-22 (2) shall not apply to cases where a decision is made pursuant to Article 80 (1) of the Income Tax Act or Article 66 (1) of the Corporate Tax Act, or where a return is made after the given period pursuant to Article 45-3 of the Framework Act on National Taxes.
(3)
Articles 6, 7, 12-2, 31 (4) and (5), 33-2, 62 (4), 63, 63-2 (2), 64, 66 through 68, 102, 104-24 (1), 121-8, 121-9 (2), 121-17 (2), 121-20 (2), 121-21 (2) and 121-22 (2) shall not apply to the underreported amount prescribed by Presidential Decree, where correction (excluding correction due to any cause falling under any of the subparagraphs of paragraph (4)) is made pursuant to Article 80 (2) of the Income Tax Act or Article 66 (2) of the Corporate Tax Act and where an amended tax base return form is filed knowing in advance that the tax base filed and the tax amount will be corrected.
(4)
Articles 6, 7, 12-2, 31 (4) and (5), 33-2, 62 (4), 63, 63-2 (2), 64, 66 through 68, 102, 104-24 (1), 121-8, 121-9 (2), 121-17 (2), 121-20 (2), 121-21 (2) and 121-22 (2) shall not apply to the relevant place of business of the taxable period, where a business operator falls under any of the following subparagraphs: Provided, That this shall not apply where the business operator has any justifiable ground for failing to fulfill the duty of subparagraph 1 or 2:
1.
Where the business operator fails to report a business account, in violation of Article 160-5 (3) of the Income Tax Act;
2.
Where the business operator fails to become a Cash Receipt merchant in violation of Article 162-3 (1) of the Income Tax Act or Article 117-2 (1) of the Corporate Tax Act;
3.
Where the business operator who has become a credit card merchant under Article 162-2 (2) of the Income Tax Act and Article 117 of the Corporate Tax Act or a Cash Receipt merchant under Article 162-3 (1) of the Income Tax Act or Article 117-2 of the Corporate Tax Act falls under the occasions prescribed by Presidential Decree in consideration of such number of times, amount, etc. as cases where he/she falls under any of the following items:
(a)
Where he/she has refused to transact by a credit card or issued a credit card sales slip different from the fact;
(b)
Where he/she has refused a request for issuance of a Cash Receipt or issued it different from the fact.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

law view

 Article 129 (Exclusion, etc. from Reduction or Exemption of Capital Gains Tax)
 

(1)
Where a transaction party who trades any asset referred to in Article 94 (1) 1 and 2 of the Income Tax Act enters the different transaction price in the transaction contract from the actual transaction price, non-taxation, reduction or exemption on the capital gains tax under this Act shall be restricted pursuant to Article 91 (2) of the Income Tax Act.
(2)
The provisions of non-taxation, reduction or exemption of capital gains tax shall not be applicable to the unregistered transfer assets under Article 104 (3) of the Income Tax Act.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

law view

 Article 130 (Exclusion from Tax Reduction or Exemption for Investment in Overconcentration Control Region of Seoul Metropolitan Area)
 

(1)
With respect to the fixed business assets (excluding any digital broadcasting equipment prescribed by Presidential Decree and any information and communications equipment prescribed by Presidential Decree) acquired for using them in a business place located within the overconcentration control region of the Seoul Metropolitan area, which are subject to the enlarged investment prescribed by Presidential Decree, by any national running his/her business within the overconcentration control region of the Seoul Metropolitan area on or before December 31, 1989 and by any small or medium enterprise commencing its business by newly establishing such business place within the overconcentration control region of the Seoul Metropolitan area or relocating its existing business place (including the business place established before December 31, 1989; hereafter the same shall apply in this Article) into such zone on or after January 1, 1990 (hereafter referred to as "small or medium enterprise, etc. since 1990" in this paragraph), Articles 5 (1) 1 and 2, 11 (2) 3, 24 (1) 1 and 2, 25 (excluding paragraph (1) 7 and 9 of the same Article, and limited to cases where any small or medium enterprise, etc. since 1990 has made an investment) shall not apply: Provided, That this shall not apply where the enlarged investment is made within such industrial complex or industrial area prescribed by Presidential Decree.
(2)
Where any person, who is not a small or medium enterpriser, commences his/her business by newly establishing a business place within the overconcentration control zone of the Seoul Metropolitan area or relocates his/her existing business place into such zone on or after January 1, 1990, Articles 11 (2) 3, 24 (1) 1 and 2, 25 (excluding paragraph (1) 7 and 9 of the same Article) shall not apply to his/her fixed business assets (excluding any digital broadcasting equipment prescribed by Presidential Decree and information and communications equipment prescribed by Presidential Decree) acquired for using them in the relevant business place located within the overconcentration control region of the Seoul Metropolitan area.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

law view

 Article 131 Deleted.
 

law view

 Article 132 (Exclusion from Reduction of or Exemption from Tax, etc. Short of Minimum Tax)
 

(1)
In calculating corporate tax on the income of a domestic corporation (excluding incorporated associations, etc. governed by Article 72 (1) ) for each business year, and on the income accrued from sources in Korea of a foreign corporation governed by Article 91 (1) of the Corporate Tax Act for each business year (excluding corporate tax on the capital gains from land, etc. under Article 55-2 of the Corporate Tax Act, an amount of tax paid in addition to the corporate tax under Article 96 of the same Act, additional tax, and the tax collected as a penalty which is prescribed by Presidential Decree; referring to corporate tax to which tax deduction, etc. prescribed by Presidential Decree have not been applied), where the amount of tax after reduction, exemption, etc. prescribed in any of the following subparagraphs have been applied falls short of the amount of tax obtained by multiplying the tax base (including the amount of reserves under subparagraph 1, which has been included in the gross income pursuant to the related provisions; hereafter referred to as "tax base" in this Article) to which inclusion in the deductible expenses, income deduction, etc. prescribed in subparagraphs 1 and 2 have not been applied by 16/100 [12/100 for the portion of tax base exceeding ten billion won but not more than 100 billion won; 10/100 for the portion of tax base not more than ten billion won; 7/100 for small or medium enterprises and social enterprises under Article 85-6 (where a small or medium enterprise becomes no longer such enterprise for the first time, as prescribed by Presidential Decree, 8/100 for taxable years that end within three years from the date on which the taxable year in which it becomes no longer a small or medium enterprise for the first time commences, and 9/10 for taxable years which end with the subsequent two years)], reduction, exemption, etc. shall not be applicable to the portion equivalent to such insufficient amount of tax:
1.
Reserves for research and human resources development to be included in the deductible expenses in calculating the amount of income for each business year pursuant to Article 9;
2.
Amount of tax deduction, amount to be included in the deductible expenses, amount not to be included in the gross income, and non-taxable amount pursuant to Articles 8, 8-2, 10-2, 13, 14, 55-2 (4), 60 (2), 61 (3), 62 (1) and 63-2 (5);
3.
Amounts of tax credit pursuant to Articles 5, 7-2, 8-3, and 10 (limited to a person who is not small or medium enterprises; hereafter the same shall apply in this Article), 11, 12 (2), 24, 25, 25-2 through 25-4, 26, 29-2, 30-2, 30-4, 31 (6), 32 (4), 94, 104-8, 104-14, 104-15, 104-18, 104-22 and 104-22;
4.
Release or exemption from, or reduction of corporate tax pursuant to Articles 6, 7, 12-2, 21, 31 (4) and (5), 32 (4), 33-2, 62 (4), 63 (excluding cases of being relocated to an area other than the Seoul Metropolitan area), 64, 68 (limited to any income other than agricultural income), 85-6, 102 and 121-22.
(2)
In calculating income tax on the business income of a resident (including income accrued from the rental of the relevant real estate, only in cases Article 16 are applicable; hereafter the same shall apply in this paragraph) and on the income of a non-resident accrued at a domestic place of business (excluding additional tax and the tax collected as a penalty which is prescribed by Presidential Decree; referring to income tax to which income deduction, etc. prescribed by Presidential Decree for business income have not been applied), where the amount of tax after reduction, exemption, etc. prescribed in any of the following subparagraphs have been applied falls short of the amount of tax (hereafter referred to as "minimum income tax" in this Article) calculated by multiplying the amount of tax calculated from the business income which has not been included in the deductible expenses and to which income deduction has not been applied, etc. prescribed in subparagraphs 1 and 2 (including the amount of reserves under subparagraph 1, which has been included in the gross income pursuant to the related provisions) by 45/100 (35/100 for the portion the calculated amount of tax of which does not exceed 30 million won), reduction, exemption, etc. shall not apply to the portion equivalent to such insufficient amount of tax:
1.
Reserves for research and human resources development to be included in the deductible expenses in calculating the amount of income for each business year pursuant to Article 9;
2.
Amount to be included in the deductible expenses and the amount of tax deduction pursuant to Articles 8, 10-2, 16, 86-3, 122-3 and 132-2;
3.
Amount of tax credit pursuant to Articles 5, 7-2, 10, 11, 12 (2), 24, 25, 25-2 through 25-4, 26, 29-2, 30-2, 30-4, 31 (6), 32 (4), 94, 104-8, 104-14, 104-15, 104-18, and 126-3 (2);
4.
Release or exemption from, or reduction of income tax pursuant to Articles 6, 7, 12-2, 21, 31 (4) and (5), 32 (4), 33-2, 63 (excluding cases of being relocated to an area other than the Seoul Metropolitan area), 64, 85-6, 102 and 121-22.
(3)
In the application of this Act, where reduction, exemption, etc. listed in the subparagraphs of paragraphs (1) and (2), and other reduction, exemption, etc. are simultaneously applicable, reduction, exemption, etc. listed in the subparagraphs of paragraphs (1) and (2) shall be applicable on the preferential basis.
(4)
Matters necessary for applying the minimum tax under paragraphs (1) and (2) shall be prescribed by Presidential Decree.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

law view

 Article 132-2 (Composit Ceiling on Income Deduction, etc. for Income Tax)
 

(1)
When calculating the income tax on the global income of a resident, if the total sum of the amounts of deduction falling under any of the following subparagraphs and necessary expenses exceeds 25 million won, the amount in excess shall be construed as nil:
1.
Designated donations under Article 34 (1) of the Income Tax Act to be included in the calculation of necessary expenses;
2.
Special deductions under Article 52 of the Income Tax Act: Provided, That the following income deductions shall not be included:
(a)
Premiums under Article 52 (1) 1 and 2 (a) of the Income Tax Act;
(b)
Medical expenses paid for disabled persons under Article 52 (2) 2 of the Income Tax Act;
(c)
Expenses for special education under Article 52 (3) 3 of the Income Tax Act;
(d)
Legal donations under Article 52 (6) 1 of the Income Tax Act;
3.
Income deduction for contribution, etc. to the Small and Medium Business Start-up Investment Corporation under Article 16 (1);
4.
Income deduction for a mutual aid deposit under Article 86-3;
5.
Income deduction for the subscription savings, etc. under Article 87 (2);
6.
Income deduction for an investment in an employee stock ownership association under Article 88-4 (1);
7.
Deduction of medical expenses and educational expenses: Provided, That the income deductions for those provided for in subparagraph 2 (b) and (c) shall not be included herein;
8.
Income deduction for amount spent on credit cards, etc. under Article 126-2.
(2)
In calculating the total sum of the amounts of deductions pursuant to paragraph (1) where both designated donations under paragraph (1) 1 above and Article 52 (6) 2 of the Income Tax Act and other deductible amounts coexist, other deductible amounts shall be included first in calculating the total sum.
(3)
Where designated donations under paragraph (1) 1 above or Article 52 (6) 2 of the Income Tax Act is included in the excessive amount resulted from the application of paragraph (1), the amount of the relevant donations may be included in calculating necessary expenses by being carried over or deducted from the amount of global income pursuant to Article 34 (3) of the Income Tax or the proviso to Article 52 (8) of the same Act.
(4)
Matters necessary for the application of the ceiling of income deduction under paragraph (1) shall be prescribed by Presidential Decree.
[This Article Newly Inserted by Act No. 11614, Jan. 1, 2013]

law view

 Article 133 (Composite Ceiling on Reduction or Exemption of Capital Gains Tax and Gift Tax)
 

(1)
From among the total amount of capital gains taxes for an individual to be reduced or exempted pursuant to Article 33, 43, 69, 69-2, 70, 77, 77-3, 85-10 or Article 29 of the Addenda of Act No. 6538, the larger amount among the amounts under the following subparagraphs shall not be reduced or exempted. In such cases, the total amount of capital gains taxes reduced or exempted shall be added up in order of transfer of assets:
1.
The larger amount of amounts under the following items calculated by taxation period:
(a)
Where the total amount of capital gains taxes to be reduced or exempted pursuant to Article 33, 43, 70, 77 (limited to cases in which the reduction rates of 20/100 and 25/100 are applicable), 77-3, 85-10 or Article 29 of the Addenda of Act No. 6538 exceeds 100 million won by taxation period, an amount equivalent to the exceeding part;
(b)
Where the total amount of capital gains taxes to be reduced or exempted pursuant to Article 33, 43, 69, 70, 69-2, 77, 77-3, 85-10 or Article 29 of the Addenda of Act No. 6538 exceeds 200 million won by taxation period, an amount equivalent to the exceeding part;
2.
The larger amount of amounts under the following items calculated as the total amount of the five taxation periods. In such cases, the total amount of capital gains taxes to be reduced or exempted in five taxation periods shall be calculated as the total amount of capital gains tax amount to be reduced or exempted in the relevant taxation period and capital gains tax amount reduced or exempted in the preceding four taxation periods:
(a)
Where the total amount of capital gains taxes to be reduced or exempted pursuant to Article 70 of the five taxation periods exceeds 100 million won, an amount equivalent to the exceeding part;
(b)
Where the total amount of capital gains taxes to be reduced or exempted pursuant to Articles 70 and 77 (limited to cases where the reduction rates of 20/100 and 25/100 are applicable) of the five taxation periods exceeds 200 million won, an amount equivalent to the exceeding part;
(c)
Where the total amount of capital gains taxes to be reduced or exempted pursuant to Article 69, 69-2, 70 or 77 (limited to cases where the reduction rates of 40/100 and 50/100 are applicable) of the five taxation periods exceeds 300 million won, an amount equivalent to the exceeding part.
(2)
Where the total amount of the gift tax to be reduced or exempted pursuant to Article 71 for five years exceeds 100 million won (hereafter referred to as "ceiling on gift tax reduction or exemption" in this paragraph), an amount equivalent to such excessive portion shall not be reduced or exempted. In such cases, the ceiling on gift tax reduction or exemption shall be calculated according to the total amount of both the gift tax amount to be reduced or exempted and the gift tax amount reduced or exempted for five years before the date of such gift.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

law view

 Article 134 Deleted.
 

law view

 Article 135 Deleted.
 

law view

 Article 136 (Special Cases concerning Non-inclusion of Reception Expenses in Deductible Expenses)
 

(1)
Deleted.
(2)
As regards the corporation falling under each of the following subparagraphs, the amount of entertainment expenses added to deductible expenses in calculating its amount of income for each business year pursuant to Article 25 (1) of the Corporate Tax Act shall be an amount equivalent to 70/100 of the total amount referred to in the main sentence of the same Article and same paragraph:
1.
Deleted;
2.
Government-contributed institutions prescribed by Presidential Decree;
3.
Corporations prescribed by Presidential Decree, in which the corporations under subparagraph 2 have invested.
(3)
The reception expenses disbursed by a national as the cultural expenses prescribed by Presidential Decree (hereafter referred to as the "cultural entertainment expenses" in this paragraph) no later than December 31, 2014, which exceed such amount prescribed by Presidential Decree, shall be included in deductible expenses within the limits of an amount equivalent to 10/100 of the ceiling of entertainment expenses for a national (referring to the total of the amounts under subparagraphs of Article 25 (1) of the Corporate Tax Act or the total of the amounts under subparagraphs of Article 35 (1) of the Income Tax Act; hereafter the same shall apply in this paragraph) when calculating an amount of income for the taxable year concerned, notwithstanding the ceiling of entertainment expenses for a national.

law view

 Article 137 Deleted.
 

law view

 Article 138 (Deemed Gross Income from Rental Security Deposits, etc.)
 

(1)
Where a domestic corporation (excluding a non-profit domestic corporation) retaining the borrowings in excess of the standards prescribed by Presidential Decree taking into account the ratio of borrowings, etc. to the equity capital of such domestic corporation which runs a real estate rental business as its principal business receives the deposits, money for lease on a deposit basis, or similar by leasing the real estate except houses prescribed by Presidential Decree, or rights on the relevant real estate, the amount calculated as prescribed by Presidential Decree shall be added to gross income under Article 15 (1) of the Corporate Tax Act.
(2)
In applying paragraph (1), the scope of borrowings, criteria for judging the principal business or other necessary matters shall be prescribed by Presidential Decree.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

law view

 Article 139 Deleted.
 

law view

 Article 140 (Special Taxation for Undersea Mineral Resources Development)
 

(1)
Deleted.
(2)
Any person who owns a submarine mining right under subparagraph 5 of Article 2 of the Submarine Mineral Resources Development Act (hereafter referred to as "submarine mining concessionaire" in this Article) shall be exempted from the taxes in the following subparagraphs: Provided, That the rate obtained by reducing 20/1,000 from the rate under Articles 11 and 12 of the Local Tax Act shall apply to the acquisition tax under subparagraph 4:
1.
Resident tax and local income tax imposed in connection with its exploratory or extracting projects for undersea minerals;
2.
Customs duties, value-added tax, individual consumption tax, and traffic, energy and environment tax on machinery, equipment and materials imported for its exploratory or extracting projects for submarine minerals;
3.
Individual consumption tax, and traffic, energy and environment tax on machinery, equipment and materials purchased in Korea for its exploratory or extracting projects for submarine minerals;
4.
Property tax, acquisition tax, and automobile tax imposed on property used or required for its exploratory or extracting projects for submarine minerals;
5.
Taxes imposed on services provided by the State or a local government, or taxes imposed in connection therewith.
(3)
Any machinery, equipment and materials that a submarine mining concessionaire's agent or a contractor imports in the name of the relevant submarine mining concessionaire for a direct use for an exploratory or extracting project shall be exempted from the customs duties, value-added tax, individual consumption tax, and traffic, energy and environment tax.
(4)
Deleted.
(5)
Salaries that a submarine mining concessionaire, his/her agent or contractor pays to a foreigner employed to explore and develop submarine crude oil shall be exempted from the income tax by no later than the business year wherein a submarine mining concessionaire pays the corporate tax for the first time.
(6)
Paragraphs (2), (3), and (5) shall apply to the portion for which the tax payment duty becomes effective on or before December 31, 2013.

law view

 Article 141 (Special Cases concerning Tax Imposition on Registration of Real Estate in Actual Titleholder's Name)
 

Where real estate registered in its actual titleholder's name pursuant to Article 11 of the Act on the Registration of Real Estate under Actual Titleholder's Name is only one case, and its value is 50 million won or less, and where it falls under any of the following subparagraphs, any taxes already exempted, imposed insufficiently or not imposed, shall not be additionally collected. In such cases, the scope of real estate registered in the actual titleholder's name and the calculation of its value shall be prescribed by Presidential Decree:
1.
Where a name transferor and a household sharing a livelihood with him/her has been subject to non-taxation following a transfer under one house for one household pursuant to subparagraph 3 of Article 89 of the Income Tax Act prior to the enforcement of this Act, and where he/she is no longer eligible for non-taxation on the date of transfer of the relevant house due to its registration in the actual titleholder's name;
2.
Where any gift tax, for which a tax payment duty becomes effective prior to the enforcement of the Act on the Registration of Real Estate under Actual Titleholder's Name, is imposed on a titleholder pursuant to Article 32-2 of the previous Inheritance Tax Act (referring to that prior to the amendment by Act No. 5193, December 30, 1996).
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

law view

 Article 141-2 (Special Provisions on Taxation for Sales Profit of Inventory Assets in Logistics Facilities in Bonded Area of Non-Resident, etc.)
 

(1)
For the income from domestic source under subparagraph 5 of Article 119 of the Income Tax Act or subparagraph 5 of Article 93 of the Corporate Tax Act accruing from transfer of inventory assets which a non-resident who has no domestic place of business under Article 120 of the Income Tax Act or a foreign corporation under Article 94 of the Corporate Tax Act (hereafter in this Article referred to as a "non-resident, etc.") manufactured or took over overseas after keeping them in a bonded area under Article 154 of the Customs Act or in logistics facilities under Article 2 (1) 4 of the Framework Act on Logistics Policies located in a Free Trade Zone under subparagraph 1 of Article 2 of the Act on Designation and Management of Free Trade Zones, the income tax under Article 156 (1) of the Income Tax Act or the corporate tax under Article 98 (1) of the Corporate Tax Act shall be exempted.
(2)
Any non-resident, etc. who intends to be governed by paragraph (1) shall apply for exemption as prescribed by Presidential Decree.
[This Article Newly Inserted by Act No. 9272, Dec. 26, 2008]

CHAPTER VII SUPPLEMENTARY PROVISIONS

law view

 Article 142 (Ex Ante and Ex Post Management of Special Cases of Taxation)
 

(1)
The Minister of Strategy and Finance shall establish a basic plan on special taxation and its restriction and notify the heads of central administrative agencies thereof after the deliberation of the State Council no later than March 31 each year.
(2)
The heads of central administrative agencies shall submit a recommendation for tax reduction or exemption including the objectives of, and policy effects expected from such tax reduction or exemption, estimated revenue effects by year, related statistical data, etc. with respect to the matters for which such reduction or exemption is deemed necessary for the efficient implementation of economic and social policies, etc., to the Minister of Strategy and Finance no later than April 30 each year.
(3)
The heads of central administrative agencies shall submit an opinion on the analysis of effects by tax reduction or exemption and on whether such tax reduction or exemption system is to be maintained with respect to the matters of special taxation prescribed by Presidential Decree, to the Minister of Strategy and Finance no later than April 30 each year.
(4)
The Minister of Strategy and Finance may conduct an assessment of major special taxation.
(5)
The Minister of Strategy and Finance may designate an institution which shall perform professional survey and research in connection with the recommendation for tax reduction or exemption under paragraph (2), submission of opinions under paragraph (3) and assessment under paragraph (4) and contribute the expenses necessary for the operation, etc. thereof.
(6)
The Minister of Strategy and Finance may, where deemed necessary, request the heads of the administrative agencies, etc. concerned to submit opinions or data concerning the submission of opinions under paragraph (3) and assessment under paragraph (4). In such cases, the heads of the relevant administrative agencies shall comply with such request unless any special reason exists.
(7)
Matters concerning the establishment of master plans for special taxation and the limitation thereof, recommendation for tax reduction and exemption, submission of opinions on ax reduction and exemption, scope of major special taxation, designation of a survey and research institution under paragraph (1) through (6) and other necessary matters shall be prescribed by Presidential Decree.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

law view

 Article 142-2 (Preparation of Tax Expenditure Budget)
 

(1)
The Minister of Strategy and Finance shall prepare a report wherein the result of the financial support pertaining to special taxation, such as reduction or exemption of tax, non-taxation, income deduction, tax deduction, application of favored-tax rate, or deferral of tax, (hereinafter referred to as "tax expenditure") in the immediately preceding year and the estimated amount thereof in the relevant year and the following year are analyzed by functions and items (hereinafter referred to as "tax expenditure budget").
(2)
The Minister of Strategy and Finance may, if necessary for the preparation of a tax expenditure budget, request persons prescribed by Presidential Decree, such as the heads of central administrative agencies, etc. to submit data. In such cases, the heads of the relevant central administrative agencies, etc. so requested shall comply with such request unless any special reason exists.
(3)
Detailed method, etc. of preparation of tax expenditure budget shall be prescribed by Presidential Decree.
[This Article Newly Inserted by Act No. 11614, Jan. 1, 2013]

law view

 Article 143 (Separate Accounting)
 

(1)
Where a national concurrently operates a business (referring to respective business in cases of two or more tax reduction rates exist; hereafter referred to as "business subject to reduction or exemption" in this Article ) to which tax reduction or exemption is applicable as prescribed by this Act and other businesses, he/she shall keep separate accounts, as prescribed by Presidential Decree.
(2)
A national who operates a consumptive service business and other businesses at the same time shall keep separate accounts of his/her assets, liabilities, profits and losses by dividing them into each business as prescribed by Presidential Decree.
(3)
When the amount of income of a business subject to reduction or exemption is calculated where loss has occurred to a business of which account has been kept separately as prescribed in paragraphs (1) and (2), an amount calculated by subtracting the amount obtained by distributing the total amount of loss in proportion to the amount of income to other businesses which have generated income from the amount of income of the businesses which have generated income shall be the income of the business subject to reduction or exemption.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

law view

 Article 144 (Tax Credit Carryforward)
 

(1)
From among the tax amounts to be deducted pursuant to Articles 5, 7-2, 8-3, 10, 11, 12 (2), 24, 25, 25-2 through 25-4, 26, 29-2, 30-2, 30-4, 94, 104-5, 104-8, 104-14, 104-15, 104-18, 104-22, 104-25, and 126-6 of this Act, and Article 12 (2) (limited to the amended provisions of former Article 37) of the Addenda of the amended Regulation of Tax Reduction and Exemption Act (Act No. 5584), the amount equivalent to the portions of such events as there exists no tax amount payable for the relevant taxable year or as being not deducted because the tax amount has been less than the minimum corporate tax or minimum income tax under Article 132, shall be carried over to each taxable year ending within five years from the starting day of the taxable year next to the relevant taxable year, and shall be deducted from his/her income tax [applicable only to income tax on business income (including the income incurred in a real estate leasing business under Article 45 (2) of the Income Tax Act)]or corporate tax in each taxable year whereto such portions have been carried over.
(2)
If the amounts to be deducted from the income tax or corporate tax for each taxable year, which are deductible under Articles 5, 7-2, 10, 11, 12 (2), 24, 25, 25-2 through 25-4, 26, 29-2, 30-2, 30-4, 94, 104-5, 104-8, 104-14, 104-15, 104-18, and 126-6 of this Act, and Article 12 (2) (limited to the amendments to previous Article 37) of the Addenda of the amended Regulation of Tax Reduction and Exemption Act (Act No. 5584), and the non-deducted amounts carried over pursuant to paragraph (1), overlap with each other, the non-deducted amounts carried over pursuant to paragraph (1) shall be deducted first, and if any overlap occurs between the non-deducted amounts carried over, the deduction shall be made successively in the order of their occurrence.
(3)
Notwithstanding paragraph (1), the non-deducted amount for the taxable year during which the relevant investment has been made pursuant to the proviso to the part other than each item of Article 26 (1) 2 and the amount paid as income tax or corporate tax under Article 26 (6) shall be carried forward to each taxable year that ends within five years from the commencement date of the taxable year following the taxable year during which the relevant investment is made and they shall be deducted from the income tax (limited to the income tax on business income) or corporate tax carried forward for each taxable year within the total sum calculated in the order of the following subparagraphs. In such cases, the number of workers at ordinary times in the taxable year subject to deduction carried forward shall exceed the largest figure of the number of workers at ordinary times under each item of subparagraph 3:
1.
Number of graduates from high schools tailored to industrial demand, etc. from among the workers at ordinary times who have entered into an employment contract for the first time in the taxable year subject to deduction carried forward;
2.
Number of youth workers from among the workers at ordinary times other than those in subparagraph 1 who have entered into an employment contract for the first time in the taxable year subject to deduction carried forward x fifteen million won;
3.
(Number of the workers at ordinary times in the taxable year subject to deduction carried forward - number of graduates referred to in subparagraph 1 - number of youth workers referred to in subparagraph 2 - the largest figure of the following numbers) x ten million won;
(a)
Number of workers at ordinary times in the immediately preceding taxable year of the taxable year subject to deduction carried forward;
(b)
Number of workers at ordinary times in the immediately preceding taxable year of the taxable year during which the relevant investment is made with the amount carried forward;
(c)
Where the income tax or corporate tax is paid due to decrease of the number of workers at ordinary times under Article 26 (6), the number of workers at ordinary times in the taxable year (where the number of workers at ordinary times is decreased for two consecutive taxable years, the second taxable year) during which such number of workers at ordinary times is decreased.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

law view

 Article 145 Deleted.
 

law view

 Article 146 (Additional Collection of Reduced or Exempted Tax Amounts)
 

Where any person subject to deduction of the income tax or corporate tax under Articles 5, 11, 24 through 26, and 94 of this Act and Article 12 (2) (limited to the provisions of the previous Article 37) of the Addenda of the amended Regulation of Tax Reduction and Exemption Act (Act No. 5584), has disposed of the relevant assets (including cases of lease, and excluding the cases prescribed by Presidential Decree) prior to the date on which two years elapse from the date on which the investment is completed under the same Article, he/she shall pay the income tax or corporate tax by adding the additional amount equivalent to the interests calculated as prescribed by Presidential Decree to the amount equivalent to the tax-deducted amount on the relevant assets; the relevant tax amount shall be deemed to be the tax amount to be paid under Article 76 of the Income Tax Act or Article 64 of the Corporate Tax Act.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]

law view

 Article 147 (Calculation of Value of Non-Par Value Stocks)
 

In cases of non-par value stocks at the time of applying Articles 87-6 (1), 88-4 (9) 3 and (10) 2, 91-4 (1) and 91-6 (1), an amount calculated by dividing the capital of a corporation which has issued the relevant stocks by the total number of issued stocks as of the record date of dividends (as of the issuing date in case of Article 88-4 (14) 3) shall be deemed the par value thereof.

ADDENDA
Article 1 (Enforcement Date)
This Act shall enter into force on January 1, 1999: Provided, That the amendments to Articles 38, 39 and 45 through 48 shall enter into force on the date of its promulgation.
Article 2 (General Applicability)
(1)
The amendments related to the income tax and corporate tax in this Act shall apply starting with the first taxable year after this Act enters into force.
(2)
The amendments relating to the capital gains tax and its special surtax in this Act shall apply starting with the portion first transferred after this Act enters into force.
(3)
The amendments relating to the value-added tax in this Act shall apply starting with the portion of goods or services first supplied or purchased, or goods declared for import after this Act enters into force.
(4)
The amendments relating to the special consumption tax in this Act shall apply starting with the portion whose taxable period first arrives after this Act enters into force.
(5)
The amendments relating to the liquor tax in this Act shall apply starting with the portion first shipped out of a factory or a bonded area after this Act enters into force.
(6)
The amendments relating to the inheritance or gift tax in this Act shall apply starting with the portion for which an inheritance first commences or is donated after this Act enters into force.
(7)
The amendments relating to the stamp tax in this Act shall apply starting with taxable documents first prepared after this Act enters into force.
(8)
The amendments relating to the securities transaction tax in this Act shall apply starting with the portion first transferred, withdrawn, incorporated, entrusted or invested in kind after this Act enters into force.
(9)
The amendments relating to the customs in this Act shall apply starting with the portion first declared for import after this Act enters into force.
(10)
The amendments relating to the local taxes in this Act shall apply starting with the portion first acquired, registered or on which the property tax or aggregate land tax is first imposed and collected after this Act enters into force.
Article 3 (Applicability to Small or Medium Business Investment Reserves)
The amendments to Articles 4, 9, 28, 30, 58, 59, and 75 shall apply to the reserves first charged to deductible expenses after this Act enters into force: Provided, That the amendments relating to the payment of an amount equivalent to interest under the provisions of Articles 4 (4), 9 (4), 28 (4), 30 (2), 58 (4), 59 (5) and 75 (4) shall apply starting with the portion that is first added to gross income after this Act enters into force. In this case, the amounts added to gross income under Articles 4, 8, 28, 29, 41, 42 and 61-2 of the previous Regulation of Tax Reduction and Exemption Act shall be deemed the amount added to gross income under this Act.
Article 4 (Applicability to Tax Credit for Investments by Small or Medium Business)
The amendments to Articles 5, 11, 24 through 26, 62, 65 (2), 94, 103 and 126 shall apply starting with the portion first invested after this Act enters into force.
Article 5 (Applicability to Tax Reduction or Exemption on Income from Technology Transfer)
The amendments to Article 12 shall apply starting with the portion first transferred, provided or leased after this Act enters into force.
Article 6 (Applicability to Capital Gains Tax Exemption for Support, etc. of Corporate Financial Structure Improvement)
(1)
The amendments to Articles 36 (2) 1, 37 (2) 1, 40 (1) 3 and 41 (1) 3 shall apply starting with the portion of real estate first transferred or donated prior to the enforcement date of this Act, but whose redemption date of liabilities to financial institutions has not arrived.
(2)
In applying the amendments to Articles 37 (2) 2, 40 (2) 2, 41 (3) 2 and 42 (2) 3 to real estate transferred prior to the enforcement date of this Act, the said amendments shall apply starting on the date on which such real estate is transferred.
(3)
The amendments to Articles 40 (1) 1 and 2, and 41 (1) 2 and (4) shall apply starting with the portion first transferred or donated on or after February 24, 1998.
Article 7 (Application Examples of Minimum Tax, etc.)
Where a person obtains any tax reduction or exemption under Article 127, 128, 132, 134, 144 and 145 in the taxable year that commences prior to the enforcement date of this Act, such reduced or exempted tax amount shall be considered a tax amount reduced and exempted under Article 112, 117, 118, 120, 121 and 123 of the previous Regulation of Tax Reduction and Exemption Act.
Article 8 (Application Examples of Non-taxation, etc. on Gains from Transfer of Stocks by Small or Medium Start-up Business Investment Companies)
(1)
The amendments to Articles 13, 14 (1) 2 through 4 and 14 (2) shall apply starting with the portion of stocks or contribution shares first acquired after this Act enters into force.
(2)
The amendments to Articles 14 (4) and (5), 20 (limited to the portion collected by withholding at source), 29, 89 and 91 shall apply starting with the portion whose tax withholding time first arrives after this Act enters into force.
(3)
The amendments to Article 15 shall apply to stock options first granted after this Act enters into force.
(4)
The amendments to Article 16 shall apply starting with the portion first contributed or invested after this Act enters into force.
(5)
The amendments to Article 17 (1) shall apply starting with investment or loan loss reserves first charged to deductible expenses after this Act enters into force. In this case, the balance in such investment or loan loss reserve accounts that are charged to deductible expenses under Article 14 (1) of the previous Regulation of Tax Reduction and Exemption Act at the time this Act enters into force shall be deemed an investment or loan loss reserve under this Act.
(6)
The amendments to Articles 21 and 22 (limited to the portions relating to the enforcement of the Foreign Exchange Transactions Act) shall apply starting with the portion that first becomes applicable under the Foreign Exchange Transactions Act after this Act enters into force.
(7)
The amendments to the proviso of Article 21 (1) shall apply starting with the portion of bonds denominated in foreign currency first issued after this Act enters into force.
(8)
The amendments to Article 23 shall apply starting with the portion first transferred after this Act enters into force.
(9)
The amendments to Article 38 shall apply starting with the portion first invested in kind in the business year whereto belongs the date on which this Act enters into force.
(10)
The amendments to Article 39 shall apply starting with the portion of liabilities first assumed, performed, reduced or exempted in the business year whereto belongs the date on which this Act enters into force.
(11)
The amendments to Article 45 shall apply starting with the portion of liabilities first exempted or equity capital decreased in the business year whereto belongs the date on which this Act enters into force.
(12)
The amendments to Article 46 shall apply starting with the portion of stocks transferred or taken over or liabilities accepted or performed or real estate donated in the taxable year whereto belongs the date on which this Act enters into force.
(13)
The amendments to Article 47 shall apply starting with the portion of stocks exchanged in the business year whereto belongs the date on which this Act enters into force.
(14)
The amendments to Article 48 (4) shall apply starting with the portion of bad debt allowances that are charged to deductible expenses in the business year whereto belongs the date on which this Act enters into force.
(15)
The amendments to Article 100 (1) shall apply to housing subsidies first paid after this Act enters into force.
(16)
The amendments to Article 135 shall apply only to the business year commencing on or before December 31, 1999 with respect to assets provided for in paragraph (1) 2 of the said Article.
(17)
The amendments to Article 141 shall apply starting with the portion first converted to an actual name titleholder after this Act enters into force.
(18)
The amendments to Article 146 shall apply starting with the portion for which a cause for an additional collection first occurs after this Act enters into force (including the portion for which a cause for the additional collection occurs after this Act enters into force among the reduced or exempted tax amounts under the previous Regulation of Tax Reduction and Exemption Act).
Article 9 (General Transitional Measures)
(1)
The national taxes and local taxes imposed or taxable pursuant to the previous provisions prior to the enforcement date of this Act shall be governed by the previous provisions.
(2)
The national taxes and local taxes reduced or abatable pursuant to the previous provisions prior to the enforcement date of this Act shall be governed by the previous provisions.
(3)
The Acts and subordinate statutes that cite the previous Regulation of Tax Reduction and Exemption Act and its articles or clauses at the time this Act enters into force shall be deemed the respective corresponding articles or clauses of this Act.
Article 10 (Transitional Measures for Small or Medium Businesses Investment Reserves, etc.)
The reserves that have been charged to deductible expenses in calculating incomes for each taxable year pursuant to Articles 4, 8, 28, 29, 41, 42 and 61-2 of the previous Regulation of Tax Reduction and Exemption Act at the time this Act enters into force shall be added to gross income pursuant to the previous provisions.
Article 11 (Transitional Measures for Tax Reduction or Exemption for Income from Transfer of Technology)
(1)
Patents, utility models, or technical know-how leased prior to the enforcement date of this Act shall be governed by the provisions of Article 11 of the previous Regulation of Tax Reduction and Exemption Act until the relevant lease term expires.
(2)
A national who is subject to Articles 6, 34, 46, 50, 51 (1), 53 and 96 of the previous Regulation of Tax Reduction and Exemption Act prior to the enforcement date of this Act shall be governed by the provisions of Articles 6, 34, 63, 64, 65 (1), 68 and 101 of this Act, respectively, from the taxable year first starting after this Act enters into force and limited to the remaining reduction or exemption period.
Article 12 (Transitional Measures for International Ship Transfer Margin Charged to Deductible Expenses, etc.)
(1)
The previous provisions shall apply to adding to gross income of the amount charged to deductible expenses pursuant to Articles 24-2 and 40-4 of the previous Regulation of Tax Reduction and Exemption Act.
(2)
Where an enterprise designated as the enterprise subject to rationalization pursuant to Article 39 (1) of the previous Regulation of Tax Reduction and Exemption Act prior to the enforcement date of this Act satisfies the rationalization standards under paragraph (2) of the said Article, the provisions of Articles 35 through 37 of the previous Regulation of Tax Reduction and Exemption Act shall govern.
(3)
Capital increases subjected to Article 93 of the previous Regulation of Tax Reduction and Exemption Act prior to the enforcement date of this Act shall be governed by the previous provisions during the remaining deduction period under the same Act.
(4)
A small or medium business subjected to Article 54 of the previous Regulation of Tax Reduction and Exemption Act prior to the enforcement date of this Act shall be governed by the previous provisions during the remaining reduction or exemption period under the same Act.
(5)
Borrowings for housing funds subjected to Article 92-4 of the previous Regulation of Tax Reduction and Exemption Act at the time this Act enters into force shall be governed by the previous provisions until their redemption is completed.
(6)
Reserves for a mine closure subjected to Article 123-2 of the previous Regulation of Tax Reduction and Exemption Act at the time this Act enters into force shall be governed by the previous provisions.
Article 13 (Transitional Measures for Long-term Household Savings and Employee Stock Savings)
(1)
Long-term household savings under Article 80-3 of the previous Regulation of Tax Reduction and Exemption Act shall, limited to those whose contracts are concluded on or before December 31, 1998, be governed by the previous provisions not later than the expiration of the relevant savings contracts.
(2)
Employee stock savings under Article 80-4 of the previous Regulation of Tax Reduction and Exemption Act shall, limited to those whose contracts are concluded and the deposit amounts are paid on or before December 31, 1998, be governed by the previous provisions not later than the expiration of such savings contracts.
Article 14 (Transitional Measures for Reduction or Exemption, etc. of Capital Gains Tax)
(1)
The carry-over taxation on the assets subjected to an application of the carry-over taxation pursuant to Articles 31, 32 and 40-4 of the previous Regulation of Tax Reduction and Exemption Act prior to the enforcement date of this Act, shall be governed by the previous provisions.
(2)
The tax reduction or exemption, deferment, post management thereof and additional collection on the assets subjected to tax reduction or exemption, etc. pursuant to Articles 33, 40-8, 43, 44, 70, 71 and 75 (2) of the previous Regulation of Tax Reduction and Exemption Act prior to the enforcement of this Act, shall be governed by the previous provisions.
(3)
Rental houses whose rental starts under previous Article 67 while the Regulation of Tax Reduction and Exemption Act (Act No. 4806) is in force, shall be governed by the previous provisions.
(4)
With respect to land, etc. transferred under previous Articles 31 through 33, 43, 44, 68, 70 and 71 (including where applied mutatis mutandis in Article 75 (2)) while the Regulation of Tax Reduction and Exemption Act (Act No. 5417) is in force, the tax reduction or exemption, special treatment of transfer value, deferment and additional collection of tax, etc. shall be governed by the previous provisions.
Article 15 (Transitional Measures for Exemption of Gift Tax on Farmland, etc. Donated to Farming Children)
(1)
The post management and tax collection for land, etc. subject to an exemption of the gift tax pursuant to Article 58 of the previous Regulation of Tax Reduction and Exemption Act prior to the enforcement date of this Act, shall be governed by the previous provisions.
(2)
Any land, etc. subject to exemption from the gift tax pursuant to Article 58 (1) of the previous Regulation of Tax Reduction and Exemption Act at the time this Act enters into force, and that a self-cultivating farmer donates to his/her children engaged in farming not later than December 31, 2006, shall be exempted from the gift tax pursuant to Article 58 (2) through (5) of the previous Regulation of Tax Reduction and Exemption Act.
Article 16 (Transitional Measures for Exemption of Capital Gains Tax, etc. on Self-cultivating Farmers, etc.)
(1)
The post management and tax collection for land, etc. subject to exemption from the capital gains tax and gift tax under previous Articles 56 and 57 while the Amendment Act to the Regulation of Tax Reduction and Exemption Act (Act No. 5195) is in force, shall be governed by previous Articles 56 and 57.
(2)
Any land, etc. subject to exemption from the capital gains tax and gift tax under previous Articles 56 (1) and 57 (1) (limited to those located within an agricultural promotion area under the Farmland Act) while the Amendment Act to the Regulation of Tax Reduction and Exemption Act (Act No. 5195) is in force, and that are transferred or donated not later than December 31, 2006, shall be exempted from the capital gains tax or gift tax pursuant to previous Article 56 (2) through (5) or 57 (2) through (4).
(3)
Any fishing ships and fishing rights subject to exemption from the gift tax under previous Article 57 (1) while the Regulation of Tax Reduction and Exemption Act (Act No. 5195) is in force, and that are donated not later than December 31, 2006, shall be exempted from the gift tax pursuant to previous Article 57 (2) through (4).
Article 17 (Transitional Measures for Exclusion from Tax Reduction or Exemption within Seoul Metropolitan Area)
Foreign investments that have been excluded from tax reduction or exemption pursuant to Article 47 (3) and (4) of the previous Regulation of Tax Reduction and Exemption Act prior to the enforcement date of this Act, shall be governed by the previous provisions.
Article 18 Deleted.
Article 19 Omitted.

ADDENDA
Article 1 (Enforcement Date)
This Act shall enter into force on April 1, 1999.
Articles 2 through 5 Omitted.

ADDENDA

(1)
(Enforcement Date) This Act shall enter into force on July 1, 1999.
(2)
(Application Examples) The amendments to Article 106 (1) 2 shall apply starting with the portion first supplied after this Act enters into force.

ADDENDA
Article 1 (Enforcement Date)
This Act shall enter into force on the date of its promulgation. (Proviso Omitted.)
Articles 2 through 6 Omitted.

ADDENDA
Article 1 (Enforcement Date)
This Act shall enter into force on the date of its promulgation: Provided, That the amended provisions of Article 126-2 shall enter into force on the first day of the month next to that whereto belongs the date of promulgation.
Article 2 (Application Examples Relating to Tax Reduction or Exemption)
(1)
The amended provisions of Articles 6 and 31 shall apply starting with a start-up first established or venture business first confirmed after the enforcement of this Act: Provided, That they shall apply starting with the taxable period first commences after January 1, 2001 with respect to the nationals that established a new enterprise after August 31, 1997, and has been confirmed as a venture business not later than August 30, 1999. In this case, this shall apply only to the remaining reduction or exemption period if any income first accrues on or before December 31, 2000.
(2)
The amended provisions of Article 63 shall apply starting with the portion of factory facilities first relocated after this Act enters into force.
Article 3 (Application Examples for Reserves, etc.)
(1)
The amended provisions of Article 8-2 shall apply starting with the taxable year whereto belongs the date this Act enters into force.
(2)
The amended provisions of Articles 60 and 61 shall apply starting with the portion first transferred after this Act enters into force.
Article 4 (Application Examples of Income Deduction)
(1)
The amended provisions of Article 16 shall apply starting with the portion of contributions or investments first made after this Act enters into force.
(2)
The amended provisions of Article 126-2 shall apply starting with the portion of payments by credit or debit cards first disbursed after the enforcement date of this Act. In this case, as regards the income deduction on the amount spent on credit cards, etc. from the date this Act enters into force to November 30, 1999, in case where the amount spent on credit cards, etc. exceeds 10/100 of the gross earned income during the same period, the amount equivalent to 10/100 of the excessive amount (up to a maximum of 1 million won) shall be deducted from the earned income for the relevant taxable year.
Article 5 (Application Examples of Equity Investment Tax Deduction)
The amended provisions of Articles 27 and 62 shall apply starting with equity investments or acquisitions made first after this Act enters into force.
Article 6 (Application Examples of Special Surtax Deferment)
(1)
The amended provisions of Articles 37, 47-2 and 49 shall apply starting with a merger first effected in the taxable year whereto belongs the date this Act enters into force.
(2)
The amended provisions of Articles 38 and 42 shall apply starting with investments in kind made in the taxable year whereto belongs the date this Act enters into force.
(3)
The amended provisions of Article 38-2 shall apply starting with investments in kind or transfers first effected after this Act enters into force.
(4)
The amended provisions of Article 39 shall apply starting with the portion of a guaranteed liabilities first assumed or performed after this Act enters into force.
(5)
The amended provisions of Article 44 shall apply starting with the taxable year whereto belongs the date this Act enters into force.
(6)
The amended provisions of Article 99 (1) shall apply starting with the portion first transferred on or after July 1, 1999.
Article 7 (Application Examples for Dividends of Securities Investment Companies)
The amended provisions of Article 91-2 shall apply starting with the taxable year whereto belongs the date this Act enters into force.
Article 8 (Application Examples of Value-Added Tax, etc.)
(1)
The amended provisions of Article 106 shall apply starting with the portion first supplied after this Act enters into force.
(2)
The amended provisions of Articles 112-2 and 113 shall apply starting with the portion first shipped out of factories or bonded areas after this Act enters into force.
Article 9 (Application Examples of Securities Transaction Tax)
The amended provisions of Article 117 shall apply starting with stocks or contribution shares first transferred after this Act enters into force.
Article 10 (Application Examples of Local Municipal Taxes)
The amended provisions of Articles 119 through 121 shall apply starting with the portion first acquired after this Act enters into force.
Article 11 (Application Examples of Duplicate Support Elimination)
The amended provisions of Articles 127, 128, 132, 144, 145 and 146 shall apply starting with the taxable year whereto belongs the date this Act enters into force.
Article 12 (Transitional Measures)
(1)
A small or medium enterprise subjected to the previous provisions of Articles 6 and 63 at the time this Act enters into force shall be governed by the previous provisions.
(2)
The acts performed by the Minister of Finance and Economy pursuant to the previous provisions of Article 50 (2) 1 prior to the enforcement of this Act shall be deemed the acts performed by the Chairperson of the Financial Supervisory Commission.
(3)
The addition to gross income of the reserves charged to deductible expenses pursuant to the previous provisions of Articles 58 and 59 at the time this Act enters into force, and additional collection thereof, shall be governed by the previous provisions.
(4)
In applying the amendments to Article 87 (2), the previous provisions shall apply to the savings deposited on or before December 31, 1998.

ADDENDA
Article 1 (Enforcement Date)
This Act shall enter into force on January 1, 2000: Provided, That the amended provisions of Articles 14, 16, 41-2, 44, 48 (4), 86 (2), 104-2, 117 (1) 2-2 and the amended provisions of subparagraph 3 of Article 4 of the Act on Special Rural Development Tax among the amended provisions of Article 16 of these Addenda, shall enter into force on the day of its promulgation, while the amendment to Articles 50, 72 (1) 2, 3, and 7, Articles 74 and 84 (excluding those concerning the farmland improvement cooperatives and the Agriculture Infrastructure Corporation), subparagraphs 5 and 6 of Article 105 and Article 116 shall enter into force on July 1, 2000, and the amended provisions of subparagraph 4 of Article 4 and Article 5 of the Act on Special Rural Development Tax among the amended provisions of Articles 89, 89-2 and 90 and the amended Article 16 of these Addenda shall enter into force on January 1, 2001.
Article 2 (General Application Examples)
(1)
The amended provisions concerning the income tax and corporate tax in this Act shall apply starting with the portion of taxable year first commencing after this Act enters into force.
(2)
The amended provisions concerning the capital gains tax and special surtax in this Act shall apply starting with the portion of a transfer first effected after this Act enters into force.
(3)
The amended provisions concerning the value-added tax in this Act shall apply starting with the portion of goods or services first supplied or purchased after this Act enters into force.
(4)
The amended provisions concerning the special consumption tax in this Act shall apply starting with the portion of taxable period first arriving after this Act enters into force.
(5)
The amended provisions concerning the stamp tax in this Act shall apply starting with the portion of taxable documents first prepared after this Act enters into force.
(6)
The amended provisions concerning the customs in this Act shall apply starting with the portion of imports first declared after this Act enters into force.
Article 3 (Application Examples of Exemption of Corporate Restructuring Cooperatives from Capital Gains Tax)
The amended provisions of Articles 14 and 16 shall apply starting with the portion of equity investments in a corporate restructuring cooperative, or of acquisition of stocks or contribution shares by such a cooperative during the taxable period whereto belongs the date this Act enters into force.
Article 4 (Application Examples of Non-residents' Income from Securities Transfer)
The amended provisions of Article 21 (3) shall apply starting with the portion of securities first transferred after this Act enters into force.
Article 5 (Application Examples of Special Cases of Taxation, etc. on Investment in Kind)
(1)
The amended provisions of Article 38 shall apply starting with the portion of investments in kind first made after this Act enters into force.
(2)
The amended provisions of Article 41-2 (1) and (2) shall apply starting with the portion of assets donated gratuitously during the business year first closed after this Act enters into force, and the amended provisions of the same Article (3) shall apply starting with the portion of assets first donated after the date on which a petition is filed for commencement of liquidation proceedings, etc.
(3)
The amended provisions of Article 44 shall apply starting with the portion of liabilities exempted in the business year closing first after this Act enters into force: Provided, That the decreased liability excluded from adding to gross income and included in ductible expenses which satisfy the requirements under each subparagraph of previous Article 44 (1) shall be governed by the previous provisions.
(4)
The amended provisions of Article 48 (4) shall apply starting with the portion of bad debt allowances charged to deductible expenses in the business year whereto belongs the date on which this Act enters into force.
(5)
The amended provisions of Article 120 (5) 8 shall apply starting with the portion of stocks first acquired after this Act enters into force.
Article 6 (Application Examples of Extraordinary Special Tax Reduction or Exemption for Corporations Relocated Outside Seoul Metropolitan Life Zone)
(1)
The amended provisions of Article 63-2 (2) shall apply starting with the portion of the taxable year whereto belongs the date on which a factory or head office is first relocated after this Act enters into force: Provided, That such cases are excluded where a site or building has been transferred prior to the enforcement of this Act, and such relocation is made after this Act enters into force.
(2)
The amended provisions of Article 63-2 (3) and (4) shall apply starting with the portion of first transfer after this Act enters into force: Provided, That such portions are excluded where a relocation is made prior to the enforcement of this Act and a transfer is effected after this Act enters into force.
Article 7 (Application Examples to Tax-favored Savings)
(1)
The amended provisions of Article 86 (2) shall apply starting with the portion of tax-favored savings terminated or withdrawn in other forms than annuity payments in the taxable period whereto belongs the date on which this Act enters into force.
(2)
The amended provisions of Article 89 shall apply starting with the portion of savings contracts first concluded after this Act enters into force.
(3)
The amended provisions of Article 90-2 shall apply starting with the portion of savings contracts first concluded or terminated after this Act enters into force.
Article 8 (Application Examples of Subsidies to Fishery Business Operators)
The amended provisions of Article 104-2 shall apply starting with the portion of subsidies granted or received in the taxable year whereto belongs the date on which this Act enters into force.
Article 9 (Application Examples to Value-Added Tax)
(1)
The amended provisions of subparagraph 3-2 of Article 105 shall apply starting with the portion of adoption of donations first made to the State or local governments after this Act enters into force.
(2)
The amended provisions of Article 107 shall apply starting with the portion of first supplied or purchased after this Act enters into force.
Article 10 (Application Examples to Securities Transaction Tax)
The amended provisions of Article 117 shall apply starting with the portion of stock certificates or equity shares first transferred after this Act enters into force.
Article 11 (Application Examples to Local Taxes)
The amended provisions of Articles 119 and 120 shall apply starting with the portion of registration or acquisition first effected after this Act enters into force.
Article 12 (Transitional Measures for Tax-favored Savings Subjected to Special Cases of Tax Withholding at Source)
(1)
Persons who establish the tax-favored savings accounts as of December 31, 2000 under the previous provisions of Article 89 (1) 1 (excluding the cases where the amended provisions of Article 89-2 are applicable), 3 (excluding the national stocks trust), 4, 5, 6 or 8 shall be deemed the holders of tax-favored comprehensive savings accounts under the amended provisions of Article 89. In case where the total contracted amount of said savings accounts exceeds the limit for tax-favored comprehensive savings under the amended provisions of Article 89 (1) 3, such excessive portion shall also be deemed the tax-favored comprehensive savings not later than the expiration of the same savings.
(2)
Any financial institutions handling the tax-favored comprehensive savings under paragraph (1) shall notify the tax-favored savings data center of the name and resident registration number by holder of the said savings account, and other particulars including the conclusion and termination of savings contracts, and right transfers not later than December 31, 2000.
(3)
Deleted.
Article 13 (Transitional Measures for Farmland Improvement Cooperatives, etc.)
In applying Article 84 (2), the use period of facilities by the previous farmland improvement cooperatives or their national federation at the time this Act enters into force, shall be considered the period used by the Agriculture Infrastructure Corporation.
Article 14 (Transitional Measures for Household Livelihood Fund Savings)
(1)
The provisions of previous Article 90 shall apply only to incomes accruing on or before December 31, 2000 from the household livelihood fund savings under the same Article.
(2)
The amended provisions of Article 90-2 shall apply to the tax-favored savings data on the household livelihood fund savings under the provisions of previous Article 90 (2).
Article 15 (Transitional Measures for Rental Fees of Social Infrastructure Facilities)
The previous provisions shall apply to the goods and services subjected to exemption from the value-added tax under the provisions of previous Article 106 (1) 5 at the time this Act enters into force.
Article 16 Omitted.
Article 17 (Application Examples following Amendments to Other Acts)
The amended provisions of subparagraph 3 of Article 4 of the Act on Special Rural Development Tax in the amended provisions of Article 16 of these Addenda, shall apply starting with the taxable year whereto belongs the date this Act enters into force, and the amended provisons of subparagraph 4 of Article 4 and Article 5 of the same Act shall apply starting with the portion of a payment of income accruing after January 1, 2001.
Article 18 (Transitional Measures following Amendments to Other Acts)
In the case of the reduction or exemption for the interest and dividend income accruing from the savings under the provisions of previous Article 89 (1) 4 from among the amended provisions of subparagraph 4 of Article 4 of the Act on Special Rural Development Tax, the previous provisions shall apply, not later than the expiry of the same savings, to the portion of opening an account for such savings until December 31, 2000.

ADDENDA

(1)
(Enforcement Date) This Act shall enter into force three months after the date of its promulgation.
(2)
Omitted.

ADDENDA
Article 1 (Enforcement Date)
This Act shall enter into force on January 1, 2000. (Proviso Omitted.)
Articles 2 through 20 Omitted.

ADDENDA
Article 1 (Enforcement Date)
This Act shall enter into force on the date of its promulgation.
Articles 2 and 3 Omitted.

ADDENDA
Article 1 (Enforcement Date)
This Act shall enter into force two months after the date of its promulgation.
Articles 2 through 7 Omitted.

ADDENDA
Article 1 (Enforcement Date)
This Act shall enter into force three months after the date of its promulgation.
Articles 2 through 4 Omitted.

ADDENDA
Article 1 (Enforcement Date)
This Act shall enter into force on the date of its promulgation: Provided, That the matters related to financial holding companies in the amended provisions of Articles 38, 52-2, 117, 119 and 120 shall enter into force on the date on which the Financial Holding Companies Act enters into force, while the amended provisions of Article 89 (2) shall enter into force on January 1, 2001.
Article 2 (Application Examples of Tax Credit for Improvement of Bill System)
The amended provisions of Article 7-2 (1) shall apply starting with the portion first settled or issued after this Act enters into force: Provided, That the portion issued before the enforcement date of this Act shall be excluded in calculating the amount under paragraph (1) 2 of the same Article.
Article 3 (Application Examples of Special Cases of Taxation on Corporate Division)
The amended provisions of Articles 45-2 and 106 (3) shall apply starting with the portion of a corporate division effected first after this Act enters into force.
Article 4 (Application Examples of Special Cases of Taxation on Incorporation of Financial Holding Companies)
The amended provisions of Article 52-2 shall apply starting with the portion of stocks transferred or exchanged first after this Act enters into force.
Article 5 (Application Examples of Special Cases of Taxation on Stock Transfer Margin, etc. of Corporate Restructuring Investment Companies)
The amended provisions of Article 55 (4) shall apply starting with the portion first transferred or dividend income first paid after this Act enters into force.
Article 6 (Application Examples of Special Cases of Taxation of Corporate Tax on Merger of National Agricultural Cooperative Federation, etc.)
The amended provisions of Article 72-2 shall apply starting with the business year whereto belongs the date this Act enters into force.
Article 7 (Application Examples of Inclusion in Deductible Expenses, etc. of Donation)
(1)
The amended provisions of Article 73 (1) 12 shall apply starting with the portion first disbursed after this Act enters into force.
(2)
The amended provisions of Article 74 (1) 10 shall apply starting with the portion of taxable year whereto belongs the date this Act enters into force.
Article 8 (Application Examples of Non-taxation on Livelihood Savings, etc.)
The amended provisions of Article 88-2 shall apply starting with the portion of savings accounts first opened after this Act enters into force, and the amended provisions of Article 88-3 shall apply starting with the portion of income first paid after this Act enters into force.
Article 9 (Application Examples of Exemption of Securities Transaction Tax for Korea Deposit Insurance Corporation)
The amended provisions of Article 117 (1) 8, 16 and 17 shall apply starting with the portion of stocks sold, transferred or exchanged first after this Act enters into force.
Article 10 (Application Examples of Exemption, etc. of Registration Tax)
The amended provisions of Article 119 (1) 18 through 20 and paragraph (6) of the same Article shall apply starting with the portion of registration first effected after this Act enters into force.
Article 11 (Application Examples of Exemption of Acquisition Tax)
The amended provisions of Article 120 (5) 8 and 11 shall apply starting with the portion of stocks or equity shares first acquired after this Acts enters into force.
Article 12 (Application Examples of Exclusion of Reduction or Exemption at Time of Estimated Taxation)
The amended provisions of the text of Articles 128 (1), 132 (1) 3, 144 (1) and 145 (1) shall apply starting with the portion of taxable year whereto belongs the date this Act enters into force.
Article 13 Omitted.
Article 14 (Application Examples following Amendments to Other Acts)
The amended provisions of Article 13 of these Addenda shall apply starting with the portion of income first paid after this Act enters into force.

ADDENDA
Article 1 (Enforcement Date)
This Act shall enter into force on January 1, 2001: Provided, That the amended provisions of Articles 6, 72-2 (2) and 88-6 shall enter into force on its promulgation date, the portions concerning the donations in the amended provisions of Article 72 (1) and (4), on January 1, 2003, the amended provisions of Article 106-2, on January 1, 2002, and the amended provisions of Articles 121-2 (9), 121-5 (1) 1, (2) 1 and (3) 3, on February 1, 2001.
Article 2 (General Application Examples)
(1)
The amended provisions concerning the income tax and corporate tax in this Act shall apply starting with the portion of taxable year first starting after this Act enters into force.
(2)
The amended provisions concerning the capital gains tax and special surtax in this Act shall apply starting with the portion first transferred after this Act enters into force.
(3)
The amended provisions concerning the value-added tax in this Act shall apply starting with the portion of goods or services first supplied or purchased, goods declared for import after this Act enters into force.
(4)
The amended provisions concerning the special consumption tax in this Act shall apply starting with the portion first shipped out of a manufacturing place or a bonded area, or declared for import after this Act enters into force.
Article 3 (Application Examples of Tax Deduction on Small or Medium Enterprise's Investments)
The amended provisions of Articles 5 (1), 24, 25 and 25-2 shall apply starting with the portion first invested after this Act enters into force.
Article 4 (Application Examples of Tax Reduction on Small or Medium Start-up Enterprises, etc.)
The amended provisions of Article 6 shall apply starting with the taxable year whereto belongs the enforcement date of this Act.
Article 5 (Application Examples of Tax Reduction or Exemption, etc. on Technology Transfer Income)
The amended provisions of Article 12 shall apply starting with the portion first transferred, leased, provided or acquired after this Act enters into force.
Article 6 (Application Examples of Non-taxation, etc. on Stock Transfer Margin by Small or Medium Start-up Business Investment Companies, etc.)
The amended provisions of Article 13 (excluding paragraph (1) 3 of the same Article) and Article 14 shall apply starting with the portion of stocks or contribution shares first acquired after this Act enters into force, and the amended provisions of Article 13 (1) 3 shall apply starting with the portion of stocks or contribution shares first transferred after this Act enters into force.
Article 7 (Application Examples of Special Cases of Taxation on Stock Option)
The amended provisions of Article 15 shall apply starting with the portion of income accruing from exercising the stock option first granted after this Act enters into force.
Article 8 (Application Examples for Interest Income from Social Infrastructure Bonds)
The amended provisions of Article 29 shall apply starting with the portion of income first received after this Acts enters into force.
Article 9 (Application Examples for Payment of Abated or Exempted Capital Gains Tax and Others and Amount Equivalent to Interest Thereof)
The amended provisions concerning the payment of the reduced or exempted tax and an amount equivalent to interest thereof in the amended provisions of Articles 33, 35 through 37, 40, 42, 46, 60, 61, 63-2, 66, 67, 70, 71, 77, 79 through 81, 82 and 83, shall apply starting with the portion for which the relevant cause first occurs after this Act enters into force.
Article 10 (Application Examples for Incorporation, etc. of Holding Companies Due to Investment in Kind or Exchange of Stocks)
The amended provisions of Articles 38 and 38-2 shall apply starting with the portion of stocks invested in kind or exchanged first after this Act enters into force.
Article 11 (Application Examples of Special Cases of Taxation of Corporate Tax on Transfer Margin of Land, etc. Acquired for Support of Corporate Restructuring)
The amended provisions of Article 43-2 shall apply starting with the taxable year whereto belongs the date on which the land, etc. are first transferred after this Acts enters into force.
Article 12 (Application Examples of Special Cases of Taxation, etc. on Corporate Division)
The amended provisions of Articles 45-2 and 106 (3) shall apply starting with the portion first divided or converted into equity investment after this Act enters into force.
Article 13 (Application Examples of Tax Reduction or Exemption, etc. on Corporations Relocated Outside Seoul Metropolitan Life Zone or Project Executors in Abandoned Mine Promotion Zone)
(1)
The amended provisions of Article 63-2 (excluding paragraph (7) of the same Article) shall apply starting with the portion of factories or head offices first relocated after this Act enters into force.
(2)
The amended provisions of Article 64 (1) 2 shall apply starting with the portion of projects first started for locating in the abandoned mine promotion zone after this Act enters into force.
Article 14 (Application Examples for Investment of Grassland in Kind)
The provisions of Articles 66 (4) and 68 (2) shall apply starting with the portion of grassland first invested in kind to a agricultural partnership corporation or an corporation of agricultural business after this Act enters into force.
Article 15 (Application Examples of Special Cases of Taxation of Corporate Tax on National Agricultural Cooperatives Federation)
The amended provisions of Article 72-2 (2) shall apply starting with the taxable year whereto belongs the promulgation date of this Act.
Article 16 (Application Examples of Charging Donation to Deductible Expenses)
The amended provisions of Article 73 shall apply starting with the portion first disbursed after this Act enters into force.
Article 17 (Application Examples of Special Cases of Taxation of Gift Tax Imposition following Dissolution of School Corporation)
The amended provisions of Article 81-2 shall apply starting with the portion first determined after this Act enters into force.
Article 18 (Application Examples of Income Deduction, etc. for Pension Savings)
(1)
The amended provisions of Article 86 (2) and (6) shall apply starting with the portion of private pension savings accounts first transferred after this Act enters into force.
(2)
The amended provisions of Article 86-2 shall apply starting with the portion of savings accounts first opened after this Act enters into force.
Article 19 (Application Examples for Tax-exempted Savings and Low-tax Savings, etc.)
(1)
The amended provisions of Article 87 shall apply starting with the portion of savings accounts first terminated after this Act enters into force.
(2)
The amended provisions of Article 88-2 (1) shall apply starting with the portion of savings accounts first opened after this Act enters into force.
(3)
The amended provisions of Articles 88-4 and 88-5 shall apply starting with the portion of dividend income first paid after this Act enters into force.
(4)
The amended provisions of Article 88-6 shall apply starting with the portion of savings accounts first opened in the taxable year whereto belongs the promulgation date of this Act.
(5)
The amended provisions of Article 89-3 shall apply starting with the portion of income first accruing after this Act enters into force.
(6)
The amended provisions of Article 90-2 shall apply starting with the portion of tax-favored savings data for which a submission duty first effected after this Act enters into force.
(7)
The amended provisions of Article 91-2 (1) shall apply starting with the portion of income first accrued and paid after this Act enters into force, and the amended provisions of paragraph (6) of the same Article shall apply starting with the portion of profits first distributed or the portion of payment made for repurchase after this Act enters into force.
(8)
The amended provisions of Article 92 shall apply starting with the portion of income first paid after this Act enters into force.
Article 20 (Application Examples of Special Cases of Taxation of Capital Gains Tax following Transfer of Houses for Acquisition of Newly-built Houses)
The amended provisions of Article 99-2 shall apply starting with the portions first transferred on or after September 1, 2000.
Article 21 (Application Examples of Inclusion of Treasury Stock Disposal Loss Reserves in Deductible Expenses)
The amended provisions concerning Article 104-3 in Articles 104-3 and 132 (1) 1 shall apply starting with the portion first reported after this Act enters into force.
Article 22 Deleted.
Article 23 (Application Examples of Exemption of Stamp Tax)
The amended provisions of Article 116 shall apply starting with the portion of taxable documents first prepared after this Act enters into force.
Article 24 (Application Examples of Abatement of Customs)
The amended provisions of Article 118 (1) 10 shall apply starting with the portion first declared for import after this Act enters into force.
Article 25 (Application Examples of Exemption of Registration Tax and Acquisition Tax)
The amended provisions of Articles 119 and 120 shall apply starting with the portion first registered or acquired after this Act enters into force.
Article 26 (Application Examples of Foreigner's Investment Ratio in Case of Merger of Foreign-invested Enterprises)
The amended provisions of the latter part of Article 121-2 (2) shall apply starting with the portion of merger first effected after this Act enters into force.
Article 27 (Application Examples of Application for Tax Reduction or Exemption after Lapse of Application Period for Foreign-invested Enterprises, etc.)
The amended provisions of Article 121-2 (10) or 121-6 (3) shall apply starting with the portion first applied for tax reduction or exemption after this Act enters into force.
Article 28 (Application Examples of Elimination of Overlapped Support of Capital Gains Tax, etc.)
The amended provisions of Article 127 (7) shall apply starting with the portion first applied for reduction or exemption of the capital gains tax or special surtax after this Act enters into force.
Article 29 (Special Cases of Exemption of Value-added Tax on Retail Business, etc. by Organizations Performing Government Affairs in Proxy)
The exemption of value-added tax on "those prescribed by Presidential Decree among the items listed in subparagraph 6" in the text of previous Article 106 (1) shall be applied only to the portions supplied not later than June 30, 2001, notwithstanding the previous time limit applicable.
Article 30 Deleted.
Article 31 (Transitional Measures for Inclusion of Business Loss Reserves in Deductible Expenses)
The amended provisions of Article 8-2 shall apply to small or medium enterprises, whose stocks are listed on the Korea Stock Exchange or registered with the Korea Securities Dealers Association (KOSDAQ) at the time this Act enters into force, by treating them as listed or registered on the date on which this Act enters into force.
Article 32 (Transitional Measures for Tax Deduction, etc. on Technology and Manpower Development Expenses)
(1)
The amended provisions of Articles 9 and 10 shall apply to the amount incurred, but not disbursed, among technology development reserves under the provisions of previous Article 9 or technology and manpower development expenses under Article 10, by treating them as having incurred in the taxable year first commenced after this Act enters into force.
(2)
The previous provisions of subparagraphs 3 and 6 of Article 146 shall apply to the additional collection of amounts deducted under the previous provisions of Articles 27, 27-2, 65 (2), 103 and 126 at the time this Act enters into force.
Article 33 (Transitional Measures for Inclusion of Energy-saving Facility Investment Reserves in Deductible Expenses)
The previous provisions shall apply to the inclusion in gross income of the reserves charged to deductible expenses pursuant to the previous provisions of Article 30 at the time this Act enters into force. In this case, the amended provisions of Article 4 (4) shall apply mutatis mutandis to the payment of additional amount equivalent to the interest on the amount added to gross income.
Article 34 (Transitional Measures for Additional Collection, etc. of Abated or Exempted Special Surtax, etc.)
The previous provisions shall apply to the additional collection of the special surtax or capital gains tax reduced or exempted pursuant to the previous provisions of Articles 38-2 and 46-2 at the time this Act enters into force: Provided, That the amended provisions of Article 33 (2) and (4) shall apply mutatis mutandis in case where an event falling under any of the subparagraphs of previous Articles 38-2 (3) and 46-2 (2) occurs after this Act enters into force.
Article 35 (Transitional Measures for Reduction or Exemption of Special Surtax for Support of Corporate Financial Restructuring)
Notwithstanding the amended provisions of Article 37 (1), the amount equivalent to special surtax shall be exempted where land, etc. are transferred not later than December 31, 2001 according to a plan for improvement of financial structure or corporate improvement program approved under the previous provisions of Article 37 (1) at the time this Act enters into force.
Article 36 (Transitional Measures for Special Cases of Taxation, etc. on Corporate Division)
Corporate improvement programs approved by the corporate restructuring committee under the previous provisions of Article 45-2 at the time this Act enters into force shall be regarded as approved by the creditor financial institutions consultative council under this Act.
Article 37 (Transitional Measures for Tax Reduction or Exemption for Newly-built Hospitals in Poor Medical Service Area)
The previous provisions shall, only for the remaining tax reduction period, apply to the clinics and general hospitals subject to the previous provisions of Article 65 (1) at the time this Act enters into force.
Article 38 (Transitional Measures for Deposits in Cooperatives, etc.)
(1)
Account holders for deposit in cooperatives, etc. under the amended provisions of Article 89-3 as of December 31, 2004 shall be treated as having established a tax-favored comprehensive savings account under Article 89, but where the total sum of the said deposit and the contract amount of tax-favored comprehensive savings exceeds the limit of tax-favored comprehensive savings under Article 89 (1) 3, such excessive portions shall also be treated as the tax-favored comprehensive savings not later than the expiration of such deposit account.
(2)
Financial institutions handling the deposits in cooperatives, etc. shall notify the tax-favored savings data center of the account holder's name, resident registration number, conclusion or termination of savings contracts, and details of rights transfer under Article 89 (2) not later than December 31, 2004.
Article 39 (Transitional Measures for Additional Collection of Abated or Exempted Special Consumption Tax)
The previous provisions of Article 113 (1) shall apply to the additional collection of the special consumption tax exempted under the previous provisions of subparagraphs 9 and 10 of Article 109 at the time this Act enters into force.
Article 40 (Transitional Measures for Exemption of Registration Tax and Acquisition Tax)
The previous provisions of Articles 119 (1) 7 and 120 (1) 6 shall apply to the exemption of registration tax and acquisition tax on the assets acquired through a corporate division under the previous provisions of Article 38-2 at the time this Act enters into force.
Article 41 (Transitional Measures for Elimination, etc. of Overlapping Tax Deduction on Energy-saving Facility Investment)
The previous provisions of Articles 127, 128, 132, 144 and 145 shall apply to the reduced or exempted tax under the amended provisions of Article 25-2 in the taxable years that start before an enforcement of this Act and end after an enforcement of this Act, by treating such tax as having been reduced or exempted under previous Article 25.
Article 42 (Transitional Measures for Tax Reduction or Exemption for Foreigners' Investment)
In applying the amended provisions of Article 121-2 (10) or 121-6 (3), where applications for tax reduction or exemption are filed before this Act enters into force, but a decision on tax reduction or exemption or a verification of tax exemption has not been obtained not later than the date this Act enters into force, such applications for tax reduction or exemption and for tax exemption shall be regarded as having been filed on the date this Act enters into force.
Article 43 (Transitional Measures for Post Management of Taxes Abated or Exempted for Small Businesses, etc.)
The reduced or exempted tax amount (excluding the amount falling under each subparagraph of previous Article 145 (4) and the text of previous Article 145 (6)) subjected to the provisions of previous Article 145 (1) and (6) at the time this Act enters into force for the small or medium corporations, shall be deemed to have been first reduced or exempted in the taxable year first commencing after the enforcement of this Act, but notwithstanding the amendments to Article 145 (5), it shall be used for an investment in the fixed assets or for repaying the borrowings not later than the end of the taxable year whereto belongs December 31. 2005.

ADDENDA
Article 1 (Enforcement Date)
This Act shall enter into force on September 1, 2001.
Articles 2 and 3 Omitted.

ADDENDA
Article 1 (Enforcement Date)
This Act shall enter into force on January 1, 2001.
Articles 2 through 8 Omitted.

ADDENDA
Article 1 (Enforcement Date)
This Act shall enter into force on January 1, 2001. (Proviso Omitted.)
Articles 2 through 12 Omitted.

ADDENDA
Article 1 (Enforcement Date)
This Act shall enter into force on the date of its promulgation.
Articles 2 through 6 Omitted.

ADDENDA
Article 1 (Enforcement Date)
This Act shall enter into force on the date of its promulgation: Provided, That the amended provisions of Articles 106 (1) 4-2, 119 (6) shall enter into force on July 1, 2001, and the amended provisions of Article 106 (1) 4-3 on January 1, 2004.
Article 2 (Application Examples to Special Cases for Inclusion in Losses of Proper Purpose Business)
The amended provisions of Articles 74 (3) shall apply to the portion of incomes first accruing after the enforcement date of this Act.
Article 3 (Application Examples to Employee Stock Ownership Dividend Income and Long-held Stocks Dividend Income)
The amended provisions of Articles 88-4 and 91 shall be applied to the portion of incomes first paid after the enforcement date of this Act.
Article 4 (Application Examples to Special Cases of Taxation on Electronic Over-the-counter Transactions)
The amended provisions of Article 104-4 shall be applied to the portion of transfer of stocks first made after the enforcement date of this Act.
Article 5 (Application Examples to Exemption of Value-Added Tax)
The amended provisions of Article 106 shall be applied to the portion of services first provided after the enforcement date of this Act.
Article 6 (Application Examples to Exemption of Securities Transaction Tax)
The amended provisions of Article 117 shall be applied to the portion of transfer of stocks first made after the enforcement date of this Act.
Article 7 (Application Examples to Exemption, etc. of Registration Tax)
The amended provisions of Article 119 shall be applied to the portion of establishment registration first made after the enforcement date of this Act.

ADDENDA
Article 1 (Enforcement Date)
This Act shall enter into force on the date of its promulgation: Provided, That the amended provisions of Article 7-2 shall enter into force on November 1, 2001.
Article 2 (Application Example to Tax Credit for Improvement of Enterprise's Bill Systems)
The amended provisions of Article 7-2 shall apply from the portion of first using the corporate card meant exclusively for paying business purchases on or after November 1, 2001.
Article 3 (Application Example to Special Refund Example, etc. by Retroactive Deduction of Losses of Small or Medium Business)
The portions related to the investment loss reserves among the amended provisions of Article 8-3 and of Article 55-2 shall apply from the portion of taxable year whereto belongs the date of promulgation of this Act.
Article 4 (Application Example to Temporary Investment Tax Credit)
The amended provisions of Article 26 (2) through (4) shall apply from the portion of intermediate prepayment first made after the enforcement of this Act.
Article 5 (Application Example to Reduction or Exemption of Transfer Tax or Special Surtax)
(1)
The portions related to Article 94 (1) 3 of the Income Tax Act among the amended provisions of Article 55 (4), 55-2 (3) and 55-2 (4) and the amended provisions of Articles 56, 78 (1) 11 and 14 and 99-3 (1) shall apply from the portion first transferred after the enforcement of this Act.
(2)
The amended provisions of Article 78 (2) shall apply from the portion first commencing the lease on or after May 7, 2001.
Article 6 (Application Example to Dividend Income Paid to Investors in Real Estate Investment Company)
The portion related to the dividend among the amended provisions of Article 55-2 (4) shall apply from the portion of dividend first accruing after the enforcement of this Act.
Article 7 (Application Example to Non-taxation, etc. on High-income High-risk Trust Savings)
The amended provisions of Article 87-2 shall apply from the portion of savings first opened after the enforcement of this Act.
Article 8 (Application Example to Exemption, etc. of Registration Tax and Acquisition Tax)
(1)
The amended provisions of Article 119 (1) and (7) shall apply from the portion of registration first filed after the enforcement of this Act.
(2)
The amended provisions of Articles 119 (6) and 120 (4) shall apply from the portion of acquisition first made after the enforcement of this Act.
Article 9 (Application Example to Tax Credit on Increase of Revenue Amount, etc.)
The amended provisions of Article 122 shall apply to the portion of revenue amount by credit card for the taxable year whereto belongs the date of promulgation of this Act.
Article 10 (Application Example to Income Deduction for Amounts of Using Credit Card, etc.)
The amended provisions of Article 126-2 (1) shall apply to the portion of using the credit cards or debit cards in the taxable year whereto belongs the date of promulgation of this Act.
Article 11 (Transitional Measures on Amounts Using Corporate Card Meant Exclusively for Paying Business Purchases)
With respect to the amount using the corporate card meant exclusively for paying business purchases which have been used at the time of enforcement of the amended provisions of Article 7-2, the previous provisions shall govern, notwithstanding the amended provisions of Article 7-2.
Article 12 (Transitional Measures on Reduction or Exemption of Special Surtax following Transfer of Apartment-type Factory)
Where the Small Business Corporation transfers on or before December 31, 2003 to the end-user occupants the apartment-type factory built by it on or before May 7, 2001 under the Industrial Placement and Factory Construction Act, the previous provisions shall govern with respect to the reduction or exemption of special surtax, notwithstanding the amended provisions of Article 78 (1).
Article 13 (Transitional Measures on Reduction or Exemption of Capital Gains Tax on Acquisitor of Newly-built House)
Where any person has acquired a newly-built house under the previous provisions of Article 99-3 (1) on or before May 23, 2001, and transfers the said house after the enforcement of this Act, the previous provisions shall govern with respect to the reduction or exemption of capital gains tax and the calculation of revenue amounts subject to imposition of transfer tax, notwithstanding the amended provisions of Article 99-3 (1).

ADDENDA
Article 1 (Enforcement Date)
This Act shall enter into force on January 1, 2002.
Articles 2 through 7 Omitted.

ADDENDA

(1)
(Enforcement Date) This Act shall enter into force on the date of its promulgation.
(2)
(Application Examples to Tax Deduction and Non-Taxation on Long-Term Stocks Savings) The amended provisions of Article 87-3 shall be applicable from the portion of deposits paid in the taxable year whereto belongs the enforcement date of this Act.

ADDENDA
Article 1 (Enforcement Date)
This Act shall enter into force on January 1, 2002: Provided, That the amendments to Articles 5-2,15 (1) and (2), 16 (3), 23 (1), 38 (3) through (5), 38-3, 45-2, 72-2 (2), 73 (1) 15, 74 (1) 12, 86-2 (10), 88-5 (2), 89 (1), 117 (1) 4 through 6, 10 and 18, 119 (1) 18, and 144 (2) shall enter into force on the date of its promulgation, the amendment to Article 106-2 (3) and (4) on July 1, 2002, and the amendments to Articles 106 (2) 2, 121-2 (excluding the portion concerning investment ratio of foreigners in the former part of paragraph (2)), and 121-5 on January 1, 2003, respectively.
Article 2 (General Application Examples)
(1)
The amendments to the income tax and corporate tax from among this Act shall apply starting with the taxable year first commencing after this Act enters into force.
(2)
The amendments to the capital gains tax from among this Act shall apply starting with the portion of transfer first made after this Act enters into force.
(3)
The amendments to the value-added tax from among this Act shall apply starting with the portion of supply, or being supplied, of goods or services, or the portion of goods declared for import, first made after this Act enters into force.
(4)
The amendments to the special consumption tax and traffic tax from among this Act shall apply starting with the portion of carried out from the manufacturing place of bonded area, or the portion of import declaration, first made after this Act enters into force.
(5)
The amendments to the stamp tax from among this Act shall apply starting with the portion of preparing the taxable documents, first made after this Act enters into force.
(6)
The amendments to the securities transaction tax from among this Act shall apply starting with the portion of transferring the stocks or equity shares, first made after this Act enters into force.
(7)
The amendments to the customs duties from among this Act shall apply starting with the portion of import declaration, first made after this Act enters into force.
(8)
The amendments to the acquisition tax and registration tax from among this Act shall apply starting with the portion of acquisition or registration, first made after this Act enters into force.
Article 3 (Application Examples to Tax Credit, etc. for Investments of Small or Medium Enterprises)
The amendments to Articles 5 (1), 11 (1), 24 (1) and 130 (excluding the portion concerning business places) shall apply starting with the portion of investments after September 3, 2001, which is the portion of tax base return (excluding a return after term under Article 45-3 of the Framework Act on National Taxes), first made after this Act enters into force.
Article 4 (Application Examples to special cases of taxation on Supporting Projects for Informatization of Small or Medium Enterprises)
The amendments to Article 5-2 shall apply from the taxable year whereto belongs the date of promulgation of this Act.
Article 5 (Application Examples to Reduction or Exemption of Tax Amount for Start-up Small or Medium Enterprises, etc.)
The amendments to Article 6 (4) shall apply from the portion of commencing a business after this Act enters into force.
Article 6 (Application Examples to Tax Credit for Improving Enterprises' Note Systems, etc.)
(1)
The amendments to Article 7-2 shall apply from the portion of paying the purchase price by using an exclusive-use card for business purchase or by utilizing a loan system on security of credit sale claims, first made after this Act enters into force.
(2)
The amendments to Article 7-3 shall apply from the portion of purchase first made after this Act enters into force.
Article 7 (Application Examples to Non-taxation, etc. on Transfer Margin of Stocks of Specialized Investment Association for Component and Material)
The amendments to Articles 13 and 14 (1) 6, (2), (4) 4 and (5) shall apply from the portion of acquiring the stocks or equity shares or of being paid the dividend income first made after this Act enters into force, and the amendments to the text of other portions than each subparagraph of Article 14 (1) shall apply from the portion of transferring the stocks or equity shares, first made after this Act enters into force.
Article 8 (Application Examples to Special Cases of Taxation on Stock Options)
The amendments to Article 15 (1) and (2) shall apply from the portion of being granted in the taxable year whereto belongs the date of promulgation of this Act.
Article 9 (Application Examples to Income Deduction for Investment to Small or Medium Enterprise Start-up Investment Association)
(1)
The amendments to Article 16 (1) shall apply from the portion of contribution or investment fist made after this Act enters into force.
(2)
The amendments to Article 16 (3) shall apply from the portion of contribution or investment in the taxable year whereto belongs the date of promulgation of this Act.
Article 10 (Application Examples to Special Case of Inclusion of Transfer Margin of International Ships in Deductible Expenses)
(1)
The amendments to Articles 23 (1), 38 (3) through (5) and 45-2 shall apply from the taxable year whereto belongs the date of promulgation of this Act.
(2)
The amendments to Article 34 shall apply from the portion of business conversion first made after this Act enters into force.
Article 11 (Application Examples to Special Cases of Taxation on Investment in Kind of Stocks of Foreign Affiliates of Domestic Corporation)
The amendments to Article 38-3 shall apply from the portion of investment in kind in the business year whereto belongs the date of promulgation of this Act.
Article 12 (Application Examples to Special Cases of Taxation on Corporate Restructuring Specialization Company, etc.)
(1)
The amendments to Article 55 (1) shall apply from the portion of transferring the stocks or equity shares or of being paid the dividend income, first made after this Act enters into force.
(2)
The amendments to Article 55-2 (4) shall apply from the portion of lease income accruing in the business year commenced first after this Act enters into force. In this case, if the lease income first accrues before December 31, 2001, it shall apply only to the remaining reduction of exemption period.
Article 13 (Application Examples to Tax Credit for Small or Medium Enterprises Relocating to Other Area than Seoul Metropolitan Area and Corporation Relocating to Other Area than Seoul Metropolitan Life Zone)
The amendments to Articles 63 and 63-2 (1) shall apply to the portion of relocating a factory or main office, first made after this Act enters into force.
Article 14 (Application Examples to Special Cases of Taxation of Corporate Tax on Merger of National Agricultural Cooperatives Federation, etc.)
The amendments to Article 72-2 (2) shall apply from the portion of being paid in the business year whereto belongs the date of promulgation of this Act.
Article 15 (Application Examples to Special Case of Inclusion of Donations and Proper Purpose Business Reserves in Deductible Expenses)
(1)
The amendments to Article 73 (1) (excluding subparagraph 15) shall apply from the portion of disbursement first made after this Act enters into force.
(2)
The amendments to Articles 73 (1) 15 and 74 (1) 12 shall apply from the portion of disbursement or of inclusion in deductible expenses in the taxable year whereto belongs the date of promulgation of this Act.
Article 16 (Application Examples to Income Deduction of Annuity Savings)
The amendments to Article 86-2 (10) shall apply from the portion of payment in the taxable year whereto belongs the date of promulgation of this Act.
Article 17 (Application Examples to Special Cases of Taxation on Members of Employee Stock Ownership Association, etc.)
The amendments to Article 88-4 shall apply from the portion of contribution first made after this Act enters into force.
Article 18 (Application Examples to Special Cases of Taxation on Equity Investments in Cooperatives, etc. and Tax-favored Comprehensive Savings)
The amendments to Articles 88-5 (2) and 89 (1) shall apply from the portion of incomes accruing in the taxable year whereto belongs the date of promulgation of this Act.
Article 19 (Application Examples to Exemption of Securities Transaction Tax for Stocks, etc. of Electronic Over-the-counter Transactions)
(1)
The amendments to Articles 117 (1) 4 through 6, 10 and 18 shall apply from the portion of transfer first made in the taxable year whereto belongs the date of promulgation of this Act.
(2)
The amendments to Article 117 (1) 14 and (2) 3 shall apply from the portion of a decision or revision first made after this Act enters into force.
Article 20 (Application Examples to Exemption of Local Tax)
(1)
The amendments to Article 119 (1) 18 shall apply from the portion of the business year whereto belongs the date of promulgation of this Act.
(2)
The amendments to Articles 119 (1) 21, 22 and 120 (1) 17 and 18 shall apply from the portion of a registration or acquisition first made after this Act enters into force by the corporation first established after this Act enters into force.
Article 21 (Application Examples to Reduction or Exemption of Corporate Tax, etc. for Foreign Investments)
(1)
The amendments to Articles 121-2 (excluding the portion concerning the ratio of foreign investments in the former part of paragraph (2)) and 121-5 shall apply from the portion of foreign investments first reported after January 1, 2003.
(2)
The portion concerning the ratio of foreign investments from among the amendments to the former part of Article 121-2 (2) shall apply from the portion of investments first made after this Act enters into force.
Article 22 (Application Examples to Exclusion of Tax Reduction or Exemption for Investments within Seoul Metropolitan Area)
The portion concerning business places from among the amendments to Article 130 (1) shall apply from the portion of commencing a business by newly installing a business place within the Seoul Metropolitan area or of installing by relocating the existing business place, first made after this Act enters into force.
Article 23 (Application Examples to Carried-Over Deduction of Tax Deduction Amount)
The amendments to Article 144 (2) shall apply from the portion subjected to a deduction in the taxable year whereto belongs the date of promulgation of this Act.
Article 24 (Application Examples to Accumulation for Business Rationalization Reserve)
(1)
The amendments to Article 145 (5) shall apply from the portion of repayment of the borrowings first made after this Act enters into force.
(2)
The amendments to Article 146 shall apply from the portion of revision first made after this Act enters into force.
Article 25 (Transitional Measures for Reduction or Exemption, etc. of Carried-over Taxation and Capital Gains Tax, etc.)
(1)
With regard to the transfer subject to the carried-over taxation under previous Article 2 (1) 6 at the time of enforcement of this Act, the previous provisions shall govern, notwithstanding the amendments to Article 2 (1) 6.
(2)
With regard to the reduction or exemption, carried-over taxation, deferment of taxation and additional collection of capital gains tax and special surtax in the case of transfer of land, etc. under previous Articles 33, 35 through 38, 42, 43, 46-2, 48, 50, 51, 55-2 (3), 56, 60, 61, 63-2, 69 through 71, 77 through 81, 82 through 85, 97 and 97-2, the previous provisions shall govern.
(3)
The reduction or exemption of capital gains tax for a person who has acquired on and before December 31, 1999 the real estate subject to reduction or exemption of capital gains tax or special surtax under the provisions of previous Articles 36 (1), 37 (1) and 42 (1), shall be governed by the previous provisions, notwithstanding the amendments to Article 43.
Article 26 (Transitional Measures for Tax Reduction or Exemption for Business-converted Small or Medium Enterprises)
With regard to a person subjected to previous Article 34 (1) at the time of enforcement of this Act, the previous provisions shall apply, notwithstanding the amendments to Article 34 (1).
Article 27 (Transitional Measures for Special Cases of Taxation on Corporate Restructuring Securities Investment Company)
With regard to an inclusion in gross income of the securities investment loss reserves which have been included in deductible expenses under previous Article 54 (1) and (2) at the time of enforcement of this Act, the previous provisions shall govern, notwithstanding the amendments to Article 54 (1) and (2).
Article 28 (Transitional Measures for Exemption of Capital Gains Tax for Self-Cultivating Farmland)
(1)
With regard to an exemption of capital gains tax on the transfer of farmland subjected to an incorporation into other living area, commercial area or industrial area under the provisions of the Urban Planning Act, or to a designation of scheduled land substitution as other land than farmland before the disposition of land substitution under the Urban Development Act and other Acts, the previous provisions shall govern, notwithstanding the amendments to the proviso of Article 69 (1).
(2)
With regard to the integrated limit of reduction or exemption of capital gains in case where a resident has been subjected to reduction or exemption of capital gains tax on the capital gains (including the capital gains under paragraph (1)) accruing from the transfer of self-cultivating farmland under the amendments to Article 69 from January 1, 2002 to December 31, 2003, the previous provisions shall govern, notwithstanding the amendments to Article 133 (2) and (3). In this case, the term "300 million won" in Article 133 (2) and (3) shall be read as "200 million won".
Article 29 (Transitional Measures for Reduction or Exemption of Apartment-style Factory)
With regard to a resident subjected to a construction permit for building an apartment-style factory at the time of enforcement of this Act, the previous provisions shall govern, notwithstanding the amendments to Article 78 (2) and (3).
Article 30 (Transitional Measures for Withholding Tax on House Purchase Savings)
With regard to the house purchase savings subscribed not later than December 31, 2001 under previous Article 89-2, the previous provisions shall govern not later than the maturity of relevant savings contract, and with regard to the relevant interest incomes, they shall not be included in the tax base for global incomes, notwithstanding Article 14 of the Income Tax Act.
Article 31 (Transitional Measures for Income Deduction for Livestock Industry)
(1)
With regard to a national carrying on the livestock industry under previous Article 101 (1) at the time of enforcement of this Act, the previous provisions shall govern, notwithstanding the amendments to Article 101.
(2)
Where a national carrying on the livestock industry is subjected to income deduction under paragraph (1), he/she shall not be subject to the special tax reduction or exemption for a small or medium enterprise under Article 7 and the tax credit for temporary investment under Article 26.
Article 32 (Transitional Measures for Additional Collection of Abated or Exempted Tax Amount of Special Consumption Tax)
(1)
With regard to an exemption of special consumption tax on those imported from foreign countries as the domestic production under previous subparagraphs 7, 8 and 13 of Article 109 is difficult, the previous provisions shall govern only on the portion of being carried out from the bonded area, or of being declared for importation, not later than December 31, 2003.
(2)
With regard to the additional collection of special consumption tax which has been subjected to, or is to be subjected to, an exemption under previous Article 109 at the time of enforcement of this Act, the provisions of previous Article 113 (1) and (3) shall govern.

ADDENDA
Article 1 (Enforcement Date)
This Act shall enter into force on the date of its promulgation: Provided, That the amended provisions of Article 121-13 shall enter into force on September 1, 2002.
Article 2 (Application Example to Special Cases of Taxation on Incomes Generated from Domestic Sources of Non-Residents, etc. Related to 2002 FIFA World Cup)
The amended provisions of Article 104-5 shall apply from the portion of incomes paid first after the enforcement of this Act.
Article 3 (Application Example to Reduction or Exemption, etc. of Corporate Tax, etc. on Companies Located in Jeju High-tech Science and Technology Complex)
(1)
The amended provisions of Articles 121-8 (1) and 121-9 (2) shall apply from the taxable year whereto belongs the enforcement date of this Act.
(2)
The amended provisions related to the acquisition tax and registration tax from among the amended provisions of Article 121-9 (3) shall apply from the portion of first acquisition after the enforcement of this Act, and the amended provisions related to the property tax shall apply to the portion of constituting the tax liability first after the enforcement of this Act.
Article 4 (Application Example to Special Case of Indirect Tax, etc. on Duty-free Shops for Nationals in Jeju-do)
(1)
The amended provisions related to value-added tax from among the amended provisions of Article 121-13 shall apply from the portion of supplying the goods or receiving them or of filing an import declaration first after September 1, 2002.
(2)
The amended provisions related to the special consumption tax, liquor tax and tobacco consumption tax from among the amended provisions of Article 121-13 shall apply from the portion of goods carried out from a manufacturing place or of filing an import declaration first after September 1, 2002.
Article 5 (Application Example to Special Case of Special Consumption Tax, etc. on Golf Courses within Jeju-do)
(1)
The amended provisions of Article 121-14 (1) shall apply from the portion of admissions into a golf course first after the enforcement of this Act.
(2)
The amended provisions related to the acquisition tax from among the amended provisions of Article 121-14 (2) shall apply from the portion of acquisition first after the enforcement of this Act, and the amended provisions related to the property tax shall apply from the portion of constituting the tax liability first after the enforcement of this Act.
Article 6 (Application Example to Reduction or Exemption, etc. of Local Tax on Registration of International Vessels)
The amended provisions related to the acquisition tax and local education tax from among the amended provisions of Article 121-15 shall apply from the portion of acquisition after the enforcement of this Act, and the amended provisions related to the property tax and joint facility tax shall apply from the portion of constituting the tax liability first after the enforcement of this Act.
Article 7 (Application Example to Reduction or Exemption, etc. of Local Tax on Jeju Free International City Development Center)
(1)
The amended provisions related to the acquisition tax and registration tax from among the amended provisions of Article 121-16 (1) shall apply from the portion of acquisition after the enforcement of this Act, and the amended provisions related to the property tax, urban planning tax and joint facility tax shall apply from the portion of constituting the tax liability first after the enforcement of this Act.
(2)
The amended provisions of Article 121-16 (2) shall apply from the portion of registration first after the enforcement of this Act.

ADDENDA
Article 1 (Enforcement Date)
This Act shall enter into force three months after the date of its promulgation.
Articles 2 through 4 Omitted.

ADDENDA

(1)
(Enforcement Date) This Act shall enter into force on the date of its promulgation: Provided, That the amendments to Article 105 shall enter into force on January 1, 2003.
(2)
(Application Example) The amendments to Article 105 shall apply from the portion first provided or being provided after January 1, 2003, and the amendments to Article 106 shall apply from the portion first provided after the enforcement date of this Act.

ADDENDA
Article 1 (Enforcement Date)
This Act shall enter into force on January 1, 2003: Provided, That the amendments to Articles 38-2 (3) 1 (proviso), 94 (4), 145 and 146 shall enter into force on the date of its promulgation, the amendment to Article 106-3 shall enter into force on July 1, 2003, and the amendment to Article 126-2 shall enter into force December 1, 2002.
Article 2 (General Application Examples)
(1)
The amendments relating to the income tax and corporate tax in this Act shall apply starting with the taxable year that first starts after this Act enters into force.
(2)
The amendments relating to the capital gains tax in this Act shall apply starting with the portion first transferred after this Act enters into force.
Article 3 (Application Example to Reduction and Exemption of Tax Amount for Small or Medium Start-up Enterprise, etc.)
The amendment to Article 6 shall apply starting with the portion first start-up or first confirmed as a venture business after this Act enters into force.
Article 4 (Application Example to Tax Deduction for Improvement of Enterprise's Bill System)
The amendment to Article 7-2 (1) shall apply starting with the portion first settled, used or utilized after this Act enters into force.
Article 5 (Application Example to Special Case, etc. on Adding in Deductible Expenses for Facilities to Support Small or Medium Enterprise)
The amendment to Article 8 shall apply starting with the portion first donated or transferred after this Act enters into force.
Article 6 (Application Example to Tax Credit for Investment in Facilities for Research and Manpower Development)
The amendments to Articles 11, 24, and 25-2 shall apply starting with the portion first invested after this Act enters into force.
Article 7 (Application Example to Special Cases of Taxation on Income, etc. from Technology Transfer)
The amendment to Article 12 (2) shall apply starting with the portion first acquired after this Act enters into force.
Article 8 (Application Example to Special Cases of Taxation on Investment in Small or Medium Start-up Business Investment Companies, etc.)
The amendment to Article 14 (2) shall apply starting with the portion first acquiring the stocks or equity shares after this Act enters into force.
Article 9 (Application Example to Special Cases of Taxation on Foreign Workers)
The amendment to Article 18-2 shall apply starting with the portion of incomes first accruing after this Act enters into force.
Article 10 (Application Example to Tax Reduction or Exemption on Off-shore Financial Business)
The amendment to Article 21 (2) shall apply starting with the portion of paying or receiving the incomes first accruing after this Act enters into force.
Article 11 (Application Example to Carryover Taxation of Capital Gains Tax for Conversion into Corporation)
The amendment to Article 32 (1) shall apply starting with the portion first invested in kind or transferring business after this Act enters into force.
Article 12 (Application Example to Special Cases of Taxation on Establishment, etc. of Holding Company)
(1)
The amendment to Article 38-2 (excluding the proviso of paragraph (3) 1) shall apply starting with the portion first invested in kind after this Act enters into force.
(2)
The amendment to the proviso of Article 38-2 (3) 1 shall apply starting with the portion of taxable year whereto belongs the date of promulgation of this Act.
Article 13 (Application Example to Special Cases of Taxation on Debt Exemption Gains of Corporation Granted Decision on Approval of Reorganization Program)
The amendment to Article 44 shall apply starting with the portion first subjected to debt exemption after this Act enters into force.
Article 14 (Application Example to Special Cases of Taxation of Corporate Tax on Relocating Corporate Headquarters Outside Over concentration Control Region of Seoul Metropolitan Area)
The amendment to Article 61 shall apply starting with the portion first transferred in order to relocate the corporate headquarters outside the over concentration control region of the Seoul Metropolitan area after this Act enters into force.
Article 15 (Application Example to Tax Reduction or Exemption for Small or Medium Enterprise Relocated Outside Over concentration Control Region of Seoul Metropolitan Area)
(1)
The amendment to Article 63 shall apply starting with the portion first commencing a business by moving the factory outside the overconcentration control region of the Seoul Metropolitan area after this Act enters into force.
(2)
The amendment to Article 63-2 shall apply starting with the portion first commencing a business by moving the factory outside the Seoul Metropolitan area after this Act enters into force.
Article 16 (Application Example to Income Deduction, etc. for Annuity Savings)
The amendment to Article 86-2 shall apply starting with the portion first receiving an annuity payment or terminating it after this Act enters into force.
Article 17 (Application Example to Special Cases of Taxation on Members of Employee Stock Ownership Association)
The amendment to Article 88-4 (7) shall apply starting with the portion first acquiring the treasury stocks after this Act enters into force, and the amendment to paragraph (9) of the same Article shall apply starting with the portion of incomes first accruing after this Act enters into force.
Article 18 (Application Example to Special Cases of Taxation on Ship Investment Companies)
The amendment to Article 91-3 shall apply starting with the portion first transferred or receiving dividends after this Act enters into force.
Article 19 (Application Example to Special Cases of Taxation on Indirect Tax Amount Paid Overseas)
The amendment to Article 104-6 shall apply starting with the portion of revenue distribution first received after this Act enters into force.
Article 20 (Application Example to Application, etc. of Zero Rating of Value-Added Tax)
(1)
The amended provisions relating to value-added taxes in the amendments to Articles 105 (2), 106-2 and 106-3 shall apply starting with the portion first supplying or receiving the goods or services, or first declaring the import of goods, after this Act enters into force.
(2)
The amended provisions relating to the special consumption tax and traffic tax in the amendment to Articles 106-2 shall apply starting with the portion first carrying out from the manufacturing place or bonded area or first declaring an import after this Act enters into force.
Article 21 (Application Example to Exemption of Securities Transaction Tax)
The amendment to Article 117 shall apply starting with the portion first transferred after this Act enters into force.
Article 22 (Application Example to Exemption of Registration Tax and Acquisition Tax)
The amendments to Articles 119 and 120 shall apply starting with the portion first registered or acquired after this Act enters into force.
Article 23 (Application Example to Income Deduction for Amounts Spent on Credit Cards, etc.)
The amendment to Article 126-2 shall apply starting with the portion first using the credit cards, etc. after December 1, 2002.
Article 24 (Application Example to Exclusion from Tax Reduction or Exemption for Investment in Overconcentration Control Zone of Seoul Metropolitan Area)
The amendment to Article 130 shall apply starting with the portion first invested after this Act enters into force.
Article 25 (Application Example to Accumulation, etc. for Business Rationalization Reserve)
(1)
The amendment to Article 145 shall apply starting with the portion of receiving the reduction or exemption, etc. in the taxable year to which the promulgation date of this Act belongs.
(2)
The amendment to Article 146 shall apply starting with the portion of causes for the additional collection first occurred after this Act enters into force.
Article 26 (Transitional Measures for Special Cases of Taxation of Corporate Tax on Moving Corporate Factories and Head Office Outside Large Cities and Seoul Metropolitan Area)
With respect to a corporation which has transferred the site and buildings of its factory or head office by December 31, 2003 in order to move its factory outside a large city or its head office outside the Seoul Metropolitan area under the previous Articles 60 and 61 at the time of enforcement of this Act, the special cases of taxation of corporate tax may be applied under the previous provisions, notwithstanding the amended provisions of Articles 60 and 61.
Article 27 (Transitional Measures for Tax Reduction or Exemption for Small or Medium Enterprise Relocated Outside Seoul Metropolitan Area)
Where a small or medium enterprise concludes a contract for purchase of land and factory facilities located outside Seoul Metropolitan area, gets permission for building a new factory, or starts the substantial re-location of its factory facilities in the Seoul Metropolitan area outside such area not later than December 31, 2003 and has commenced its business activities not later than December 31, 2003 by moving all its factory facilities in the Seoul Metropolitan area outside such area under the previous Article 63 at the time of enforcement of this Act, the tax reduction or exemption may be applied under the previous provisions, notwithstanding the amended provisions of Article 63.
Article 28 (Transitional Measures for Special Cases of Taxation on Donation)
The amount exceeding the limit of addition to deductible expenses which has not been added to deductible expenses under Article 73 (1) at the time of enforcement of this Act, the previous provisions shall govern, notwithstanding the amendments to Article 73 (3) and (4).
Article 29 (Transitional Measures for Special Cases of Taxation of Capital Gains Tax on Acquisitors of Newly-built Houses)
(1)
In case where a newly-built house for which a down payment has been made after first concluding a sales contract with the housing developer, or a house newly constructed by himself/herself for which the approval for use or inspection for use (including the approval for temporary use) has been given under the previous Article 99 (1) or 99-3 (1) prior to the enforcement of this Act, is transferred after the enforcement of this Act, the previous provisions shall apply to the reduction or exemption of the capital gains tax and the calculation of income amounts subject to imposition of capital gains tax, notwithstanding the amendments to Article 99 (1) or 99-3 (1). In this case, the standard for the deluxe house at the time of the date on which the down payment has been made after concluding a sales contract, or the approval for use or inspection for use has been received for the house newly constructed by himself/herself.
(2)
In case where the approval for use or inspection for use (including the approval for temporary use) has been received prior to June 30, 2003 for the newly-built house under Article 99-3 (1) 2, after under-taking the works on the relevant newly-built house prior to the enforcement of this Act, the previous provisions shall apply, notwithstanding the amendment to Article 99-3 (1).
Article 30 (Transitional Measures for Special Cases of Taxation Value-Added Tax on Gold Metals)
In applying the amendment to Article 106-3, with regard to a tax invoice delivered to a general taxable person for value-added tax after receiving the supply of gold metals prior to the enforcement date of this Act, it may be subject to a deduction as the input tax amount by applying Article 17 of the Value-Added Tax Act, notwithstanding the amendment to paragraph (3) of the same Article.
Article 31 (Transitional Measures for Deduction, etc. of Income Tax Amount for Small-scale Businessman Filing Bona Fide Return)
In case where the tax base and tax amount of income tax or value-added tax have been corrected or re-corrected after the enforcement of this Act for the businessmen who have filed a bona fide return under the previous Articles 123 and 125 at the time of enforcement of this Act, the previous provisions shall apply, notwithstanding the amendments to Articles 123 and 125.
Article 32 (Transitional Measures for Exclusion from Tax Reduction or Exemption for Investment in Seoul Metropolitan Area)
With regard to the fixed business assets acquired by a national carrying on the business in other area than Seoul Metropolitan area as stipulated in the previous Article 130 at the time of enforcement of this Act in order to use them at the relevant business place after the enforcement of this Act, the previous provisions shall apply, notwithstanding the amendment to Article 130.

ADDENDA
Article 1 (Enforcement Date)
This Act shall enter into force six months after the date of its promulgation.
Articles 2 through 18 Omitted.

ADDENDA

(1)
(Enforcement Date) This Act shall enter into force on the date of its promulgation.
(2)
(Application Example to Opening of Long-Term Stock Savings) The amendment to Article 87-4 shall also apply to the savings opened at the time of enforcement of this Act. In this case, the relevant savings shall be deemed to have been opened on the enforcement date of this Act.
(3)
(Application Example to Non-Taxation on Long-Term Stock Savings) The amendment to Article 87-4 shall apply from the portion of incomes accruing first after the enforcement date of this Act.

ADDENDA
Article 1 (Enforcement Date)
This Act shall enter into force six months after the date of its promulgation. (Proviso Omitted.)
Articles 2 through 13 Omitted.

ADDENDA
Article 1 (Enforcement Date)
This Act shall enter into force on January 1, 2004: Provided, That the amended provisions of Articles 44 and 73 (3) shall enter into force on the date of its promulgation; the amended provisions of the main sentences of Articles 121-2 (2), (4) 1 and 2, and (5) 2 and 3, on January 1, 2005; and the amended provisions of Articles 126-2 (1) (limited to the portion related to Cash Receipts) and 126-3 (limited to the portion related to tax credit for the cases of Cash Receipt account settlement in paragraph (1)), on the date as set by Presidential Decree.
Article 2 (General Application Examples)
(1)
The amendments relating to the income tax and corporate tax in this Act shall apply starting with the taxable year that first starts after this Act enters into force.
(2)
The amendments relating to the capital gains tax and securities transaction tax in this Act shall apply starting with the portion first transferred after this Act enters into force.
(3)
The amendments relating to the gift tax in this Act shall apply starting with the portion first donated after this Act enters into force.
(4)
The amendments relating to the value-added tax in this Act shall apply starting with the portion of goods or service first given or taken, or the portion of goods whose importation is first declared, after this Act enters into force.
(5)
The amendments relating to the special consumption tax and traffic tax in this Act shall apply starting with the portion which is first carried out of the manufacturing place or bonded area, or whose importation is first declared, after this Act enters into force.
(6)
The amendments relating to the stamp tax in this Act shall apply starting with the taxation documents first prepared after this Act enters into force.
(7)
The amendments relating to the customs duties in this Act shall apply starting with the portion whose importation is first declared after this Act enters into force.
(8)
The amendments relating to the acquisition tax and registration tax in this Act shall apply starting with the portion which is first acquired or registered after this Act enters into force.
Article 3 (Application Examples to Tax Reduction and Exemption for Small or Medium Start-up Enterprises, etc.)
The amendments to Articles 6 (1) and (2), 64 (1), and 68 (1) shall apply with respect to the small or medium started-up enterprises incorporated or confirmed as venture businesses, the enterprises located in agro-industrial complexes, or the corporations of agricultural business incorporated, after this Act enters into force.
Article 4 (Application Examples to Special Tax Reduction or Exemption for Small or Medium Enterprises)
The amendments to Article 7 (1) 2 shall apply starting with the taxable year which first ends after this Act enters into force.
Article 5 (Application Examples to Temporary Tax Credit for Overseas Dispatch Expenses)
The amendments to Article 10-2 shall apply with respect to the expenses for overseas training incurred after this Act enters into force.
Article 6 (Application Examples to Special Cases of Taxation on Stock Options)
The amendments to Article 15 (2) 4 shall apply with respect to the stock options exercised after this Act enters into force.
Article 7 (Application Examples to Special Cases of Taxation for Foreign Workers)
The amendments to Article 18-2 shall apply starting with the taxable year to which the enforcement date of this Act belongs.
Article 8 (Application Examples to Tax Credit for Investment in Productivity Improvement Facilities)
The amendments to Article 24 (1) 1 and 2 shall apply with respect to the investments made after this Act enters into force.
Article 9 (Application Examples to Temporary Investment Tax Deduction)
(1)
The amendments to the proviso of Article 26 (1) shall apply with respect to the investments made on or after July 1, 2003: Provided, That with respect to the portion of investment which has commenced on or after July 1, 2000 and has not been completed as of July 1, 2003, the amendments to the proviso of Article 26 (1) shall also apply to the portion of investment made on or after July 1, 2003.
(2)
In applying the amendments to the proviso of Article 26 (1), if the investment is not completed as of June 30, 2004, the portion of investment made by June 30, 2004 shall be deemed to be completed as of June 30, 2004.
(3)
In applying the amendments to Article 26 (1), if a tax base return is made in accordance with the Income Tax Act or the Corporate Tax Act by applying the tax credit rate prior to the enforcement of this Act, the request for rectification may be made pursuant to Article 45-2 of the Framework Act on National Taxes, or the carried-over deduction, pursuant to Article 144 of this Act.
Article 10 (Application Examples to Separate Taxation on Interest Income from Social Infrastructure Bonds, etc.)
The amendments to Article 29 shall apply with respect to the bonds issued after this Act enters into force.
Article 11 (Application Examples to Special Cases of Inclusion of Depreciation Cost in Deductible Expenses)
The amendments to Article 30 shall apply with respect to the fixed assets acquired, or in which an investment is commenced, on or after July 1, 2003, on which a tax base return (excluding the return after term provided in Article 45-3 of the Framework Act on National Taxes) is filed on or after the enforcement date of this Act: Provided, That with respect to a corporation for which the time limit of a tax base return under Article 60 of the Corporate Tax Act has already expired before the enforcement of this Act, such amendments shall apply, according to an application for special cases of the inclusion of depreciation cost in deductible expenses under the amendments to Article 30 (2), starting with the taxable year following the taxable year to which the date of acquisition or the date of commencement of investment concerned belongs.
Article 12 (Application Examples to Special Cases of Taxation on Gains from Debt Exemption of Corporation Subject to Decision to Approve Reorganization Program, etc.)
The amendments to Article 44 shall apply starting with the portion of debt exemption first made in the taxable year to which the promulgation date of this Act belongs.
Article 13 (Application Examples to Special Cases of Taxation on Corporate Stock Exchange, etc. for Strategic Affiliation with Venture Business)
The amendments to Article 46-2 shall apply with respect to the stock exchange, etc. effected after this Act enters into force.
Article 14 (Application Examples to Special Cases of Taxation on Succession to Carried-over Deficit at Time of Merger with Venture Business)
The amendments to Article 47-3 shall apply with respect to the tax base returns (excluding the return after term provided in Article 45-3 of the Framework Act on National Taxes) made after this Act enters into force.
Article 15 (Application Examples to Tax Reduction or Exemption for Moving Factories and Corporate Head Offices Outside Overconcentration Control Zone of Seoul Metropolitan Area, etc.)
The amendments to Articles 63 and 63-2 shall apply with respect to the moving of factories and head offices outside the overconcentration control zone of the Seoul Metropolitan area or outside the Seoul Metropolitan area which is effected after this Act enters into force.
Article 16 (Application Examples to Special Cases of Taxation on Contribution)
(1)
The amendments to Article 73 (1) 2 shall apply with respect to the contributions made after this Act enters into force: Provided, That with respect to the Seoul National University Dental Hospital under the Establishment of Seoul National University Dental Hospital Act, such amendments shall apply starting with the portion of contributions first made after the said Act enters into force.
(2)
The amendments to Article 73 (3) shall apply starting with the taxable year to which the promulgation date of this Act belongs.
Article 17 (Application Examples to Special Cases of Inclusion of Reserves for Business Proper to Specific Purpose in Deductible Expenses)
The amendments to Article 74 (1) 1 and 3 shall apply with respect to the incomes accrued after this Act enters into force: Provided, That with respect to the Seoul National University Dental Hospital under the Establishment of Seoul National University Dental Hospital Act, such amendments shall apply starting with the portion of income first accrued after the said Act enters into force.
Article 18 (Application Examples to Special Cases of Taxation for Stockholders of Ship Investment Company)
The amendments to Article 87-5 shall apply with respect to the incomes accrued and paid on or after January 1, 2004.
Article 19 (Application Examples to Special Cases of Taxation on Members of Employee Stock Ownership Association)
(1)
The amendments to Article 88-4 (1) shall apply with respect to the contributions made after this Act enters into force.
(2)
The amendments to Article 88-4 (5) shall apply with respect to the stocks withdrawn after this Act enters into force.
(3)
The amendments to Article 88-4 (12) shall apply with respect to the contributions made after this Act enters into force.
Article 20 (Application Examples to Special Cases of Income Tax Exemption and Tax Withholding on Dividend Income concerning Long-held Stocks)
The amendments to Article 91 shall apply with respect to the dividend incomes paid after this Act enters into force.
Article 21 (Application Examples to Separate Taxation, etc. on Lottery Prize Income, etc.)
The amendments to Article 92 shall apply with respect to the incomes accrued and paid on or after January 1, 2004.
Article 22 (Application Examples to Tax Credit for Facility Investment Designed to Promote Employees' Welfare)
The amendments to Article 94 shall apply with respect to the facility investments made after this Act enters into force.
Article 23 (Application Examples to Special Cases of Taxation on Capital Gains Tax Applicable to Purchasers of Rural or Fishing Village Housing)
The amendments to Article 99-4 shall apply with respect to the general housing transferred on or after August 1, 2003.
Article 24 (Application Examples to Special Cases of Taxation with respect to Foreign Tax Amount Paid Indirectly)
The amendments to Article 104-6 (1) shall apply with respect to the paid dividends received after this Act enters into force.
Article 25 (Application Examples to Special Cases of Taxation with respect to Urban Improvement Work Association)
The amendments to Article 104-7 shall apply starting with the taxable year to which the enforcement date of this Act belongs: Provided, That the amendments to Article 104-7 (1) through (3) and (5) shall apply starting with the taxable year to which the promulgation date of this Act belongs.
Article 26 (Application Examples to Tax Deduction Applicable to Tax Return by Electronic Method)
The amendments to Article 104-8 shall apply with respect to the electronic tax returns filed after this Act enters into force.
Article 27 (Application Examples to Reduction of or Exemption from Corporate Tax, etc. for Foreigner's Investment)
The amendments to Articles 121-2 and 121-3 shall apply with respect to the applications for reduction of or exemption from corporate tax, etc. made after this Act enters into force.
Article 28 (Application Examples to Tax Reduction or Exemption Application by Foreign-invested Enterprises Located in Free Economic Zone)
(1)
Where a foreign-invested enterprise that is located in a free economic zone as referred to in subparagraph 1 of Article 2 of the Act on Designation and Management of Free Economic Zones prior to the enforcement of this Act intends to be eligible for the reduction of or exemption from taxes under the amendments to the proviso of Article 121-2 (2), it shall file an application therefor not later than December 31, 2004, notwithstanding the main sentence of Article 121-2 (6).
(2)
Where a foreign-invested enterprise which intends to be put under application of the amendments to Article 121-3 (2) makes an application for the reduction of or exemption from customs duties, which are already paid prior to the enforcement of this Act, during the period from the enforcement date of this Act to December 31, 2004, the corresponding amount shall be refunded.
Article 29 (Application Examples to Tax Credit on Increased Revenue Amounts, etc.)
The amendments to Article 122 (2) 2 shall apply starting with the taxable year to which the enforcement date of this Act belongs.
Article 30 (Application Examples to Income Deduction for Amounts Drawn on Credit Cards, etc.)
The amendments to Article 126-2 (1) and (3) shall apply with respect to the amounts drawn on credit cards, etc. on or after December 1, 2003: Provided, That with respect to the income deduction for the amounts stated in the Cash Receipts, such amendments shall apply with respect to the Cash Receipts issued on or after the enforcement date of the amendments to Article 126-2 (1).
Article 31 (Application Examples to Value-added Tax Credits for Cash Receipt Service Operators)
(1)
The amendments to Article 126-3 concerning tax credits on the installation of Cash Receipt issuing machines shall apply with respect to the issuance machines installed on or after January 1, 2004.
(2)
The amendments to Article 126-3 concerning tax credits for the cases of Cash Receipt account settlement shall apply with respect to the Cash Receipts issued on or after the enforcement date of the amendments.
Article 32 (Application Examples to Exclusion from Tax Reduction or Exemption for Investment in Overconcentration Control Zone of Seoul Metropolitan Area)
The amendments to Article 130 shall apply with respect to the investments made after this Act enters into force.
Article 33 (Application Examples to Minimum Tax)
The amendments to Article 132 (1) 1 and (2) 1 shall apply with respect to the tax base returns (excluding the return after term provided in Article 45-3 of the Framework Act on National Taxes) which are filed on or after the enforcement date of this Act.
Article 34 (Application Examples to Special Cases of Taxation for Submarine Mineral Resources Development)
The amendments to Article 140 (1) and (4) shall apply with respect to the submarine mineral resources development on which tax liability is established on or after the enforcement date of this Act.
Article 35 (Application Examples to Investment Trust, Investment Company, etc.)
The amendments made according to the enforcement of the Act on the Business of Operating Indirect Investment Assets concerning investment trust, investment companies, etc. shall apply with respect to the investment trust, investment companies, etc. established or incorporated on or after the enforcement date of the said Act, and the investment trust, investment companies, etc. established or incorporated before the enforcement date of the said Act shall be governed by the previous provisions.
Article 36 (Transitional Measures for Tax Reduction or Exemption for Small or Medium Start-up Enterprises)
With respect to the persons whose tax amount is reduced or exempted under the previous Articles 6 (1) and (2), 64 (1), and 68 (1) at the time of entry into force of this Act, the previous provisions shall apply, notwithstanding the amended provisions.
Article 37 (Transitional Measures for Special Cases of Taxation on Income from Transfer of Technology)
With respect to income derived from the transfer, lending, or provision of secret technical processes or formulae under the previous Article 12 (1) 2 at the time of entry into force of this Act, the previous provisions shall apply until the contract period of such lending or provision ends, notwithstanding the amended provisions.
Article 38 (Transitional Measures for Tax Reduction or Exemption for Small or Medium Enterprises Relocated Outside Overconcentration Control Zone of Seoul Metropolitan Area)
(1)
With respect to the small or medium enterprises whose tax amount is reduced or exempted under the previous Article 63 at the time of entry into force of this Act, the previous provisions shall apply, notwithstanding the amended provisions.
(2)
With respect to the corporations whose tax amount is reduced or exempted under the previous Article 63-2 at the time of entry into force of this Act, the previous provisions shall apply, notwithstanding the amended provisions.
(3)
Where, at the time of the entry into force of this Act, a corporation starts the substantial relocation of itself outside the Seoul Metropolitan area in such a manner as commencing its business by relocating its factory and head office located in the overconcentration control zone of the Seoul Metropolitan area outside such area, transferring, removing, or closing its factory and head office located in the overconcentration control zone of the Seoul Metropolitan area, concluding a contract for transfer of its factory and head office located in the overconcentration control zone of the Seoul Metropolitan area, or entering into a contract for purchase of its factory and head office or getting permission for the building of a new factory located outside the Seoul Metropolitan area, in order to put itself under the application of the previous Article 63-2, the previous provisions shall apply, notwithstanding the amended provisions.
Article 39 (Transitional Measures for Special Cases of Local Tax for Assistance in Stability of Employees' Housing Situation)
With respect to the persons whose acquisition tax, registration tax, and property tax are reduced or exempted under the previous Article 100 (2) and (4) at the time of entry into force of this Act, the additional collection of such taxes shall be governed by the previous provisions.
Article 40 (Transitional Measures for Reduction of or Exemption from Corporate Tax, etc. for Foreigner's Investment)
With respect to the foreigner's investment for which the corporate tax, etc. is reduced or exempted under the previous Article 121-2 at the time of entry into force of this Act, the previous provisions shall apply in regard of the period of such reduction or exemption, notwithstanding the amended provisions of the main sentences of Article 121-2 (2), (4) 1 and 2, and (5) 2 and 3.
Article 41 (Transitional Measures for Special Cases of Taxation for Submarine Mineral Resources Development)
Carried-over losses incurred in any business year that starts within 10 years prior to the starting date of each business year under the previous Article 140 (4) at the time of entry into force of this Act shall be governed by the previous provisions, notwithstanding the amended provisions.
Article 42 (Transitional Measures for Carried-over Deduction of Tax Credit)
The tax amount subject to deduction under the previous Article 144 (1) at the time of entry into force of this Act shall be governed by the previous provisions, notwithstanding the amended provisions of Article 144 (1).

ADDENDA
Article 1 (Enforcement Date)
This Act shall enter into force on March 1, 2004. (Proviso Omitted.)
Articles 2 through 12 Omitted.

ADDENDA

(1)
(Enforcement Date) This Act shall enter into force on March 1, 2004.
(2)
(Application Example) The amendments to Articles 119 (1) and 120 (1) shall apply with respect to the portion of acquisition and registration made on or after the enforcement date of this Act.

ADDENDA
Article 1 (Enforcement Date)
This Act shall enter into force on the date of its promulgation.
Articles 2 through 13 Omitted.

ADDENDA
Article 1 (Enforcement Date)
This Act shall enter into force three months after the date of its promulgation.
Articles 2 through 16 Omitted.

ADDENDA
Article 1 (Enforcement Date)
This Act shall enter into force on the date of its promulgation.
Article 2 (General Application Example)
(1)
The amended provisions concerning the income tax and the corporate tax in this Act shall apply, starting with the portion of the taxable year that first commences after the enforcement of this Act.
(2)
The amended provisions concerning the value-added tax in this Act shall apply, starting with the portion of goods or services that is first supplied and rendered, or the portion of goods or services on which an import declaration is first filed after the enforcement of this Act.
Article 3 (Application Example concerning Temporary Deduction of Tax Amount for Investment)
(1)
The amended provisions of the proviso of Article 26 (1) of the Act shall apply, starting with the portion of investment that is made after July 1, 2004: Provided, That with respect to any investment that is in progress as of July 1, 2004 and such investment starts to be made after July 1, 2000, the amended provisions of the proviso of the same paragraph shall apply to the portion of investment that is made after July 1, 2004.
(2)
In the application of the amended provisons of the proviso of Article 26 (1), if any investment is not completed as of December 31, 2004, the portion of such investment that is made by December 31, 2004 shall be deemed to be completely made as of December 31, 2004.
Article 4 (Application Example concerning Special Case of Period for Deducting Amount of Loss Carried Forward for Job-Creating Start-up Enterprises)
The amended provisions of Article 30-3 shall apply, starting with the amount of loss that is incurred in the taxable year belonging to the date of the enforcement of this Act.
Article 5 (Application Example concerning Deduction of Amount of Special Tax for Boosting Employment)
The amended provisions of Article 30-4 shall apply, starting with the portion of the taxable year belonging to the date of the enforcement of this Act.
Article 6 (Application Example concerning Non-Taxation of Livelihood Savings for Aged and Handicapped, etc.)
The amended provisions of Article 88-2 (1) shall apply, starting with the portion of livelihood savings that are first subscribed after the date of the enforcement of this Act.
Article 7 (Application Example concerning Special Treatment in Taxation for Members of Employee Stock Ownership Association)
The amended provisions of Article 88-4 (13) shall apply, starting with the portion that is first transferred after the enforcement of this Act.
Article 8 (Application Example concerning Exemption of Value-Added Tax for Security Services of Apartment Houses)
The amended provisions of Article 106 (1) 4-2 and 4-3 shall apply, starting with the portion of the taxable period during which the tax base is returned after July 1, 2004.
Article 9 (Application Example concerning Exemption, etc. of Registration Tax and Acquisition Tax)
The amended provisions of Articles 119 (3) 1 and 2 and 120 (3) shall apply, starting with the portion that is registered or acquired after July 1, 2004 and the amended provisions of Articles 119 (6) 3, 119 (7) and 120 (4) 3 shall apply, starting with the portion that is registered or acquired after the enforcement of this Act.
Article 10 (Application Example concerning Reduction and Exemption of Property Tax, etc.)
The amended provisions of Article 121 shall apply, starting with the portion that is acquired after July 1, 2004.
Article 11 (Application Example concerning Minimum Tax)
The amended provisions of Article 132 (2), with the exception of each subparagraph thereof, shall apply, starting with the portion on which a final return on the tax base is filed after the enforcement of this Act.
Article 12 (Transitional Measures concerning Limit on Non-Taxation of Livelihood Savings for Aged and Handicapped, etc.)
The amended provisions of Article 88-2 (1) shall apply to the portion of livelihood savings that are subscribed pursuant to the previous provisions of Article 88-2 (1), beginning on the date of the enforcement of this Act.
Article 13 Omitted.

ADDENDA

(1)
(Enforcement Date) This Act shall enter into force on the date of its promulgation.
(2)
(Application Example concerning Reduction or Exemption of Tax Amount for Small or Medium Start-up Enterprises, etc.) The amended provisions of Article 6 shall begin to apply to a start-up business on and after July 1, 2004.
(3)
(Application Example concerning Special Case of Taxation for Contribution) The amended provisions of Article 73 shall begin to apply to the portion disbursed in the taxable year whereto belongs the date of enforcement of this Act.
(4)
(Application Example concerning Inclusion of Cultural Business Reserve in Deductible Expenses) The amended provisions of Article 104-9 shall begin to apply to the portion to be included in deductible expenses in the taxable year whereto belongs the date of enforcement of this Act.

ADDENDA
Article 1 (Enforcement Date)
This Act shall enter into force six months after the date of its promulgation. (Proviso Omitted.)
Articles 2 through 6 Omitted.

ADDENDA
Article 1 (Enforcement Date)
This Act shall enter into force on January 1, 2005. (Proviso Omitted.)
Articles 2 through 5 Omitted.

ADDENDA
Article 1 (Enforcement Date)
This Act shall enter into force six months after the date of its promulgation. (Proviso Omitted.)
Articles 2 through 5 Omitted.

ADDENDA
Article 1 (Enforcement Date)
This Act shall enter into force six months after the date of its promulgation: Provided, That the amended provisions of Article 13 of Addenda shall enter into force on the date of its promulgation.
Articles 2 through 16 Omitted.

ADDENDA
Article 1 (Enforcement Date)
This Act shall enter into force on January 1, 2005: Provided, That the amended provisions falling under each of the following subparagraphs shall enter into force on the date that is set in the relevant subparagraph:
1.
The amended provisions of Articles 63-2, 72, 92, 105 (1) 3 (d) and 106 (1) 7 shall enter into force on the date of its promulgation;
2.
The amended provisions of Article 106-3 shall enter into force on April 1, 2005;
3.
The amended provisions of Articles 55-2, 119 (6) and (7) and 120 (4) 1 (limited to the portion of the real estate investment company) shall enter into force on April 23, 2005;
4.
The amended provisions of Articles 121-2 (limited to the portion of the enterprise city development zone and the enterprise city development project undertaker), 121-17, 121-18 and 121-19 shall enter into force on the date on which the Special Act on the Development of Enterprise Cities enters into force.
Article 2 (Application Example concerning Tax Credit for Purchase of Small or Medium Enterprise Management Consulting Coupons)
The amended provisions of Article 5-3 shall apply, starting with the portion of the small or medium enterprise management consulting coupons that are first purchased and furnished after the enforcement of this Act.
Article 3 (Application Example concerning Amount of Tax Reduction or Exemption for Small or Medium Start-up Enterprises, etc.)
The amended provisions of Article 6 shall apply, starting with any small or medium enterprise that is first incorporated after the enforcement of this Act.
Article 4 (Application Example concerning Tax Credit for Improving Bill System of Enterprises)
The amended provisions of Article 7-2 shall apply, starting with the portion of the bill that is first settled, used or utilized after the enforcement of this Act.
Article 5 (Application Example concerning Inclusion of Investment and Loan Loss Reserve in Deductible Expenses)
The amended provisions of Article 17 shall apply, starting with the portion of causes for inclusion in the gross income that first occurs after the enforcement of this Act.
Article 6 (Application Example concerning Tax Credit for Investment in Productivity Increase Facilities)
The amended provisions of Article 24 shall apply, starting with the portion of cost that is first incurred after the enforcement of this Act.
Article 7 (Application Example concerning Tax Credit for Investment in Environment or Safety Facility and Equipment, etc.)
The amended provisions of Article 25 shall apply, starting with the portion of investment that is first made after the enforcement of this Act.
Article 8 (Application Example concerning Tax Credit for Investment in Energy-Saving Facilities)
The amended provisions of Article 25-2 shall apply, starting with the portion of investment that is frist made after the enforcement of this Act.
Article 9 (Application Example concerning Temporary and Special Tax Reduction or Exemption for Relocation of Factories and Head Offices of Corporations to Areas Other Than Seoul Metropolitan Area)
The amended provisions of Article 63-2 shall apply, starting with the portion of any head office that is first relocated from the overconcentration control zone of Seoul Metropolitan area to any area other than the Seoul Metropolitan area during the taxable year whereto belongs the date on which this Act is promulgated.
Article 10 (Application Example concerning Special Case of Taxation of Corporate Tax on Partnership Corporation)
The amended provisions of Article 72 shall apply, starting with the taxable year whereto belongs the date on which this Act is promulgated.
Article 11 (Application Example concerning Special Case of Including Political Funds in Deductable Expenses)
The amended provisions of Article 76 shall apply, starting with the portion of any political fund that is first contributed after the enforcement of this Act.
Article 12 (Application Example concerning Special Case of Taxation of Capital Gains Tax on Real Estate Used for Public Projects in Designated Areas)
The amended provisions of Article 85 shall apply, starting with the portion for which the deadline for a final tax return of the tax base on the capital gains first arrives after the enforcement of this Act.
Article 13 (Application Example concerning Persons Eligible for Livelihood Savings)
The amended provisions of Article 88-2 (1) shall apply, starting with the livelihood savings that are first subscribed after the enforcement of this Act.
Article 14 (Application Example concerning Non-Taxation of Dividend Income for Members of Employee Stock Ownership Association)
The amended provisions of Article 88-4 (8) through (10) shall apply, starting with the portion of the dividend income that is first paid after the enforcement of this Act.
Article 15 (Application Example concerning Lowering of Tax Rate for Tax-Favored Comprehensive Savings)
The amended provisions of Article 89 shall apply, starting with the portion of income that first accrues after the enforcement of this Act.
Article 16 (Application Example concerning Additional Tax Levied Due to Failure to Furnish Tax-Favored Data)
The amended provisions of Article 90-2 shall apply, starting with the portion of savings that are first subscribed after the enforcement of this Act.
Article 17 (Application Example concerning Separate Taxation on Income Accruing from Lottery Prize, etc.)
The amended provisions of Article 92 shall apply, starting with the portion of lottery prize won in the taxable year whereto belongs the date on which this Act is promulgated.
Article 18 (Application Example concerning Tax Credit for Cost of Cargo Transportation Commissioned by Making Use of Joint Computer Network)
The amended provisions of Article 104 shall apply, starting with the portion of cost that is first incurred after the enforcement of this Act.
Article 19 (Application Example concerning Tax Credit on Information Return)
The amended provisions of Article 104-5 shall apply, starting with the portion that is first furnished after the enforcement of this Act.
Article 20 (Application Example concerning Tax Credit for Electronic Return on Value-Added Tax)
The amended provisions of Article 104-8 (2) shall apply, starting with the portion of any electronic return that is first made after the enforcement of this Act.
Article 21 (Application Example concerning Tax Withheld at Source for Special Case of Taxation on Personnel Company)
The amended provisions of Article 104-11 (2) shall apply, starting with the portion of any dividend that is paid by the personnel company applicable to the special case of taxation after the enforcement of this Act.
Article 22 (Application Example concerning Application of Zero Rate to Urban Railroad Construction Services Rendered Directly to Korea Rail Network Authority)
The amended provisions of Article 105 (1) 3 (d) shall apply, starting with the portion of construction services that are rendered directly to the Korea Rail Network Authority after a contract is concluded prior to the enforcement of this Act.
Article 23 (Application Example concerning Application of Zero Rate to Urban Railroad Construction Services Rendered Directly to Under-takers of Urban Railroad Private Investment Projects)
The amended provisions of Article 105 (1) 3 (e) shall apply, starting with the portion of the value-added tax that is determined, corrected or re-corrected for any project undertaker who enters into an implementation agreement with the competent administrative agency in accordance with the Act on Private Participation in Infrastructure prior to the enforcement of this Act.
Article 24 (Application Example concerning Exemption from Value-Added Tax for Reversion of Railroad Facilities to State)
The amended provisions of Article 106 (1) 7 shall apply, starting with the portion of railroad facilities that revert to the State during the taxable year whereto belongs the date on which this Act is promulgated.
Article 25 (Application Example concerning Relief for Payable Tax Amount of Value-Added Tax by General Taxicab Business Operators)
The amended provisions of Article 106-4 shall apply, starting with the portion of the taxation period during which the return of the tax base is filed after the enforcement of this Act.
Article 26 (Application Example concerning Exemption from Registration Tax and Acquisition Tax for Real Estate Investment Companies)
The amended provisions of Articles 119 (6) and (7) and 120 (4) 1 (limited to the portion related to the real estate investment company) shall apply, starting with the portion that is registered or acquired after April 23, 2005.
Article 27 (Application Example concerning Reduction and Exemption of Corporate Tax, etc. for Foreigner's Investments)
(1)
The amended provisions of Articles 121-2 (excluding the portion concerning any enterprise city development zone and any enterprise city development project undertaker) and 121-3 shall apply, starting with the portion of foreigner's investment that is first reported after the enforcement of this Act: Provided, That with respect to any foreign-invested enterprise that is already located in any foreign investment zone provided for in Article 18 (1) 1 of the Foreign Investment Promotion Act, the amended provisions shall apply, starting with the portion of any foreign investment that is reported in order to increase its capital after the enforcement of this Act.
(2)
The amended provisions of Article 121-2 (limited to the portion concerning any enterprise city development zone and any enterprise city development project undertaker) shall apply, starting with the portion of any foreigner's investment that is reported after the enforcement of the Special Act on the Development of Enterprise Cities that is enacted in accordance with Act No. 7310.
Article 28 (Application Example concerning Additional Collection of Tax)
The amended provisions of Article 121-5 shall apply, starting with the portion of any foreigner's investment that is first reported after the enforcement of this Act.
Article 29 (Application Example concerning Income Deduction on Used Amount of Credit Cards, etc.)
The amended provisions of Article 126-2 shall apply, starting with the portion of any amount that is spent by making use of any credit card, etc. after December 1, 2004: Provided, That with respect to the portion of any amount that is spent by making use of Cash Receipt, the amended provisions shall apply, starting with the portion of any amount that is spent after January 1, 2005.
Article 30 (Application Example concerning Exclusion of Reduction and Exemption When Estimated Tax is Levied)
The amended provisions of Article 128 (3) shall apply, starting with the portion of an amended tax return that is made after the enforcement of this Act.
Article 31 (Application Example concerning Exclusion of Tax Reduction or Exemption from Investment in Overconcentration Control Zone of Seoul Metropolitan Area)
The amended provisions of Article 130 shall apply, starting with the portion that is first invested after the enforcement of this Act.
Article 32 (Application Example concerning Additional Collection of Reduced and Exempted Tax Amount)
The amended provisions of Article 146 shall apply, starting with the portion of a disposition taken to additionally collect the reduced and exempted tax amount after the enforcement of this Act.
Article 33 (General Application Examples)
(1)
The amended provisions governing the income tax and the corporate tax in this Act shall apply, starting with the portion of the taxable year that first begins after the enforcement of this Act.
(2)
The amended provisions governing the value-added tax in this Act shall apply, starting with the portion of goods or services that anyone first supplies or are first supplied or goods on which an import declaration is first filed after the enforcement of this Act.
(3)
The amended provisions governing the stamp tax in this Act shall apply, starting with the portion of a taxation document that is first prepared after the enforcement of this Act.
(4)
The amended provisions governing the capital gains tax and the securities transaction tax in this Act shall apply, starting with the portion that is first transferred after the enforcement of this Act.
(5)
The amended provisions governing the inheritance tax and the gift tax shall apply, starting with the portion that is first inherited or gifted after the enforcement of this Act.
(6)
The amended provisions governing the registration tax, the acquisition tax, the property tax and the aggregate land tax in this Act shall apply, starting with the portion that is first registered or acquired after the enforcement of this Act.
(7)
The amended provisions governing the special consumption tax and the traffic tax in this Act shall apply, starting with the portion of taxable goods that are first shipped out of factory, an import declaration is filed on them or the act of accessing such taxable goods is performed after the enforcement of this Act.
Article 34 (Transitional Measures concerning Temporary and Special Tax Reduction or Exemption for Relocating Head Offices of Corporations to Areas Other Than Seoul Metropolitan Area)
(1)
The previous provisions of Article 63-2 shall apply to any corporation that relocates its head office from the overconcentration control zone of Seoul Metropolitan area to any other area in order to make it subject to the application of the previous provisions of Article 63-2 prior to the taxable year whereto belongs the date on which this Act is promulgated, notwithstanding the amended provisions of Article 63-2.
(2)
In case where any corporation transfers, removes or shuts down its head office located in the overconcentration control zone of Seoul Metropolitan area or shifts the purpose of its head office to other purpose or concludes a contract for transferring its head office located in the overconcentration control zone of Seoul Metropolitan area or for purchasing its head office in an area other than the Seoul Metropolitan area prior to the taxable year whereto belongs the date on which this Act is promulgated in order to make it subject to the application of the previous provisions of Article 63-2 and such corporation fails to relocate its head office prior to the taxable year whereto belongs the date on which this Act is promulgated, the previous provisions may apply to such corporation, notwithstanding the amended provisions of Article 63-2.
(3)
In cases where any corporation relocates, transfers, removes or shuts down its head office located in the overconcentration control zone of Seoul Metropolitan area or shifts the purpose of its head office to other purpose or concludes a contract for transferring its head office located in the overconcentration control zone of Seoul Metropolitan area or for purchasing its head office in an area other than the Seoul Metropolitan area or actually starts relocating its head office to a rural area in the taxable year whereto belongs the date on which this Act is promulgated in order to make it subject to the application of the previous provisions of Article 63-2, the previous provisions may apply to such corporation, notwithstanding the amended provisions of Article 63-2.
(4)
In cases where any corporation is subject to the application of the tax reduction or exemption provided for in the previous provisions or the amended provisions in accordance with paragraph (2) or (3), either of the chosen provisions shall continue applying to the relevant corporation during the tax reduction or exemption period.

ADDENDA
Article 1 (Enforcement Date)
This Act shall enter into force on the date of its promulgation. (Proviso Omitted.)
Articles 2 through 7 Omitted.

ADDENDA
Article 1 (Enforcement Date)
This Act shall enter into force one year after the date of its promulgation.
Articles 2 through 6 Omitted.

ADDENDA
Article 1 (Enforcement Date)
This Act shall enter into force on the date of its promulgation.
Article 2 (Application Example concerning Special Tax Amount Reduction on Small or Medium Enterprise Operating Construction Wastes Treatment Business)
The amended provisions of Article 7 (1) 1 (zc) shall apply, starting with the incomes accruing in the taxable year whereto the enforcement date of this Act belongs.
Article 3 (Application Example concerning Inclusion of Business Loss Reserves in Deductible Expenses for KOSDAQ-listed Small or Medium Enterprise)
The amended provisions of Article 8-2 shall apply, starting with the small or medium enterprise listed in the taxable year whereto the enforcement date of this Act belongs.
Article 4 (Application Example concerning Nontaxation etc. on Stock Transfer Margins)
(1)
The amended provisions of Articles 13 (1) and (2) and 14 (1) and (2) shall apply, starting with the stocks or equities transferred first after the enforcement of this Act.
(2)
The amended provisions of Article 14 (4) and (5) shall apply, starting with the dividends income or interests income paid first after the enforcement of this Act.
Article 5 (Application Example concerning Income Deduction on Investments to Korea Venture Business Investment Association)
The amended provisions of Articles 16 (1) 1 shall apply, starting with the portion of the contribution or investment made first after the enforcement of this Act.
Article 6 (Application Example concerning Special Cases of Taxation on Dividends of Investment Company)
(1)
The amended provisions of Article 91-2 (1) 4 shall apply, starting with the investment company established first after the enforcement of this Act.
(2)
With regards to the investment company established before the enforcement of this Act, the amended provisions of Articles 91-2 (1) 4 shall apply, starting with the dividend incomes accrued after the settlement day coming first after the enforcement of this Act.
Article 7 (Application Example concerning Special Cases of Taxation on Dividend Income of Stocks of Social Fundamental Facilities Investment and Lending Company)
The amended provisions of Article 91-4 shall apply, starting with the dividend incomes accrued first after the enforcement of this Act.
Article 8 (Application Example concerning Application of Zero Tax Rate of Value-Added Tax Rate on Private Investment Business)
The amended provisions of Article 105 (1) 3-2 shall apply, starting with the social fundamental facilities provided to the State or local governments by the mode under subparagraph 2 of Article 4 of the Act on Private Participation in Infrastructure or the construction services of the same facilities first after the enforcement of this Act.
Article 9 (Application Example concerning Special Cases of Taxation of Value-Added Tax on Gold Bullions)
The amended provisions of Article 106-3 (1) and (2) shall apply, starting with the portions of provisions or receiving such provisions during the taxation period whereto belongs the enforcement date of this Act, or of the import declaration.
Article 10 (Application Example concerning Special Cases of Purchase Value-Added Tax Deduction on Recycled Waste Resources, etc.)
The amended provisions of Article 108 (1) shall apply, starting with the portions acquired in the taxation period whereto belongs the enforcement date of this Act.
Article 11 (Transitional Measures concerning Inclusion of Business Loss Reserves in Deductible Expenses for Stock-Listed Corporation, etc.)
The previous provisions shall govern the inclusion in the pecuniary loss or profits in calculating the revenue amount of the small or medium enterprise subjected to the provisions of previous Article 8-2 before the enforcement of this Act.
Article 12 (Transitional Measures concerning Special Cases of Taxation on Dividends of Investment Company)
The previous provisions shall govern the investment company established prior to the enforcement of this Act and provided its existence period on the articles of association (excluding the case of extending its existence period) under Article 37 (2) of the Act on Business of Operating Indirect Investment and Assets, and which do not issue the additional stocks, notwithstanding the amended provisions of Article 91-2 (1) 4.

ADDENDA
Article 1 (Enforcement Date)
This Act shall enter into force on January 1, 2006. (Proviso Omitted.)
Articles 2 through 9 Omitted.

ADDENDA
Article 1 (Enforcement Date)
This Act shall enter into force one year after the date of its promulgation.
Articles 2 through 12 Omitted.

ADDENDA
Article 1 (Enforcement Date)
This Act shall enter into force 4 months after the date of its promulgation: Provided, That …
Articles 2 through 5 Omitted.

ADDENDA
Article 1 (Enforcement Date)
This Act shall enter into force on January 1, 2006: Provided, That the amended provisions of Articles 15 (3), 118 (1) 1 and 3 and 127 (8) shall enter into force, beginning on the date of its promulgation.
Article 2 (General Application Examples)
(1)
The amended provisions concerning the income tax and the corporate tax in this Act shall apply, starting with the portion of the taxable year that first commences after the enforcement of this Act.
(2)
The amended provisions concerning the value-added tax in this Act shall apply, starting with the portion of goods and service that are first supplied or purchased or the portion of goods on which an import declaration is filed after the enforcement of this Act.
(3)
The amended provisions concerning the capital gains tax and the securities transaction tax in this Act shall apply, starting with the portion that is first transferred after the enforcement of this Act.
(4)
The amended provisions concerning the inheritance tax and the gift tax shall apply, starting with the portion that is first inherited or donated after the enforcement of this Act.
Article 3 (Application Example concerning Reduction or Exemption of Special Tax Amount of Small or Medium Enterprises)
The amended provisions of Article 7 shall apply, starting with the portion of the taxable year that comes to an end after the enforcement of this Act.
Article 4 (Application Example concerning Tax Reduction or Exemption for Improving Bill System of Enterprises)
The amended provisions of Article 7-2 (1) shall apply, starting with the portion that is first settled, used or utilized after the enforcement of this Act.
Article 5 (Application Example concerning Non-Taxation of Marginal Profits, etc. from Transfer of Stocks by Small or Medium Start-up Business Investment Companies, etc.)
The amended provisions of Article 13 (1) through (3) shall apply, starting with the portion of stocks or equities that are first transferred or the dividend income that is first paid after the enforcement of this Act.
Article 6 (Application Example concerning Special Case of Taxation on Stock Options)
The amended provisions of Article 15 (3) shall apply, starting with the portion of the taxable year to which the date on which this Act enters into force belongs.
Article 7 (Application Example concerning Inclusion of Marginal Profits from Transfer of International Ships)
(1)
The amended provisions of Article 23 (1) shall apply, starting with the portion that is first transferred after the enforcement of this Act.
(2)
The amended provisions of the latter part of Article 23 (3) shall apply, starting with the portion that is first included in the gross income after the enforcement of this Act.
Article 8 (Application Example concerning Tax Credit for Energy-Saving Facility Investment)
The amended provisions of Article 25-2 shall apply, starting with the portion of an investment which is first made after the enforcement of this Act.
Article 9 (Application Example concerning Special Case of Taxation on Business Conversion of Small or Medium Enterprises)
The amended provisions of Article 33 shall apply, starting with the portion of the fixed assets for the business used before the conversion which is first transferred after the enforcement of this Act.
Article 10 (Application Example concerning Special Case of Taxation on Financial Obligations, etc. That are Met by Small or Medium Enterprises)
(1)
The amended provisions of Article 34 (1) and (4) shall apply, starting with the portion that a small or medium enterprise is first exempted from obligations or which a financial institution first exempts obligations after the enforcement of this Act.
(2)
The amended provisions of Article 34 (2) shall apply, starting with the portion of the real estate for business that is first transferred after the enforcement of this Act.
Article 11 (Application Example concerning Special Case of Taxation on Incorporation, etc. of Holding Companies by Means of In-Kind Investment, Exchange or Transfer of Stocks)
The amended provisions of Article 38-2 shall apply, starting with the portion of the holding company that is first incorporated by means of all-inclusive transfer of stocks after the enforcement of this Act.
Article 12 (Application Example concerning Special Case of Taxation of Corporate Tax, etc. on Donations of Assets by Stockholders of Small or Medium Enterprises)
(1)
The amended provisions of Article 41 (1) shall apply, starting with the portion of assets that is gratuitously granted for the first time after the enforcement of this Act.
(2)
The amended provisions of Article 41 (2) shall apply, stating with the portion of the real estate that is transferred for the first time after the enforcement of this Act.
Article 13 (Application Example concerning Special Case of Taxation on Transfer of Overlapping Assets Following Merger)
The amended provisions of Article 47-4 shall apply, starting with the portion that is first merged (including merger after division) after the enforcement of this Act.
Article 14 (Application Example concerning Special Case of Taxation of Corporate Tax on Relocation of Factories to Area other than Big City)
The amended provisions of Article 60 (2) shall apply, starting with the portion of the factory that is first relocated after the enforcement of this Act.
Article 15 (Application Example concerning Special Case of Taxation of Corporate Tax on Relocation of Corporation's Head Office to Area other than Overconcentration Control Zone of Seoul Metropolitan Area)
The amended provisions of Article 61 (3) shall apply, starting with the portion of the corporation's head office that is first relocated after the enforcement of this Act.
Article 16 (Application Example concerning Tax Credit for Small or Medium Enterprise that are Relocated to Area other than Overconcentration Control Zone of Seoul Metropolitan Area)
The amended provisions of Article 63 (1) shall apply, starting with the portion that is first relocated after the enforcement of this Act.
Article 17 (Application Example concerning Temporary and Special Tax Credit for Relocation of Factories and Head Offices of Corporations to Area other than Seoul Metropolitan Area)
The amended provisions of Article 63-2 shall apply, starting with the portion of the factory or the head office of any corporation, which is first relocated after the enforcement of this Act.
Article 18 (Application Example and Special Application Example concerning Special Case of Taxation on Donations)
(1)
The amended provisions of Article 73 shall apply, starting with the portion that is disbursed in the taxable year that first commences after the enforcement of this Act.
(2)
In the application of the amended provisions of the former part of Article 73 (1) with the exception of each subparagraph, with respect to the portion that is disbursed on or before December 31, 2006, notwithstanding the amended provisions of the partial former part of Article 73 (1) with the exception of each subparagraph, "50/100" provided for in the partial former part of the same paragraph with the exception of each subparagraph shall be deemed "75/100".
Article 19 (Application Example concerning Special Case of Inclusion of Deductable Expenses for Agricultural Cooperatives, etc.)
The amended provisions of Article 84 shall apply, starting with the portion of in-kind investment that is first made after the enforcement of this Act.
Article 20 (Application Example concerning Income Deduction, etc. for Pension Savings)
The amended provisions of Article 86-2 shall apply, starting with the portion that is first deposited after the enforcement of this Act.
Article 21 (Application Example concerning Special Case of Taxation for Members of Employee Stock Ownership Association)
The amended provisions of Article 88-4 (5) shall apply, starting with the portion that is first withdrawn after the enforcement of this Act.
Article 22 (Application Example concerning Special Case of Taxation on Tax-Favored Comprehensive Savings)
The amended provisions of Article 89 shall apply, starting with the portion that is first subscribed after the enforcement of this Act.
Article 23 (Application Example concerning Additional Tax Levied on Failure to Submit Tax-Favored Data)
The amended provisions of Article 90-2 (1) shall apply, starting with the portion that is first submitted after the enforcement of this Act.
Article 24 (Application Example concerning Special Case of Taxation on Real Estate Indirect Investment Fund, etc.)
The amended provisions of Article 91-5 shall apply, starting with the portion of the income that first accrues after the enforcement of this Act.
Article 25 (Application Example concerning Tax Credit on Information Return, etc.)
The amended provisions of Article 104-5 shall apply, starting with the portion of the information return, etc. that are first filed after the enforcement of this Act.
Article 26 (Application Example concerning Tax Credit on Electronic Return)
The amended provisions of Article 104-8 shall apply, starting with the portion of the electronic return that is first filed after the enforcement of this Act.
Article 27 (Application Example concerning Special Case of Calculation of Tax Base of Corporate Tax on Shipping Enterprises)
The amended provisions of Article 104-10 (6) shall apply, starting with the portion that first fails to meet the requirements provided for in the provisions of paragraph (1) of the same Article for not less than 2 business years after the enforcement of this Act.
Article 28 (Application Example concerning Exemption from Value-Added Tax on Business of Operating School Facilities, etc.)
The amended provisions of Article 106 (1) 8 shall also apply to the portion of the implementation agreement (excluding any school facilities that are already in operation after the completion of their construction) which is concluded prior to the enforcement of this Act.
Article 29 (Application Example concerning Special Case of Deduction of Input Tax Amount of Value-Added Tax on Operational Assets of High-Speed Railway)
(1)
The amended provisions of Article 108-2 shall apply, starting with the portion that is first returned and paid after the enforcement of this Act.
(2)
In case where it is intended to have the input tax amount deducted pursuant to the amended provisions of Article 108-2, the details of the operational assets and the input tax amount by year shall be returned to the head of tax office having jurisdiction over the business place or the main business place on or before January 25, 2006.
Article 30 (Application Example concerning Invalidation of Effect of Decision on Tax Reduction or Exemption)
The amended provisions of Article 121-2 (13) shall apply, starting with the portion that is first subject to the decision on the tax reduction or exemption after the enforcement of this Act.
Article 31 (Application Example concerning Procedures for Reducing or Exempting from Tax on Capital Increase)
The amended provisions of Article 121-4 (4) shall apply, starting with the portion of capital that is first increased after the enforcement of this Act.
Article 32 (Application Example concerning Additional Collection of Reduced or Exempted from Tax on Foreigner's Investment)
The amended provisions of Article 121-5 shall apply, starting with the portion for which grounds for making the additional collection first occur after the enforcement of this Act.
Article 33 (Application Example concerning Coordination of Sale and Purchase Limit of Tax-Free Goods at Designated Tax-Free Shops)
The amended provisions of Article 121-13 (4) and (5) shall apply, starting with the portion of tax-free goods that are first sold and purchased after the enforcement of this Act.
Article 34 (Application Example concerning Income Deduction on Amount Drawn on Credit Cards, etc.)
The amended provisions of Article 126-2 (1) shall apply, starting with the portion of the calculation of the total amount that is spent in use of credit cards, etc. in the year whereto belongs the date on which this Act enters into force.
Article 35 (Application Example concerning Exclusion of Overlapping Support)
The amended provisions of Article 127 (8) shall apply, starting with the portion of the taxable year whereto belongs the date on which this Act enters into force.
Article 36 (Application Example concerning Composite Limited Amount on Reduction or Exemption of Capital Gains Tax)
(1)
The composite limited amount of the reduction or exemption of the capital gains on the substitute land for the farmland from among the amended provisions of Article 133 shall apply, starting with the portion that is converted into the substitute land by means of transfer after the enforcement of this Act.
(2)
In the application of the amended provisions of the latter part of Article 133 (2), the tax amount that is reduced or exempted pursuant to the provisions of Article 69 prior to the enforcement of this Act shall not be added up.
Article 37 (Application Example concerning Additional Collection of Reduced or Exempted Tax Amount)
The amended provisions of Article 146 shall apply, starting with the portion of the relevant assets that are first disposed of after the enforcement of this Act.
Article 38 (Transitional Measure concerning Ex Post Management of Special Tax Amount that is deducted for Increasing Employment)
In case where any national who has had his/her income tax and corporate tax deducted pursuant to the previous provisions of Article 30-4 (2) suspends the employment maintaining system or reverts to the previous system, the previous provisions of Article 30-4 (3) shall apply to the payment of his/her income tax or corporate tax, notwithstanding the amended provisions of Article 30-4.
Article 39 (Transitional Measure concerning Special Case of Taxation on Debt-for-Equity Conversion)
The appropriation of the gains from debt exemption by converting them into investment that are not included in the gross income for the amount of deficit pursuant to the previous provisions of the former part of Article 44 (2) and the inclusion of such gains in the gross income at the time of the enforcement of this Act shall be governed by the previous provisions of the latter part of Article 44 (2) and (4).
Article 40 (Transitional Measure concerning Temporary and Special Reduction or Exemption of Tax Amount on Relocation of Corporation's Head Office to Area other than Seoul Metropolitan Area)
(1)
In case where the head office located in the overconcentration control zone of the Seoul Metropolitan area is transferred, removed, closed or converted into other use than the use of the head office or a contract on the transfer of the head office located in the overconcentration control zone of the Seoul Metropolitan area is concluded or a contract on the purchase of an area other than the Seoul Metropolitan area, in which the head office is to be located in order to make the head office subject to the application of the previous provisions of Article 63-2 prior to the enforcement of this Act and the head office is not relocated prior to the taxable year whereto belongs the date on which this Act enters into force, the previous provisions may be applied thereto, notwithstanding the amended provisions of Article 63-2.
(2)
In case where the reduction or exemption provided for in the previous provisions or the amended provisions are applied pursuant to the provisions of paragraph (1), one of them shall be chosen and the chosen provision shall be applied thereto without interruption during the reduction or exemption period.
Article 41 (Transitional Measure concerning Reduction and Exemption of Capital Gains Tax on Self-Tilling Farmland)
The transfer of any farmland that has been tilled by any agricultural corporation for not less than 5 years after having acquired it pursuant to the previous provisions of Article 69 (1) prior to the enforcement of this Act shall be governed by the previous provisions of Article 69-2, notwithstanding the amended provisions of Article 69 (1).
Article 42 (Transitional Measure concerning Shortening of Period during which Deducted Amount of Donations are Carried Over)
The inclusion of donations that are included in deductible expenses pursuant to the previous provisions of Article 73 (1) prior to the enforcement of this Act shall be governed by the previous provisions, notwithstanding the amended provisions of Article 73 (4).
Article 43 (Transitional Measure concerning Special Taxation on Stockholders of Ship Investment Companies)
The transfer of stocks that are first acquired after making investments in any ship investment company pursuant to the previous provisions of Article 87-5 (1) prior to the enforcement of this Act shall be governed by the previous provisions, notwithstanding the amended provisions of Article 87-5 (1).
Article 44 (Transitional Measure concerning Special Taxation on Tax-Favored Comprehensive Savings)
The tax-favored comprehensive savings to which subscriptions are made pursuant to the previous provisions of Article 89 (1) prior to the enforcement of this Act shall be governed by the previous provisions, notwithstanding the amended provisions of Article 89 (1).
Article 45 (Transitional Measure concerning Inclusion of Reserve for Treasury Stock Disposal Loss in Deductible Expenses for Stock-Listed Corporations or Association-Registered Corporations)
The inclusion of the reserve in the gross income, which is included in the deductible expenses pursuant to the previous provisions of Article 104-3 at the time of the enforcement of this Act, shall be governed by the previous provisions.
Article 46 (Transitional Measure concerning Exemption from Value-Added Tax on Business of Operating School Facilities, etc.)
In case where any business operator who converts his/her business into the business eligible for the exemption from the value-added tax and adds the tax-free business pursuant to the amended provisions of Article 106 (1) 8 uses goods that he/she has acquired prior to the enforcement of this Act directly for the relevant business that is exempted from the value-added tax, the provisions of Articles 6 (2) and 17 (5) of the Value-Added Tax Act shall not apply thereto.
Article 47 (Transitional Measure concerning Application for Tax Reduction or Exemption on Capital Increase)
The time limit for filing the application for the tax reduction or exemption on the capital that is increased prior to the enforcement of this Act shall be governed by the previous provisions, notwithstanding the amended provisions of Article 121-2 (6).

ADDENDA
Article 1 (Enforcement Date)
This Act shall enter into force on the date of its promulgation. (Proviso Omitted.)
Articles 2 through 16 Omitted.

ADDENDA
Article 1 (Enforcement Date)
This Act shall enter into force on July 1, 2006. (Proviso Omitted.)
Articles 2 through 41 Omitted.

ADDENDA
Article 1 (Enforcement Date)
This Act shall enter into force six months after the date of its promulgation.
Articles 2 through 7 Omitted.

ADDENDA
Article 1 (Enforcement Date)
This Act shall enter into force on January 1, 2007. (Proviso Omitted.)
Articles 2 through 12 Omitted.

ADDENDA
Article 1 (Enforcement Date)
This Act shall enter into force three months after the date of its promulgation.
Articles 2 through 4 Omitted.

ADDENDA
Article 1 (Enforcement Date)
This Act shall enter into force on January 1, 2007. (Proviso Omitted.)
Articles 2 through 6 Omitted.

ADDENDA
Article 1 (Enforcement Date)
This Act shall enter into force on January 1, 2007: Provided, That the amended provisions of Articles 126-4, 126-5 and 128 (4) 2 and 3 shall take effect on July 1, 2007, and the amended provisions of Articles 100-2 through 100-13 and 128 (4) 1, on January 1, 2008.
Article 2 (General Application Examples)
(1)
The amended provisions of this Act concerning the income tax and corporate tax shall apply starting with the taxable year that first starts after this Act enters into force.
(2)
The amended provisions of this Act concerning the value-added tax shall apply starting with the portion of goods or services first supplied or purchased, or goods declared for import after this Act enters into force.
(3)
The amended provisions of this Act concerning the capital gains tax and securities transaction tax shall apply starting with the portion first transferred after this Act enters into force.
(4)
The amended provisions of this Act concerning the inheritance tax or gift tax shall apply starting with the portion for which an inheritance or gift first commences after this Act enters into force.
(5)
The amended provisions of this Act concerning the special consumption tax, traffic, environment and energy tax, education tax and driving tax shall apply starting with the portion which is first carried out of the manufacturing place or bonded area, or whose importation is first declared, after this Act enters into force.
(6)
The amended provisions of this Act concerning the stamp tax shall apply starting with taxable documents first prepared after this Act enters into force.
(7)
The amended provisions of this Act concerning the customs duties shall apply starting with the portion whose importation is first declared after this Act enters into force.
(8)
The amended provisions of this Act concerning the acquisition tax or registration tax shall apply starting with the portion which is first acquired or registered after this Act enters into force.
Article 3 (Application Example concerning Special Case of Inclusion in Deductible Expenses for Small or Medium Enterprise Support Facilities)
The amended provisions of Article 8 shall apply starting with the portion for which a donation is first given or taken after this Act enters into force.
Article 4 (Application Example concerning Tax Credit for Entrusted Research and Manpower Development Expenses)
The amended provisions of Article 10 (1) shall apply starting with the taxable year whereto belongs the date this Act enters into force.
Article 5 (Application Example concerning Special Taxation for Contribution, etc. for Research and Development)
The amended provisions of Article 10-2 shall apply starting with the portion for which a contribution, etc. is first paid after this Act enters into force.
Article 6 (Application Example concerning Reduction or Exemption of Corporate Tax, etc. for High-Tech Enterprises, etc. Located in Special Research and Development Zones)
The amended provisions of Article 12-2 shall apply starting with the portion of the income which first accrues after this Act enters into force.
Article 7 (Application Example concerning Income Deduction for Contribution, etc. to Small or Medium Start-up Business Investment Association)
The amended provisions of Article 16 (1) shall apply starting with the portion of the contribution or investment which is first made after this Act enters into force.
Article 8 (Application Example concerning Special Taxation for Foreign Workers)
The amended provisions of Article 18-2 shall apply starting with the portion of the income which is first paid after this Act enters into force.
Article 9 (Application Example concerning Corporate Tax Exemption on Dividend Income from Investment in Overseas Resource Development)
The amended provisions of Article 22 (1) shall apply starting with the business year whereto belongs the date this Act enters into force.
Article 10 (Application Example concerning Reduction or Exemption of Tax Amount for Small or Medium Enterprise Whose Business is Converted)
The amended provisions of Article 33-2 shall apply starting with the portion of the business which is first converted after this Act enters into force.
Article 11 (Application Example concerning Special Taxation on Stock Exchange, etc. for Strategic Alliance with Venture Business)
The amended provisions of Article 46-2 (1) shall apply starting with the portion of the transfer margin which first accrues from the exchange with the treasury stocks or the in-kind investment in a venture business after this Act enters into force.
Article 12 (Application Example concerning Special Taxation of Corporate Tax on Margins Accruing from Transfer of Self-Logistics Facilities)
The amended provisions of Article 46-4 shall apply starting with the portion which is first transferred after this Act enters into force.
Article 13 (Application Example concerning Special Taxation on Division of Distribution Business)
The amended provisions of Article 46-5 shall apply starting with the portion which is first divided after this Act enters into force.
Article 14 (Application Example concerning Special Taxation on Succession to Deficits Carried Forward Following Merger of Logistics Corporations)
The amended provisions of Article 46-6 shall apply starting with the portion which is first merged after this Act enters into force.
Article 15 (Application Example concerning Special Taxation on Self-Managed Real Estate Investment Company, etc.)
The amended provisions of Article 55-2 (4) shall apply starting with the portion of purchasing a national housing unit which is first newly built, or which has never been occupied at the time of acquisition, after this Act enters into force.
Article 16 (Application Example concerning Corporate Tax Exemption, etc. for Agricultural Partnership Corporation, etc.)
The amended provisions of Article 66 (1) shall apply starting with the business year whereto belongs the date this Act enters into force.
Article 17 (Application Example concerning Exemption, etc. of Corporate Tax for Fishery Partnership Corporation, etc.)
The amended provisions of Article 67 (1) shall apply starting with the business year whereto belongs the date this Act enters into force.
Article 18 (Application Example concerning Non-taxation, etc. on Dividend from Incorporated Agricultural Corporation)
(1)
The amended provisions of Article 68 (1) shall apply starting with the business year whereto belongs the date this Act enters into force.
(2)
The amended provisions of Article 68 (4) and (5) shall apply starting with the portion of the dividend which is first paid after this Act enters into force.
Article 19 (Application Example concerning Special Taxation of Corporate Tax on Partnership Corporation, etc.)
(1)
The amended provisions of Article 72 (1) shall apply starting with the business year whereto belongs the date this Act enters into force.
(2)
The amended provisions of Article 72 (4) shall apply starting with the portion of the interest on funds provided for the improvement of financial structure, which is first paid after this Act enters into force.
Article 20 (Application Example concerning Special Taxation on Donations)
The amended provisions of Article 73 shall apply starting with the portion which is first disbursed after this Act enters into force.
Article 21 (Application Example concerning Special Case of Inclusion of Reserves for Business Proper to Specific Purpose in Deductible Expenses)
The amended provisions of Article 74 (1) shall apply starting with the portion of the income which accrues in the business year whereto belongs the date this Act enters into force.
Article 22 (Application Example concerning Special Case, etc. of Inclusion of Political Funds in Deductible Expenses)
The amended provisions of Article 76 shall apply starting with the portion which is first donated after this Act enters into force.
Article 23 (Application Example concerning Special Taxation for Relocation of Factories Located in Multifunctional Administrative City to Local Areas)
The amended provisions of Article 85-2 shall apply starting with the portion which is first relocated after this Act enters into force.
Article 24 (Application Example concerning Special Taxation of Corporate Tax on Investment of Land in Kind within Enterprise City Development Project Zone)
The amended provisions of Article 85-3 shall apply starting with the portion which is first invested in kind after this Act enters into force.
Article 25 (Application Example concerning Special Taxation of Corporate Tax on Investment of Land in Kind for Free Economic Zone Development Projects)
The amended provisions of Article 85-4 shall apply starting with the portion which is first invested in kind after this Act enters into force.
Article 26 (Application Example concerning Special Taxation on Margins Accruing from Transfer of Land, etc. for Nursery Facilities)
The amended provisions of Article 85-5 shall apply starting with the portion which is first transferred after this Act enters into force.
Article 27 (Application Example concerning Non-taxation, etc. on Long-term Savings for Purchase of Housing Unit)
The amended provisions of Article 87 (1) shall apply starting with the portion which is first opened after this Act enters into force.
Article 28 (Application Example concerning Non-taxation, etc. on Livelihood Savings of Aged or Disabled Persons, etc.)
The amended provisions of Article 88-2 (1) 1 shall apply starting with the portion which is first subscribed to after this Act enters into force.
Article 29 (Application Example concerning Special Taxation for Members, etc. of Employee Stock Ownership Association)
(1)
The amended provisions of Article 88-4 (4) and (6) shall apply starting with the portion which is first alloted after this Act enters into force.
(2)
The amended provisions of Article 88-4 (9) and (10) shall apply starting with the portion of the dividend income the base date of whose dividend first comes after this Act enters into force.
Article 30 (Application Example concerning Special Taxation on Tax-favored Comprehensive Savings)
The amended provisions of Article 89 (1) shall apply starting with the portion which is first opened, or whose contract period is first extended, after this Act enters into force.
Article 31 (Application Example concerning Lower Rate of Tax, etc. on Deposits in Cooperatives, etc.)
The amended provisions of Article 89-3 shall apply starting with the portion which is first opened, or whose contract period is first extended, after this Act enters into force.
Article 32 (Application Example concerning Non-Taxation of Income Tax and Special Case of Withholding Tax on Dividend Income on Long-held Stocks)
The amended provisions of Article 91 (1), (3) and (5) shall apply starting with the portion of the dividend income which is paid after this Act enters into force.
Article 33 (Application Example concerning Special Taxation on Dividend Income of Stocks of Overseas Resources Development Investment Company, etc.)
The amended provisions of Article 91-6 shall apply starting with the portion of the dividend income which is paid after this Act enters into force.
Article 34 (Application Example concerning Special Taxation for High-income High-risk Investment Trusts, etc.)
The amended provisions of Article 91-7 shall apply starting with the portion of the high-income high-risk investment trust, etc. which is first created or established after this Act enters into force.
Article 35 (Application Example concerning Separate Taxation, etc. on Lottery Prize Income, etc.)
The amended provisions of Article 92 shall apply starting with the portion of the income which first accrues after this Act enters into force.
Article 36 (Application Example concerning Strict Management of Tax-Free Petroleums)
(1)
The amended provisions of Article 106-2 (6) shall apply starting with the portion of additional collection due to the transfer of the purchase coupon of tax-free petroleums, etc. which is first issued or the petroleum products supplied by the purchase coupon of tax-free petroleums, etc., or the use of the petroleum products, for other purposes than farming, forestry or fishing industry, which are first supplied by the purchase coupon of tax-free petroleums, etc., after this Act enters into force.
(2)
The amended provisions of Article 106-2 (8) shall apply starting with the portion of the purchase coupon of tax-free petroleums, etc. which is first issued, or the purchase coupon of tax-free petroleums, etc. or the petroleum products supplied by the purchase coupon of tax-free petroleums, etc. which are first taken over, after this Act enters into force.
Article 37 (Application Example concerning Special Case of Deduction of Input Tax Amount of Value-Added Tax on Recycled Waste Resources, etc.)
(1)
The amended provisions of Article 108 (1) shall apply starting with the portion which is first acquired after this Act enters into force.
(2)
The amended provisions of Article 108 (2) shall apply starting with the taxable period which first commences after this Act enters into force.
Article 38 (Application Example concerning Tax Credit on Increased Revenue Amounts, etc.)
The amended provisions of Article 122 (2) and (3) shall apply starting with the portion of the amount of revenues which is derived after this Act enters into force.
Article 39 (Application Example concerning Special Taxation on Income Tax, etc. for Business Operators Filing Faithful Returns)
(1)
The amended provisions of Article 122-2 (1) (excluding the amended provisions concerning the value-added tax), (2), (4), (8) (excluding the amended provisions concerning the value-added tax) and (9) shall apply starting with the portion of the income which first accrues after this Act enters into force.
(2)
The amended provisions of Article 122-2 (1) and (8) concerning the value-added tax and of paragraphs (3) and (5) of the said Article shall apply starting with the portion which is reported on or after July 1, 2007.
(3)
The amended provisions of Article 122-2 (9) 1 (c) shall apply starting with the portion which is first settled after this Act enters into force.
Article 40 (Application Example concerning Income Deduction for Amounts Drawn on Credit Cards, etc.)
The amended provisions of Article 126-2 (1) shall apply starting with the portion of the annual aggregate of amounts drawn on credit cards, etc. which is calculated in the year whereto belongs the date this Act enters into force.
Article 41 (Application Example concerning Value-Added Tax Credits, etc. for Cash Receipt Service Operators)
The amended provisions of Article 126-3 (1) shall apply starting with the portion of the payment records which are submitted after this Act enters into force.
Article 42 (Application Example concerning Composite Ceiling of Reduction or Exemption of Gift Tax)
In the application of the amended provisions of Article 133 (3), the amount of the gift tax exempted pursuant to Articles 15 and 16 of the Addenda of the amended Regulation of Tax Reduction and Exemption Act, Act No. 5584, before this Act enters into force shall not be added up.
Article 43 (Transitional Measures concerning Inclusion of Reserves in Deductible Expenses)
With respect to the inclusion of the reserves, which are added to the deductible expenses in each taxable year, in the gross income or the payment of an additional amount equivalent to the interest pursuant to the previous provisions of Articles 8-2, 9, 28, 55-2 (1) and (2) and 104-9, at the time of the entry into force of this Act, the previous provisions shall apply, respectively.
Article 44 (Transitional Measures concerning Special Taxation on Stock Option)
With respect to the profits derived by exercising a stock option which is granted prior to the entry into force of this Act, the previous provisions shall apply, notwithstanding the amended provisions of Article 15.
Article 45 (Transitional Measures concerning Reduction and Exemption of Tax Amount, Property Tax, etc. for Job-Creating Start-up Enterprises)
(1)
With respect to the reduction and exemption of a tax amount for a national who incorporates a start-up enterprise pursuant to the previous provisions of Article 30-2 (1) prior to the entry into force of this Act, the previous provisions shall apply, notwithstanding the amended provisions of Article 30-2.
(2)
With respect to the reduction and exemption of a tax amount for a national who incorporates a start-up enterprise pursuant to the previous provisions of Article 30-2 (1) prior to the entry into force of this Act, the previous provisions shall apply, notwithstanding the amended provisions of Article 121.
Article 46 (Transitional Measures concerning Special Case of Period for Deduction Carried Forward of Loss of Job-Creating Start-up Enterprises)
With respect to the deduction carried forward of a loss incurred pursuant to the previous provisions of Article 30-3 prior to the entry into force of this Act, the previous provisions shall apply, notwithstanding the amended provisions of Article 30-3.
Article 47 (Transitional Measures concerning Special Taxation on Corporate Restructuring Securities Investment Companies, etc.)
With respect to the transfer of the stocks or equities acquired through a direct investment in a corporate restructuring securities investment company pursuant to the previous provisions of Article 54 (3) prior to the entry into force of this Act, the previous provisions shall apply, notwithstanding the amended provisions of Article 54 (3).
Article 48 (Transitional Measures concerning Special Taxation on Special Company for Corporate Restructuring, etc.)
(1)
With respect to the non-taxation of the corporate tax on the dividend income received from an enterprise subject to corporate restructuring prior to the entry into force of this Act, the previous provisions shall apply, notwithstanding the amended provisions of Article 55 (1).
(2)
With respect to the transfer of the stocks that are first acquired by investing in a special company for corporate restructuring or a corporate restructuring investment company pursuant to the previous provisions of Article 55 (4) prior to the entry into force of this Act, the previous provisions shall apply, notwithstanding the amended provisions of Article 55 (4).
Article 49 (Transitional Measures concerning Special Taxation on Self-Managed Real Estate Investment Company, etc.)
(1)
With respect to the person who commenced a lease business but had no income from the lease business prior to the entry into force of this Act, he/she shall be deemed to have commenced the lease business on the enforcement date of this Act, and thereby shall be subject to the amended provisions of Article 55-2 (4).
(2)
With respect to the transfer of the stocks that are first acquired by investing in a real estate investment company pursuant to the previous provisions of Article 55-2 (5) prior to the entry into force of this Act, the previous provisions shall apply, notwithstanding the amended provisions of Article 55-2 (5).
Article 50 (Transitional Measures concerning Special Taxation of Corporate Tax for Merger of National Agricultural Cooperatives Federation, etc.)
With respect to the inclusion of a subsidy, which is not added to the gross income, in the gross income pursuant to the previous provisions of Article 72-2 prior to the entry into force of this Act, the previous provisions shall apply, notwithstanding the amended provisions of Article 72-2.
Article 51 (Transitional Measures concerning Special Taxation on Donations)
With respect to the inclusion of a donation, which is not added to the deductible expenses, in the deductible expenses pursuant to the previous provisions of Article 73 (1) and (2) prior to the entry into force of this Act, the previous provisions shall apply, notwithstanding the amended provisions of Article 73 (4). calm
Article 52 (Transitional Measures concerning Exemption of Capital Gains Tax for Relocation of Museum, etc.)
With respect to the reduction or exemption of a capital gains tax pursuant to the previous provisions of Article 83, or the transfer of land, etc. for the application of the said provisions, prior to the entry into force of this Act, the previous provisions shall apply, notwithstanding the amended provisions of Article 83.
Article 53 (Transitional Measures concerning Special Case of Inclusion in Deductible Expenses for Agricultural Cooperatives, etc.)
With respect to the inclusion of the transfer margin, which is added to the deductible expenses, in the deductible expenses pursuant to the previous provisions of Article 84 prior to the entry into force of this Act, the previous provisions shall apply, notwithstanding the amended provisions of Article 84.
Article 54 (Transitional Measures concerning Special Taxation of Capital Gains Tax on Real Estate Used for Public Projects in Designated Areas)
With respect to the transfer (including the case of expropriation) of real estate used for the public project for the application of the previous provisions of Article 85 prior to the entry into force of this Act, the previous provisions shall apply, notwithstanding the amended provisions of Article 85.
Article 55 (Transitional Measures concerning Special Taxation on Tax-favored Comprehensive Savings)
(1)
With respect to the interest or dividend income accruing from the tax-favored comprehensive savings, the expiry date of whose contract period is fixed, subscribed to pursuant to the previous provisions of Article 89 (1) prior to the entry into force of this Act, the previous provisions shall apply until the contract period of the savings expires, notwithstanding the amended provisions of Article 89 (1).
(2)
With respect to the interest or dividend income accruing from the tax-favored comprehensive savings, the expiry date of whose contract period is not fixed, subscribed to pursuant to the previous provisions of Article 89 (1) prior to the entry into force of this Act, the previous provisions shall apply until December 31, 2009, notwithstanding the amended provisions of Article 89 (1).
Article 56 (Transit