Securities Transaction Tax Act


Published: 2008-01-09

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 Article 1 (Taxable Objects)   print
The securities transaction tax shall be imposed on a transfer of share certificates or portions (hereinafter referred to as "share certificates, etc.") under this Act: Provided, That in case where the transfer of share certificates, etc. falls under any of the following subparagraphs, the securities transaction tax shall not be levied:
1. Where the share certificates, etc. listed on the markets located in the foreign states (limited to the markets stipulated in Presidential Decree; hereafter referred to as the "foreign securities market" in this Article) which are similar to the securities market and Association brokerage market under the Securities and Exchange Act (hereinafter referred to as the "securities market, etc."), are transferred; and
2. Where the share certificates, etc. are transferred to the underwriters (referring to the underwriters under Article 2 (7) of the Securities and Exchange Act; hereinafter the same shall apply) in order to list the share certificates, etc. on the foreign securities market.
[This Article Wholly Amended by Act No. 6302, Dec. 29, 2000]
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 Article 2 (Definitions)   print
(1) For the purpose of this Act, the term "share certificates" means any of the following subparagraphs: <Amended by Act No. 5156, Aug. 14, 1996; Act No. 6302, Dec. 29, 2000>
1. Share certificates of a corporation established under the Commercial Act or under other special Acts; or
2. Share certificates or depository receipts which are issued by a foreign corporation and are listed on or registered with the securities market, etc.
(2) For the purpose of this Act, the term "portion" means a certain share of a partner or member of an partnership, limited partnership and limited liability company established under the Commercial Act.
(3) For the purpose of this Act, the term "transfer" means that the ownership is transferred onerously by contract or legal causes.
(4) Share prior to issuance of the share certificates, rights acquired by subscribing for the shares, preemptive rights, and certificates of contribution issued by a corporation which is established under a special Act, shall be deemed to be share certificate in applying this Act.
(5) In applying this Act, the terms of a resident, non-resident, domestic corporation, foreign corporation, domestic business place of a non-resident or foreign corporation, shall have the same meaning as those used in the Income Tax Act and the Corporate Tax Act. <Newly Inserted by Act No. 4670, Dec. 31, 1993>
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 Article 3 (Taxpayer)   print
The taxpayer to pay the securities transaction tax, shall be those who fall under any of the following subparagraphs: <Amended by Act No. 5156, Aug. 14, 1996; Act No. 6302, Dec. 29, 2000>
1. Where the share certificates falling under one of the following items are settled by account transfer, the person who conducts the relevant settlement by account transfer:
(a) Share certificates transferred at the securities market, etc.; and
(b) Share certificates transferred outside of the securities market, etc. by means prescribed by Presidential Decree;
2. Where the share certificates, etc. are transferred through securities companies except as referred to in subparagraph 1, the securities companies; and
3. Where the share certificates, etc. are transferred, except as is provided in subparagraphs 1 and 2, the transferor: Provided, That if a non-resident or foreign corporation that does not have any domestic business place in Korea transfers share certificates, etc., not through any securities company, a transferee of such share certificates shall be deemed to be a taxpayer.
[This Article Wholly Amended by Act No. 4670, Dec. 31, 1993]
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 Article 4 (Place of Tax Payment)   print
(1) The place where the securities transaction tax is to be paid shall be any of the following places: <Amended by Act No. 6302, Dec. 29, 2000>
1. In the case as referred to in subparagraphs 1 and 2 of Article 3, the location of each business place of the relevant taxpayer: Provided, That in the case as prescribed by Presidential Decree, the location of the head office or principal offices may be made as the tax payment place for the securities transaction tax; or
2. In the case as referred to in subparagraph 3 of Article 3:
(a) If the taxpayer is a resident, his domicile: Provided, That if he has no domicile, it shall be his residence;
(b) If the taxpayer is a domestic corporation, the location of its head or principal office recorded in the register;
(c) If the taxpayer is a non-resident or foreign corporation and has a domestic business place, the location of its domestic business place (if there are two or more domestic business places, the principal one); or
(d) If the taxpayer is a non-resident or foreign corporation and has no domestic business place, the location of the head or principal office of the corporation which has issued the share certificates on which the securities transaction tax is levied.
(2) If the place of tax payment is not clear, it shall be determined under the conditions as prescribed by Presidential Decree.
[This Article Wholly Amended by Act No. 4670, Dec. 31, 1993]
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 Article 5 (Timing of Transfer)   print
(1) In applying this Act, the time for transfer of a share certificate, etc. shall be the time when the transaction is settled definitely.
(2) The matters necessary for a definite settlement of a transaction under paragraph (1) shall be prescribed by Presidential Decree.
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 Article 6 (Transfer not Subject to Taxation)   print
No securities transaction tax shall be assessed in the following cases: <Amended by Act No. 6302, Dec. 29, 2000>
1. Where the State or local government transfers the share certificates, etc.;
2. Where a public offering of outstanding share certificates are made under Article 8 of the Securities and Exchange Act (including the case where an underwriter subscribes for the share certificates with respect to which an offer of subscription has not been made);
3. Deleted; or <by Act No. 6302, Dec. 29, 2000>
4. Where share certificates, etc. as determined by Presidential Decree, other than those as referred to in subparagraphs 1 and 2, are transferred.
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 Article 7 (Tax Base)   print
(1) The tax base on which the securities transaction tax is levied, shall be as follows: <Amended by Act No. 8838, Jan. 9, 2008>
1. Where the share certificates under each item of subparagraph 1 of Article 3 are transferred, the sum of the transfer value of relevant share certificates; and
2. Where the share certificates, etc. other than subparagraph 1 are transferred, the value under the division falling under each of the following items:
(a) Where the transferred values of share certificates, etc. are known: the transferred values of relevant share certificates, etc.: Provided, That in cases where falling under any of the following sub-items, the value as prescribed as follows shall apply:
(i) The relevant market value in case where acknowledged that the share certificates, etc. have been transferred at the price lower than the market value under Article 101 of the Income Tax Act, Article 52 of the Corporate Tax Act, or Article 35 of the Inheritance Tax and Gift Tax Act (except the case where the provisions of Article 4 of the Adjustment of International Taxes Act shall apply); and
(ii) The normal value in case where acknowledged that the share certificates, etc. have been transferred at the price lower than the normal value under Article 126 of the Income Tax Act, Article 92 of the Corporate Tax Act or Article 4 of the Adjustment of International Taxes Act;
(b) Where the transferred values of share certificates, etc. are unknown: the value assessed by means of the assessment of transferred values as stipulated in Presidential Decree.
(2) Matters necessary for computing the market price and normal price in the application of the provisions of paragraph (1) shall be prescribed by the Presidential Decree. <Amended by Act. No. 8838, Jan. 9, 2008>
[This Article Wholly Amended by Act No. 6302, Dec. 29, 2000]
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 Article 8 (Tax Rate)   print
(1) The tax rate of the securities transaction tax shall be 5/1,000.
(2) If it is deemed that there is an urgent need to support the development of the capital market, the tax rate as referred to in paragraph (1) may be reduced or may be zero percent, per item only in respect of the share certificates traded in the securities market, etc. under the conditions as prescribed by the Presidential Decree. <Amended by Act No. 5156, Aug. 14, 1996; Act No. 6302, Dec. 29, 2000>
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 Article 9 (Withholding of Securities Transaction Tax)   print
Any taxpayer under the proviso of subparagraphs 1, 2, and 3 of Article 3 shall withhold from the transferor of the share certificate, etc. the securities transaction tax calculated by applying the tax rate as prescribed in Article 8 to the tax base as prescribed in Article 7. <Amended by Act No. 4670, Dec. 31, 1993>
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 Article 10 (Tax Return, Payment and Refund)   print
(1) Any taxpayer for the securities transaction tax shall file his tax return in respect of the tax base and tax amount for each month to the director of a competent tax office by the 10th of the following month under the conditions as prescribed by the Presidential Decree. <Amended by Act No. 5156, Aug. 14, 1996>
(2) The taxpayer shall pay to the tax office having jurisdiction over the tax payment place, the Bank of Korea (including its agents) or the postal offices the securities transaction tax for each month with the return as referred to in paragraph (1), under the conditions as prescribed by the Presidential Decree. <Amended by Act No. 5156, Aug. 14, 1996; Act No. 6302, Dec. 29, 2000>
(3) Where there exists any excessive or wrong payment in the securities transaction tax paid under paragraph (2) by the taxpayer under subparagraph 1 of Article 3, and where the refund is made to the transferor of the share certificates, etc., it may be refunded by adjusting the securities transaction tax to be paid by the relevant taxpayer by collecting at the trade. <Newly Inserted by Act No. 6302, Dec. 29, 2000>
(4) Matters necessary for the requisites, etc. of the refund under paragraph (3) shall be prescribed by the Presidential Decree. <Newly Inserted by Act No. 6302, Dec. 29, 2000>
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 Article 11 (Adjustment)   print
(1) If no return is made on the tax base and tax amount under Article 10, or any error or omission is found in the contents of return, the director of a competent tax office may investigate the tax base and tax amount, and determine or adjust both of them. <Amended by Act No. 5156, Aug. 14, 1996>
(2) In making a decision or adjustment under paragraph (1), it shall be based on books and other documentary evidence: Provided, That if it is unable to be based on books or other documentary evidence and it is prescribed by the Presidential Decree, such decision or adjustment may be based on the estimation. <Amended by Act No. 6302, Dec. 29, 2000>
(3) If it is found that an error or omission is included in the tax base and tax amount decided or adjusted under paragraphs (1) and (2), the director of a competent tax office shall adjust it immediately. <Amended by Act No. 5156, Aug. 14, 1996>
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 Article 12 (Occasional Imposition)   print
Notwithstanding the provisions of Article 10, when a taxpayer suspends or discontinues his business, or it is deemed that he might evade payment obligations of the securities transaction tax, the director of a competent tax office may investigate and decide at any time his tax base and tax amount. In this case, the provisions of Article 11 (2) shall apply mutatis mutandis. <Amended by Act No. 5156, Aug. 14, 1996>
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 Article 13 (Collection)   print
If a taxpayer for the securities transaction tax fails to pay the tax amount in full for which a tax return was filed earlier, the director of a competent tax office shall collect the unpaid or insufficient tax amount, and if a decision, adjustment or occasional imposition is made under Articles 11 and 12, the payable tax amount. <Amended by Act No. 5156, Aug. 14, 1996>
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 Article 14 Deleted.<by Act No. 8139, Dec. 30, 2006>   print
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 Article 15 (Keeping and Entry of Books)   print
(1) The corporation who is a taxpayer for the securities transaction tax shall keep books relating to its business, and record thereon the kinds, quantity, transaction amount of share certificate, etc. and other matters as prescribed by the Presidential Decree.
(2) Books as referred to in paragraph (1) shall be preserved for five years from date on which the tax return is filed.
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 Article 16 (Matters to be Ordered)   print
If the Government deems it necessary for the purpose of assuring the payment of the securities transaction tax, the Government may order any taxpayer to observe matters necessary to keep control over purchase and sale, tax-free transfers, etc. of share certificates, etc. under the conditions as prescribed by the Presidential Decree.
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 Article 17 (Question and Inspection)   print
Any tax official who is engaged in affairs concerning the securities transaction tax, may ask a taxpayer and his counterpart of the transaction in respect of the matters in relation to the securities transaction tax, or inspect books, documents or other things pertaining to his affairs.
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 Article 18 Deleted.<by Act No. 5156, Aug. 14, 1996>   print
ADDENDA
(1) (Enforcement Date) This Act shall enter into force on the date of its promulgation.
(2) (Examples of Application) This Act shall apply to the transaction by which share certificates, etc. are transferred for the first time after January 1, 1979.
ADDENDA<Act No. 4670, Dec. 31, 1993>
(1) (Enforcement Date) This Act shall enter into force on January 1, 1994.
(2) (Examples of Application) This Act shall apply to the transaction by which share certificates, etc. are transferred for the first time after this Act enter into force.
(3) (Transitional Measures) Any securities transactions tax which has been, or is to be, levied pursuant to the previous provisions at the time this Act enters into force, shall be subject to the previous provisions.
ADDENDA<Act No. 5156, Aug. 14, 1996>
(1) (Enforcement Date) This Act shall enter into force on the date of its promulgation.
(2) (Examples of Application) This Act shall apply to the transaction by which share certificates, etc. are transferred for the first time after this Act enters into force.
ADDENDA<Act No. 6302, Dec. 29, 2000>
(1) (Enforcement Date) This Act shall enter into force on January 1, 2001.
(2) (General Application Examples) This Act shall apply starting with the transaction by which the share certificates, etc. are transferred for the first time after this Act enters into force.
(3) (Applicability to Non-Taxable Transfer) The amendments to subparagraph 3 of Article 6 shall apply to the portion of acceptance by the underwriter for the first time after this Act enters into force.
(4) (General Applicability) With respect to the securities transaction tax levied or to be levied under the previous provisions at the time of enforcement of this Act, the previous provisions shall apply.
ADDENDA<Act No. 7324, Dec. 31, 2004>
(1) (Enforcement Date) This Act shall enter into force on January 1, 2005.
(2) (General Applicability) This Act shall apply starting with the transaction by which the share certificates, etc. are transferred for the first time after this Act enters into force.
(3) (General Transitional Measures) With respect to the additional tax
levied or to be levied under the previous provisions at the time of enforcement of this Act, the previous provisions shall apply.
ADDENDA<Act No. 8139, Dec. 30, 2006>
Article 1 (Enforcement Date)
This Act shall enter into force on January 1, 2007. (Proviso Omitted.)
Articles 2 through 15 Omitted.
Article 16 (Transitional Measures for Amendment to Other Acts)
The additional tax that was imposed or is to be imposed pursuant to the provisions of the tax-related Act falling under each of the following subparagraphs before this Act enters into force, shall be governed by the previous provisions of the corresponding tax-related Act, notwithstanding the corresponding tax-related Act amended by Article 15 (1) through (7) of the Addenda:
1. through 5. Omitted.
7. Omitted.
ADDENDA<Act No. 8838, Jan. 9, 2008>
(1) (Enforcement Date) This Act shall enter into force on April 1, 2008.
(2) (General Applicability) This Act shall apply from the portion which transfers the share certificate first after this Act enters into force.