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RESTRICTION OF SPECIAL TAXATION ACT

Wholly Amended by Act No. 5584, Dec. 28, 1998

Amended by Act No. 5825, Feb. 8, 1999

Act No. 5960, Mar. 31, 1999

Act No. 5980, Apr. 30, 1999

Act No. 5982, May 24, 1999

Act No. 5996, Aug. 31, 1999

Act No. 6055, Dec. 28, 1999

Act No. 6054, Dec. 28, 1999

Act No. 6045, Dec. 28, 1999

Act No. 6073, Dec. 31, 1999

Act No. 6136, Jan. 12, 2000

Act No. 6194, Jan. 21, 2000

Act No. 6273, Oct. 21, 2000

Act No. 6312, Dec. 29, 2000

Act No. 6305, Dec. 29, 2000

Act No. 6299, Dec. 29, 2000

Act No. 6297, Dec. 29, 2000

Act No. 6372, Jan. 16, 2001

Act No. 6480, May 24, 2001

Act No. 6510, Aug. 14, 2001

Act No. 6501, Aug. 14, 2001

Act No. 6519, Nov. 21, 2001

Act No. 6538, Dec. 29, 2001

Act No. 6689, Apr. 20, 2002

Act No. 6708, Aug. 26, 2002

Act No. 6705, Aug. 26, 2002

Act No. 6762, Dec. 11, 2002

Act No. 6852, Dec. 30, 2002

Act No. 6867, May 10, 2003

Act No. 6916, May 29, 2003

Act No. 7003, Dec. 30, 2003

Act No. 7030, Dec. 31, 2003

Act No. 7066, Jan. 20, 2004

Act No. 7191, Mar. 12, 2004

Act No. 7210, Mar. 22, 2004

Act No. 7216, Jul. 26, 2004

Act No. 7220, Oct. 5, 2004

Act No. 7240, Oct. 22, 2004

Act No. 7322, Dec. 31, 2004

Act No. 7311, Dec. 31, 2004

Act No. 7284, Dec. 31, 2004

Act No. 7281, Dec. 31, 2004

Act No. 7332, Jan. 5, 2005

Act No. 7428, Mar. 31, 2005

Act No. 7577, Jul. 13, 2005

Act No. 7601, Jul. 13, 2005

Act No. 7678, Aug. 4, 2005

Act No. 7775, Dec. 29, 2005

Act No. 7839, Dec. 31, 2005

Act No. 7845, Jan. 2, 2006

Act No. 7849, Feb. 21, 2006

Act No. 7949, Apr. 28, 2006

Act No. 8050, Oct. 4, 2006

Act No. 8086, Dec. 26, 2006

Act No. 8146, Dec. 30, 2006

Act No. 8138, Dec. 30, 2006

Act No. 8371, Apr. 11, 2007

Act No. 8362, Apr. 11, 2007

Act No. 8347, Apr. 11, 2007

Act No. 8367, Apr. 11, 2007

Act No. 8387, Apr. 27, 2007

Act No. 8466, May 17, 2007

Act No. 8493, jun. 1, 2007

Act No. 8572, Aug. 3, 2007

Act No. 8827, Dec. 31, 2007

Act No. 8852, Feb. 29, 2008

Act No. 8966, Mar. 21, 2008

Act No. 8986, Mar. 28, 2008

Act No. 9088, jun. 5, 2008

Act No. 9131, Sep. 26, 2008

Act No. 9272, Dec. 26, 2008

Act No. 9276, Dec. 29, 2008

Act No. 9353, Jan. 30, 2009

Act No. 9366, Jan. 30, 2009

Act No. 9370, Jan. 30, 2009

Act No. 9374, Jan. 30, 2009

Act No. 9432, Feb. 6, 2009

Act No. 9512, Mar. 25, 2009

Act No. 9584, Apr. 1, 2009

Act No. 9620, Apr. 1, 2009

Act No. 9671, May 21, 2009

Act No. 9705, May 22, 2009

Act No. 9708, May 22, 2009

Act No. 9763, jun. 9, 2009

Act No. 9921, Jan. 1, 2010

Act No. 9924, Jan. 1, 2010

Act No. 10068, Mar. 12, 2010

Act No. 10220, Mar. 31, 2010

Act No. 10221, Mar. 31, 2010

Act No. 10285, May 14, 2010

Act No. 10310, May 25, 2010

Act No. 10339, jun. 4, 2010

Act No. 10361, jun. 8, 2010

Act No. 10406, Dec. 27, 2010

Act No. 10445, Mar. 9, 2011

Act No. 10529, Apr. 4, 2011

Act No. 10596, Apr. 14, 2011

Act No. 10631, May 19, 2011

Act No. 10653, May 19, 2011

Act No. 10682, May 19, 2011

Act No. 10684, May 19, 2011

Act No. 10764, May 30, 2011

Act No. 10789, jun. 7, 2011

Act No. 10854, Jul. 14, 2011

Act No. 10890, Jul. 21, 2011

Act No. 10907, Jul. 25, 2011

Act No. 10901, Jul. 25, 2011

Act No. 11133, Dec. 31, 2011

Act No. 11241, Jan. 26, 2012

Act No. 11232, Jan. 26, 2012

Act No. 11459, jun. 1, 2012

Act No. 11486, Oct. 2, 2012

Act No. 11614, Jan. 1, 2013

Act No. 11690, Mar. 23, 2013

Act No. 11759, May 10, 2013

Act No. 11845, May 28, 2013

Act No. 11873, jun. 7, 2013

Act No. 11965, Jul. 30, 2013

Act No. 11989, Jul. 30, 2013

Act No. 12031, Aug. 13, 2013

Act No. 12153, Jan. 1, 2014

Act No. 12173, Jan. 1, 2014

Act No. 12251, Jan. 14, 2014

Act No. 12570, May 14, 2014

Act No. 12663, May 21, 2014

Act No. 12853, Dec. 23, 2014

Act No. 13082, Jan. 28, 2015

Act No. 13230, Mar. 27, 2015

Act No. 13372, jun. 22, 2015

Act No. 13383, jun. 22, 2015

Act No. 13448, Jul. 24, 2015

Act No. 13426, Jul. 24, 2015

Act No. 13474, Aug. 11, 2015

Act No. 13498, Aug. 28, 2015

Act No. 13499, Aug. 28, 2015

Act No. 13560, Dec. 15, 2015

Act No. 13613, Dec. 22, 2015

Act No. 13605, Dec. 22, 2015

Act No. 13797, Jan. 19, 2016

Act No. 13805, Jan. 19, 2016

Act No. 13854, Jan. 27, 2016

Act No. 13856, Jan. 27, 2016

Act No. 13983, Feb. 3, 2016

Act No. 14095, Mar. 22, 2016

Act No. 14111, Mar. 29, 2016

Act No. 14122, Mar. 29, 2016

Act No. 14127, Mar. 29, 2016

Act No. 14198, May 29, 2016

Act No. 14390, Dec. 20, 2016

Act No. 14481, Dec. 27, 2016

Act No. 14760, Apr. 18, 2017

CHAPTER I GENERAL PROVISIONS
 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]
 Article 2 (Definitions)
(1) The definitions of terms used in this Act shall be as follows:
1. The term "national" means a resident defined in the Income Tax Act and a domestic corporation defined in the Corporate Tax Act;
2. The term "taxable year" means a taxable period defined in the Income Tax Act or a business year defined in the Corporate Tax Act;
3. The term "tax return" means the final tax return filed under Articles 70 71, 74, and 110 of the Income Tax Act, and the tax return filed under Article 60 of the Corporate Tax Act;
4. The term "gross income" means total amount of income prescribed under Article 24 of the Income Tax Act, or income prescribed under Article 14 of the Corporate Tax Act;
5. The term "deductible expenses" means necessary expenses prescribed under Article 27 of the Income Tax Act, or deductible expenses prescribed under Article 14 of the Corporate Tax Act;
6. The term "tax carried forward" means that, where an individual transfers his/her fixed assets, etc. used for business purposes (hereafter in this subparagraph, referred to as "fixed assets, etc. for the previous business") to a corporation as investment in kind, etc., no income tax on the income generated from such transfer under Article 94 of the Income Tax Act (hereinafter referred to as "capital gains tax") shall be imposed on the individual transferring his/her fixed assets, etc., but the corporation acquiring such assets, etc. shall, if it is to transfer such fixed assets, etc. used for the relevant business purposes pay, as the corporate tax, the equivalent of the capital gains tax calculated under Article 104 of the same Act, which is calculated as if no other assets had been transferred during the taxable period in 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 his/her fixed assets used for business purposes (hereafter in this subparagraph, referred to as "fixed assets, etc. for the previous business") to relocate his/her factory, etc., and acquires the fixed assets used for other business (hereafter in this subparagraph, referred to as "fixed assets, etc. for the new business") with the transfer value, no capital gains tax shall be imposed on the amount calculated by the following formula (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 on transfer accruing from the transfer of the fixed assets, etc. for the previous business shall be the ceiling; hereafter in this subparagraph, referred to as "amount of tax deferred") among the gains on transfer accruing 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 calculated by subtracting the amount of tax deferred from the acquisition value of the fixed assets, etc. for the new business, shall be deemed the acquisition value, and the capital gains tax shall be levied thereon:
The gains on transfer accruing from the transfer of the fixed assets, etc. for the previous business × (the acquisition value of the fixed assets, etc. for the new business/the transfer value of the fixed assets, etc. for the previous business)
8. The term "special taxation" means the reduction of or exemption from tax, such as applying special tax rates, reducing or exempting the amount of tax, tax credits, income deduction, including reserves in deductible expenses, etc. where specific conditions are satisfied, as well as heavy taxation, such as inclusion in 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 "over-concentration control region of the Seoul Metropolitan area" means the over-concentration control region provided for in Article 6 (1) 1 of the Seoul Metropolitan Area Readjustment Planning Act.
(2) Except as otherwise expressly provided for in this Act, any terms other than those defined in paragraph (1), shall be as defined in the Acts set forth in Article 3 (1) 1 through 19.
(3) Except as otherwise expressly 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 special taxation under this Act due to a change in the Korea Standard Industrial Classification, shall remain eligible for special taxation applicable to the relevant types of business under the former Korea Standard Industrial Classification for the taxable year in 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]
 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: <Amended by Act No. 6054, Dec. 28, 1999; Act No. 7210, Mar. 22, 2004; Act No. 7849, Feb. 21, 2006; Act No. 8138, Dec. 30, 2006; Act No. 8827, Dec. 31, 2007; Act No. 9921, Jan. 1, 2010; Act No. 10220, Mar. 31, 2010>
14. Deleted; <by Act No. 6538, Dec. 29, 2001>
17. Deleted; <by Act No. 6299, Dec. 29, 2000>
20. Deleted; <by Act No. 5982, May 24, 1999>
22. Deleted; <by Act No. 9921, Jan. 1, 2010>
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);
(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 listed under paragraph (1), except as otherwise expressly provided for in such Acts or treaties. <Amended by Act No. 9921, Jan. 1, 2010>
CHAPTER II DIRECT NATIONAL TAXES
SECTION 1 Special Taxation for Small or Medium Enterprises
 Article 4 Deleted. <by Act No. 8827, Dec. 31, 2007>
 Article 5 (Tax Credits for Investments by Small or Medium Enterprises, etc.)
(1) Where a national who operates a small or medium enterprise prescribed by Presidential Decree (hereinafter referred to as "small or medium enterprise") or a middle-standing enterprise prescribed by Presidential Decree and listed for the first time (hereafter referred to as "newly listed, middle-standing enterprise" in this Article) on the securities market established under the Financial Investment Services and Capital Markets Act (hereafter referred to as "securities market" in this Article) during the period from January 1, 2015 to December 31, 2015 invests (excluding any investment in used facilities and investment through lease prescribed by Presidential Decree) in any of the following assets by not later than December 31, 2018 [or by not later than the taxable year in which a small or medium enterprise is listed and the taxable years that end within three years from the first day of the following taxable year, in cases of a small or medium enterprise listed for the first time on the securities market during the period from January 1, 2015 to December 31, 2015 (hereafter referred to as "newly listed, small or medium enterprise" in this Article) or a newly listed, middle-standing enterprise], the national is entitled to a tax credit by an amount equivalent to 3/100 (4/100 for a newly listed, small or medium enterprise or a newly listed, middle-standing enterprise) of the relevant investment from the income tax (limited to the income tax on business income (excluded herefrom is the income accruing from a real estate rental business under Article 45 (2) of the Income Tax Act; the same shall apply hereinafter, except for Articles 122-3, 126-2, 126-6, and 132)) or corporate tax for the taxable year in which such investment is completed: <Amended by Act No. 10406, Dec. 27, 2010; Act No. 11614, Jan. 1, 2013; Act No. 12173, Jan. 1, 2014; Act No. 12853, Dec. 23, 2014; Act No. 13560, Dec. 15, 2015>
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 installed 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 as defined under subparagraph 6 of Article 3 of the Framework Act on National Informatization, the depreciation period of which is at least two years (hereinafter referred to as "facilities for information protection system").
(2) Where the investment under paragraph (1) is made over at least two taxable years, paragraph (1) may apply to each amount invested for each taxable year in which such investment is made.
(3) Matters necessary for calculating the amount of investment under paragraph (2) shall be prescribed by Presidential Decree.
(4) Any national who wishes to obtain tax credits pursuant to paragraph (1) or (2) shall file an application for tax credits, as prescribed by Presidential Decree.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]
 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: <Amended by Act No. 11614, Jan. 1, 2013>
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]
 Article 5-3 Deleted. <by Act No. 8827, Dec. 31, 2007>
 Article 6 (Tax Reductions or Exemptions for Small or Medium Start-Up Enterprises, etc.)
(1) A small or medium enterprise incorporated in an area outside the over-concentration control region of the Seoul Metropolitan area (hereinafter referred to as "small or medium start-up enterprise") or a national designated as an operator of a business incubator under Article 6 (1) of the Support for Small and Medium Enterprise Establishment Act, as at December 31, 2018, is entitled to an income tax or corporate tax reduction by the equivalent to 50/100 of the income tax or corporate tax levied on income accruing from the relevant business for the taxable year in which the first income accrues from the relevant business (if no income accrues from the relevant business by the taxable year falling on the fifth anniversary from the date the relevant business commences, referring to the taxable year falling on such fifth anniversary; hereafter in this paragraph, the same shall apply), and also within the four subsequent taxable years from the date the following taxable year commences: Provided, That any youth start-up enterprise prescribed by Presidential Decree, among small and medium start-up enterprises incorporated as at December 31, 2018, is entitled to a tax reduction by the equivalent to 75/100 of income tax or corporate tax for the taxable year in which the first income accrues from the relevant business, and also within the two subsequent taxable years from the date the following taxable year commences; and to a tax reduction by the equivalent to 50/100 of income tax or corporate tax for the two subsequent taxable years thereafter, out of income accrues from its business. <Amended by Act No. 11614, Jan. 1, 2013; Act No. 13560, Dec. 15, 2015; Act No. 14390, Dec. 20, 2016>
(2) Where an enterprise prescribed by Presidential Decree among a venture business defined in Article 2 (1) of the Act on Special Measures for the Promotion of Venture Businesses (hereinafter referred to as "venture business"), is certified as a venture business as at December 31, 2018 pursuant to Article 25 of the same Act within three years from its incorporation (hereinafter referred to as "small or medium start-up venture enterprise"), that enterprise is entitled to an income tax or corporate tax reduction by the equivalent to 50/100 of the income tax or corporate tax levied on the income accruing from the relevant business for the taxable year in which the first income accrues from the relevant business after the date of such certification (or the taxable year falling on the fifth anniversary from the date such enterprise is certified as a venture business, if no income accrues from the relevant business by the taxable year falling on such fifth anniversary), and also within the four subsequent taxable years from the date the following taxable year commences: Provided, That the same shall not apply where the enterprise is granted an income or corporate tax reduction under paragraph (1) and, if any of the following events occurs during the period of reduction, it becomes ineligible for a reduction, starting from the taxable year in which the date classified as follows, falls: <Amended by Act No. 11614, Jan. 1, 2013; Act No. 13560, Dec. 15, 2015; Act No. 14390, Dec. 20, 2016>
1. Where its certification as the venture business is revoked: The date of revocation;
2. Where the period of validity of the certificate of the venture business issued under Article 25 (2) of the Act on Special Measures for the Promotion of Venture Businesses, expires (excluding where the relevant enterprise is re-certified as a venture business as at the end of the relevant taxable year): The expiry date of the period of validity.
(3) Small or medium start-up enterprises and small or medium start-up venture enterprises shall be small or medium enterprises engaging in the following types of business: <Amended by Act No. 10406, Dec. 27, 2010; Act No. 11614, Jan. 1, 2013; Act No. 13560, Dec. 15, 2015; Act No. 14390, Dec. 20, 2016>
1. Mining business;
2. Manufacturing business (including that prescribed by Presidential Decree, similar to manufacturing business: hereinafter the same shall apply);
3. Construction business;
4. Restaurant business;
5. Publishing business;
6. Business producing or distributing video and audio record products (excluding business operating rooms for viewing video products);
7. Broadcasting business;
8. Telecommunications business;
9. Computer programming, system integration, and management business;
10. Information service business (excluding business providing news information);
11. Research and development business;
12. Advertising business;
13. Other science and technology service business;
14. Specialized design business;
15. Exhibition and event agency business;
16. Service business related to creation and art (excluding individual 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 operating a private institute teaching vocational skills under the Act on the Establishment and Operation of Private Teaching Institutes and Extracurricular Lessons, or business operating a vocational skill development training establishment under the Act on the Development of Vocational Skills of Workers (limited to where the main business is vocational skill development training);
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 operating welfare facilities for elderly persons under the Welfare of Older Persons Act;
22. Exhibition industry under the Act on the Development of Exhibition Industry;
23. Human resources supply and employment arrangement services (including services supplying farm workers);
24. Services cleaning buildings and industrial facilities;
25. Security service business;
26. Market research and opinion survey business;
27. Social welfare service business;
28. Security system service business.
(4) Where a small or medium enterprise, in whose case three taxable years have not passed since the date of its incorporation, is recognized as a new energy technology small or medium enterprise prescribed by Presidential Decree (hereinafter referred to as "new energy technology small or medium enterprise") as at December 31, 2018, the small or medium enterprise is entitled to an income or corporate tax reduction by the equivalent to 50/100 of the income tax or corporate tax levied on income accrued from the relevant business for the taxable year in which the first income accrues from the relevant business after it is recognized as a new energy technology small or medium enterprise (or the taxable year falling on the fifth anniversary from the date such enterprise is recognized as a new energy technology small or medium enterprise, if no income accrues from the relevant business by the taxable year falling on such fifth anniversary), and also within the four subsequent taxable years from the date the following taxable year commences: Provided, That the same shall not apply where the small or medium enterprise is granted an income or corporate tax reduction under paragraph (1) or (2); and, if the small or medium enterprise ceases to be a new energy technology small or medium enterprise during the period of reduction, it becomes ineligible for a reduction, starting from the taxable year in which it ceases to be a new energy technology small or medium enterprise. <Amended by Act No. 11614, Jan. 1, 2013; Act No. 13560, Dec. 15, 2015>
(5) For the purposes of paragraph (4), methods for calculating income accrued from the relevant business shall be prescribed by Presidential Decree.
(6) For the purposes of paragraphs (1) through (5), none of the following cases shall be deemed a new business startup:
1. Where a previous business is succeeded through a merger, division, investment in kind, or acquisition of business, or where a business of the same type is conducted through acquiring or purchasing the assets used in the previous business: Provided, That, excluded herefrom shall be where the assets used for the previous business are acquired or purchased to operate the same type of business and the ratio of the total value of those assets to the total value of business assets prescribed by Presidential Decree, including land, buildings, and machinery, is less than 50/100, which does not exceed the ratio prescribed by Presidential Decree;
2. Where a new corporation is incorporated by converting a business operated by a resident into a corporation;
3. Where a business of the same type as the one before its closure is conducted by re-starting a business after its closure;
4. Where it is impracticable to deem that a new business has been started, as it involves expanding the existing business or adding another business line, etc.
(7) Where an enterprise granted a tax reduction under paragraph (1), (2), or (4), ceases to be a small or medium enterprise due to any of the events prescribed by Presidential Decree, such as a merger with any enterprise other than small and medium enterprises under the Framework Act on Small and Medium Enterprises, it becomes ineligible for a tax reduction, starting from the taxable year in which the relevant event occurs. <Newly Inserted by Act No. 14390, Dec. 20, 2016>
(8) Any national who intends to be granted a tax reduction or exemption pursuant to paragraph (1), (2), or (4), shall file an application therefor, as prescribed by Presidential Decree.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]
 Article 7 (Special Tax Reductions or Exemptions for Small or Medium Enterprises)
(1) A small or medium enterprise that engages in any of the following types of business eligible for tax reduction or exemption specified in subparagraph 1, is entitled to a reduction of the income tax or corporate tax levied on the income accruing from the relevant place of business for the taxable years that end on or before December 31, 2017 by an amount calculated by multiplying such income tax or corporate tax by the reduction rate prescribed in subparagraph 2: Provided, That a domestic corporation that has its head office or principal place of business in the Seoul Metropolitan area, shall be deemed to have all of its places of business in the Seoul Metropolitan area for applying the reduction rate prescribed in subparagraph 2 to that domestic corporation: <Amended by Act No. 10406, Dec. 27, 2010; Act No. 11133, Dec. 31, 2011; Act No. 11614, Jan. 1, 2013; Act No. 12173, Jan. 1, 2014; Act No. 12853, Dec. 23, 2014; Act No. 13474, Aug. 11, 2015; Act No. 13560, Dec. 15, 2015; Act No. 14390, Dec. 20, 2016>
1. Types of business eligible for tax reduction or exemption:
(a) Crop-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 among transportation business;
(j) Publishing business;
(k) Business producing or distributing video and audio record products (excluding business operating rooms for viewing video products);
(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 science and technology service business;
(s) Packaging and charging business;
(t) Specialized design business;
(u) Creation and art-related service business (excluding individual artists);
(v) Outsourced manufacturing business by OEM method prescribed by Presidential Decree;
(w) Engineering business;
(x) Logistics industry;
(y) Business operating a private institute teaching vocational skills under the Act on the Establishment and Operation of Private Teaching Institutes and Extracurricular Lessons, or business operating a vocational skill development training establishment under the Act on the Development of Vocational Skills of Workers (limited to where the main business is vocational skill development training);
(z) Business operating a motor vehicle maintenance factory prescribed by Presidential Decree;
(za) Ship management business under the Marine Transportation Act;
(zb) Business operating a medical institution under the Medical Service Act (only applicable to a clinic, a dental clinic, and an oriental medical clinic, if the ratio of the costs of health care benefits paid under Article 47 of the National Health Insurance Act to the total amount of its income for the relevant taxable year (referring to the sales calculated according to the Business Accounting Standards), is at least 80/100, and its global income for the relevant taxable year does not exceed 100 million won; hereafter in this Article, referred to as "medical service business");
(zc) Tourist business under the Tourism Promotion Act (excluding casinos, tourist amusement restaurants, and foreigner-only amusement restaurants);
(zd) Business operating welfare facilities for elderly persons under the Welfare of Older Persons Act;
(ze) Exhibition industry provided for in the Act on the Development of Exhibition Industry;
(zf) Human resource supply and employment arrangement services (including service supplying farm workers);
(zg) Call center and tele-marketing business;
(zh) Business engaged in by an enterprise specialized in energy saving under Article 25 of the Energy Use Rationalization Act;
(zi) Business operating a domiciliary long-term care institution under Article 32 of the Act on Long-Term Care Insurance for Older Persons;
(zj) Services cleaning building and industrial facilities;
(zk) Security service business;
(zl) Market research and opinion survey business;
(zm) Social welfare service business;
(zn) Business leasing intangible property rights (limited to leasing intellectual property defined in subparagraph 1 of Article 3 of the Framework Act on Intellectual Property);
(zp) An individual careworker or other similar service business, a social educational facility, vocational training center, or other technical and vocational training institute, a library, historic site, and other similar leisure-related service business (excluding business operating reading rooms);
(zq) Housing rental and management business under the Special Act on Private Rental Housing;
(zr) Business generating new and renewable energy under the Act on the Promotion of the Development, Use and Diffusion of New and Renewable Energy;
(zs) Security system service business;
(zt) Forestry;
2. Tax reduction rates:
(a) A place of business where a small enterprise prescribed by Presidential Decree (hereafter in this Article, referred to as "small enterprise"), engages in wholesale business, retail business, or medical service business (hereafter in this Article, referred to as "wholesale business, etc."): 10/100;
(b) A place of business where a small enterprise engages in any type of business eligible for tax reduction or exemption specified in subparagraph 1, excluding wholesale business, etc., in the Seoul Metropolitan area: 20/100;
(c) A place of business where a small enterprise engages in any type of business eligible for tax reduction or exemption specified in subparagraph 1, excluding wholesale business, etc., in an area outside the Seoul Metropolitan area: 30/100;
(d) A place of business where a medium enterprise (hereafter in this Article, referred to as "medium enterprise") other than small enterprises, engages in wholesale business, etc. in an area outside the Seoul Metropolitan area: 5/100;
(e) A place of business where a medium enterprise engages in any knowledge-based business prescribed by Presidential Decree in the Seoul Metropolitan area: 10/100;
(f) A place of business where a medium enterprise engages in any type of business eligible for tax reduction or exemption specified in subparagraph 1, excluding wholesale business, etc., in an area outside the Seoul Metropolitan area: 15/100.
(2) For the purposes of paragraph (1), if a small or medium enterprise meets each of the following requirements, the tax reduction rate calculated by multiplying the tax reduction rate prescribed in paragraph (1) 2 by 110/100, shall apply to the small or medium enterprise, notwithstanding paragraph (1) 2: <Amended by Act No. 14390, Dec. 20, 2016>
1. The enterprise has engaged in the relevant type of business continuously for at least ten years as at the first date the relevant taxable year commences;
2. Its global income for the relevant taxable year does not exceed 100 million won;
3. It shall be a compliant business operator defined in Article 59-4 (9) of the Income Tax Act, and shall meet each of the requirements provided for in Article 122-3 (1) 1, 2, and 4.
(3) If a small or medium enterprise is a car rental business entity registered under Article 31 (1) of the Passenger Transport Service Act, and at least 50/100 of the motor vehicles it has registered under Article 28 of the same Act, are electric motor vehicles defined in subparagraph 3 of Article 2 of the Act on Promotion of Development and Distribution of Environment-Friendly Motor Vehicles, the small or medium enterprise is entitled to a tax reduction by the equivalent to 30/100 of income tax or corporate tax levied on the income accruing from the car rental business until December 31, 2019, notwithstanding paragraph (1). <Newly Inserted by Act No. 14390, Dec. 20, 2016>
(4) Any national who intends to be granted a tax reduction or exemption pursuant to paragraphs (1) through (3), shall file an application therefor, as prescribed by Presidential Decree. <Newly Inserted by Act No. 11614, Jan. 1, 2013; Act No. 14390, Dec. 20, 2016>
[This Article Wholly Amended by Act No. 9924, Jan. 1, 2010]
 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: <Amended by Act No. 10406, Dec. 27, 2010>
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 Finance 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]
 Article 7-3 Deleted. <by Act No. 7003, Dec. 30, 2003>
 Article 7-4 (Tax Credits on Payments Settled through Win-Win Payment System)
(1) Where a national who operates a small or medium enterprise pays any purchase price (referring to a purchase price as defined under Article 7-2 (3) 1; the same shall apply hereafter in this Article) to other small and medium enterprises through the win-win payment system prescribed by Presidential Decree (hereafter referred to as the "win-win payment system" in this Article), on or before December 31, 2017, and such price meets all the following conditions, the national is eligible for tax credits calculated by the formula prescribed in paragraph (2) from the income tax (limited to the income tax on business income) or corporate tax: Provided, That the maximum tax credit shall be 10/100 of the income tax or corporate tax, if the tax credit so calculated exceeds 10/100 of the income tax or corporate tax for the relevant taxable year:
1. The ratio of the price paid in cash or cash equivalents prescribed by Presidential Decree, to the purchase price paid during the relevant taxable year, shall be higher than the ratio in the immediately preceding taxable year;
2. The amount of promissory notes delivered to pay the purchase price during the relevant year shall not exceed the amount of promissory notes delivered during the immediately preceding taxable year.
(2) The amount of tax credits granted under paragraph (1) shall be the aggregate of the amount computed under subparagraph 1 and the amount computed under subparagraph 2:
1. The amount paid through the win-win payment system, where the payment deadline is within 15 days from the issue date of the tax invoice, etc. referred to in Article 7-2 (1) 2; the same shall apply hereafter in this Article) × 2/1,000;
2. The amount paid through the win-win payment system, where the payment deadline falls more than 15 but not more than 60 days from the issue date of the tax invoice, etc. × 1/1,000.
(3) Any national who intends to obtain tax credits under paragraphs (1) and (2) shall file an application therefor, as prescribed by Presidential Decree.
[This Article Newly Inserted by Act No. 13560, Dec. 15, 2015]
 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]
 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. <Amended by Act No. 10406, Dec. 27, 2010>
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]
 Article 8-3 (Tax Credits for Contributions to Funds for Collaborative Cooperation)
(1) Where a domestic corporation makes any of the following contributions for collaborative cooperation, defined in subparagraph 3 of Article 2 of the Act on the Promotion of Collaborative Cooperation between Large Enterprises and Small-Medium Enterprises, or subparagraph 19 of Article 2 of the Special Act on Assistance to Farmers, Fishers, etc. Following the Conclusion of Free Trade Agreements, by December 31, 2019, the domestic corporation is entitled to deduct the equivalent to 10/100 of the relevant contribution from corporate tax for the business year in which such contribution is made: Provided, That such domestic corporation is ineligible to claim a deduction if it uses such contribution to support any of the related parties prescribed by Presidential Decree: <Amended by Act No. 11133, Dec. 31, 2011; Act No. 12173, Jan. 1, 2014; Act No. 14122, Mar. 29, 2016; Act No. 14390, Dec. 20, 2016>
1. A contribution to the Credit Guarantee Fund incorporated under the Credit Guarantee Fund Act (hereafter in this Article, referred to as the "Credit Guarantee Fund") or the Korea Technology Finance Corporation incorporated under the Korea Technology Finance Corporation Act (hereafter in this Article, referred to as the "Korea Technology Finance Corporation") for the purposes of providing guarantee or loans to a small or medium enterprise prescribed by Presidential Decree, such as a commissioned enterprise defined in subparagraph 6 of Article 2 of the Act on the Promotion of Collaborative Cooperation between Large Enterprises and Small-Medium Enterprises (hereafter in this Article, referred to as "small or medium enterprises requiring cooperation");
2. A contribution to the Foundation for the Cooperation of Large, Small and Medium Enterprises, Agriculture and Fisheries incorporated under the Act on the Promotion of Collaborative Cooperation between Large Enterprises and Small-Medium Enterprises (including the Agricultural and Fishing Villages Collaborative Cooperation Fund incorporated under the Special Act on Assistance to Farmers, Fishers, etc. Following the Conclusion of Free Trade Agreements; hereafter in this Article, referred to as the "Cooperation Foundation").
(2) Where a domestic corporation gratuitously leases any of the tangible fixed assets prescribed by Presidential Decree to a small or medium enterprise requiring cooperation by December 31, 2019, as prescribed by Presidential Decree, to assist the small or medium enterprise requiring cooperation (excluding where the small or medium enterprise requiring cooperation is any of the related parties prescribed by Presidential Decree of the domestic corporation), the domestic corporation is entitled to deduct the equivalent to 3/100 of the book value of the tangible fixed asset from corporate tax for the business year in which it starts leasing the tangible fixed asset gratuitously, as prescribed by Presidential Decree. <Newly Inserted by Act No. 14390, Dec. 20, 2016>
(3) The Credit Guarantee Fund Korea, the Korea Technology Finance Corporation, and the Cooperation Foundation shall separate the account for the contributions to which tax credits have been granted under paragraph (1), from the accounts of other funds. <Amended by Act No. 14122, Mar. 29, 2016>
(4) Where the Credit Guarantee Fund Korea or the Korea Technology Finance uses contributions it has received under paragraph (1) for any purpose other than those set forth in the same paragraph, it shall pay the equivalent of the tax credit the domestic corporation has received under paragraph (1), as corporate tax, when it files a tax return of the relevant business year. <Amended by Act No. 14122, Mar. 29, 2016; Act No. 14390, Dec. 20, 2016>
(5) Where a domestic corporation ceases to gratuitously lease the tangible fixed asset within five years after it starts leasing it gratuitously under paragraph (2), it shall pay the equivalent of the tax credit it has received under paragraph (2), as corporate tax, when it files a tax return of the relevant business year. <Newly Inserted by Act No. 14390, Dec. 20, 2016>
(6) A domestic corporation that intends to be granted a tax credit pursuant to paragraph (1) or (2), shall file an application therefor, as prescribed by Presidential Decree. <Amended by Act No. 14390, Dec. 20, 2016>
[This Article Newly Inserted by Act No. 10406, Dec. 27, 2010]
SECTION 2 Special Taxation for Research and Human Resources Development
 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. <Amended by Act No. 11133, Dec. 31, 2011>
(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: <Amended by Act No. 11133, Dec. 31, 2011>
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. <Amended by Act No. 11133, Dec. 31, 2011>
(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]
 Article 10 (Tax Credits for Research and Human Resources Development Expenses)
(1) Where a national has research and human resources development expenses incurred in a taxable year, the aggregate of the following amounts shall be subtracted from the income tax (limited to income tax on business income) or corporate tax for the relevant taxable year. In such cases, subparagraph 1 shall apply only to research and human resources development expenses incurred by no later than December 31, 2018: <Amended by Act No. 10406, Dec. 27, 2010; Act No. 11133, Dec. 31, 2011; Act No. 11614, Jan. 1, 2013; Act No. 12173, Jan. 1, 2014; Act No. 12853, Dec. 23, 2014; Act No. 13560, Dec. 15, 2015; Act No. 14390, Dec. 20, 2016>
1. As regards the research and development expenses incurred in the new growth engine industries prescribed by Presidential Decree or the research and development expenses incurred in acquiring source technologies (hereafter in this Article, referred to as "research and development expenses incurred for new growth engines or source technologies"), an amount calculated by multiplying the research and development expenses incurred for new growth engines or source technologies during the relevant taxable year, by the rate classified as follows:
(a) Where the national is a small or medium enterprise: 30/100;
(b) Where the national is not a small or medium enterprise: The ratio calculated by the following formula (the maximum shall be 30/100):
20/100 + (the ratio of the research and development expenses incurred for new growth engines or source technologies to the revenue for the relevant taxable year x the multiplying factor prescribed by Presidential Decree)
2. Deleted; <by Act No. 14390, Dec. 20, 2016>
3. As regards the research and human resources development expenses (hereafter in this Article, referred to as "general research and human resources development expenses") not specified in subparagraph 1, or incurred by a national who does not select subparagraph 1, either of the following amounts that the national selects: Provided, That an amount referred to in item (b) where no general research and human resources developments expenses incur for the four years retroactively from the date the relevant taxable year commences, or where the amount of the general research and human resources developments expenses incurred in the immediately preceding taxable year is less than the annual average of the general research and human resources development expenses incurred for the four preceding years retroactively from the date the relevant taxable year commences:
(a) Where the general research and human resources development expenses incurred in the relevant taxable year, exceed the general research and human resources development expenses incurred in the immediately preceding taxable year, the equivalent to 30/100 of such excess (or 40/100 in cases of a middle-standing enterprise prescribed by Presidential Decree (hereafter in this Article, referred to as "middle-standing enterprise"); and 50/100 in cases of a small or medium enterprise);
(b) An amount calculated by multiplying the general research and human resources development expenses incurred in the relevant taxable year, by the rate classified as follows:
(i) Where the national is a small or medium enterprise: 25/100;
(ii) Where a small or medium enterprise first ceases to be a small or medium enterprise, as prescribed by Presidential Decree: The rate classified as follows:
a. From the commencement date of the taxable year during which it first ceases to be a small or medium enterprise, until the taxable year that ends within three years thereafter: 15/100;
b. Until the taxable year that ends within two years since the period referred to in a. above: 10/100;
(iii) Where a middle-standing enterprise does not fall under sub-item (ii): 8/100;
(iv) Where none of sub-items (i) through (iii) is applicable to the national: The ratio calculated by the following formula (the maximum shall be 3/100):
1/100 + (the ratio of the general research and human resources development expenses to the revenue for the relevant taxable year × 1/2)
(2) The classification and calculation of the annual average of the general research and human resources development expenses incurred for the four preceding years, as referred to in paragraph (1) 3, and other necessary matters, shall be prescribed by Presidential Decree.
(3) Any national who intends to be granted a tax credit pursuant to paragraph (1), shall file an application therefor, as prescribed by Presidential Decree.
(4) Any national who intends to be granted a tax credit pursuant to paragraph (1) 1, shall separate the account for general research and human resources development expenses from the account for research and development expenses incurred for new growth engines and source technologies, as prescribed by Presidential Decree. <Amended by Act No. 14390, Dec. 20, 2016>
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]
 Article 10-2 (Special Taxation on Contributions, etc. Related to Research and Development)
(1) Where a national accepts assets, such as a contribution (hereafter referred to as "research and development contribution, etc." in this Article), on or before December 31, 2018, for purposes of conducting research and development, etc. pursuant to the Basic Research Promotion and Technology Development Support Act or any other Act prescribed by Presidential Decree and keeps separate accounts of the research and development contribution, etc. in a manner prescribed by Presidential Decree, the national may exclude an amount equivalent to the research and development contribution, etc. from gross income, for the purposes of calculating the amount of income for the relevant taxable year. <Amended by Act No. 10445, Mar. 9, 2011; Act No. 11614, Jan. 1, 2013; Act No. 13560, Dec. 15, 2015>
(2) The amount excluded from gross income pursuant to paragraph (1) shall be included therein according to the following methods:
1. Where the research and development contribution, etc. is disbursed to meet the research and development expenses concerned: Including an amount equivalent to the disbursed amount in gross income, for the purposes of calculating the amount of income for the taxable year in which the date of such disbursement falls;
2. Where the research and development contribution, etc. is disbursed to acquire an asset used for the research and development concerned: Including an amount equivalent to the disbursed amount in gross income in a manner prescribed by Presidential Decree.
(3) Where a national who has excluded an amount equivalent to the research and development contribution, etc. from gross income pursuant to paragraph (1) misappropriates the research and development contribution, etc. or discontinues his/her business or is dissolved before fully disbursing the research and development contribution, etc. for the research and development, the remaining amount shall be included in gross income, for the purposes of calculating the amount of income for the taxable year during which such cause occurs: Provided, That the same shall not apply where a corporation, etc. that is newly incorporated through a merger or division succeeds to the amount, and such amount shall be deemed to be excluded by said corporation, etc. from gross income pursuant to paragraph (1).
(4) The latter part of Article 33 (3) shall apply mutatis mutandis to the amount to be included in gross income pursuant to paragraph (3).
(5) For the purposes of paragraphs (1) through (4), the submission of statements of the research and development contribution, etc. excluded from gross income and other necessary matters shall be prescribed by Presidential Decree. <Amended by Act No. 11133, Dec. 31, 2011>
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]
 Article 11 (Tax Credits for Investment in Facilities for Research and Human Resources Development)
(1) Where a national invests in facilities for research and human resources development (excluding investing in used facilities and through lease prescribed by Presidential Decree) by no later than December 31, 2018, the national is entitled to deduct the equivalent to 1/100 (or 3/100 for a middle-standing enterprise prescribed by Presidential Decree; and 6/100 for a small or medium enterprise) of the amount invested, from income tax (limited to income tax on business income) or corporate tax for the taxable year in which such investment is completed. <Amended by Act No. 10406, Dec. 27, 2010; Act No. 11614, Jan. 1, 2013; Act No. 12173, Jan. 1, 2014; Act No. 13560, Dec. 15, 2015; Act No. 14390, Dec. 20, 2016>
(2) "Facilities for research and human resources development" in paragraph (1), means the following: <Amended by Act No. 14390, Dec. 20, 2016>
1. Facilities for research and experimenting prescribed by Presidential Decree;
2. Facilities for vocational training prescribed by Presidential Decree;
3. Deleted. <by Act No. 14390, Dec. 20, 2016>
(3) Where the investment referred to in paragraph (1) is made over at least two taxable years, paragraph (1) may apply to each amount invested for each taxable year in which such investment is made.
(4) Matters necessary for calculating the amount invested under paragraph (3), shall be prescribed by Presidential Decree.
(5) Any national who wishes to be granted a tax credit under paragraph (1) or (3), shall file an application therefor, as prescribed by Presidential Decree.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]
 Article 12 (Special Taxation for Transfer, Acquisition, etc. of Technology)
(1) Where a small or medium enterprise or a middle-standing enterprise prescribed by Presidential Decree, transfers a patent, utility model right, technical knowhow, or technology obtained as a result of its own research and development, as prescribed by Presidential Decree (hereafter in this Article, referred to as "patent, etc."), to a national (excluding transferring a patent, etc. to any of the related parties prescribed by Presidential Decree), by no later than December 31, 2018, such enterprise is entitled to a tax reduction by the equivalent to 50/100 of the income tax or corporate tax on income accruing from the transfer. <Newly Inserted by Act No. 12173, Jan. 1, 2014; Act No. 12853, Dec. 23, 2014; Act No. 13560, Dec. 15, 2015; Act No. 14390, Dec. 20, 2016>
(2) Where a national acquires a patent, etc. from another national who holds the patent, etc. prescribed by Presidential Decree obtained as a result of his/her own research and development (excluding acquiring a patent, etc. from any of the related parties prescribed by Presidential Decree) by no later than December 31, 2018, such national is entitled to deduct an amount calculated by multiplying the acquisition cost by the rate classified as follows, from income tax (limited to income tax on business income) or corporate tax for the relevant taxable year. In such cases, the maximum deductible shall not exceed 10/100 of the income tax or corporate tax for the relevant taxable year: <Amended by Act No. 9921, Jan. 1, 2010; Act No. 11133, Dec. 31, 2011; Act No. 11614, Jan. 1, 2013; Act No. 12173, Jan. 1, 2014; Act No. 13560, Dec. 15, 2015; Act No. 14390, Dec. 20, 2016>
1. Where the acquirer is a small or medium enterprise: 10/100;
2. Where the acquirer is not a small or medium enterprise: 5/100 (only applicable to where the national acquires a patent, etc. from a small or medium enterprise).
(3) Where a small or medium enterprise grants a license for a patent, etc. prescribed by Presidential Decree, obtained as a result of its own research and development, by no later than December 31, 2018 (excluding granting a license to any of the related parties prescribed by Presidential Decree), such enterprise is entitled to an income or corporate tax reduction by the equivalent to 25/100 of the income tax or corporate tax levied on income accruing from the grant of such license. <Newly Inserted by Act No. 12853, Dec. 23, 2014; Act No. 13560, Dec. 15, 2015>
(4) Any national who intends to be granted a tax reduction, exemption, or credit pursuant to paragraphs (1) through (3), shall file an application therefor, as prescribed by Presidential Decree. <Amended by Act No. 9921, Jan. 1, 2010; Act No. 12173, Jan. 1, 2014; Act No. 12853, Dec. 23, 2014>
 Article 12-2 (Reduction or Exemption of Corporate Tax, etc. for High-Tech Enterprises, etc. that Occupy Special Research and Development Zones)
(1) Where any of the following enterprises that occupy a special research and development zone defined in subparagraph 1 of Article 2 of the Special Act on Promotion of Special Research and Development Zones, engages in a business prescribed by Presidential Decree, such as the biotech industry or the information and communications industry (hereafter in this Article, referred to as "business eligible for reduction or exemption") at the place of business (hereafter in this Article, referred to as "place of business eligible for reduction or exemption") located in the special research and development zone, the reduction or exemption of income tax or corporate tax shall be granted, as prescribed in paragraphs (2) through (6): <Amended by Act No. 10406, Dec. 27, 2010; Act No. 11133, Dec. 31, 2011; Act No. 11232, Jan. 26, 2012; Act No. 11614, Jan. 1, 2013; Act No. 13560, Dec. 15, 2015>
1. A high-tech enterprise designated by no later than December 31, 2018 pursuant to Article 9 (1) of the Special Act on Promotion of Special Research and Development Zones;
2. A research-based spin-off company registered by no later than December 31, 2018 pursuant to Article 9-3 (2) of the Special Act on Promotion of Special Research and Development Zones.
(2) Where an enterprise which meets the conditions specified in paragraph (1), has income generated from a business eligible for reduction or exemption, the enterprise is entitled to a tax reduction by the equivalent to 100/100 of the income tax or corporate tax for the three subsequent taxable years from the commencement date of the taxable year in which the first income accrues from the relevant business (or the taxable year falling on the fifth anniversary from the date of designation or registration, if no income accrues from the relevant business by the taxable year falling on such fifth anniversary); and to a tax reduction by the equivalent to 50/100 of the income tax or corporate tax for the two subsequent taxable years thereafter. <Amended by Act No. 11133, Dec. 31, 2011; Act No. 11614, Jan. 1, 2013>
(3) Where the total amount of income tax or corporate tax reduced or exempted for the period of reduction or exemption to which paragraph (2) applies, exceeds the aggregate of the amounts prescribed in subparagraphs 1 and 2, the amount of tax shall be reduced or exempted by up to such aggregate (hereafter in this Article, referred to as "reduction or exemption ceiling"): Provided, That, where an enterprise engages in any of the services businesses prescribed by Presidential Decree (hereafter in this Article, referred to as "service business"); and where the total amount of income tax or corporate tax reduced or exempted on income accruing from the relevant service business for the period of reduction or exemption to which paragraph (2) applies, exceeds the greater of the aggregate of the amounts prescribed in subparagraphs 1 and 2, or of the amount prescribed in subparagraph 3, the amount of tax may be reduced or exempted by up to such greater amount: <Newly Inserted by Act No. 10406, Dec. 27, 2010; Act No. 14390, Dec. 20, 2016>
1. 50/100 of cumulative investments prescribed by Presidential Decree;
2. The lesser of the following:
(a) Number of full-time employees at the place of business eligible for reduction or exemption in the relevant taxable year x 10 million won;
(b) 20/100 of the cumulative investments referred to in subparagraph 1;
3. The lesser of the following:
(a) Number of full-time employees at the place of business eligible for tax reduction or exemption in the relevant taxable year × 20 million won;
(b) 100/100 of the cumulative investments referred to in subparagraph 1.
(4) For the purposes of applying the reduction or exemption ceiling to income tax or corporate tax to be reduced or exempted each taxable year pursuant to paragraph (2), an amount referred to in paragraph (3) 1 shall be first applied, and then an amount referred to in subparagraph (3) 2 shall be applied. <Newly Inserted by Act No. 10406, Dec. 27, 2010>
(5) Where the number of full-time employees each taxable year at the place of business eligible for reduction or exemption during the period until the end of the taxable year falling on the second anniversary from the end of the taxable year in which a tax reduction or exemption was granted, has decreased as compared with the number of full-time employees in the taxable year in which a tax reduction or exemption was granted, an enterprise granted a reduction or exemption of income tax or corporate tax under paragraph (3) 2 or 3, shall pay the equivalent to the amount of tax reduced or exempted, as income tax or corporate tax, as prescribed by Presidential Decree. <Newly Inserted by Act No. 10406, Dec. 27, 2010; Act No. 14390, Dec. 20, 2016>
(6) For the purposes of paragraphs (3) through (5), the scope of full-time employees; methods for calculating the number of full-time employees; and other necessary matters, shall be prescribed by Presidential Decree. <Newly Inserted by Act No. 10406, Dec. 27, 2010>
(7) Any person who wishes to be granted a tax credit under paragraph (2), shall file an application therefor, as prescribed by Presidential Decree.
(8) An enterprise to which the ceiling on a service business applies under the proviso to paragraph (3), shall keep separate accounting for the service business and for other businesses, applying mutatis mutandis Article 143. <Newly Inserted by Act No. 14390, Dec. 20, 2016>
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]
 Article 12-3 (Tax Credits for Technological Innovation-Oriented Mergers)
(1) Where a domestic corporation merges with a technological innovation-oriented small or medium enterprise prescribed by Presidential Decree (excluding a merger with a related party prescribed by Presidential Decree) as at December 31, 2018, upon fully satisfying the following conditions, the equivalent to 10/100 of the technical value prescribed by Presidential Decree, out of the transfer value paid by the merging corporation to the merged corporation (hereafter in this Article, referred to as "transfer value"), shall be deducted from the corporate tax of the relevant business year: <Amended by Act No. 13560, Dec. 15, 2015; Act No. 14390, Dec. 20, 2016>
1. The merger shall be conducted between domestic corporations, each of which has continued its business for at least one year as at the date the merger is registered;
2. The transfer value shall be at least 130/100 of the net asset value of the merged corporation as at the date the merger is registered;
3. The value of stocks or equity shares that the stockholders or investors (hereafter in this Article, referred to as "stockholders, etc.”) of the merged corporation receive following the merger shall be less than 50/100 of the total price for the merger, and the stockholders, etc. of the merged corporation prescribed by Presidential Decree shall not be controlling stockholders, etc. of the merging corporation from the date the merger is registered until the end of the business year in which the merger is registered;
4. The merging corporation shall continue the business succeeded from the merged corporation until the end of the business year in which the merger is registered.
(2) Where any of the following events occurs in relation to a domestic corporation granted a deduction of corporate tax under paragraph (1) during the period prescribed by Presidential Decree not exceeding three years, the domestic corporation shall pay the amount of tax deducted under paragraph (1) plus the amount equivalent to the interest calculated by the formula prescribed by Presidential Decree, as corporate tax, at the time of filing its tax return for the business year in which the relevant event occurs:
1. Where the stockholders, etc. of the merged corporation prescribed by Presidential Decree, become controlling stockholders, etc. of the merging corporation;
2. Where the merging corporation discontinues the business succeeded from the merged corporation.
(3) For the purposes of paragraph (1) 4 or (2) 2, in extenuating circumstances prescribed by Presidential Decree, the merging corporation shall be deemed to continue the business succeeded from the merged corporation.
(4) Calculation of the transfer value, and the net assets value of a merged corporation; calculation of the total price for the merger; scope of controlling stockholders, etc.; criteria for determining whether a merging corporation continues or discontinues the business succeeded under paragraphs (1) and (2); and other necessary matters, shall be prescribed by Presidential Decree.
(5) Any domestic corporation that wishes to be granted a tax credit under paragraph (1), shall file an application therefor, as prescribed by Presidential Decree.
[This Article Newly Inserted by Act No. 12173, Jan. 1, 2014]
 Article 12-4 (Tax Credits for Acquisition of Technological Innovation-Oriented Stocks)
(1) Where a domestic corporation (hereafter in this Article, referred to as "acquiring corporation") acquires (excluding acquiring stocks, etc. from a related party prescribed by Presidential Decree) stocks or equity shares (hereafter in this Article, referred to as "stocks, etc.") of a technological innovation-oriented small or medium enterprise prescribed by Presidential Decree (hereafter in this Article, referred to as "acquired corporation"), as at December 31, 2018, upon fully satisfying the following conditions, the equivalent to 10/100 of the technical value prescribed by Presidential Decree out of the purchase value, shall be deducted from the corporate tax of the relevant business year: <Amended by Act No. 12853, Dec. 23, 2014; Act No. 13560, Dec. 15, 2015; Act No. 14390, Dec. 20, 2016>
1. The acquisition shall be made between domestic corporations, each of which has continued its business for at least one year as at the date the acquiring corporation first acquires the stocks, etc. of the acquired corporation (hereafter in this Article, referred to as "date of acquisition");
2. The stocks, etc. acquired by the acquiring corporation on the date of acquisition, shall exceed 50/100 of the total number of outstanding stocks or equity shares of the acquired corporation as at the date of acquisition (or 30/100, if the acquiring corporation is the largest investor in the acquired corporation with de facto control over the management of the acquired corporation), and the acquiring corporation shall hold such stocks, etc. until the end of the business year in which the stocks, etc. are acquired;
3. The purchase price of the stocks, etc. acquired by the acquiring corporation on the date of acquisition, shall exceed the amount calculated by multiplying the amount of item (a) by the rate of item (b):
(a) 130/100 of the net asset value of the acquired corporation as at the date of acquisition;
(b) The ratio of stocks, etc. acquired on the date of acquisition to the total number of outstanding stocks or equity shares of the acquired corporation as at the date of acquisition (hereafter in this Article, referred to as "stockholding ratio");
4. The value of stocks or equity shares shall be less than 50/100 of the total price that the stockholders or investors (hereafter in this Article, referred to as "stockholders, etc.”) of the acquired corporation receive by selling stocks, etc., and the stockholders, etc. of the acquired corporation prescribed by Presidential Decree shall not be controlling stockholders, etc. of the acquiring corporation or the acquired corporation from the date of acquisition until the end of the business year in which the date of acquisition falls;
5. The acquired corporation shall continue the business in which it has been engaged until the end of the business year in which the date of acquisition falls.
(2) Where any of the following events occurs in relation to a domestic corporation granted a deduction of corporate tax under paragraph (1) during the period prescribed by Presidential Decree not exceeding five years, the domestic corporation shall pay the amount of tax deducted under paragraph (1) plus the equivalent to the interest calculated by the formula prescribed by Presidential Decree, as corporate tax, at the time of filing its tax return for the business year in which the relevant event occurs: <Amended by Act No. 13560, Dec. 15, 2015>
1. Where the stockholders, etc. of the acquired corporation prescribed by Presidential Decree, become controlling stockholders, etc. of the acquiring corporation or acquired corporation;
2. Where the acquired corporation discontinues the business in which it has been engaged;
3. Where the stockholding ratio of the acquiring corporation to the acquired corporation as at the end of each business year, falls below its stockholding ratio as at the date of acquisition: Provided, That the reduction of the stockholding ratio due to any of the following events shall be excluded herefrom:
(b) Where a member of an employee stock ownership association under the Framework Act on Labor Welfare acquires employee stocks;
(c) Where a small or medium business start-up investment company referred to in Article 13 (1) 1, a new technology venture capitalist referred to in Article 13 (1) 2, or a business start-up investment fund, etc. referred to in Article 13 (1) 3, invests (excluding purchasing stocks or equity shares owned by third persons).
(3) For the purposes of paragraph (1) 5 or (2) 2, in extenuating circumstances prescribed by Presidential Decree, the acquiring corporation shall be deemed to continue the business in which it has been engaged.
(4) Calculation of the purchase price, and the net assets value of an acquired corporation; scope of controlling stockholders, etc.; criteria for determining whether an acquired corporation continues or discontinues the business in which it has been engaged under paragraphs (1) and (2); and other necessary matters, shall be prescribed by Presidential Decree.
(5) Any domestic corporation that wishes to be granted a tax credit under paragraph (1), shall file an application therefor, as prescribed by Presidential Decree.
[This Article Newly Inserted by Act No. 12173, Jan. 1, 2014]
 Article 13 (Non-Taxation on Gains, etc. from Transferring Stocks of Small or Medium Business Start-Up Investment Companies, etc.)
(1) No corporate tax shall be levied on gains from transferring any of the following stocks or equity shares: <Amended by Act No. 11133, Dec. 31, 2011; Act No. 11614, Jan. 1, 2013; Act No. 12173, Jan. 1, 2014; Act No. 12853, Dec. 23, 2014; Act No. 13082, Jan. 28, 2015; Act No. 14122, Mar. 29, 2016; Act No. 14390, Dec. 20, 2016>
1. Stocks or equity shares acquired by a small or medium business start-up investment company (hereinafter referred to as "small or medium business start-up investment company") or an accelerator (hereinafter referred to as "accelerator") under the Support for Small and Medium Enterprise Establishment Act, in return for 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 enterprise defined in 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"), by no later than December 31, 2017;
2. Stocks or equity shares acquired by a new technology venture capitalist (hereinafter referred to as "new technology venture capitalist") under the Specialized Credit Finance Business Act, in return for its investment in a new technology business entity licensed under the Korea Technology Finance Corporation Act (hereinafter referred to as "new technology business entity"), a venture business, or a company specializing in the start-up of new technology-based businesses, by no later than December 31, 2017;
3. Stocks or equity shares acquired by a small or medium business start-up investment company, an accelerator, a limited-liability company established under the Commercial Act pursuant to Article 4-3 (1) 3 of the Act on Special Measures for the Promotion of Venture Businesses (hereafter in this Article, referred to as "limited-liability company investing in venture businesses"), or a new technology venture capitalist, in return for its investment in a business starter, a new technology business entity, a venture business, or a company specializing in the start-up of new technology-based businesses through any of the following funds (hereinafter referred to as "business start-up investment fund, etc."), by no later than December 31, 2017:
(a) A small or medium business start-up investment fund registered under the Support for Small and Medium Enterprise Establishment Act (hereinafter referred to as "small or medium business start-up investment fund");
(b) The Korea Venture Fund established under Article 4-3 of the Act on Special Measures for the Promotion of Venture Businesses (hereinafter referred to as the "Korea Venture Fund");
(c) A new technology venture capital fund established under the Specialized Credit Finance Business Act (hereinafter referred to as "new technology venture capital fund");
(d) A specialized investment fund for materials and components established under the Act on Special Measures for the Promotion of Specialized Enterprises, etc. for Materials and Components (hereinafter referred to as "specialized investment fund for materials and components");
(e) An agriculture and food investment fund established under the Act on Formation and Operation of Agricultural, Fisheries, and Food Investment Funds (hereinafter referred to as "agriculture and food investment fund");
4. Stocks or equity shares acquired by a corporation prescribed by Presidential Decree among those managing and operating funds or those operating a mutual aid business (hereafter in this Article, referred to as "fund management corporation, etc."), in return for its investment in a business starter, a new technology business entity, a venture business, or a company specializing in the start-up of new technology-based businesses through a business start-up investment fund, etc., by no later than December 31, 2017;
5. Stocks or equity shares acquired by a small or medium enterprise start-up investment company or a new technology venture capitalist, in return for its investment in a small or medium enterprise listed on the KONEX (referring to the KONEX established under the Financial Investment Services and Capital Markets Act and the Enforcement Decree of the same Act) (hereafter in this Article and Article 117, referred to as "KONEX-listed corporation"), by no later than December 31, 2017;
6. Stocks or equity shares acquired by a small or medium enterprise start-up investment company, a limited-liability company investing in venture businesses, or a new technology venture capitalist, in return for its investment in a KONEX-listed corporation through a business start-up investment fund, etc., by no later than December 31, 2017.
(2) For the purposes of paragraph (1) 1 through 4, an investment means acquisition of stocks or equity shares of a business starter, a new technology business entity, a venture business, or a company specializing in the start-up of new technology-based businesses by a small or medium business start-up investment company, an accelerator, a limited-liability company investing in venture businesses, a new technology venture capitalist, or a fund management corporation, etc. directly or through a business start-up investment fund. etc. in any of the following manners; however, acquisition through purchasing stocks or equity shares owned by any third person, shall be excluded herefrom: <Amended by Act No. 11133, Dec. 31, 2011; Act No. 12173, Jan. 1, 2014; Act No. 14390, Dec. 20, 2016>
1. Paying a share capital at the time of incorporation of the relevant enterprise;
2. Paying subscription money for new shares issued by the relevant enterprise to increase its capital within seven years from its incorporation;
3. Acquiring stocks or equity shares of the relevant enterprise at the time of capitalization of its surplus within seven years from its incorporation;
4. Acquiring stocks or equity shares of the relevant enterprise at the time of conversion of its liabilities into capital within seven years from its incorporation.
(3) For the purposes of paragraph (1) 5 or 6, an investment means acquisition of stocks or equity shares of a KONEX-listed corporation, by a small or medium business start-up investment company, a limited-liability company investing in venture businesses, or a new technology venture capitalist directly or through a business start-up investment fund, etc. in any of the following manners; however, acquisition through purchasing stocks or equity shares owned by any third person, shall be excluded herefrom: <Newly Inserted by Act No. 12173, Jan. 1, 2014>
1. Paying subscription money for new shares issued by the relevant enterprise to increase its capital within two years after getting its stocks listed;
2. Acquiring stocks or equity shares of the relevant enterprise at the time of capitalization of its surplus within two years after getting its stocks listed;
3. Acquiring stocks or equity shares of the relevant enterprise at the time of conversion of its liabilities into capital within two years after getting its stocks listed.
(4) No corporate tax shall be levied on dividend income received from any investment under paragraph (1) in a business starter, a new technology business entity, a venture business, a company specializing in the start-up of new technology-based businesses, or a KONEX-listed corporation by a small or medium business start-up investment company, an accelerator, a limited-liability company investing in venture businesses, or a new technology venture capitalist, by no later than December 31, 2017. <Amended by Act No. 11133, Dec. 31, 2011; Act No. 11614, Jan. 1, 2013; Act No. 12173, Jan. 1, 2014; Act No. 12853, Dec. 23, 2014; Act No. 14390, Dec. 20, 2016>
(5) Calculation of capital gains and dividend income under paragraphs (1) through (4), and other necessary matters, shall be prescribed by Presidential Decree. <Amended by Act No. 12173, Jan. 1, 2014>
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]
 Article 13-2 (Special Taxation for Investment by Domestic Corporations in Venture Businesses, etc.)
(1) Where a domestic corporation prescribed by Presidential Decree acquires any of the following stocks or equity shares, by no later than December 31, 2019, the domestic corporation is entitled to deduct the equivalent to 5/100 of the acquisition price of the stocks or equity shares from corporate tax for the relevant business year: Provided, That, if such corporation acquires stocks or equity shares of any related party prescribed by Presidential Decree, the amount shall not be deducted:
1. Stocks or equity shares acquired in return for its investment in a business starter, a new technology business entity, a venture business, or a company specializing in the start-up of new technology-based businesses;
2. Stocks or equity shares acquired in return for its investment in a business starter, a new technology business entity, a venture business, or a company specializing in the start-up of new technology-based businesses through a private equity fund specializing in business start-ups and venture businesses provided for in Article 249-23 of the Financial Investment Services and Capital Markets Act (hereinafter referred to as "private equity fund specializing in business start-ups and venture businesses") or a business start-up investment fund, etc.
(2) For the purposes of paragraph (1), an investment means acquisition of stocks or equity shares by a domestic corporation in any of the following manners; however, acquisition through purchasing stocks or equity shares owned by any third person, shall be excluded herefrom:
1. Paying a share capital at the time of incorporation of the relevant enterprise;
2. Paying subscription money for new shares issued by the relevant enterprise to increase its capital within seven years from its incorporation.
(3) If a domestic corporation granted a deduction of corporate tax under paragraph (1), becomes the controlling stockholder, etc. of the invested corporation within five years after acquiring stocks or equity shares, it shall pay the equivalent to the amount of tax deducted on the stocks or equity shares plus an additional amount equivalent to the interest calculated by the formula prescribed by Presidential Decree, as corporate tax, at the time of filing its tax return of the business year in which it becomes the controlling stockholder, etc.; and the amount of tax shall be deemed the amount of tax payable under Article 64 of the Corporate Tax Act.
(4) Any domestic corporation who intends to be granted a tax credit pursuant to paragraph (1), shall file an application therefor, as prescribed by Presidential Decree.
(5) Matters necessary for the scope, etc. of the controlling stockholder, etc. referred to in paragraphs (1) through (4), shall be prescribed by Presidential Decree.
[This Article Newly Inserted by Act No. 14390, Dec. 20, 2016]
 Article 14 (Special Taxation for Investment in Business Starters, etc.)
(1) Article 94 (1) 3 of the Income Tax Act shall not apply to transferring any of the following stocks or equity shares (only applicable to the stocks or equity shares specified in subparagraphs 1, 2, 2-2, 2-3, and 3 through 6, if they are acquired in any of the manners prescribed under Article 13 (2)): Provided, That acquisition through purchasing stocks or equity shares specified in subparagraphs 1, 2, 2-2, 2-3, and 3 through 6, owned by any third person, shall be excluded herefrom: <Amended by Act No. 6045, Dec. 28, 1999; Act No. 6297, Dec. 29, 2000; Act No. 6538, Dec. 29, 2001; Act No. 7577, Jul. 13, 2005; Act No. 7839, Dec. 31, 2005; Act No. 8146, Dec. 30, 2006; Act No. 8827, Dec. 31, 2007; Act No. 9921, Jan. 1, 2010; Act No. 11133, Dec. 31, 2011; Act No. 13082, Jan. 28, 2015; Act No. 14127, Mar. 29, 2016; Act No. 14390, Dec. 20, 2016>
1. Stocks or equity shares acquired in return for an investment in a small or medium business start-up investment company or a new technology venture capital company under the Specialized Credit Finance Business Act;
2. Stocks or equity shares acquired by a small or medium business start-up investment fund in return for its investment in a business starter, a venture business, or a company specializing in the start-up of new technology-based businesses;
2-2. Stocks or equity shares acquired by the Korea Venture Fund in return for its investment in a business starter, a venture business, or a company specializing in the start-up of new technology-based businesses;
2-3. Stocks or equity shares acquired by an agriculture and food investment fund in return for its investment in a business starter, a venture business, or a company specializing in the start-up of new technology-based businesses;
3. Stocks or equity shares acquired by a new technology venture capital fund in return for its investment in a new technology business entity, a venture business, or a company specializing in the start-up of new technology-based businesses;
4. Stocks or equity shares prescribed by Presidential Decree, acquired in return for an investment in a venture business (including acquisition in return for an investment in a venture business through a fund under Article 13 of the Act on Special Measures for the Promotion of Venture Businesses);
5. Stocks or equity shares acquired in return for an investment in an accelerator;
6. Stocks or equity shares acquired by a specialized investment fund for materials and components in return for its investment in a business starter, a new technology business entity, a venture business, or a company specializing in the start-up of new technology-based businesses;
7. Stocks of a venture business traded by the method prescribed in subparagraph 1 (b) of Article 3 of the Securities Transaction Tax Act (limited to stocks transferred by any person other than a majority stockholder referred to in Article 104 (1) 11 (a) of the Income Tax Act).
(2) Deleted. <by Act No. 9272, Dec. 26, 2008>
(3) Deleted. <by Act No. 7003, Dec. 30, 2003>
(4) The relevant fund or partnership shall withhold income tax on the following incomes when it pays such income to its members or partners: <Amended by Act No. 9921, Jan. 1, 2010; Act No. 11133, Dec. 31, 2011; Act No. 13082, Jan. 28, 2015>
1. Dividend income obtained by a small or medium business start-up investment fund from its investment in a business starter, a venture business, or a 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, a venture business, or a company specializing in the start-up of new technology-based businesses;
1-3. Dividend income obtained by an agriculture and food investment fund through its investment in a business starter, a venture business, or a company specializing in the start-up of new technology-based businesses;
2. Dividend income obtained by a new technology venture capital fund from its investment in a new technology business entity, a venture business, or a company specializing in the start-up of new technology-based businesses;
3. Dividend income obtained by a corporate restructuring limited partnership registered pursuant to Article 15 of the Industrial Development Act (referring to the Industrial Development Act in force prior to the amendment 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 investment fund for materials and components from its investment in a business starter, a new technology business entity, a venture business, or a company specializing in the start-up of new technology-based businesses.
(5) Notwithstanding the Income Tax Act and the Corporate Tax Act, a small or medium business start-up investment fund, the Korea Venture Fund, an agriculture and food investment fund, a new technology venture capital fund, a corporate restructuring limited partnership, or a specialized investment fund for materials and components, shall withhold income tax or corporate tax from income that is attributable to it and referred to any subparagraph of Article 16 (1) of the Income Tax Act or Article 17 (1) 5 of the same Act, when it pays such income to its members or partners. <Amended by Act No. 9921, Jan. 1, 2010; Act No. 11133, Dec. 31, 2011; Act No. 13082, Jan. 28, 2015>
(6) In cases of income referred to in paragraphs (4) and (5), the gross income less expenses disbursed by the relevant fund or partnership (limited to expenses relative to gross income), shall be deemed 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. <Amended by Act No. 9921, Jan. 1, 2010>
(7) Paragraphs (4) through (6) shall only apply to income accruing by no later than December 31, 2017. <Amended by Act No. 9921, Jan. 1, 2010; Act No. 11614, Jan. 1, 2013; Act No. 12853, Dec. 23, 2014>
(8) Paragraph (1) 1 shall apply only to stocks or equity shares acquired by no later than December 31, 2009; paragraph (1) 2, 2-2, 2-3, and 3 through 7 shall apply only to stocks and equity shares acquired by no later than December 31, 2017. <Amended by Act No. 9921, Jan. 1, 2010; Act No. 11133, Dec. 31, 2011; Act No. 11614, Jan. 1, 2013; Act No. 12853, Dec. 23, 2014; Act No. 14390, Dec. 20, 2016>
 Article 15 Deleted. <by Act No. 9272, Dec. 26, 2008>
 Article 16 (Income Deductions for Contributions, etc. to Small or Medium Business Start-Up Investment Funds)
(1) Where a resident makes any of the following contributions or investments, the resident is entitled to deduct the equivalent (which shall not exceed 50/100 of the amount of global income for the relevant taxable year) to 10/100 (or 100/100 for an amount up to 15 million won; 50/100 for an amount between 15 million won and 50 million won; and 30/100 for an amount exceeding 50 million won, in cases of a contribution or an investment provided for in subparagraph 3 or 4) of the amount contributed or invested by no later than December 31, 2017, from his/her global income for one taxable year he/she chooses, of the taxable years from the taxable year in which such contribution or investment is made until the taxable year falling on the second anniversary from the date of such contribution or investment: Provided, That this shall not apply where the resident makes a contribution or investment by acquiring equity shares, investment shares, or beneficiary certificates from any third person: <Amended by Act No. 9921, Jan. 1, 2010; Act No. 10406, Dec. 27, 2010; Amended by Act No. 11133, Dec. 31, 2011; Act No. 11614, Jan. 1, 2013; Act No. 12173, Jan. 1, 2014; Act No. 12853, Dec. 23, 2014; Act No. 13082, Jan. 28, 2015; Act No. 14390, Dec. 20, 2016>
1. Where the resident contributes to a small or medium business start-up investment fund, the Korea Venture Fund, a new technology venture capital fund, or a specialized investment fund for materials and components;
2. Where the resident invests in beneficiary certificates of a venture business investment trust prescribed by Presidential Decree (hereafter in this Article, referred to as "venture business investment trust");
3. Where the resident invests the amount contributed to an association established under Article 13 of the Act on Special Measures for the Promotion of Venture Businesses, in a venture business or an equivalent small or medium enterprise prescribed by Presidential Decree for which three years have not passed since its incorporation (hereafter in this Article and Article 16-4, referred to as "venture business, etc.”), as prescribed by Presidential Decree;
4. Where the resident invests in a venture business, etc. under the Act on Special Measures for the Promotion of Venture Businesses;
5. Where the resident invests in a private equity fund specializing in business start-ups and venture businesses.
(2) Where any of the following events occurs by no later than the third anniversary from the date a resident granted an income deduction under the main sentence of paragraph (1) made a contribution or an investment, the head of the tax office having jurisdiction over his/her residence or the withholding agent shall additionally collect an amount of tax equivalent to income already deducted, as a penalty, as prescribed by Presidential Decree: Provided, That this shall not apply if a contributor or investor dies, or if any ground prescribed by Presidential Decree, arises: <Amended by Act No. 9921, Jan. 1, 2010; Amended by Act No. 11133, Dec. 31, 2011; Act No. 14390, Dec. 20, 2016>
1. Where the resident transfers or collects his/her equity shares or investment shares referred to in paragraph (1) 1 or 5;
2. Where the resident transfers or resells beneficiary certificates of a venture business investment trust referred to in paragraph (1) 2;
3. Where the resident transfers or collects equity shares or investment shares referred to in paragraph (1) 3 and 4.
(3) Deleted. <by Act No. 8146, Dec. 30, 2006>
(4) For the purposes of paragraphs (1) and (2), the limits and calculation of deductible amounts; filing an application for income deduction; and other necessary matters, shall be prescribed by Presidential Decree. <Amended by Act No. 9921, Jan. 1, 2010>
 Article 16-2 (Special Treatment in Payment of Gains from Exercising Stock Options of Venture Businesses)
(1) An executive officer or employee of a venture business referred to in Article 16 (1) 4 (hereafter in this Article, referred to as "executive officer, etc. of a venture business"), may pay income tax on the gains (referring to the difference between the market value at the time a stock option is exercised and the actual purchase price, and the stocks include preemptive rights; hereafter in this paragraph, the same shall apply) accruing upon exercising his/her stock option granted from that venture business (including where an executive officer, etc. of a venture business exercises his/her stock option after his/her retirement), as at December 31, 2018, as follows: Provided, That the same shall not apply where the difference between the exercising price of the stock option and the market value, is paid in cash: <Amended by Act No. 13560, Dec. 15, 2015>
1. No income tax shall be withheld, notwithstanding Articles 127, 134, and 145 of the Income Tax Act, where the executive officer, etc. of the venture business files an application for special treatment in payment with the withholding agent with respect to the gains accruing upon exercising his/her stock option;
2. Where no income tax has been withheld under subparagraph 1, the executive officer, etc. of the venture business shall file a tax return of global income of the taxable year in which he/she exercises his/her stock option, including the gains accruing upon exercising his/her stock option when filing the final return on tax base of global income and making tax payment by the final return under Articles 70 and 76 of the Income Tax Act, but may exclude an amount of income tax on the gains accruing upon exercising his/her stock option, which is equivalent to 4/5 of the amount prescribed by Presidential Decree (hereafter in this paragraph, referred to as "amount of tax to be paid in installments");
3. Where income tax has been paid under subparagraph 2, the executive officer, etc. of the venture business shall pay the equivalent to 1/4 of the amount of tax to be paid in installments when filing the final return on tax base of global income and making tax payment by the final return under Articles 70 and 76 of the Income Tax Act for four years following the taxable year in which he/she exercises his/her stock option.
(2) Where an event described in Article 74 (4) of the Income Tax Act arises while an executive officer, etc. of a venture business pays income tax under paragraph (1), the relevant provisions shall apply mutatis mutandis.
(3) For the purposes of paragraphs (1) and (2), procedures for filing applications for special treatment, and other necessary matters, shall be prescribed by Presidential Decree.
[This Article Newly Inserted by Act No. 12031, Aug. 13, 2013]
 Article 16-3 (Special Taxation for Gains from Exercising Stock Options)
(1) Where any person prescribed by Presidential Decree, being an executive officer or employee of a venture business (hereafter in this Article, referred to as “executive officer or employee of a venture business”), files an application to be eligible under paragraph (2), as prescribed by Presidential Decree, regarding the gains (referring to the difference between the market price and the actual purchase price as at the time of exercise of a stock option, and stocks include preemptive rights; hereafter in this Article the same shall apply) accruing upon exercising (including exercising a stock option granted to an executive officer or employee of a venture business after his/her retirement) a stock option granted by the venture business, which meets the following conditions (hereafter in this Article, referred to as “qualified stock option”), such person may be exempt from income tax at the time of exercising the stock option, notwithstanding Article 20 or 21 of the Income Tax Act: <Amended by Act No. 14390, Dec. 20, 2016>
1. The stock option shall be a stock option defined in Article 16-3 of the Act on Special Measures for the Promotion of Venture Businesses, and shall meet the requirements prescribed by Presidential Decree;
2. The total value of the stock options exercised (hereafter in this Article, referred to as "total option price") from the taxable period falling on the second anniversary retrospectively from the exercise date of the stock options granted by the venture business, until the taxable period in which the exercise date of the stock options falls, shall not exceed 500 million won.
(2) Where no income tax is levied under paragraph (1) at the time of exercising a qualified stock option, capital gains tax shall be levied on the capital gains accruing from the transfer of stocks acquired by exercising the qualified stock option (including stocks acquired gratuitously by transferring the surplus of the venture business in equity for the holding of the relevant stocks), deeming such stocks to be the stocks, etc. defined in Article 94 (1) 3 of the Income Tax Act, notwithstanding the aforesaid provisions. <Amended by Act No. 13560, Dec. 15, 2015>
(3) Where capital gains tax is levied under paragraph (2), the actual purchase price at the time of exercising a qualified stock option shall be deemed the acquisition price defined in Article 97 (1) 1 of the Income Tax Act.
(4) Where no income tax is levied under paragraph (1) (including income tax levied under paragraph (5) after exercising a stock option), the amount prescribed by Presidential Decree, which are expenses incurred in exercising a qualified stock option, shall be excluded from deductable expenses for the purposes of calculating the amount of income for each business year of the relevant venture business, notwithstanding Articles 19, 20, and 52 of the Corporate Tax Act. <Amended by Act No. 14390, Dec. 20, 2016>
(5) Notwithstanding paragraph (1), in any of the following cases, income tax shall be levied on an executive officer or employee of a venture business (in cases falling under subparagraph 2, income tax shall be imposed on all gains accrued by exercising the stock option within the period stated in paragraph (1) 2) pursuant to Article 20 or 21 of the Income Tax Act. In such cases, the time to which income belongs shall be the taxable year in which the date classified as follows, falls: <Amended by Act No. 14390, Dec. 20, 2016>
1. Where the executive officer or employee gives the stocks acquired by exercising the qualified stock option to a third person as a gift, or disposes of such stocks before the lapse of one year from the exercise date (excluding extenuating circumstances prescribed by Presidential Decree, such as where the venture business becomes bankrupt): The date of donation or the date of disposition;
2. Where the total option price exceeds 500 million won: The date the total option price exceeds 500 million won.
(6) A venture business that grants qualified stock options or a financial investment business entity defined in Article 8 (1) of the Financial Investment Services and Capital Markets Act, shall submit data prescribed by Presidential Decree as necessary for the purposes of paragraphs (1) through (5), including data about granting and exercising the qualified stock options and data about transferring stocks acquired by exercising such qualified stock options, to the head of the tax office having jurisdiction over the place of tax payment, as prescribed by Presidential Decree.
(7) Article 14 (1) 7 shall not apply where capital gains tax is levied under paragraph (2).
(8) For the purposes of paragraphs (1) through (7), the procedures for applying for, and implementing, the special taxation, and other necessary matters, shall be prescribed by Presidential Decree.
[This Article Newly Inserted by Act No. 12853, Dec. 23, 2014]
 Article 16-4 (Special Taxation for Gains from Investment of Industrial Property Rights in Kind)
(1) Where a resident who holds a patent, utility model right, design right, or trademark prescribed by Presidential Decree, or any other industrial property right prescribed by Presidential Decree (hereafter in this Article, referred to as "industrial property right"), invests the industrial property right in a venture business, etc. and receives stocks of the venture business, etc. in return (excluding where the resident is a related party prescribed by Presidential Decree of the venture business), the resident may be exempt from income tax at the time of acquisition of such stocks, notwithstanding Article 21 of the Income Tax Act, if that resident files an application, as prescribed by Presidential Decree, to inform his/her intention to pay capital gains tax when he/she transfers the stocks to any third person. <Amended by Act No. 14390, Dec. 20, 2016>
(2) Capital gains tax shall be levied on capital gains accruing from the transfer of stocks that a resident has received from a venture business, etc. in return for investment of his/her industrial property right under paragraph (1), deeming such stocks to be the stocks, etc. defined in Article 94 (1) 3 of the Income Tax Act, notwithstanding the items of Article 94 (1) 3 of the same Act. <Amended by Act No. 14390, Dec. 20, 2016>
(3) Where capital gains tax is levied under paragraph (2), the acquisition price of stocks shall be deemed the acquisition price of the invested industrial property right, notwithstanding Article 97 of the Income Tax Act; and the acquisition price of such industrial property right shall be calculated as prescribed by Presidential Decree, based on the actual expenses incurred in acquiring the industrial property right.
(4) A venture business, etc. that grants stocks or a financial investment business entity defined in Article 8 (1) of the Financial Investment Services and Capital Markets Act (hereafter in this Article, referred to as "financial investment business entity"), shall submit data prescribed by Presidential Decree as necessary for the purposes of paragraphs (1) through (3), including data about investing industrial property rights in kind and data about transferring stocks acquired in return for the investment in kind, to the head of the tax office having jurisdiction over the place of tax payment, as prescribed by Presidential Decree. <Amended by Act No. 14390, Dec. 20, 2016>
(5) Article 14 (1) 4 and 7 shall not apply where capital gains tax is levied under paragraph (2).
(6) For the purposes of paragraphs (1) through (5), the procedures for applying for, and implementing, the special taxation, and other necessary matters, shall be prescribed by Presidential Decree.
[This Article Newly Inserted by Act No. 13560, Dec. 15, 2015]
 Article 17 Deleted. <by Act No. 8827, Dec. 31, 2007>
 Article 18 (Income Tax Reductions for Foreign Engineers)
(1) A foreign engineer prescribed by Presidential Decree shall be granted a tax reduction equivalent to 50/100 of the income tax on the earned income from the offer of his/her services to a national in the Republic of Korea until the month in which the date falling on two years from the date (applicable only to the period until December 31, 2018) such foreign engineer started to offer his/her services in Korea falls. <Amended by Act No. 11133, Dec. 31, 2011; Act No. 12853, Dec. 23, 2014>
(2) Deleted. <by Act No. 12853, Dec. 23, 2014>
(3) When a withholding agent pays earned income for which income tax reduction is granted under paragraph (1), he/she shall withhold an amount equivalent to 50/100 of the income tax to be collected under Article 127 of the Income Tax Act. <Amended by Act No. 12853, Dec. 23, 2014>
(4) Anyone who wishes to obtain a tax reduction under paragraph (1) shall file an application for tax reduction, as prescribed by Presidential Decree. <Amended by Act No. 12853, Dec. 23, 2014>
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]
 Article 18-2 (Special Taxation for Foreign Workers)
(1) Deleted. <by Act No. 10406, Dec. 27, 2010>
(2) Where a foreign executive officer or employee (excluding daily employed workers; hereinafter referred to as "foreign worker") begins to first provide labor in the Republic of Korea as at December 31, 2018, the amount of income tax on earned income that the foreign worker receives in return for his/her labor in the Republic of Korea (excluding providing labor to any related party prescribed by Presidential Decree (hereafter in this Article, referred to as "related enterprise") other than foreign-capital invested-corporations prescribed by Presidential Decree) until the taxable period that ends within five years from the date the person first provides labor in the Republic of Korea, may be calculated by multiplying the relevant earned income by 19/100, notwithstanding Article 55 (1) of the Income Tax Act: Provided, That, the amount of income tax on earned income that a foreign worker receives in return for his/her labor in the regional headquarters prescribed by Presidential Decree until the taxable period that ends within five years from the date the person first provides labor in the Republic of Korea, may be calculated by multiplying the relevant earned income by 19/100, notwithstanding Article 55 (1) of the Income Tax Act. <Amended by Act No. 10406, Dec. 27, 2010; Act No. 11614, Jan. 1, 2013; Act No. 12173, Jan. 1, 2014; Act No. 12853, Dec. 23, 2014; Act No. 14390, Dec. 20, 2016>
(3) The provisions concerning non-taxation, tax deductions, reductions, exemptions, and tax credits related to income tax under the Income Tax Act and this Act, shall not apply for the purposes of paragraph (2); and the earned income shall not be included in the tax base of global income under Article 14 (2) of the Income Tax Act. <Amended by Act No. 12853, Dec. 23, 2014>
(4) A withholding agent may withhold an amount calculated by multiplying the relevant earned income by 19/100, when paying the monthly earned income to a foreign worker, notwithstanding Article 134 (1) of the Income Tax Act. <Newly Inserted by Act No. 10406, Dec. 27, 2010; Act No. 11614, Jan. 1, 2013; Act No. 14390, Dec. 20, 2016>
(5) Any foreign worker who wishes to be granted a tax deduction under paragraph (2) or (4), shall file an application therefor, as prescribed by Presidential Decree. <Amended by Act No. 10406, Dec. 27, 2010>
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]
 Article 19 Deleted. <by Act No. 6297, Dec. 29, 2000>
SECTION 3 Special Taxation for International Capital Transactions
 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]
 Article 21 (Corporate Tax Exemptions, etc. on Interest Income, etc. from International Financial Transactions)
(1) A person (excluding residents, domestic corporations, and domestic business places of foreign corporations) shall be exempt from income tax or corporate tax on any of the following incomes: <Amended by Act No. 9921, Jan. 1, 2010; Act No. 11133, Dec. 31, 2011; Act No. 12853, Dec. 23, 2014>
1. Interest and fees on the foreign currency bonds issued overseas by the State, local governments, or domestic corporations;
2. Interest and fees that a foreign exchange agency permitted under the Foreign Exchange Transactions Act pays to a foreign financial institution for foreign currency loans obtained from the financial institution for its foreign exchange business under the aforesaid Act and payable in the foreign currency to the financial institution;
3. Interest and fees 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. <by Act No. 6762, Dec. 11, 2002>
(3) Any income accruing 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 exempt from the income tax or corporate tax. <Amended by Act No. 9921, Jan. 1, 2010>
 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]
 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. <Amended by Act No. 11614, Jan. 1, 2013>
(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]
 Article 23 Deleted. <by Act No. 9272, Dec. 26, 2008>
SECTION 4 Special Taxation for Investment Promotion
 Article 24 (Tax Credits for Investment, etc. in Facilities for Improving Productivity)
(1) Where a national makes an investment in any of the following facilities (excluding any investment in used facilities and investment through lease prescribed by Presidential Decree) by not later than December 31, 2017 in order to improve productivity, an amount equivalent to 3/100 of the amount of the investment (5/100 in cases of a middle-standing enterprise prescribed by Presidential Decree, or 7/100 in cases of a small or medium enterprise) shall be subtracted from the income tax (limited to the income tax on business income) or corporate tax of the national: <Amended by Act No. 6297, Dec. 29, 2000; Act No. 6538, Dec. 29, 2001; Act No. 6762, Dec. 11, 2002; Act No. 7003, Dec. 30, 2003; Act No. 7322, Dec. 31, 2004; Act No. 8146, Dec. 30, 2006; Act No. 8827, Dec. 31, 2007; Act No. 9921, Jan. 1, 2010; Act No. 10406, Dec. 27, 2010; Act No. 11614, Jan. 1, 2013; Act No. 12853, Dec. 23, 2014>
1. Facilities prescribed by Presidential Decree, being facilities for improvement and automation of process;
2. Equipment prescribed by Presidential Decree that belongs to high-technology equipment;
3. Deleted; <by Act No. 6297, Dec. 29, 2000>
4. and 5. Deleted; <by Act No. 10406, Dec. 27, 2010>
6. Computers and 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, the depreciation period of which is two years or longer (hereinafter referred to as "facilities for supply chain management system");
7. Computers and 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, the depreciation period of which is two years or longer (hereinafter referred to as "facilities for customer relationship management system");
8. Computers and 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, the depreciation period of which is two years or longer;
9. Systems prescribed by Presidential Decree, such as a knowledge management system to systematize and share knowledge held by the executives and employees hired by nationals.
(2) Where a small or medium enterprises use any of the facilities referred to in paragraph (1) 6 and 7, which are held by any third person by no later than December 31, 2017, via the Internet to increase its productivity, an amount equivalent to 7/100 of the user fees shall be subtracted from its income tax (limited to the income tax on business income) or corporate tax. <Amended by Act No. 9921, Jan. 1, 2010; Act No. 10406, Dec. 27, 2010; Act No. 11614, Jan. 1, 2013; Act No. 12853, Dec. 23, 2014>
(3) Article 11 (1), (3) and (4) shall apply mutatis mutandis to the method of granting tax credits under paragraph (1) or (2). <Amended by Act No. 9921, Jan. 1, 2010>
(4) Any national who intends to obtain a tax credit under paragraphs (1) and (2) shall file an application for tax credits, as prescribed by Presidential Decree. <Amended by Act No. 9921, Jan. 1, 2010>
 Article 25 (Tax Credits for Investment, etc. in Safety Facilities)
(1) Where a national invests in any of the following facilities prescribed by Presidential Decree (excluding investing in used facilities or through lease prescribed by Presidential Decree) as deemed necessary for industrial and safety policies (including commodities in cases falling under subparagraph 1; hereafter in this Article, the same shall apply), by not later than December 31, 2017, the national is entitled to deduct the equivalent to 3/100 (or 5/100 in cases of a middle-standing enterprise prescribed by Presidential Decree; or 7/100 in cases of a small or medium enterprise (or 10/100 where a small or medium enterprise invests in the facilities prescribed in subparagraph 9)) of the amount invested, from his/her 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 methods for granting tax credits: <Amended by Act No. 6297, Dec. 29, 2000; Act No. 6762, Dec. 11, 2002; Act No. 7003, Dec. 30, 2003; Act No. 7322, Dec. 31, 2004; Act No. 8146, Dec. 30, 2006; Act No. 9432, Feb. 6, 2009; Act No. 9921, Jan. 1, 2010; Act No. 10310, May 25, 2010; Act No. 10406, Dec. 27, 2010; Act No. 11614, Jan. 1, 2013; Act No. 11989, Jul. 30, 2013; Act No. 12853, Dec. 23, 2014; Act No. 14390, Dec. 20, 2016>
1. Fire-fighting facilities defined in Article 2 of the Installation, Maintenance, and Safety Control of Fire-Fighting Systems Act (excluding fire-fighting facilities that shall be installed in specific objects of fire service under Article 9 of the aforesaid Act), and other commodities prescribed by Presidential Decree for fire-fighting;
2. Deleted; <by Act No. 8827, Dec. 31, 2007>
3. Facilities for distribution business conducted under the Distribution Industry Development Act;
4. Facilities installed in a commissioned enterprise by a commissioning enterprise 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 a designated enterprise requiring intensive management under the Emergency Resources Management Act, in order to perform 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 the business operators subject to the Hazard Analysis Critical Control Point under Article 9 of the Livestock Products Sanitary Control Act or Article 48 of the Food Sanitation Act;
9. Facilities installed to prevent illegal transfer of technology;
10. Facilities installed to develop overseas resources;
11. Facilities installed to reinforce earthquake-resistant structures.
(2) Any national who intends to be granted a tax credit pursuant to paragraph (1), shall file an application therefor, as prescribed by Presidential Decree. <Amended by Act No. 9921, Jan. 1, 2010>
 Article 25-2 (Tax Credits for Investment in Energy-Saving Facilities)
(1) Where a national invests in energy-saving facilities prescribed by Presidential Decree (excluding investing in used facilities or through lease prescribed by Presidential Decree), by not later than December 31, 2018, the national is entitled to deduct the equivalent to 1/100 (or 3/100 in cases of a middle-standing enterprise prescribed by Presidential Decree; and 6/100 in cases of a small or medium enterprise) of the amount invested, from income tax (limited to income tax on business income) or corporate tax. <Amended by Act No. 10406, Dec. 27, 2010; Act No. 11133, Dec. 31, 2011; Act No. 12173, Jan. 1, 2014; Act No. 13560, Dec. 15, 2015; Act No. 14390, Dec. 20, 2016>
(2) For the purposes of paragraph (1), Article 11 (1), (3), and (4) shall apply mutatis mutandis to methods for granting tax credits.
(3) Any national who intends to be granted a tax credit pursuant to paragraph (1), shall file an application therefor, as prescribed by Presidential Decree.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]
 Article 25-3 (Tax Credits for Investment in Facilities for Environmental Conservation)
(1) Where a national invests in any facility for environmental conservation prescribed by Presidential Decree (excluding investing in used facilities or through leases prescribed by Presidential Decree), by not later than December 31, 2018, the national is entitled to deduct the equivalent to 3/100 (or 5/100 in cases of a middle-standing enterprise prescribed by Presidential Decree; and 10/100 in cases of a small or medium enterprise) of the amount invested, from income tax (limited to income tax on business income) or corporate tax. In such cases, Article 11 shall apply mutatis mutandis to methods for granting tax credits. <Amended by Act No. 10406, Dec. 27, 2010; Act No. 12173, Jan. 1, 2014; Act No. 14390, Dec. 20, 2016>
(2) Any national who intends to be granted a tax credit under paragraph (1), shall file an application therefor, as prescribed by Presidential Decree.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]
 Article 25-4 (Tax Credits for Investment in Facilities to Improve Quality Control of Medical Supplies)
(1) Where a national invests in facilities to improve the quality control of medical supplies prescribed by Presidential Decree (excluding investing in used facilities or through leases prescribed by Presidential Decree), by not later than December 31, 2019, the national is entitled to deduct the equivalent to 1/100 (or 3/100 in cases of a middle-standing enterprise prescribed by Presidential Decree; and 6/100 in cases of a small or medium enterprise) of the amount invested, from income tax (limited to income tax on business income) or corporate tax. In such cases, Article 11 shall apply mutatis mutandis to methods for granting tax credits. <Amended by Act No. 10406, Dec. 27, 2010; Act No. 12173, Jan. 1, 2014; Act No. 14390, Dec. 20, 2016>
(2) Any national who intends to be granted a tax credit pursuant to paragraph (1), shall file an application therefor, as prescribed by Presidential Decree.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]
 Article 25-5 (Tax Credits for Investment in Facilities for Commercializing New Growth Technologies)
(1) Where a national invests in facilities for commercializing new growth technologies prescribed by Presidential Decree (excluding investing in used facilities or through lease prescribed by Presidential Decree), by not later than December 31, 2018, upon satisfying all the following conditions, the national is entitled to deduct the equivalent to 5/100 (or 7/100 in cases of a middle-standing enterprise prescribed by Presidential Decree; and 10/100 in cases of a small or medium enterprise) of the amount invested (referring to the amount calculated by subtracting ten million won per full-time employees decreased from the relevant amount in cases falling under the proviso to subparagraph 2; and the amount, which is a negative figure, shall be deemed nil), from income tax (limited to income tax on business income) or corporate tax for the taxable year in which the investment is made:
1. The ratio of research and human resources development expenses to the revenue (referring to sales calculated according to the Business Accounting Standards) for the taxable year immediately preceding the taxable year in which the national begins the investment, shall be at least 5/100; and research and development expenses for new growth engines and source technologies, etc. prescribed in Article 10 (1) 1, shall meet the requirements prescribed by Presidential Decree;
2. The number of full-time employees during the relevant taxable year, shall not be smaller than that of full-time employees during the immediately preceding taxable year: Provided, That the tax credit shall also apply where the number of full-time employees during the relevant taxable year is smaller than the number of full-time employees during the immediately preceding taxable year, in cases of a small or medium enterprise.
(2) Where any of the following events occurs in relation to a national granted a deduction of income tax or corporate tax under paragraph (1) or Article 144 (4), the national shall pay the equivalent to the amount of tax deducted (the equivalent to the interest calculated as prescribed by Presidential Decree shall be added thereto, in cases falling under subparagraph 2), as income tax or corporate tax, as prescribed by Presidential Decree:
1. Where the number of full-time employees each taxable year during the period, from the end of the taxable year in which he/she is granted a tax deduction until the end of the taxable year falling on the second anniversary therefrom, is smaller than that of full-time employees for the taxable year in which he/she is granted a tax deduction;
2. Where the national uses the relevant facility for any purpose other than the intended purpose within three years from the date he/she completes an investment in that asset.
(3) Any national who intends to be granted a tax credit pursuant to paragraph (1), shall file an application therefor, as prescribed by Presidential Decree.
(4) For the purposes of paragraphs (1) through (3) or Article 144 (4), methods for identifying relevant technologies and facilities; the scope and number of full-time employees; and other necessary matters, shall be prescribed by Presidential Decree.
[This Article Newly Inserted by Act No. 14390, Dec. 20, 2016]
 Article 25-6 (Tax Credit for Production Costs of Video Content)
(1) Where a national prescribed by Presidential Decree has any cost prescribed by Presidential Decree (hereafter in this Article, referred to as "production costs of video content") incurred in producing any of the following broadcast programs or motion pictures prescribed by Presidential Decree (hereafter in this Article, referred to as "video content"), in the Republic of Korea, by not later than December 31, 2019, the national is entitled to deduct the equivalent to 3/100 of the production costs of video content (or 7/100 in cases of a middle-standing enterprise prescribed by Presidential Decree; and 10/100 in cases of a small or medium enterprise), from income tax (limited to income tax on business income) or corporate tax, for the taxable year in which the video content first broadcasts or premieres in a cinema, as prescribed by Presidential Decree:
1. Broadcast programs defined in Article 2 of the Broadcasting Act;
(2) Any national who intends to be granted a tax credit pursuant to paragraph (1), shall file an application therefor, as prescribed by Presidential Decree.
(3) For the purposes of paragraph (1), the scope of video content; methods for calculating production costs; and other necessary matters, shall be prescribed by Presidential Decree.
 Article 26 (Tax Credits for Employment-Creating Investment)
(1) Where a national makes an investment prescribed by Presidential Decree (excluding investing in used goods or through lease prescribed by Presidential Decree, and investing in the over-concentration control region of the Seoul Metropolitan area; hereafter in this Article, the same shall apply), by not later than December 31, 2017, and the number of full-time employees in the relevant taxable year is not smaller than that of full-time employees in the immediately preceding taxable year, the national is entitled to deduct the aggregate of the following amounts from income tax (limited to income tax on business income) or corporate tax each taxable year in which the investment is made: Provided, That subparagraph 1 shall also apply where the number of full-time employees in the relevant taxable year is smaller than that of full-time employees in the immediately preceding taxable year in cases of a small or medium enterprise. In such cases, the amount of deduction shall be the amount calculated by subtracting ten million won per number of full-time employees decreased from the amount calculated under subparagraph 1, and if such amount is a negative number, it shall be deemed nil: <Amended by Act No. 11133, Dec. 31, 2011; Act No. 11614, Jan. 1, 2013; Act No. 12031, Aug. 13, 2013; Act No. 12173, Jan. 1, 2014; Act No. 12853, Dec. 23, 2014; Act No. 14390, Dec. 20, 2016; Act No. 14760, Apr. 18, 2017>
1. Basic deduction amount: The equivalent to 3/100 of the amount invested, in cases of a small or medium enterprise; or the amount prescribed in the following, in cases of a middle-standing enterprise prescribed by Presidential Decree (hereafter in this Article, referred to as "middle-standing enterprise"):
(a) The equivalent to 1/100 of the amount invested, if the middle-standing enterprise invests in a growth management region classified under Article 6 (1) 2 of the Seoul Metropolitan Area Readjustment Planning Act or a nature preservation region classified under Article 6 (1) 3 of the aforesaid Act (hereafter in this Article, referred to as "region outside the over-concentration control region of the Seoul Metropolitan area");
(b) The equivalent to 2/100 of the amount invested, if the middle-standing enterprise invests in any region outside the Seoul Metropolitan area;
2. Additional deduction amount: It shall be the equivalent to 3/100 (or 6/100 in cases of a small or medium enterprise; and 5/100 in cases of a middle-standing enterprise) of the amount invested, if such investment is made in a region outside the over-concentration control region of the Seoul Metropolitan area; or 4/100 (or 7/100 in cases of a small or medium enterprise; and 6/100 in cases of a middle-standing enterprise) of the amount invested, if such investment is made in any region outside the Seoul Metropolitan area, but the amount shall be determined by adding the equivalent to 1/100 of the amount invested thereto, if the taxpayer engages in any of the service businesses prescribed by Presidential Decree: Provided, That, if the amount exceeds an amount calculated by subtracting the amount specified in item (d) from the aggregate of the amounts specified in items (a) through (c) in the order listed below, such excess shall be deemed nil:
(a) Number of graduates from schools prescribed by Presidential Decree which conduct vocational education and training, such as high schools operating the aligned curricula directly linked to industry demand as schools defined in Article 2 of the Elementary and Secondary Education Act, among the full-time employees who have first entered into an employment contract in the relevant taxable year (hereinafter referred to as "high school, etc. aligned to industry demand") × 20 million won (or 25 million won in cases of a small or medium enterprise);
(b) Number of youth employees, employees with disabilities, and employees aged at least 60 years among the full-time employees excluding those referred to in item (a) who have first entered into an employment contract in the relevant taxable year × 15 million won (or 20 million won in cases of a small or medium enterprise);
(c) (Number of the full-time employees in the relevant taxable year ­ number of the full-time employees in the immediately preceding taxable year - number of graduates referred to in item (a) - number of youth employees, employees with disabilities, and employees aged at least 60 years referred to in item (b)) × 10 million won (or 15 million won in cases of a small or medium enterprise);
(d) Amount of deduction carried forward in the relevant taxable year under Article 144 (3).
(2) Where a domestic corporation is to make an interim prepayment under Article 63 of the Corporate Tax Act (excluding any interim prepayment made under the proviso to Article 63 (1) of the same Act and Article 63 (5)) or is to make a consolidated interim prepayment under Article 76-18 of the same Act (excluding any interim prepayment made under the proviso to Article 76-18 (1) of the same Act and Article 76-18 (3)), and makes an investment eligible under paragraph (1) during the period of interim prepayment, the domestic corporation may pay, as its interim prepayment, an amount calculated by subtracting the amount of tax credits 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, "relevant taxable year" shall be construed as "period of interim prepayment." <Amended by Act No. 11133, Dec. 31, 2011>
(3) Where a resident is to make an interim prepayment under Article 65 of the Income Tax Act, and makes an investment eligible under paragraph (1) during the period of interim prepayment, the resident may file a tax return on interim prepayment with the head of the tax office having jurisdiction over the place of tax payment for an amount calculated by subtracting the amount of tax credits equivalent to such investment during the period of interim prepayment calculated by applying mutatis mutandis paragraph (1) (its ceiling shall be the amount of tax on business income out of the amount of tax for interim prepayment) from the amount of tax for interim prepayment between November 1 and November 30. In such cases, "relevant taxable year" shall be construed as "period of interim prepayment." <Amended by Act No. 11133, Dec. 31, 2011>
(4) Where a resident files a tax return pursuant to paragraph (3), the Income Tax Act (excluding the latter part of Article 65 (9)) shall apply to the resident, deeming that such resident has filed a tax return under Article 65 (3) of the Income Tax Act. <Amended by Act No. 11133, Dec. 31, 2011>
(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 calculated under Article 132, the amount of tax credits equivalent to such deficiency during the period of interim prepayment shall not be subtracted. <Newly Inserted by Act No. 11133, Dec. 31, 2011>
(6) Where the number of full-time employees each taxable year during the period from the end of the taxable year in which a tax deduction was granted, until the end of the taxable year falling on the second anniversary therefrom, has decreased as compared with that of full-time employees in the taxable year in which the tax deduction was granted, a taxpayer granted a deduction of income tax or corporate tax pursuant to paragraph (1) or Article 144 (3), shall pay the equivalent to the amount of tax deducted, as income tax or corporate tax, as prescribed by Presidential Decree. <Amended by Act No. 11133, Dec. 31, 2011>
(7) Where the amount of tax deducted, equivalent to the investment during the period of interim prepayment granted under paragraphs (2) and (3), exceeds the amount of tax deducted, equivalent to the investment eligible under paragraph (1) in the relevant taxable year, an amount equivalent to such excess shall be paid as income tax or corporate tax, at the time of filing the tax base of the relevant taxable year. <Amended by Act No. 11133, Dec. 31, 2011>
(8) For the purposes of paragraphs (1) through (3) and (6), or Article 144 (3), the scopes of full-time employees, youth employees, employees with disabilities, and employees aged at least 60 years; methods for calculating the number of full-time employees, graduates from high schools, etc. aligned to industry demand, youth employees, employees with disabilities, and employees aged at least 60 years; and other necessary matters, shall be prescribed by Presidential Decree. <Amended by Act No. 11133, Dec. 31, 2011; Act No. 12173, Jan. 1, 2014>
(9) Any national who wishes to be granted a tax credit pursuant to paragraphs (1) through (3), shall file an application therefor, as prescribed by Presidential Decree. <Amended by Act No. 11133, Dec. 31, 2011>
[This Article Wholly Amended by Act No. 10406, Dec. 27, 2010]
 Articles 27 and 27-2 Deleted. <by Act No. 6297, Dec. 29, 2000>
 Article 28 (Special Taxation for Including Depreciation Cost of Service Businesses in Deductible Expenses)
(1) Where a national who engages in any of the service businesses prescribed by Presidential Decree and who meets both of the following requirements acquires any of the fixed assets prescribed by Presidential Decree (hereafter referred to as "assets invested in plant and equipment" in this Article) to use it for the relevant business, by not later than December 31, 2015, the national may include the depreciation cost of the relevant assets invested in plant and equipment in deductible expenses, for the purpose of computing income for the relevant taxable year, up to the amount calculated by the formula prescribed by Presidential Decree, irrespective of whether such national has recognized the depreciation cost as deductible expenses at the time of settling the accounts for each taxable year:
1. The aggregate of acquisition prices of the assets invested in plant and equipment and acquired in the relevant taxable year shall exceed the aggregate of acquisition prices of the assets invested in plant and equipment and acquired in the immediately preceding taxable year;
2. The aggregate of acquisition prices of the assets invested in plant and equipment and acquired in the immediately preceding taxable year shall exceed the aggregate of acquisition prices of the assets invested in plant and equipment and acquired in the taxable year before the immediately preceding taxable year.
(2) Any national who wishes to be accorded special tax treatment under paragraph (1) shall file an application for special taxation for inclusion in deductible expenses, as prescribed by Presidential Decree.
(3) The method of recognizing the depreciation cost as deductible expenses under paragraph (1) and other necessary matters shall be prescribed by Presidential Decree.
[This Article Newly Inserted by Act No. 12853, Dec. 23, 2014]
 Article 28-2 (Special Taxation for Including Depreciation Cost of Assets Invested in Plant and Equipment of Small or Medium and Middle-Standing Enterprises in Deductible Expenses)
(1) Where a small or medium enterprise or a middle-standing enterprise prescribed by Presidential Decree (hereafter in this Article, referred to as "middle-standing enterprise"), acquires any of the fixed assets prescribed by Presidential Decree (hereafter in this Article, referred to as "assets invested in plant and equipment") by not later than June 30, 2017, to use for its business, the small or medium enterprise or the middle-standing enterprise may include the depreciation cost of the assets invested in plant and equipment in deductible expenses for the purposes of calculating the amount of income for the taxable year by up to the amount calculated, as prescribed by Presidential Decree, irrespective of whether such depreciation cost was recognized as deductible expenses at the time of finally settling accounts for each taxable year.
(2) Paragraph (1) shall not apply where the aggregate of acquisition costs of the assets invested in plant and equipment that a small or medium enterprise or a middle-standing enterprise acquires during the relevant business year, is smaller than that of acquisition costs of the assets invested in plant and equipment acquired during the immediately preceding business year.
(3) Any national who intends to include depreciation costs in deductible expenses pursuant to paragraph (1), shall file an application for special taxation for inclusion in deductible expenses, as prescribed by Presidential Decree.
(4) Methods for recognizing depreciation costs as deductible expenses under paragraph (1), and other necessary matters, shall be prescribed by Presidential Decree.
[This Article Newly Inserted by Act No. 14390, Dec. 20, 2016]
 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. <Amended by Act No. 11614, Jan. 1, 2013>
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]
SECTION 4-2 Special Taxation for Employment Support
 Article 29-2 (Tax Credits for Small or Medium Enterprises Having Reinstated Graduates of High Schools, etc. Aligned to Industry Demand 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, etc. aligned to industry demand, and such employee is reinstated by no later than December 31, 2017 after performing the military service prescribed by Presidential Decree (only applicable to where reinstatement is made within one year after completing the military service), the equivalent to 10/100 of the labor cost prescribed by Presidential Decree and paid to the reinstated employee for two years from the date of reinstatement, shall be deducted from income tax (only applicable to income tax on business income) or corporate tax of the relevant taxable year.
(2) Any small or medium enterprise that intends to be granted a tax credit under paragraph (1), shall file an application therefor, as prescribed by Presidential Decree.
[This Article Newly Inserted by Act No. 11614, Jan. 1, 2013]
 Article 29-3 (Tax Credits for Small or Medium Enterprises Re-Employing Career-Interrupted Women)
(1) Where a small or medium enterprise enters into an employment agreement for at least one year (hereafter in this Article, referred to as "re-employment") with a woman who meets all of the following conditions (hereafter in this Article and Article 30, referred to as "career-interrupted woman"), by not later than December 31, 2017, the small or medium enterprise is entitled to deduct the equivalent to 10/100 of the labor cost prescribed by Presidential Decree paid to the career-interrupted woman from the date of re-employment until the month falling on the second anniversary therefrom, from income tax (limited to income tax on business income) or corporate tax payable for the relevant taxable year: <Amended by Act No. 13560, Dec. 15, 2015; Act No. 14390, Dec. 20, 2016>
1. She shall have worked for that small or medium enterprise for at least one year (limited to where it is verified that such small or medium enterprise withheld the income tax on the income earned by her, as prescribed by Presidential Decree);
2. She shall have resigned from that small or medium enterprise due to grounds prescribed by Presidential Decree, such as pregnancy, childbirth, or child-care;
3. A period of at least three to ten years shall have passed since the date of resignation from that small or medium enterprise;
4. She shall neither be the largest stockholder or investor of that small or medium enterprise (referring to the representative if the small or medium enterprise is an individual business entity), nor a related party prescribed by Presidential Decree of the largest stockholder or investor.
(2) Any small or medium enterprise that intends to be granted a tax credit pursuant to paragraph (1), shall file an application therefor, as prescribed by Presidential Decree.
[This Article Newly Inserted by Act No. 12853, Dec. 23, 2014]
 Article 29-4 (Tax Credits for Enterprises Increasing Earned Income)
(1) A national is entitled to deduct the equivalent to 5/100 (or 10/100 in cases of a small and medium enterprise and a middle-standing enterprise prescribed by Presidential Decree) of the portion of wages increased beyond the average wages for three immediately preceding years until the taxable year in which December 31, 2017 falls, from income tax (limited to income tax on business income) or corporate tax payable by the national for the relevant taxable year, if the national satisfies each of the following conditions:
1. The rate of increase in the average wages of full-time employees prescribed by Presidential Decree (hereafter in this Article, referred to as "full-time employee") for the relevant taxable year, shall exceed the mean increase rate of average wages for three immediately preceding taxable years (hereafter in this Article, referred to as "mean increase rate of average wages for three immediately preceding years");
2. The number of full-time employees in the relevant taxable year, shall be at least equal to that of full-time employees in the immediately preceding taxable year.
(2) The portion of wages increased beyond average wages for three immediately preceding years referred to in paragraph (1), shall be calculated by the following formula:
The portion of wages increased beyond average wages for three immediately preceding years = [Average wages of full-time employees in the relevant taxable year - Average wages of full-time employees in the immediately preceding taxable year × (1 + Mean increase rate of average wages for three immediately preceding years)] × Number of full-time employees in the immediately preceding taxable year.
(3) A national is entitled to deduct the equivalent to 5/100 (or 10/100 in cases of a middle-standing enterprise prescribed by Presidential Decree; or 20/100 in cases of a small or medium enterprise) of the aggregate of increased wages of employees whose status has been changed to regular employees and meet the requirements prescribed by Presidential Decree for the period and type of employment (hereafter in this Article, referred to as “employees changed to regular employees”) until the taxable year in which December 31, 2017 falls, from income tax (limited to income tax on business income) or corporate tax payable by the national for the relevant taxable year, if the national satisfies each of the following conditions: <Newly Inserted by Act No. 13560, Dec. 15, 2015>
1. The national has changed the status of any of his/her employees to a regular employee in the relevant taxable year;
2. The number of full-time employees in the relevant taxable year, shall be at least equal to that of full-time employees in the immediately preceding taxable year.
(4) Where a national granted a deduction of income tax or corporate tax under paragraph (3), terminates labor relations with any employee changed to a regular employee, during the period from the end of the taxable year in which the tax deduction was granted, until the end of the taxable year falling on the first anniversary therefrom, the national shall pay the amount of tax calculated as prescribed by Presidential Decree, as income tax or corporate tax, at the time of filing a tax return for the taxable year in which such labor relations terminate. <Newly Inserted by Act No. 13560, Dec. 15, 2015>
(5) Notwithstanding paragraph (1), a small or medium enterprise is entitled to deduct the amount equivalent to 10/100 of the portion of wages increased beyond the average increase in wages of all small or medium enterprises until the taxable year in which December 31, 2017 falls, from income tax (limited to income tax on business income) or corporate tax payable by it for the relevant taxable year, in lieu of the amount specified in paragraph (1), if it satisfies each of the following conditions: <Newly Inserted by Act No. 14390, Dec. 20, 2016>
1. The increase rate of the average wages of full-time employees for the relevant taxable year, shall be greater than the rate prescribed by Presidential Decree, based upon the increase rate of wages of all small or medium enterprises;
2. The number of full-time employees for the relevant taxable year, shall be at least equal to that of full-time employees for the immediately preceding taxable year;
3. The increase rate of the average wages for the immediately preceding taxable year, must not be a negative figure.
(6) The portion of wages increased beyond the average increase in wages of all small of medium enterprises referred to in paragraph (5), shall be calculated by the following formula: <Newly Inserted by Act No. 14390, Dec. 20, 2016>
The portion of wages increased beyond the average increase in wages of all small or medium enterprises = [Average wages of full-time employees for the relevant taxable year - Average wages of full-time employees for the immediately preceding taxable year × (1 + The rate prescribed by Presidential Decree, based upon the increase rate of wages of all small or medium enterprises)] × The number of full-time employees for the immediately preceding taxable year
(7) Any national who intends to be granted a tax credit under paragraph (1) or (3), shall file an application therefor, as prescribed by Presidential Decree. <Amended by Act No. 13560, Dec. 15, 2015>
(8) For the purposes of paragraphs (1) through (4), the scope of wages; methods for calculating the increase rate of the average wages and the mean increase rate of average wages for three immediately preceding years; the aggregate of increased wages of employees changed to regular employees; and other necessary matters, shall be prescribed by Presidential Decree. <Amended by Act No. 13560, Dec. 15, 2015>
[This Article Newly Inserted by Act No. 12853, Dec. 23, 2014]
 Article 29-5 (Tax Credits for Enterprises Increasing Jobs for Youths)
(1) Where the number of regular youth employees prescribed by Presidential Decree (hereafter in this Article, referred to as "number of regular youth employees") for the relevant taxable year, during the period until the taxable years in which December 31, 2017 falls, among the regular youth employees hired by a national (excluding nationals that engage in the types of business prescribed by Presidential Decree, such as a consumer service business), exceeds the number of regular youth employees for the immediately preceding taxable year, the national is entitled to deduct an amount calculated by multiplying the increased number of persons (which shall not exceed the smaller of the increased number of regular employees prescribed by Presidential Decree (hereafter in this Article, referred to as "all regular employees") or the increased number of full-time employees prescribed by Presidential Decree (hereafter in this Article, referred to as "full-time employees")), by three million won (or ten million won in cases of a small or medium enterprise; and seven million won in cases of a middle-standing enterprise prescribed by Presidential Decree), from income tax (limited to income tax on business income) or corporate tax payable by that national for the relevant taxable year. <Amended by Act No. 14760, Apr. 18, 2017>
(2) Where the number of regular youth employees, all regular employees, or full-time employees each taxable year, during the period from the end of the taxable year in which a national was granted a deduction of income tax or corporate tax under paragraph (1), until the end of the taxable year falling on the second anniversary therefrom, is smaller than the number of such employees in the taxable year in which the tax deduction was granted, that national shall pay the equivalent to the amount of tax deducted, as income tax or corporate tax, as prescribed by Presidential Decree.
(3) Any national who intends to be granted a tax credit under paragraph (1), shall file an application therefor, as prescribed by Presidential Decree.
(4) For the purposes of paragraph (1) or (2), methods for calculating the number of regular youth employees, all regular employees, or full-time employees, and other necessary matters, shall be prescribed by Presidential Decree.
[This Article Newly Inserted by Act No. 13560, Dec. 15, 2015]
 Article 29-6 (Income Tax Reductions or Exemptions, etc. on Payments Received from Performance Compensation Fund for Core Personnel of Small and Medium Enterprises)
(1) Where any of the core personnel of a small or medium enterprise as defined under subparagraph 6 of Article 2 of the Special Act on Support for Human Resources of Small and Medium Enterprises (excluding persons prescribed by Presidential Decree, such as the largest stockholder of the relevant enterprise; hereafter referred to as "core personnel" in this Article) joins a mutual aid program provided by the Performance Compensation Fund for Core Personnel of Small and Medium Enterprises established under Article 35-2 of the same Act on or before December 31, 2018, pays contributions for at least five years, and then receives mutual aid payments from the Performance Compensation Fund, income tax shall be levied on the endowment paid by the relevant small or medium enterprise under subparagraph 1 of Article 35-3 of the same Act (hereafter referred to as "endowment" in this Article), deeming that such endowment is earned income under Article 20 of the Income Tax Act, but shall be reduced by an amount of tax equivalent to 50/100 of the income tax.
(2) Income tax shall be levied on mutual aid payments, less mutual aid contributions and endowments paid by core personnel, deeming that such payments are interest income under Article 16 (1) of the Income Tax Act.
(3) Except as otherwise expressly provided in paragraphs (1) and (2), the methods of calculating income tax reductions, procedures for filing applications for tax reductions, and other necessary matters shall be prescribed by Presidential Decree.
[This Article Newly Inserted by Act No. 13560, Dec. 15, 2015]
 Article 30 (Income Tax Reduction or Exemption for Employees of Small or Medium Enterprises)
(1) Where a youth prescribed by Presidential Decree (hereafter in this paragraph, referred to as "youth"), a person aged at least 60, a person with a disability, or a career-interrupted woman, is employed by an enterprise prescribed by Presidential Decree (hereafter in this Article, referred to as "small or medium enterprise") among small or medium enterprises (including non-profit corporations) defined in Article 2 of the Framework Act on Small and Medium Enterprises, (or where a career-interrupted woman is reinstated in service by the same small or medium enterprise) during the period between January 1, 2012 (or January 1, 2014, in cases of a person aged at least 60, or a person with a disability) and December 31, 2018, the youth, the person aged at least 60, the person with a disability, or the career-interrupted woman is entitled to income tax reductions by the equivalent to 70/100 of income tax (the maximum for each taxable period shall be 1,500,000 won) on income that each of such persons earns from the small or medium enterprise until the month falling on the third anniversary (referring to the second anniversary from the date reinstated, if the youth is reinstated in service for the small or medium enterprise to which he/she had provided his/her service before he/she was called for the performance of the military service prescribed by Presidential Decree, within one year after performing the military service; or the fifth anniversary from the date of initial employment, if the youth is reinstated in service within three years from the date of initial employment) from the date of employment (referring to the date of re-employment in cases of a career-interrupted woman; hereafter in this paragraph, the same shall apply). In such cases, the period eligible for income tax reductions shall be calculated from the date of initial employment, based on which income tax reductions are granted, irrespective of whether the person granted income tax reductions is employed by another small or medium enterprise or re-employed by the relevant small or medium enterprise, or whether the employment of such person is transferred to another small or medium enterprise as a consequence of a merger, division, business transfer, or any similar cause. <Amended by Act No. 11133, Dec. 31, 2011; Act No. 12173, Jan. 1, 2014; Act No. 12853, Dec. 23, 2014; Act No. 13560, Dec. 15, 2015; Act No. 14390, Dec. 20, 2016>
(2) Any employee who wishes to be granted a tax reduction under paragraph (1), shall file an application therefor, with the withholding agent. <Amended by Act No. 11133, Dec. 31, 2011>
(3) Upon receipt of an application for tax reductions filed under paragraph (2), the withholding agent shall submit a list of employees who have filed such application, to the head of the tax office having jurisdiction over the withholding, by not later than 10th of the month following the month during which it has received such application. <Amended by Act No. 11133, Dec. 31, 2011>
(4) Upon receipt of a list of employees who have filed an application for tax reductions or exemptions under paragraph (3), if the head of the tax office having jurisdiction over the withholding ascertains that the relevant employee fails to meet the requirements prescribed under paragraph (1), he/she shall notify the withholding agent of such fact. <Amended by Act No. 11133, Dec. 31, 2011>
(5) The withholding agent who has been notified that the employee who filed an application for tax reductions or exemptions pursuant to paragraph (4) fails to meet the requirements provided for in paragraph (1), shall withhold an amount calculated by adding the amount calculated by multiplying the aggregate 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 as of the date he/she was notified as such: Provided, That, where the relevant employee has resigned, the withholding agent shall notify the head of the tax office having jurisdiction over withholding of such fact, as prescribed by Presidential Decree. <Amended by Act No. 11133, Dec. 31, 2011>
(6) The head of the tax office having jurisdiction over the residence of the employee whose resignation was notified under the proviso to paragraph (5), shall impose and collect an amount calculated by multiplying the amount under-collected under paragraph (1) by 105/100 as income tax from such employee.
(7) For the purposes of paragraph (1), where a person employed by a small or medium enterprise as at December 31, 2011 (excluding a career-interrupted woman), is re-employed by that small or medium enterprise through an extension of the initial term of the employment agreement as of January 1, 2012, the person is ineligible for income tax reductions provided for in paragraph (1). <Newly Inserted by Act No. 11133, Dec. 31, 2011; Act No. 14390, Dec. 20, 2016>
(8) Except as otherwise expressly prescribed in paragraphs (1) through (7), the procedure for filing applications for income tax reductions or exemptions; documents to be submitted; and other necessary matters, shall be prescribed by Presidential Decree. <Newly Inserted by Act No. 11133, Dec. 31, 2011>
[This Article Wholly Amended by Act No. 10068, Mar. 12, 2010]
 Article 30-2 (Tax Credits for Change of Status to Regular Employees)
(1) Where a small or medium enterprise or a middle-standing enterprise prescribed by Presidential Decree, changes the status of any fixed-term worker or part-time worker defined in the Act on the Protection, etc. of Fixed-Term and Part-Time Workers (hereafter in this Article, referred to as "fixed-term worker or part-time worker"), or temporary agency worker defined in the Act on the Protection, etc. of Temporary Agency Workers, who is employed as at June 30, 2016, or any fixed-term worker or part-time worker employed by any of its subcontractors defined in the Fair Transactions in Subcontracting Act, to an employee with whom it enters into an indefinite term employment contract, directly employs such temporary agency worker by the employer under the Act on the Protection, etc. of Temporary Agency Workers, or directly employs such worker upon entering into an indefinite term employment contract by a prime contractor defined in Article 2 (2) 2 of the Fair Transactions in Subcontracting Act (hereafter in this Article, referred to as "change to a regular employee"), by not later than December 31, 2017, the small or medium enterprise is entitled to deduct an amount calculated by multiplying the number of employees changed to regular employees by seven million won (or five million won in cases of a middle-standing enterprise prescribed by Presidential Decree), from income tax (limited to income tax on business income) or corporate tax payable by it for the relevant taxable year. <Amended by Act No. 12173, Jan. 1, 2014; Act No. 12853, Dec. 23, 2014; Act No. 13560, Dec. 15, 2015; Act No. 14390, Dec. 20, 2016; Act No. 14760, Apr. 18, 2017>
(2) Where a person granted a deduction of income tax or corporate tax pursuant to paragraph (1), terminates labor relations with a regular employee within one year from the date the relevant employee was changed to a regular employee, the person shall pay, as income tax or corporate tax, an amount calculated by adding the equivalent to interest calculated as prescribed by Presidential Decree, to the equivalent to the amount of tax deducted, at the time of filing a tax return for the taxable year in which such labor relations terminate.
(3) A national who wishes to be granted a tax credit pursuant to paragraph (1), shall file an application therefor in the form prescribed by Ordinance of the Ministry of Strategy and Finance, with the tax return for the relevant taxable year. <Amended by Act No. 14760, Apr. 18, 2017>
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]
 Article 30-3 (Special Taxation for Small or Medium Enterprises, etc. Maintaining Employment)
(1) A small or medium enterprise defined in Article 2 of the Framework Act on Small and Medium Enterprises, meeting each of the following conditions (hereafter in this Article, referred to as "small or medium enterprise maintaining employment"), is entitled to deduct an amount calculated by the formula prescribed in paragraph (2), from income or gross income each business year until the taxable year in which December 31, 2018 falls: <Amended by Act No. 9671, May 21, 2009; Act No. 10406, Dec. 27, 2010; Act No. 11133, Dec. 31, 2011; Act No. 11614, Jan. 1, 2013; Act No. 12173, Jan. 1, 2014; Act No. 13560, Dec. 15, 2015>
1. Where the hourly rate of a full-time employee (excluding full-time employees that enter into an employment contract in the relevant taxable year) in the relevant taxable year calculated, as prescribed by Presidential Decree, has not decreased as compared with that of the immediately preceding taxable year;
2. Where the number of full-time employees in the relevant taxable year has not decreased by at least the rate prescribed by Presidential Decree as compared with that of full-time employees in the immediately preceding taxable year;
3. Where the total annual wages per full-time employee (excluding full-time employees that enter into an employment contract in the relevant taxable year) of the relevant taxable year calculated, as prescribed by Presidential Decree, has decreased as compared with that of the immediately preceding taxable year.
(2) The amount of income deducted under paragraph (1) shall the aggregate of the amount calculated under subparagraph 1 and the amount calculated under subparagraph 2 (if the amount is a negative figure, it shall be deemed nil): <Amended by Act No. 14390, Dec. 20, 2016>
1. (Total annual wages of a full-time employee for the immediately preceding taxable year - Total annual wages of a full-time employee for the relevant taxable year) × Number of full-time employees for the relevant taxable year × 50/100;
2. (Hourly rate of a full-time employee for the relevant taxable year - Hourly rate of a full-time employee for the immediately preceding taxable year × 105/100) × Total working hours of all full-time employees for the relevant taxable year × 50/100.
(3) A full-time employee who provides labor to a small or medium enterprise maintaining employment, may deduct the amount calculated by the following formula from earned income for the relevant year until the taxable year in which December 31, 2018 falls. If the deductible amount in such cases exceeds ten million won, such excess shall be deemed nil: <Amended by Act No. 13560, Dec. 15, 2015>
(Total annual wages of the full-time employee for the immediately preceding taxable year-Total annual wages of the full-time employee for the relevant taxable year) × 50/100.
(4) For the purposes of paragraphs (1) through (3), the scope of full-time employees, total wages, and other necessary matters, shall be prescribed by Presidential Decree. <Amended by Act No. 9671, May 21, 2009>
[This Article Newly Inserted by Act No. 9512, Mar. 25, 2009]
 Article 30-4 (Tax Credits for Social Insurance Premiums for Increased Number of Employees in Small or Medium Enterprises)
(1) A small or medium enterprise is entitled to deduct the aggregate of the following amounts from income tax (limited to income tax on business income) or corporate tax payable by it for the relevant taxable year, if the number of its full-time employees increases between a certain taxable year and the immediately preceding taxable year, until the taxable years in which December 31, 2018 falls: <Amended by Act No. 12173, Jan. 1, 2014; Act No. 13560, Dec. 15, 2015; Act No. 14390, Dec. 20, 2016>
1. The equivalent to social insurance premiums borne by the employer for the increased number of youths and career-interrupted women (hereafter in this Article, referred to as "youths, etc.”) hired as full-time employees:
Number of employees prescribed by Presidential Decrees among the increased number of full-time youth employees, etc. × Amount prescribed by Presidential Decree out of the amount of social insurance premiums borne by the employer for the increased number of full-time youth employees, etc. × 100/100;
2. The equivalent to social insurance premiums borne by the employer for the increased number of full-time employees, excluding youths, etc.:
Number of increased full-time employees prescribed by Presidential Decree, excluding youths, etc. × Amount prescribed by Presidential Decree out of the amount of social insurance premiums borne by the employer for the increased number of full-time employees, excluding youths, etc. × 50/100 (or 75/100 in cases of a small or medium enterprise engaging in any of the new-growth service businesses prescribed by Presidential Decree).
(2) The social insurance referred to in paragraph (1) means:
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 Older Persons.
(3) Any small or medium enterprise that intends to be granted a tax credit under paragraph (1), shall file an application therefor in the form prescribed by Ordinance of the Ministry of Strategy and Finance and an account statement of tax credits, at the time of filing its tax return for the relevant taxable year.
(4) For the purposes of paragraph (1), the scope of full-time employees and full-time youth employees, etc.; methods for calculating the increased number of full-time youth employees, etc. where a tax credit is applied under Article 29-3; and other necessary matters, shall be prescribed by Presidential Decree. <Amended by Act No. 14390, Dec. 20, 2016>
[This Article Wholly Amended by Act No. 11133, Dec. 31, 2011]
SECTION 5 Special Taxation for Corporate Restructuring
 Article 30-5 (Special Taxation for Gift Tax on Start-Up Funds)
(1) Where a resident aged at least 18 accepts donations of any property, other than property prescribed by Presidential Decree, such as land and buildings, from any of his/her parents aged at least 60 (including parents of his/her father or mother, if his/her father or mother is dead as at the time such donation is made; hereafter in this Article, the same shall apply), in order to start a small or medium enterprise that engages in any of the types of business prescribed under Article 6 (3), 500 million won shall be deducted from the taxable value of gift tax on the business start-up fund prescribed by Presidential Decree (the maximum taxable value of gift tax shall be three billion won (or five billion won, if the resident hires at least ten new employees through the start-up of business; hereafter in this Article, referred to as "start-up fund")), out of the value of the property that he/receives as a gift, and gift tax shall be levied at the tax rate of 10/100, notwithstanding Articles 53 and 56 of the Inheritance Tax and Gift Tax Act. If such resident receives donated start-up funds at least twice, or from each of his/her parents respectively, deductions shall apply based on the aggregate of taxable amounts of gift tax. <Amended by Act No. 10406, Dec. 27, 2010; Act No. 11133, Dec. 31, 2011; Act No. 12173, Jan. 1, 2014; Act No. 13560, Dec. 15, 2015>
(2) A person in receipt of donated start-up funds shall commence his/her business within one year from the date of the donation. In such cases, situations prescribed by Presidential Decree, such as expansion of a business, shall be deemed a new business startup, but none of the following cases shall be deemed a new business startup: <Amended by Act No. 13560, Dec. 15, 2015>
1. Where anyone succeeds to a previous business in the course of a merger, split-off, investment in kind, or acquisition of business, or operates the same type of business upon acquiring or purchasing assets used for a previous business;
2. Where a resident incorporates a new corporation upon converting a business he/she has operated, into a corporation;
3. Where anyone operates the same type of business as the previous business upon resuming the business after closure of the business;
4. Where it is impracticable to deem that a new business is commenced, as it involves adding another type of business, and in similar cases prescribed by Presidential Decree.
(3) Paragraph (2) 3 and 4 shall not apply where anyone who has commenced his/her business pursuant to paragraph (2) after receiving donated start-up funds, receives newly donated start-up funds and uses such funds for the original start-up business.
(4) A person in receipt of donated start-up funds shall use all of such start-up funds for the relevant purpose by the third anniversary from the date he/she receives such donated start-up funds.
(5) Where a person in receipt of donated start-up funds commences his/her business pursuant to paragraph (2), the person shall submit a statement on the spending of start-up funds (including a statement on employment, if the donated start-up funds exceed three billion won), to the head of the tax office having jurisdiction over the place of payment of gift tax, on the date prescribed by Presidential Decree. In such cases, if that person fails to submit a statement on the spending of start-up funds or if the statement on the spending of start-up funds submitted is unclear, an amount calculated by multiplying the amount related to the portion on which no statement or a unclear statement has been submitted, by 3/1,000, shall be levied as penalty tax on the failure to submit the statement on the spending of start-up funds. <Amended by Act No. 13560, Dec. 15, 2015>
(6) A resident accorded special tax treatment with respect to gift tax on start-up funds under paragraph (1), shall be subject to gift tax and inheritance tax, respectively, on the following amounts pursuant to the Inheritance Tax and Gift Tax Act, if any of the following events occurs. In such cases, the equivalent to interest calculated as prescribed by Presidential Decree, shall be added to gift tax to be levied: <Amended by Act No. 11133, Dec. 31, 2011; Act No. 12173, Jan. 1, 2014; Act No. 13560, Dec. 15, 2015>
1. Where the resident fails to commence his/her business pursuant to paragraph (2): The start-up funds;
2. Where the resident spends the start-up funds for engaging in a type of business, other than those prescribed under Article 6 (3): The start-up funds spent for a type of business, other than those prescribed under Article 6 (3);
3. Where the resident fails to spend the newly donated start-up funds pursuant to paragraph (3): The start-up funds not spent for the relevant purpose;
4. Where the resident fails to spend all of the start-up funds for the relevant purpose by the third anniversary from the date such start-up funds are donated pursuant to paragraph (4): The start-up funds not spent for the relevant purpose;
5. Where the resident misappropriates the donated start-up funds (including the value increased by the start-up business, calculated by the formula prescribed by Presidential Decree; hereinafter referred to as "start-up funds, etc.") for other purposes within ten years after receiving the donated start-up funds: The start-up funds, etc. misappropriated for other purposes;
6. Where the resident closes his/her business within ten years after startup of the business, or in other cases prescribed by Presidential Decree: The start-up funds, etc., and other amount prescribed by Presidential Decree;
7. Where the donated start-up funds exceed three billion won, and the number of employees during each taxable year, within five years from the end of the taxable year in which the date of commencement of business falls, does not exceed the number calculated by the following formula: The start-up fund in excess of three billion won:
Number of employees on the date of commencement of business - (Number of new employees hired by commencing a business - 10 persons).
(7) For the purposes of Article 3-2 (1) of the Inheritance Tax and Gift Tax Act, start-up funds shall be deemed donated property added to the inherited property. <Amended by Act No. 13560, Dec. 15, 2015>
(8) For the purposes of Article 13 (1) 1 of the Inheritance Tax and Gift Tax Act, start-up funds shall be added to the taxable value of inheritance tax, regardless of the period from the date the start-up funds are donated until the date the inheritance commences; for the purposes of subparagraph 3 of Article 24 of the same Act, no start-up funds shall be deemed the value of the donated property added to the taxable value of inheritance tax.
(9) Where the amount of gift tax on start-up funds is subject to Article 28 of the Inheritance Tax and Gift Tax Act, the amount of gift tax on start-up funds shall be deducted from the amount of inheritance tax calculated, notwithstanding paragraph (2) of the same Article. In such cases, where the amount of the deductible gift tax exceeds the amount of inheritance tax calculated, the amount of gift tax equivalent to the difference between them shall not be refunded.
(10) Where gift tax is levied on start-up funds, the value of property other than start-up funds donated by the same person (including his/her spouse) as a gift, shall not be added to the taxable value of gift tax on start-up funds, notwithstanding Article 47 (2) of the Inheritance Tax and Gift Tax Act; and even where the tax return of gift tax on start-up funds is filed, the tax credit for a voluntary return under Article 69 (2) of the aforesaid Act, shall not apply. <Amended by Act No. 12853, Dec. 23, 2014>
(11) Anyone who wishes to be granted a tax credit under paragraph (1), shall file an application for special taxation by the deadline for filing the tax return of gift tax, as prescribed by Presidential Decree. In such cases, the provisions on special taxation shall not apply if he/she fails to file the application for special taxation by such deadline.
(12) The imposition of gift tax and the inheritance tax shall be governed by the Inheritance Tax and Gift Tax Act, except as otherwise expressly provided for in this Article.
(13) Article 30-6 shall not apply to residents granted tax credits under paragraph (1).
(14) For the purposes of paragraphs (1) and (6), the criteria for determination of new employment; scope of employees; methods for calculating the number of employees; and other necessary matters, shall be prescribed by Presidential Decree. <Newly Inserted by Act No. 13560, Dec. 15, 2015>
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]
 Article 30-6 (Special Taxation for Gift Tax on Succession to Family Business)
(1) Where a resident aged 18 years or over succeeds to a family business under Article 18 (2) 1 of the Inheritance Tax and Gift Tax Act (in this regard, the term "decedent" shall be construed as "parent," and "inheritor" as "resident"; the same shall apply hereafter in this Article) from any of his/her parents aged 60 years or over (or any of parents of his/her father or mother, if his/her father or mother is dead at the time of conveyance as a gift; the same shall apply hereafter in this Article) by acquiring stocks or equity shares of the family business (hereafter referred to as "stocks, etc." in this Article) conveyed by the parent as a gift, as prescribed by Presidential Decree, gift tax shall be levied at the tax rate of 10/100 (20/100 for the excess amount, if the tax base exceeds three billion won) after deducting 500 million won from the taxable value (the maximum taxable value shall be ten billion won) of gift tax on the amount equivalent to the property of the family business prescribed by Presidential Decree, out of the value of the stocks, etc., notwithstanding Articles 53 and 56 of the Inheritance Tax and Gift Tax Act: Provided, That this shall not apply where a resident acquires stocks, etc. conveyed as a gift by the donator of the relevant stocks, etc. or by a person who is the largest stockholder or investor referred to in Article 22 (2) of the Inheritance Tax and Gift Tax Act at the time of succession to the family business (excluding a person to whom such stocks, etc. are conveyed as a gift at the time of succession to the family business) after succeeding to the family business. <Amended by Act No. 10406, Dec. 27, 2010; Act No. 11133, Dec. 31, 2011; Act No. 12173, Jan. 1, 2014; Act No. 12853, Dec. 23, 2014>
(2) Where a person who acquires stocks, etc. conveyed as a gift pursuant to paragraph (1) fails to succeed to the family business, as prescribed by Presidential Decree, or either of the following events arises, without just grounds prescribed by Presidential Decree, within seven years from the date the person acquires the stocks, etc. as a gift after succeeding to the family business, gift tax shall be levied on the taxable value of the stocks, etc. pursuant to the Inheritance Tax and Gift Tax Act. In such cases, an amount equivalent to the interest calculated by the formula prescribed by Presidential Decree, shall be levied in addition to the gift tax: <Amended by Act No. 12853, Dec. 23, 2014>
1. Where the person fails to run the family business, or suspends or closes the family business;
2. Where the person’s equity in stocks, etc. conveyed as a gift is reduced.
(3) Article 30-5 (7) through (12) shall apply mutatis mutandis to the conveyance of stocks, etc. under paragraph (1). In this regard, the "start-up fund" shall be construed as “stocks, etc."
(4) The method of applying special taxation for gift tax where Articles 41-3 and 41-5 of the Inheritance Tax and Gift Tax Act apply after stocks, etc. have been conveyed as a gift pursuant to paragraph (1); method of applying deduction for succession to a family business where succession is initiated after the stocks, etc. have conveyed as a gift; scope of donors and donees; and other necessary matters shall be prescribed by Presidential Decree. <Amended by Act No. 13560, Dec. 15, 2015>
(5) Article 30-5 shall not apply to the residents who have obtained tax deductions under paragraph (1).
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]
 Article 31 (Capital Gains Tax Carried Forward, etc. Following Consolidation between Small or Medium Enterprises)
(1) Where a small or medium enterprise to be extinguished by consolidation between small or medium enterprises engaging in the types of business prescribed by Presidential Decree transfers fixed business assets prescribed by Presidential Decree (hereinafter referred to as "fixed business assets") 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 the fixed business assets. <Amended by Act No. 11614, Jan. 1, 2013>
(2) The scope of, and requirements, for consolidation between small or medium enterprises subject to paragraph (1), shall be prescribed by Presidential Decree.
(3) Any national who intends to carry forward tax under paragraph (1) shall file an application for taxation carried forward, as prescribed by Presidential Decree.
(4) Where a small or medium start-up enterprise or a small or medium start-up venture enterprise as prescribed in Article 6 (1) and (2) or a national eligible for tax reduction or exemption under Article 64 (1) consolidates as prescribed in paragraph (1) before the expiration of the period of tax reduction or exemption under Article 6 or 64, the consolidated corporation is entitled to tax reduction or exemption under Article 6 or 64 for the remaining period of tax reduction or exemption, as prescribed by Presidential Decree. <Amended by Act No. 12853, Dec. 23, 2014>
(5) Where a small or medium enterprise relocating to an area outside the over-concentration control region of the Seoul Metropolitan area under Article 63, or an agricultural company under Article 68 consolidate as prescribed in paragraph (1) before the expiration of the period of tax reduction or tax exemption under Article 63 or 68, the consolidated corporation is entitled to tax reduction and exemption under Article 63 or 68 for the remaining period of tax reduction or tax exemption, as prescribed by Presidential Decree.
(6) Where a national who has an unused tax credit under Article 144 consolidates as prescribed in paragraph (1), the consolidated corporation may succeed to the amount of the unused tax credit of the national and obtain a tax credit, as prescribed by Presidential Decree.
(7) Where either of the following events arises within five years from the date a national who has tax carried forward under paragraph (1) transfers fixed business assets, the national shall pay the tax carried forward under paragraph (1) (referring to the amount less the amount of tax already paid by a consolidated corporation) as the capital gains tax within two months from the end of the month in which the relevant event arises. In such cases, the criteria for determination of the discontinuance of business, and other necessary matters shall be prescribed by Presidential Decree: <Newly Inserted by Act No. 11614, Jan. 1, 2013; Act No. 12853, Dec. 23, 2014>
1. Where the consolidated corporation discontinues the business succeeded from a small or medium enterprise to be extinguished;
2. Where a national who has tax carried forward under paragraph (1) disposes of at least 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]
 Article 32 (Capital Gains Tax Carried Forward Following Conversion into Corporation)
(1) Where a resident converts his/her business into a corporation (excluding any corporation that engages in consumer service business prescribed by Presidential Decree), by making an investment in kind with fixed business assets, or by the means of business transfer or acquisition prescribed by Presidential Decree, taxation carried forward may apply to the fixed business assets. <Amended by Act No. 11614, Jan. 1, 2013>
(2) Paragraph (1) shall apply only where the capital of a newly-established corporation exceeds the amount prescribed by Presidential Decree.
(3) Any resident who intends to be accorded special tax treatment under paragraph (1) shall file an application for taxation carried forward, as prescribed by Presidential Decree.
(4) Article 31 (4) through (6) shall apply mutatis mutandis to corporations to be established under paragraph (1).
(5) Where either of the following events occurs within five years from the date a corporation is established pursuant to paragraph (1), the resident who has tax carried forward under paragraph (1) shall pay the tax carried forward under paragraph (1) (referring to the amount less the amount of tax already paid by the corporation) as capital gains tax within two months from the last day of the month in which the relevant event arises. In such cases, the criteria for determination of the discontinuance of business, and other necessary matters shall be prescribed by Presidential Decree: <Amended by Act No. 11614, Jan. 1, 2013; Act No. 12853, Dec. 23, 2014>
1. Where the corporation established pursuant to paragraph (1) discontinues the business succeeded from the resident who has tax carried forward under paragraph (1);
2. Where the resident who has tax carried forward under paragraph (1) disposes of at least 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]
 Article 33 (Special Taxation for Enterprises Undergoing Trade Adjustment Assistance whose Business is Converted)
(1) Where a person transfers fixed business assets used directly for the pre-conversion business (hereafter in this Article, referred to as "fixed assets for the pre-conversion business") by not later than December 31, 2018, and acquires fixed business assets to be used directly for the converted business within one year from the date of transfer, in order to convert a business that an enterprise undergoing trade adjustment assistance under Article 6 of the Act on Trade Adjustment Assistance Following the Free Trade Agreements (hereafter in this Article and Article 33-2, referred to as "enterprise undergoing trade adjustment assistance") has engaged in (hereafter in this Article, referred to as "pre-conversion business"), into a business falling under any subparagraph of Article 6 (3) of this Act (hereafter in this Article, referred to as “converted business”), the person may choose to exclude the amount calculated, as prescribed by Presidential Decree, regarding proceeds accruing from transfer of the fixed assets for the pre-conversion business, from the gross income, for the purposes of calculating the amount of his/her income for the relevant business year. In such cases, the relevant amount shall be included in the gross income, in at least equal installments, over a three-business year period starting from the business year falling on the third anniversary from the end of the business year in which such assets are transferred. <Amended by Act No. 10406, Dec. 27, 2010; Act No. 12173, Jan. 1, 2014; Act No. 13560, Dec. 15, 2015>
(2) For the purposes of paragraph (1), a resident is entitled to a tax reduction or exemption, or deferral, as follows:
1. Where the resident acquires the machinery and equipment for the converted business with the transfer value of the business buildings of the pre-conversion business and land appurtenant thereto (hereafter in this Article, referred to as "transfer value of the pre-conversion business"): Reducing an amount of tax equivalent to 50/100 of the capital gains tax, as prescribed by Presidential Decree;
2. Where the resident acquires the business buildings of the converted business and land appurtenant thereto with the transfer value of the pre-conversion business: Granting deferred taxation, as prescribed by Presidential Decree.
(3) Where any resident accorded special tax treatment under paragraphs (1) and (2), fails to convert his/her business, or discontinues or closes his/her converted business within three years from the date the converted business commences, the resident shall include an amount calculated, as prescribed by Presidential Decree, in his/her gross income, for the purposes of calculating the amount of income in the business year during which the relevant ground arises, or pay, as capital gains tax, the amount of tax credits or the amount of tax deferred. In such cases, the corporate tax or capital gains tax plus the equivalent to the interest calculated as prescribed by Presidential Decree, shall be paid, at the time of filing a tax return of the relevant taxable year; and the amount of such tax shall be deemed the amount of tax payable under Article 64 of the Corporate Tax Act and Article 111 of the Income Tax Act.
(4) In any of the following cases, a resident granted deferred taxation under paragraph (2) 2 (referring to the heir of the relevant resident in cases falling under subparagraph 2 of this paragraph), shall pay the amount of tax deferred, calculated as prescribed by Presidential Decree, as capital gains tax, by the following relevant deadline: <Newly Inserted by Act No. 14390, Dec. 20, 2016>
1. Where the resident donates the building for the place of the converted business and land appurtenant thereto: Within three months from the end of the month in which the property is donated;
2. Where the building for the place of the converted business and land appurtenant thereto is inherited upon the death of the resident: Within six months from the end of the month in which inheritance commences.
(5) For the purposes of paragraphs (1) through (4), the scope of business conversion; the scope of fixed business assets; submitting applications for tax reductions or tax exemptions, or applications for tax deferral, and statements of proceeds from transfer of fixed business assets; and other necessary matters, shall be prescribed by Presidential Decree. <Amended by Act No. 14390, Dec. 20, 2016>
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]
 Article 33-2 (Tax Reduction or Exemption for Small or Medium Enterprises or Enterprises Undergoing Trade Adjustment Assistance whose Business is Converted)
(1) Where a national operating a small or medium enterprise, converts a business that he/she has engaged in for at least five consecutive years and a business that an enterprise undergoing trade adjustment assistance has engaged in (hereafter in this Article, referred to as "pre-conversion business"), into a business falling under any subparagraph of Article 6 (3) (hereafter in this Article, referred to as "converted business") in an area outside the over-concentration control region of the Seoul Metropolitan area (in cases of an enterprise undergoing trade adjustment assistance, including conversion of its business within the over-concentration control region of the Seoul Metropolitan area), by not later than December 31, 2018 (or by not later than December 31, 2020, where a new factory is established), as follows, the national is entitled to a reduction of the equivalent to 50/100 of the income tax or corporate tax on incomes accruing from the converted business, for the taxable year in which the first income accrues from the relevant business (or the taxable year falling on the fifth anniversary from the date the relevant business is converted, if no income accrues from the relevant business by the taxable year falling on such fifth anniversary) after the date of business conversion prescribed by Presidential Decree (hereafter in this Article, referred to as "date business is converted"), and also within the three subsequent taxable years from the date the following taxable year commences: <Amended by Act No. 11614, Jan. 1, 2013; Act No. 13560, Dec. 15, 2015>
1. Where the national transfers or discontinues the pre-conversion business and converts it into the converted business within one year (or three years if a new factory is established) after the date of such transfer or discontinuance;
2. Where the national downsizes the pre-conversion business and adds a converted business, as prescribed by Presidential Decree.
(2) For the purposes of paragraph (1) 2, a reduction of income tax or corporate tax granted under the same paragraph, shall not apply to the taxable year prescribed by Presidential Decree during the period of income tax or corporate tax reduction.
(3) Where a national granted a tax reduction under paragraph (1), fails to convert his/her business or discontinues the converted business, or is dissolved within three years from the date business is converted, the national shall pay, the amount of tax reduced, as income tax or corporate tax, at the time of calculating the amount of income for the taxable year in which such ground arises.
(4) Where a national pays the amount of income tax or corporate tax reduced under paragraph (1) pursuant to paragraph (3), the national shall pay such income tax or corporate tax plus the equivalent to the interest calculated as prescribed by Presidential Decree; and the relevant amount of tax shall be deemed the amount of tax payable under Article 76 of the Income Tax Act or Article 64 of the Corporate Tax Act.
(5) Any national who intends to be granted a tax reduction under paragraph (1), shall file an application therefor, as prescribed by Presidential Decree.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]
 Article 34 (Special Taxation for Assets Sold by Domestic Corporations to Pay Financial Debts)
(1) Where a domestic corporation transfers its assets to any third person, on or before December 31, 2008, according to its financial restructuring plan prescribed by Presidential Decree (limited to plans approved by the persons prescribed by Presidential Decree; hereafter referred to as "financial restructuring plan" in this Article), which includes its plan to pay debts by the deadline prescribed by Presidential Decree from the date of transfer of assets (referring to the date prescribed by Presidential Decree if such assets are transferred under a long-term installment plan, or the date of termination of a cause if any of the unavoidable causes prescribed by Presidential Decree exists; hereafter the same shall apply in this Article) in order to improve its financial structure, the domestic corporation may elect to exclude an amount equivalent to the paid debts prescribed by Presidential Decree (limited to the amount that exceeds the deficit prescribed by Presidential Decree; hereafter referred to as "amount equivalent to the gains from transfer" in this Article) out of the capital gains from the transfer of such assets, from its gross income, during the period of the relevant business year and three business years after the end of the relevant business year, and may include the relevant amount in gross income, in at least equal installments, during the subsequent three business years thereafter. <Amended by Act No. 10406, Dec. 27, 2010; Act No. 12173, Jan. 1, 2014; Act No. 13560, Dec. 15, 2015>
1. and 2. Deleted. <by Act No. 13560, Dec. 15, 2015>
(2) If any of the following causes occurs, a domestic corporation accorded special tax treatment under paragraph (1) shall include the amount excluded from gross income under paragraph (1) in gross income for the purposes of calculating the income for the business year in which the relevant cause arises, as prescribed by Presidential Decree. In such cases, the domestic corporation shall pay corporate tax plus an amount equivalent to the interest calculated by the formula prescribed by Presidential Decree, and the relevant tax amount shall be deemed the tax amount payable under Article 64 of the Corporate Tax Act: <Amended by Act No. 13560, Dec. 15, 2015>
1. Where the domestic corporation fails to pay its debts according to its financial restructuring plan;
2. Where the debt ratio of the domestic corporation that has transferred assets, exceeds the standard debt ratio during a three-year period following the transfer of the assets;
3. Where the domestic corporation closes the relevant business or is dissolved within three years from the date of transfer of the relevant assets, and a merging corporation, a corporation newly established following a division, or the counterpart corporation of a merger through division fails to succeed to the relevant business: Provided, That an amount equivalent to the interest calculated by the formula prescribed by Presidential Decree, shall not be added if an unavoidable cause prescribed by Presidential Decree arises, such as bankruptcy.
(3) The person who has approved a financial restructuring plan under paragraph (1) shall annually submit the contents of the financial restructuring plan and outcomes of implementation of the plan to the head of the tax office having jurisdiction over the place of tax payment, as prescribed by Presidential Decree. <Amended by Act No. 13560, Dec. 15, 2015>
(4) The time of transfer, contents and approval criteria of the financial restructuring plan, the scope of debts referred to in paragraph (1), and calculation of the debt ratio and the standard debt ratio, filing applications for tax reductions and exemptions under paragraph (2), and other necessary matters shall be prescribed by Presidential Decree.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]
 Articles 35 and 36 Deleted. <by Act No. 6538, Dec. 29, 2001>
 Article 37 (Special Taxation for Comprehensive Transfer of Assets)
(1) Where a domestic corporation that fully meets the following conditions (hereafter referred to as "acquired corporation" in this Article) transfers most of its assets (hereafter referred to as "comprehensive transfer of assets" in this Article) to another domestic corporation (hereafter referred to as "acquiring corporation" in this Article), as prescribed by Presidential Decree, and is dissolved after receiving the stocks or equity shares (hereafter referred to as "stocks, etc." in this Article) of the acquiring corporation in return for such transfer, the value of transferred assets may be appraised at their 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: <Amended by Act No. 10406, Dec. 27, 2010; Act No. 13560, Dec. 15, 2015>
1. That the transfer and acquisition shall be made between domestic corporations that have engaged in a business for at least one year as at the date of comprehensive transfer of assets;
2. That the value of voting stocks, etc. of the acquiring corporation shall be at least 80/100 of the aggregate (hereinafter referred to as "price of acquisition") of the values of stocks, etc. of the acquiring corporation, money, and other property that the acquired corporation acquires from the acquiring corporation in return for the comprehensive transfer of assets, and such stocks, etc. are distributed, as prescribed by Presidential Decree, and such acquired corporation or stockholders, etc. of the acquired corporation prescribed by Presidential Decree shall hold the stocks, etc. until the last day of the business year in which the date of comprehensive transfer of assets falls;
3. That the acquiring corporation shall continue the business succeeded from the acquired corporation until the last day of business year in which the date of comprehensive transfer of assets falls.
(2) Where a domestic corporation is dissolved through comprehensive transfer of its assets upon fully meeting the conditions provided 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 the stockholders, etc. of the acquired corporation receive due to dissolution shall be calculated, as prescribed by Presidential Decree.
(3) Where the acquired corporation has transferred its assets at book value through comprehensive transfer of assets fully meeting the conditions provided in the subparagraphs of paragraph (1), the acquiring corporation shall be deemed to have acquired such assets at book value. In such cases, the difference between the book value and the price of acquisition shall be calculated by asset, as prescribed by Presidential Decree.
(4) Where the acquiring corporation has acquired the assets of the acquired corporation at book value pursuant to paragraph (3), the amounts that have included in the gross income or deductible expenses or that have excluded from the gross income or deductible expenses, tax reductions, exemptions or credits granted under Article 59 of the Corporate Tax Act, other assets, liabilities, etc. shall be succeeded by the acquiring corporation, as prescribed by Presidential Decree, for the purposes of calculating the deficit of the acquired corporation under subparagraph 1 of Article 13 of the Corporate Tax Act as at the date of comprehensive transfer of assets, and the amount of income and tax base for each business year. In such cases, the deficit, tax reductions, exemptions, or credits granted under Article 59 of the Corporate Tax Act, assets, liabilities, etc. of the acquired corporation that the acquiring corporation has succeeded shall be deemed nil for the purposes of calculating the amount of income of the acquired corporation during the business year in which the date of comprehensive transfer of assets falls and the subsequent business years. <Amended by Act No. 10406, Dec. 27, 2010>
(5) In cases of comprehensive transfer of assets fully meeting the conditions provided in the subparagraphs of paragraph (1), the deficit of the acquiring corporation under subparagraph 1 of Article 13 of the Corporate Tax Act as at the date of the comprehensive transfer of assets, and the deficit succeeded from the acquired corporation, losses on disposal of assets acquired by transfer from the acquired corporation, and reductions/exemptions or tax credits under Article 59 of the Corporate Tax Act succeeded from the acquired corporation shall be deducted or included in the deductible expenses by applying mutatis mutandis Article 45 of the Corporate Tax Act. <Amended by Act No. 10406, Dec. 27, 2010>
(6) Where any of the following causes occurs during the period prescribed by Presidential Decree within three years, the acquiring corporation (including where that acquiring corporation has succeeded the deficit, etc. pursuant to paragraph (4)) that has acquired the assets of the acquired corporation at book value pursuant to paragraph (3) shall include the difference (only applicable where the price of acquisition exceeds the book value) between the book value and the price of acquisition of assets acquired by transfer, the amount, etc, deducted from the succeeded deficit, etc. in the gross income, as prescribed by Presidential Decree, for the purposes of calculating the amount of income for the business year during which the relevant cause occurs: Provided, That reductions/exemptions or tax credits, etc. deducted after succession from the acquired corporation under paragraph (5) shall be treated by applying mutatis mutandis Article 44-3 (3) of the Corporate Tax Act. <Amended by Act No. 10406, Dec. 27, 2010>
1. Where the acquiring corporation discontinues the business succeeded from the acquired corporation;
2. Where the acquired corporation or stockholders, etc. of the acquired corporation prescribed by Presidential Decree dispose of stocks, etc. of the acquiring corporation it has acquired through comprehensive transfer of assets.
(7) Where unavoidable causes prescribed by Presidential Decree arise for the purposes of paragraph (1) 2 and 3 and paragraph (6) 1 and 2, the stocks, etc. shall be deemed held or the business shall be deemed continued.
(8) Any acquired corporation and acquiring corporation that intend to be accorded special tax treatment under paragraph (1) or (3) shall submit a statement of comprehensive transfer of assets, etc. to the head of the tax office having jurisdiction over the place of tax payment, as prescribed by Presidential Decree.
(9) The period from the comprehensive transfer of assets to liquidation, calculation of the price of acquisition, criteria for determination as to continuance and closure of the succeeded business, calculation of amounts to include in the gross income and deductible expenses, method of inclusion thereof, under paragraphs (1) through (7), and other necessary matters shall be prescribed by Presidential Decree.
[This Article Newly Inserted by Act No. 9921, Jan. 1, 2010]
 Article 38 (Special Taxation for All-Inclusive Share Swap or Transfer)
(1) Where a domestic corporation becomes a wholly-owned subsidiary of the counterpart corporation of an all-inclusive share swap or transfer (hereafter in this Article, referred to as "all-inclusive share swap, etc.") through an all-inclusive share swap provided for in Article 360-2 of the Commercial Act or all-inclusive share transfer provided for in Article 360-15 of the same Act, meeting all the following conditions, capital gains tax or corporate tax on the equivalent to proceeds from transfer of stocks accrued to the stockholders of the wholly-owned subsidiary from the all-inclusive share swap, etc., may be deferred until the stockholders of the wholly-owned subsidiary dispose of the stocks of a wholly-owning parent company or the wholly-owning parent company of the wholly-owning parent company, as prescribed by Presidential Decree: <Amended by Act No. 10406, Dec. 27, 2010; Act No. 12173, Jan. 1, 2014; Act No. 14390, Dec. 20, 2016>
1. The all-inclusive share swap, etc. shall be made between domestic corporations operating business for at least one year as at the date of the all-inclusive share swap or transfer: Provided, That the wholly-owning parent company to be newly incorporated in the course of the all-inclusive share transfer, shall be excluded herefrom;
2. Where stockholders of the wholly-owned subsidiary receive the prices for the swap or transfer from the wholly-owning parent company, the price of the stocks of the wholly-owning parent company shall be at least 80/100 of the aggregate of prices for such swap and transfer, or the price of the stocks of the wholly-owning parent company of the wholly-owning parent company shall be at least 80/100, and such stocks shall be distributed, as prescribed by Presidential Decree, and the stockholders of the wholly-owning parent company and stockholders of the wholly-owned subsidiary prescribed by Presidential Decree shall hold the stocks acquired through the all-inclusive share swap, etc. until the end of the business year in which the date of the share swap or transfer falls;
3. The wholly-owned subsidiary shall keep on operating until the end of the business year in which the date of the share swap or transfer falls.
(2) Where the stockholders of the wholly-owned subsidiary are granted deferred taxation under paragraph (1), the wholly-owning parent company shall include the difference (if only the market value exceeds the book value) between the book value of stocks of the wholly-owned subsidiary acquired through the all-inclusive share swap, etc. and the market value as at the date of the all-inclusive share swap or transfer in its gross income, as prescribed by Presidential Decree, if any of the following events occurs within the period prescribed by Presidential Decree not exceeding three years after it has acquired the stocks of the wholly-owned subsidiary at book value: <Amended by Act No. 10406, Dec. 27, 2010>
1. Where the wholly-owned subsidiary discontinues business;
2. Where the stockholders of the wholly-owning parent company or shareholders of the wholly-owned subsidiary prescribed by Presidential Decree dispose of the stocks acquired through the all-inclusive share swap, etc.
(3) For the purposes of paragraphs (1) 2 and 3, and (2) 1 and 2, where stocks are unavoidably disposed of pursuant to statutes, or other extenuating circumstances prescribed by Presidential Decree arise, it shall be deemed that stocks are held or business is operated continuously. <Amended by Act No. 10631, May. 19, 2011>
(4) Methods for calculating capital gains on transfer of stocks; criteria for determining whether the wholly-owned subsidiary continues or discontinues continuance business; methods for calculating the amount to be included in the gross income and method of inclusion thereof; methods for calculating the book value of stocks of the wholly-owned subsidiary; submitting the detailed statement on the all-inclusive share swap, etc. under paragraphs (1) through (3); and other necessary matters, shall be prescribed by Presidential Decree.
[This Article Newly Inserted by Act No. 9921, Jan. 1, 2010]
 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 incorporated 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 not later than December 31, 2018, upon fully meeting the following conditions, the imposition of capital gains tax or corporate tax on an amount equivalent to the gains from transfer accruing from such investment in kind out of the value of stocks acquired from the investment in kind may be deferred until the stockholder disposes of the stocks of that holding company, as prescribed by Presidential Decree: <Amended by Act No. 10406, Dec. 27, 2010; Act No. 11614, Jan. 1, 2013; Act No. 13560, Dec. 15, 2015>
1. Where the holding company and stockholders prescribed by Presidential Decree among those who have made investment in kind shall hold the stocks acquired from the investment in kind until the last day of the business year in which the date of investment in kind falls;
2. The domestic corporation that has become a subsidiary of the holding company (hereafter referred to as "subsidiary" in this Article) through investment in kind shall continue its business until the last day of the business year in which the date of investment in kind falls.
(2) Where a Korean stockholder of a domestic corporation makes investment in kind with his/her stocks in a domestic corporation 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 division (only applicable to the corporate division meeting the conditions provided 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 "division"), or swaps his/her stocks with the treasury stocks of such converted holding company (hereafter referred to as "treasury stock swap" in this Article), by not later than December 31, 2018, upon fully meeting conditions provided in the subparagraphs of paragraph (1) and the following conditions, the imposition of capital gains tax or corporate tax on an amount equivalent to the gains from transfer accruing from such investment in kind or treasury stock swap out of the value of stocks acquired from investment in kind or treasury stock swap may be deferred until such stockholder disposes of the stocks of that holding company, as prescribed by Presidential Decree: Provided, That for the purposes of paragraph (1), a "holding company", a "subsidiary" and "investment in kind" shall be construed as a "converted holding company", a "subsidiary falling short of the equity ratio", and "investment in kind or treasury stock swap", respectively. <Amended by Act No. 10406, Dec. 27, 2010; Act No. 11614, Jan. 1, 2013; Act No. 13560, Dec. 15, 2015>
1. That the domestic corporation’s stock holding ratio in the converted holding company shall not exceed the percentage prescribed in the main sentence 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"), and stocks of either of the following corporations shall be subject to investment in kind or treasury stock swap:
(a) Another domestic corporation invested by the converted holding company as at the time of conversion into a holding company;
(b) A corporation newly established or merged by a division of the converted holding company and a corporation surviving a division;
2. That investment in kind or treasury stock swap shall be made within two years from the date of conversion into a holding company;
3. That, in cases of treasury stock swap, all stockholders of the subsidiary affiliated by lower stock holding ratio shall be allowed to participate in such treasury stock swap and this fact shall 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 exceeds the book value) between the book value of stocks acquired through investment in kinds, etc. and the market value as at the date of investment in kind, etc. in gross income, as prescribed by Presidential Decree, if any of the following events occurs within the period prescribed by Presidential Decree not exceeding three years thereafter: Provided, That, if the event prescribed in subparagraph 2 occurs, the holding company shall pay the corporate tax plus an amount equivalent to the interest calculated by the formula prescribed by Presidential Decree: <Amended by Act No. 10406, Dec. 27, 2010>
1. Where the holding company incorporated or converted under paragraph (1) or the converted holding company ceases to be a holding company: Provided, That this shall not apply to cases prescribed by Presidential Decree where it ceases to be a holding company due to an amendment to the statute establishing the standards for holding companies, such as the Monopoly Regulation and Fair Trade Act, etc.;
2. Where the converted holding company holds the stocks of a subsidiary affiliated with lower stock holding ratio at any percentage not exceeding the percentage prescribed in the main sentence of Article 8-2 (2) 2 of the Monopoly Regulation and Fair Trade Act until the date falling on two years from the date of conversion into a holding company;
3. Where a subsidiary (including any subsidiary affiliated with lower stock holding) 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 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 return for such stock swap or stock transfer with the stocks of the financial holding company controlling the intermediary holding company by not later than December 31, 2018, the imposition of capital gains tax or corporate tax initially deferred may be re-deferred until the stockholder transfers the stocks of the financial holding company received in return for such stock swap, as prescribed by Presidential Decree, notwithstanding paragraph (1). <Amended by Act No. 11614, Jan. 1, 2013; Act No. 13560, Dec. 15, 2015>
(5) Where unavoidable causes prescribed by Presidential Decree arise for the purposes of each subparagraph of paragraph (1) (including where each subparagraph of paragraph (1) is applied mutatis mutandis under paragraph (2)) and paragraph (3) 3 and 4, stocks shall be deemed held or the business shall be deemed continued. <Newly Inserted by Act No. 10406, Dec. 27, 2010>
(6) For the purposes of paragraphs (1) through (5), the calculation of the gains from transfer, criteria for determination as to continuance and closure of the business of a subsidiary, submission of statements of the investment in kind, and other necessary matters shall be prescribed by Presidential Decree. <Amended by Act No. 10406, Dec. 27, 2010>
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]
 Article 38-3 (Special Taxation for Investment in Kind with Stocks, etc. of Foreign Subsidiaries by Domestic Corporation)
(1) Where a domestic corporation engaging in a business for at least five consecutive years establishes a new foreign corporation through investment in kind with the stocks or equity shares (hereafter in this Article referred to as "stocks, etc.") of a foreign subsidiary (referring to a foreign corporation in which a domestic corporation contributes at least 20/100 of the total outstanding stocks or total contribution amount as at the date of investment in kind; hereafter in this Article the same shall apply), or makes investment in kind in a foreign corporation already established, by not later than December 31, 2018, the domestic corporation shall include an amount equivalent to the gains from the transfer of the stocks, etc. of the foreign subsidiary accruing from such investment in kind, divided by 36 and multiplied by the number of months in each business year, in gross income, for the purposes of calculating the income amount for each business year, starting from the business year in which the fourth anniversary of the date of such transfer falls. <Amended by Act No. 11614, Jan. 1, 2013; Act No. 13560, Dec. 15, 2015>
(2) Where a domestic corporation which has made investment in kind with the stocks, etc. of a foreign subsidiary under paragraph (1), transfers the stocks, etc. acquired through such investment in kind before including the full amount of gains from the transfer of such stocks, etc. in gross income, the domestic corporation shall include the amount calculated by the formula prescribed by Presidential Decree, which is an amount equivalent to the rate of transferred stocks, etc. out of the amount not included in gross income, in gross income, and where a domestic corporation or a foreign corporation in which the domestic corporation has made investment in kind with the stocks, etc. of a foreign subsidiary, closes its business or is dissolved, the domestic corporation or the foreign corporation shall include the full amount not included in gross income, in the gross income, for the purposes of calculating the income amount for the business year in which the date of closure or dissolution falls: Provided, That this shall not apply in the following cases:
1. Where any of the following corporations, which comes into existence due to a merger or division of a domestic corporation, succeeds to the stocks, etc. acquired through investment in kind by that domestic corporation:
(a) A merging corporation;
(b) A corporation newly established following a division;
(c) A counterpart corporation of a merger through division;
2. Where a domestic corporation makes re-investment in kind with the stocks, etc. of a foreign corporation, which has been acquired through investment in kind with the stocks, etc. of a foreign subsidiary, in another foreign corporation within one month.
(3) Any domestic corporation that intends to be accorded special tax treatment under paragraph (1) shall submit a statement of transfer gains from investment in kind with 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]
 Article 39 (Special Taxation for Assumption and Payment of Debts)
(1) Where a stockholder or investor (limited to a corporate stockholder or investor; hereafter referred to as "stockholder, etc." in this Article) of a domestic corporation assumes or pays debts of the domestic corporation, the debts assumed and paid by the stockholder, etc., out of the debts of the domestic corporation, shall be included in deductible expenses up to the maximum amount prescribed by Presidential Decree when calculating the income of such stockholder, etc. in the relevant year, if either of the following conditions is satisfied:
1. All stocks or equity shares held by the controlling stockholder or investor of the domestic corporation and related persons to such controlling stockholder or investor (hereafter referred to as "controlling stockholder, etc." in this Article) shall be transferred to a person prescribed by Presidential Decree, other than the related persons, by not later than December 31, 2018 according to the financial restructuring plan prescribed by Presidential Decree (limited to plans approved by the persons prescribed by Presidential Decree; hereafter referred to as "financial restructuring plan" in this Article);
2. A plan for liquidating the domestic corporation shall be submitted to the head of the tax office having jurisdiction over the place of tax payment of that domestic corporation, as prescribed by Presidential Decree, and the liquidation of such domestic corporation shall be completed by not later than December 31, 2019.
(2) A corporation whose debts have been reduced as a result of the assumption and payment of debts under paragraph (1) (hereafter referred to as "corporation subject to transfer, etc." in this Article) shall exclude the reduced amount of debts (limited to the amount that exceeds the deficit prescribed by Presidential Decree; hereafter referred to as "reduced amount of debts" in this Article) from its gross income during the period of the relevant business year and three business years after the end of the relevant business year, for the purposes of calculating the amount of its income, and shall include the reduced amount of debts in its gross income, in at least equal installments, during the subsequent three business years thereafter: Provided, That the reduced amount of debts shall be included in the gross income for the purpose of calculating the amount of income for the business year in which a corporation subject to transfer, etc. is dissolved, if the corporation meets the condition provided in paragraph (1) 2.
(3) For the purposes of paragraph (1) or (2), if any of the following events occurs, a corporation subject to transfer, etc. accorded special tax treatment under paragraph (2) shall include the amount excluded from gross income in the gross income, as prescribed by Presidential Decree, at the time of calculating the amount of income of that corporation for the taxable year in which the relevant event has occurred. In such cases, the corporation subject to transfer, etc. shall pay corporate tax plus the corporate tax reduction granted to the stockholder, etc. under paragraph (1) and an additional amount equivalent to the interest calculated by the formula prescribed by Presidential Decree, and the relevant amount of tax shall be deemed an amount of tax payable under Article 64 of the Corporate Tax Act:
1. Where the debt ratio of the corporation subject to transfer, etc. exceeds the standard debt ratio for a three-year period after the assumption and payment of debts (limited to the corporations subject to transfer, etc. that falls under paragraph (1) 1);
2. Where the corporation subject to transfer, etc. closes its business or is dissolved within three years from the date of assumption and payment of debts, but the merging corporation, the corporation newly established as a consequence of a division, or the counterpart corporation of a division through merger does not succeed to the relevant business (limited to the corporations subject to transfer, etc. that falls under paragraph (1) 1): Provided, That, if any unavoidable cause prescribed by Presidential Decree, such as bankruptcy, exists, the corporate tax reduction granted to the stockholder, etc. under paragraph (1) and an additional amount equivalent to interest calculated by the formula prescribed by Presidential Decree shall not be added;
3. Where the corporation subject to transfer, etc. fails to meet either of the conditions provided in paragraph (1) 1 and 2.
(4) Where deficits in the assets of a corporation subject to transfer, etc. are included in gross income and are disposed of pursuant to Article 67 of the Corporate Tax Act for the transfer and acquisition of the corporation as prescribed in paragraph (1) 1, the corporation subject to transfer, etc. shall not withhold the income tax on the disposed amount, notwithstanding the Income Tax Act.
(5) Gains that other stockholders, etc. of a corporation obtain as a consequence of the assumption and payment of debts of the corporation under paragraph (1) shall not be deemed as a gift defined in the Inheritance Tax and Gift Tax Act: Provided, That the same shall not apply to related persons prescribed by Presidential Decree, such as the stockholders, etc. who have assumed and paid the debts.
(6) The person who has approved a financial restructuring plan under paragraph (1) 1 shall annually submit the contents of the financial restructuring plan and outcomes of implementation of such plan to the head of the tax office having jurisdiction over the place of payment, as prescribed by Presidential Decree.
(7) For the purposes of paragraphs (1) through (6), the scope of debts, the contents and approval criteria of the financial restructuring plan, the scope of the controlling stockholder, etc., criteria for deficits in assets, the method of reporting such deficits, submission of statements of the transfer and acquisition of a corporation, submission of the corporate liquidation plan, filing applications for tax reductions, and other necessary matters shall be prescribed by Presidential Decree.
[This Article Wholly Amended by Act No. 13560, Dec. 15, 2015]
 Article 40 (Special Taxation on Corporate Tax, etc. Following Transfer of Assets by Stockholders, etc.)
(1) Where a domestic corporation accepts assets gratuitously conveyed by its stockholder or investor (hereafter referred to as "stockholder, etc." in this Article) on or before December 31, 2018, upon fully satisfying the following requirements, the domestic corporation may elect to exclude the value of the assets (limited to the amount that exceeds the deficit prescribed by Presidential Decree) from its gross income for three business years after the end of the business year in which the date of acceptance of such assets falls, for the purposes of calculating the income of the relevant business year, and shall include such value in its gross income, in at least equal installments, during the subsequent three business years thereafter: <Amended by Act No. 10406, Dec. 27, 2010; Act No. 11614, Jan. 1, 2013; Act No. 13560, Dec. 15, 2015>
1. The stockholder, etc. shall convey assets as a gift and the domestic corporation shall pay its debts according to the financial restructuring plan prescribed by Presidential Decree (limited to plans 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 full amount (referring to using the full amount to pay debts on the day following the day on which a cause disappears where any inevitable causes prescribed by Presidential Decree exist) of money by the deadline prescribed by Presidential Decree within the duration from the date such corporation accepts money to December 31, 2018, and use the full amount of the transfer price of assets, other than money, by the deadline prescribed by Presidential Decree within the duration from the date such assets are transferred (referring to the date prescribed by Presidential Decree if such assets are transferred under a long-term installment plan) to December 31, 2018 to pay debts to any financial institution prescribed by Presidential Decree (hereafter referred to as "financial institution" in this Article and Article 44).
(2) A stockholder, etc. (limited to a corporation) that has conveyed an asset as a gift under paragraph (1) shall include the amount prescribed by Presidential Decree, out of the value (referring to the book value) of the conveyed asset, in deductible expenses for the purposes of calculating its income for the relevant business year.
(3) Where a stockholder, etc. transfers an asset held by him/her as the time the stockholder, etc. conveys an asset as a gift to a corporation under paragraph (1) and donates the transfer price of that asset to the corporation on or before December 31, 2018, the stockholder, etc. is eligible for a full exemption from capital gains tax on an amount equivalent to the donated amount prescribed by Presidential Decree (hereafter referred to as "amount equivalent to gains from transfer" in this Article), out of gains accruing from the transfer of such asset shall be exempt from capital gains tax, or may exclude the same amount from the gross income, as follows: <Amended by Act No. 10406, Dec. 27, 2010; Act No. 11614, Jan. 1, 2013; Act No. 13560, Dec. 15, 2015>
1. Residents: A tax exemption equivalent to 100/100 of the capital gains tax on the amount equivalent to the gains from transfer;
2. Domestic corporations: Excluding the amount equivalent to gains from transfer from the gross income when calculating the amount of income for the relevant business year.
(4) If any of the following events occurs, a corporation that has accepted an asset conveyed as a gift under paragraph (1) shall include the amount excluded from the gross income under paragraph (1), in the gross income, as prescribed by Presidential Decree, when calculating the amount of income for the business year in which the relevant event occurs. In this regard, the tax reduction or exemption granted under paragraphs (2) and (3) shall be levied in addition to the amount of corporate tax to be paid by that corporation:
1. Where the corporation fails to pay debts according to the financial restructuring plan;
2. Where the corporation’s debt ratio exceeds the standard debt ratio during a three-year period after the payment of debts;
3. Where the corporation closes its business or is dissolved within three years from the date of acceptance of the asset conveyed as a gift under paragraph (1), but the merging corporation, the corporation newly established as a consequence of a division, or the counterpart corporation of a merger through division does not succeed to the relevant business: Provided, That, if any unavoidable cause prescribed by Presidential Decree, such as bankruptcy, exists, the corporate tax reduction or exemption granted under paragraphs (1) and (2) shall not be added.
(5) An additional amount equivalent to the interest calculated by the formula 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 deemed the tax amount payable under Article 64 of the Corporate Tax Act: Provided, That the same shall not apply if the corporation is subject to the proviso to paragraph (4) 3.
(6) Gains that other stockholders, etc. of a corporation obtain as the corporation accepts an asset gratuitously conveyed by the stockholders, etc. as a gift under paragraph (1) shall not be deemed a gift in the meaning of the Inheritance Tax and Gift Tax Act: Provided, That the same shall not apply to the related persons, such as the stockholders, etc. who have conveyed such asset as a gift. <Amended by Act No. 11133, Dec. 31, 2011>
(7) The person who has approved a financial restructuring plan under paragraph (1) 1 shall annually submit the contents of the financial restructuring plan and outcomes of implementation of such plan to the head of the tax office having jurisdiction over the place of payment, as prescribed by Presidential Decree.
(8) For the purposes of paragraphs (1) through (7), the time of transfer, the contents and approval criteria of the financial restructuring plan, calculation of the debt ratio and the standard debt ratio, the scope of related persons, filing applications for tax reductions or tax exemptions, and other necessary matters shall be prescribed by Presidential Decree. <Amended by Act No. 11133, Dec. 31, 2011>
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]
 Article 41 Deleted. <by Act No. 8827, Dec. 31, 2007>
 Article 41-2 Deleted. <by Act No. 9272, Dec. 26, 2008>
 Article 42 Deleted. <by Act No. 6538, Dec. 29, 2001>
 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.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]
 Article 43-2 Deleted. <by Act No. 9272, Dec. 26, 2008>
 Article 44 (Special Taxation for Gains from Debt Relief of Corporations Implementing Financial Restructuring Plans, etc.)
(1) Where a domestic corporation is partially relieved from its debts owed to a financial institution by not later than December 31, 2018 and meets any of the following conditions, the domestic corporation shall exclude the equivalent to the debts relieved (limited to the amount that exceeds the deficit prescribed by Presidential Decree; hereafter in this Article, referred to as "gains from debt relief") from its gross income for the relevant business year and three business years after the end of the relevant business year, for the purposes of calculating the amount of income, and shall include such amount, in at least equal installments, in its gross income for the subsequent three business years thereafter: <Amended by Act No. 10684, May 19, 2011; Act No. 11614, Jan. 1, 2013; Act No. 13560, Dec. 15, 2015>
1. Where the corporation for which a decision has been made to authorize its rehabilitation plan under the Debtor Rehabilitation and Bankruptcy Act, is partially relieved from its debts owed to a financial institution; and the amount of debts to be relieved is included in the decision thereof;
2. Where a potentially insolvent company which has entered into an agreement to implement the management normalization plan under the Corporate Restructuring Promotion Act, is partially relieved from its owed debts to a creditor financial institution under the same Act; and the amount of debts to be relieved is included in the agreement and the company is partially relieved from its debts concerning a counter-creditor's exercise of bond purchase claim under Article 20 of the same Act;
3. Where the domestic corporation is relieved from its debts under an agreement between the financial institutions retaining receivables, as prescribed by Presidential Decree;
4. Other cases prescribed by Presidential Decree, where the domestic corporation is relieved from its debt under the relevant Acts.
(2) Where a company entering into an agreement under the Corporate Restructuring Investment Companies Act, is partially relieved from its debts in the process of having its debt converted into equity shares by the corporate restructuring investment company, gains from such debt relief shall be included in the gross income by applying mutatis mutandis paragraph (1).
(3) Where any corporation relieved from its debts under paragraph (1), closes its business or is dissolved before fully including the gains from debt relief in its gross income, the corporation shall add the total amount not included in its gross income to its gross income for the purposes of calculating its income for the business year in which the date of such closure or dissolution falls.
(4) A financial institution that has relieved corporations from their debts under paragraph (1) (including debt relief through debt-equity swap) and a creditor financial institution defined in the Corporate Restructuring Promotion Act (excluding any corporate restructuring investment company established pursuant to the Corporate Restructuring Investment Company Act), shall include the equivalent to relieved debts in its deductible expenses for the purposes of calculating the amount of its income for the relevant business year. <Amended by Act No. 14390, Dec. 20, 2016>
(5) For the purposes of paragraphs (1) through (4), submitting statements of debt relief; filing applications for tax reductions or exemptions; and other necessary matters, shall be prescribed by Presidential Decree. <Amended by Act No. 11133, Dec. 31, 2011>
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]
 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 domestic corporation from its stockholders or investors (hereafter referred to as "stockholders, etc." in this Article) for free under 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) and retires them on or before December 31, 2012, the value of the 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. <Amended by Act No. 10406, Dec. 27, 2010>
(2) Article 52 of the Corporate Tax Act shall not apply to stockholders, etc. who have donated stocks, etc. under paragraph (1) (limited to a corporation), and 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 deemed 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. <Amended by Act No. 11133, Dec. 31, 2011>
(4) In applying paragraphs (1) through (3), contents and approval standard of a financial restructuring plan, the scope of the related persons, filing applications for tax reduction or exemption, and other necessary matters shall be prescribed by Presidential Decree. <Amended by Act No. 11133, Dec. 31, 2011>
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]
 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]
 Article 46 (Special Taxation for Exchange of Stocks, etc. between Enterprises)
(1) Where the controlling stockholder or investor of a domestic corporation (hereafter referred to as "exchanged corporation" in this Article) or a related person to such stockholder or investor (hereafter referred to as "controlling stockholder, etc." in this Article) transfers all stocks or equity shares (hereafter referred to as "stocks, etc." in this Article) held by him/her on or before December 31, 2017 in accordance with a financial restructuring plan prescribed by Presidential Decree (limited to the plan approved by the person prescribed by Presidential Decree; hereafter referred to as "financial restructuring plan" in this Article) and acquires stocks, etc. of any domestic corporation (hereafter referred to as "transferred corporation for exchange" in this Article), other than the related persons prescribed by Presidential Decree to the exchanged corporation, in proportion to the holding ratio by either of the following methods, the imposition of capital gains tax on an amount equivalent to the gains from the transfer of such stocks, etc. (including the gains accruing to the transferred corporation for exchange and the controlling stockholder, etc. of the transferred corporation for exchange) or corporate tax may be deferred until the stocks, etc. so acquired are disposed of (including inheritance or conveyance as a gift), as prescribed by Presidential Decree: <Amended by Act No. 10406, Dec. 27, 2010; Act No. 11133, Dec. 31, 2011; Act No. 12853, Dec. 23, 2014; Act No. 13560, Dec. 15, 2015>
1. Acquiring stocks, etc. held or newly issued by the transferred corporation for exchange;
2. Acquiring all stocks, etc. held by the controlling stockholder, etc. of the transferred corporation for exchange (limited to where the corporate groups (referring to the corporate groups defined under subparagraph 2 of Article 2 of the Monopoly Regulation and Fair Trade Act; the same shall apply hereafter in this Article) to which the exchanged corporation and the transferred corporation for exchange belong are different from one another).
(2) Where deficits in the assets that appears in the course of the transfer and acquisition of the exchanged corporation under paragraph (1) 2 are added to the gross income and are disposed of pursuant to Article 67 of the Corporate Tax Act, the exchanged corporation shall not withhold the income tax on the amount of disposal, notwithstanding the Income Tax Act.
(3) Where any of the following events occurs, a stockholder, etc. who has transferred stocks, etc. of the exchanged corporation under paragraph (1) 2 shall either pay the amount of tax unpaid for the taxable year in which the relevant event occurs or add the amount included in the deductible expense, to the gross income at the time of calculating the amount of income. In such cases, an amount equivalent to the interest calculated by the formula prescribed by Presidential Decree shall be paid in addition to the capital gains tax or corporate tax, and the relevant amount of tax shall be deemed the amount of tax payable under Article 64 of the Corporate Tax Act or Article 76 of the Income Tax Act: <Amended by Act No. 12853, Dec. 23, 2014>
1. Where a corporation engaging in the same type of business as that of the exchanged corporation becomes affiliated with the corporate group with which the exchanged corporation was affiliated, within five years after the end of the business year in which stocks, etc. were transferred;
2. Where the controlling stockholder, etc. re-holds stocks, etc. of the exchanged corporation within five years after the end of the business year in which stocks, etc. were transferred.
(4) Where a domestic corporation exchanges all stocks, etc. it acquired through the spin-off defined under Article 47 of the Corporate Tax Act or an investment in kind under Article 47-2 of the same Act with the stocks, etc. of any other corporation pursuant to paragraph (1), the tax-deferred amount as included in deductible expenses and equivalent to the gains from transfer of assets as at the time of the investment in kind or spin-off may be re-deferred, as prescribed by Presidential Decree.
(5) The person who has approved the financial restructuring plan of the exchanged corporation which has transferred stocks, etc. under paragraph (1) 2 shall annually submit the contents of the financial restructuring plan and outcomes of implementation of the plan, to the head of the tax office having jurisdiction over the place of payment, as prescribed by Presidential Decree.
(6) For the purposes of paragraphs (1) through (5), the scope of controlling stockholders, etc., methods of transfer and acquisition of stocks, etc., calculation of gains from transfer eligible for inclusion in deductible expense, contents and approval criteria of the financial restructuring plan, submission of statements on the transfer and acquisition of stocks, etc., the scope of debts, filing applications for tax reductions and exemptions, and other necessary matters shall be prescribed by Presidential Decree.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]
 Article 46-2 (Special Taxation for Corporate Stock Exchange, etc. for Strategic Partnership with Venture Business)
(1) Where a stockholder (referring to a stockholder who holds at least 10/100 of the total number of stocks issued by a corporation; hereafter in this Article the same shall apply) of a corporation, that is a stock company, (hereafter in this Article referred to as "affiliated corporation") exchanges stocks of the affiliated corporation with the treasury stocks of a venture business (excluding listed-stock 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, upon meeting all the following requirements, the taxation of capital gains tax on the margin accruing from such exchange or acquisition of new stocks may, as prescribed by Presidential Decree, be deferred until the relevant stockholder disposes of stocks of the venture business, which he/she acquires by means of stock exchange or investment in kind (hereafter in this Article referred to as "stock exchange, etc."): <Amended by Act No. 11133, Dec. 31, 2011>
1. That the strategic partnership program should be implemented between the venture business and the affiliated corporation, as prescribed by Presidential Decree, and stock exchange, etc. should be made according to such program;
2. That a related person prescribed by Presidential Decree to a stockholder 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. That the affiliated corporation and the venture business should enter into an agreement 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 at least one year, respectively.
(2) Where the stockholder of the affiliated corporation who was allowed to defer capital gains tax under paragraph (1) violates paragraph (1) 3, he/she shall, as prescribed by Presidential Decree, pay the capital gains tax so 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]
 Article 46-3 (Special Taxation for Corporate Stock Exchange, etc. for Strategic Partnership of Logistics Enterprises)
(1) Where a stockholder (referring to a stockholder who holds at least 10/100 of the total number of stocks issued by a 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 listed corporations 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 and whose value is equivalent to investment amount, in return for his/her investment in kind, on or before December 31, 2009 upon meeting all the following requirements, the taxation of capital gains tax on the margin accruing from such exchange or acquisition of new stocks may be deferred until the 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: <Amended by Act No. 11133, Dec. 31, 2011>
1. That the strategic partnership program should be implemented between the partnership logistics corporation and the partnership counterpart logistics corporation, as prescribed by Presidential Decree, and stock exchange, etc. should be made according to such program;
2. That a stockholder of the partnership logistics corporation and anyone specially related to the relevant stockholder should not be in any special relationship prescribed by Presidential Decree with the largest stockholder of the partnership counterpart logistics corporation;
3. That the partnership logistics corporation and the partnership counterpart logistics corporation should enter into an agreement stipulating that any stockholder of the partnership logistics corporation should hold any stock acquired through the stock exchange, etc. and the partnership counterpart logistics corporation should hold any stock acquired through the stock exchange, etc. for at least one year, respectively.
(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 prescribed by Presidential Decree.
(3) Article 46-2 (2) and (3) shall apply mutatis mutandis to the special taxation for stock exchange, etc. for the strategic partnership of logistics corporations. In such cases, "affiliated corporation" shall be construed as "partnership logistics corporation."
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]
 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. <Amended by Act No. 11133, Dec. 31, 2011>
(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: <Amended by Act No. 11133, Dec. 31, 2011>
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]
 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 person as provided for in Article 52 (1) of the Corporate Tax Act: <Amended by Act No. 11133, Dec. 31, 2011>
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]
 Article 46-6 (Special Taxation for Succession to Deficits Carried Forward following Merger of Logistics Corporations)
Where a corporation 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 following requirements, the deficits of the disappearing corporation in the merger (hereinafter referred to as "merged corporation") provided for in subparagraph 1 of Article 13 of the Corporate Tax Act as at 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 prescribed by Presidential Decree:
1. That the corporation shall meet all the requirements referred to in subparagraphs of Article 44 (1) of the Corporate Tax Act;
2. That the merging corporation shall succeed to the assets of the merged corporation in its book value;
3. That the stocks or equities received by the stockholders, employees, or investors of the merged corporation shall be at least 3/100 of the total number of stocks issued by, or the total amount of owner' equity in, the merging corporation as at the registration date of merger by the merging corporation;
4. That the corporation shall fall under Article 45 (1) 3 of the Corporate Tax Act.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]
 Article 46-7 (Special Taxation for Swap of Unlisted Stocks, etc. for Strategic Partnership)
(1) Where a stockholder (referring to a stockholder who holds at least 10/100 of the total number of stocks issued by a corporation; hereafter the same shall apply in this Article) of a venture business, excluding listed-stock corporations as defined under the Financial Investment Services and Capital Markets Act (including small or medium enterprises which invest at least five percent of their sales prescribed by Presidential Decree in research and development of human resources; hereafter referred to as "venture business, etc." in this Article), swaps stocks of the venture business, etc. held by him/her with the treasury stocks held by a stock corporation (hereafter referred to as "affiliated corporation" in this Article) or stocks held by a stockholder (referring to a stockholder who holds at least 10/100 of the total number of stocks issued by the affiliated corporation; hereafter the same shall apply in this Article) of the affiliated corporation, or receives stocks newly issued by the affiliated corporation in a value equivalent to the investment amount, in return for his/her investment in kind, on or before December 31, 2018, upon fully meeting the following requirements, the imposition of capital gains tax on the gains from such swap or acquisition may be deferred, as prescribed by Presidential Decree, until the stockholder disposes of the stocks of the affiliated corporation, which he/she acquires through stock swap or investment in kind (hereafter referred to as "stock swap, etc." in this Article): <Amended by Act No. 13560, Dec. 15, 2015>
1. That the strategic partnership program shall be implemented between the venture business, etc., and the affiliated corporation, as prescribed by Presidential Decree, and stock swap, etc. shall be made according to such program;
2. That a related person prescribed by Presidential Decree to any stockholder of the venture business, etc. shall not be in any special relationship prescribed by Presidential Decree with the largest stockholder prescribed by Presidential Decree of the affiliated corporation;
3. That the venture business, etc. and the affiliated corporation shall enter into an agreement stipulating that the stocks acquired by the stockholders of the venture business, etc. through stock swap, etc., and the stocks acquired by the affiliated corporation or the stockholders of the affiliated corporation through stock swap, etc. must be held for at least one year, respectively.
(2) Where the stockholder of the venture business, etc. who is allowed to defer capital gains tax under paragraph (1) violates the agreement entered into under paragraph (1) 3, he/she shall, as prescribed by Presidential Decree, pay the capital gains tax so deferred.
(3) Any person who desires to be allowed to defer capital gains tax under paragraph (1) shall file an apply therefor, as prescribed by Presidential Decree.
[This Article Newly Inserted by Act No. 12173, Jan. 1, 2014]
 Article 46-8 (Special Taxation for Re-Investment in Venture Businesses, etc. after Sale of Stocks)
(1) Where a stockholder of a venture business or a stockholder prescribed by Presidential Decree of an enterprise in which case seven years have not passed since it ceased to be a venture business (hereafter in this Article, referred to as "enterprise for sale"), transfers stocks of the enterprise for sale that he/she holds at least the percentage prescribed by Presidential Decree to any person, other than a related party prescribed by Presidential Decree, and makes a contribution or investment of at least 80/100 of the proceeds from such transfer (hereinafter referred to as "re-investment") by not later than December 31, 2018, upon fully meeting the following conditions, capital gains tax on the gains accruing from the sale of stocks of the enterprise for sale, may be deferred until the stockholder disposes of the stocks or equity shares acquired by re-investment (including where an enterprise in which re-investment has been made, closes its business), as prescribed by Presidential Decree: Provided, That the same shall not apply where re-investment is made by acquiring any third person’s equity shares, investment shares, or beneficiary certificates, or by making a re-investment after disposing of the stocks or equity shares acquired by re-investment: <Amended by Act No. 13082, Jan. 28, 2015; Act No. 13560, Dec. 15, 2015; Act No. 14390, Dec. 20, 2016>
1. That the stockholder shall make any of the following re-investments within the period prescribed by Presidential Decree from the date he/she transfers the stocks under paragraph (1):
(a) Contributing to a small or medium business start-up investment fund, the Korea Venture Fund, a new technology venture capital fund, or a specialized investment fund for materials and components;
(b) Investing in beneficiary certificates of a venture business investment trust prescribed by Presidential Decree (hereafter in this Article, referred to as "venture business investment trust");
(c) Investing the amount contributed to an association established under Article 13 of the Act on Special Measures for the Promotion of Venture Businesses, as prescribed by Presidential Decree, in a venture business or an equivalent small or medium enterprise prescribed by Presidential Decree for which three years have not passed since its incorporation (hereafter in this Article, referred to as "venture business, etc.");
(d) Investing in a venture business, etc.;
2. A related party prescribed by Presidential Decree to any stockholder of the enterprise for sale, shall not be in any special relationship prescribed by Presidential Decree with the largest stockholder of the venture business, etc. referred to in subparagraph 1 (c) or (d);
3. The stocks or equity shares acquired by re-investment shall be held for at least three years.
(2) Any person who wishes to be granted deferment of capital gains tax under paragraph (1), shall file an application therefor within the period for preliminary return, as prescribed by Presidential Decree.
(3) If any person granted deferment of capital gains tax under paragraph (1), violates paragraph (1) 1 or 3, the person shall pay the capital gains tax deferred, as prescribed by Presidential Decree; and where the person violates paragraph (1) 1, the amount of capital gains tax payable shall be calculated by deeming that he/she has filed a tax return within the period for preliminary return but fails to pay such tax, except where no re-investment has been made on the grounds prescribed by Presidential Decree.
[This Article Newly Inserted by Act No. 12173, Jan. 1, 2014]
 Articles 47 and 47-2 Deleted. <by Act No. 9272, Dec. 26, 2008>
 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
 Article 47-4 (Special Taxation for Transfer of Redundant Assets following Merger)
(1) Where any assets become redundant as a consequence of a merger (including a merger through division, but limited to a merger of corporations engaging in the same type of business) between domestic corporations engaging in the type of business prescribed by Presidential Decree, including pharmaceutical business, by not later than December 31, 2018, and the merging corporation transfers the redundant assets within one year from the date the merger is registered, the merging corporation may exclude the amount calculated by the formula prescribed by Presidential Decree, out of the proceeds from the transfer of such redundant assets (including proceeds on the valuation of such redundant assets upon the merger or proceeds on the valuation of such redundant assets upon the division) from the gross income, for the purposes of calculating the amount of its income for the relevant business year. In such cases, the relevant amount shall be included in the gross income, in at least equal installments, for three business years starting from the business year falling on the third anniversary from the end of the business year in which such assets are transferred. <Amended by Act No. 10406, Dec. 27, 2010; Act No. 11614, Jan. 1, 2013; Act No. 12173, Jan. 1, 2014; Act No. 13560, Dec. 15, 2015; Act No. 14390, Dec. 20, 2016>
(2) Where a domestic corporation subject to paragraph (1) closes its business or is dissolved within three years from the date the merger is registered, the domestic corporation shall include the amount calculated by the formula prescribed by Presidential Decree in its gross income for the purposes of calculating the amount of income of the business year in which the date of such closure or dissolution falls. In such cases, the latter part of Article 33 (3) shall apply mutatis mutandis to the amount included in the gross income. <Amended by Act No. 14390, Dec. 20, 2016>
(3) For the purposes of paragraph (1), the scope of redundant assets; submitting the statements of proceeds from transfer; and other necessary matters, shall be prescribed by Presidential Decree. <Amended by Act No. 14390, Dec. 20, 2016>
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]
 Article 48 (Special Taxation for Reserves for Structural Improvement)
(1) Where the Korea Federation of Saving Banks established 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) to use such reserves for structural improvement projects of mutual savings banks, such as take-over of insolvent mutual savings banks (referring to take-over defined in subparagraph 4 of Article 2 of the Act on the Structural Improvement of the Financial Industry), and increase of capital (hereafter referred to as "structural improvement projects" in this Article) until the business year in which June 30, 2013 falls, the amount equivalent to such reserves 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 profits accruing from operating the reserves for structural improvement for the reserve for loss compensation in order to compensate for losses arising from structural improvement projects until the business year in which June 30, 2013 falls, the relevant amount shall be included in the deductible expense when computing the income of the relevant business year.
(3) Where any loss is incurred from structural improvement projects, the Korea Federation of Saving Banks shall offset such loss by the reserves for loss compensation in good order of appropriation.
(4) Where any balance of the reserve remains after appropriation under paragraph (3) by the ending date of the business year in which the date 5 years elapse falls 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 in which the date 5 years elapse falls.
(5) In any of the following circumstances, 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 the reserves for structural improvement is partially 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 is dissolved.
(6) Where the Korea Federation of Saving Banks wishes to secure tax credits under paragraphs (1) and (2), it shall submit a specification of the reserves for loss compensation to the head of the district tax office in the place of tax 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 matters shall be prescribed by Presidential Decree.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]
 Article 49 Deleted. <by Act No. 9272, Dec. 26, 2008>
 Articles 50 and 51 Deleted. <by Act No. 6538, Dec. 29, 2001>
 Article 52 (Special Taxation of Corporate Tax on Takeover of Assets or Debts by Financial Institutions)
Where any financial institution as defined 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 debts that exceed the value of assets of an insolvent financial institution (hereinafter referred to as "insolvent financial institution") as defined under subparagraph 3 of Article 2 of the aforesaid Act, by not later than December 31, 2018, in accordance with an order to transfer contracts, as a timely corrective measure taken under Article 10 of the aforesaid Act (hereafter referred to as "timely corrective measure" in Article 117) or a decision on transfer of contracts under Article 14 (2) of the aforesaid Act (hereafter referred to as "decision on contract transfer" in Article 117) and fully satisfies the following requirements, it shall include the amount of transferred debts that exceed the value of transferred assets (hereafter referred to as "net debts" in this Article) in its deductible expenses when calculating its income for the relevant business year: <Amended by Act No. 10406, Dec. 27, 2010; Act No. 11614, Jan. 1, 2013; Act No. 12853, Dec. 23, 2014; Act No. 13560, Dec. 15, 2015>
1. 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. That the values of assets and debts transferred to the underwriting financial institution should be the value verified by the Governor of the Financial Supervisory Service.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]
 Article 52-2 Deleted. <by Act No. 9272, Dec. 26, 2008>
 Article 53 Deleted. <by Act No. 6045, Dec. 28, 1999>
 Articles 54 and 55 Deleted. <by Act No. 9272, Dec. 26, 2008>
 Article 55-2 (Special Taxation for Self-Managed Real Estate Investment Companies, etc.)
(1) and (2) Deleted. <by Act No. 8146, Dec. 30, 2006>
(3) Deleted. <by Act No. 6538, Dec. 29, 2001>
(4) Where a self-managed real estate investment trust as defined under subparagraph 1 (a) of Article 2 of the Real Estate Investment Company Act (hereafter referred to as "self-managed real estate investment trust" in this Article), builds new housing units below the size prescribed by Presidential Decree (hereinafter referred to as "national housing units"), or purchases national housing units, which have never been occupied by any person at the time of their acquisition to operate a lease business, on or before December, 31, 2009, it is entitled to deduct an amount equivalent to the 50/100 of the income amount accruing from the lease of the national housing units from its income for each business year during a period from the business year in which the first income accrued from such lease business (or the taxable year in which the fifth anniversary of the date of commencement of the lease business falls, if no income accrues from the lease business from the taxable year in which the business commences to the taxable year in which the fifth anniversary of the date of commencement of the business falls) and subsequent five business years that end within five years from the first day of the following business year. <Amended by Act No. 9921, Jan. 1, 2010; Act No. 13560, Dec. 15, 2015>
(5) Where a self-managed real estate investment company builds any of the following houses or purchases any of such houses, which have never been occupied by any person at the time of its acquisition, to operate a lease business, on or before December 31, 2018, it is entitled to deduction of an amount equivalent to 100/100 of the income accruing from the lease of such houses from its income for each business year during the period starting from the business year in which the first income accrues from the lease business (or the taxable year in which the fifth anniversary of the date of commencement of the lease business falls, if no income accrues from the lease business from the taxable year in which the business commences to the taxable year in which the fifth anniversary of the date of commencement of the business falls) and subsequent taxable years that end within eight years (five years, in cases of the houses specified in subparagraph 2) from the first day of the following taxable year: <Newly Inserted by Act No. 10901, Jul. 25, 2011; Act No. 11614, Jan. 1, 2013; Act No. 13560, Dec. 15, 2015>
1. Houses below the size prescribed by Presidential Decree, among corporate rental housing units as defined under subparagraph 4 of Article 2 of the Special Act on Private Rental Housing or quasi-public rental housing units as defined under subparagraph 5 of Article 2 of the same Act;
2. Houses below the size prescribed by Presidential Decree, among houses that do not fall within the category of subparagraph 1.
(6) Where a self-managed real estate investment company seeking to be accorded special tax treatment under paragraphs (4) and (5) concurrently engages in the business eligible for the tax deduction and any other businesses, it shall keep separate accounting pursuant to Article 113 of the Corporate Tax Act. <Newly Inserted by Act No. 10901, Jul. 25, 2011; Act No. 13560, Dec. 15, 2015>
(7) For the purposes of paragraphs (4) and (5), the calculation of the amount of income deductions, filing applications for income deductions, and other necessary matters shall be prescribed by Presidential Decree. <Amended by Act No. 6538, Dec. 29, 2001; Act No. 8146, Dec. 30, 2006; Act No. 10901, Jul. 25, 2011>
[This Article Newly Inserted by Act No. 6501, Aug. 14, 2001]
 Article 56 Deleted. <by Act No. 6538, Dec. 29, 2001>
 Article 57 (Business Year for Profits or Losses Arising from Investments in Securities Market Stabilization Fund, etc.)
With respect to the business year whereto belong any profits or losses arising to a corporation from investing, not later than December 31, 2004, in an association prescribed by Presidential Decree which has been organized to stabilize the securities market or the investment trust market through investment, etc. in the listed securities, the business year during which the association has actually distributed such profits and losses to the corporation shall become the business year whereto belong such profits and losses, notwithstanding Article 40 of the Corporate Tax Act.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]
SECTION 7 Special Taxation for Balanced Regional Development
 Articles 58 and 59 Deleted. <by Act No. 5996, Aug. 31, 1999>
 Article 60 (Special Taxation for Corporate Tax on Relocating Factories Outside of Large Cities)
(1) Deleted. <by Act No. 6538, Dec. 29, 2001>
(2) Where a domestic corporation which runs a business with its factory and facilities established in a large city prescribed by Presidential Decree (hereinafter referred to as "large city") transfers the factory site and buildings on or before December 31, 2017 in order to re-locate (excluding re-location of any factory outside of the Seoul Metropolitan area into the Seoul Metropolitan area) such factory to outside of the large city (hereafter referred to as "rural area" in this Article), the domestic corporation may elect to exclude an amount computed by the formula prescribed by Presidential Decree from its gross income up to the gains accruing from such transfer less the carried-over deficits under subparagraph 1 of Article 13 of the Corporate Tax Act as at the end of the business year immediately preceding the year in which the date of transfer falls, for the purposes of calculating its income for the relevant business year. In such cases, the relevant amount shall be included in the gross income, in at least equal installments, during the period of five business years starting from the business year in which the fifth anniversary of the end of the business year in which such site and buildings are transferred falls. <Amended by Act No. 9921, Jan. 1, 2010; Act No. 11133, Dec. 31, 2011; Act No. 12853, Dec. 23, 2014>
(3) A domestic corporation that wishes to be accorded special tax treatment under paragraph (2) shall engage in the same type of business in the factory before and after relocation, according to the classification prescribed by Presidential Decree. <Newly Inserted by Act No. 11133, Dec. 31, 2011>
(4) Where a domestic corporation accorded special tax treatment under paragraph (2) fails to commence its business by acquiring a factory in any rural area, as prescribed by Presidential Decree, or closes its business, or is dissolved before fully including the amount excluded from gross income in its gross income, the domestic corporation shall include an amount calculated by the formula prescribed by Presidential Decree out of the remaining amount excluded from its gross income, in its gross income, for the purposes of calculating the income for the business year in which the date of such failure, closure, or dissolution falls. 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 due to closure of business or dissolution as a consequence of a merger, division, or merger through division). <Amended by Act No. 9921, Jan. 1, 2010>
(5) Deleted. <by Act No. 6538, Dec. 29, 2001>
(6) Any domestic corporation that wishes to be accorded special tax treatment under paragraph (2) shall submit a statement on transfer gains of land or building (hereinafter referred to as "land, etc.") and other required documents to the head of the tax office having jurisdiction over the place of tax payment, as prescribed by Presidential Decree. <Amended by Act No. 9921, Jan. 1, 2010>
 Article 61 (Special Taxation for Corporate Tax on Transfer Gains Following Relocation of Corporation's Head Office to Outside of Overconcentration Control Region of Seoul Metropolitan Area)
(1) and (2) Deleted. <by Act No. 6538, Dec. 29, 2001>
(3) Where a domestic corporation whose head office or principal place of business is located in the over-concentration control region of the Seoul Metropolitan area transfers the site and buildings of the head office or principal place of business on or before December 31, 2017 in order to relocate the head office or principal place of business to outside of the over-concentration control region of the Seoul Metropolitan area, the domestic corporation may elect to exclude an amount computed by the formula prescribed by Presidential Decree from its gross income up to the gains accruing from such transfer less the carried-over deficits under subparagraph 1 of Article 13 of the Corporate Tax Act as at the end of the business year immediately preceding the year in which the date of transfer falls, for the purposes of calculating the income for the relevant business year. In such cases, the relevant amount shall be included in the gross income, in at least equal installments, during the period of five business years starting from the business year in which the fifth anniversary of the end of the business year in which such site and buildings are transferred falls. <Amended by Act No. 9921, Jan. 1, 2010; Act No. 11133, Dec. 31, 2011; Act No. 12853, Dec. 23, 2014>
(4) A domestic corporation that wishes to be accorded special tax treatment under paragraph (3) shall engage in the same type of business at its head office or principal place of business before and after relocation, according to the classification prescribed by Presidential Decree. <Newly Inserted by Act No. 12853, Dec. 23, 2014>
(5) Where any of the following events occurs before a domestic corporation accorded special tax treatment under paragraph (3) fully includes the amount excluded from its gross income in the gross income, the domestic corporation shall include the amount calculated by the formula prescribed by Presidential Decree out of the amount excluded from its gross income, in its gross income, for the purpose of calculating the income for the business year in which the date of occurrence of the relevant event falls. 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 due to closure of business or dissolution as a consequence of a merger, division, or merger through division): <Amended by Act No. 9921, Jan. 1, 2010; Act No. 12853, Dec. 23, 2014>
1. Where the domestic corporation fails to relocate its head office or principal place of business to outside of the over-concentration control region of the Seoul Metropolitan area, as prescribed by Presidential Decree;
2. Where the domestic corporation has any office exceeding the criteria prescribed by Presidential Decree in the over-concentration control region of the Seoul Metropolitan area;
3. Where the domestic corporation disburses the proceeds from the disposal of the site and building of the head office or principal place of business in the over-concentration control region of the Seoul Metropolitan area for any purpose other than purposes prescribed by Presidential Decree;
4. Where the domestic corporation closes its business or is dissolved.
(6) Any domestic corporation seeking to be accorded special tax treatment under paragraph (3) shall submit a statement on transfer gains of land, etc. and other required documents to the head of the tax office having jurisdiction over the place of tax payment, as prescribed by Presidential Decree. <Amended by Act No. 9921, Jan. 1, 2010>
 Article 62 (Reduction or Exemption of Corporate Tax, etc. for Public Institutions Relocating to Innovation Cities, etc.)
(1) Where a relocated public agency defined in subparagraph 2 of Article 2 of the Special Act on the Construction and Support of Innovation Cities Following Relocation of Public Agencies (hereafter in this Article, referred to as "relocated public agency"), transfers any previous real estate prescribed by Presidential Decree (hereafter in this Article, referred to as "previous real estate"), which is defined in subparagraph 6 of Article 2 of the Special Act on the Construction and Support of Innovation Cities Following Relocation of Public Agencies, by not later than December 31, 2018, in order to relocate its head office or principal place of business (hereafter in this Article, referred to as "head office") to an innovation city defined in subparagraph 3 of Article 2 of the aforesaid Act or to Sejong Special Self-Governing City established under the Special Act on the Establishment, etc. of Sejong Special Self-Governing City (hereafter in this Article, referred to as "Sejong Self-Governing City”), the relocated public agency may choose to exclude an amount computed by the formula prescribed by Presidential Decree from its gross income up to the proceeds accruing from such transfer less the deficits carried forward under subparagraph 1 of Article 13 of the Corporate Tax Act as at the end of the business year immediately preceding the business year in which the date of transfer falls, when calculating the income for the relevant business year. In such cases, the relevant amount shall be included in the gross income, in at least equal installments, during the period of five business years starting from the business year falling on the fifth anniversary from the end of the business year in which such previous real estate is transferred. <Amended by Act No. 11614, Jan. 1, 2013; Act No. 12173, Jan. 1, 2014; Act No. 13560, Dec. 15, 2015>
(2) Article 61 (5) shall apply mutatis mutandis to a domestic corporation eligible under paragraph (1), as prescribed by Presidential Decree. In such cases, "outside of the over-concentration control region of the Seoul Metropolitan area" shall be construed as "innovation city or Sejong Self-Governing City"; "over-concentration control region of the Seoul Metropolitan area" as “Seoul Metropolitan area"; and "site and building of the head office or principal place of business in the over-concentration control region of the Seoul Metropolitan area" as "previous real estate," respectively. <Amended by Act No. 12173, Jan. 1, 2014>
(3) Any domestic corporation seeking to be accorded special tax treatment under paragraph (1), shall submit a statement on proceeds from transfer of land, etc. and other required documents, to the head of the tax office having jurisdiction over the place of tax payment, as prescribed by Presidential Decree.
(4) Where a relocated public agency, the head office of which is located in the growth management region classified under Article 6 (1) 2 of the Seoul Metropolitan Area Readjustment Planning Act (hereafter in this Article, referred to as "growth management region"), relocates its head office to an innovation city by not later than December 31, 2018, the relocated public agency is entitled to an exemption of corporate tax on the income equivalent to an amount calculated by multiplying the amount of subparagraph 1 by the smaller of the ratios prescribed in subparagraph 2 or 3 for each taxable year, for the taxable year in which the first income accrues after the date of relocation (or the taxable year falling on the fifth anniversary from the date of relocation, if no income accrues until the taxable year falling on the fifth anniversary from the date of relocation), and also within the two subsequent taxable years from the date the following taxable year commences; and entitled to a reduction of corporate tax by the equivalent to 50/100 of corporate tax levied for the two subsequent taxable years thereafter: <Amended by Act No. 12853, Dec. 23, 2014; Act No. 13560, Dec. 15, 2015>
1. The tax base for the relevant taxable year less the proceeds from the transfer of land, buildings, or the right to acquire real estate and the income prescribed by Presidential Decree;
2. The ratio of the total wages paid to employees working at the head office relocated to an innovation city (hereafter in this Article, referred to as "relocated head office") during the relevant taxable year to the total wages paid to all employees of the corporation after relocation for their service during the taxable year;
3. The ratio of the number of employees working at the relocated head office during the relevant taxable year to the total number of all employees working at the corporation.
(5) For the purposes of paragraph (4), "number of employees working at the relocated head office" means the number of employees calculated by subtracting the average number of full-time employees per year at the relocated head office during the taxable year in which three years retrospectively lapse from the date of relocation from the average number of full-time employees per year (referring to the number of employees calculated by aggregating the number of employees as at the end of each month and dividing the aggregate by the number of relevant months, but excluding the number of employees assigned to the relocated head office after having worked at the head office in an area outside of the Seoul Metropolitan area after the taxable year in which two years retrospectively lapse from the date of relocation); and "number of all employees working at the corporation" means the average number of all full-time employees per year working at the corporation. <Amended by Act No. 12853, Dec. 23, 2014>
(6) For the purposes of paragraph (4), where the ratio of the number of executive officers prescribed by Presidential Decree (hereafter in this Article, referred to as "executive officer") working at the relocated head office to the total number of executive officers working at the head office in the Seoul Metropolitan area and at the relocated head office, does not exceed 50/100 during the period of reduction or exemption of corporate tax, the relocated public agency loses its entitlement to a reduction or exemption of corporate tax under paragraph (4) starting from the relevant taxable year.
(7) Where any of the following events arises, a relocated public agency granted a reduction or exemption of corporate tax under paragraph (4), shall pay, as corporate tax, an amount of tax calculated as prescribed by Presidential Decree, when filing its tax return for the taxable year in which the relevant event arises:
1. Where the agency closes its business, or is dissolved, within three years from the date it has started business after relocating its head office to the innovation city;
2. In cases prescribed by Presidential Decree, such as the agency’s failure to start business after relocating its head office to the innovation city;
3. Where the agency maintains its office of at least the scale prescribed by Presidential Decree in the Seoul Metropolitan area;
4. Where the ratio of the number of executive officers working at the relocated head office to the total number of executive officers working at the head office in the Seoul Metropolitan area and at the relocated head office, does not exceed 50/100.
(8) The provisions of Article 33-2 (4) concerning an additional amount equivalent to the interest shall apply mutatis mutandis where the amount of corporate tax reduced or exempted under paragraph (4) is paid under paragraph (7).
(9) For the purposes of paragraphs (4) through (6), methods for calculating the period; scope of wages; application for reducing or exempting the amount of tax; and other necessary matters, shall be prescribed by Presidential Decree.
[This Article Newly Inserted by Act No. 11133, Dec. 31, 2011]
 Article 63 (Tax Reduction or Exemption for Small or Medium Enterprises Relocating Outside of Over-Concentration Control Region of Seoul Metropolitan Area)
(1) Where a small or medium enterprise (limited to a national) that has engaged in a business for at least two consecutive years with factory facilities established in the over-concentration control region of the Seoul Metropolitan area, fully relocates its factory facilities to an area outside of the over-concentration control region of the Seoul Metropolitan area, as prescribed by Presidential Decree, and starts its business in that area, by not later than December 31, 2017 (limited to where the head office or principal place of business is relocated along with factory facilities, if the head office or principal place of business is located in the over-concentration control region of the Seoul Metropolitan area), the small or medium enterprise is entitled to an exemption of income tax or corporate tax by the equivalent to 100/100 of the income tax or corporate tax on income accruing from the relevant factory after relocation, for the taxable year in which the first income accrues from the relevant factory (or the taxable year falling on the fifth anniversary from the date of relocation, if no income accrues until the taxable year falling on such fifth anniversary), and also within the six subsequent taxable years from the date the following taxable year commences (or four subsequent taxable years, if it relocates to a growth management region referred to in Article 6 (1) 2 of the Seoul Metropolitan Area Readjustment Planning Act, a nature preservation region referred to in Article 6 (1) 3 of the aforesaid Act, a Metropolitan City located in any area other than the Seoul Metropolitan area, or any other area prescribed by Presidential Decree); and entitled to a reduction of income tax or corporate tax by the equivalent to 50/100 of the income tax or corporate tax on income accruing from the relevant factory after relocation for the three subsequent taxable years thereafter (or two subsequent taxable years thereafter, if it is relocated to a growth management region referred to in Article 6 (1) 2 of the Seoul Metropolitan Area Readjustment Planning Act, a nature preservation region referred to in Article 6 (1) 3 of the aforesaid Act, a Metropolitan City located in any area other than the Seoul Metropolitan area, or any other area prescribed by Presidential Decree). <Amended by Act No. 11133, Dec. 31, 2011; Act No. 12853, Dec. 23, 2014>
(2) Where any of the following event arises, a small or medium enterprise granted a tax reduction or exemption under paragraph (1), shall pay, as income tax or corporate tax, the amount of tax calculated, as prescribed by Presidential Decree, when filing its tax return for the taxable year in which the relevant event arises:
1. Where the small or medium enterprise closes its business or is dissolved within three years from the date the business commences after relocating the factory: Provided, That this shall not apply where such closure or dissolution is caused by a merger, division, or merger through division;
2. Where the small or medium enterprise does not qualify as starting its business after having relocated its factory outside of the over-concentration control region of the Seoul Metropolitan area, as prescribed by Presidential Decree;
3. Where the small or medium enterprise establishes a factory which produces the same products as those produced at the factory relocated pursuant to paragraph (1), or its head office in the over-concentration control region of the Seoul Metropolitan area during the period of reduction or exemption granted under paragraph (1).
(3) The provisions of Article 33-2 (4) concerning the additional amount equivalent to the interest, shall apply mutatis mutandis where the amount of income tax or corporate tax reduced or exempted under paragraph (1), is paid under paragraph (2).
(4) Any person who intends to be granted a reduction or exemption of income tax or corporate tax under paragraph (1), shall file an application therefor, as prescribed by Presidential Decree.
(5) Any small or medium corporation that intends to be granted a reduction or exemption of income tax or corporate tax under paragraph (1), shall engage in the same type of business in the factory before and after relocation, according to the classification prescribed by Presidential Decree. <Newly Inserted by Act No. 11133, Dec. 31, 2011>
(6) If an enterprise granted a tax reduction or exemption under paragraph (1), ceases to be a small or medium enterprise by merging with any enterprise that is not a small or medium enterprise under the Framework Act on Small and Medium Enterprises or due to any of the grounds prescribed by Presidential Decree, it becomes ineligible to the tax reduction or exemption, starting from the taxable year in which the relevant ground arises. <Newly Inserted by Act No. 14390, Dec. 20, 2016>
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]
 Article 63-2 (Reduction or Exemption of Corporate Tax, etc. for Relocating Factories and Head Offices to Areas Outside of Seoul Metropolitan Area)
(1) A corporation that fully meets the following conditions (hereafter in this Article, referred to as "corporation relocating to a rural area"), is entitled to a reduction or exemption of corporate tax, as prescribed in paragraphs (2) through (4): Provided, That the same shall not apply to any corporation that engages in real estate business, construction business, consumer service business, non-store retailing business, or shipping brokerage business prescribed by Presidential Decree: <Amended by Act No. 9921, Jan. 1, 2010; Act No. 11133, Dec. 31, 2011; Act No. 12853, Dec. 23, 2014>
1. The corporation shall have engaged in its business with factory facilities for at least three consecutive years, or have its head office or principal place of business (hereafter in this Article, referred to as "head office") for at least three consecutive years in the over-concentration control region of the Seoul Metropolitan area;
2. The corporation shall relocate its entire factory facilities or head office outside of the Seoul Metropolitan area (only applicable to an industrial complex designated under the Industrial Sites and Development Act where relocating its factory facilities to a Metropolitan City; hereafter in this Article, the same shall apply) and start its business therein, as prescribed by Presidential Decree, by not later than December 31, 2017; or it shall build a new factory or head office in an area outside the Seoul Metropolitan area and start its business by not later than December 31, 2020 (only applicable where it acquires a site for factory or head office by not later than December 31, 2017, and submits a relocation plan when filing a tax return for the taxable year in which December 31, 2017 falls).
(2) A corporation relocating to a rural area is entitled to an exemption of corporate tax on incomes prescribed in subparagraphs 1 through 3, for the taxable year in which the first income accrues from the corporation relocating to a rural area after the date of relocation (or the taxable year falling on the fifth anniversary from the date of relocation, if no income accrues until the taxable year falling on the fifth anniversary from the date of relocation) and also within the six subsequent taxable years from the date the following taxable year commences (or four subsequent taxable years, if it relocates to a Metropolitan City located in any area other than the Seoul Metropolitan area or any other area prescribed by Presidential Decree); and entitled to a reduction of corporate tax by the equivalent to 50/100 of corporate tax for the three subsequent taxable years thereafter (or two subsequent taxable years thereafter, if it relocates to a Metropolitan City located in any area other than the Seoul Metropolitan area or any other area prescribed by Presidential Decree): <Amended by Act No. 9921, Jan. 1, 2010; Act No. 10406, Dec. 27, 2010; Act No. 11133, Dec. 31, 2011; Act No. 12853, Dec. 23, 2014>
1. If the corporation relocates its factory, income accruing from the factory;
2. If the corporation relocates its head office, income equivalent to an amount calculated by multiplying the amount prescribed in item (a) by the smaller of the ratios prescribed in items (b) and (c), and the ratio prescribed in item (d) for each taxable year:
(a) The tax base for the relevant taxable year less the proceeds from transfer of land, buildings, or the right to acquire real estate and the income prescribed by Presidential Decree;
(b) The ratio of the total wages paid to employees working at the head office relocated to outside of the Seoul Metropolitan area (hereafter in this Article, referred to as "relocated head office") during the relevant taxable year to the total wages paid to all employees of the corporation for their service during the year;
(c) The ratio of the number of employees working at the relocated head office during the relevant taxable year to the total number of all employees working at the corporation;
(d) The ratio of the amount calculated by subtracting the sales from consignment processing trade prescribed by Presidential Decree, from the total sales for the relevant taxable year to the total sales for the relevant taxable year;
3. If the corporation relocates its factory and head office together, income equivalent to the aggregate of the incomes prescribed in subparagraphs 1 and 2: Provided, That the cap shall not exceed the total income for the relevant taxable year.
(3) For the purposes of paragraph (2) 2, "number of employees working at the relocated head office" means the number of employees calculated by subtracting the average number of full-time employees per year at the relocated head office during the taxable year in which three years retrospectively lapse from the date of relocation from the average number of full-time employees per year (referring to the number of employees computed by aggregating the number of employees as at the end of each month and dividing the aggregate by the number of relevant months, but excluding the number of employees assigned to the relocated head office after having worked at the head office in an area outside of the Seoul Metropolitan area after the taxable year in which two years retrospectively lapse from the date of relocation); and "number of all employees working at the corporation" means the average number of all full-time employees per year working at the corporation. <Amended by Act No. 9921, Jan. 1, 2010; Act No. 12853, Dec. 23, 2014>
(4) For the purposes of paragraph (2) 2, where the following event arises during the period of reduction or exemption of corporate tax, the corporation relocating to a rural area loses its entitlement to a reduction or exemption of corporate tax under paragraph (2) starting from the relevant taxable year: <Amended by Act No. 7322, Dec. 31, 2004; Act No. 9272, Dec. 26, 2008; Act No. 9921, Jan. 1, 2010>
1. Deleted; <by Act No. 9272, Dec. 26, 2008>
2. Where the ratio of the number of executive officers prescribed by Presidential Decree (hereafter in this Article, referred to as "executive officer") working at the relocated head office to the total number of executive officers working at the head office in the Seoul Metropolitan area and at the relocated head office, does not exceed 50/100.
(5) Article 60 (2), (4), and (6), or 61 (3), (5), and (6) shall apply mutatis mutandis to corporate tax on the proceeds from transfer accruing when a corporation relocating to a rural area transfers its factory or head office in the over-concentration control region of the Seoul Metropolitan area. <Amended by Act No. 9921, Jan. 1, 2010>
(6) A parcel of land appurtenant to a factory site owned (including a parcel of land, the ownership of which is transferred due to a merger, division, or merger through division) by a corporation relocating to a rural area (limited to relocating its factory) prior to its relocation, shall be deemed a parcel of land subject to Article 106 (1) 3 (a) of the Local Tax Act for five years, beginning on the date of relocation of the factory, if the parcel of land is subject to Article 106 (1) 3 (a) of the Local Tax Act as at the date of relocation: Provided, That the same shall not apply where the corporation closes its business after having commenced the operation of the relocated factory. <Amended by Act No. 9921, Jan. 1, 2010; Act No. 10221, Mar. 31, 2010>
(7) Where any of the following events arises, a corporation relocating to a rural area granted a reduction or exemption of corporate tax under paragraph (2), shall pay, as corporate tax, an amount of tax calculated as prescribed by Presidential Decree, when filing its tax return for the taxable year in which such event arises: <Amended by Act No. 6297, Dec. 29, 2000; Act No. 6538, Dec. 29, 2001; Act No. 6762, Dec. 11, 2002; Act No. 7003, Dec. 30, 2003; Act No. 7322, Dec. 31, 2004; Act No. 9921, Jan. 1, 2010>
1. Where the corporation closes its business, or is dissolved within three years from the date the business commences after relocating its factory or head office: Provided, That the same shall not apply where such closure or dissolution is caused by a merger, division, or merger through division;
2. Where the corporation does not qualify as starting its business after having relocated its factory outside of the over-concentration control region of the Seoul Metropolitan area, as prescribed by Presidential Decree;
3. Where the corporation establishes its head office or a factory producing the same products as those produced at the factory relocated under paragraph (1) in the Seoul Metropolitan area;
4. Deleted; <by Act No. 6538, Dec. 29, 2001>
5. Where the corporation has relocated its head office, but maintains an office of at least the scale prescribed by Presidential Decree in the Seoul Metropolitan area;
6. Where the corporation has relocated its head office, but subject to paragraph (4) 2.
(8) The provisions concerning an additional amount equivalent to the interest under Article 33-2 (4), shall apply mutatis mutandis where the amount of corporate tax reduced or exempted under paragraph (2) is paid pursuant to paragraph (7). <Amended by Act No. 9921, Jan. 1, 2010>
(9) Where any of the events prescribed in paragraph (7) 1 through 3, arises while a corporation relocating to a rural area enjoys the benefit of Article 106 (1) 3 (a) of the Local Tax Act regarding a parcel of land appurtenant to a factory site prior to its relocation, for five years from the date of relocation pursuant to paragraph (6), the property tax, the comprehensive real estate holding tax, and the additional amount equivalent to the interest, shall be levied additionally, as prescribed by Presidential Decree. <Amended by Act No. 9921, Jan. 1, 2010; Act No. 10221, Mar. 31, 2010>
(10) Any corporation relocating to a rural area that wishes to be accorded special tax treatment under paragraph (1), (2), (5), or (6), the type of business in which it engaged in its factory or head office before relocation shall be identical with the type of business in which it engages in the factory or head office after relocation, according to the classification prescribed by Presidential Decree. <Newly Inserted by Act No. 11133, Dec. 31, 2011; Act No. 13560, Dec. 15, 2015>
(11) For the purposes of paragraphs (1) through (5) and (7), methods for calculating a period; scope of wages; application for reducing or exempting the amount of tax; and other necessary matters, shall be prescribed by Presidential Decree. <Amended by Act No. 9921, Jan. 1, 2010>
[This Article Newly Inserted by Act No. 6045, Dec. 28, 1999]
 Article 63-3 Deleted. <by Act No. 9272, Dec. 26, 2008>
 Article 64 (Tax Reduction or Exemption for Enterprises, etc. that Occupy Agro-Industrial Complexes)
(1) The following entities are entitled to a reduction or exemption of income tax or corporate tax on income accruing from the relevant business by applying mutatis mutandis Article 6 (1): <Amended by Act No. 11614, Jan. 1, 2013; Act No. 12853, Dec. 23, 2014; Act No. 13560, Dec. 15, 2015; Act No. 14111, Mar. 29, 2016>
1. A national that occupies an agro-industrial complex prescribed by Presidential Decree, among agro-industrial complexes designated under the Industrial Sites and Development Act, and engages in a business developing the income sources of farming and fishing communities, by not later than December 31, 2018;
2. A small or medium enterprise that occupies an area prescribed by Presidential Decree, of the areas for special support for local small and medium enterprises designated under Article 62-23 of the Small and Medium Enterprises Promotion Act, and engages in a business in that area, by not later than December 31, 2018.
(2) Any person who intends to be granted a tax reduction or exemption under paragraph (1), shall file an application therefor, as prescribed by Presidential Decree.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]
 Article 65 Deleted. <by Act No. 6297, Dec. 29, 2000>
 Article 66 (Corporation Tax Exemption, etc. for Agricultural Partnerships, etc.)
(1) An agricultural partnership incorporated under the Act on Fostering and Supporting Agricultural and Fisheries Business Entities (hereinafter referred to as "agricultural partnership"), is entitled to an exemption of corporate tax on the total income accruing from business growing cereal crops and other crops for food (hereinafter referred to as "income from fool-crop growing business"), and on the amount prescribed by Presidential Decree, out of the income other than that from food-crop growing business, by the taxable year ending on or before December 31, 2018. <Amended by Act No. 11614, Jan. 1, 2013; Act No. 12173, Jan. 1, 2014; Act No. 13560, Dec. 15, 2015>
(2) Of the dividend income that a member of an agricultural partnership receives from the agricultural partnership by not later than December 31, 2018, the full amount of dividends accruing from income from food-crop growing business, and the amount prescribed by Presidential Decree, out of the dividends accruing from income other than that from food-crop growing business, shall be exempt from income tax. In such cases, the dividends accruing from income from food-crop growing business, and the dividends accruing from income other than that from food-crop growing business, shall be calculated, as prescribed by Presidential Decree. <Amended by Act No. 11614, Jan. 1, 2013; Act No. 12173, Jan. 1, 2014; Act No. 13560, Dec. 15, 2015>
(3) Notwithstanding Article 129 of the Income Tax Act, the rate of withholding tax on the dividend income paid by not later than December 31, 2018, other than the amount exempt from income tax under paragraph (2), out of dividends paid by an agricultural partnership to its members, shall be 5/100; and such dividend income shall not be added to the tax base of global income calculated under Article 14 (2) of the Income Tax Act. <Amended by Act No. 11614, Jan. 1, 2013; Act No. 12153, Jan. 1, 2014; Act No. 13560, Dec. 15, 2015>
(4) A farmer prescribed by Presidential Decree is entitled to a full exemption from capital gains tax on income accruing from an investment in kind with farmland or grassland developed with permission to develop grassland under Article 5 of the Grassland Act (hereinafter referred to as "grassland") in an agricultural partnership, by not later than December 31, 2018: Provided, That, where the relevant farmland or grassland is incorporated into a residential area, commercial area, or industrial area under the National Land Planning and Utilization Act (hereafter in this Article through Article 69, Article 69-2, and Article 70, referred to as "residential area, etc."); or where it is designated as land reserved for replotting into any category of land other than farmland or grassland, prior to a disposition for replotting under the Urban Development Act or any other statute, the farmer is entitled to a full exemption from capital gains tax levied only on the income prescribed by Presidential Decree, accruing as at the date of incorporation into a residential area, etc.; or as at the date of designation of land reserved for replotting. <Amended by Act No. 11614, Jan. 1, 2013; Act No. 12853, Dec. 23, 2014; Act No. 13560, Dec. 15, 2015; Act No. 14390, Dec. 20, 2016>
(5) Where a person granted an exemption of capital gains tax under paragraph (4), transfers his/her equity shares to any third person within three years from the date of investment, the person shall pay, as capital gains tax, an amount calculated by the formula prescribed by Presidential Decree, at the time of filing his/her tax return for the taxable year in which the date of such transfer falls: Provided, That this shall not apply in cases prescribed by Presidential Decree. <Amended by Act No. 12853, Dec. 23, 2014>
(6) An amount equivalent to the interest calculated by the formula prescribed by Presidential Decree, shall be additionally paid, where the capital gains tax exempted under paragraph (4) shall be paid pursuant to the main sentence of paragraph (5). <Amended by Act No. 12853, Dec. 23, 2014>
(7) A farmer prescribed by Presidential Decree is eligible for carried-forward taxation if the farmer makes an investment, in kind, in an agricultural partnership with real estate (excluding the farmland and grassland referred to in paragraph (4)), used directly for crop-growing business, breeding livestock, or forestry defined in subparagraph 1 of Article 3 of the Framework Act on Agriculture, Rural Community and Food Industry, by not later than December 31, 2018. <Amended by Act No. 11614, Jan. 1, 2013; Act No. 13372, Jun. 22, 2015; Act No. 13560, Dec. 15, 2015>
(8) Anyone who wishes to be accorded special tax treatment under paragraph (1), (2), (4), or (7), shall file an application therefor, as prescribed by Presidential Decree.
(9) Where a farmer allowed to carry forward capital gains tax under paragraph (7), disposes of at least 50/100 of the stocks or equity shares that he/she acquired by making an investment in kind within three years from the date of the investment, the farmer shall pay the amount of tax carried forward under paragraph (7) (referring to the amount less the amount of tax already paid by the relevant agricultural partnership), as capital gains tax, within two months from the end of the month in which such stocks or equity shares are disposed of, as prescribed by Presidential Decree. <Newly Inserted by Act No. 12173, Jan. 1, 2014; Act No. 12853, Dec. 23, 2014>
(10) Criteria for determining whether a farmer has disposed of at least 50/100 of his/her stocks or equity shares when the farmer pays the amount of tax carried forward under paragraph (7) pursuant to paragraph (9), and other necessary matters, shall be prescribed by Presidential Decree, and an amount equivalent to the interest calculated, as prescribed by Presidential Decree, shall be added thereto. <Newly Inserted by Act No. 12173, Jan. 1, 2014>
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]
 Article 67 (Corporate Tax Exemption, etc. for Fishery Partnerships, etc.)
(1) A fishery partnership incorporated under the Act on Fostering and Supporting Agricultural and Fisheries Business Entities (hereinafter referred to as "fishery partnership"), is entitled to an exemption of corporate tax on the amount prescribed by Presidential Decree, out of its income for each business year by the taxable year ending on or before December 31, 2018. <Amended by Act No. 11614, Jan. 1, 2013; Act No. 13560, Dec. 15, 2015>
(2) Of the dividend income that a member of a fishery partnership receives from the fishery partnership by December 31, 2018, an amount prescribed by Presidential Decree shall be exempted from income tax. <Amended by Act No. 11614, Jan. 1, 2013; Act No. 13560, Dec. 15, 2015>
(3) Notwithstanding Article 129 of the Income Tax Act, the rate of withholding tax on the dividend income paid by December 31, 2018, other than the amount exempt from income tax under paragraph (2), out of the total amount of dividend income paid by the fishery partnership to its members, shall be 5/100. Such dividend income shall not be added to the tax base of global income calculated under Article 14 (2) of the Income Tax Act. <Amended by Act No. 11614, Jan. 1, 2013; Act No. 12153, Jan. 1, 2014; Act No. 13560, Dec. 15, 2015>
(4) A fisherman prescribed by Presidential Decree is entitled to a full exemption from capital gains tax on income accruing from an investment in kind with land, etc. for fisheries prescribed by Presidential Decree (hereafter in this Article, referred to as "land, etc. for fisheries") in a fishery partnership or fishery company incorporated under the Act on Fostering and Supporting Agricultural and Fisheries Business Entities, by December 31, 2018: Provided, That, where the relevant land, etc. for fisheries is incorporated into a residential area, etc.; where the relevant land, etc. for fisheries is designated as land reserved for replotting into any category of land other than land, etc. for fisheries, prior to a disposition for replotting under the Urban Development Act or any other statute, the fisherman is entitled to a full exemption from capital gains tax levied only on the income prescribed by Presidential Decree, accruing as at the date of incorporation into a residential area, etc.; or as at the date of designation of land reserved for replotting. <Amended by Act No. 11614, Jan. 1, 2013; Act No. 12853, Dec. 23, 2014; Act No. 13560, Dec. 15, 2015; Act No. 14390, Dec. 20, 2016>
(5) Where a person granted an exemption from capital gains tax under paragraph (4), transfers his/her equity shares to any third person within three years from the date of investment, the person shall pay, as capital gains tax, an amount calculated by the formula prescribed by Presidential Decree, at the time of filing his/her tax return for the taxable year in which the equity shares are transferred: Provided, That this shall not apply in cases prescribed by Presidential Decree. <Amended by Act No. 12853, Dec. 23, 2014>
(6) Article 66 (6) and (8) shall apply mutatis mutandis to filing an application for tax exemption or reduction under paragraphs (1), (2), and (4), and the payment of tax under the main sentence of paragraph (5). <Amended by Act No. 12853, Dec. 23, 2014>
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]
 Article 68 (Corporate Tax Exemption, etc. for Agricultural Companies)
(1) An agricultural company incorporated under the Act on Fostering and Supporting Agricultural and Fisheries Business Entities (hereinafter referred to as "agricultural company"), is entitled to an exemption of corporate tax on the total amount of income from food-crop growing business, and on the amount prescribed by Presidential Decree, out of the income accruing from crop growing business other than that accruing from food-crop growing business; and entitled to a reduction or exemption of corporate tax on the amount of income prescribed by Presidential Decree, other than the income accruing from crop growing business, applying mutatis mutandis Article 6 (1) of the Corporate Tax Act, by not later than the taxable year ending on or before December 31, 2018. <Amended by Act No. 11614, Jan. 1, 2013; Act No. 12173, Jan. 1, 2014; Act No. 13560, Dec. 15, 2015>
(2) A farmer prescribed by Presidential Decree is entitled to a full exemption from capital gains tax on income accruing from an investment in kind with farmland or grassland in an agricultural company (limited to agricultural companies that meet the requirements for agricultural corporations under the Farmland Act), by not later than December 31, 2018: Provided, That, where the relevant farmland or grassland is incorporated into a residential area, etc.; or where it is designated as land reserved for replotting into any category of land other than farmland or grassland, prior to a disposition for replotting under the Urban Development Act or any other statute, the farmer is entitled to a full exemption from capital gains tax levied only on the income prescribed by Presidential Decree, accruing as at the date of incorporation into a residential area, etc.; or as at the date of designation of land reserved for replotting. <Amended by Act No. 11614, Jan. 1, 2013; Act No. 12853, Dec. 23, 2014; Act No. 13560, Dec. 15, 2015; Act No. 14390, Dec. 20, 2016>
(3) A farmer prescribed by Presidential Decree is eligible for carried-forward taxation if the farmer makes an investment, in kind, in an agricultural company with real estate (excluding the farmland and grassland referred to in paragraph (2)), used directly for crop growing business, breeding livestock, or forestry defined in subparagraph 1 of Article 3 of the Framework Act on Agriculture, Rural Community and Food Industry, by not later than December 31, 2018. Article 66 (9) and (10) shall apply mutatis mutandis to such cases. <Amended by Act No. 11614, Jan. 1, 2013; Act No. 12173, Jan. 1, 2014; Act No. 13383, Jun. 22, 2015; Act No. 13560, Dec. 15, 2015>
(4) A resident who has invested in an agricultural company is entitled to an exemption of income tax on the full amount of dividends from income from food-crop growing business, of the dividend income he/she receives by not later than December 31, 2018, and need not add the dividends from income prescribed by Presidential Decree, out of the income other than that from food-crop growing business, to the tax base of global income calculated under Article 14 (2) of the Income Tax Act. In such cases, the amount of dividend income from income from food-crop growing business and the amount of dividend income earned from income prescribed by Presidential Decree out of the income other than that from food-crop growing business, shall be calculated, as prescribed by Presidential Decree. <Amended by Act No. 11133, Dec. 31, 2011; Act No. 11614, Jan. 1, 2013; No. 12173, Jan. 1, 2014; Act No. 13560, Dec. 15, 2015>
(5) Anyone who wishes to be accorded special tax treatment under paragraph (1), (3), or (4), shall file an application therefor, as prescribed by Presidential Decree.
(6) Article 66 (5), (6), and (8) shall apply mutatis mutandis to reducing or exempting capital gains tax under the main sentence of and proviso to paragraph (2). <Newly Inserted by Act No. 14390, Dec. 20, 2016>
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]
 Article 69 (Reduction or Exemption of Capital Gains Tax for Self-Cultivating Farmland)
(1) Where a resident prescribed by Presidential Decree who resides on farmland, transfers a parcel of land prescribed by Presidential Decree, by not later than December 31, 2018, of the parcels of land that the resident has directly cultivated for at least eight years ((or for at least three years where farmland eligible for the directly-paid subsidy for the transfer of management prescribed by Presidential Decree, is transferred to the Korea Rural Community Corporation incorporated under the Korea Rural Community Corporation and Farmland Management Fund Act or a corporation prescribed by Presidential Decree mainly engaging in agriculture (hereafter in this Article, referred to as "agricultural corporation")) by the method prescribed by Presidential Decree, the resident is entitled to a full exemption from the capital gains tax levied on income accruing from such transfer: Provided, That, where such parcel of land is incorporated into a residential area, etc.; or where it is designated as land reserved for replotting into any category of land other than farmland, prior to a disposition for replotting under the Urban Development Act or any other statute, the resident is entitled to a full exemption from capital gains tax levied only on the income prescribed by Presidential Decree, accruing as at the date of incorporation into a residential area, etc.; or as at the date of designation as land reserved for replotting. <Amended by Act No. 10406, Dec. 27, 2010; Act No. 11133, Dec. 31, 2011; Act No. 11614, Jan. 1, 2013; Act No. 13560, Dec. 15, 2015; Act No. 14390, Dec. 20, 2016>
(2) Where an agricultural corporation transfers land within three years from the date of acquisition of such land, or any of the grounds prescribed by Presidential Decree arises, the agricultural corporation shall pay, as corporate tax, the equivalent to the amount of tax exempted under paragraph (1), at the time of filing its tax return for the taxable year in which such ground arises.
(3) Any person who intends to be granted a tax exemption under paragraph (1), shall file an application therefor, as prescribed by Presidential Decree.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]
 Article 69-2 (Reduction or Exemption of Capital Gains Tax on Site of Stables for Livestock)
(1) Where a resident prescribed by Presidential Decree who resides in an area prescribed by Presidential Decree (limited to 1,650 square meters per person) as a site of stables used for breeding livestock and the land appurtenant thereto (hereafter in this Article and Article 71, referred to as "site of stables for livestock"), used directly for breeding livestock for at least eight years by the method prescribed by Presidential Decree, transfers such site by not later than December 31, 2017 for business closure, the resident is entitled to a full exemption from capital gains tax levied on income accruing from such transfer: Provided, That, where the relevant land is incorporated into a residential area, etc.; or where it is designated as land reserved for replotting into any category of land other than livestock, prior to a disposition for replotting under the Urban Development Act or any other statute, the resident is entitled to a full exemption from capital gains tax levied only on the income prescribed by Presidential Decree, accruing as at the date of incorporation into a residential area, etc.; or as at the date of designation as land reserved for replotting. <Amended by Act No. 11133, Dec. 31, 2011; Act No. 12853, Dec. 23, 2014; Act No. 13560, Dec. 15, 2015; Act No. 14390, Dec. 20, 2016>
(2) Where a resident granted an exemption from capital gains tax pursuant to paragraph (1), re-starts a livestock business within five years after transferring the site of stables for livestock, the amount of tax exempted shall be additionally levied: Provided, That this shall not apply in cases prescribed by Presidential Decree, such as inheritance.
(3) A person who intends to be granted a tax exemption under paragraph (1), shall file an application therefor, as prescribed by Presidential Decree.
(4) For the purposes of paragraphs (1) through (3), the holding period of a site of stables for livestock; the scope of business closure; the method for calculating the amount of tax to be reduced or exempted; and other necessary matters, shall be prescribed by Presidential Decree.
[This Article Newly Inserted by Act No. 10901, Jul. 25, 2011]
 Article 70 (Reduction or Exemption of Capital Gains Tax for Substitute Land for Farmland)
(1) A resident prescribed by Presidential Decree who resides on farmland, is entitled to a full exemption from capital gains tax levied on income accruing from exchanging the land the resident has directly cultivated by the method prescribed by Presidential Decree with the substitute farmland that meets the conditions prescribed by Presidential Decree as necessary for cultivation: Provided, That, where the relevant land is incorporated into a residential area, etc.; or where it is designated as land reserved for replotting into any category of land other than farmland, prior to a disposition for replotting under the Urban Development Act or any other statute, the resident is entitled to a reduction or exemption from capital gains tax levied only on the income prescribed by Presidential Decree, accruing as at the date of incorporation into a residential area, etc.; or as at the date of designation as land reserved for replotting. <Amended by Act No. 10406, Dec. 27, 2010; Act No. 11133, Dec. 31, 2011; Act No. 13560, Dec. 15, 2015; Act No. 14390, Dec. 20, 2016>
(2) Paragraph (1) shall not apply where any land transferred or acquired pursuant to paragraph (1) is incorporated into a residential area, etc.; or where it is land prescribed by Presidential Decree, designated as land reserved for replotting into any category of land other than farmland, prior to a disposition for replotting under the Urban Development Act or any other statute. <Amended by Act No. 14390, Dec. 20, 2016>
(3) Anyone who intends to be granted a tax reduction or exemption pursuant to paragraph (1), shall file an application therefor, as prescribed by Presidential Decree.
(4) A resident granted a reduction or exemption of capital gains tax under paragraph (1), fails to meet the conditions of paragraph (1) because any of the grounds prescribed by Presidential Decree arises, the resident shall pay the capital gains tax so reduced or exempted within two months from the end of the month in which the relevant event arises. <Newly Inserted by Act No. 12173, Jan. 1, 2014>
(5) Where capital gains tax reduced or exempted under paragraph (1), is paid under paragraph (4), the equivalent to the interest calculated as prescribed by Presidential Decree, shall be added thereto. <Newly Inserted by Act No. 12173, Jan. 1, 2014>
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]
 Article 70-2 (Special Taxation for Capital Gains Tax on Sale, etc. of Farmland to Support Business Workout)
(1) Where a farmer defined in Article 2 of the Farmland Act (hereafter in this Article, referred to as “farmer”), has transferred farmland cultivated by him/herself and appurtenant agricultural facilities under Article 24-3 (1) of the Korea Rural Community Corporation and Farmland Management Fund Act (hereafter in this Article, referred to as "farmland, etc.") to the Korea Rural Community Corporation incorporated under Article 3 of the same Act (hereafter in this Article, referred to as the “Korea Rural Community Corporation"), cultivates it directly under a lease contract, and repurchases the relevant farmland, etc. within the lease period provided for in Article 24-3 (3) of the same Act, the farmer can receive a refund of the capital gains tax that he/she has paid for the income accruing from the transfer of such farmland, etc.
(2) Where a farmer in receipt of a refund of capital gains tax under paragraph (1), re-transfers the farmland, etc. that he/she repurchased, the amount of capital gains tax on the farmland, etc. shall be calculated by applying the following acquisition value and the time of acquisition, notwithstanding Articles 95 (4), 97 (1) 1, 98, and 104 (2) of the Income Tax Act: <Amended by Act No. 14390, Dec. 20, 2016>
1. Acquisition value: The acquisition value of the relevant farmland, etc. as at the time the farmer acquires it before transferring it to the Korea Rural Community Corporation;
2. Time of acquisition: The date of acquisition of the relevant farmland, etc. before transferring it to the Korea Rural Community Corporation.
(3) A person who intends to receive a refund under paragraph (1), shall file an application therefor, as prescribed by Presidential Decree.
(4) For the purposes of paragraphs (1) and (2), where re-transferring the farmland, etc. repurchased, methods for granting a reduction or exemption of capital gains tax for self-cultivating farmland provided for in Article 69, and other necessary matters, shall be prescribed by Presidential Decree.
[This Article Newly Inserted by Act No. 12173, Jan. 1, 2014]
 Article 71 (Reduction or Exemption of Gift Tax for Farmland, etc. Gifted to Farming Offspring)
(1) Where a resident prescribed by Presidential Decree (hereafter in this Article, referred to as "self-cultivating farmer") who resides on farmland, grassland, in forest, or on a site for stables of livestock, which fully meets the following requirements (including equity shares acquired in return for the farmland, grassland, forest, or site for stables of livestock invested in kind in an agricultural partnership; hereafter in this Article, referred to as "farmland, etc.") and engages in cultivating the farmland, etc. (including breeding livestock and forest management; hereafter in this Article, the same shall apply), conveys the farmland, etc. as a gift, to his/her lineal descendants prescribed by Presidential Decree (hereafter in this Article, referred to as "farming offspring") by not later than December 31, 2017, such conveyance of farmland, etc. as a gift is fully exempted from gift tax on the value of the farmland, etc.: <Amended by Act No. 10406, Dec. 27, 2010; Act No. 10764, May 30, 2011; Act No. 11133, Dec. 31, 2011; Act No. 12853, Dec. 23, 2014; Act No. 13560, Dec. 15, 2015>
1. Any of the following farmland, etc.:
(a) Farmland: Any land defined under subparagraph 1 (a) of Article 2 of the Farmland Act, which shall not exceed 40,000 square meters;
(b) Grassland: Any grassland developed with a permit to develop grassland under Article 5 of the Grassland Act, which shall not exceed 148,500 square meters;
(c) Forest land: Any forest land not exceeding 297,000 square meters (including seed-gathering forests and forest protection zones under Article 7 of the Forest Protection Act; hereafter in this item, the same shall apply), which has been newly afforested for at least five years in accordance with a forest management plan approved under the Creation and Management of Forest Resources Act or as a special forest project zone designated under the same Act, as part of a preserved mountainous district under Article 4 (1) 1 of the Mountainous Districts Management Act: Provided, That, in cases of forest land afforested for at least 20 years, its area shall be extended up to 990,000 square meters, including forest land not exceeding 297,000 square meters, which has been afforested for at least five years;
(d) A site for stables of livestock: A site for stables of livestock and the land appurtenant thereto, and the building area of the stables of livestock shall not exceed the area divided by the building-to-land ratio set under Article 55 of the Building Act;
2. Farmland, etc. located outside of a residential area, commercial area, and industrial area designated under Article 36 of the National Land Planning and Utilization Act;
3. Farmland, etc. located outside of a housing site development zone designated under the Housing Site Development Promotion Act or other development project zones prescribed by Presidential Decree.
(2) Where farmland, etc. exempted from gift tax pursuant to paragraph (1), is transferred within five years from the date of conveyance, as a gift, without just grounds prescribed by Presidential Decree, such as the death of farming offspring, or the farming offspring discontinues to directly cultivate the farmland, etc. without just grounds prescribed by Presidential Decree, such as having a disease or attending school, the equivalent to the amount of gift tax exempted on such farmland, etc., shall be immediately levied.
(3) Where capital gains tax is levied upon transferring farmland, etc. exempted from gift tax pursuant to paragraph (1), the time of acquisition shall be deemed the date a self-cultivating farmer acquires the farmland, etc.; and the expenses incurred shall be deemed the expenses incurred by the self-cultivating farmer as at the time of acquisition of such farmland, etc., notwithstanding the Income Tax Act.
(4) Article 66 (6) shall apply mutatis mutandis where the amount of tax exempted under paragraph (1) is collected pursuant to paragraph (2).
(5) For the purposes of Article 3-2 (1) of the Inheritance Tax and Gift Tax Act, the farmland, etc. exempt from gift tax 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 pursuant to Article 13 (1) of the aforesaid Act. <Amended by Act No. 11133, Dec. 31, 2011; Act No. 13560, Dec. 15, 2015>
(6) No farmland, etc. exempted from gift tax pursuant to paragraph (1), may be included in the value of the property donated by a self-cultivating farmer (including his/her spouse) and added 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 a reduction or exemption of gift tax pursuant to paragraph (1), shall file an application therefor by the deadline for filing the tax return of gift tax, as prescribed by Presidential Decree.
(8) For the purposes of paragraphs (1) through (7), methods for calculating the holding period of the farmland, etc. exempted from gift tax, and the value of acquisition, 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
 Article 72 (Special Taxation concerning Corporate Tax on Incorporated Associations, etc.)
(1) Notwithstanding Articles 13 and 55 of the Corporate Tax Act, the corporate tax on the income of any of the following corporations for the business years that end as at December 31, 2017, shall be levied (hereafter in this Article, referred to as "taxation on the profit for the year") at the tax rate of 9/100 (or 12/100 of the excess, if the relevant amount exceeds two billion won (or four billion won, for the business year in which the incorporation of a new cooperative as a consequence of a merger or a cooperative surviving a merger is registered and the immediately following business year thereafter, where cooperatives are merged as at December 31, 2016)) to the aggregate of the amount calculated by adding the amount of donations (limited to donations related to its profit-making business), which has not been added to deductible expenses under Article 24 of the Corporate Tax Act, and of the amount calculated by applying the provisions concerning the calculation of 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 aforesaid Act, to the profit for the year on the final financial statements of the relevant corporation (referring to the profit for the year before deduction of corporate tax, etc.): Provided, That, if the relevant corporation waives its entitlement to taxation on the profit for the year, as prescribed by Presidential Decree, no taxation on the profit for the year shall apply to the subsequent business years: <Amended by Act No. 6045, Dec. 28, 1999; Act No. 6273, Oct. 21, 2000; Act No. 6297, Dec. 29, 2000; Act No. 6538, Dec. 29, 2001; Act No. 7003, Dec. 30, 2003; Act No. 7311, Dec. 31, 2004; Act No. 7839, Dec. 31, 2005; Act No. 8146, Dec. 30, 2006; Act No. 9272, Dec. 26, 2008; Act No. 9921, Jan. 1, 2010; Act No. 11614, Jan. 1, 2013; Act No. 12173, Jan. 1, 2014; Act No. 12853, Dec. 23, 2014; Act No. 13560, Dec. 15, 2015; Act No. 14390, Dec. 20, 2016>
1. A credit union incorporated under the Credit Unions Act, and a community credit cooperative incorporated under the Community Credit Cooperatives Act;
2. A cooperative and a cooperative joint business corporation incorporated pursuant to the Agricultural Cooperatives Act;
3. Deleted; <by Act No. 6045, Dec. 28, 1999>
4. A fisheries cooperative (including a fishery village cooperative) and a cooperative joint business corporation incorporated under the Fisheries Cooperatives Act;
5. A cooperative, a business cooperative, and the National Federation of Cooperatives incorporated under the Small and Medium Enterprise Cooperatives Act;
6. A forestry cooperative (including a forestry village cooperative) and a cooperative joint business corporation incorporated under the Forestry Cooperatives Act;
7. A tobacco producers’ cooperative incorporated under the Tobacco Producers Cooperatives Act;
8. A consumer cooperative incorporated under the Consumer Cooperatives Act.
(2) Articles 5, 5-2, 6, 7, 7-2, 7-4, 8, 8-2, 8-3, 9, 10, 10-2, 11, 12, 12-2 through 12-4, 13, 14, 22, 24, 25, 25-2 through 25-6, 26, 28, 29-2 through 29-4, 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 incorporated unions and cooperatives specified in paragraph (1) (excluding any union and cooperative that waives its entitlement to taxation on the profit for the year under the proviso to paragraph (1)). <Amended by Act No. 8827, Dec. 31, 2007; Act No. 9671, May 21, 2009; Act No. 10068, Mar. 12, 2010; Act No. 11614, Jan. 1, 2013; Act No. 12853, Dec. 23, 2014; Act No. 14390, Dec. 20, 2016>
(3) Deleted. <by Act No. 11614, Jan. 1, 2013>
(4) For the purposes of paragraph (1), where the cooperative referred to in paragraph (1) 4 or the forestry cooperative referred to in paragraph (1) 6 accepted support funds (referring to the support provided in such a manner that it repays funds after depositing such funds loaned free of interest from the Mutual Financing Depositors Protection Fund under the Act on the Structural Improvement of Fisheries Cooperatives or the Act on the Structural Improvement of Forestry Cooperatives, in the National Federation of Fisheries Cooperatives or the National Forestry Cooperatives Federation upon receiving interest periodically) to improve its financial structure, by 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 keeps separate accounting for such funds, as prescribed by Ordinance of the Ministry of Strategy and Finance, the interest that accrues from the deposit of such funds need not be deemed the income when calculating its profit for the year. In such cases, when such cooperative paid the interest and has accounted it as expenses (when disbursed to acquire assets, referring to accounting as the depreciation cost or the book value at the time of disposal), the amount of such interest shall not be deemed expenses. <Amended by Act No. 9921, Jan. 1, 2010>
(5) For the purposes of paragraph (1), where an underwriting union or underwriting community credit cooperative referred to in Article 86-4 (2) of the Credit Unions Act or Article 80-2 (2) of the Community Credit Cooperatives Act (hereafter in this Article, referred to as "underwriting union, etc.") among the credit unions and community credit cooperatives provided for in paragraph (1) 1 accepts support funds (referring to the support provided in such a manner that the funds are loaned free of interest from the Depositor Protection Fund or the Depositor Protection Reserve, deposited in the National Credit Union Federation of Korea or the Korean Federation of Community Credit Cooperatives, and redeemed upon receiving interest periodically) to transfer a contract pursuant to Article 86-4 (3) of the Credit Unions Act or Article 80-2 (3) of the Community Credit Cooperatives Act by not later than December 31, 2015 and keeps separate accounting for such funds, as prescribed by Ordinance of the Ministry of Strategy and Finance, the interest that accrues from the deposit of such funds need not be deemed income when computing the profit for the year. In such cases, where such underwriting union, etc. pays the interest and accounts it as expenses (when disbursed to acquire assets, referring to accounting as the depreciation cost or the book value at the time of disposal), such amount of interest shall not be deemed expenses. <Newly Inserted by Act No. 11614, Jan. 1, 2013>
(6) Calculation of the amounts of donations and entertainment expenses of incorporated unions and cooperatives under paragraph (1), which have not added to deductible expenses, and other necessary matters, shall be prescribed by Presidential Decree. <Amended by Act No. 9921, Jan. 1, 2010>
 Article 72-2 Deleted. <by Act No. 8146, Dec. 30, 2006>
 Article 73 Deleted. <by Act No. 10406, Dec. 27, 2010>
 Article 74 (Special Cases of Including Reserve Funds for Proper Purpose Business in Deductible Expenses)
(1) Notwithstanding Article 29 (1) 4 of the Corporate Tax Act, any of the following corporations may include the income accruing from its profit-making business (limited to the relevant business and profit-making business conducted for users of the relevant institutions and facilities therein, in cases falling under subparagraph 4 or 5 of this paragraph) in deductible expenses as reserves for its proper purpose business by the business years that end as at December 31, 2019 (or December 31, 2015, in cases falling under subparagraph 7 (f); or December 31, 2017, in cases falling under subparagraph 9) for the purposes of Article 29 of the Corporate Tax Act: <Amended by Act No. 10406, Dec. 27, 2010; Act No. 10907, Jul. 25, 2011; Act No. 11133, Dec. 31, 2011; Act No. 11241, Jan. 26, 2012; Act No. 11614, Jan. 1, 2013; Act No. 12173, Jan. 1, 2014; Act No. 12853, Dec. 23, 2014; Act No. 13560, Dec. 15, 2015; Act No. 14198, May 29, 2016; Act No. 14390, Dec. 20, 2016>
1. Any of the following educational foundations:
(a) Educational foundations established under the Private School Act;
(b) Industry-academy cooperation foundations established under the Industrial Education Enhancement and Industry-Academia-Research Cooperation Promotion Act;
(c) Non-profit corporations established 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 and its Development Fund established under the Act on Establishing and Administrating Seoul National University;
(e) Deleted; <by Act No. 13560, Dec. 15, 2015>
(f) Incheon National University and its Development Fund established under the Act on Establishing and Administrating Incheon National University;
2. Social welfare foundations established under the Social Welfare Services Act;
3. Any of the following corporations:
(a) National university-affiliated hospitals established under the Act on the Establishment of National University-Affiliated Hospitals and national university-affiliated dental hospitals established under the Act on the Establishment of National University-Affiliated Dental Hospitals;
(b) The Seoul National University Hospital established under the Establishment of Seoul National University Hospital Act;
(c) The Seoul National University Dental Hospital established under the Establishment of Seoul National University Dental Hospital Act;
(d) The National Cancer Center established under the National Cancer Center Act;
(e) Local medical centers established under the Act on the Establishment and Management of Local Medical Centers;
(f) Hospitals operated by the Korean National Red Cross under the Organization of the Republic of Korea National Red Cross Act;
(g) The National Medical Center established under the Act on Establishing and Administrating the 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. Any of the following organizing committees for international events;
(a) Organizing committees deemed necessary and publicly notified by the Minister of Strategy and Finance to efficiently prepare and manage international athletic games among the organizing committees established pursuant to the International Athletic Games Support Act;
(b) The Organizing Committee for the 17th 2014 Incheon Asian Games (hereinafter referred to as "Organizing Committee for the 17th 2014 Incheon Asian Games"), the Organizing Committee for the 2014 Incheon Asian Para Games (hereinafter referred as "Organizing Committee for the 2014 Incheon Asian Para Games"), 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 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 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 Paralympic Winter Games (hereinafter referred to as "Organizing Committee for the 2018 PyeongChang Olympic and Paralympic Winter Games");
(d) Deleted; <by Act No. 12853, Dec. 23, 2014>
(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");
(f) The Organizing Committee for the 2015 Gyeongbuk Mungyeong Military World Games established under the Act on Assistance to the 2015 Military World Games Korea (hereinafter referred to as "Organizing Committee for the 2015 Gyeongbuk Mungyeong Military World Games");
8. A corporation incorporated under the Act on the Establishment and Operation of Public Interest Corporations, which has disbursed at least 80/100 of the expenditure for its proper purpose business or designated contributions for the relevant taxable year as scholarship;
9. Any of the following corporations:
(a) The Government Employees Pension Service established under the Public Officials Pension Act;
(b) The Korea Teachers Pension established under the Pension for Private School Teachers and Staff Act.
(2) For the purposes of Article 29 of the Corporate Tax Act, any of the following corporations may include an amount prescribed by Presidential Decree, out of the income accruing from its profit-making business, in its deductible expenses as reserves for its proper purpose business by the business years that end as at December 31, 2011:
1. The National Agricultural Cooperative Federation incorporated under the Agricultural Cooperatives Act;
2. The National Federation of Fisheries Cooperatives incorporated under the Fisheries Cooperatives Act;
3. The National Forestry Cooperatives Federation incorporated under the Forestry Cooperatives Act.
(3) Where a non-profit corporation prescribed by Presidential Decree among the corporations that manage and operate the Funds established under Acts listed in attached Table 2 to the National Finance Act, has any income accruing from the transfer of the stocks of any listed-stock corporation under the Financial Investment Services and Capital Markets Act, which was acquired through payments of the relevant Funds, for the business years that end as at December 31, 2009, the non-profit corporation may include the full amount of such income in its deductible expenses as reserves for its proper purpose business, notwithstanding Article 29 (1) 4 of the Corporate Tax Act.
(4) For the purposes of Article 29 of the Corporate Tax Act, a non-profit domestic corporation (excluding any non-profit domestic corporation subject to paragraph (1)) that provides medical services by establishing a medical institution defined in Article 3 (2) 1 or 3 of the Medical Service Act, in any area prescribed by Presidential Decree, other than the over-concentration control region of the Seoul Metropolitan area and Metropolitan cities, taking account of its population, etc., may include the income accruing from its profit-making business in deductible expenses as reserves for its proper purpose business by the business years that end as at December 31, 2019. <Newly Inserted by Act No. 10406, Dec. 27, 2010; Act No. 11614, Jan. 1, 2013; Act No. 12853, Dec. 23, 2014; Act No. 14390, Dec. 20, 2016>
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]
 Article 75 (Donation Incentives)
(1) A resident eligible for a tax credit for a donation under Article 59-4 (4) of the Income Tax Act (hereafter in this Article, referred to as "donor"), may file an application for a donation incentive by which the equivalent to the tax credit for the donation (hereafter in this Article, referred to as "donation incentive"), may be paid to the person who has received the donation in substitution for the donor's tax credit for the donation. <Amended by Act No. 14390, Dec. 20, 2016>
(2) The Minister of Strategy and Finance may designate an entity recognized and recommended by the Commissioner of the National Tax Service, that meets the requirements prescribed by Presidential Decree, in terms of the performance of duties to cooperate in tax payment, including the duty to prepare and keep statements of issuance of donation receipts under Article 160-3 of the Income Tax Act or Article 112-2 of the Corporate Tax Act (hereafter in this Article, referred to as "donation receipts"), and transparency in accounting, as an organization eligible for donation incentives, among those entities obliged to issue such donation receipts.
(3) An organization eligible for donation incentives designated under paragraph (2) (hereafter in this Article, referred to as "organization eligible for donation incentives"), shall ascertain whether a donor has applied for a donation incentive when it issues a donation receipt to the donor. It shall submit a statement of applications for donation incentives in the form prescribed by Ordinance of the Ministry of Strategy and Finance, when submitting a statement of issuance of donation receipts pursuant to Article 160-3 (3) of the Income Tax Act or Article 112-2 (3) of the Corporate Tax Act.
(4) Upon receipt of a statement of applications for donation incentives from an organization eligible for donation incentives under paragraph (3), the head of the tax office having jurisdiction over the place of tax payment shall determine the donation incentives by subtracting the amount of subparagraph 2 from the amount of subparagraph 1. In such cases, the head of the tax office having jurisdiction over the place of tax payment shall determine the donation incentives within four months after the deadline for submitting a statement of applications for donation incentives under paragraph (3): <Amended by Act No. 14390, Dec. 20, 2016>
1. The assessed amount of global income tax of the donor who applies for a donation incentive for the relevant taxable period;
2. The assessed amount of global income tax calculated, deeming that the donor has applied for the tax credit for a donation under Article 59-4 (4) of the Income Tax Act regarding the donation for which the donor applies for the donation incentive. In such cases, the maximum designated donation calculated under Article 59-4 (4) 2 of the Income Tax Act, shall not apply to the donation for which a donation incentive is applied for, in calculating the tax credit for the donation under Article 59-4 (4) of the Income Tax Act.
(5) The head of the tax office having jurisdiction over the place of tax payment shall apply mutatis mutandis Article 51 of the Framework Act on National Taxes to an organization eligible for donation incentives, when he/she pays a donation incentive determined under paragraph (4) to the organization eligible for donation incentives. In such cases, "national tax refund" shall be construed as "donation incentive," and "refund" as "payment."
(6) If the head of the tax office having jurisdiction over the place of tax payment finds any omission or error in a determination on the amount of a donation incentive under paragraph (4), he/she shall correct the amount of the donation incentive.
(7) If it is found that a statement prepared by an organization eligible for donation incentives regarding an application for a donation incentive is untrue and the donation incentive is reduced by the correction made under paragraph (6), the head of the tax office having jurisdiction over the place of tax payment shall collect the aggregate of the following amounts in addition to the overpaid donation incentive (hereafter in this Article, referred to as "overpaid amount"):
1. The equivalent to 3/100 of the overpaid amount;
2. Overpaid amount × Period from the day immediately following the date of refund of the donation incentive, until the date of voluntary payment or the date of tax payment notice × Interest rate prescribed by Presidential Decree, based upon the interest rates, etc. applied by financial institutions to past due loans.
(8) The Minister of Strategy and Finance may revoke the designation of an organization eligible for donation incentives, as prescribed by Presidential Decree, if the organization falls under any of the following:
1. If a statement prepared by the organization eligible for donation incentives is untrue;
2. If a list stating the organization eligible for donation incentives as a dishonest donee organization is published under Article 85-5 of the Framework Act on National Taxes;
3. If the organization eligible for donation incentives is dissolved;
4. If the organization eligible for donation incentives violates any statute or engages in any unauthorized business, or if any of the grounds prescribed by Presidential Decree arises.
(9) If designation as an organization eligible for donation incentives is revoked under paragraph (8) 1, 2, or 4, it is disqualified from re-designation as an organization eligible for donation incentives for five years from the taxable year in which the designation is revoked.
(10) Where a donor applies for both the tax credit for a donation under Article 59-4 (4) of the Income Tax Act and the donation incentive, the donor shall be deemed to have applied for the tax credit for the donation for the purposes of Article 59-4 (4) of the Income Tax Act: Provided, That, if a donor who has applied for a donation incentive applies for the tax credit for a donation after the deadline for submitting a statement of applications for donation incentives under paragraph (3), the donor shall be deemed to have applied for a donation incentive for the purposes of paragraphs (1) through (9). <Newly Inserted by Act No. 14390, Dec. 20, 2016>
(11) Except as otherwise expressly provided for in paragraphs (1) through (10), procedures for applying for donation incentives; methods for distribution; methods for refunding donation incentives; and other necessary matters, shall be prescribed by Presidential Decree. <Amended by Act No. 14390, Dec. 20, 2016>
[This Article Newly Inserted by Act No. 12853, Dec. 23, 2014]
 Article 76 (Special Cases, etc. of Including Political Funds in Deductible Expenses)
(1) Where a resident donates political funds to a political party (including its supporters' association under the Political Funds Act and the election commissions under the same Act), an amount equivalent to 100/110 of the donated funds of up to 100 thousand won, and an amount equivalent to 15/100 of the amount exceeding 100 thousand won (if the such amount exceeds 30 million won, an amount equivalent to 25/100 of the amount exceeding 30 million won) shall be deducted respectively from his/her income tax on the global income for the relevant taxable year wherein it has been disbursed: Provided, That where a resident business operator donates political funds, the amount exceeding 100 thousand won shall be added to his/her deductible expenses within the limits of the income amount less the carried-over deficits. <Amended by Act No. 12173, Jan. 1, 2014>
(2) No inheritance tax or gift tax shall be imposed on the political funds donated under paragraph (1).
(3) The inheritance tax or gift tax shall be levied on a person to whom any political fund, other than the political funds referred to in paragraph (1) is donated, by deeming that the person has succeeded to or been given such political fund, notwithstanding 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]
 Article 77 (Reduction or Exemption of Capital Gains Tax for Land, etc. for Public Works Projects)
(1) Capital gains tax on any of the following incomes accruing from the transfer of land, etc. as at December 31, 2018, acquired at least two years, retrospectively, before the date the project approval is publicly notified for the area for a public project in which the land, etc. is located (or the date of transfer, if the land, etc. is transferred before the date the project approval is publicly notified), shall be reduced by an amount of tax equivalent to 10/100 of the capital gains tax (the tax reduction rate for the portion paid by the bonds prescribed by Presidential Decree, out of the sales price of the land, etc., shall be 15/100, but the rate shall be 30/100, if the income accrues from the sale under a negotiated agreement or as a consequence of expropriation under the Special Act on Public Housing and other Acts prescribed by Presidential Decree and if a special agreement is made to hold such bonds until maturity for at least three years in the manner prescribed by Presidential Decree (or the rate shall be 40/100, if maturity of such bonds exceeds five years): <Amended by Act No. 11614, Jan. 1, 2013; Act No. 12173, Jan. 1, 2014; Act No. 12251, Jan. 14, 2014; Act No. 13498, Aug. 28, 2015; Act No. 13560, Dec. 15, 2015>
1. Income accruing from the transfer of land, etc. necessary for a public project subject to the Act on Acquisition of and Compensation for Land, etc. for Public Works Projects, to the implementer of the public project;
2. Income accruing from the transfer of land, etc. located in a rearrangement zone designated under the Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents (excluding any rearrangement zone not requiring rearrangement infrastructure), to the relevant project implementer designated under the same Act;
3. Income accruing as a consequence of expropriation of land, etc. under the Act on Acquisition of and Compensation for Land, etc. for Public Works Projects and other statutes.
(2) Where a resident transfers land, etc. he/she owns for at least two years (referring to land, etc. necessary for the public project referred to in paragraph (1) 1 or land, etc. within the rearrangement zones referred to in paragraph (1) 2; hereafter in this paragraph, the same shall apply), to the implementer of the public project referred to in paragraph (1) 1 or the project implementer referred to in paragraph (1) 2 (hereafter in this Article, referred to as "project implementer"), before such implementer is designated as a project implementer (hereafter in this paragraph, referred to as "project implementer before designation") as at December 2015, and files his/her tax return (including a preliminary return) of the taxable period in which the relevant land, etc. is transferred, by the statutory filing deadline; and where the project implementer before designation, is designated as the project implementer within five years from the date the land, etc. is transferred, the resident is entitled to a reduction of capital gains tax under paragraph (1), as prescribed by Presidential Decree. In such cases, capital gains tax to be reduced shall be calculated pursuant to the Act in force as at the time of transfer, although the reduction rate, etc. is changed. <Newly Inserted by Act No. 10406, Dec. 27, 2010; Act No. 11614, Jan. 1, 2013>
(3) Where any of the following events arises, the relevant project implementer shall pay the equivalent to the amount of tax reduced or exempted under paragraph (1) or (2), as income tax or corporate tax, when filing his/her tax return for the taxable year in which such event arises: <Amended by Act No. 10406, Dec. 27, 2010>
1. Where the implementer of a public project referred to in paragraph (1) 1, fails to commence the public project within three years from the date he/she obtains authorization, etc. to implement such project;
2. Where the project implementer referred to in paragraph (1) 2, fails to obtain authorization to implement a rearrangement project under the Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents, or to complete such project within the time limit prescribed by Presidential Decree.
(4) Where a person granted a reduction by an amount of tax equivalent to 30/100 (or 40/100 in cases of bonds with maturity of at least five years) of capital gains tax under a special agreement entered into to hold the relevant bonds until maturity under paragraph (1), breaches the special agreement, the equivalent to 10/100 (or 20/100 in cases of bonds with maturity of at least five years) of capital gains tax out of the amount of tax reduced shall be levied immediately. <Amended by Act No. 12173, Jan. 1, 2014>
(5) The provisions concerning an additional amount equivalent to interest under Article 33-2 (4) shall apply mutatis mutandis where the amount of tax reduced under paragraph (1) 1 or 2 or (2) is paid under paragraph (3); and Article 66 (6) shall apply mutatis mutandis where the amount of tax reduced under paragraph (1) is levied under paragraph (4). <Amended by Act No. 10406, Dec. 27, 2010>
(6) Any project implementer that intends to be granted a tax reduction as prescribed in paragraph (1) 1 or 2, shall file an application therefor, as prescribed by Presidential Decree. <Amended by Act No. 10406, Dec. 27, 2010>
(7) Any person who intends to be granted a tax reduction under paragraph (1) 3, shall file an application therefor, as prescribed by Presidential Decree.
(8) For the purposes of paragraphs (1) and (4), the terms and conditions of the special agreement to hold related bonds until maturity; methods for giving notice to the National Tax Service of a breach of such special agreement; and other necessary matters, shall be prescribed by Presidential Decree. <Amended by Act No. 10406, Dec. 27, 2010>
(9) For the purposes of paragraphs (1) and (2), any parcel of land, etc. inherited or donated subject to Article 97-2 (1) of the Income Tax Act, shall be deemed acquired on the date such parcel of land, etc. is acquired by an inheritee or donor. <Amended by Act No. 10406, Dec. 27, 2010; Act No. 12173, Jan. 1, 2014>
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]
 Article 77-2 (Special Taxation for Capital Gains Tax on Compensation by Substitute Land)
(1) Where a resident who transferred a parcel of land that was acquired at least two years, counting retroactively, before the date of public announcement of project approval under the Act on Acquisition of and Compensation for Land, etc. for Public Works Projects (the date of transfer, if the transfer was made before the date of public announcement of project approval), to the implementer of the relevant public project, by not later than December 31, 2018, due to the implementation of the public project, and to whom another parcel of land developed through the execution of such 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, the resident is entitled to reduction of capital gains tax on the gains from such transfer by an amount equivalent to 15/100 of the capital gains tax, or entitled to deferment of the taxation of capital gains tax, as prescribed by Presidential Decree. <Amended by Act No. 11614, Jan. 1, 2013; Act No. 12853, Dec. 23, 2014; Act No. 13560, Dec. 15, 2015>
(2) Paragraph (1) shall apply only where the implement 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) Any resident granted a reduction of capital gains tax or tax deferral under paragraph (1) shall pay the amount of the capital gains tax reduced or deferred and the interest added thereto, as prescribed by Presidential Decree, in either of the following cases: <Amended by Act No. 12853, Dec. 23, 2014>
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 seeking to obtain a tax reduction or tax deferral under paragraph (1) shall file an application therefor, as prescribed by Presidential Decree. <Amended by Act No. 12853, Dec. 23, 2014>
(5) For the purposes of paragraphs (1) through (3), the requirements and methods for compensation by substitute land, the grounds and methods for the payment of the amount of tax reduced or deferred, and other necessary matters shall be prescribed by Presidential Decree. <Amended by Act No. 12853, Dec. 23, 2014>
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]
 Article 77-3 (Capital Gains Tax Reduction or Exemption for Land, etc. subject to Purchase Following Designation of Development Restriction Zones)
(1) The following amounts of tax shall be reduced from any income accrued from the transfer of a parcel of land, etc. in a development restriction zone designated under Article 3 of the Act on Special Measures for Designation and Management of Development Restriction Zones (hereafter referred to as "development restriction zone" in this Article) through claim for purchase of land under Article 17 of the same Act or purchase through consultation under Article 20 of the same Act, by not later than December 31, 2017: <Amended by Act No. 11133, Dec. 31, 2011; Act No. 12173, Jan. 1, 2014; Act No. 12853, Dec. 23, 2014>
1. Land, etc. owned by a resident prescribed by Presidential Decree residing on the land, etc. from the date of acquisition to the date of the claim for purchase or the date of purchase through consultation after he/she acquired such land, etc. prior to the date of designation of the development restriction zone: An amount of tax equivalent to 40/100 of the capital gains tax;
2. Land, etc. owned by a resident prescribed by Presidential Decree residing on the land, etc. from the date of acquisition to the date of the claim for purchase or the date of purchase through consultation after he/she acquired such land, etc. 20 years prior to the date of the claim for purchase or the date of purchase through consultation: An amount of tax equivalent to 25/100 of the capital gains tax.
(2) The following amounts of tax shall be reduced from any income accrued from the transfer of a parcel of land, etc., released from a development restriction zone, through purchase by consultation or expropriation under the Act on Acquisition of and Compensation for Land, etc. for Public Works Projects and other Acts, by not later than December 31, 2017: Provided, That this shall be limited to where approval of the relevant project is publicly announced under the Act on Acquisition of and Compensation for Land, etc. for Public Works Projects and other Acts within one year (five years when the relevant area is designated as an area prescribed by Presidential Decree, such as a free economic zone under the Act on Designation and Management of Free Economic Zones, prior to the cancellation of designation of a development restriction zone) from the date of cancellation of the designation of a development restriction zone: <Amended by Act No. 11133, Dec. 31, 2011; Act No. 12173, Jan. 1, 2014; Act No. 12853, Dec. 23, 2014>
1. Land, etc. owned by a resident prescribed by Presidential Decree residing on the land, etc. from the date of acquisition to the public announcement date of project approval after he/she has acquired such land, etc. prior to the date of designation of the development restriction zone: An amount of tax equivalent to 40/100 of the capital gains tax;
2. Land, etc. owned by a resident prescribed by Presidential Decree residing on the relevant land, etc. from the date of acquisition to the public announcement date of project approval after he/she has acquired such land, etc. 20 years before the public announcement date of project approval: An amount of tax equivalent to 25/100 of the capital gains tax.
(3) For the purposes of paragraphs (1) and (2), inherited land, etc. shall be deemed acquired on the date of acquisition of the land, etc. by the inheritee.
(4) For the purposes of paragraphs (1) and (2), filing applications 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]
 Articles 78 through 81 Deleted. <by Act No. 6538, Dec. 29, 2001>
 Article 81-2 Deleted. <by Act No. 8146, Dec. 30, 2006>
 Article 82 Deleted. <by Act No. 6538, Dec. 29, 2001>
 Article 83 (Special Taxation for Capital Gains Tax for Relocating Museums, etc.)
(1) Where a resident transfers the building of a museum, etc. and appurtenant land (hereafter in this Article, referred to as "existing establishment") to relocate any of the following establishments (hereafter in this Article, referred to as “museum, etc.”) that the resident has operated for at least three years, by not later than December 31, 2019, the resident may pay capital gains tax on the equivalent to proceeds from transferring the existing establishment, calculated as prescribed by Presidential Decree, in not less than equal installments for three years from the third anniversary from the deadline for filing the final return on the tax base of capital gains tax for the relevant year in which such establishment is transferred:
1. A nongovernmental public library registered pursuant to Article 31 of the Libraries Act;
2. A private museum or a private art gallery registered pursuant to Article 16 of the Museum and Art Gallery Support Act;
(2) If a person subject to paragraph (1) fails to relocate the relevant museum, etc. as prescribed by Presidential Decree, or disposes of the relevant building and appurtenant land or closes the relevant museum, etc. within three years from the date of opening the museum, etc. after relocation, the person shall pay the amount calculated as prescribed by Presidential Decree as capital gains tax: Provided, That the foregoing shall not apply in extenuating circumstances prescribed by Presidential Decree.
(3) The latter part of Article 33 (3) shall apply mutatis mutandis to the amount of tax payable under the main sentence of paragraph (2).
(4) For the purposes of paragraph (1) or (2), submitting an application for payment in installments, and other necessary matters, shall be prescribed by Presidential Decree.
[This Article Newly Inserted by Act No. 14390, Dec. 20, 2016]
 Articles 84 and 85 Deleted. <by Act No. 8146, Dec. 30, 2006>
 Article 85-2 (Special Taxation for Relocating Factories in Areas Subject to Development Plans of Administrative City and Innovation Cities to Rural Areas)
(1) Where a national operating a business with his/her factory facilities established within the area predetermined for the Administrative City under the Special Act on the Construction of Administrative City in Yeongi-Gongju Area for Follow-up Measures for New Administrative Capital or an area predetermined for an innovation city under the Special Act on the Construction and Support of Innovation Cities Following Relocation of Public Agencies (hereafter in this Article, referred to as "administrative city, etc."), transfers the site and buildings of such factory to any of the project implementers designated under such Acts, no later than December 31, 2012, in order to relocate such factory to an area outside the administrative city, etc. prescribed by Presidential Decree (hereafter in this Article, referred to as "rural area"), the national may choose not to include the equivalent to proceeds from such transfer in his/her gross income, or is entitled to tax deferral, as follows:
1. Domestic corporations: Not to include the amount calculated as prescribed by Presidential Decree in the gross income, when calculating the amount of income of the relevant business year. In such cases, the amount shall be included in the gross income in at least equal installments for the five business years from the business year falling on the fifth anniversary from the end of the business year in which the date of transfer falls;
2. Residents: To obtain tax deferral as prescribed by Presidential Decree.
(2) Where a national subject to paragraph (1) fails to relocate his/her factory to a rural area, or discontinues or closes his/her business within three years from the date the factory is transferred, as prescribed by Presidential Decree, the national shall include the amount calculated as prescribed by Presidential Decree, in his/her gross income, when calculating his/her income for the business year in which the relevant ground arises, or shall pay the amount of tax deferred as 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 paid as capital gains tax.
(3) Where a national operating a business with factory facilities established in the administrative city, etc., relocates to a rural area and starts a business there, the national is entitled to a tax reduction by the equivalent to 50/100 of the income tax or corporate tax for income accruing from the relocated business for the taxable year in which the first income accrues after the date of relocation (or the taxable year falling on the fifth anniversary from the date of relocation, where no income accrues from the relevant business until the taxable year falling on such fifth anniversary), and also within the three subsequent taxable years from the date the following taxable year commences.
(4) In any of the following cases, a resident (referring to the heir of the relevant resident in cases falling under subparagraph 2 of this paragraph) granted deferred taxation under paragraph (1) 2, shall pay the amount of tax deferred, calculated as prescribed by Presidential Decree, as capital gains tax, by the following relevant deadline: <Newly Inserted by Act No. 14390, Dec. 20, 2016>
1. Where the resident donates the factory acquired after relocating to a rural area (hereafter in this Article, referred to as "factory in a rural area"): Within three months from the end of the month in which the factory is donated;
2. Where such factory in the rural area is inherited upon the death of the resident: Within six months from the end of the month in which inheritance commences.
(5) For the purposes of (1), (2), or (4), submitting a statement of proceeds from transfer, and other necessary matters, shall be prescribed by Presidential Decree. <Amended by Act No. 14390, Dec. 20, 2016>
(6) Any national who intends to be granted a tax reduction pursuant to paragraph (3), shall submit an application therefor in the form prescribed by Ordinance of the Ministry of Strategy and Finance along with his/her tax return of the relevant taxable year.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]
 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: <Amended by Act No. 11614, Jan. 1, 2013>
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. <Amended by Act No. 11614, Jan. 1, 2013>
(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]
 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. <Amended by Act No. 10529, Apr. 4, 2011; Act No. 11614, Jan. 1, 2013>
(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]
 Article 85-5 (Special Taxation for Proceeds from Transferring Land, etc. for Child-Care Centers)
(1) Where a person who operates a workplace child-care center under the Infant Care Act (hereafter in this Article, referred to as "previous child-care center"), transfers the previous child-care center as at December 31, 2009, and then acquires a new workplace child-care center (hereafter in this Article, referred to as "new child-care center") within one year from the date of such transfer, the person may choose not to include the equivalent to proceeds from transferring the previous child-care center in his/her gross income, or is entitled to tax deferral, as follows: <Amended by Act No. 10789, Jun. 7, 2011>
1. Corporations: Not to include the amount calculated as prescribed by Presidential Decree in the gross income, when calculating the income for the relevant business year. In such cases, the amount shall be included in the gross income in at least equal installments for the three business years from the business year falling on the third anniversary from the end of the business year in which the date of transfer falls;
2. Individuals: To obtain tax deferral as prescribed by Presidential Decree.
(2) Where a person subject to paragraph (1) fails to acquire a new child-care center, or closes a new child-care center within three years after starting operating the new child-care center, the person shall include the amount calculated as prescribed by Presidential Decree in the gross income, when calculating his/her income for the business year in which the relevant ground arises, or shall pay the amount of tax deferred as 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 paid as the capital gains tax. <Amended by Act No. 10789, Jun. 7, 2011>
(3) In any of the following cases, a resident (referring to the heir of the relevant resident in cases falling under subparagraph 2 of this paragraph) granted deferred taxation under paragraph (1) 2, shall pay the amount of tax deferred, calculated as prescribed by Presidential Decree, as capital gains tax, by the following relevant deadline: <Newly Inserted by Act No. 14390, Dec. 20, 2016>
1. Where the resident donates the new child-care center: Within three months from the end of the month in which it is donated;
2. Where the new child-care center is inherited upon the death of the resident: Within six months from the end of the month in which inheritance commences.
(4) For the purposes of paragraphs (1) through (3), the scope of child-care centers; submitting a statement of proceeds from transfer, an application for tax deferral, and an adjustment statement of inclusion in gross income in installments; and other necessary matters, shall be prescribed by Presidential Decree. <Amended by Act No. 10789, Jun. 7, 2011; Act No. 14390, Dec. 20, 2016>
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]
 Article 85-6 (Reduction or Exemption of Corporate Tax, etc. for Social Enterprises and Standard Workplaces for Persons with Disabilities)
(1) A national certified as a social enterprise, as defined in subparagraph 1 of Article 2 of the Social Enterprise Promotion Act, as at December 31, 2019, is entitled to a full exemption from corporate tax or income tax on the income accruing from the relevant business for the taxable year in which the first income accrues from the relevant business (or the taxable year falling on the fifth anniversary from the date of certification, where no income accrues from the relevant business until the taxable year falling on such fifth anniversary), and also within the two subsequent taxable years from the date the following taxable year commences; and entitled to a tax reduction by the equivalent to 50/100 of the income tax or corporate tax for the two subsequent taxable years thereafter. <Amended by Act No. 10406, Dec. 27, 2010; Act No. 11614, Jan. 1, 2013; Act No. 12173, Jan. 1, 2014; Act No. 14390, Dec. 20, 2016>
(2) A national certified as a standard workplace for persons with disabilities, as defined in subparagraph 8 of Article 2 of the Act on the Employment Promotion and Vocational Rehabilitation of Persons with Disabilities, as at December 31, 2019, is entitled to a full exemption from corporate tax or income tax on the income accruing from the relevant business for the taxable year in which the first income accrues from the relevant business (or the taxable year falling on the fifth anniversary from the date of certification, where no income accrues from the relevant business until the taxable year falling on such fifth anniversary), and also within the two subsequent taxable years from the date the following taxable year commences; and entitled to a tax reduction by the equivalent to 50/100 of the income tax or corporate tax for the two subsequent taxable years thereafter. <Newly Inserted by Act No. 10406, Dec. 27, 2010; Act No. 11614, Jan. 1, 2013; Act No. 12173, Jan. 1, 2014; Act No. 14390, Dec. 20, 2016>
(3) For the purposes of paragraph (1), where the certification of a social enterprise is revoked pursuant to Article 18 of the Social Enterprise Promotion Act due to any of the following grounds during the period of tax reduction or exemption, the social enterprise becomes ineligible for a reduction or exemption of corporate tax or income tax as prescribed in paragraph (1) from the relevant taxable year:
1. It has obtained certification fraudulently or deceptively;
2. It fails to meet any of the requirements for certification prescribed under Article 8 of the Social Enterprise Promotion Act.
(4) For the purposes of paragraph (2), where any of the following applies to a standard workplace for persons with disabilities during the period of tax reduction or exemption, it becomes ineligible for a reduction or exemption of corporate tax or income tax under paragraph (2) from the relevant taxable year: <Newly Inserted by Act No. 10406, Dec. 27, 2010>
1. Where it has obtained a loan or subsidy under Article 21 or 22 of the Act on the Employment Promotion and Vocational Rehabilitation of Persons with Disabilities fraudulently or deceptively;
2. Where the business operator fails to use a loan or subsidy granted under Article 21 or 22 of the Act on the Employment Promotion and Vocational Rehabilitation of Persons with Disabilities for the purposes provided for in the same provisions;
3. Where it fails to meet any of the standards referred to in subparagraph 8 of Article 2 of the Act on the Employment Promotion and Vocational Rehabilitation of Persons with Disabilities.
(5) Where a national granted a tax reduction or exemption pursuant to paragraph (1) or (2), falls under paragraph (3) 1 or (4) 1, the national shall pay the amount of tax reduced or exempted, plus an amount calculated by applying mutatis mutandis the provisions on the additional amount equivalent to interest under Article 33-2 (4), as corporate tax or income tax, at the time of filing his/her tax return for the taxable year in which the relevant ground arises. <Amended by Act No. 10406, Dec. 27, 2010>
(6) Any person who intends to be granted a tax reduction or exemption pursuant to paragraph (1) or (2), shall file an application therefor, as prescribed by Presidential Decree. <Amended by Act No. 10406, Dec. 27, 2010>
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]
 Article 85-7 (Special Taxation for Relocation of Factories due to Expropriation, etc. for Public Works Projects)
(1) Where a domestic corporation or a resident transfers the site and buildings of a factory that has been operated within the area for a public service project for at least two years (including land held for at least five years, counting retroactively from the date of public announcement of project approval, is for a factory operated for at least one year as at the date of transfer where such factory has been operated for less than two years, counting retroactively, from the date of public announcement of project approval), counting retroactively from the date of public announcement of project approval (referring to the date of transfer where such site and buildings are transferred before the date of public announcement of project approval; hereafter the same shall apply in this Article), to the implementer of the relevant public service project by not later than December 31, 2018 due to the implementation of the public service project pursuant to the Act on Acquisition of and Compensation for Land, etc. for Public Works Projects, in order to relocate such factory to an area prescribed by Presidential Decree located outside of the area for such public service project (including such area for the public service project where land within that area developed as a consequence of the implementation of the public service project is used as the site of the factory after acquiring it directly from the implementer of the public service project), the domestic corporation or the resident may either exclude an amount equivalent to the gains from the transfer of such site and buildings of the factory (including partial transfer of the site of the factory) from its gross income, or pay the capital gains tax on such gains from transfer, in installments, as follows: <Amended by Act No. 11614, Jan. 1, 2013; Act No. 13560, Dec. 15, 2015>
1. The domestic corporation: Excluding the amount calculated, as prescribed by Presidential Decree, from the gross income for the purposes of computing the amount of income for the relevant business year. In this regard, the relevant amount shall be included in the gross income, in at least equal installments, during the period of three business years, starting from the business year in which the third anniversary of the end of the business year in which such site and buildings are transferred falls;
2. The resident: Not deeming the capital gains tax calculated, as prescribed by Presidential Decree, to be capital gains tax payable by the filing deadline of the final capital gains tax return for the relevant year in which the date of transfer falls. In this regard the amount of such tax shall be paid, in at least equal installment, during the period of three years, starting from the third anniversary of the end of the filing deadline for the final capital gains tax return for the relevant year in which such site and buildings are transferred falls.
(2) Where a national accorded special tax treatment under paragraph (1) fails to relocate a factory, as prescribed by Presidential Decree, or closes his/her business or is dissolved within three years from the date of transfer of the factory, the national shall either include the amount calculated by the formula prescribed by Presidential Decree in the gross income at the time of calculating the income for the business year in which the date of occurrence of such cause falls, or pay the tax to be paid in 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 amount of tax payable.
(3) For the purposes of paragraphs (1) and (2), submission of a statement of gains from transfer, and other necessary matters shall be prescribed by Presidential Decree.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]
 Article 85-8 (Special Taxation for Small or Medium Enterprises Upon Relocation of Factories)
(1) Where a small or medium enterprise that has engaged in business for at least ten consecutive years with factory facilities transfers the site and buildings of its factory, by not later than December 31, 2017, in order to relocate the factory to an area, other than the areas prescribed by Presidential Decree, the small or medium enterprise may either exclude an amount equivalent to the transfer gains from its gross income, or pay the capital gains tax on such transfer gains in installments, as follows: <Amended by Act No. 11133, Dec. 31, 2011; Act No. 12853, Dec. 23, 2014>
1. Domestic corporations: Excluding the amount calculated, as prescribed by Presidential Decree, from the gross income for the purposes of computing the amount of income for the relevant business year. In this regard, the relevant amount shall be included in the gross income, in at least equal installments, during the period of two business years, starting from the business year in which the second anniversary of the end of the business year in which such site and buildings are transferred falls;
2. Residents: Not deeming the capital gains tax calculated, as prescribed by Presidential Decree, to be capital gains tax payable by the filing deadline of the final capital gains tax return for the relevant year in which the date of transfer falls. In this regard, the amount of such tax shall be paid, in at least equal installment, during the period of two years, starting from the second anniversary of the end of the filing deadline for the final capital gains tax return for the relevant year in which such site and buildings are transferred falls.
(2) Where a national accorded special tax treatment under paragraph (1) fails to relocate a factory, as prescribed by Presidential Decree, or closes his/her business or is dissolved within three years from the date of transfer of the factory, the national shall either include the amount calculated by the formula prescribed by Presidential Decree in the gross income at the time of calculating the income for the business year in which the date of occurrence of such cause falls, or pay the tax to be paid in 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 amount of tax payable.
(3) For the purposes of paragraphs (1) and (2), submission of a statement of gains from transfer, and other necessary matters shall be prescribed by Presidential Decree.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]
 Article 85-9 (Special Taxation for Relocation of Logistics Facilities due to Expropriation, etc. for Public Service Projects)
(1) Where a domestic corporation or a resident transfers the site or buildings of logistics facilities (hereafter referred to as "logistics facilities" in this Article) to the implementer of a public service project by not later than December 31, 2018 in order to relocate such logistics facilities prescribed by Presidential Decree, which have been used for at least five years, counting retroactively from the date of public announcement of project approval (or from the date of transfer if such transfer is made before the date of public announcement of project approval), to an area prescribed by Presidential Decree due to the implementation of the public service project pursuant to the Act on Acquisition of and Compensation for Land, etc. for Public Works Projects, the domestic corporation or the resident may either exclude an amount equivalent to the transfer gains from its gross income, or pay the capital gains tax on such transfer gains in installments, as follows: <Amended by Act No. 11614, Jan. 1, 2013; Act No. 13560, Dec. 15, 2015>
1. The domestic corporation: Excluding the amount calculated, as prescribed by Presidential Decree, from the gross income for the purposes of computing the amount of income for the relevant business year. In this regard, the relevant amount shall be included in the gross income, in at least equal installments, during the period of three business years, starting from the business year in which the third anniversary of the end of the business year in which such site and buildings are transferred falls;
2. The resident: Paying the capital gains tax calculated, as prescribed by Presidential Decree, in installments. In this regard, the amount of such tax shall be paid, in at least equal installment, during the period of three years, starting from the third anniversary of the end of the filing deadline for the final capital gains tax return for the relevant year in which such logistics facilities are transferred falls.
(2) Where a national accorded special tax treatment under paragraph (1) fails to relocate logistics facilities, as prescribed by Presidential Decree, or closes his/her business or is dissolved within three years from the date of transfer of the logistics facilities, the national shall either include the amount calculated by the formula prescribed by Presidential Decree in the gross income at the time of calculating the income for the business year in which the date of occurrence of such cause falls, or pay the tax to be paid in 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 amount of tax payable.
(3) For the purposes of paragraphs (1) and (2), submission of a statement of gains from transfer, and other necessary matters shall be prescribed by Presidential Decree.
[This Article Newly Inserted by Act No. 9921, Jan. 1, 2010]
 Article 85-10 (Capital Gains Tax Reduction or Exemption for Mountainous Areas Transferred to State)
(1) Where a national transfers a mountainous area as defined under the Mountainous Districts Management Act (excluding any mountainous area located in an urban area designated under the National Land Planning and Utilization Act; hereafter referred to as “mountainous area” in this paragraph) he/she has held for at least two years, to the State, by not later than December 31, 2017, pursuant to Article 18 of the State Forest Administration and Management Act, the resident is entitled to a reduction of capital gains tax levied on the income accruing from such transfer by an amount equivalent to 10/100 of the capital gains tax. <Amended by Act No. 11614, Jan. 1, 2013; Act No. 12173, Jan. 1, 2014; Act No. 12853, Dec. 23, 2014; Act No. 13560, Dec. 15, 2015>
(2) A person seeking to obtain a tax reduction under paragraph (1) shall file an application therefor, as prescribed by Presidential Decree.
[This Article Newly Inserted by Act No. 9921, Jan. 1, 2010]
SECTION 9 Special Taxation for Support of Savings
 Articles 86 and 86-2 Deleted. <by Act No. 11614, Jan. 1, 2013>
 Article 86-3 (Income Deductions, etc. for Mutual Aid Funds for Small Enterprises and Micro Enterprises)
(1) Where a resident joins, and makes deposits, in a mutual aid fund prescribed by Presidential Decree for small enterprises and micro enterprises under Article 115 of the Small and Medium Enterprise Cooperatives Act (hereafter in this Article, referred to as "mutual aid fund for small or micro enterprises"), the resident is entitled to deduct the smaller of an amount deposited in the mutual aid fund for the relevant year, and of any of the following amounts, from the amount of business income (or from the amount of earned income, if the resident is the representative of a corporation and his/her gross wages for the relevant taxable period do not exceed 70 million won; hereafter in this paragraph, the same shall apply) for the relevant taxable year: <Amended by Act No. 12853, Dec. 23, 2014; Act No. 13560, Dec. 15, 2015; Act No. 14390, Dec. 20, 2016>
1. If the amount of business income for the relevant taxable year, does not exceed 40 million won: 5 million won;
2. If the amount of business income for the relevant taxable year, is between 40 million won and 100 million won: 3 million won;
3. If the amount of business income for the relevant taxable year, exceeds 100 million won: 2 million won.
(2) Incomes accruing from the mutual aid fund for small or micro enterprises under paragraph (1), shall be deemed accrued at the time the person who has joined the mutual aid fund for small or micro enterprises actually receives such incomes.
(3) Where a person receives mutual aid benefits from the mutual aid fund for small or micro enterprises due to any of the grounds prescribed by Presidential Decree, such as business closure, the amount calculated by the following formula shall be levied as income tax, deeming such amount to be the retirement income under Article 22 (1) 2 of the Income Tax Act. In such cases, the number of years of continuous service under Articles 48 and 55 of the Income Tax Act, shall be determined by the method prescribed by Presidential Decree, based upon the period of membership of the mutual aid fund for small or micro enterprises: <Amended by Act No. 12853, Dec. 23, 2014>
Retirement income = Mutual aid benefits ­ Aggregate of deposits made in excess of the amount of actual income deduction.
(4) Where a person terminates a contract for the mutual aid fund for small or micro enterprises before any of the grounds prescribed by Presidential Decree, such as business closure, arises, the amount calculated by the following formula shall be levied as income tax, deeming such amount to be miscellaneous incomes under Article 21 of the Income Tax Act: Provided, That paragraph (3) shall apply where the contract is terminated due to any of the grounds prescribed by Presidential Decree, such as emigration:
Miscellaneous incomes = Amount refunded upon termination - Aggregate of deposits made in excess of the amount of actual income deduction.
(5) Deleted. <by Act No. 14390, Dec. 20, 2016>
(6) Where the amount of tax payable under paragraph (3) or (4) is not paid by the deadline prescribed under Article 128 (1) of the Income Tax Act, or is underpaid, the Korea Federation of Small and Medium Business incorporated under the Small and Medium Enterprise Cooperatives Act, shall pay the amount of tax unpaid or underpaid, plus an amount calculated under Article 47-5 (1) of the Framework Act on National Taxes. <Amended by Act No. 14390, Dec. 20, 2016>
(7) No income tax imposed under paragraph (4) shall exceed the refund that a member of the mutual aid fund for small enterprises and small commercial receives upon termination of the contract for the mutual aid fund for small or micro enterprises. <Amended by Act No. 14390, Dec. 20, 2016>
(8) The methods and procedures for granting income deductions to persons who have joined the mutual aid fund for small or micro enterprises, and other necessary matters, shall be prescribed by Presidential Decree.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]
 Article 87 (Income Deductions, etc. for Collective Savings Accounts for Housing Subscription)
(1) No income tax shall be imposed on any interest income and dividend income accruing from a savings account opened to purchase a housing unit (hereafter in this Article, referred to as "long-term savings account for housing purchase") as at December 31, 2012, if the account meets all of the following requirements:
1. Persons eligible to open a long-term savings account for housing purchase shall be a resident of at least 18 years of age, falling under any of the following at the time of opening an account:
(a) The head of a household prescribed by Presidential Decree (hereafter in this Article, referred to as "household") that does not own a house;
(b) The head of a household that owns only one house with the standard market price not exceeding 50 million won, appraised under Article 99 (1) of the Income Tax Act (hereafter in this Article, referred to as "standard market price"), or with the standard market price not exceeding 300 million won and not larger than the size prescribed by Presidential Decree (hereafter in this Article, referred to as "house of national housing size");
2. Requirements prescribed by Presidential Decree, including the limits on installment savings and the contract period, shall be satisfied.
(2) Where a resident (excluding daily employed workers) who has earned income, is the head of a household whose gross wages for a certain taxable year under Article 20 (2) of the Income Tax Act does not exceed 70 million won; has not owned any house during that taxable period; and has deposited an amount in his/her collective savings account for housing subscription under the Housing Act during such taxable period, the resident is entitled to deduct the equivalent to 40/100 of the amount deposited in his/her savings account (the maximum shall be 2,400,000 won per year, but the amount deposited only after the taxable period eligible for income deductions under paragraph (3) is eligible for deduction) from his/her earned income for the relevant taxable period: Provided, That no amount deposited during the relevant taxable period shall be deducted, if the account is closed before maturity due to any ground other than winning a draw to acquire a house: <Amended by Act No. 11133, Dec. 31, 2011; Act No. 12853, Dec. 23, 2014; Act No. 13560, Dec. 15, 2015; Act No. 13805, Jan. 19, 2016>
1. and 2. Deleted. <by Act No. 13805, Jan. 19, 2016>
(3) A person who intends to be granted an income deduction for the amount deposited in his/her collective savings account for housing subscription pursuant to paragraph (2), shall submit the document prescribed by Presidential Decree verifying that he/she is the head of a household with no house owned (hereafter in this Article, referred to as "non-homeowner certificate") to the institution handling such savings account, by not later than the end of the year immediately following the taxable period for which he/she intends to be granted an income deduction (hereafter in this Article, referred to as "taxable period eligible for income deduction"). <Amended by Act No. 13560, Dec. 15, 2015>
(4) If the aggregate of the amounts deducted under paragraph (2) of this Act and Article 52 (4) of the Income Tax Act, exceeds three million won per year, such excess shall not be deducted from the earned income for the relevant year; and, if the aggregate of the amounts deducted under paragraph (2) of this Act and Article 52 (4) through (6) of the Income Tax Act, exceeds five million won per year (the maximum on each deduction, if a long-term house mortgage loan provided under Article 52 (5) of the Income Tax Act meets the requirements of Article 52 (6) of the same Act), such excess shall not be deducted from the earned income for the relevant year. In such cases, whether the account holder is the head of a household shall be determined as at the end of the relevant taxable period. <Amended by Act No. 11614, Jan. 1, 2013; Act No. 12173, Jan. 1, 2014; Act No. 12853, Dec. 23, 2014; Act No. 13560, Dec. 15, 2015>
(5) If a person who has opened a long-term savings account for housing purchase withdraws the principal, interest, etc. from the account, or closes the account within seven years from the opening date of the savings account, the financial institution handling such savings account shall collect the tax reduction or exemption granted on the interest income and dividends income exempt from income tax: Provided, That the same shall not apply where the savings account is closed due to the account holder's death or emigration abroad or any other reason prescribed by Presidential Decree.
(6) Where a person granted an income deduction for the amount deposited in a collective savings account for housing subscription, falls under any of the following cases, the institution handling the relevant savings account shall additionally collect an amount (hereafter in this Article, referred to as "additional tax") calculated by multiplying the aggregate of the amounts deposited after the taxable period to which the income deduction was applied (such amount shall not exceed 2,400,000 won per annum) by 6/100 from the amount in the relevant savings account, at the time of closing the savings account, and shall pay it to the head of the tax office having jurisdiction over the tax withholding by the 10th day of the month immediately following the month in which the account is closed: Provided, That, if the person granted an income deduction proves that the amount of tax reduced or exempted by the relevant income deduction falls short of the additional amount of tax, the equivalent to such amount of tax reduced or exempted shall be collected additionally: <Amended by Act No. 11133, Dec. 31, 2011; Act No. 12853, Dec. 23, 2014; Act No. 13560, Dec. 15, 2015>
1. Where the person closes the savings account within five years from the date of opening the savings account: Provided, That the same shall not apply where the savings account is closed due to the account holder's death or emigration abroad or any other reason prescribed by Presidential Decree;
2. Where the person wins a draw to acquire a house that exceeds the size of national housing and is constructed according to the project plan approved under the Housing Act.
(7) Where an institution handling savings accounts fails to pay the additional amount of tax calculated under paragraph (5) or (6) by the prescribed deadline or underpays it, the institution shall pay the equivalent to 10/100 of the amount of tax unpaid or underpaid, to the head of the tax office having jurisdiction over tax withholding in addition to such additional amount of tax. <Amended by Act No. 11614, Jan. 1, 2013>
(8) Persons eligible to open the long-term savings account for housing purchase shall be identified and managed in the following manner: <Amended by Act No. 12853, Dec. 23, 2014>
1. The Commissioner of the National Tax Service shall examine whether each holder of the long-term savings account for housing purchase fully meets the requirements of the subparagraphs of paragraph (1) as at the time of opening the account and notify the financial institution handling the savings account of the findings within the period prescribed by Presidential Decree;
2. The Commissioner of the National Tax Service shall examine whether each holder of the long-term savings account for housing purchase fully meets the requirements of the subparagraphs of paragraph (1) (excluding the requirement that the standard market price shall not exceed 300 million won) as at the end of the taxable year falling on the seventh anniversary from the date of opening the long-term savings account for housing purchase and as at the end of every third taxable period after the afore-mentioned taxable year, and shall notify the financial institution handling the account of the findings. In such cases, the savings account shall be deemed terminated as of the date the financial institution receives the relevant notification if the person fails to meet any of the requirements of the subparagraphs of paragraph (1) (excluding the requirement that the standard market price shall not exceed 300 million won), but paragraphs (5) and (7) shall not apply.
(9) Persons eligible to open the collective savings account for housing subscription shall be identified and managed in the following manner: <Amended by Act No. 10406, Dec. 27, 2010; Act No. 11690, Mar. 23, 2013; Act No. 12853, Dec. 23, 2014; Act No. 13560, Dec. 15, 2015>
1. Each institution handling the savings account shall submit a list of persons who have submitted non-homeowner certificates to the Minister of Land, Infrastructure and Transport by not later than five days after the deadline for submission specified in paragraph (3);
2. The Minister of Infrastructure and Transport shall verify whether the persons who have submitted non-homeowner certificates are the head of a household with no house owned during the taxable period and shall notify the findings thereof to the Commissioner of the National Tax Service by not later than April 30 of the following year.
(10) The procedure for opening and terminating the long-term savings accounts for housing purchase; the procedure for income deductions; and the procedure for income deductions with respect to the deposit in the saving account for subscription and the collective savings account for housing subscription; and other necessary matters, shall be prescribed by Presidential Decree.
[This Article Wholly Amended by Act No. 9924, Jan. 1, 2010]
 Article 87-2 (Non-Taxation on Lump-Sum Savings of Farming and Fishing Households)
Where a farmer or fisherman opens a lump-sum savings account under the Act on Raising Lump-Sum Saving of Farming and Fishing Households by not later than December 31, 2017, no income tax, gift tax or inheritance tax shall be levied on the interest income and saving incentives that the farmer, fisherman, or any of his/her descendants receives on the maturity of the lump-sum savings account or due to any of the following events that arises one year after the date of opening such account: <Amended by Act No. 11133, Dec. 31, 2011; Act No. 12853, Dec. 23, 2014>
1. Where the farmer or fisherman dies;
2. Where the farmer or fisherman emigrates abroad;
3. Where a natural calamity or other causes prescribed by Presidential Decree occur.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]
 Article 87-3 Deleted. <by Act No. 9921, Jan. 1, 2010>
 Article 87-4 Deleted. <by Act No. 7839, Dec. 31, 2005>
 Article 87-5 (Special Taxation for Stockholders of Ship Investment Companies)
(1) Deleted. <by Act No. 7839, Dec. 31, 2005>
(2) Notwithstanding Article 129 of the Income tax Act, the tax rate of 9/100 shall apply to the dividends paid by any ship investment company defined in 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, 2015 with respect to the stocks in his/her possession by ship investment company with par value not exceeding 50 million won. In such cases, the dividend income of the stocks in his/her possession with par value not exceeding 200 million won shall not be included in the tax base of global income calculated under Article 14 (2) of the Income Tax Act. <Amended by Act No. 9921, Jan. 1, 2010; Act No. 10406, Dec. 27, 2010; Act No. 12173, Jan. 1, 2014>
(3) If a ship investment company intends to pay the dividend income where its stock certificates have been deposited in an investment trader or investment broker, it shall, immediately after passing a resolution on dividend payment, notify the investment trader or 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 so notified shall withhold as notified. <Amended by Act No. 9272, Dec. 26, 2008>
(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 forepart 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. <Amended by Act No. 9921, Jan. 1, 2010>
(5) Where the withholding agent referred to in paragraphs (3) and (4) directly pays the dividends of the relevant ship investment company, he/she shall submit a detailed statement of the separate taxation of the ship investment company in the form 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 on which the payment date of the dividends falls. <Amended by Act No. 9921, Jan. 1, 2010>
[This Article Newly Inserted by Act No. 7003, Dec. 30, 2003]
 Article 87-6 (Special Taxation for Dividend Income from Collective Investment Securities, such as Real Estate Funds)
(1) Where a resident receives dividend income, by not later than December 31, 2018, for stocks or beneficiary certificates (hereafter in this Article, referred to as "collective investment securities") of any real estate fund under the Financial Investment Services and Capital Markets Act (including a privately-placed fund defined in Article 9 (19) of the same Act, which invests at least 50/100 of its collective investment property in the real estate specified in subparagraph 2 of Article 229 of the same Act) or of any real estate investment company under the Real Estate Investment Company Act (hereafter in this Article, referred to as "real estate fund, etc."), which invests at least the ratio prescribed by Presidential Decree of its total assets, in the rental housing prescribed by Presidential Decree, from such real estate fund, etc., the resident need not add such dividend income to the tax base of his/her global income under Article 14 (2) of the Income Tax Act, if the total par value of the collective investment securities in each real estate fund, etc. does not exceed 200 million won. In such cases, the tax rate of 5/100 shall apply to the dividend income from collective investment securities, if the total par value of collective investment securities in each real estate fund, etc., does not exceed 50 million won, notwithstanding Article 129 of the Income Tax Act. <Amended by Act No. 11614, Jan. 1, 2013; Act No. 12853, Dec. 23, 2014; Act No. 14390, Dec. 20, 2016>
(2) Where the collective investment securities in a real estate fund, etc., are deposited with an investment trader or investment broker, the real estate fund, etc. shall notify the investment trader or investment broker to whom a holder of such collective investment securities entrusts the purchase and sale of a 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) Where the collective investment securities in a real estate fund, etc., are not deposited with an investment trader or investment broker, the real estate fund, etc. shall withhold the tax, directly or through its transfer agency, upon classifying the income subject to separate taxation by holder of collective investment securities.
(4) Where the withholding agents referred to in paragraphs (2) and (3), pay the dividend income from the real estate fund, etc. directly, they shall submit a statement of the separate taxation of the real estate fund, etc., in the form 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 dividend income is paid.
(5) Where a resident invests in collective investment securities of a real estate fund, etc. under a trust contract with a trust business entity permitted under the Financial Investment Services and Capital Markets Act, the trust business entity and the real estate fund, etc. shall be deemed to be in an agency or delegation relationship in relation to the withholding obligation. <Newly Inserted by Act No. 14390, Dec. 20, 2016>
(6) Methods for computing the investment ratio of a real estate fund, etc.; methods for withholding taxes; and other necessary matters, shall be prescribed by Presidential Decree. <Newly Inserted by Act No. 14390, Dec. 20, 2016>
[This Article Newly Inserted by Act No. 10631, May 19, 2011]
 Article 88 Deleted. <by Act No. 9921, Jan. 1, 2010>
 Article 88-2 (Special Taxation on Tax-Free Comprehensive Savings)
(1) Where any of the following residents opens a savings account prescribed by Presidential Decree (hereafter in this Article, referred to as "tax-free comprehensive savings"), with the maximum principal savings not exceeding 50 million won (if a resident who has a tax-favored comprehensive savings account under Article 89 has not terminated or closed the account, the amount of savings shall be determined by subtracting the total contract amount on the tax-favored comprehensive savings account held by the resident from 50 million won), by not later than December 31, 2019, no income tax shall be levied on the interest income or dividend income accruing from the savings account: <Amended by Act No. 9921, Jan. 1, 2010; Act No. 11133, Dec. 31, 2011; Act No. 12853, Dec. 23, 2014; Act No. 13605, Dec. 22, 2015>
1. A resident aged at least 65;
2. A person with a disability registered under Article 32 of the Act on Welfare of Persons with Disabilities;
3. A person of distinguished service to independence, registered under Article 6 of the Act on the Honorable Treatment of Persons of Distinguished Service to Independence, his/her bereaved family, or his/her family;
5. A recipient defined in subparagraph 2 of Article 2 of the National Basic Living Security Act;
6. A patient suffering from actual or potential aftereffects of defoliants, defined in subparagraph 3 of Article 2 of the Act on Assistance to Patients Suffering from Actual or Potential Aftereffects of Defoliants, etc. and Establishment of Related Organizations;
7. A wounded person in the May 18 Democratization Movement, defined in subparagraph 2 of Article 4 of the Act on the Honorable Treatment of Persons of Distinguished Service to the May 18 Democratization Movement.
(2) Deleted. <by Act No. 6538, Dec. 29, 2001>
(3) Methods for calculating the total contract amount of tax-free comprehensive savings accounts; methods for operating and managing tax-free comprehensive savings accounts; and other necessary matters, shall be prescribed by Presidential Decree. <Amended by Act No. 12853, Dec. 23, 2014>
[This Article Newly Inserted by Act No. 6273, Oct. 21, 2000]
 Article 88-3 Deleted. <by Act No. 7003, Dec. 30, 2003>
 Article 88-4 (Special Taxation for Members, etc. of Employee Stock Ownership Associations)
(1) Where a member of an employee stock ownership association established under the Framework Act on Labor Welfare (hereinafter referred to as "member of an employee stock ownership association") make an investment in the employee stock ownership association established under the same Act (hereinafter referred to as "employee stock ownership association") in order to acquire the stocks of his/her own company, the member is entitled to deduct the amount of investment made in the relevant year and four million won, whichever is smaller, from the amounts of his/her earned income for the relevant year. <Amended by Act No. 10361, Jun. 8, 2010>
(2) No income tax shall be levied on income accrued from the funds of the employee stock ownership association established under Article 36 of the Framework Act on Labor Welfare or from the employee stocks held by the employee stock ownership association. <Amended by Act No. 10361, Jun. 8, 2010>
(3) Where a member 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 employee stocks which have been acquired through purchase of stocks at the securities market, etc. under the Financial Investment Services and Capital Markets Act, allocated by the employee stock ownership association, no income tax shall be levied thereon. <Amended by Act No. 10361, Jun. 8, 2010>
(4) Notwithstanding paragraph (3), where the employee stocks allotted by the employee stock ownership association to its members are contributed by the relevant corporation or acquired with contributions by such corporation, income tax shall be levied on the portion of such stocks exceeding the limits set by Presidential Decree. In such cases, where the employee stocks allotted 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 such members may deduct the amount from their earned income at the time of the year-end settlement of their earned income for the taxable period in which the date of such collection falls. <Amended by Act No. 10361, Jun. 8, 2010>
(5) Where a member of an employee stock ownership association withdraws his/her shares of employee stock allotted by the employee stock ownership association, income tax shall be levied on an amount calculated, as prescribed by Presidential Decree (hereafter in this Article referred to as "withdrawn amount"), with respect to the withdrawn employee stocks less the following employee stocks (hereafter in this Article referred to as "taxable, withdrawn stocks"), deeming such amount to be the earned income under Article 20 of the Income Tax Act. In such cases, the date on which such employee stocks are withdrawn shall be deemed the time of earning of such income, and the relevant corporation shall withhold an amount computed by applying the tax rate under Article 55 (1) of the Income Tax Act to the withdrawn amount: <Amended by Act No. 10361, Jun. 8, 2010>
1. Employee stocks acquired with an investment not granted income deductions under paragraph (1);
2. Employee stocks referred to in the fore part of paragraph (4);
3. Employee stocks given gratuitously to the members of the employee stock ownership association through the transfer of surplus into capital.
(6) Where a member of an employee stock ownership association withdraws any amount for taxable, withdrawn stocks, no income tax shall be levied on any of the following amounts, depending upon the holding period of the employee stocks and the size of the relevant corporation. In such cases, the holding period of employee stocks shall be the period from the day immediately following the last day of the period during which the stocks shall be compulsorily deposited in the account of each member of the employee stock ownership association with a securities finance company authorized under the Financial Investment Services and Capital Markets Act (hereafter referred to as "securities finance company" in this Article) to the date of withdrawal: <Amended by Act No. 10361, Jun. 8, 2010; Act No. 13560, Dec. 15, 2015>
1. In cases of a small or medium enterprise: Any of the following amounts:
(a) If taxable, withdrawn stocks have been held for a period from two to not exceeding four years: An amount equivalent to 50/100 of the withdrawn amount;
(b) If taxable, withdrawn stocks have been held for a period from four years to not exceeding six years: An amount equivalent to 75/100 of the withdrawn amount;
(c) If taxable, withdrawn stocks have been held for at least six years: An amount equivalent to 100/100 of the withdrawn amount;
2. In cases of any enterprise, other than small and medium enterprises: Either of the following amounts:
(a) If taxable, withdrawn stocks have been held for a period from two to not exceeding four years: An amount equivalent to 50/100 of the withdrawn amount;
(b) If taxable, withdrawn stocks have been held for at least four years: An amount equivalent to 75/100 of the withdrawn amount.
(7) Where a member of an employee stock ownership association withdraws contributions without disbursing them on the purchase of employee stocks, the amount such contributions (excluding contributions which were not deducted from any income under paragraph (1)) shall be included in the withdrawn amount pursuant to paragraph (5). <Amended by Act No. 10361, Jun. 8, 2010>
(8) Where a member of an employee stock ownership association make an investment in the employee stock ownership association and acquire employee stocks through such association, the income tax on the difference between the acquisition price of such stocks and the market price thereof shall be levied, as follows: <Amended by Act No. 10361, Jun. 8, 2010>
1. Where the investment does not exceed four million won, no tax shall be levied on such difference;
2. Where the investment exceeds four million won and the acquisition price of employee stocks acquired with such excess amount does not exceed 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 the standard price, deeming such difference to be the earned income.
(9) No income tax shall be levied on any dividend income from the employee stocks a member of an employee stock ownership association acquired through the employee stock ownership association and has deposited in a securities finance company, if the following conditions are fully satisfied: Provided, That where the stocks are withdrawn within one year from the date of deposit, the dividend income from such stocks paid, on or before the date of deposit, shall be deemed the dividend income paid on the date of deposit, and the income tax shall be levied thereon: <Amended by Act No. 10361, Jun. 8, 2010>
1. It shall be verified by a stock depository certificate issued by the securities finance company that the employee stocks held by the member of the employee stock ownership association are deposited in such securities finance company as at the base date on which the dividend is paid;
2. The member of the employee stock ownership association shall be a minority stockholder (hereafter referred to as "minority stockholder" in this Article) prescribed by Presidential Decree;
3. The total par value of the employee stocks that are held by each member of the employee stock ownership association shall not exceed 18 million won.
(10) No income tax shall be levied on the dividend income accrued from the treasury shares held by workers who acquire equity shares pursuant to 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, if the following conditions are fully satisfied: Provided, That where the treasury shares are not held for at least one year from the date of acquisition, the dividend income paid before the date the relevant cause occurs, shall be deemed the dividend income paid on the date on which such cause occur, and the income tax shall be levied thereon: <Amended by Act No. 11614, Jan. 1, 2013>
1. The workers shall be minority stockholders;
2. The total par value of the treasury shares held by each worker shall not exceed 18 million won.
(11) Any withholding agent shall submit a statement of nontaxation on the dividend income paid to the members of employee stock ownership associations and the workers pursuant to paragraphs (9) and (10) to the head of the tax office having jurisdiction over withholding taxes, as prescribed by Presidential Decree.
(12) Income deductions for contributions of the members of the employee stock ownership association, non-taxation on dividend income, taxation on the withdrawn employee stocks, calculation of the holding period of employee stocks, keeping records of treasury stocks, and other necessary matters shall be prescribed by Presidential Decree. <Amended by Act No. 10361, Jun. 8, 2010>
(13) A donation made by a resident to an employee stock ownership association (excluding donations made by members of an employee stock ownership association; the same shall apply hereafter in this paragraph) shall be either included in necessary expenses under Article 34 (1) of the Income Tax Act, or deducted from the amount of global income for the relevant taxable year, subject to a ceiling computed by multiplying 30/100 by the amount of global income for the relevant taxable year, less the donations referred to in Article 34 (2) of the Income Tax Act, for the purpose of computing the amount of business income for the taxable year;, and a donation made by a corporation to an employee stock ownership association shall be included in deductible expenses, subject to a ceiling computed by multiplying 30/100 by the amount of income for the relevant taxable year, less carried-over losses, for the purpose of computing income for the relevant taxable year. <Amended by Act No. 12853, Dec. 23, 2014>
(14) Article 94 (1) 3 of the Income Tax Act shall not apply where a member of an employee stock ownership association withdraws his/her employee stocks he/she holds on the ground of his/her retirement and transfers such stocks to the employee stock ownership association, if the following conditions are fully met. In such cases, the same shall not apply to any transfer margin that exceeds 30 million won: <Amended by Act No. 10361, Jun. 8, 2010>
1. The member of the employee stock ownership association hold the employee stocks, which he/she has acquired through the employee stock ownership association, for at least one year;
2. The employees stocks held by the member of the employee stock ownership association have been deposited in a securities finance company for at least one year as at the date of transfer;
3. The total par value of the employee stocks held by the members of the employee stock ownership association shall not exceed 18 million won.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]
 Article 88-5 (Special Taxation for Capital Investments, etc. in Cooperatives, etc.)
No income tax shall be levied on dividend income distributed by not later than December 31, 2018, out of the dividend income distributed for investments prescribed by Presidential Decree and not exceeding ten million won per person, in a financial institution whose partners, members, etc. are comprised of farmers, fishermen, or other residents with a mutual tie, and dividend income distributed by such financial institution to its partners, members, etc. based on the records of use of its business (hereafter referred to as "dividend income, etc." in this Article), and either of the following rates shall apply to dividend income, etc. distributed thereafter as the withholding tax rate, notwithstanding Article 129 of the Income Tax Act; but such dividend income, etc. shall not be added to the tax base of global income under Article 14 (2) of the same Act: <Amended by Act No. 11614, Jan. 1, 2013; Act No. 13560, Dec. 15, 2015>
1. Dividend income, etc. distributed from January 1, 2019 to December 31, 2019: 5/100;
2. Dividend income, etc. distributed on or after January 1, 2020: 9/100.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]
 Article 88-6 Deleted. <by Act No. 9921, Jan. 1, 2010>
 Article 89 (Special Taxation for Tax-Favored Comprehensive Savings)
(1) Where a resident opens a savings account meeting each of the following requirements (hereinafter referred to as "tax-favored comprehensive savings") by December 31, 2014, 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, no individual local income tax shall be imposed on such interest income and dividend income under the Local Tax Act: <Amended by Act No. 9921, Jan. 1, 2010; Act No. 10854, Jul. 14, 2011; Act No. 11133, Dec. 31, 2011; Act No. 12153, Jan. 1, 2014>
1. That an account holder shall apply for tax credits 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) sold 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. That the contract period shall be at least one year;
3. That the total amount of contracts for the tax-favored comprehensive savings opened at all financial companies, etc. should not exceed either of the following amounts: Provided, That the interest, 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 aged 20 years or over: 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. <by Act No. 6538, Dec. 29, 2001>
(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 paragraph (1) and the tax amount calculated under Article 129 of the Income Tax Act: Provided, That this shall not apply in cases unavoidable reasons prescribed by Presidential Decree, such as death of the account holder or emigration. <Amended by Act No. 9921, Jan. 1, 2010>
(8) The method of calculating the total amount of contracts for the tax-favored comprehensive savings, the method of their operation and management, and other necessary matters shall be prescribed by Presidential Decree. <Amended by Act No. 9921, Jan. 1, 2010>
[This Article Wholly Amended by Act No. 6045, Dec. 28, 1999]
 Article 89-2 (Submission, etc. of Data on Tax-Favored Savings)
(1) A financial institution, etc. handling any of the following savings accounts (hereafter in this Article, referred to as "institution handling tax-favored savings"), shall immediately notify the agency prescribed by Presidential Decree (hereinafter referred to as "agency collecting data on tax-favored savings") of the name and resident registration number of each depositor, details concerning the conclusion or termination of each savings contract and the transfer of rights to savings contracts, and other matters concerning the amendment of each contract (including the amount paid for insurance proceeds, deductibles, refund upon termination, and early withdrawal of savings insurance contracts referred to in subparagraph 2 (hereafter in this Article, referred to as “insurance proceeds, etc."); the amounts deposited in and withdrawn from pension accounts referred to in subparagraph 4; and the amount that does not fall under Article 20-3 (1) 2 of the Income Tax Act; hereinafter referred to as “data on tax-favored savings”) via electronic means, including computer systems: <Amended by Act No. 6867, May 10, 2003; Act No. 7003, Dec. 30, 2003; Act No. 7839, Dec. 31, 2005; Act No. 9272, Dec. 26, 2008; Act No. 9921, Jan. 1, 2010; Act No. 11614, Jan. 1, 2013; Act No. 12173, Jan. 1, 2014; Act No. 12853, Dec. 23, 2014; Act No. 13560, Dec. 15, 2015; Act No. 14390, Dec. 20, 2016>
1. Long-term savings for housing purchase, tax-free comprehensive savings, investments, tax-favored comprehensive savings, deposits in cooperatives, etc., asset-building savings, high-yield, high-risk investment trusts, long-term collective investment securities savings, collective investment securities savings only for investment in foreign stocks, and individual savings accounts referred to in Articles 87, 88-2, 88-5, 89, 89-3, and 91-14 through 91-18;
2. Savings insurance referred to in Article 16 (1) 9 of the Income Tax Act;
3. Lump-sum savings for farming and fishing households under the Act on Raising Lump-Sum Saving of Farming and Fishing Households;
4. Pension accounts referred to in Article 20-3 (1) 2 of the Income Tax Act.
(2) An institution handling tax-favored savings shall notify the agency collecting data on tax-favored savings, by the 20th day of the month after the end of each quarter, of the number of account holders, number of accounts, amount of deposits, and amount paid for insurance proceeds, etc. by type of savings. <Amended by Act No. 9921, Jan. 1, 2010; Act No. 11614, Jan. 1, 2013>
(3) The Commissioner of the National Tax Service may make an inquiry about, or request access to, or submission of, data on tax-favored savings held by depositors, to the agency collecting data on tax-favored savings. <Amended by Act No. 9921, Jan. 1, 2010>
(4) An institution handling tax-favored savings may make an inquiry to the agency collecting data on tax-favored savings about the total contract amounts and amount paid for insurance proceeds, etc. for the tax-favored savings accounts held by a depositor in other institutions handling tax-favored savings (including the beneficiaries in cases of trust, and the insured and beneficiaries in cases of insurance; hereafter in this Article, the same shall apply) and may, upon receipt of a written request or consent of the depositor, inquire about the details of the total contract amounts and amount paid for insurance proceeds, etc. and inform the depositor thereabout. <Amended by Act No. 9921, Jan. 1, 2010; Act No. 11614, Jan. 1, 2013>
(5) The agency collecting data on tax-favored savings shall immediately process the data on tax-favored savings notified by the institutions handling tax-favored savings, build an information network on the contract amounts and amount paid for insurance proceeds, etc. of tax-favored savings and details thereof, by type of savings and by depositor, and shall comply with any request or inquiry made under paragraph (3) or (4). <Amended by Act No. 9921, Jan. 1, 2010; Act No. 11614, Jan. 1, 2013>
(6) The agency collecting data on tax-favored savings shall retain the data on tax-favored savings for three years following the year in which each tax-favored savings account is closed. No person employed by an institution handling tax-favored savings or the agency collecting data on tax-favored savings (hereafter in this Article, referred to as "employee of a financial institution, etc."), shall provide or divulge information or data on the tax-favored savings (hereafter in this Article, referred to as "data, etc.") to any third person without a written request or consent of the relevant depositor; and no one shall request any employee of a financial institution, etc. to provide such data, etc.: Provided, That this shall not apply where such data, etc. is requested or provided under paragraph (3) of this Article and each subparagraph of Article 4 (1) of the Act on Real Name Financial Transactions and Confidentiality. <Amended by Act No. 9921, Jan. 1, 2010>
[This Article Wholly Amended by Act No. 6538, Dec. 29, 2001]
 Article 89-3 (Low Rate of Taxation on Deposits in Cooperatives, etc.)
(1) Where a resident aged 20 years or over as at the time of deposit makes a deposit prescribed by Presidential Decree (limited to a deposit not exceeding 30 million won per person; hereinafter referred to as "deposit in a cooperative, etc.") in a cooperative, etc. whose members, partners, etc. are comprised of farmers, fishermen, and other residents with a mutual tie, no income tax shall be levied on an interest income accrued from the deposit in the cooperative, etc. for the period from January 1, 2007 to December 31, 2018; the tax rate of 5/100 shall apply to such interest income accrued for the period from January 1, 2019 to December 31, 2019, notwithstanding Article 129 of the Income Tax Act; such interest income shall neither be included in the tax base of the global income calculated under Article 14 (2) of the Income Tax Act, nor be subject to individual local income tax under the Local Tax Act. <Amended by Act No. 11133, Dec. 31, 2011; Act No. 11614, Jan. 1, 2013; Act No. 12153, Jan. 1, 2014; Act No. 13560, Dec. 15, 2015>
(2) The tax rate of 9/100 shall apply to the interest income accrued from the deposit in a cooperative, etc. by not later than January 1, 2020, notwithstanding Article 129 of the Income Tax Act; and such income shall neither be included in the tax base of the global income calculated under Article 14 (2) of the same Act, nor be subject to individual local income tax under the Local Tax Act. <Amended by Act No. 11614, Jan. 1, 2013; Act No. 12153, Jan. 1, 2014; Act No. 13560, Dec. 15, 2015>
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]
 Article 90 Deleted. <by Act No. 6045, Dec. 28, 1999>
 Article 90-2 (Penalty Tax on Failure to Submit Tax-favored Data)
(1) Where a person who is obliged to submit tax-favored data or notify data on tax-favored savings under Article 87-5 (5), 87-6 (4), 88-4 (11), 89-2 (1), or 91-6 (4) fails to submit the tax-favored data or to notify the data on tax-favored savings, within the period prescribed in the relevant Article (15 days from the occurrence of the cause of notification, in cases falling under Article 89-2 (1)), or where the tax-favored data or data on tax-favored savings submitted or notified, are found ambiguous on any of the grounds prescribed by Presidential Decree, 2,000 won for each contract or termination, in regard to which such data have not been submitted or notified or have been found ambiguous, shall be added to the amount of tax payable. <Amended by Act No. 10406, Dec. 27, 2010; Act No. 11614, Jan. 1, 2013; Act No. 12853, Dec. 23, 2014>
(2) For the purposes of paragraph (1), a tax amount equivalent to 50/100 of the additional tax imposable shall be reduced where such data are submitted or notified by the end of the month following the month in which the last day of the period for submission of the tax-favored data or notification of the data on tax-favored savings falls.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]
 Article 91 Deleted. <by Act No. 10406, Dec. 27, 2010>
 Article 91-2 (Special Taxation for Collective Investment Schemes)
Where a collective investment scheme (limited to those meeting the requirements prescribed under Article 17 (1) 5 of the Income Tax Act) created under the Financial Investment Services and Capital Markets Act repurchases its collective investment securities (hereafter referred to as "collective investment securities" in this Article) defined in Article 9 (21) of the Financial Investment Services and Capital Markets Act, the transfer of collective investment securities to the collective investment scheme 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]
 Article 91-3 Deleted. <by Act No. 7003, Dec. 30, 2003>
 Article 91-4 Deleted. <by Act No. 11614, Jan. 1, 2013>
 Article 91-5 Deleted. <by Act No. 9921, Jan. 1, 2010>
 Article 91-6 (Special Taxation on Dividend Income from Stocks of Overseas Resources Development Investment Company, etc.)
(1) If the total par value of stocks of an overseas resources development investment company or a specialized overseas resources development investment company established under Article 13 of the Overseas Resources Development Business Act (hereinafter referred to as "overseas resources development investment company, etc.") held by a resident does not exceed 200 million won, the resident needs not add the dividend income that he/she receives from the overseas resources development investment company, etc., for the holding of such stocks on or before December 31, 2016 to the tax base of his/her global income under Article 14 (2) of the Income Tax Act. If the total par value of stocks of an overseas resources development investment company, etc. does not exceed 50 million won in such cases, the tax rate of 9/100 shall apply to the dividend income from the holding of such stocks, notwithstanding Article 129 of the Income Tax Act. <Amended by Act No. 11133, Dec. 31, 2011; Act No. 12853, Dec. 23, 2014>
(2) If the stocks of an overseas resources development investment company, etc. are deposited with an investment trader or an investment broker and the overseas resources development investment company, etc. intends to distribute its dividend income, it shall notify a statement of the non-taxable income and the income subject to separate taxation under paragraph (1), as prepared for each stockholder and each securities company, to the investment trader or the investment broker to which stockholders have entrusted the sale or purchase of the stocks, directly or through the Korea Securities Depository, immediately after passing a resolution on distribution of dividend income and the investment trader or the investment broker shall either levy no tax or withhold tax, as notified.
(3) If the stocks of an overseas resources development investment company, etc. are not deposited with an investment trader or an investment broker, the overseas resources development investment company, etc. shall withhold tax, directly or through its transfer agency, upon classifying each stockholder’s income into non-taxable income and income subject to separate taxation.
(4) If the withholding agent referred to in paragraphs (2) and (3) directly pays the dividend income of an overseas resources development investment company, etc., the withholding agent 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. in the form prescribed by Ordinance of the Ministry of Strategy and Finance by no later than the end of the month immediately following the end of the quarter in which the payment date of the dividend income falls.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]
 Article 91-7 Deleted. <by Act No. 12853, Dec. 23, 2014>
 Article 91-8 Deleted. <by Act No. 10406, Dec. 27, 2010>
 Articles 91-9 through 91-11 Deleted. <by Act No. 12853, Dec. 23, 2014>
 Article 91-12 (Special Taxation on Investment Trusts, etc. for Exclusive Use of Overseas Koreans)
(1) No income tax shall be imposed on the dividend income accruing from the investment of up to 100 million won in each investment trust, etc. for exclusive use of overseas Korean among the dividend income accrued to an overseas Korean prescribed by Presidential Decree having no domestic place of business under Article 120 of the Income Tax Act by no later than December 31, 2012 after opening 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) on or before December 31, 2010, notwithstanding Article 156 (1) 3 of the Income Tax Act, and the tax rate of 5/100 shall be applied to the dividend income accruing from the amount of investment exceeding 100 million won.
(2) Where an account holder of an investment trust, etc. for exclusive use of overseas Koreans sells the investment trust, etc. for exclusive use of overseas Koreans or transfers the right thereto within one year from the date of entering into a contract, the withholding agent shall withhold the tax according to the following, notwithstanding paragraph (1): Provided, That this shall not apply where the account holder dies or other inevitable causes prescribed by Presidential Decree arise:
1. Where the closing date does not come during the period from the date of entering into the contract to the date of sale or stock transfer: Withhold the tax at the tax rate prescribed under Article 156 (1) 3 of the Income Tax Act;
2. Where the closing date falls in the period from the date of entering into the contract to the date of sale or stock transfer, and no tax is imposed on the interest divided on the same closing date under paragraph (1) or taxes are withheld at the tax rate of 5/100: Additionally withhold the difference between the taxes imposed under paragraph (1) and the taxes imposed under Article 156 (1) 3 of the Income Tax Act.
(3) Requirements for 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 prescribed by Presidential Decree.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]
 Article 91-13 Deleted. <by Act No. 12173, Jan. 1, 2014>
 Article 91-14 (Non-Taxation on Asset-Building Savings)
(1) A resident who opens a savings account that fully meets the following conditions (hereafter referred to as "asset-building savings account" in this Article) by not later than December 31, 2015 is exempt from income tax on the interest income and dividend income accrued from the relevant savings account: <Amended by Act No. 12173, Jan. 1, 2014; Act No. 12853, Dec. 23, 2014>
1. As at the time the resident opens an asset-building savings account:
(a) His/her gross wages in the immediately preceding taxable period shall not exceed 50 million won (limited to where such resident either has earned income only, or earned income and global income not added to the tax base of global income, in immediately preceding taxable period);
(b) His/her global income added to the tax base of global income in the immediately preceding taxable period shall not exceed 35 million won (limited to where such resident has earned income or business income in the immediately preceding taxable period), if such resident does not fall under item (a);
2. The type of the savings account shall be an installment savings account offered by financial companies, etc. referred to in 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), which is transacted through a bankbook bearing an indication that it is for the asset-building savings account subject to no income tax;
3. The contract period shall be seven years;
4. 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 resident). In such cases, the quarterly deposit shall be made only in the corresponding quarter, but in cases of insurance or mutual aid, the amount that should have been deposited in the interim may be deposited by no later than two years and two months from the last day of the month in which the date of the last deposit falls.
(2) An holder of an asset-building savings account may renew the maturity of the savings account for up to three years only on one occasion, upon the arrival of the seventh anniversary of the date of opening such asset-building savings account. In such cases, no income tax shall be imposed on the interest income and dividend income accrued from the savings account until the maturity so extended.
(3) Where a resident who has an asset-building savings account withdraws the principal, interest, etc. from the savings account, closes the account, or transfers the account to any third person, earlier than the date classified below, the financial company, etc. that handles such savings account (hereafter referred to as "institution handling savings accounts" in this Article) shall additionally collect the amount by which the income tax on interest income and dividend income was reduced or exempted: Provided, That the same shall not apply where the resident closes his/her savings account due to the account holder's death or emigration abroad or any other ground prescribed by Presidential Decree: <Amended by Act No. 12853, Dec. 23, 2014>
1. In cases of the following residents as at the time of opening an account: The third anniversary of the date of signing the initial contract:
(a) A resident falling under paragraph (1) 1 (a), whose gross wages in the immediately preceding taxable period does not exceed 25 million won;
(b) A resident falling under paragraph (1) 1 (b), whose global income added to the tax base of his/her global income in the immediately preceding taxable period does not exceed 16 million won;
(c) A youth (excluding the residents specified in items (a) and (b)) prescribed by Presidential Decree, among those who work for any enterprise prescribed by Presidential Decree, which is a small or medium enterprise as defined under Article 2 of the Framework Act on Small and Medium Enterprises (including non-profit corporations);
2. In cases of any resident other than those prescribed in subparagraph 1: The seventh anniversary of the date of signing the initial contract.
(4) An institution handling savings accounts shall give written notice to the account holder immediately after collecting the additional tax pursuant to paragraph (3).
(5) An institution handling savings accounts that fails to pay the additional tax computed under paragraph (3) by the prescribed deadline or underpays it, shall pay an additional amount equivalent to 10/100 of the amount of tax unpaid or underpaid to the head of the tax office having jurisdiction over withholding.
(6) The Commissioner of National Tax Service shall verify whether a person who has an asset-building savings account meets either of the conditions provided in under paragraph (1) 1 as at the time of opening such account and notify the institution handling the savings accounts of the findings thereof.
(7) Where an institution handling savings accounts is notified under paragraph (6) that a holder of an asset-building savings account fails to meet either of the conditions provided in under paragraph (1) 1, such asset-building savings account shall be deemed terminated on the date of such notification, and the institution handling savings accounts shall notify the holder of the asset-building savings account of such fact. In such cases, paragraphs (3) through (5) shall not apply.
(8) Procedures for opening the asset-building savings account, the verification and management of persons eligible to open such account, termination of such account, and other necessary matters shall be prescribed by Presidential Decree.
[This Article Newly Inserted by Act No. 11614, Jan. 1, 2013]
 Article 91-15 (Special Taxation for High-Yield, High-Risk Investment Trusts, etc.)
(1) Where a resident opens an account in an investment trust, etc. prescribed by Presidential Decree (hereinafter referred to as "high-yield, high-risk investment trust, etc.") which consists of at least a fixed ratio of the bonds prescribed by Presidential Decree or stock certificates prescribed by Presidential Decree, by not later than December 31, 2017, the resident need not add the interest income or dividend income received from an investment trust, etc. with the amount invested per person, not exceeding 30 million won (referring to the total investment in investment trusts, etc. of all finance companies), to the tax base of his/her global income under Article 14 (2) of the Income Tax Act. <Amended by Act No. 12853, Dec. 23, 2014; Act No. 13560, Dec. 15, 2015; Act No. 14390, Dec. 20, 2016>
(2) Where a non-resident subject to global taxation under Article 121 (2) or (5) of the Income Tax Act, opens an account in a high-yield, high-risk investment trust by not later than December 31, 2014, the non-resident need not add the interest income or dividend income received from an investment trust, etc. with the amount invested per person, not exceeding 50 million won (referring to the total investment in investment trusts, etc. of all finance companies), to the tax base of his/her global income under Article 122 of the Income Tax Act.
(3) The contract term of a high-yield, high-risk investment trust, etc. shall be at least one to three years, and paragraphs (1) and (2) shall not apply to the income accruing after three years from the date of signing the contract.
(4) Paragraphs (1) and (2) shall not apply where a person who has an account in a high-yield, high-risk investment trust, cancels or redeems the high-yield, high-risk investment trust, or transfers his/her right to such trust within one year from the date of signing the contract: Provided, That the same shall not apply where the account holder dies or emigrates or in extenuating circumstances prescribed by Presidential Decree.
(5) Methods for opening an account in a high-yield, high-risk investment trust; methods for calculating the holding ratio; and other necessary matters, shall be prescribed by Presidential Decree.
[This Article Newly Inserted by Act No. 12173, Jan. 1, 2014]
 Article 91-16 (Income Deductions for Long-Term Collective Investment Securities Savings)
(1) Where a resident who has earned income (excluding daily employed workers) opens a savings account which meets each of the following requirements (hereafter referred to as "long-term collective investment securities savings" in this Article) by no later than December 31, 2015, an amount equivalent to 40/100 of the amount paid in each taxable period for ten years from the date of opening the account shall be deducted from the total amount of the earned income in the relevant taxable year (up to the amount of earned income in the relevant taxable year):
1. That the resident shall have gross pay not exceeding 50 million won during the immediately preceding taxable period (limited to where he/she has earned income only, or global income not added to the earned income or tax base of global income, during the immediately preceding taxable period) as at the time he/she opens an account for long-term collective investment securities savings;
2. That the savings are to acquire collective investment securities issued by a collective investment scheme referred to in Article 17 (1) 5 of the Income Tax Act which invests at least 40/100 of its total amount of assets in stocks issued and traded in the Republic of Korea (limited to the stocks listed on a securities market under the Financial Investment Services and Capital Markets Act);
3. That the contract term of the long-term collective investment securities savings shall be at least ten years, and its principal, interest, dividend, stocks or beneficiary securities, etc. shall not be withdrawn within ten years from the opening date of the account for such savings;
4. That it shall be an installment savings deposit with the maximum annual deposit of up to six million won per person (referring to the total amount deposited by the account holder in all long-term collective investment securities savings).
(2) Notwithstanding paragraph (1), where a resident who has an account for long-term collective investment securities savings falls within any of the following cases, no income deduction under paragraph (1) shall be made for the relevant taxable period:
1. Where the resident has earned income only, or global income not added to the earned income or tax base of global income, during the immediately preceding taxable period, and his/her gross pay during the immediately preceding taxable period exceeds 80 million won;
2. Where the resident has no earned income during the relevant taxable period.
(3) Any resident who intends to secure income deductions pursuant to paragraph (1) shall present a payment certificate of long-term collective investment securities savings issued by the financial company dealing in the long-term collective investment securities savings (hereafter referred to as "savings institution" in this Article) wherein the amount of savings deposited in the relevant year is stated, which is necessary to secure the income deductions, to the relevant withholding agent or the head of the tax office having jurisdiction over the place of his/her domicile when he/she makes a year-end settlement of the amount of earned income when he/she makes a year-end settlement of the amount of earned income tax, etc., or files a final return on the tax base of his/her gross income.
(4) Where a person who has an account for long-term collective investment securities savings fully or partially withdraws the principal, interest, dividend, stocks, beneficiary certificates, etc., or terminates or transfers the relevant savings contract to any third person (hereafter referred to as "termination" in this Article) within ten years from the date of opening such account, no income deductions shall be granted under paragraph (1) from the relevant taxable period.
(5) Where a person who has an account for long-term collective investment savings terminates the account within five years from the date of opening such account, the savings institution shall additionally collect an amount computed by multiplying the accumulated total amount paid to the relevant savings account by six percent (hereafter referred to as "additional tax") 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 in which such savings account is terminated: Provided, That the same shall not apply where the savings account is terminated due to account holder's death, emigration to a foreign country or unavoidable circumstances prescribed by Presidential Decree, and where a person who has benefited from income deductions verifies that the amount of tax reduced or exempted based on such income deductions falls short of the additional tax, an amount equivalent to the tax amount actually reduced or exempted shall be collected additionally.
(6) Where a savings institution collects additional tax pursuant to paragraph (5), it shall notify the relevant account holder of the details thereof in writing.
(7) Where a savings institution fails to pay, or underpay, additional tax computed under paragraph (5) by the prescribed deadline, it shall pay an additional amount equivalent to 10/100 of the amount of tax unpaid or underpaid to the head of the tax office having jurisdiction over the withholding.
(8) The Commissioner of National Tax Service shall verify whether a person who opens an account for long-term collective investment securities savings meets the requirements of paragraph (1) 1 as at the time of opening such account, and notify the relevant savings institution of the result thereof.
(9) Where a savings institution is notified, pursuant to paragraph (8), that an account holder of long-term collective investment securities savings fails to meet the requirements of paragraph (1) 1, such long-term collective investment securities savings shall be deemed terminated on the date of receipt of such notification, and the relevant savings institution shall notify the account holder of long-term collective investment securities savings of such fact.
(10) No income deductions under paragraph (1) shall apply to savings, etc. subject to special taxation under this Act, including non-taxation, or subject to Article 20-3 (1) 2 of the Income Tax Act.
(11) Procedures for opening an account for long-term collective investment securities savings, verification and management of persons eligible to open such account, termination of accounts, procedures for income deductions, and other necessary matters shall be prescribed by Presidential Decree.
[This Article Newly Inserted by Act No. 12173, Jan. 1, 2014]
 Article 91-17 (Special Taxation for Collective Investment Schemes Only for Investment in Foreign Stocks)
(1) Where a resident invests in collective investment securities defined under Article 9 (21) of the Financial Investment Services and Capital Markets Act (hereafter referred to as "collective investment securities" in this Article) and issued by a collective investment scheme under Article 17 (1) 5 of the Income Tax Act, which invests at least 60/100 of its total assets in stocks issued and traded overseas (hereafter referred to as "stocks listed on a foreign exchange" in this Article) (hereafter referred to as "collective investment scheme only for investment in foreign stocks" in this Article), by not later than December 31, 2017, the gains or losses on the sale or valuation of the stocks listed on a foreign exchange (including gains and losses on fluctuation of foreign exchanges), acquired by the collective investment scheme only for investment in foreign stocks, either directly or through investment in collective investment securities (including foreign collective investment securities defined under Article 279 (1) of the Financial Investment Services and Capital Markets Act), shall not be included in the dividend income distributed by the collective investment scheme only for investment in foreign stocks until the tenth anniversary of the day the resident opens an account for collective investment securities savings only for investment in foreign stocks, notwithstanding Article 17 (1) 5 of the Income Tax Act, if the following conditions are fully satisfied:
1. The resident shall open an account prescribed by Presidential Decree for collective investment securities savings only for investment in foreign stocks (hereafter referred to as "account for collective investment securities savings only for investment in foreign stocks" in this Article) and shall invest in collective investment securities issued by a collective investment scheme only for investment in foreign stocks through the account for collective investment securities savings only for investment in foreign stocks;
2. The principal deposited by each resident in accounts for collective investment securities savings only for investment in foreign stocks shall not exceed 30 million won (referring to the sum of the amounts deposited in the accounts opened with all financial companies, etc. defined under subparagraph 1 of Article 2 of the Act on Real Name Financial Transactions and Confidentiality for collective investment securities savings only for investment in foreign stocks);
(2) The requirements for collective investment securities savings only for investment in foreign stocks, stocks listed on a foreign exchange, and collective investment schemes only for investment in foreign stocks, and other necessary matters shall be prescribed by Presidential Decree.
[This Article Newly Inserted by Act No. 13560, Dec. 15, 2015]
 Article 91-18 (Special Taxation for Individual Savings Accounts)
(1) Where any of the following residents (limited to persons whose total income, as referred to in Article 14 (3) 6 of the Income Tax Act, for the immediately preceding taxable period, does not exceed 20 million won), opens an account that fully meets the requirements provided under paragraph (3) (hereafter in this Article, referred to as "individual savings account") by not later than December 31, 2018, no income tax shall be levied on up to two million won for the aggregate of interest income and dividend income accruing from the account (hereafter in this Article, referred to as "interest income, etc."); and the tax rate of 9/100 shall apply to the amount exceeding two million won, notwithstanding Article 129 of the Income Tax Act, and such interest income, etc. shall not be added to the tax base of global income defined in Article 14 (2) of the same Act:
1. A person who has business income defined in Article 19 of the Income Tax Act for the immediately preceding taxable period or the relevant taxable period (excluding persons who have non-taxable income only; hereafter in this Article, the same shall apply);
2. A person who has earned income defined in Article 20 of the Income Tax Act for the immediately preceding taxable period or the relevant taxable period (excluding persons who have non-taxable income only; hereafter in this Article, the same shall apply);
3. A farmer or fisherman prescribed by Presidential Decree, among persons not falling under subparagraph 1 or 2.
(2) Where any of the following applies to a resident who has an individual savings account as at the time of opening the individual savings account, no income tax shall be levied on up to 2,500,000 won for the total interest income, etc., notwithstanding paragraph (1); and the tax rate of 9/100 shall apply to the amount exceeding 2,500,000 won, notwithstanding Article 129 of the Income Tax Act, and such interest income, etc. shall not be added to the tax base of global income defined in Article 14 (2) of the same Act:
1. A resident whose gross wages for the immediately preceding taxable period do not exceed 50 million won (limited to persons who have earned income only, or earned income and global income not added to the tax base of global income for the immediately preceding taxable period);
2. A resident whose global income added to the tax base of global income during the immediately preceding taxable period does not exceed 35 million won (limited to persons whose gross wages during the immediately preceding taxable period do not exceed 50 million won).
(3) "Individual savings account" means an account that fully meets the following requirements: <Amended by Act No. 14390, Dec. 20, 2016>
1. A person shall open only one account;
2. The account shall be either a trust account opened as an individual savings account under a specified money trust contract entered into with a trust business entity defined in Article 8 (7) of the Financial Investment Services and Capital Markets Act (hereafter in this Article, referred to as "trust business entity") or any other similar account opened as an individual savings account under a contract entered into with a financial investment business entity defined in Article 8 of the Financial Investment Services and Capital Markets Act, and prescribed by Presidential Decree (hereafter in this Article, referred to as "financial investment business entity");
3. The account shall be operated with the following assets:
(a) Bank deposits, installment bank deposits, deposits, and other similar financial instruments prescribed by Presidential Decree;
(b) Collective investment securities of collective investment schemes defined in Article 17 (1) 5 of the Income Tax Act;
(c) Securities or certificates taxable under Article 17 (1) 9 of the Income Tax Act;
(d) Other assets determined by Presidential Decree;
4. The term of the contract shall be five years;
5. The maximum annual deposit per person shall be 20 million won (in cases of a resident who has an asset-building savings account under Article 91-14 or an account for long-term collective investment securities savings under Article 91-16, the maximum deposit shall be determined by subtracting the aggregate of agreed, annual deposits in the account that the resident has for the asset-building savings or long-term collective investment securities savings from 20 million won per annum).
(4) For the purposes of paragraph (1) or (2), the aggregate of interest income, etc. shall be calculated by subtracting losses incurred to the assets listed under paragraph (3) 3 from the interest income, etc. accruing from the assets listed under paragraph (3) 3 as at the date of expiration of the term of the contract for the individual savings account, the date of termination of the contract, or the date of withdrawal of assets, whichever comes first, by the method prescribed by Presidential Decree.
(5) Notwithstanding Articles 130 and 155-2 of the Income Tax Act, a trust business entity or a financial investment business entity (hereafter in this Article, referred to as "trust business entity, etc."), shall withhold income tax on interest income, etc. on the date of expiration of the term of the contract for an individual savings account, the date of termination of a contract, or the date of withdrawal of assets, whichever comes first. <Amended by Act No. 14390, Dec. 20, 2016>
(6) Where a holder of an individual savings account terminates the contract for the individual savings account (excluding terminating the contract due to extenuating circumstances prescribed by Presidential Decree, such as the account holder's death or emigration) or withdraws assets from the individual savings account prior to the date classified as follows, the relevant trust business entity, etc. shall additionally collect an amount of tax equivalent to the income tax for which special taxation has been granted to the account holder and shall pay the amount to the head of the tax office having jurisdiction over the withholding, by not later than the tenth day of the month immediately following the month in which such assets are withdrawn or the contract is terminated. If the trust business entity, etc. fails to pay such amount by the deadline or underpays, such trust business entity, etc. shall additionally pay the equivalent to 10/100 of the amount of tax unpaid or underpaid: <Amended by Act No. 14390, Dec. 20, 2016>
1. Any of the following residents as at the time of opening an individual savings account: The third anniversary from the date of signing the initial contract:
(a) A youth prescribed by Presidential Decree;
(b) A resident specified in paragraph (2) 1 or 2;
(c) A person who receives a subsidy upon filing an application for support for asset-building under Article 18-4 of the National Basic Living Security Act;
2. A resident, other than those referred to subparagraph 1: The fifth anniversary from the date of signing the initial contract.
(7) Where a trust business entity, etc. collects an additional amount of tax under paragraph (6), it shall give written notice of details thereof immediately to the holder of the relevant individual savings account. <Amended by Act No. 14390, Dec. 20, 2016>
(8) The Commissioner of the National Tax Service shall verify whether each holder of an individual savings account meets the requirements of paragraphs (1) 1 and 2, (2), and (6) 1 (b) as at the time of opening the account and shall notify the relevant trust business entity, etc. of the findings thereof. <Amended by Act No. 14390, Dec. 20, 2016>
(9) If a trust business entity, etc. is notified that a holder of an individual savings account fails to meet the requirements of paragraph (1) 1 and 2 pursuant to paragraph (8), the individual savings account shall be deemed terminated on the date of notice; and the trust business entity, etc. shall notify the holder of the individual savings account thereof. <Amended by Act No. 14390, Dec. 20, 2016>
(10) Procedures for opening an individual savings account; methods for verifying and managing persons eligible to open such account; methods for calculating interest income, etc.; and other necessary matters, shall be prescribed by Presidential Decree.
[This Article Newly Inserted by Act No. 13560, Dec. 15, 2015]
SECTION 10 Special Taxation for Stabilization of National Living
 Article 92 Deleted. <by Act No. 9272, Dec. 26, 2008>
 Article 93 Deleted. <by Act No. 8827, Dec. 31, 2007>
 Article 94 (Tax Credits for Investment in Facilities for Promoting Workers' Welfare)
(1) If a national prescribed by Presidential Decree acquires (including new construction, extension, renovation, or purchase; hereafter in this Article, the same shall apply) any of the following facilities by not later than December 31, 2018, to promote housing stability or other welfare of his/her employees, the national is entitled to a tax credit by the equivalent to 7/100 (or 10/100, if the acquiring person is a small or medium enterprise or if such national acquires any of the facilities specified in subparagraph 1 or 2, which is housing prescribed by Presidential Decree in any area outside the Seoul Metropolitan area or the facilities specified in subparagraph 3) of the acquisition price of the facility (excluding the acquisition price of land appurtenant to such facility) from income tax (limited to income tax on business income) or corporate tax levied for the taxable year in which the date of acquisition falls: <Amended by Act No. 10406, Dec. 27, 2010; Act No. 10789, Jun. 7, 2011; Act No. 11133, Dec. 31, 2011; Act No. 11614, Jan. 1, 2013; Act No. 12853, Dec. 23, 2014; Act No. 13560, Dec. 15, 2015; Act No. 14390, Dec. 20, 2016>
1. National housing to be rented to employees, who are non-homeowners (excluding the executives who are equity investors);
2. A dormitory for employees;
3. A workplace child-care center established under the Infant Care Act;
4. Facilities prescribed by Presidential Decree for promoting the convenience of persons with disabilities, elderly persons, or pregnant women;
5. Facilities prescribed by Presidential Decree for the rest or health training of employees;
6. A medical institution established as an affiliated institution under Article 35 of the Medical Service Act for employees' health care.
(2) Matters necessary for calculating tax credits, where a national acquires both national housing specified in paragraph (1) 1 and other houses, or where the national acquires both a dormitory specified in paragraph (1) 2 and other buildings, shall be prescribed by Presidential Decree.
(3) Any national who intends to be granted a tax credit under paragraph (1), shall file an application therefor, as prescribed by Presidential Decree.
(4) Where a person who had an income tax or corporate tax credit under paragraph (1) or (2), converts the purpose of the assets for any other purpose within five years from the date of completion or purchase of the assets, the person shall pay, as income tax or corporate tax, the amount of the tax credit for the asset plus an additional amount equivalent to the interest calculated as prescribed by Presidential Decree, at the time of filing his/her tax return for the taxable year in which the date of conversion falls; and the amount of tax shall be deemed the amount of tax payable under Article 76 of the Income Tax Act or Article 64 of the Corporate Tax Act. <Amended by Act No. 12853, Dec. 23, 2014>
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]
 Article 95 Deleted. <by Act No. 6538, Dec. 29, 2001>
 Article 95-2 (Tax Credits for Monthly Rents)
(1) Where the head of a household prescribed by Presidential Decree (referring to a member of a household, if the head of the household is ineligible for the tax credit under this paragraph, Article 87 (2) of this Act, or Article 52 (4) or (5) of the Income Tax Act), who does not own a house as at the end of a taxable period, is a worker whose gross wages, as earned income, for the relevant taxable period do not exceed 70 million won (excluding the persons whose global income to be added to the tax base of global income for the relevant taxable period exceeds 60 million won) and pays a monthly rent prescribed by Presidential Decree, an amount equivalent to 10/100 of the monthly rent shall be deducted from the amount of global income tax computed for the relevant taxable period: Provided, That, if such monthly rent exceeds 7,500,000 won, the excess shall be deemed nil.
(2) A tax credit under paragraph (1) shall apply when the relevant resident files an application therefor, as prescribed by Presidential Decree.
(3) The application of a tax credit under paragraph (1), and other necessary matters shall be prescribed by Presidential Decree.
[This Article Newly Inserted by Act No. 12853, Dec. 23, 2014]
 Article 96 (Tax Reduction or Exemption for Small-Housing Rental Business Operators)
(1) Where a national prescribed by Presidential Decree leases at least three units of rental housing prescribed by Presidential Decree (hereafter in this Article, referred to as "rental housing"), the resident is entitled to a tax reduction by the equivalent to 30/100 (or 75/100, in cases of commercial rental housing defined in subparagraph 4 of Article 2 of the Special Act on Private Rental Housing, or quasi-public rental housing defined in subparagraph 5 of Article 2 of the same Act (hereafter in this Article, referred to as "quasi-public rental housing, etc.")) of the income tax or corporate tax on income accruing from the relevant rental business for the taxable years that end as at December 31, 2019. <Amended by Act No. 12853, Dec. 23, 2014; Act No. 13499, Aug. 28, 2015; Act No. 13560, Dec. 15, 2015; Act No. 14390, Dec. 20, 2016>
(2) Where a national granted a reduction of income tax or corporate tax under paragraph (1), fails to lease at least three units of rental housing for at least four years (or eight years, in cases of quasi-public rental housing, etc.), as prescribed by Presidential Decree, the national shall pay the amount of tax reduced, as income tax or corporate tax, at the time of filing his/her tax return for the taxable year in which the relevant ground arises. <Amended by Act No. 12853, Dec. 23, 2014; Act No. 13560, Dec. 15, 2015>
(3) The provisions concerning an additional amount equivalent to interest under Article 33-2 (4), shall apply mutatis mutandis where a national pays the amount of income tax or corporate tax reduced pursuant to paragraph (1) as prescribed in paragraph (2): Provided, That the same shall not apply in extenuating circumstances prescribed by Presidential Decree.
(4) Any person who intends to be granted a reduction of income tax or corporate tax under paragraph (1), shall file an application therefor, as prescribed by Presidential Decree.
(5) For the purposes of paragraphs (1) through (4), the number of rental housing units; filing an application for tax reductions; methods for calculating the interest on the amount of income tax or corporate tax reduced; and other necessary matters, shall be prescribed by Presidential Decree. <Amended by Act No. 12853, Dec. 23, 2014>
[This Article Newly Inserted by Act No. 12173, Jan. 1, 2014]
 Article 97 (Capital Gains Tax Reduction or Exemption for Long-Term Rental Housing Units)
(1) Where a resident prescribed by Presidential Decree transfers any of the following national housing units (including the land appurtenant thereto with an area of not exceeding two times the total floor area of the building thereon) to any third person after leasing it for at least five years since the commencement of leasing on or before December 31, 2000, the resident is entitled to a tax reduction by 50/100 of the capital gains tax on the income that accrues from the transfer of the housing unit (hereinafter referred to as “rental housing unit”): Provided, That a resident is entitled to a full exemption from capital gains tax, if the resident transfers a rental housing unit leased for at least five years, among the built-to-rent housing units under the Special Act on Private Rental Housing or the Special Act on Public Housing; a rental housing unit leased for at least five years after acquiring it on or after January 1, 1995 and leasing it since then (limited to houses that had never been occupied by any person as at the time of acquisition), among buy-to-rent housing units under either of the same Acts; or a rental house unit leased for at least ten years: <Amended by Act No. 13499, Aug. 28, 2015>
1. A house newly built during the period from January 1, 1986 to December 31, 2000;
2. A multi-family housing unit newly built on or before December 31, 1985 that had never been occupied by any person as of January 1, 1986.
(2) For the purposes of Article 89 (1) 3 of the Income Tax Act, a rental housing unit shall not be deemed a house owned by a resident.
(3) Any person who intends to obtain a capital gains tax reduction or exemption as prescribed in paragraph (1) shall file a report on housing lease and file an application therefor, as prescribed by Presidential Decree.
(4) The calculation of the rental period of a rental house unit under paragraph (1) and other necessary matters shall be prescribed by Presidential Decree.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]
 Article 97-2 (Special Taxation for Capital Gains Tax Reduction or Exemption for Newly-Built Rental Housing Units)
(1) Where a resident prescribed by Presidential Decree transfers any of the following national housing units (including the land appurtenant thereto with an area of not exceeding two times the total floor area of the building thereon) to any third person after leasing it for at least five years, the resident is entitled to a full exemption from the capital gains tax on the income accruing from the transfer of the house (hereafter referred to as "newly-built rental housing unit" in this Article): <Amended by Act No. 13499, Aug. 28, 2015>
1. Either of the following built-to-rent housing units under the Special Act on Private Rental Housing or the Special Act on Public Housing:
(a) A house newly built during the period from August 20, 1999 to December 31, 2001;
(b) A multi-unit house newly built on or before August 19, 1999 that has never been occupied by any person as of August 20, 1999;
2. Either of the following rental housing units acquired on or after August 20, 1999 (limited to where a purchase contract was concluded and a down payment was made during the period from August 20, 1999 to December 31, 2001) and leased since then, among buy-to-rental housing units under the Special Act on Private Rental Housing or the Special Act on Public Housing (limited to houses that had never been occupied by any person as at the time of acquisition):
(a) A house newly built during the period from August 20, 1999 to December 31, 2001;
(b) A house falling under subparagraph 1 (b).
(2) Article 97 (2) through (4) shall apply mutatis mutandis to newly-built rental housing unit.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]
 Article 97-3 (Special Taxation for Capital Gains Tax on Quasi-Public Rental Housing, etc.)
(1) Where a resident prescribed by Presidential Decree fully meets the following requirements by registering a corporate rental housing unit defined under subparagraph 4 of Article 2 of the Special Act on Private Rental Housing or a quasi-public rental housing unit defined under subparagraph 5 of Article 2 of the same Act, the deduction rate of 50/100 shall apply to the income that accrues from the transfer of such unit (hereafter referred to as "quasi-public rental housing unit, etc." in this Article), for the purposes of computing a special deduction for long-term holding under Article 95 (1) of the Income Tax Act, notwithstanding Article 95 (2) of the same Act: Provided, That the deduction rate of 70/100 shall apply where the resident transfers the quasi-public rental housing unit, etc. to any third person after leasing it for at least ten consecutive years: <Amended by Act No. 12853, Dec. 23, 2014; Act No. 13499, Aug. 28, 2015; Act No. 13560, Dec. 15, 2015>
1. The resident shall transfer the housing unit after leasing for at least eight consecutive years;
2. The resident shall comply with the requirements, etc. for restrictions on the increase of rental deposits or rents prescribed by Presidential Decree.
(2) Any person who intends to be accorded special tax treatment under paragraph (1) shall file a report on housing lease and an application therefor, as prescribed by Presidential Decree.
(3) The calculation of the rental periods of rental housing units under paragraph (1), and other necessary matters shall be prescribed by Presidential Decree.
[This Article Newly Inserted by Act No. 12173, Jan. 1, 2014]
 Article 97-4 (Special Taxation for Capital Gains Tax on Long-Term Rental Housing Units)
(1) Where a resident or non-resident transfers a housing unit prescribed by Presidential Decree after leasing it for at least six years, among private rental housing units built under subparagraph 2 of Article 2 of the Special Act on Private Rental Housing; private rental housing units purchased under subparagraph 3 of Article 2 of the same Act; public rental housing units built under subparagraph 1-2 of Article 2 of the Special Act on Public Housing; and public rental housing units purchased under subparagraph 1-3 of Article 2 of the Special Act on Public Housing, to any third person, a deduction rate computed by adding the following additional deduction rate applicable depending on the rental period of the relevant housing unit, to the deduction rate applicable to the relevant holding period under Article 95 (2) of the Income Tax Act, shall apply to the income accruing from the transfer of such housing unit, for the purposes of computing a special deduction for long-term holding under Article 95 (1) of the same Act: Provided, That the same shall not apply in cases falling under the proviso to Article 95 (2) of the same Act: <Amended by Act No. 13499, Aug. 28, 2015; Act No. 13560, Dec. 15, 2015>
Rental PeriodsAdditional Deduction Rates
No less than six, but less than seven years2/100
No less than seven, but less than eight years4/100
No less than eight, but less than nine years6/100
No less than nine, but less than ten years8/100
Ten years or more10/100
(2) Any person who intends to be accorded special tax treatment under paragraph (1) shall file a report on housing lease and an application therefor, as prescribed by Presidential Decree.
(3) The calculation of the rental periods of rental housing units under paragraph (1), and other necessary matters shall be prescribed by Presidential Decree.
[This Article Newly Inserted by Act No. 12173, Jan. 1, 2014]
 Article 97-5 (Capital Gains Tax Reductions or Exemptions for Quasi-Public Rental Housing Units, etc.)
(1) Where a resident transfers a corporate rental housing unit defined under subparagraph 4 of Article 2 of the Special Act on Private Rental Housing or a quasi-public rental housing unit defined under subparagraph 5 of Article 2 of the same Act (hereafter referred to as "quasi-public rental housing unit, etc." in this Article), the resident is entitled to a full exemption from the capital gains tax on the income accruing from the transfer during the period of lease, as prescribed by Presidential Decree, if the following conditions are fully met: <Amended by Act No. 13499, Aug. 28, 2015; Act No. 13560, Dec. 15, 2015>
1. The resident shall acquire (including where the purchase agreement is concluded and a down payment is made by not later than December 31, 2017) a private rental housing unit purchased under subparagraph 3 of Article 2 of the Special Act on Private Rental Housing or a public rental housing unit purchased under subparagraph 1-3 of Article 2 of the Special Act on Public Housing by not later than December 31, 2017, and such housing unit shall be registered as a quasi-public rental housing unit, etc. under the Special Act on Private Rental Housing within three months from the date of acquisition;
2. The resident shall transfer a quasi-public rental housing unit, etc. after leasing it as a quasi-public rental housing unit, etc. for at least ten consecutive years after registration;
3. The resident shall comply with the requirements of Article 97-3 (1) 2 during the lease period.
(2) No tax exemption under paragraph (1) shall apply concurrently with the special taxation for capital gains tax on quasi-public rental housing units, etc. under Article 97-3 and the special taxation for capital gains tax on long-term rental housing units under Article 97-4. <Amended by Act No. 13560, Dec. 15, 2015>
(3) Any person who intends to obtain a tax exemption under paragraph (1) shall file a report on housing lease and an application for special taxation, as prescribed by Presidential Decree.
(4) The calculation of the rental periods of rental housing units under paragraph (1) and other necessary matters shall be prescribed by Presidential Decree.
[This Article Newly Inserted by Act No. 12853, Dec. 23, 2014]
 Article 97-6 (Special Taxation, etc. on In-Kind Investors in Real Estate Investment Companies for Rental Housing)
(1) Where a national makes an investment in kind with land or a building as specified in Article 94 (1) 1 of the Income Tax Act, in a real estate investment company for rental housing prescribed by Presidential Decree (hereafter in this Article, referred to as "real estate investment company for rental housing"), by not later than December 31, 2017, the national may defer the payment of capital gains tax or the imposition of corporate tax on the equivalent to the gains accruing from such investment in kind with the land or building, as prescribed by Presidential Decree (limited to the gains accruing from the portion used for rental housing after the investment in kind, as prescribed by Presidential Decree), if the following conditions are fully met:
1. The investment in kind shall be made within one year from the date of business authorization under Article 9 (1) of the Real Estate Investment Company Act (in cases of amended authorization, limited to amended authorization for additional investment in kind after the initial business authorization);
2. The national shall receive stocks in full consideration for the investment in kind.
(2) In any of the following cases, a national subject to paragraph (1) shall pay the amount of capital gains tax deferred within two months (within three months in cases of donation under subparagraph 4; or within six months in cases of inheritance) from the end of the month in which the relevant ground arises, as prescribed by Presidential Decree, if the national is a resident; or shall include the amount granted deferred taxation in gross income, at the time of calculating the amount of income for the business year in which the relevant ground arises, if the national is a domestic corporation: <Amended by Act No. 14390, Dec. 20, 2016>
1. Where the national disposes of all or some of the stocks received in consideration for his/her investment in kind (excluding where the resident donates stocks, or stocks are inherited upon the death of the resident as prescribed in subparagraph 4);
2. Where the real estate investment company for rental housing, which has received an investment in kind, is dissolved under Article 44 of the Real Estate Investment Company Act (Provided, That this shall not apply if such company is dissolved as a consequence of a merger under Article 43 of the Real Estate Investment Company Act, which fully meets the requirements prescribed under Article 44 (2) of the Corporate Tax Act. In such cases, the merging corporation shall be deemed the real estate investment company for rental housing, that has received such investment in kind, for the purposes of this Article);
3. Where the real estate investment company fails to meet the requirements prescribed by Presidential Decree for two consecutive quarters as at the end of each quarter;
4. Where a resident subject to paragraph (1) donates all or some of the stocks received in consideration for investment in kind or where the relevant stocks are inherited upon the death of the resident.
(3) Where a national is required to pay capital gains tax, the payment of which was deferred under paragraph (1), or corporate tax, the imposition of which was deferred, pursuant to paragraph (2) 2 (limited to revocation of business authorization under Article 42 of the Real Estate Investment Company Act) or paragraph (2) 3, the national shall pay the capital gains tax or corporate tax plus an additional amount equivalent to the interest calculated as prescribed by Presidential Decree; and the amount of such tax shall be deemed the amount of tax payable under Article 111 of the Income Tax Act or Article 64 of the Corporate Tax Act.
(4) A person who intends to be accorded special tax treatment under paragraph (1), shall file an application therefor, as prescribed by Presidential Decree.
(5) A real estate investment company for rental housing that receives an investment in kind made under paragraph (1), shall submit documents necessary for special taxation for investors in kind in the real estate investment company for rental housing, as prescribed by Presidential Decree.
(6) For the purposes of paragraphs (1) through (3), methods for paying capital gains tax or corporate tax, the payment or imposition of which is deferred, and other necessary matters, shall be prescribed by Presidential Decree.
[This Article Newly Inserted by Act No. 12853, Dec. 23, 2014]
 Article 97-7 (Special Taxation on Land Transferred to Commercial Rental Business Operators)
(1) Where a resident transfers his/her land to a commercial rental housing business operator defined in subparagraph 8 of Article 2 of the Special Act on Private Rental Housing (hereafter in this Article, referred to as “commercial rental housing business operator”), by not later than December 31, 2018, the resident is entitled to a tax reduction by an amount of tax equivalent to 10/100 of the capital gains tax on income accruing from the transfer of his/her land.
(2) A person who intends to be granted a tax reduction under paragraph (1), shall file an application therefor with the head of the tax office having jurisdiction over the place of tax payment, as prescribed by Presidential Decree.
(3) In any of the following cases, a commercial rental housing business operator shall pay the equivalent to the amount of tax reduced under paragraph (1), as income tax or corporate tax, when filing its tax return for the taxable year in which the relevant ground arises: <Amended by Act No. 13805, Jan. 19, 2016>
1. Where the commercial rental housing business operator is designated as the implementer of a corporate rental housing project under Article 23 of the Special Act on Private Rental Housing: If the relevant land has not been designated as a supply promotion district under Article 22 of the Special Act on Private Rental Housing within the period prescribed by Presidential Decree from the date of transfer of the land, or has been designated as a supply promotion district, but the project implementer fails to build and acquire commercial rental housing units on at least 50/100 of the area to be supplied in return for consideration in the supply promotion district within the period prescribed by Presidential Decree from the date of designation as the supply promotion district;
2. Where the commercial rental housing business operator is not a person specified in subparagraph 1: If the project implementer fails to obtain approval of a project plan under Article 15 of the Housing Act or a building permit under Article 11 of the Building Act (hereafter in this Article, referred to as "approval of a project plan, etc.") for the construction of commercial rental housing units within the period prescribed by Presidential Decree from the date of transfer of the land, or has obtained approval of a project plan, etc., but the ratio of the gross floor area of commercial rental housing units to the gross floor area of all buildings on the project site does not exceed 50/100 within the period prescribed by Presidential Decree from the date of approval of the project plan.
(4) The provisions concerning an additional amount equivalent to interest under Article 33-2 (4), shall apply mutatis mutandis, where a person pays an amount of tax reduced under paragraph (1) as prescribed in paragraph (3).
(5) Calculation of an amount of capital gains eligible for reductions under paragraph (1), and other necessary matters, shall be prescribed by Presidential Decree.
[This Article Newly Inserted by Act No. 13560, Dec. 15, 2015]
 Article 97-8 (Special Taxation on In-Kind Investors in Publicly-Offering Real Estate Investment Companies)
(1) Where a domestic corporation transfers, as an investment in kind, a parcel of land or a building referred to in Article 94 (1) 1 of the Income Tax Act, to a publicly-offering real estate investment company under Article 49-3 (1) of the Real Estate Investment Company Act (hereafter in this Article, referred to as "publicly-offering real estate investment company") within one year from the date of business authorization under Article 9 (1) of the same Act (limited to amended authorization due to an additional investment in kind after the initial business authorization, in cases of amended authorization), the domestic corporation may be granted deferred taxation until it disposes of the stocks acquired in consideration for the investment in kind by including the equivalent to capital gains from the investment in kind made until December 31, 2019 in its deductible expenses, at the time of calculating the amount of its income for the relevant business year, as prescribed by Presidential Decree.
(2) In any of the following cases, a domestic corporation subject to paragraph (1) shall include the amount of tax deferred in its gross income, at the time of calculating the amount of its income for the business year in which the relevant ground arises, as prescribed by Presidential Decree:
1. Where the domestic corporation disposes of the stocks received in consideration for its investment in kind;
2. Where the publicly-offering real estate investment company that has received an investment in kind, is dissolved under Article 44 of the Real Estate Investment Company Act: Provided, That this shall not apply if such company is dissolved as a consequence of a merger under Article 43 of the Real Estate Investment Company Act, which fully meets the requirements prescribed under Article 44 (2) of the Corporate Tax Act; and the merging corporation shall be deemed the publicly-offering real estate investment company, that has received an investment in kind under paragraph (1), for the purposes of this Article.
(3) Where a domestic corporation is required to pay the amount of corporate tax granted deferred taxation under paragraph (1) as prescribed in paragraph (2) 2 (limited to dissolution due to cancelling business authorization under Article 42 of the Real Estate Investment Company Act), the domestic corporation shall pay the corporate tax plus an additional amount equivalent to interest calculated as prescribed by Presidential Decree; and such amount of tax shall be deemed the amount of tax payable under Article 64 of the Corporate Tax Act.
(4) A domestic corporation that intends to be accorded special tax treatment under paragraph (1), shall file an application therefor, as prescribed by Presidential Decree.
(5) A publicly-offering real estate investment company that has receives an investment in kind under paragraph (1), shall submit documents necessary for giving special tax treatment to in-kind investors in the publicly offering real estate investment company, as prescribed by Presidential Decree.
(6) For the purpose of paragraphs (1) through (5), methods for including capital gains granted deferred taxation in gross income, and other necessary matters, shall be prescribed by Presidential Decree.
[This Article Newly Inserted by Act No. 14390, Dec. 20, 2016]
 Article 98 (Special Taxation for Unsold Housing Units)
(1) Where a resident acquired an unsold national housing unit prescribed by Presidential Decree (hereafter in this Article referred to as "unsold housing unit"), during the period from November 1, 1995 to December 31, 1997 (including where a purchase contract was concluded and a down payment was made no later than December 31, 1997), and transfers it after holding and renting it for at least five years, he/she may select one of the following methods for any income accruing from the transfer of the unsold housing unit:
1. 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 same Act;
2. 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, 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 the relevant housing unit.
(2) In applying paragraph (1), matters necessary for the special taxation on unsold housing unit, such as whether the relevant housing unit falls under any item of Article 89 (1) 3 of the Income Tax Act, or how to file an application for special taxation, shall be prescribed by Presidential Decree. <Amended by Act No. 12173, Jan. 1, 2014>
(3) Where a resident acquired an unsold national housing unit prescribed by Presidential Decree, during the period from March 1, 1998 to December 31, 1998 (including where a purchase contract was concluded and a down payment was made no later than December 31, 1998), and transfers it after holding and renting it for at least five years, paragraph (1) shall apply mutatis mutandis to any income accruing from the transfer of the relevant housing unit.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]
 Article 98-2 (Special Taxation on Capital Gains Tax for Acquisition of Unsold Local Housing Units)
(1) Notwithstanding the main body of Article 95 (2) of the Income Tax Act and Article 104 (1) 3 of the same Act, the following shall apply to the special deduction for long-term holding and tax rate for the income accruing from the transfer of an unsold housing unit prescribed by Presidential Decree and located outside the Seoul Metropolitan area (hereafter referred to as "unsold local housing unit" in this Article), acquired (including where a purchase contract was concluded and a down payment was made by December 31, 2010) by a resident for the period from November 3, 2008 to December 31, 2010: <Amended by Act No. 12173, Jan. 1, 2014>
1. Special deduction for long-term holding: An amount computed by multiplying the gains from transfer by the deduction rate by holding period classified in Table 2 of Article 95 (2) of the Income tax Act;
2. Tax rate: A tax rate prescribed 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 unsold local housing units: Provided, That this shall not apply to unregistered transfer.
(3) The amount of global income tax on the income accrued to a resident realtor from the transfer of local unsold housing units shall be calculated under Article 55 (1) of the Income Tax Act, notwithstanding Article 64 (1) of the same Act.
(4) When Article 89 (1) 3 of the Income Tax Act is applied, an unsold local housing unit subject to paragraph (1) shall not be deemed a housing unit owned by the relevant resident. <Amended by Act No. 12173, Jan. 1, 2014>
(5) How to file a final return on the tax base, and other necessary matters when applying paragraphs (1) through (4) shall be prescribed by Presidential Decree.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]
 Article 98-3 (Special Taxation for Capital Gains Tax on Purchasers of Unsold Housing Units)
(1) Where a resident or a non-resident having no place of business in the Republic of Korea, as referred to in Article 120 of the Income Tax Act, purchased an unsold housing unit prescribed by Presidential Decree (hereafter in this Article, referred to as "unsold housing unit") located outside Seoul Special Metropolitan City (excluding the designated areas under Article 104-2 of the Income Tax Act) (including where a purchase contract was concluded and a down payment was made by no later than February 11, 2010) by first contracting to purchase the same with the relevant project operator supplying housing units pursuant to Article 54 of the Housing Act (including the relevant housing builder if less than 20 housing units are supplied) during the following applicable period, the resident or the non-resident is entitled to a full exemption (or 60/100 in cases of the over-concentration control region of the Seoul Metropolitan area) from the tax on capital gains from transfer of such housing unit if he/she transfers the housing unit within five years from the date of purchase; and to deduct the amount of capital gains accruing for five years since the date of purchase (or the equivalent to 60/100 of the amount of capital gains in cases of the over-concentration control region of the Seoul Metropolitan area), from the amount of income subject to capital gains tax on that housing unit, if he/she transfers the housing unit five years after the date of purchase. In such cases, the deductible amount that exceeds the amount of the income subject to capital gains tax, shall be deemed nil: <Amended by Act No. 13805, Jan. 19, 2016>
1. In cases of residents: The period between February 12, 2009 and February 11, 2010;
2. In cases of non-residents: The period between March 16, 2009 and February 11, 2010.
(2) For the purposes of paragraph (1), an unsold housing unit shall include a house a person builds upon starting its construction during the period between February 12, 2009 and February 11, 2010 (where the date of commencement is uncertain, it shall be based on the date an application for commencement is submitted), and for which he/she has obtained approval for use or inspection for use (including approval for temporary use): Provided, That the same shall not apply to the following houses:
1. A house acquired by a member of a rearrangement project association conducting a housing redevelopment project or housing reconstruction project under the Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents according to the relevant management and disposal plan;
2. A house demolished and then reconstructed after being lost by fire, collapsing, being worn-out, etc. while occupied or owned.
(3) For the purposes of Article 89 (1) 3 of the Income Tax Act, no housing unit subject to paragraphs (1) and (2) shall be deemed a housing unit owned by a resident. <Amended by Act No. 12173, Jan. 1, 2014>
(4) Notwithstanding Articles 95 (2) and 104 (1) 3 of the Income Tax Act, the following long-term holding special deduction and tax rate shall apply to gains on transfer of a housing unit subject to paragraphs (1) and (2): <Amended by Act No. 12173, Jan. 1, 2014>
1. The long-term holding special deduction: An amount calculated by multiplying the gains on transfer by the deduction rate by holding period classified in Table 1 of Article 95 (2) of the Income Tax Act (or Table 2 in cases falling under the proviso to paragraph (2) of the same Article);
2. The tax rate: A tax rate prescribed under Article 104 (1) 1 of the Income tax Act.
(5) For the purposes of paragraphs (1) and (2), methods for calculating the amount of capital gains accruing from the transfer of an unsold housing unit within five years since the date of purchase, and other necessary matters, shall be prescribed by Presidential Decree.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]
 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]
 Article 98-5 (Special Taxation for Capital Gains Tax on Purchasers of Unsold Housing Units Located outside Seoul Metropolitan Area)
(1) Where a resident or a non-resident having no place of business in the Republic of Korea, as referred to in Article 120 of the Income Tax Act, purchased an unsold housing unit prescribed by Presidential Decree (hereafter in this Article, referred to as "unsold housing unit") located outside the Seoul Metropolitan area as at February 11, 2010 (including where a purchase contract was concluded and a down payment was made by no later than April 30, 2011) by first contracting to purchase the same with the relevant project operator, etc. supplying housing units pursuant to Article 54 of the Housing Act by no later than April 30, 2011, the resident or the non-resident is entitled to a tax reduction by an amount calculated by multiplying the tax on capital gains from transfer of such housing unit by the following reduction rate based on the discount rate of the selling price (referring to the selling price publicly announced in the invitation to purchasers under the Housing Act; hereafter in this Article, the same shall apply) from capital gains tax, if he/she transfers the housing unit within five years from the date of purchase; and to deduct an amount calculated by multiplying the amount of capital gains accruing for five years from the date of purchase of such housing unit by the following reduction rate based on the discount rate of the selling price, from the amount of income subject to capital gains tax on the relevant housing unit, if he/she transfers it five years after the date of purchase. In such cases, the deductible amount that exceeds the amount of income subject to capital gains tax, shall be deemed nil: <Amended by Act No. 13805, Jan. 19, 2016>
1. Where the discount rate of the selling price does not exceed 10/100: 60/100;
2. Where the discount rate of the selling price is between 10/100 and 20/100: 80/100;
3. Where the discount rate of the selling price exceeds 20/100: 100/100.
(2) For the purposes of Article 89 (1) 3 of the Income Tax Act, no unsold housing unit subject to paragraph (1) shall be deemed a housing unit owned by a resident. <Amended by Act No. 12173, Jan. 1, 2014>
(3) Notwithstanding Articles 95 (2) and 104 (1) 3 of the Income Tax Act, the following long-term holding special deduction and tax rate shall apply to gains on transfer of an unsold housing unit subject to paragraph (1): <Amended by Act No. 12173, Jan. 1, 2014>
1. The long-term holding special deduction: An amount calculated by multiplying the gains on transfer by the deduction rate by holding period classified in Table 1 of Article 95 (2) of the Income Tax Act (or Table 2 in cases falling under the proviso to the same paragraph);
2. The tax rate: Tax rate prescribed under Article 104 (1) 1 of the Income Tax Act.
(4) For the purposes of paragraph (1), methods for calculating the capital gains accruing for five years from the date an unsold housing unit is purchased; methods for calculating the discount rate of the selling price; and other necessary matters, shall be prescribed by Presidential Decree.
[This Article Newly Inserted by Act No. 10285, May 14, 2010]
 Article 98-6 (Special Taxation for Capital Gains Tax on Purchasers of Completed but Unsold Housing Units)
(1) Where a resident or a non-resident having no place of business in the Republic of Korea, as referred to in Article 120 of the Income Tax Act (hereafter in this Article, referred to as "non-resident"), transfers any of the following housing units, the resident or the non-resident is entitled to a tax reduction by the equivalent to 50/100 of the tax on capital gains accruing from the transfer of the housing unit (limited to the housing units that meet the conditions prescribed in subparagraph 1), if he/she transfers such housing unit within five years from the date of purchase; and to deduct the equivalent to 50/100 of the capital gains accruing for five years from the date of purchase of the housing unit, from the amount of income subject to capital gains tax on that housing unit, if he/she transfers such housing unit five years after the date of purchase. In such cases, the deductible amount that exceeds the amount of income subject to capital gains tax, shall be deemed nil: <Amended by Act No. 13499, Aug. 28, 2015; Act No. 13805, Jan. 19, 2016>
1. A completed but unsold housing unit prescribed by Presidential Decree (hereafter in this Article, referred to as "completed but unsold housing unit"), which a project entity supplying housing units pursuant to Article 54 of the Housing Act or any other project implementer prescribed by Presidential Decree (hereafter in this Article, referred to as "project entity, etc."), has leased for at least two years by contracting to lease, by not later than December 31, 2011, and is purchased by a resident or a non-resident upon first contracting to purchase the same with the relevant project entity, etc.;
2. A completed but unsold housing unit, purchased by a resident or a non-resident by first contracting to purchase the same with the relevant project entity, etc. and leasing for at least five years (limited to where a resident or a non-resident contracts to lease, by not later than December 31, 2011, upon completing business registration under Article 168 of the Income Tax Act and being registered as a rental business operator under Article 5 of the Special Act on Private Rental Housing).
(2) For the purposes of Article 89 (1) 3 of the Income Tax Act, no housing unit subject to paragraph (1) shall be deemed a housing unit owned by a resident. <Amended by Act No. 12173, Jan. 1, 2014>
(3) Notwithstanding Articles 95 (2) and 104 (1) 3 of the Income Tax Act, the following long-term holding special deduction and tax rate shall apply to gains on transfer of a housing unit subject to paragraph (1): <Amended by Act No. 12173, Jan. 1, 2014>
1. The long-term holding special deduction: An amount calculated by multiplying the gains on transfer by the deduction rate by holding period classified in Table 1 of Article 95 (2) of the Income Tax Act (or Table 2 in cases falling under the proviso to the same paragraph);
2. The tax rate: Tax rate prescribed under Article 104 (1) 1 of the Income Tax Act.
(4) For the purposes of paragraph (1), methods for calculating the amount of capital gains; procedures for verifying completed but unsold housing units and the lease period of such housing units; and other necessary matters, shall be prescribed by Presidential Decree.
[This Article Newly Inserted by Act No. 10631, May 19, 2011]
 Article 98-7 (Special Taxation for Capital Gains Tax on Purchasers of Unsold Housing Units)
(1) Where a national first contracts to purchase an unsold housing unit prescribed by Presidential Decree as at September 24, 2012, at a purchase price not exceeding 900 million won (hereafter in this Article, referred to "unsold housing unit"), with the relevant project entity supplying housing units under Article 54 of the Housing Act or any other project implementer prescribed by Presidential Decree (limited to where a down payment is made) or purchases an unsold housing unit through such contract during the period between September 24, 2012 and December 31, 2012, the national is entitled to a full exemption from the tax on capital gains accruing from the transfer of the housing unit, if he/she transfer it within five years from the date of purchase; and to deduct the amount of capital gains accruing for five years since the date of purchase of such housing unit, from the amount of income subject to capital gains tax on such housing, if he/she transfers it five years after the date of purchase. In such cases, the deductible amount that exceeds the income subject to capital gains tax, shall be deemed nil. <Amended by Act No. 13805, Jan. 19, 2016>
(2) For the purposes of Article 89 (1) 3 of the Income Tax Act, no unsold housing unit subject to paragraph (1) shall be deemed a housing unit owned by a resident. <Amended by Act No. 12173, Jan. 1, 2014>
(3) For the purposes of paragraph (1), methods for calculating the amount of capital gains accruing for five years from the date an unsold housing unit is purchased, and other necessary matters, shall be prescribed by Presidential Decree.
[This Article Newly Inserted by Act No. 11486, Oct. 2, 2012]
 Article 98-8 (Special Taxation for Capital Gains Tax on Purchasers of Completed but Unsold Housing Units)
(1) Where a resident first contracts to purchase a completed but unsold housing unit prescribed by Presidential Decree with the gross total floor area (or an area for exclusive use, in cases of multi-family housing) not exceeding 135 square meters at an purchase price not exceeding 600 million won as at the time of purchase, with a person prescribed by Presidential Decree, such as a project entity supplying housing units under Article 54 of the Housing Act, during the period between January 1, 2015 and December 31, 2015, and transfers the housing unit after having leased it for at least five years (limited to where a resident contracts to lease, by no later than December 31, 2015, after completing business registration under Article 168 of the Income Tax Act and being registered as a rental business operator under Article 5 of the Special Act on Private Rental Housing), the resident is entitled to deduct the equivalent to 50/100 of the capital gains accruing for five years from the date the housing unit is purchased, from the income subject to capital gains tax on the housing unit. In such cases, the deductible amount that exceeds the income subject to capital gains tax, shall be deemed nil. <Amended by Act No. 13499, Aug. 28, 2015; Act No. 13805, Jan. 19, 2016>
(2) For the purposes of Article 89 (1) 3 of the Income Tax Act, no housing unit subject to paragraph (1) shall be deemed a housing unit owned by a resident.
(3) For the purposes of paragraph (1), methods for calculating the capital gains accruing for five years from the date a housing unit is purchased; procedures for verifying a completed but unsold housing unit and the lease period of a housing unit; and other necessary matters, shall be prescribed by Presidential Decree.
[This Article Newly Inserted by Act No. 12853, Dec. 23, 2014]
 Article 99 (Capital Gains Tax Reduction or Exemption for Purchasers of Newly-Built Houses)
(1) Where a resident (excluding housing developers) transfers any of the following newly-built houses (including the land appurtenant thereto with an area of not exceeding two times the total floor area of the relevant building; the same shall apply hereafter in this Article) within five years from the date of acquisition, the resident is entitled to deduction of the amount of capital gains accruing from the date of acquisition of the newly-built house to the date of transfer from the amount of income subject to capital gains tax, and entitled to deduction of the amount of capital gains accruing for five years from the date of acquisition of the newly-built house from the amount of taxable income subject to capital gains tax, if such resident transfers the newly-built house to any third person after the lapse of five years from the date of acquisition of the newly-built house: Provided, That this shall not apply where such newly-built house is a high-priced house that is not exempt from capital gains tax under Article 89 (1) 3 of the Income Tax Act: <Amended by Act No. 13560, Dec. 15, 2015>
1. A house constructed by the resident (including any house acquired by a member through a housing cooperative established under the Housing Act, or a cooperative for maintenance and improvement projects established under the Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents), and the approval for use or inspection for use of which (including approval for temporary use) was granted during the period from May 22, 1998 to June 30, 1999 (or from May 22, 1998 to December 31, 1999 in cases of national housing units; hereafter in this Article referred to as "period for acquisition of a newly-built house");
2. A house acquired from a housing developer by a person who first concludes a sales contract and makes a down payment within the period for acquisition of a newly-built house (including a house prescribed by Presidential Decree that has been acquired through a housing cooperative established under the Housing Act, or a cooperative for maintenance and improvement projects established under the Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents): Provided, That excluded herefrom is a house that has been occupied by any person as at the date of a sales contract, or a house eligible under circumstances prescribed by Presidential Decree during the period for acquisition of a newly-built house.
(2) For the purposes of Article 89 (1) 3 of the Income Tax Act, no newly-built house subject to paragraph (1) shall be deemed a house owned by a resident only where the resident holding the newly-built house and any other house transfers the other by not later than December 31, 2007.
(3) Any person who intends to obtain a tax reduction or exemption under paragraph (1) shall file an application therefor, as prescribed by Presidential Decree.
(4) How to calculate the capital gains to be deducted from an amount of taxable income subject to capital gains tax under paragraph (1), and other necessary matters shall be prescribed by Presidential Decree. <Amended by Act No. 13560, Dec. 15, 2015>
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]
 Article 99-2 (Special Taxation for Capital Gains on Purchasers of Newly-Built Houses, etc.)
(1) Where a resident or a non-resident purchases a newly-built house or an unsold housing unit prescribed by Presidential Decree or a house classified as one house for one household, at a purchase price not exceeding 600 million won, or with the gross floor area (or the area for exclusive use, in cases of multi-family housing) not exceeding 85 square meters, by first contracting to purchase the same with a project entity, etc. supplying housing units under Article 54 of the Housing Act during the period between April 1, 2013 and December 31, 2013, or any other person prescribed by Presidential Decree (including where a down payment is made by December 31, 2013 after contracting to purchase the same), the resident or the non-resident is entitled to a full exemption from tax on capital gains from the transfer of the house or housing unit, if he/she transfers it within five years from the date of purchase; and to deduct the amount of capital gains accruing for five years from the date of purchase, from the amount of income subject to capital gains tax on such house or housing unit, if he/she transfers it five years after the date of purchase. In such cases, the deductible amount that exceeds the amount of income subject to capital gains tax, shall be deemed nil. <Amended by Act No. 13805, Jan. 19, 2016>
(2) For the purposes of Article 89 (1) 3 of the Income Tax Act, no house or housing unit subject to paragraph (1) shall be deemed a house or housing unit owned by a resident. <Amended by Act No. 12173, Jan. 1, 2014>
(3) Paragraph (1) shall not apply to any area prescribed by Presidential Decree wherein the price of real estate has risen or is likely to rise sharply, in light of the inflation of the national consumer prices and of the national trade prices of housing.
(4) Capital gains tax reductions or exemptions under paragraph (1) shall be granted only where a resident or a non-resident submits to the head of the tax office having jurisdiction over the place of tax payment, documents verifying that the relevant house or housing unit is eligible for reductions or exemptions under paragraph (1), as prescribed by Presidential Decree. <Amended by Act No. 12173, Jan. 1, 2014>
(5) For the purposes of paragraph (1), methods for calculating the amount of capital gains accruing for five years from the date a house or housing unit is purchased, and other necessary matters, shall be prescribed by Presidential Decree.
[This Article Newly Inserted by Act No. 11759, May 10, 2013]
 Article 99-3 (Special Taxation for Capital Gains Tax on Purchasers of Newly-Built Houses)
(1) Where a resident (excluding housing developers) transfers any of the following newly-built houses (including the land appurtenant thereto with an area of not exceeding two times the total floor area of the relevant house; the same shall apply hereafter in this Article) in any area, other than the areas prescribed by Presidential Decree where the price of real estate rises or is likely rise sharply, in view of the inflation of national consumer prices and of national sales prices of houses, within five years from the date of acquisition, the resident is entitled to deduction of the amount of capital gains accruing from the date of acquisition of the newly-built house to the date of transfer, from the amount of taxable income subject to capital gains tax, and entitled to deduction of the amount of capital gains accruing for five years from the date of acquisition of the newly-built house, from the amount of taxable income subject to capital gains tax, if such resident transfers the newly-built house to any third person after the lapse of five years from the date of acquisition of the newly-built house: Provided, That this shall not apply where such newly-built house is a high-priced house that is not exempt from capital gains tax under Article 89 (1) 3 of the Income Tax Act: <Amended by Act No. 13560, Dec. 15, 2015>
1. A newly-built house acquired from a housing developer: A newly-built house acquired by a person who first concluded a sales contract with a housing developer and made a down payment (including a house prescribed by Presidential Decree that is acquired through a housing cooperative established under the Housing Act, or a cooperative for maintenance and improvement projects established under the Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents) during the period from May 23, 2001 to June 30, 2003 (hereafter in this Article referred to as "period for acquisition of a newly-built house"): Provided, That excluded herefrom is a house that has been occupied by any person as at the date of the sales contract, or a hours eligible under circumstances prescribed by Presidential Decree during the period for acquisition of a newly-built house;
2. A newly-built house constructed by the resident (including a house acquired, through a housing cooperative established under the Housing Act, or a cooperative for maintenance and improvement projects established under the Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents, by its member prescribed by Presidential Decree): A newly-built house, the approval for use or inspection for use (including the approval for temporary use) of which has been granted during the period for acquisition of a newly-built house.
(2) For the purposes of Article 89 (1) 3 of the Income Tax Act, no newly-built house subject to paragraph (1) shall be deemed a house owned by a resident only where the resident holding the newly-built house and any other house transfers the other house by not later than December 31, 2007.
(3) A person who intends to obtain a tax reduction or exemption under paragraph (1) shall file an application therefor, as prescribed by Presidential Decree.
(4) How to calculate the capital gains to be deducted from an amount of taxable income subject to capital gains tax under paragraph (1), and other necessary matters shall be prescribed by Presidential Decree. <Amended by Act No. 13560, Dec. 15, 2015>
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]
 Article 99-4 (Special Taxation for Capital Gains Tax on Purchasers of Houses, etc. in Agricultural or Fishing Villages)
(1) Where one household prescribed by Presidential Decree, consisting of a resident and his/her spouse (hereafter in this Article, referred to as "one household"), purchases (including acquisition by directly building a house) any of the following houses (hereafter in this Article, referred to as "house in an agricultural or fishing village") during the period between August 1, 2003 (or January 1, 2009 for a house in one's hometown) and December 31, 2017 (hereafter in this Article, referred to as "period for purchase of a house, etc. in an agricultural or fishing village"); owns it for at least three years; and subsequently transfers another house that the same household owns before acquiring the house in an agricultural or fishing village (hereafter in this Article, referred to as "ordinary house"), the house in an agricultural or fishing village shall not be deemed a house owned by such household for the purposes of Article 89 (1) 3 of the Income Tax Act: <Amended by Act No. 9921, Jan. 1, 2010; Act No. 10653, May 19, 2011; Act No. 11133, Dec. 31, 2011; Act No. 12173, Jan. 1, 2014; Act No. 12853, Dec. 23, 2014; Act No. 13560, Dec. 15, 2015; Act No. 13797, Jan. 19, 2016; Act No. 14390, Dec. 20, 2016>
1. A house fully satisfying the following requirements (hereafter in this Article, referred to as “house in an agricultural or fishing village”):
(a) The house shall be located, at the time of purchase, in an Eup/Myeon defined under Article 3 (3) and (4) of the Local Autonomy Act, or a Dong prescribed by Presidential Decree in consideration of population, etc., except the following areas:
(i) Seoul Metropolitan area: Provided, That excluded herefrom are areas prescribed by Presidential Decree, in consideration of the trends of real estate prices, among border areas defined in Article 2 of the Special Act on Support for Border Area;
(iii) A designated area under Article 104-2 (1) of the Income Tax Act;
(v) Other areas prescribed by Presidential Decree, such as tourist complexes as it is deemed necessary to stabilize the price of real estate therein;
(b) Its plottage does not exceed 660 square meters;
(c) The total price (referring to the standard market price under Article 99 of the Income Tax Act) of a house and appurtenant land, shall not exceed 200 million won (or 400 million won in cases of a traditional Korean-style house prescribed by Presidential Decree) as at the time of purchase of the house;
2. A house fully satisfying the following requirements (hereafter in this Article, referred to as "house in one’s hometown"):
(a) The house shall be located in one's hometown prescribed by Presidential Decree;
(b) The house shall be located in a Si area prescribed by Presidential Decree in consideration of population, etc. as at the time of purchase, except the following areas:
(i) Seoul Metropolitan area;
(ii) A designated area under Article 104-2 (1) of the Income Tax Act;
(iii) Other areas prescribed by Presidential Decree, such as tourist complexes as it is deemed necessary to stabilize the price of real estate therein;
(c) Its plottage shall not exceed 660 square meters;
(d) The total price (referring to the standard market price under Article 99 of the Income Tax Act) of a house and appurtenant land, shall not exceed 200 million won (or 400 million won in cases of a traditional Korean-style house prescribed by Presidential Decree) as at the time of purchase of the house.
(2) Deleted. <by Act No. 8827, Dec. 31, 2007>
(3) Paragraph (1) shall not apply where the house that one household purchases in an agricultural or fishing village is located in the Eup/Myeon where the ordinary house owned by the household is located or in an adjacent Eup/Myeon, in terms of administrative districts, or where the house that one household purchases in one's hometown is located in the Si where the ordinary house owned by the household is located or in an adjacent Si, in terms of administrative districts. <Amended by Act No. 9921, Jan. 1, 2010; Act No. 12853, Dec. 23, 2014>
(4) Paragraph (1) shall also apply even if a household transfers the ordinary house before it satisfies the requirement that it shall own a house, etc. in an agricultural or fishing village for at least three years as prescribed in paragraph (1). <Amended by Act No. 9921, Jan. 1, 2010>
(5) Where a household accorded special tax treatment for capital gains tax under paragraph (4), fails to own a house, etc. in an agricultural or fishing village for at least three years, the amount of tax calculated as prescribed by Presidential Decree for computing the amount of tax the household would have paid if it had not been accorded such special tax treatment, shall be paid as capital gains tax, within two months from the end of the month in which the household ceases to own the house: Provided, That the same shall not apply in extenuating circumstances prescribed by Presidential Decree, such as expropriation under the Act on Acquisition of and Compensation for Land, etc. for Public Works Projects. <Amended by Act No. 9921, Jan. 1, 2010; Act No. 12853, Dec. 23, 2014>
(6) Any person who intends to be accorded special tax treatment under paragraphs (1) and (4), shall file an application therefor, as prescribed by Presidential Decree. <Amended by Act No. 9921, Jan. 1, 2010>
(7) Methods for calculating the plottage and purchase price of a house, etc. in an agricultural or fishing village; methods for calculating the holding period of such house, etc.; criteria for determining whether a house meets requirements for a house, etc. in an agricultural or fishing village; and other necessary matters, shall be prescribed by Presidential Decree. <Amended by Act No. 9921, Jan. 1, 2010>
[This Article Newly Inserted by Act No. 7003, Dec. 30, 2003]
 Article 99-5 (Special Cases concerning Extinction of Small Private Enterprises’ Liability to Pay Tax for which Disposition of Deficit was Issued)
(1) Upon receipt of an application filed by a resident meeting all of the following requirements, the head of the relevant tax office may extinguish the liability to pay an amount of up to five million won per person for which extinctive prescription of authority to collect national tax has not been completed among the global income tax, value-added tax, and special tax for agricultural and fishing villages, surcharges and expenses for disposition on default, all of which are 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, 2012. In such cases, the ceiling shall apply to the total of the amount of tax for which disposition of deficit was issued by the heads of other tax offices to extinguish the liability to pay such tax: <Amended by Act No. 10406, Dec. 27, 2010; Act No. 12031, Aug. 13, 2013>
1. A 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. A person who closes his/her business before December 31, 2012, and has been working for at least three months as of the date (hereafter referred to as "date of application") when he/she files an application to extinguish his/her liability to pay after applying for business registration at the tax office to start a new business between January 1, 2010 and December 31, 2013, or being employed between January 1, 2010 and December 31, 2013;
3. A person who has neither been punished nor been issued any disposition under the Punishment of Tax Offenses Act, nor any case being tried in the court within five years immediately preceding the date of application;
4. A person against whom no investigation being conducted into a violation of the Punishment of Tax Offenses Act as of the filing date of application.
(2) Where a resident intends to have his/her liability to pay the amount of tax for which disposition of deficit was issued extinguished under paragraph (1), he/she shall file an application for extinguishment of liability to pay the amount of tax for which disposition of deficit was issued to the head of the tax office having jurisdiction over the amount of tax for which disposition of deficit was issued, between January 1, 2010 and December 31, 2014, as prescribed by Presidential Decree. <Amended by Act No. 10406, Dec. 27, 2010; Act No. 12031, Aug. 13, 2013>
(3) Upon receipt of an application for extinguishment of liability to pay the amount of tax for which disposition of deficit was issued under paragraph (2), the head of the tax office shall determine whether to approve or reject the application within two months from the date of application after deliberation thereon by the Defaulted National Tax Adjustment Committee under Article 87 of the National Tax Collection Act. In such cases, when the head of the tax has determined to extinguish the relevant resident’s liability 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 extinguished on the date of application.
(4) When the head of the relevant tax office finds that other collectible property existed as at the time 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, revoke 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 it is found, before the date of application, that a resident has property or income (hereafter referred to as "property, etc." in this Article) acquired or accrued after disposition of deficit, the head of the relevant tax office may issue disposition on default.
(6) Where it is found, after the date of application, that a resident has property, etc. were acquired or accrued after disposition of deficit, the head of the relevant tax office shall not issue disposition on default on the property, etc. of the 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 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) The method of filing an application for extinguishment of liability to pay the amount of tax for which disposition of deficit was issued, and other necessary matters shall be prescribed by Presidential Decree.
[This Article Newly Inserted by Act No. 9921, Jan. 1, 2010]
 Article 99-6 (Special Taxation for Delinquent Taxes, etc. of Resurgent Small or Medium Entrepreneurs)
(1) Upon receipt of an application by a national prescribed by Presidential Decree who fully satisfies the following requirements (hereafter referred to as "resurgent small or medium entrepreneur" in this Article), including those who have borrowed the re-establishment fund from the Small and Medium Business Corporation established under the Small and Medium Enterprises Promotion Act, the head of the competent tax office may defer the seizure of property (including the seizure of property already seized) or the sale of seized property subject to disposition on default of taxes under the National Tax Collection Act, according to the applicant’s plan to pay delinquent taxes (limited to the delinquent amount of income tax, corporate tax, value-added tax, and of tax items added thereto) until the period prescribed by Presidential Decree:
1. A person whose annual average number of tax delinquency within five years immediately preceding the filing date of the application and amount of delinquent taxes as at the filing date of the application fall short of the guidelines prescribed by Presidential Decree;
2. A person prescribed by Presidential Decree among nationals whose average revenue (referring to the sales calculated according to the Korea Financial Accounting Standards) for three taxable years immediately preceding the filing date of the application does not exceed the amount prescribed by Presidential Decree;
3. A person who has neither been punished nor subject to disposition under the Punishment of Tax Offenses Act, nor any case being tried in the court within five years immediately preceding the filing date of the application;
4. A person against whom no investigation is being conducted into any alleged violation of the Punishment of Tax Offenses Act as at the filing date of the application;
5. A person who is fulfilling his/her legal liability under tax laws prescribed by Presidential Decree, such as the liability to keep double-entry bookkeeping, as at the filing date of the application.
(2) A resurgent small or medium entrepreneur that intends to have the seizure of property or the sale of the seized property deferred under paragraph (1) shall file an application therefor with the head of the competent tax office by not later than December 31, 2018, as prescribed by Presidential Decree. <Amended by Act No. 13560, Dec. 15, 2015>
(3) Upon receipt of an application filed by a resurgent small or medium entrepreneur under paragraph (2), the head of the competent tax office shall determine whether the resurgent small or medium entrepreneur is required to provide security for tax payment, after deliberation by the Defaulted National Tax Adjustment Committee established under Article 87 of the National Tax Collection Act, and notify the resurgent small or medium entrepreneur of such determination within two months from the filing date of the application.
(4) Where any of the following applies to a resurgent small or medium entrepreneur after the head of the competent tax office has determined to defer the disposition on default under paragraph (1), the head of the competent tax office shall revoke the deferment and make a disposition on default:
1. Where the resurgent small or medium entrepreneur fails to comply with his/her plan to pay delinquent taxes on at least three occasions;
2. Where it is deemed impossible to collect the full amount of delinquent taxes related to deferment until the deferred due date, because any of the events prescribed in Article 14 (1) 2 through 8 of the National Tax Collection Act occurs;
3. Where it is deemed unnecessary to defer the disposition on default, because any event prescribed by Presidential Decree, such as collection of the re-establishment fund, occurs.
(5) Where Article 6 applies to a resurgent small or medium entrepreneur who has established a new business or obtained designation or certification under Article 6 by not later than December 31, 2018, Article 6 (6) 3 shall not apply to the small or medium entrepreneur. <Amended by Act No. 13560, Dec. 15, 2015>
(6) A resurgent small or medium entrepreneur who wishes to secure tax credits under paragraph (5) shall file an application for tax reductions or exemptions, as prescribed by Presidential Decree.
(7) The method of filing an application for special taxation for delinquent taxes, etc. of resurgent small or medium entrepreneurs, and other necessary matters shall be prescribed by Presidential Decree.
[This Article Newly Inserted by Act No. 12031, Aug. 13, 2013]
 Article 99-7 (Special Taxation for Lease on Deposit Basis without Large Sum of Key Money)
(1) Where a resident leases a house upon satisfying each of the following requirements and pays interest on his/her loan by not later than December 31, 2015, an amount equivalent to 40/100 of the interest paid during the relevant taxable period shall be deducted from the amount of his/her global income in the relevant taxable period: Provided, That where such amount exceeds three million won per year, the ceiling shall be three million won per year:
1. That the resident shall establish mortgage on his/her own house in leasing the house, and borrow key money for the lease on a deposit basis from a financial company, etc. defined in 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) establishing the resident as a debtor;
2. That the lessee of the relevant house shall be the head of a household who does not own a house prescribed by Presidential Decree as of the date of the lease contract, and his/her total amount of annual income in the immediately preceding year (including the income of hi/her spouse) shall not exceed 60 million won;
3. That the total amount of key money for lease on a deposit basis shall not exceed 200 million won (300 million won in Seoul Metropolitan area) and the key money borrowed under subparagraph 1 shall not exceed 30 million won (50 million won in Seoul Metropolitan area);
4. That the resident shall take a loan within three months from or after the date which comes earlier between the date of move-in specified on the written lease contract (referring to the date of renewal, if the written lease contract is renewed) under Article 3-2 (2) of the Housing Lease Protection Act and the date of move-in registered on the certified copy of his/her resident registration card;
5. That the lessee of the relevant house shall pay the interest on key money borrowed under subparagraph 1 directly to the financial company, etc. to which it should be paid;
6. That the lessee’s address on the written lease contract shall be same as the address on the certified copy of his/her resident registration card.
(2) The key money for lease on a deposit basis under paragraph (1) 1 and amount of interest paid under paragraph (1) 5 shall be exempt from income tax until December 31, 2015.
[This Article Newly Inserted by Act No. 12031, Aug. 13, 2013]
 Article 99-8 (Special Cases concerning Deferment of Tax Collection from Resurgent Small and Medium Entrepreneurs)
(1) Upon receipt of an application filed for deferring the collection of tax (limited to the deferment of collection of income tax, corporate tax, value-added tax, or any tax added thereto), by not later than December 31, 2018, by a person who fully meets the following requirements (hereafter referred to as "resurgent small or medium entrepreneur" in this Article) as at the filing date of the application for deferring collection set under the National Tax Collection Act on any of the grounds specified in Article 15 (1) 1 through 4 and 6 of the National Tax Collection Act, among residents prescribed by Presidential Decree, including those who have borrowed the re-establishment fund from the Small and Medium Business Corporation established under the Small and Medium Enterprises Promotion Act (hereafter referred to as the "Small and Medium Business Corporation" in this Article), the head of the competent tax office may defer the collection of tax for a period prescribed by Presidential Decree from the day immediately after the date he/she defers the collection, and may determine the deadline for installment payments and the amount of such installments during the period of deferment of collection, notwithstanding Articles 15 and 17 of the National Tax Collection Act:
1. A person whose annual average number of tax delinquency within five years immediately preceding the filing date of the application, and the amount of delinquent taxes fall short of the guidelines prescribed by Presidential Decree;
2. A person whose average revenue (referring to the sales calculated according to the Korea Financial Accounting Standards) for three taxable years immediately preceding the filing date of the application, does not exceed the amount prescribed by Presidential Decree;
3. A person who has neither been punished nor subject to disposition under the Punishment of Tax Offenses Act, nor any case being tried in the court within five years immediately preceding the filing date of the application;
4. A person against whom no investigation is being conducted into any alleged violation of the Punishment of Tax Offenses Act as at the filing date of the application;
5. A person who fulfills his/her legal liability under tax laws prescribed by Presidential Decree, such as the liability to keep double-entry bookkeeping, as at the filing date of the application.
(2) Where any of the following applies to a resurgent small or medium entrepreneur after the head of the competent tax office has determined to defer the collection of tax under paragraph (1), the head of the competent tax office may revoke the deferment of collection and may collect the national taxes involved in the deferment or the delinquent tax amount in lump sum. In such cases, the head of the competent tax office shall notify the resurgent small or medium entrepreneur thereof:
1. Where any of the events prescribed in the subparagraphs of Article 20 (1) of the National Tax Collection Act occurs;
2. Where it is deemed unnecessary to defer the collection of tax, because of the occurrence of any event prescribed by Presidential Decree, such as collection of the re-establishment fund by the Small and Medium Business Corporation.
[This Article Newly Inserted by Act No. 13560, Dec. 15, 2015]
 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 Heightening Willingness to Work
 Article 100-2 (Earned Income Tax Credits)
In order to heighten low-income earners' willingness to work and supplement their income, labor encouragement subsidies 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]
 Article 100-3 (Eligibility to Apply for Labor Encouragement Subsidies)
(1) A person prescribed by Presidential Decree, among residents with business income specified in Article 19 of the Income Tax Act or earned income specified in Article 20 of the same Act during a taxable period for income tax, is eligible to apply for a labor encouragement subsidy for the taxable period for income tax, if the person fully meets the following requirements: <Amended by Act No. 11133, Dec. 31, 2011; Act No. 11614, Jan. 1, 2013; Act No. 12173, Jan. 1, 2014; Act No. 12853, Dec. 23, 2014; Act No. 14390, Dec. 20, 2016; Act No. 14760, Apr. 18, 2017>
1. The person shall have a spouse or dependent child, as provided for in Article 100-4 (1) (hereafter in this Section and Section 10-4, referred to as "dependent child”), or shall be at least the age classified as follows, as at the end of the relevant taxable year:
(a) Where the taxable period of income tax falls within the period between January 1, 2014 and December 31, 2014: At least 60 years of age;
(b) Where the taxable period of income tax falls within the period between January 1, 2015 and December 31, 2015: At least 50 years of age;
(c) Where the taxable period of income tax falls within the period between January 1, 2016 and December 31, 2016: At least 40 years of age;
(d) The taxable period of income tax in which January 1, 2017 falls and subsequent taxable periods: At least 30 years of age;
2. The total annual income prescribed by Presidential Decree (hereafter in Section 10-4, referred to as “total annual income”) of a resident (including his/her spouse; hereafter in this Article, the same shall apply), shall be less than the following base amount of total income (hereafter in this Section, referred to as "base amount of total income"), determined based on the composition of members of one household (hereafter in this Section and Section 10-4, referred to as "household") prescribed by Presidential Decree (hereafter in this Section and Section 10-4, referred to as “household members”), including the resident:
Composition of household membersBase amount of total income
Single-person household13 million won
Single-income household21 million won
Dual-income household25 million won
3. Deleted; <by Act No. 14390, Dec. 20, 2016>
4. The total amount of property prescribed by Presidential Decree, such as land, a building, a motor vehicle, and savings, which are held by all household members (hereafter in Section 10-4, referred to as "total amount of property held by all household members"), shall not exceed 140 million won.
(2) Notwithstanding paragraph (1), none of the following residents is eligible to apply for a labor encouragement subsidy: <Amended by Act No. 11614, Jan. 1, 2013; Act No. 13560, Dec. 15, 2015>
1. Deleted; <by Act No. 12173, Jan. 1, 2014>
2. A non-Korean national as at the end of the relevant taxable period for income tax: Provided, That this shall not apply to a person married to a Korean national;
3. A dependent child of any other resident during the relevant taxable period for income tax.
(3) Whether a resident has a spouse referred to in paragraph (1) 1 shall be determined based on the situation as at the end of the relevant taxable period for income tax: Provided, That, where a spouse dies before the end of the taxable period for the relevant income tax, such determination shall be made based on the situation as at the day preceding the date of his/her death. <Newly Inserted by Act No. 11614, Jan. 1, 2013>
(4) Deleted. <by Act No. 12173, Jan. 1, 2014>
(5) For the purposes of the Table of paragraph (1) 2, this Section, and Section 10-4, "single-person household," "single-income household," and "dual-income household" shall be defined as follows: <Newly Inserted by Act No. 12173, Jan. 1, 2014; Act No. 14390, Dec. 20, 2016>
1. Single-person household: A household that consists of neither a spouse nor a dependent child;
2. Single-income household: A household that consists of a spouse or a dependent child, but is not a dual-income household as defined in subparagraph 3;
3. Dual-income household: A household where a resident’s spouse has at least three million won of the following incomes (excluding non-taxable income, and earned income or business income prescribed by Presidential Decree; hereafter in this Section and Section 10-4, referred to as "gross pay, etc.") during the taxable period for income tax:
(a) The amount of income prescribed by Presidential Decree, of the business incomes listed under Article 19 (1) of the Income Tax Act;
(b) The amount of earned incomes listed under Article 20 (1) of the Income Tax Act.
(6) Deleted. <by Act No. 12853, Dec. 23, 2014>
(7) The base date for holding property referred to in paragraph (1) 4; methods for appraising such property; and other necessary matters, shall be prescribed by Presidential Decree. <Amended by Act No. 14390, Dec. 20, 2016>
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]
 Article 100-4 (Requirements for Dependent Children and Timing for Determination)
(1) Dependent children mean the persons who meet all the following requirements: <Amended by Act No. 11133, Dec. 31, 2011; Act No. 12173, Jan. 1, 2014>
1. That they shall be a resident’s children or adopted children prescribed by Presidential Decree (including the resident’s spouse; hereafter the same shall apply in this subparagraph) living together: Provided, That in circumstances prescribed by Presidential Decree in which such children do not have parents or their parents are unable to support such children, dependent children shall include the resident's grandsons, granddaughters or siblings;
2. That they shall be under the age of 18: Provided, That disabled persons prescribed by Presidential Decree shall not be subject to such 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 deemed a person living together as referred to in paragraph (1) 4. <Amended by Act No. 11133, Dec. 31, 2011>
(3) Whether a person is eligible for a dependent child shall be determined based on the situation as of the end of the taxable period of the relevant income tax in the relevant year: Provided, That if a person is dead, or whose disability is treated before the end of the taxable period of the relevant income tax, the determination as to whether the person is a dependent child shall be made based on the situation as of the day preceding the day of his/her death or treatment. <Amended by Act No. 11133, Dec. 31, 2011; Act No. 11614, Jan. 1, 2013>
(4) Where a dependent child becomes 18 years of age during the taxable period of the relevant income tax, he/she shall be deemed under the age of 18, notwithstanding the main body of paragraph (3). <Amended by Act No. 11614, Jan. 1, 2013>
(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 a dependent child of either of the residents, as prescribed by Presidential Decree.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]
 Article 100-5 (Calculation of Labor Encouragement Subsidies)
(1) Labor encouragement subsidies shall be calculated as follows, based on gross pay, etc. In such cases, a labor encouragement subsidy of less than 15,000 won shall be deemed nil; and a labor encouragement subsidy of at least 15,000 won, but less than 30,000 won, shall be deemed 30,000 won: <Amended by Act No. 11133, Dec. 31, 2011; Act No. 12173, Jan. 1, 2014; Act No. 14390, Dec. 20, 2016>
1. In cases of a single-person household: An amount calculated as follows:
ItemAmount of Gross Pay, etc.Labor Encouragement Subsidies
(a)Less than 6 million wonAmount of gross pay, etc. x 77/600
(b)At least 6 million won, but less than 9 million won770,000 won
(c) At least 9 million won, but less than 13 million won770,000 won - (Amount of gross pay, etc. - 9 million won) x 77/400
2. In cases of a single-income household: An amount calculated as follows:
ItemAmount of Gross Pay, etc.Labor Encouragement Subsidies
(a)Less than 9 million wonAmount of gross pay, etc. x 185/900
(b)At least 9 million won, but less than 12 million won1,850,000 won
(c) At least 12 million won, but less than 21 million won1,850,000 won - (Amount of gross pay, etc. - 12 million won) x 185/900
3. In cases of a dual-income household: An amount calculated as follows:
ItemAmount of Gross Pay, etc.Labor Encouragement Subsidies
(a)Less than 10 million wonAmount of gross pay, etc. x 230/1,000
(b)At least 10 million won, but less than 13 million won2,300,000 won
(c)At least 13 million won, but less than 25 million won2,300,000 won - (Amount of gross pay, etc. - 13 million won) x 230/1,200
4. Deleted. <by Act No. 12173, Jan. 1, 2014>
(2) For the purposes of paragraph (1), when the spouse of a resident (excluding a non-resident; hereafter in this paragraph, the same shall apply) has earned income or business income, the amount of gross pay, etc. shall be calculated by adding, to the amount of gross pay, etc. of the principal income earner prescribed by Presidential Decree among the resident and his/her spouse (hereafter in this Section and Section 10-4, referred to as "principal income earner"), the amount of gross pay, etc. of the principal income earner's spouse. <Amended by Act No. 12173, Jan. 1, 2014>
(3) Notwithstanding paragraph (1), where the total amount of property referred to in Article 100-3 (1) 4 is at least 100 million won, a labor encouragement subsidy shall be the equivalent to 50/100 of the labor encouragement subsidy calculated pursuant to paragraph (1). <Newly Inserted by Act No. 12173, Jan. 1, 2014>
(4) Notwithstanding paragraph (1), labor encouragement subsidies shall be calculated according to the labor encouragement subsidy calculation schedule prescribed by Presidential Decree by the range of the amount of gross pay, etc.
[This Article Wholly Amended by Act No. 9921, Jan. 1, 2010]
 Article 100-6 (Filing Applications, etc. for Labor Encouragement Subsidies)
(1) A resident (or a resident who is a principal income earner in cases falling under Article 100-5 (2)) who intends to obtain a labor encouragement subsidy, shall file an application for a labor encouragement subsidy stating the following information, with the head of the tax office having jurisdiction over the place of tax payment, along with evidentiary documents prescribed by Presidential Decree as necessary for verifying his/her eligibility for the labor encouragement subsidy, during the filing period of the final return on the tax base of global income under Article 70 or 74 of the Income Tax Act (hereafter in this Article, referred to as "filing period"): <Amended by Act No. 12173, Jan. 1, 2014>
1. His/her eligibility for application;
2. Amount of the labor encouragement subsidy calculated pursuant to