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ENFORCEMENT DECREE OF THE INCOME TAX ACT

Wholly Amended by Presidential Decree No. 14467, Dec. 31, 1994

Amended by Presidential Decree No. 14682, jun. 30, 1995

Presidential Decree No. 14721, Jul. 6, 1995

Presidential Decree No. 14739, Jul. 20, 1995

Presidential Decree No. 14860, Dec. 30, 1995

Presidential Decree No. 14988, Apr. 27, 1996

Presidential Decree No. 14999, May 13, 1996

Presidential Decree No. 15138, Aug. 22, 1996

Presidential Decree No. 15191, Dec. 31, 1996

Presidential Decree No. 15486, Sep. 30, 1997

Presidential Decree No. 15500, Oct. 25, 1997

Presidential Decree No. 15604, Dec. 31, 1997

Presidential Decree No. 15565, Dec. 31, 1997

Presidential Decree No. 15747, Apr. 1, 1998

Presidential Decree No. 15969, Dec. 31, 1998

Presidential Decree No. 15967, Dec. 31, 1998

Presidential Decree No. 16112, Feb. 8, 1999

Presidential Decree No. 16556, Sep. 18, 1999

Presidential Decree No. 16682, Dec. 31, 1999

Presidential Decree No. 16664, Dec. 31, 1999

Presidential Decree No. 16762, Mar. 28, 2000

Presidential Decree No. 16809, May 16, 2000

Presidential Decree No. 16988, Oct. 23, 2000

Presidential Decree No. 17032, Dec. 29, 2000

Presidential Decree No. 17115, Jan. 29, 2001

Presidential Decree No. 17158, Mar. 27, 2001

Presidential Decree No. 17296, Jul. 7, 2001

Presidential Decree No. 17339, Aug. 14, 2001

Presidential Decree No. 17456, Dec. 31, 2001

Presidential Decree No. 17555, Mar. 30, 2002

Presidential Decree No. 17751, Oct. 1, 2002

Presidential Decree No. 17825, Dec. 30, 2002

Presidential Decree No. 18044, jun. 30, 2003

Presidential Decree No. 18048, Jul. 10, 2003

Presidential Decree No. 18073, Jul. 30, 2003

Presidential Decree No. 18127, Nov. 20, 2003

Presidential Decree No. 18146, Nov. 29, 2003

Presidential Decree No. 18173, Dec. 30, 2003

Presidential Decree No. 18297, Feb. 28, 2004

Presidential Decree No. 18312, Mar. 17, 2004

Presidential Decree No. 18401, May 25, 2004

Presidential Decree No. 18529, Aug. 30, 2004

Presidential Decree No. 18705, Feb. 19, 2005

Presidential Decree No. 18850, May 31, 2005

Presidential Decree No. 18903, jun. 30, 2005

Presidential Decree No. 18988, Aug. 5, 2005

Presidential Decree No. 19010, Aug. 19, 2005

Presidential Decree No. 19254, Dec. 31, 2005

Presidential Decree No. 19327, Feb. 9, 2006

Presidential Decree No. 19463, Apr. 28, 2006

Presidential Decree No. 19513, jun. 12, 2006

Presidential Decree No. 19507, jun. 12, 2006

Presidential Decree No. 19687, Sep. 22, 2006

Presidential Decree No. 20618, Feb. 22, 2008

Presidential Decree No. 20720, Feb. 29, 2008

Presidential Decree No. 20763, Apr. 3, 2008

Presidential Decree No. 20931, Jul. 24, 2008

Presidential Decree No. 21025, Sep. 22, 2008

Presidential Decree No. 21062, Oct. 7, 2008

Presidential Decree No. 21138, Nov. 28, 2008

Presidential Decree No. 21148, Dec. 3, 2008

Presidential Decree No. 21195, Dec. 31, 2008

Presidential Decree No. 21214, Dec. 31, 2008

Presidential Decree No. 21215, Dec. 31, 2008

Presidential Decree No. 21301, Feb. 4, 2009

Presidential Decree No. 21430, Apr. 21, 2009

Presidential Decree No. 21515, May 29, 2009

Presidential Decree No. 21525, jun. 8, 2009

Presidential Decree No. 21528, jun. 9, 2009

Presidential Decree No. 21565, jun. 26, 2009

Presidential Decree No. 21765, Oct. 1, 2009

Presidential Decree No. 21881, Dec. 14, 2009

Presidential Decree No. 21887, Dec. 15, 2009

Presidential Decree No. 21934, Dec. 31, 2009

Presidential Decree No. 22003, Jan. 27, 2010

Presidential Decree No. 22034, Feb. 18, 2010

Presidential Decree No. 22037, Mar. 9, 2010

Presidential Decree No. 22075, Mar. 15, 2010

Presidential Decree No. 22151, May 4, 2010

Presidential Decree No. 22185, jun. 8, 2010

Presidential Decree No. 22269, Jul. 12, 2010

Presidential Decree No. 22391, Sep. 20, 2010

Presidential Decree No. 22395, Sep. 20, 2010

Presidential Decree No. 22493, Nov. 15, 2010

Presidential Decree No. 22516, Dec. 7, 2010

Presidential Decree No. 22560, Dec. 29, 2010

Presidential Decree No. 22580, Dec. 30, 2010

Presidential Decree No. 22977, jun. 24, 2011

Presidential Decree No. 23113, Aug. 30, 2011

Presidential Decree No. 23139, Sep. 15, 2011

Presidential Decree No. 23218, Oct. 14, 2011

Presidential Decree No. 23356, Dec. 8, 2011

Presidential Decree No. 23588, Feb. 2, 2012

Presidential Decree No. 23723, Apr. 13, 2012

Presidential Decree No. 23887, jun. 29, 2012

Presidential Decree No. 23964, Jul. 20, 2012

Presidential Decree No. 23987, Jul. 24, 2012

Presidential Decree No. 24017, Aug. 3, 2012

Presidential Decree No. 24076, Aug. 31, 2012

Presidential Decree No. 24104, Sep. 14, 2012

Presidential Decree No. 24315, Jan. 16, 2013

Presidential Decree No. 24356, Feb. 15, 2013

Presidential Decree No. 24441, Mar. 23, 2013

Presidential Decree No. 24574, jun. 11, 2013

Presidential Decree No. 24638, jun. 28, 2013

Presidential Decree No. 24640, jun. 28, 2013

Presidential Decree No. 24697, Aug. 27, 2013

Presidential Decree No. 24709, Sep. 9, 2013

Presidential Decree No. 24823, Nov. 5, 2013

Presidential Decree No. 25193, Feb. 21, 2014

Presidential Decree No. 25249, Mar. 11, 2014

Presidential Decree No. 25523, Jul. 28, 2014

Presidential Decree No. 25522, Jul. 28, 2014

Presidential Decree No. 25641, Sep. 26, 2014

Presidential Decree No. 25751, Nov. 19, 2014

Presidential Decree No. 25945, Dec. 30, 2014

Presidential Decree No. 26067, Feb. 3, 2015

Presidential Decree No. 26302, jun. 1, 2015

Presidential Decree No. 26344, jun. 30, 2015

Presidential Decree No. 26369, jun. 30, 2015

Presidential Decree No. 26416, Jul. 20, 2015

Presidential Decree No. 26600, Oct. 23, 2015

Presidential Decree No. 26659, Nov. 20, 2015

Presidential Decree No. 26763, Dec. 28, 2015

Presidential Decree No. 26844, Dec. 31, 2015

Presidential Decree No. 26922, Jan. 22, 2016

Presidential Decree No. 26982, Feb. 17, 2016

Presidential Decree No. 27074, Mar. 31, 2016

Presidential Decree No. 27245, jun. 21, 2016

Presidential Decree No. 27444, Aug. 11, 2016

Presidential Decree No. 27472, Aug. 31, 2016

Presidential Decree No. 27471, Aug. 31, 2016

Presidential Decree No. 27506, Sep. 22, 2016

Presidential Decree No. 27617, Nov. 29, 2016

Presidential Decree No. 27653, Dec. 5, 2016

Presidential Decree No. 27793, Jan. 17, 2017

Presidential Decree No. 27829, Feb. 3, 2017

Presidential Decree No. 27972, Mar. 29, 2017

Presidential Decree No. 28211, Jul. 26, 2017

Presidential Decree No. 28293, Sep. 19, 2017

Presidential Decree No. 28440, Nov. 21, 2017

Presidential Decree No. 28511, Dec. 29, 2017

CHAPTER I GENERAL PROVISIONS
 Article 1 (Purpose)
The purpose of this Decree is to provide for matters delegated by the Income Tax Act and those necessary for the enforcement thereof.
[This Article Wholly Amended by Presidential Decree No. 22034, Feb. 18, 2010]
 Article 2 (Determination on Domicile and Place of Residence)
(1) A domicile defined in Article 1-2 of the Income Tax Act (hereinafter referred to as the "Act") shall be determined by the objective facts of living relationship, such as the existence of a family living together in the Republic of Korea and of the property located in the Republic of Korea. <Amended by Presidential Decree No. 22034, Feb. 18, 2010>
(2) A place of residence defined in Article 1-2 of the Act means a place where a person has lived for a long time besides his/her domicile, and in which there is no general living relationship as close as a domicile. <Amended by Presidential Decree No. 22034, Feb. 18, 2010>
(3) In any of the following cases, a natural person who resides in the Republic of Korea shall be deemed to have his/her domicile in the Republic of Korea: <Amended by Presidential Decree No. 26067, Feb. 3, 2015>
1. Where the person has an occupation which usually requires him/her to continually reside in the Republic of Korea for at least 183 days;
2. Where the person has a family member who makes a living together with him/her in the Republic of Korea and is deemed to continually reside in the Republic of Korea for at least 183 days in view of his/her occupation or property status.
(4) If a person living or working abroad with the nationality of a foreign country or a permanent residency permit issued by a foreign country has no family member who makes a living together in the Republic of Korea and is not deemed to return to the Republic of Korea to mainly reside in the Republic of Korea, in view of his/her occupation or property status, the person shall be deemed to have no domicile in the Republic of Korea. <Amended by Presidential Decree No. 26067, Feb. 3, 2015>
1. and 2. Deleted. <by Presidential Decree No. 26067, Feb. 3, 2015>
(5) In cases of a crew member of a vessel or aircraft serving an overseas route, if a place of residence of his/her family living together with the relevant crew member, or a place in which he/she usually resides during the period other than duty hours, is located in the Republic of Korea, the domicile of the relevant crew member shall be deemed to be located in the Republic of Korea; and when such place is located overseas, the domicile of the relevant crew member shall be deemed located overseas.
 Article 2-2 (Time when Person Becomes Resident or Nonresident)
(1) The time when a nonresident becomes a resident shall be any of the following days: <Amended by Presidential Decree No. 26067, Feb. 3, 2015>
1. The day when the nonresident acquires a domicile in the Republic of Korea;
2. The day when an event, based on which the nonresident shall be deemed to acquire or have a domicile in the Republic of Korea under Article 2 (3) or (5), occurs;
3. The 183th day after the nonresident acquires a place of residence in the Republic of Korea.
(2) The time when a resident becomes a nonresident shall be any of the following days:
1. The next day of the date when he/she leaves Korea to move his/her domicile or place of residence outside Korea;
2. The next day of the date when an event, based on which he/she shall be deemed to have no domicile in the Republic of Korea or to have a domicile outside the Republic of Korea pursuant to Article 2 (4) or (5), occurs.
[This Article Newly Inserted by Presidential Decree No. 21301, Feb. 4, 2009]
 Article 3 (Determination of Executives, Employees, etc. of Overseas Local Corporations, etc. as Residents)
Executives or employees dispatched to an overseas place of business or an overseas local corporation of a resident or a domestic corporation (limited to where a domestic corporation has directly or indirectly invested in 100/100 of the total number of outstanding stocks or equity shares) or public officials who work abroad shall be deemed residents. <Amended by Presidential Decree No. 21301, Feb. 4, 2009; Presidential Decree No. 26067, Feb. 3, 2015>
 Article 3-2 (Distinction of the Groups Deemed Resident or Nonresident)
With respect to the non-juristic organization which is deemed a resident or a non-resident pursuant to Article 2 (3) of the Act, the Act shall apply thereto in accordance with the following classification:
1. Where the method of profit distribution or the distribution ratio among members of the non-juristic organization is determined or such profit is confirmed to be practically distributed, such members concerned shall be deemed jointly engaging in businesses and each of the members shall be taxed;
2. Where the method of profit distribution or the distribution ratio among members of the non-juristic organization is not determined or confirmed, such organization concerned shall be deemed one resident or non-resident and taxed accordingly.
[This Article Newly Inserted by Presidential Decree No. 24356, Feb. 15, 2013]
 Article 4 (Calculation of Period of Residence)
(1) The period of residence in the Republic of Korea shall be from the date after the date of a person's arrival in the Republic of Korea to the date of his/her departure.
(2) Where a person having a place of residence in the Republic of Korea returns to the Republic of Korea after his/her departure from the Republic of Korea and the purpose of his/her departure is deemed apparently temporary, such as sightseeing or medical treatment, in view of the place of residence of family members who make a living together with the person and the location of his/her property, the duration of sojourn abroad shall be also deemed the duration in which the person had a place of residence in the Republic of Korea. <Amended by Presidential Decree No. 26067, Feb. 3, 2015>
(3) If the duration in which a person had a place of residence in the Republic of Korea is at least 183 days during two taxable periods, the person shall be deemed to have had a place of residence in the Republic of Korea for at least 183 days. <Amended by Presidential Decree No. 26067, Feb. 3, 2015>
(4) Where an overseas Korean defined in Article 2 of the Act on the Immigration and Legal Status of Overseas Koreans enters the Republic of Korea but it is found, according to the method prescribed by Ordinance of the Ministry of Strategy and Finance, that the purpose of his/her entry is a temporary stay for sightseeing, medical treatment of a disease, or any of the purposes specified by Ordinance of the Ministry of Strategy and Finance, in view of the place of residence of family members who make a living together with the person and the location of his/her property, etc., the period of his/her stay shall not be deemed a period during which the person has a place of residence in the Republic of Korea. <Newly Inserted by Presidential Decree No. 26982, Feb. 17, 2016>
 Article 4-2 (Calculation of Amount of Income from Trust)
(1) When calculating the amount of income in each taxable period, any person who conducts trust business shall account for income belonging to trust assets separately from other income. <Amended by Presidential Decree No. 22034, Feb. 18, 2010>
(2) Whether a beneficiary is specified or exists under Article 2-2 (6) of the Act shall be governed by the conditions at the time when income or expenditure related to trust assets are incurred. <Amended by Presidential Decree No. 22034, Feb. 18, 2010>
(3) Profits from trust governed by Article 4 (2) of the Act, as specified money in trust pursuant to subparagraph 1 of Article 103 of the Enforcement Decree of the Financial Investment Services and Capital Markets Act, shall be calculated by applying Article 26-2 (6) mutatis mutandis thereto. <Newly Inserted by Presidential Decree No. 22034, Feb. 18, 2010>
[This Article Newly Inserted by Presidential Decree No. 20618, Feb. 22, 2008]
 Article 5 (Determination of and Reporting on Place for Tax Payment)
(1) If a place for tax payment is unclear, the determination of a place for tax payment provided for in Article 6 (3) of the Act shall be as follows: <Amended by Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 19890, Feb. 28, 2007; Presidential Decree No. 24356, Feb. 15, 2013>
1. Where a person has at least two domiciles, the place registered under the Resident Registration Act shall be the place for tax payment, and when a person has at least two places of residence, the place in which his/her living relationship is the closest shall be the place for tax payment;
2. Where a nonresident has at least two places of business in the Republic of Korea and where it is difficult to determine his/her principal place of business, the place reported by the relevant nonresident as a place for tax payment pursuant to paragraph (5) shall be the place for tax payment;
3. Where a nonresident who does not have a domestic place of business provided for in Article 120 of the Act in the Republic of Korea (hereinafter referred to as “domestic place of business”) earns income from domestic sources provided for in subparagraph 3 or 9 of Article 119 of the Act from at least two domestic places, the place reported by such nonresident as a place for tax payment pursuant to paragraph (5) from among places from which such income from domestic sources is generated shall be the place for tax payment;
4. Where a nonresident fails to report under subparagraph 2 or 3, the place designated by the Commissioner of the National Tax Service or the commissioner of the competent regional tax office in consideration of the status of income and the propriety of tax management, shall be the place for tax payment.
(2) Where the Commissioner of the National Tax Service or the commissioner of the competent regional tax office has designated the place for tax payment under paragraph (1) 4, he/she shall notify a taxpayer in writing before the final return on the tax base of relevant taxable period or before the commencement date of the period for tax payment (where any of the causes for an interim tax prepayment or an occasional imposition occur, within 15 days before the commencement date of such period for tax payment).
(3) "Cases prescribed by Presidential Decree" in the proviso to Article 7 (1) 4 of the Act means where a corporation falls under any of the following cases: <Amended by Presidential Decree No. 15747, Apr. 1, 1998; Presidential Decree No. 15969, Dec. 31, 1998; Presidential Decree No. 16664, Dec. 31, 1999; Presidential Decree No. 17032, Dec. 29, 2000; Presidential Decree No. 17456, Dec. 31, 2001; Presidential Decree No. 20618, Feb. 22, 2008; Presidential Decree No. 21301, Feb. 4, 2009; Presidential Decree No. 22034, Feb. 18, 2010; Presidential Decree No. 24638, Jun. 28, 2013>
1. Where the location of the head office or principal office is approved by the Commissioner of the National Tax Service as the place to pay withholding tax on income that has been paid by the branch offices, business offices, and other places of work of the corporation concerned. In such cases, the Commissioner of the National Tax Service may approve the place to pay the amount of income tax withheld by income;
2. Where each unit of a corporation is registered separately as an independent entrepreneur under Article 8 (3) or (4) of the Value-Added Tax Act.
(4) "Places prescribed by Presidential Decree" in Article 7 (1) 5 of the Act means the following places: <Amended by Presidential Decree No. 15969, Dec. 31, 1998; Presidential Decree No. 17339, Aug. 14, 2001; Presidential Decree No. 21301, Feb. 4, 2009; Presidential Decree No. 22034, Feb. 18, 2010; Presidential Decree No. 24356, Feb. 15, 2013>
1. Locations of business of a domestic corporation or of the foreign corporation under Article 94 of the Corporate Tax Act (hereafter referred to as the “domestic business place of a foreign corporation” in Articles 207 (1) and 207-2 (6)) which has issued securities under the relevant provisions where there exists an income falling under subparagraph 9 (b) of Article 119 of the Act and any subparagraph of Article 179 (11) of this Decree;
2. Places designated by the Commissioner of the National Tax Service in cases, other than those indicated in subparagraph 1.
(5) A person who intends to report a place for tax payment under Article 8 (1) and (2) of the Act shall submit a written report on the place for tax payment determined by Ordinance of the Ministry of Strategy and Finance (including submitting it by means of the Home Tax Service) to the head of the competent tax office. <Amended by Presidential Decree No. 15747, Apr. 1, 1998; Presidential Decree No. 18312, Mar. 17, 2004; Presidential Decree No. 20720, Feb. 29, 2008>
(6) The place for tax payment of a public official having no domicile in the Republic of Korea under Article 8 (5) of the Act, or of a person deemed a resident under Article 3, shall be the principal place of his/her family's living or the location of any agency to which he/she belongs.
 Article 6 (Designation and Notice of Places for Tax Payment)
(1) Any person who intends to apply for designation of the place for tax payment under Article 9 (1) 1 of the Act shall submit a written application for the designation of the place for tax payment prescribed by Ordinance of the Ministry of Strategy and Finance (including submitting it by means of the Home Tax Service) to the head of the competent tax office of the place of business from October 1 to December 31 of the relevant taxable period. <Amended by Presidential Decree No. 15747, Apr. 1, 1998; Presidential Decree No. 18312, Mar. 17, 2004; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 22034, Feb. 18, 2010>
(2) The commissioner of the competent regional tax office (the Commis- sioner of the National Tax Service, in cases where the commissioner of the competent regional tax office to be newly designated is different from the commissioner of the competent regional tax office of the former place for tax payment) shall, upon receipt of an application for designation of the place for tax payment stipulated under paragraph (1), designate a place of business as place for tax payment, except in cases determined by Ordinance of the Ministry of Strategy and Finance, and shall notify in writing as to whether the designation is granted to the applicant, by not later than the end of February of the following year. <Amended by Presidential Decree No. 15747, Apr. 1, 1998; Presidential Decree No. 20720, Feb. 29, 2008>
(3) The Commissioner of the National Tax Service or the commissioner of the competent regional tax office shall, where he/she designates a place for tax payment under Article 9 (1) 2 of the Act, notify the applicant thereof before the final return on tax base in the relevant taxable period or before the commencement date of the period for tax payment: Provided, That if any causes exist for interim prepayment or occasional imposition, he/she shall notify the applicant of such facts within 15 days before the commencement date of the period for tax payment.
(4) When the said notification is not made within the period designated under paragraph (2), the place for tax payment of which the relevant applicant applies for designation shall be the place for tax payment. <Newly Inserted by Presidential Decree No. 14860, Dec. 30, 1995>
 Article 7 (Reporting on Change of Places for Tax Payment)
(1) A person who intends to change the place for tax payment under Article 10 of the Act shall submit a written report on change of the place for tax payment, prescribed by Ordinance of the Ministry of Strategy and Finance (including submitting it by means of the Home Tax Service) to the head of the competent tax office having jurisdiction over such changed place for tax payment. <Amended by Presidential Decree No. 15747, Apr. 1, 1998; Presidential Decree No. 18312, Mar. 17, 2004; Presidential Decree No. 20720, Feb. 29, 2008>
(2) When a taxpayer has his/her business registration corrected under Article 14 of the Enforcement Decree of the Value-Added Tax Act due to the change of his/her domicile, he/she shall be deemed to have reported on the change of the place for tax payment under paragraph (1). <Amended by Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 24638, Jun. 28, 2013>
 Article 8 (Application Mutatis Mutandis to Authority)
Where the commissioner of a regional tax office determines or changes the tax base and amount of tax under Article 11 of the Act, the provisions related to the authority of the head of a tax office shall apply mutatis mutandis thereto.
CHAPTER II TAX LIABILITY ON RESIDENTS' GLOBAL INCOME AND RETIREMENT INCOME
SECTION 1 Non-Taxation
 Article 8-2 (Non-Taxable Income from House Rental)
(1) A house referred to in subparagraph 2 (b) of Article 12 of the Act shall include land annexed to a house. <Amended by Presidential Decree No. 22580, Dec. 30, 2010>
(2) "House" in paragraph (1) means a building used for regular residence (excluding cases for residence for business), and "land annexed to a house" means land, the area of which does not exceed the larger of the following areas, annexed to a house: <Newly Inserted by Presidential Decree No. 22034, Feb. 18, 2010>
1. Total floor area of a building (excluding the area of basement floors, the area used for parking of the ground, the area of a refuge safety zone prescribed in Article 34 (3) of the Enforcement Decree of the Building Act, and the area for common facilities of residents defined in subparagraph 3 of Article 2 of the Regulations on Standards, etc. for Housing Construction);
2. The area calculated by multiplying the area on which a house is built by five times (or ten times, in cases of land outside an urban area prescribed in subparagraph 1 of Article 6 of the National Land Planning and Utilization Act).
(3) When subparagraph 2 (b) of Article 12 of the Act applies, the number of houses shall be counted based on the following: <Amended by Presidential Decree No. 17032, Dec. 29, 2000; Presidential Decree No. 22034, Feb. 18, 2010; Presidential Decree No. 22580, Dec. 30, 2010>
1. A multi-family house shall be deemed one house, and in cases of subdivided registration, each one shall be counted as one house;
2. A jointly-owned house shall be deemed to be owned by the holder of the largest share, and if there are at least two holders of the largest share, it shall be deemed to be owned by each such owner respectively: Provided, That where there are at least two holders of the largest share, and if they agree that one of them is to be the person to whom the income from rent of the relevant house is attributed, it shall be deemed to be owned by such person;
3. In cases of a subletting or a subletting on deposit basis of houses that are rented or rented on deposit basis, the relevant house rented or rented on deposit basis shall be deemed the house of a tenant or a tenant on deposit basis;
4. Where a taxpayer and his/her spouse each own houses, the total number of houses owned by them.
(4) When paragraph (2) applies, where a house and a building for business (hereafter referred to as "building for business" in this Article) on which a value-added tax is levied are built together, the scope of such house and land annexed thereto shall be governed by the following classifications. In such cases, where a house and land annexed thereto are leased to at least two lessees, paragraph (2) shall apply to each lessee by calculating the area of a house (excluding the area for residence for business) and the area of a building for business of each lessee: <Newly Inserted by Presidential Decree No. 22034, Feb. 18, 2010>
1. Where the area of a house is larger than that of a building for business, the whole area thereof shall be deemed a house. In such cases, the scope of land annexed to a house of the relevant house shall be the same as paragraph (2);
2. Where the area of a house is equal to or smaller than that of a building for business, a building for business other than a house shall not be deemed a house. In such cases, the area of land annexed to a house of the relevant house shall be calculated by multiplying the total area of land by the ratio of the area of a house to the total floor area, and the scope thereof shall be the same as paragraph (2).
(5) "House whose standard market price exceeds 900 million won" in the former part of subparagraph 2 (b) of Article 12 of the Act, shall be determined based on the end date of taxable period or the date of transfer of the relevant house. <Amended by Presidential Decree No. 22580, Dec. 30, 2010>
(6) "The total amount of gross earnings specified by Presidential Decree" in the former part of subparagraph 2 (b) of Article 12 of the Act, means the gross revenue generated from rental housing business. <Amended by Presidential Decree No. 26067, Feb. 3, 2015>
(7) Except as otherwise expressly provided for in paragraphs (1) through (6), matters necessary for computing house rental income shall be prescribed by Ordinance of the Ministry of Strategy and Finance. <Newly Inserted by Presidential Decree No. 26067, Feb. 3, 2015>
[This Article Newly Inserted by Presidential Decree No. 16664, Dec. 31, 1999]
 Article 9 (Scope of Sideline Income of Farm Households)
(1) "Sideline income of a farm household prescribed by Presidential Decree" in subparagraph 2 (c) of Article 12 of the Act, means any of the following income among income from stock breeding, straw goods manufacturing, private house lodging, sale of foods, local speciality manufacturing, traditional tea manufacturing, fishery, fish farming, or other similar activities a farmer or a fisherman conducts as a side job: <Amended by Presidential Decree No. 18173, Dec. 30, 2003; Presidential Decree No. 20618, Feb. 22, 2008; Presidential Decree No. 21301, Feb. 4, 2009; Presidential Decree No. 22034, Feb. 18, 2010; Presidential Decree No. 23588, Feb. 2, 2012; Presidential Decree No. 26982, Feb. 17, 2016>
1. Income from stock breeding as a sideline size of a farm household in attached Table 1;
2. Income other than that specified in subparagraph 1, the total amount of which does not exceed 30 million won a year.
(2) "Private house lodging" in paragraph (1) means private lodging business in agricultural and fishing villages under the Rearrangement of Agricultural and Fishing Villages Act. <Newly Inserted by Presidential Decree No. 18173, Dec. 30, 2003; Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 19327, Feb. 9, 2006>
(3) "Specialty" in paragraph (1) means traditional food defined in the Food Industry Promotion Act and fishery specialities defined in the Agricultural and Fishery Products Quality Control Act. <Amended by Presidential Decree No. 22034, Feb. 18, 2010; Presidential Decree No. 23964, Jul. 20, 2012>
(4) "Traditional tea" in paragraph (1) means tea certified by the Minister of Agriculture, Food and Rural Affairs pursuant to Article 22 of the Food Industry Promotion Act. <Amended by Presidential Decree No. 22034, Feb. 18, 2010; Presidential Decree No. 24441, Mar. 23, 2013>
(5) “Fishery, fish farming” in paragraph (1) means the coastal fishing, inland water fishery, and cultivating fishery among the fishing industry classified pursuant to the Korea Standard Industrial Code publicly notified by the Commissioner of Statistics Korea (hereinafter referred to as “Korea Standard Industrial Code”). <Newly Inserted by Presidential Decree No. 23588, Feb. 2, 2012>
(6) In applying paragraph (1), matters necessary for calculating income from sideline of a farm household shall be prescribed by Ordinance of the Ministry of Strategy and Finance. <Amended by Presidential Decree No. 15747, Apr. 1, 1998; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 20720, Feb. 29, 2008>
 Article 9-2 (Scope of Income Generated from Manufacturing Traditional Liquor)
"Income generated from manufacturing traditional liquor prescribed by Presidential Decree" in subparagraph 2 (d) of Article 12 of the Act means income generated from manufacturing any of the following liquors in Eup/Myeon areas outside the Seoul Metropolitan area under subparagraph 1 of Article 2 of the Seoul Metropolitan Area Readjustment Planning Act (hereinafter referred to as the "Seoul Metropolitan area"), and where the total amount of income does not exceed 12 million won per year: <Amended by Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 22034, Feb. 18, 2010; Presidential Decree No. 24441, Mar. 23, 2013; Presidential Decree No. 24574, Jun. 11, 2013>
1. Traditional liquors under subparagraph 1-2 of Article 3 of the Liquor Tax Act;
2. Liquors undergone procedures prescribed by Ordinance of the Ministry of Strategy and Finance on recommendation by the Minister of Land, Infrastructure and Transport for promotion of tourism (limited to those recommended before June 30, 1991);
3. Liquors for which a license is granted by the Governor of Jeju-do in consultation with the Commissioner of the National Tax Service pursuant to the previous Special Act on Jeju-do Development (limited to those licensed before February 5, 1999).
[This Article Newly Inserted by Presidential Decree No. 18173, Dec. 30, 2003]
 Article 9-3 (Scope of Income from Non-taxable Timbering of Forest Trees, etc.)
(1) The afforestation period for the purpose of applying subparagraph 2 (e) of Article 12 of the Act shall be calculated as follows: <Amended by Presidential Decree No. 22034, Feb. 18, 2010>
1. As regards forest trees planted voluntarily by a person, the period from the date on which planting is completed to the date on which they are cut down or transferred to a third party;
2. As regards forest trees planted by contract, the period from the date on which possession of such trees is delivered to the date on which they are cut down or transferred;
3. As regards forest trees planted by any other person and purchased subsequently, the period from the date on which such trees are purchased to the date on which they are cut down or transferred;
4. As regards forest trees conveyed as a gift, the period from the date on which such trees are conveyed as a gift to the date on which they are cut down or transferred;
5. As regards forest trees inherited, the period from the commencement date of their afforestation period by the predecessor under subparagraphs 1 through 4 to the date on which an heir cuts down or transfers them;
6. In cases where a right under a forestation contract for profit sharing (referring to a contract to which the owner of a parcel of mountainous land, a person responsible for costs and expenses, and a person responsible for afforestation become parties to the contract to agree that they shall plant trees and income from forest trees planted and cut down or transferred subsequently shall be distributed to them at an agreed ratio; hereafter the same shall apply in this Article and Article 51 (9)) is acquired, the period from the date on which such right is acquired to the date on which such right is transferred.
(2) "An amount not exceeding six hundred won a year, generated from cutting down or transferring forest trees in forest land" in the former part of subparagraph 2 (e) of Article 12 of the Act means the amount of income calculated in accordance with Articles 51 (8) and (9) and 55, which shall not exceed six million won in each year. <Amended by Presidential Decree No. 22034, Feb. 18, 2010>
(3) In determining the date on which planting is completed or the possession of trees is delivered in cases of paragraph (1) 1 or 2, the unit of stands (referring to a group of trees, which serves as a unit for forest management enabling to discern a specific forest with an identical forest floor from its surroundings) of a forest as planted shall apply.
[This Article Newly Inserted by Presidential Decree No. 19890, Feb. 28, 2007]
 Article 9-4 (Scope of Non-Taxable Business of Cultivating Plants)
(1) "Income generated from business of cultivating plants prescribed by Presidential Decree" in subparagraph 2 (f) of Article 12 of the Act means any income generated from business of cultivating plants the gross amount of which does not exceed one billion won during the pertinent taxable period.
(2) For purposes of paragraph (1), matters necessary to calculate income generated from business of cultivating plants shall be prescribed by Ordinance of the Ministry of Strategy and Finance.
[This Article Newly Inserted by Presidential Decree No. 25193, Feb. 21, 2014]
 Article 10 (Scope of Soldiers in Active Service)
"A soldier in service prescribed by Presidential Decree" in subparagraph 3 (a) of Article 12 of the Act, means a soldier below sergeant (including staff sergeants appointed without volunteering), an auxiliary police officer, or any other similar person in active service, who has been drafted or called up, or volunteered to perform the duty of military service. <Amended by Presidential Decree No. 26659, Nov. 20, 2015; Presidential Decree No. 27617, Nov. 29, 2016>
[This Article Wholly Amended by Presidential Decree No. 22034, Feb. 18, 2010]
 Article 11 (Scope of School Expenses)
"School expenses prescribed by Presidential Decree" in subparagraph 3 (h) of Article 12 of the Act means school expenses satisfying the following subparagraphs (limited to the amount to be paid in the relevant taxable period), among entrance fees, tuition and lecture fees and other public imposts for schools under the Elementary and Secondary Education Act and the Higher Education Act (including educational institutions similar thereto in foreign countries) and for vocational training institutions under the Act on the Development of Occupational Abilities of Workers: <Amended by Presidential Decree No. 14860, Dec. 30, 1995; Presidential Decree No. 15191, Dec. 31, 1996; Presidential Decree Nos. 15967 & 15969, Dec. 31, 1998; Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 19890, Feb. 28, 2007; Presidential Decree No. 22034, Feb. 18, 2010>
1. Expenses paid to relevant workers for education or training related to the business of enterprises in which they are engaged;
2. Expenses paid to relevant workers pursuant to payment criteria stipulated by the regulations, etc. of enterprises in which they are engaged;
3. Expenses paid to relevant workers on condition that they return the amount paid to them, unless they work for the period exceeding the relevant period of education after completing such education or training, if such education or training period is six months or longer.
 Article 12 (Scope of Pay in Nature of Reimbursement for Actual Expenses)
"Pay in the nature of reimbursement for actual expenses prescribed by Presidential Decree" in subparagraph 3 (i) of Article 12 of the Act, means the following: <Amended by Presidential Decree No. 14682, Jun. 30, 1995; Presidential Decree No. 15191, Dec. 31, 1996; Presidential Decree No. 15747, Apr. 1, 1998; Presidential Decree No. 15969, Dec. 31, 1998; Presidential Decree No. 17032, Dec. 29, 2000; Presidential Decree No. 18173, Dec. 30, 2003; Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 19890, Feb. 28, 2007; Presidential Decree No. 20618, Feb. 22, 2008; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 21148, Dec. 3, 2008; Presidential Decree No. 21301, Feb. 4, 2009; Presidential Decree No. 22003, Jan. 27, 2010; Presidential Decree No. 2034, Feb. 18, 2010; Presidential Decree No. 22580, Dec. 30, 2010; Presidential Decree No. 22977, Jun. 24, 2011; Presidential Decree No. 23588, Feb. 2, 2012; Presidential Decree No. 24356, Feb. 15, 2013; Presidential Decree No. 25249, Mar. 11, 2014; Presidential Decree No. 27506, Sep. 22, 2016; Presidential Decree No. 28511, Dec. 29, 2017>
1. Allowances paid to unpaid members of committees, etc. under statutes, or municipal ordinances (including members of the Academy of Sciences and the Academy of Arts);
2. Food expenses received under the Seafarers’ Act;
3. Amount of such level as to reimburse actual expenses, such as pay for day duty, night watch, or business travel (including amounts not exceeding 200,000 won per month from among the incurred expenses received by an employee pursuant to payment criteria stipulated by the regulations, etc. of relevant enterprises, in lieu of receiving reimbursement for actual travel expenses incurred during a business trip within the city using his/her own car to perform his/her duties);
4. Clothing, caps, or shoes provided as uniform to employees who shall wear uniforms under statutes, or municipal ordinances;
5. through 7. Deleted; <by Presidential Decree No. 17032, Dec. 29, 2000>
8. Working clothes received by those who work in a hospital, laboratory, financial institution, etc., factory, or mine, or by those engaging in specialized jobs or services, or clothes only worn at such place of work;
9. Risk premiums paid to soldiers serving in such special fields as parachute jumping, underwater destruction, diving, high voltage, explosives handling, flight, service in the DMZ, service at the front line sentry post, service on warships or in landing tracked vehicles; police special tactical service allowances paid to police officers serving in special fields; and security service allowances paid to security service public officials;
10. Embarkation allowances not exceeding 200,000 won per month provided to seamen under the Seafarers’ Act, who are stipulated by Ordinance of the Ministry of Strategy and Finance (excluding persons to whom Articles 16 and 17 apply); allowances for service on warships and flight allowances provided to police officials; and allowances for service on warships, flight allowances, and fire fighting allowances provided to officials of fire departments;
11. Allowances for entering a mining tunnel and for blasting, received by workers in a mine;
12. Amount not exceeding 200,000 won per month out of subsidies for research or research activity expenses provided to any of the following persons:
(a) Teaching staff of a school established under the Early Childhood Education Act, the Elementary and Secondary Education Act, or the Higher Education Act, and a school equivalent thereto (including an educational institution established under a special Act);
(b) A person directly engaging in, or providing direct support for, research activities (limited to a person with qualifications equivalent to that of teaching staff of universities and colleges) in a research institute governed by the Specific Research Institutes Support Act, a government-funded research institute established pursuant to a special Act, or a local government-funded research institute established pursuant to the Act on the Establishment and Operation of Local Government-Invested Research Institutes, who is specified by Ordinance of the Ministry of Strategy and Finance;
(c) A person who directly engages in research activities in a research institute affiliated to a small or medium enterprise or a venture business, recognized under Article 14-2 (1) of the Basic Research Promotion and Technology Development Support Act as one that meets the criteria under Article 16-2 (1) 1 or 3 of the Enforcement Decree of the Basic Research Promotion and Technology Development Support Act, or in a research and development department established pursuant to the same paragraph (limited to those established within a small or medium enterprise or a venture business);
13. Amount of money, paid by the State or a local government, falling under any of the following:
(a) Money for improvement of working environment paid to improve labor conditions of a nursing teacher, among expenses referred to in Article 24 (1) 7 of the Enforcement Decree of the Infant Care Act;
(b) Labor costs paid to master teachers and teachers of private kindergartens under Article 32 (1) 2 of the Enforcement Decree of the Early Childhood Education Act;
(c) Training allowances paid to specialized doctors to induce supply-demand balance among doctors in each specialized major;
14. Amount not exceeding 200,000 won per month among allowances for news gathering that are received in connection with news gathering activities by a reporter who engages in a press enterprise that runs a broadcasting company under the Broadcasting Act, a news agency under the Act on the Promotion of News Communications, a newspaper under the Act on the Promotion of Newspapers, Etc. (referring to ordinary daily newspapers, special daily newspapers, and Internet newspapers, including periodicals under the Act on Promotion of Periodicals, including Magazines, which are directly published by a company running the relevant newspaper), or who engages in the business of using broadcasting channels under the Broadcasting Act (including editorial writers and cartoonists who perform news gathering activities under full-time employment in the relevant press enterprise and in the business of using broadcasting channels under the Broadcasting Act). In such cases, if he/she receives allowances for news gathering along with his/her wages, the amount of money equivalent to 200,000 won per month shall be deemed allowances for news gathering;
15. Allowances not exceeding 200,000 won received each month by a worker working in a remote area prescribed by Ordinance of the Ministry of Strategy and Finance;
16. Wages received by a worker in relation to natural disasters or other calamities;
17. Relocation grants not exceeding 200,000 won per month temporarily paid to the public officials or employees of public institutions defined in subparagraph 9 of Article 2 of the Special Act on Balanced National Development to be relocated to areas, other than the Seoul Metropolitan area defined in subparagraph 1 of Article 2 of the Seoul Metropolitan Area Readjustment Planning Act;
18. Money and goods that a religion-related worker receives for ordinary use in religious activities according to regulations of the religious organization to which the worker belongs or guidelines for payment determined following resolution or approval by the decision-making authority of such religious organization.
 Article 13 Deleted. <by Presidential Decree No. 19327, Feb. 9, 2006>
 Article 14 (Scope of International Organizations)
(1) "International organization prescribed by Presidential Decree" in the main sentence of subparagraph 3 (j) of Article 12 of the Act means the United Nations or its affiliated organizations.
(2) "Salary received by a person prescribed by Presidential Decree" in the main sentence of subparagraph 3 (j) of Article 12 of the Act means pay received as the price for the performance of his/her duties by a person who is not Korean, among those working for a foreign government or an international organization.
[This Article Wholly Amended by Presidential Decree No. 22034, Feb. 18, 2010]
 Article 15 (Scope of Pay Received by Military Personnel and Civilian Workers in Military Stationed in Foreign Countries)
Pay received by military personnel or a civilian worker in the military under subparagraph 3 (m) of Article 12 of the Act shall be deemed to include prepaid pay (including pay falling under the period after the period of performance of their duties): Provided, That where military personnel or a civilian worker in the military stationed in a foreign country is recalled home because he/she is deemed unfit for the performance of duties in the relevant foreign country on account of reasons, such as a disciplinary action, this shall not apply to pay for the remaining period.
[This Article Wholly Amended by Presidential Decree No. 22034, Feb. 18, 2010]
 Article 16 (Scope of Non-Taxable Wages for Workers Abroad)
(1) "Wages prescribed by Presidential Decree" in subparagraph 3 (o) of Article 12 of the Act, means the following wages: <Amended by Presidential Decree No. 14860, Dec. 30, 1995; Presidential Decree No. 16664, Dec. 31, 1999; Presidential Decree No. 17032, Dec. 29, 2000; Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 19327, Feb. 9, 2006; Presidential Decree No. 21301, Feb. 4, 2009; Presidential Decree No. 22034, Feb. 18, 2010; Presidential Decree No. 23588, Feb. 2, 2012; Presidential Decree No. 23723, Apr. 13, 2012; Presidential Decree No. 24356, Feb. 15, 2013; Presidential Decree No. 25193, Feb. 21, 2014; Presidential Decree No. 27829, Feb. 3, 2017>
1. Amount not exceeding one million won per month (or three million won per month when receiving remuneration in exchange for providing labor (including construction supervision works) on a pelagic fishing vessel, a vessel serving overseas routes, etc. or in a construction site of overseas, etc.), of the remunerations received by a person by providing labor abroad (including furnishing labor on a pelagic fishing vessel, in a vessel or aircraft serving overseas routes, or in an overseas construction work site, etc.) or in North Korea under the Inter-Korean Exchange and Cooperation Act (hereafter referred to as "overseas, etc." in this Article);
2. Pay in the nature of reimbursement for actual expenses, publicly announced by the Minister of Foreign Affairs in consultation with the Minister of Strategy and Finance, out of the allowances that a public official or an employee of the Korea Trade-Investment Promotion Agency established under the Korea Trade-Investment Promotion Agency Act, the Korea National Tourism Organization established under the Korea National Tourism Organization Act, the Korea International Cooperation Agency established under the Korea International Cooperation Agency Act, or the Korean Foundation for International Healthcare under the Korean Foundation for International Healthcare Act receives for his/her overseas service, etc. in excess of the allowances to which he/she would be otherwise entitled for domestic service.
(2) Wages provided for in paragraph (1) shall include where the remuneration for relevant labor is paid in the Republic of Korea.
(3) Wages received by a person who provides labor in a pelagic fishery vessel or on a vessel or aircraft serving overseas routes, etc. under paragraph (1) 1, shall be limited to wages received by the crew of a pelagic fishery vessel for engaging in pelagic fisheries, and to wages received by the crew of a vessel or an aircraft serving overseas route, etc. for their labor provided during the service period over the said routes, etc. <Amended by Presidential Decree No. 17032, Dec. 29, 2000>
(4) The scope of a pelagic fishery vessel, an overseas construction site, etc. referred to in paragraph (1) 1 and of crew referred to in paragraph (3) shall be prescribed by Ordinance of the Ministry of Strategy and Finance. <Amended by Presidential Decree No. 22034, Feb. 18, 2010>
 Article 17 (Scope of Night-Shift Allowance, etc. Received by Manufacturing Workers)
(1) "Worker prescribed by Presidential Decree" in subparagraph 3 (q) of Article 12 of the Act means any of the following persons, whose monthly fixed pay does not exceed 1.5 million won and his/her total salary under Article 20 (2) of the Act during the immediately preceeding tax period does not exceed 25 million won (including workers employed on a daily basis). In such cases, a monthly fixed pay means the pay calculated by subtracting the aggregate of allowances paid in addition to the regular pay for overtime work, night-shift work or holiday work under the Labor Standards Act and a production allowance received pursuant to the Seafarers Act (referring to the percentage pay exceeding the monthly fixed pay where workers are paid by percentage basis), from the total of a salary, pay, remuneration, wages, allowance and other allowances in the nature similar thereto (excluding irregular pay, such as a bonus, etc., received during the relevant taxable period and pay in the nature of compensation for actual expenses pursuant to Article 12) received monthly by worker's rank: <Amended by Presidential Decree No. 14860, Dec. 30, 1995; Presidential Decree No. 15747, Apr. 1, 1998; Presidential Decree No. 18048, Jul. 10, 2003; Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 19327, Feb. 9, 2006; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 22034, Feb. 18, 2010; Presidential Decree No. 23588, Feb. 2, 2012; Presidential Decree No. 24356, Feb. 15, 2013>
1. Persons providing labor in a factory or mine, prescribed by Ordinance of the Ministry of Strategy and Finance among employees engaging in production or related areas as indicated in the Korea Standard Occupational Classification publicly notified by the Commissioner of the National Statistical Office;
2. Persons providing labor under employment by a fishing business, prescribed by Ordinance of the Ministry of Strategy and Finance;
3. Persons stipulated by Ordinance of the Ministry of Strategy and Finance among drivers or employees in related fields, or those engaged in delivery or transport of baggage in accordance with the Korea Standard Occupational Classification published by the Commissioner of the National Statistical Office.
(2) "An allowance received for overtime work, night-shift work or holiday work prescribed by Presidential Decree" in subparagraph 3 (q) of Article 12 of the Act means the amount of money falling under any of the following: <Amended by Presidential Decree No. 14682, Jun. 30, 1995; Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 22034, Feb. 18, 2010>
1. Amount not exceeding 2.4 million won a year out of wages received in addition to ordinary wages for overtime work, night-shift work or holiday work under the Labor Standards Act (in cases of mine workers or workers employed on a daily basis, the total amount of the relevant wages);
2. Amount not exceeding 2.4 million won a year out of the allowances for production received by workers under paragraph (1) 2 pursuant to the Seafarers Act (pay based on a ratio exceeding regular monthly pay in cases where pay is based on such ratio).
(3) The scope of fisheries under paragraph (1) 2 shall be governed by the Korea Standard Industry Code. <Amended by Presidential Decree No. 23588, Feb. 2, 2012>
(4) Deleted. <by Presidential Decree No. 22034, Feb. 18, 2010>
 Article 17-2 (Scope of Non-Taxable Meal Expenses, etc.)
"Meals or meal expenses prescribed by Presidential Decree" in subparagraph 3 (r) of Article 12 of the Act means meals or meal expenses falling under any of the following subparagraphs: <Amended by Presidential Decree No. 18173, Dec. 30, 2003; Presidential Decree No. 22034, Feb. 18, 2010>
1. Meals and other food and drinks provided to workers by in-house meal services or similar means;
2. Meal costs of not more than 100 thousand won per month received by workers for whom meals and other food and drinks stipulated by sub- paragraph 1 are not provided.
[This Article Newly Inserted by Presidential Decree No. 15138, Aug. 22, 1996]
 Article 17-3 (Scope of Non-Taxable Compensations for Employee's Invention)
"The amount specified by Presidential Decree" in the main sentence of subparagraph 3 (v) of Article 12 of the Act, means an mount not exceeding three million won per year.
[This Article Newly Inserted by Presidential Decree No. 27829, Feb. 3, 2017]
 Article 18 (Scope of Non-Taxable Other Income)
(1) "Prizes and supplementary prizes prescribed by Presidential Decree" in subparagraph 5 (c) of Article 12 of the Act, means any of the following prizes: <Amended by Presidential Decree No. 16664, Dec. 31, 1999; Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 19890, Feb. 28, 2007; Presidential Decree No. 21214, Dec. 31, 2008; Presidential Decree No. 22034, Feb. 18, 2010; Presidential Decree No. 23588, Feb. 2, 2012; Presidential Decree No. 24315, Jan. 16, 2013; Presidential Decree No. 24441, Mar. 23, 2013; Presidential Decree No. 28211, Jul. 26, 2017>
1. Prize money and supplementary prizes received by the winners of the Academy of Sciences prizes under the National Academy of Sciences of the Republic of Korea Act, or of the Academy of Arts prizes under the National Academy of Arts of the Republic of Korea Act;
2. Prize money and supplementary prizes received by the winners of the Nobel Prize or of prizes from foreign governments, international agencies, international organizations, and other foreign organizations or funds;
3. Prize money and supplementary prizes received by the winners of the Korean Culture and Arts Award under the Culture and Arts Promotion Act and of various prizes granted by the Art Council Korea from the Culture and Arts Promotion Fund under the same Act;
4. Prize money and supplementary prizes received by the winners of prizes awarded at the Korean Art Contest;
5. Prize money and supplementary prizes received by the winners of athletic prizes under the National Sports Promotion Act;
6. Prize money and supplementary prizes received by the winners of prizes awarded at a science exhibition held by the Ministry of Science and ICT;
7. Prize money and supplementary prizes received by the winners of prizes awarded with approval from the head of the relevant central administrative agency by a corporation founded under a special Act;
8. Prize money and supplementary prizes received by persons selected as quality masters (including subgroups) under the Quality Control and Safety Management of Industrial Products Act;
9. Amounts not exceeding 150,000 won per person from among prize money received from an employer in connection with the relevant commendation or prize-winning in cases of employees who have received a commendation from the official ranking at least the head of a central administrative agency in view of their achievements in promoting government policies, such as at-work Saemaul campaign, the industrial accidents prevention campaign, etc., or of employees who have won a vocational technique competition in the Republic of Korea or abroad approved by the head of a relevant central administrative agency;
10. An allowance for exemplary official received by a person selected as an exemplary official pursuant to the Regulations for Exemplary Officials;
11. A reward or compensation received by a person who has reported or denounced for the observance of laws and regulations and maintenance of social order by the State or a local government as prescribed by related Acts and subordinate statutes, such as a reward, etc., pursuant to Article 84-2 of the Framework Act on National Taxes;
12. Compensation received by a person who reports a crime, as prescribed by the Commissioner of the National Police Agency;
13. Prize money and supplementary prizes granted by the State or local governments, other than those in subparagraphs 1 through 12.
(2) "Amount specified by Presidential Decree" in subparagraph 5 (d) of Article 12 of the Act, means an amount not exceeding three million won per year (if any other amount is non-taxable for the relevant taxable period under subparagraph 3 (v) of Article 12 of the Act, the amount shall be deducted from three million won). <Newly Inserted by Presidential Decree No. 27829, Feb. 3, 2017>
 Article 19 (Scope of Non-Taxable Income of Religion-Related Workers)
(1) "School expenses specified by Presidential Decree" in subparagraph 5 (h) (i) of Article 12 of the Act, means admission fees, tuition fees, and other payments that a religion-related worker defined in subparagraph 5 (h) (i) of Article 12 of the Act (hereinafter referred to as "religion-related worker"), receives to pay them to any of the following schools or facilities for education and training related to activities as a religion-related worker of the religious organization to which he/she belongs:
1. A school defined in Article 2 of the Elementary and Secondary Education Act (including similar education facilities in foreign countries);
2. A school defined in Article 2 of the Higher Education Act (including similar education facilities in foreign countries);
3. A lifelong education facility defined in Chapter V of the Lifelong Education Act.
(2) "Meals or meal allowances specified by Presidential Decree" in subparagraph 5 (h) (ii) of Article 12 of the Act, means the following meals or allowances:
1. Meals or other food that a religious organization provides to religion-related workers who belong thereto;
2. Meal allowances not exceeding 100,000 won per month, which a religion-related worker to whom meals or other food are not provided as referred to in subparagraph 1, receives from the religious organization to whom he/she belongs.
(3) "Payments specified by Presidential Decree as those paid to religion-related workers in the nature of reimbursement for actual expenses" in subparagraph 5 (h) (iii) of Article 12 of the Act, means the following payments: <Amended by Presidential Decree No. 28511, Dec. 29, 2017>
1. Day duty allowances, night watch allowances, and other similar allowances;
2. Travel expenses for reimbursement for approximately actual expenses (including an amount not exceeding 200,000 won per month, out of an amount that a religion-related worker receives according to the guidelines for payment as prescribed by rules, etc. of the relevant religious organization in lieu of actual travel expenses incurred in operating his/her own vehicle on his/her own to use the vehicle for activities as a religion-related worker of the religious organization to which he/she belongs);
3. Money and goods specified in subparagraph 18 of Article 12;
4. Payments that a religion-related worker receives for relief from a natural disaster or any other disaster.
[This Article Newly Inserted by Presidential Decree No. 26982, Feb. 17, 2016]
SECTION 2 Tax Base and Calculation of Tax Amount
 Article 20 (Scope of Workers Employed on Daily Basis, Computation of House Rental Income, etc.)
(1) "Workers employed on a daily basis prescribed by Presidential Decree" in Article 14 (3) 2 of the Act, means any of the following persons who receives remuneration for labor based upon the days or hours for which they provide labor, or where their pay is calculated based upon the outcome of labor in the days or hours for which they provide labor: <Amended by Presidential Decree No. 22034, Feb. 18, 2010>
1. Persons engaging in construction works, excluding the following:
(a) Persons employed continuously for at least one year by the same employer;
(b) Persons employed continuously by the same employer in order to engage in the following jobs in general:
(i) Directly instructing or supervising persons who prepare for works or engage in manual labor;
(ii) Technical work, clerical work, typing, cooking, guard, etc. required at a work site;
(iii) Operating or maintaining construction machines;
2. Persons engaging in loading and unloading (including stevedores), excluding the following:
(a) Persons regularly receiving remuneration for labor, not receiving remuneration for labor on days on which they provide labor;
(b) Persons employed by the same employer continuously in order to engage in the following jobs in general:
(i) Directly instructing or supervising persons who prepare for works or engage in manual labor;
(ii) Operating or maintaining major machines;
3. Persons engaging in jobs other than those referred to in subparagraph 1 or 2, who do not remain under continuous employment by the same employer for at least three months under employment contract.
(2) "The total amount of gross earnings specified by Presidential Decree" in Article 14 (3) 7 of the Act, means the gross revenue prescribed in Article 8-2 (6). <Newly Inserted by Presidential Decree No. 26067, Feb. 3, 2015>
(3) Article 8-2 (1) through (4) shall apply mutatis mutandis to the computation, etc. of house rental income prescribed in Article 14 (3) 7 of the Act. <Newly Inserted by Presidential Decree No. 26067, Feb. 3, 2015>
 Article 20-2 (Requirements, etc. for Withdrawal for Purpose of Medical Treatment or due to Inevitable Circumstances)
(1) "Pension income withdrawn in the amount where the requirements specified by Presidential Decree are met, for the purpose of medical treatment or due to a natural disaster or any other inevitable circumstances" in Article 14 (3) 9 (b) of the Act, means an amount withdrawn from a pension account under Article 20-3 (1) 2 of the Act (hereinafter referred to as “pension account”) in any of the following cases:
1. Where the person who intends to withdraw an amount from a pension account due to the occurrence of any of the following events submits documents evidencing the occurrence of such event to the financial company, etc. managing the pension account (hereinafter referred to as “pension account administrator”), within six months from the date the occurrence of the event is confirmed:
(a) A natural disaster;
(b) Death or emigration abroad of the holder of the pension account;
(c) Where the holder of the pension account or any of family members dependant to him/her (limited to persons eligible for the basic deduction under Article 50 of the Act (without any limit on income)) needs medical care for at least three months due to a disease or an injury;
(d) Where the holder of the pension account is declared bankrupt or becomes subject to a decision to commence proceedings for individual rehabilitation under the Debtor Rehabilitation and Bankruptcy Act;
(e) Suspension of business operations of the holder of the pension account, cancellation of authorization or permission for business, resolution of dissolution, or declaration of bankruptcy;
2. Where the holder of a pension account, who meets the criteria under Article 40-2 (3) 1 or 2, submits evidentiary documents specified by Ordinance of the Ministry of Strategy and Finance in order to withdraw an amount from the pension account for the medical expenses prescribed in Article 118-5 (1) or (2) (limited to medical expenses only for him/her), within six months from the date he/she pays such medical expenses.
(2) The amount that may be withdrawn under paragraph (1) 1 (c) shall be limited to the maximum amount specified by Ordinance of the Ministry of Strategy and Finance, taking into consideration medical expenses prescribed in Article 118-5 (1) or (2), nursing expenses, or the minimum living cost publicly notified by the Minster of Health and Welfare, etc.
(3) In order to withdraw medical expenses pursuant to paragraph (1) 2, only one pension account per person may be designated as the pension account for medical expenses (limited to where the administrator of the relevant pension account consents to the designation).
(4) A pension account administrator shall keep evidentiary documents submitted under paragraph (1) 1 and 2 for five years from the day immediately following the deadline for the payment of withholding tax on the relevant withdrawal.
(5) Except as otherwise expressly provided for in paragraphs (1) through (4), matters necessary for procedures for withdrawal from a pension account shall be prescribed by Ordinance of the Ministry of Strategy and Finance.
[This Article Wholly Amended by Presidential Decree No. 26067, Feb. 3, 2015]
 Article 21 (Scope of Income subject to Separate Taxation similar to Lottery Prize Income)
"Other income prescribed by Presidential Decree" in Article 14 (3) 8 (e) of the Act, means any of the following income: <Amended by Presidential Decree No. 22034, Feb. 18, 2010; Presidential Decree No. 23588, Feb. 2, 2012; Presidential Decree No. 24356, Feb. 15, 2013; Presidential Decree No. 26067, Feb. 3, 2015>
1. Deleted; <by Presidential Decree No. 24356, Feb. 15, 2013>
3. Prize money and other valuables under Article 21 (1) 14 of the Act;
4. Deleted; <by Presidential Decree No. 23588, Feb. 2, 2012>
5. Income prescribed by Ordinance of the Ministry of Strategy and Finance as income similar to those specified in subparagraphs 2 and 3.
[This Article Newly Inserted by Presidential Decree No. 21301, Feb. 4, 2009]
 Article 22 Deleted. <by Presidential Decree No. 18173, Dec. 30, 2003>
 Article 22-2 (Interest Income from State Bonds, etc.)
(1) Where bonds issued by the State are divided into principal and interest, the discounted value of bonds corresponding to the principal and interest shall be deemed the discounted value of bonds under Article 16 (1) 1 of the Act.
(2) Where the following bonds are issued in unity (referring to issuance by unifying the terms and conditions of issuance of bonds to be issued additionally for a given period, such as coupon rate, maturity, etc.) on the open market, the difference between the sale price and par value of the relevant bonds shall be deemed not to be included in the interest and discounted value under Article 16 (1) 1 or 2 of the Act: <Amended by Presidential Decree No. 20618, Feb. 22, 2008; Presidential Decree No. 22034, Feb. 18, 2010; Presidential Decree No. 25945, Dec. 30, 2014>
1. State bonds;
2. Industrial finance bonds prescribed in Article 23 of the Korea Development Bank Act;
3. Deposit protection fund bonds and compensation fund bonds for deposit protection fund bonds prescribed in Articles 26-2 and 26-3 of the Depositor Protection Act;
4. Monetary stabilization bonds of the Bank of Korea prescribed in Article 69 of the Bank of Korea Act.
(3) In cases of bonds issued by the State, the principal of which varies according to commodity prices (hereinafter referred to as "inflation-linked treasury bonds"), the amount of increase in the principal of such bonds shall be included in the interest and discounted value under Article 16 (1) 1 of the Act. <Newly Inserted by Presidential Decree No. 19890, Feb. 28, 2007; Presidential Decree No. 24356, Feb. 15, 2013; Presidential Decree No. 26982, Feb. 17, 2016>
[This Article Wholly Amended by Presidential Decree No. 19327, Feb. 9, 2006]
 Article 23 Deleted. <by Presidential Decree No. 22034, Feb. 18, 2010>
 Article 24 (Profit Margins from Repurchase Agreement)
"Profit margin on repurchase of bonds or securities prescribed by Presidential Decree" in Article 16 (1) 8 of the Act means profit margin on bonds or securities traded on condition of repurchase or resale by a financial company, etc. (referring to a financial company, etc. falling under any item of subparagraph 1 of Article 2 of the Act on Real Name Financial Transactions and Confidentiality and a corporation falling under any subparagraph of Article 111 (2) of the Enforcement Decree of the Corporate Tax Act; hereinafter the same shall apply) by applying the rate of interest agreed in advance according to the repurchase period.
[This Article Wholly Amended by Presidential Decree No. 22034, Feb. 18, 2010]
 Article 25 (Profit Margins on Savings Insurance)
(1) "Profit margins on any of the savings insurances specified by Presidential Decree" in the main sentence of Article 16 (1) 9 of the Act, means the amounts calculated by subtracting paid-in insurance premiums or paid-in mutual-aid contributions (hereafter in this Article referred to as "insurance premiums") from the insurance or mutual-aid proceeds receivable upon the expiration of an insurance contract or from the refund receivable upon the termination of an insurance contract before the expiration thereof (limited to those not receivable for the death, illness, wounds, or any other bodily injuries or for the destruction of or damage to assets; hereafter in this Article referred to as "insurance proceeds"): <Amended by Presidential Decree No. 27829, Feb. 3, 2017>
(2) "Insurance contracts" in paragraph (1) means any of the following contracts: <Amended by Presidential Decree No. 14860, Dec. 30, 1995; Presidential Decree No. 15969, Dec. 31, 1998; Presidential Decree No. 16762, Mar. 28, 2000; Presidential Decree No. 17032, Dec. 29, 2000; Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 19010, Aug. 19, 2005; Presidential Decree No. 19327, Feb. 9, 2006; Presidential Decree No. 23987, Jul. 24, 2012; Presidential Decree No. 24356, Feb. 15, 2013; Presidential Decree No. 24574, Jun. 11, 2013>
1. Life insurance contracts or accident insurance contracts provided for in the Insurance Business Act;
2. Life mutual-aid contracts or accident mutual-aid contracts administered pursuant to relevant Acts by any of the following institutions:
(a) Deleted; <by Presidential Decree No. 24356, Feb. 15, 2013>
(b) The National Federation of Fisheries Cooperatives and cooperatives incorporated under the Fisheries Cooperatives Act;
(c) Deleted; <by Presidential Decree No. 16664, Dec. 31, 1999>
(d) The National Credit Unions Federation of Korea incorporated under the Credit Unions Act;
(e) The Community Credit Cooperatives Federation incorporated under the Community Credit Cooperatives Act;
3. Postal insurance contracts established under the Postal Savings and Insurance Act.
(3) "An insurance that meets the requirements prescribed by Presidential Decree" in Article 16 (1) 9 (a) of the Act, means any of the following insurance contracts from the time of signing the insurance contract: <Newly Inserted by Presidential Decree No. 27829, Feb. 3, 2017>
1. A savings insurance contract for which the sum of insurance premiums to be paid by each policy holder (referring to the sum of insurance premiums of all saving insurance contracts signed by a policy holder (excluding savings insurance contracts under subparagraph 2 and life pension insurance contracts under paragraph (4)) does not exceed the following amounts: Provided, That the same shall not apply where the period from the date of initial payment (hereafter referred to as “date of initial payment” in this Article) to the date of expiration or early termination is at least ten years, but paid-in insurance premiums shall be paid in installments in the form of annuities during a fixed period before the lapse of ten years from the date of payment of the initial insurance premium:
(a) In cases of an insurance contract signed on or before March 31, 2017: 200 million won;
(b) In cases of an insurance contract signed on or after April 1, 2017: 100 million won;
2. A savings insurance contract in monthly installments, which meets the following requirements:
(a) The period of payment from the date of initial payment for the savings insurance contract in monthly installments shall be at least five years;
(b) The basic insurance premiums payable monthly from the date of initial payment shall be in equal installments (including where the basic insurance premiums may be increased by not more than one time the basic insurance premiums initially agreed), and the period of advance payment of the basic insurance premiums shall not exceed six months;
(c) The sum of insurance premiums to be paid monthly by each policy holder (referring to the sum of monthly paid-in insurance premiums, including basic insurance premiums of all insurance contracts in monthly installments signed by each policy holder (excluding insurance contracts specified by Ordinance of the Ministry of Strategy and Finance, among insurance contracts under which the amount refundable at maturity does not exceed paid-in insurance premiums) and additionally paid insurance premiums, as calculated by the method prescribed by Ordinance of the Ministry of Strategy and Finance), shall not exceed 1,500,000 won (limited to insurance contracts signed on or after April 1, 2017).
(4) "A pension insurance for life that meets the requirements prescribed by Presidential Decree" in Article 16 (1) 9 (b) of the Act, means a life pension insurance contract that meets all the following requirements from the time when the insurance contract is signed: <Newly Inserted by Presidential Decree No. 27829, Feb. 3, 2017>
1. Insurance proceeds, profits, etc. shall be paid to the policy holder in annuities from the time when the policy holder attains the age of 55 years after the lapse of the contract period for the payment of insurance premiums until death;
2. Insurance proceeds, profits, etc. shall not be paid in any form other than annuities;
3. Upon death (referring to the expiration of the period of guarantee, where the period during which the payment of insurance proceeds, profits, etc. in annuities is guaranteed (hereafter in this Article, referred to as "period of guarantee") within the limit of the life expectancy by gender and by age according to the statistical tables approved and publicly notified by the Commissioner of the Statistics Korea pursuant to Article 18 of the Statistics Act (a figure below the decimal point shall be cut off; hereafter in this Article, referred to as "life expectancy")), the insurance contract and the resources for the pension shall be extinguished;
4. The policy holder, the insured, and the beneficiary shall be the same person, and the insurance contract shall not be terminated early before the date of death after the intial payment of annuities commences;
5. The amount of annuity receivable annually (the amount changed according to a change of the interest rate after the receipt of pension commences and the amount of annuity to be received after deferred shall not be included herein) shall not exceed the amount calculated by the following formular:
Assessed amount of the pension account as at the commencement date of receipt of pension/Life expectancy as at the commencement date of receipt of pension x 3.
(5) If an insurance contract under paragraph (3) or (4) ceases to meet the relevant requirements after it is signed, it shall be excluded from the insurance contracts referred to in paragraphs (3) and (4): Provided, That, if an insurance contract under paragraph (3) 2 meets the requirement under paragraph (3) 1, although it ceases to meet the relevant requirements after it is signed, the insurance contract shall be deemed qualified as an insurance contract under paragraph (3) 1, while an insurance contract under paragraph (4) shall be deemed qualified as an insurance contract under any subparagraph of paragraph (3), even where it ceases to meet the relevant requirements after it is signed, but meets the requirement in any subparagraph of paragraph (3). <Newly Inserted by Presidential Decree No. 27829, Feb. 3, 2017>
(6) When any of the following changes (with respect to any previous insurance agreement, limited to the change under subparagraph 3) is made to an insurance agreement under paragraph (3) 1 and 2 and an insurance agreement entered into before February 15, 2013 (referring to an insurance agreement subject to application of former Article 25 (1) pursuant to Article 35 of the Addenda to the Enforcement Decree of the Income Tax Act (Presidential Decree No. 24356); hereafter referred to as “previous insurance agreement” in this paragraph), the date of change shall be the first payment date of the relevant insurance agreement: Provided, That if a change referred to in subparagraph 1 or 2 is made to an insurance contract under paragraph (3) 2, the period of installment payment of premiums until the date of amendment of the contract shall be included in the period of installment payment under paragraph (3) 2 (b), and the premiums already paid before the amendment of the contract shall be deemed to meet the requirements in paragraph (3) 2 (b) even after the amendment of the contract: <Newly Inserted by Presidential Decree No. 24356, Feb. 15, 2013; Presidential Decree No. 24574, Jun. 11, 2013; Presidential Decree No. 25193, Feb. 21, 2014; Presidential Decree No. 27829, Feb. 3, 2017>
1. Where the name of policyholder is changed (excluding the change due to death);
2. Where an indemnity insurance is changed to a savings insurance;
3. Where a standard insurance premium is increased by more than 100% of the initially contracted standard insurance premium.
(7) Where an insurance contract is amended under paragraph (6), the method of calculating the sum of insurance premiums under paragraph (3) 1 and 2 (c) shall be prescribed by Ordinance of the Ministry of Strategy and Finance. <Newly Inserted by Presidential Decree No. 27829, Feb. 3, 2017>
(8) In calculating an insurance premium under paragraph (1), dividends and other money similar thereto (hereafter referred to as "dividends, etc." in this paragraph) paid under an insurance contract during an insurance contract period shall be deducted from paid-up insurance premium. In cases of offsetting an insurance premium with dividends, etc., the insurance premium shall be deemed paid with dividends, etc. from an insurance contract.
 Article 26 (Scope of Interest Income)
(1) "Workplace mutual-aid association prescribed by Presidential Decree" in Article 16 (1) 10 of the Act, means a mutual-aid society or a mutual-aid association (including organizations similar thereto) established under Article 32 of the Civil Act or other Acts, which are organized for stable living, enhancement of welfare, or mutual-aid for workers engaging in the same place of work or occupation. <Amended by Presidential Decree No. 15565, Dec. 31, 1997; Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 22034, Feb. 18, 2010; Presidential Decree No. 23588, Feb. 2, 2012>
(2) An excess amount of repayment specified in Article 16 (1) 10 of the Act shall be determined by subtracting the amount of paid-in deductions from the amount of repayment that the worker receives from the relevant workplace mutual-aid association according to its bylaws upon his/her retirement or withdrawal from the mutual-aid association (hereinafter referred to as "gain exceeding the payments") and adding the gain accruing additionally during the period of payment (hereinafter referred to "gain additionally accruing from the repayment"), where the repayment is paid in installments. <Amended by Presidential Decree No. 22034, Feb. 18, 2010; Presidential Decree No. 23588, Feb. 2, 2012; Presidential Decree No. 25193, Feb. 21, 2014; Presidential Decree No. 26067, Feb. 3, 2015>
(3) A profit from a non-business loan specified in Article 16 (1) 11 of the Act shall be interest, fees, etc. paid to a person who does not have the loan of money for business purposes, by his/her temporary or incidental loan of money. <Newly Inserted by Presidential Decree No. 22034, Feb. 18, 2010>
(4) The amount equivalent to interest accrued from bonds which a resident receives from a borrower on condition that the resident redeems the same quantity of bonds in the same kind in a given period, shall be included in interest income under Article 16 (1) 12 of the Act. <Newly Inserted by Presidential Decree No. 22580, Dec. 30, 2010>
(5) "Merged with the derivatives, as prescribed by Presidential Decree" in Article 16 (1) 13 of the Act, means any of the following cases where an individual person concurrently trades instruments bearing interest income (hereafter in this paragraph referred to as "interest-bearing instruments") and derivatives defined in Article 5 of the Financial Investment Services and Capital Markets Act (hereinafter referred to as "derivatives"): <Amended by Presidential Decree No. 27829, Feb. 3, 2017>
1. Where the instruments meet all the following requirements and are managed actually as one and the same kind of instrument:
(a) Trading of interest-bearing instruments developed and sold directly by a financial company, etc. and the agreement on derivatives of the financial company, etc. shall be made through the financial company, etc.;
(b) The derivatives shall involve an agreement for trading money or any other thing with a value as property, as calculated according to all or part of principal and interest income of interest-bearing instruments (hereafter in this paragraph referred to as "interest income, etc."), the price, interest rate, indicator, or unit of interest income, etc. or an index, etc. based on such price, interest rate, indicator, or unit;
(c) The financial company, etc. under item (a) shall pay interest income, etc. accrued from interest-bearing instruments and profits accrued from derivatives;
2. Where all the following requirements are met and profits accrued from derivatives (limited to cases falling under Article 166-2 (1) 1 of the Financial Investment Services and Capital Markets Act) paid by a financial company, etc. at a specific time in the future are fixed:
(a) The trading of interest-bearing instruments handled by the financial company, etc. and the agreement on derivatives of the financial company, etc. shall be made through the financial company, etc. (including where a right of pledge is created over interest-bearing instruments for the performance of the agreement on derivatives or where the trading of interest-bearing instruments and the agreement on derivatives are made through a money trust under Article 103 of the Enforcement Decree of the Financial Investment Services and Capital Markets Act, although the trading of interest-bearing instruments and the agreement on derivatives are made through at least two financial companies, etc.);
(b) The derivatives shall involve an agreement for trading money or any other thing with a value as property, as calculated according to interest income of interest-bearing instruments, the price, interest rate, index, or unit of interest income, etc. or an index, etc. based on such price, interest rate, indicator, or unit;
(c) The definite profits accrued from derivatives shall be greater than interest income accrued from interest-bearing instruments.
 Article 26-2 (Scope, etc. of Collective Investment Schemes)
(1) "Collective investment schemes prescribed by Presidential Decree" in Article 17 (1) 5 of the Act, means a collective investment scheme meeting all the following requirements: <Amended by Presidential Decree No. 26982, Feb. 17, 2016>
1. It shall be a collective investment scheme prescribed in the Financial Investment Services and Capital Markets Act (excluding special accounts of an insurance company pursuant to Article 251 of the same Act, but including a trust which preserves the principal, as a money trust; hereinafter referred to as "collective investment scheme");
2. It shall settle accounts and distribute dividend at least once each year from the date of establishment of the relevant collective investment scheme: Provided, That the distribution of any of the following profits may be reserved, and where a profit specified in Article 242 of the Financial Investment Services and Capital Markets Act is less than zero, the distribution may also be reserved (limited to cases prescribed by collective investment rules pursuant to Article 9 (22) of the same Act):
(a) A profit calculated by changing a list of index or investing in derivatives by an exchange traded collective investment scheme pursuant to Article 234 of the Financial Investment Services and Capital Markets Act;
(b) A profit on valuation of a collective investment scheme valuated pursuant to Article 238 of the Financial Investment Services and Capital Markets Act;
(c) A profit on trading of collective investment property under the accounting standards under Article 240 (1) of the Financial Investment Services and Capital Markets Act;
3. It shall be entrusted with money and refunded with money (including a trust, the trust value and the refund value of which are all denominated in money, as cases where it is entrusted with assets other than money and refunds).
(2) When paragraph (1) applies, a collective investment scheme set up abroad shall be deemed a collective investment scheme even if it fails to meet the requirements specified under paragraph (1). <Amended by Presidential Decree No. 24356, Feb. 15, 2013>
(3) Where a collective investment scheme fails to meet the requirements specified under paragraph (1), it shall be taxed according to the following classifications: <Amended by Presidential Decree No. 26600, Oct. 23, 2015>
1. A profit from an investment trust, investment association, or undisclosed investment defined in Article 9 (18) of the Financial Investment Services and Capital Markets Act, shall be taxed, deeming it a profit from trust, other than a collective investment scheme pursuant to Article 4 (2) of the Act;
2. A profit from an investment company, limited liability investment company, or limited investment partnership defined in Article 9 (18) of the Financial Investment Services and Capital Markets Act or a private equity fund defined in Article 9 (19) 1 of the same Act (limited to where it is not subject to special taxation on a company in the same trade under Article 100-15 of the Restriction of Special Taxation Act), shall be taxed, deeming it a dividend or share distributed under Article 17 (1) 1 of the Act.
(4) Profits and losses from the trading or valuation of any of the following securities among securities that a collective investment scheme has acquired directly by investing in collective investment securities defined in Article 9 (21) of the Financial Investment Services and Capital Markets Act (referring to securities that constitute the underling asset comprised of the index of the exchange-traded securities in cases of investment in exchange-traded securities under Article 26-3 (1) 3), or exchange-traded derivatives prescribed in the Financial Investment Services and Capital Markets Act (hereinafter referred to as "exchange-traded derivatives"), shall not be included in profits from collective investment schemes under paragraph (1) (hereinafter referred to as "profits from collective investment schemes"): Provided, That the foregoing shall not apply to profits and losses from the trading of stocks or investment certificates (limited to where a person owns at least 25/100 of the total number of outstanding stocks or the total amount of investment of a corporation which has issued stocks or investment certificates in the year in which the date of transfer arrives and during the five-year period immediately preceding the year of the transfer, which are stocks listed on a securities exchange under Article 8-2 (4) 1 of the Financial Investment Services and Capital Markets Act (hereinafter referred to as "securities exchange") or investment certificates) which a nonresident or a foreign corporation has acquired through a hedge fund defined in Article 9 (19) 2 of the Financial Investment Services and Capital Markets Act or a private equity fund not subject to special taxation on a company in the same trade pursuant to Article 100-15 of the Restriction of Special Taxation Act: <Amended by Presidential Decree No. 22580, Dec. 30, 2010; Presidential Decree No. 24697, Aug. 27, 2013; Presidential Decree No. 26067, Feb. 3, 2015; Presidential Decree No. 26600, Oct. 23, 2015>
1. Securities listed on the securities exchange (excluding the following securities; hereafter the same shall apply in this paragraph):
(a) Bonds, etc. under Article 46 (1) of the Act;
(b) Stocks or beneficiary certificates of a foreign collective investment scheme established under foreign Acts and subordinate statutes;
2. Stocks or investment shares of a venture business under the Act on Special Measures for the Promotion of Venture Businesses;
3. Exchange-traded derivatives intended for securities referred to in subparagraph 1.
(5) Profits from trading collective investment securities defined in Article 9 (21) of the Financial Investment Services and Capital Markets Act and foreign collective investment securities under Article 279 (1) of the same Act (excluding those falling under any of the following) by means of money transfer between accounts, change of the name of account's holder, and actual transfer of collective investment schemes, shall be profits from a collective investment scheme: <Amended by Presidential Decree No. 22580, Dec. 30, 2010>
1. Stocks or investment shares specified in Article 94 (1) 3 of the Act;
2. Stocks, etc. specified in Article 178-2 (2);
3. Collective investment securities of the collective investment scheme, designed to trace the changes in index based only on prices of stocks traded on the securities exchange as an exchange traded fund under Article 234 of the Financial Investment Services and Capital Markets Act;
4. Collective investment securities of collective investment scheme listed on the securities exchange defined in Article 9 (18) 2 of the Financial Investment Services and Capital Markets Act (excluding a scheme which does not distribute all the profits available for dividend under Article 51-2 (1) of the Corporate Tax Act on at least one occasion in the previous business year).
(6) A profit from a collective investment scheme shall be the amount after deduction of various remuneration, fees, etc. under the Financial Investment Services and Capital Markets Act.
(7) Deleted. <by Presidential Decree No. 24356, Feb. 15, 2013>
(8) Article 4 (2) of the Act shall apply to a collective investment scheme which meets all the following requirements, as a private offering collective investment scheme defined in Article 9 (19) of the Financial Investment Services and Capital Markets Act, which is not deemed a collective investment scheme referred to in paragraph (1) even where it meets all the requirements specified under paragraph (1): <Amended by Presidential Decree No. 23588, Feb. 2, 2012>
1. Where an investor is a resident (including a nonresident and a foreign corporation who has no place of business in the Republic of Korea; hereafter the same shall apply in this Article) or is comprised of a resident and his/her related person under Article 1-2 (1) through (3) of the Enforcement Decree of the Framework Act on National Taxes (where an investor is a nonresident or a foreign corporation who has no place of business in the Republic of Korea, referring to a person in any of the following relationship):
(a) A nonresident, his/her spouse, lineal relation, brother and sister;
(b) Relationship in which one party owns directly or indirectly at least 50/100 of stocks with voting right of the other party;
(c) Where a third party owns directly or indirectly at least 50/100 of stocks with voting right of one party or the other party respectively, relationship between such one party and the other party;
2. Where an investor makes a decision on management of assets substantially.
(9) Article 2 (2) of the Enforcement Decree of the Adjustment of International Taxes Act shall apply mutatis mutandis to calculating the indirect ownership ratio of stocks pursuant to paragraph (8) 1 (b) and (c).
(10) The method of calculating tax base on a profit from a collective investment scheme, and other necessary matters, shall be prescribed by Ordinance of the Ministry of Strategy and Finance.
[This Article Wholly Amended by Presidential Decree No. 22034, Feb. 18, 2010]
 Article 26-3 (Scope of Dividend Income)
(1) Profits from any of the following securities and certificates (including profits from corporate bonds issued under Article 469 (2) 3 of the Commercial Act) and profits from trading securities or certificates referred to in subparagraph 3, including fund transfer, change of the names of accounts, and transfer of physical securities or certificates, shall be included in dividend income specified in Article 17 (1) 9 of the Act: <Amended by Presidential Decree No. 21301, Feb. 4, 2009; Presidential Decree No. 22034, Feb. 18, 2010; Presidential Decree No. 22580, Dec. 30, 2010; Presidential Decree No. 24356, Feb. 15, 2013; Presidential Decree No. 24574, Jun. 11, 2013; Presidential Decree No. 25193, Feb. 21, 2014; Presidential Decree No. 26067, Feb. 3, 2015>
1. Securities or certificates representing a right to claim the delivery of stock certificates or the payment of money (referring to money equivalent to the value of such stock certificates, securities, or certificates) in connection with fluctuations in the price or indices of specific stocks traded in a securities market or a foreign market similar thereto or fluctuations in the numerical value of the price index of such specific stocks;
2. Securities or certificates representing a contractual right for making profits or avoiding losses according to predetermined methods in connection with fluctuations in the price, interest rate, index, unit of underlying assets under Article 4 (10) of the Financial Investment Services and Capital Markets Act, or numerical value of an index based thereon other than securities or certificates specified in subparagraph 1 (excluding securities or certificates indicating a right to make transactions of purchasing and selling stock certificates or giving and receiving money, only by the declaration of intention of one party concerned, according to predetermined methods in connection with fluctuations in prices of specific stock certificates traded on the securities exchange or a foreign market similar thereto or in numerical value of the price index of stocks):
(a) through (c) Deleted; <by Presidential Decree No. 24356, Feb. 15, 2013>
3. Securities or certificates representing a contractual right for making profits or avoiding losses in a prescribed manner in connection with fluctuations in the prices of underlying assets under Article 4 (10) of the Financial Investment Services and Capital Markets Act, an interest rate, an indicator, a unit, or an index based on such price, interest rate, indicator, or unit, which are listed on and traded on an exchange (hereinafter referred to as "exchange-traded notes").
(2) Notwithstanding paragraph (1), profits from trading exchange-traded notes specified in paragraph (1) 3, which are intended to track fluctuations of an index based on only the prices of stocks traded in securities markets, by transfers between accounts, the transfer of accounts, and the physical transfer of exchange-traded notes, shall be excluded from dividend income under Article 17 (1) 9 of the Act. <Newly Inserted by Presidential Decree No. 25193, Feb. 21, 2014; Presidential Decree No. 26067, Feb. 3, 2015>
(3) Gains from exchange-traded notes shall be determined by subtracting various remunerations, fees, etc. under the Financial Investment Services and Capital Markets Act, and the method of determining tax base for gains from exchange-traded notes, etc. shall be prescribed by Ordinance of the Ministry of Strategy and Finance. <Newly Inserted by Presidential Decree No. 25193, Feb. 21, 2014; Presidential Decree No. 26067, Feb. 3, 2015>
(4) The amount equivalent to dividend accrued from stocks, received from a borrower of the stocks on condition that a resident redeems the same quantity of stocks of the same kind in a given period, shall be included in dividend income under Article 17 (1) 9 of the Act. <Newly Inserted by Presidential Decree No. 22580, Dec. 30, 2010>
(5) "Merged with derivatives, as prescribed by Presidential Decree" in Article 17 (1) 10 of the Act, means any of the following cases where an individual person concurrently trades instruments bearing dividend income (hereafter in this paragraph referred to as "dividend-bearing instruments") and derivatives: <Amended by Presidential Decree No. 27829, Feb. 3, 2017>
1. Where the instruments meet all the following requirements and are managed substantially as one and the same kind of instrument:
(a) Trading of dividend-bearing instruments developed and sold directly by a financial company, etc. and the agreement on derivatives of the financial company, etc. are made through the financial company, etc.;
(b) The derivatives shall involve an agreement for trading money or any other thing with a value as property, as calculated according to all or part of principal and dividend income of dividend-bearing instruments (hereafter in this paragraph referred to as "dividend income, etc."), the price, interest rate, indicator, or unit of interest income, etc. of dividend income, etc. or an index, etc. based on such price, interest rate, indicator, or unit;
(c) The financial company, etc. under item (a) shall pay dividend income, etc. from interest-bearing instruments and profits from derivatives;
2. Where all the following requirements are met and profits from derivatives (limited to cases falling under Article 166-2 (1) 1 of the Financial Investment Services and Capital Markets Act) paid by a financial company, etc. at a specific time in the future are fixed:
(a) The trading of dividend-bearing instruments handled by the financial company, etc. and the agreement on derivatives of the financial company, etc. shall be made through the financial company, etc. (including where a right of pledge is created over dividend-bearing instruments for the performance of the agreement on derivatives or where the trading of dividend-bearing instruments and the agreement on derivatives are made through a money trust under Article 103 of the Enforcement Decree of the Financial Investment Services and Capital Markets Act, although the trading of dividend-bearing instruments and the agreement on derivatives are made through at least two financial companies, etc.);
(b) The derivatives shall involve an agreement for trading money or any other thing with a value as property, as calculated according to dividend income of dividend-bearing instruments, the price, interest rate, index, or unit of dividend income, etc. or an index, etc. based on such price, interest rate, indicator, or unit;
(c) The definite profits from derivatives shall be greater than dividend income from dividend-bearing instruments.
(6) Dividends paid by reducing capital reserve under Article 461-2 of the Commercial Act (excluding dividends paid by reducing capital reserve that does not fall under any item of Article 17 (2) 2 of the Act) shall be excluded from dividend income specified in Article 17 (1) of the Act. <Newly Inserted by Presidential Decree No. 25193, Feb. 21, 2014>
[This Article Newly Inserted by Presidential Decree No. 19327, Feb. 9, 2006]
 Article 27 (Calculation of Deemed Dividends)
(1) In cases of deemed dividends under Article 17 (2) of the Act, the value of property other than cash shall be based upon the amount calculated as follows: <Amended by Presidential Decree No. 17032, Dec. 29, 2000; Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 22185, Jun. 8, 2010; Presidential Decree No. 26982, Feb. 17, 2016>
1. Any of the following amount, if acquired assets are stocks or contributed shares (hereafter in this Article referred to as "stocks, etc."):
(a) Face value or amount invested, in cases of stocks, etc. under Article 17 (2) 2 and 5 of the Act;
(b) Where stocks, etc. under Article 17 (2) 4 or 6 of the Act meet the requirements under Article 44 (2) 1 and 2 (excluding the provisions regarding the holding of stocks, etc.) of the Corporate Tax Act or Article 46 (2) 1 and 2 (excluding the provisions regarding the holding of stocks, etc.) of the same Act or fall under Article 44 (3) of the same Act, the value of acquisition of stocks, etc. of the merged corporation, the divided corporation, or the disappearing corporation upon the division and merger (hereafter in this item, referred to as "merged corporation, etc."): Provided, That where stocks, etc. under Article 17 (2) 4 or 6 of the Act, money, and other assets are received together by division or merger, and the market price of the relevant stocks, etc. is smaller than the value of acquisition of stocks, etc. of the merged corporation, etc., it shall be the market price;
(c) Issuance prices, in cases of stock dividends under Article 462-2 of the Commercial Act;
(d) In cases of stocks, etc., other than those specified in items (a) through (c), the market price at the time of acquisition;
2. In cases, other than subparagraph 1, the market price at the time of acquisition of such assets.
(2) In cases of acquiring stocks, etc. under the proviso to Article 17 (2) 2 of the Act, the book value per new/old stock or per unit shall be as follows:
Book value per stock or per unit of investment = Book value per old stock or per unit of investment / (1 + Alloted number of new stocks, etc. per old stock or per unit of investment).
(3) In calculating gross income from deemed dividends through capital reduction or stock retirement under Article 17 (2) 1 of the Act (including any decrease in investment or retirement of contribution quotas; hereafter referred to as "stock retirement, etc." in this paragraph), if any portion not deemed a deemed dividend under the proviso to Article 17 (2) 2 of the Act exists among stocks acquired due to the capitalization of capital reserve funds within two years retrospectively counted from the date of such deemed dividends (excluding stocks issued due to the capitalization of the amount exceeding the face value of a stock pursuant to the main sentence of Article 17 (1) 1 of the Corporate Tax Act; hereafter referred to as "short-term retired stocks, etc." in this paragraph), short-term retired stocks, etc. shall be deemed first reduced or retired, and the acquisition value of such short-term retired stock, etc. shall be deemed non-existent, notwithstanding paragraph (2). In such cases, if part of stocks, etc. are transferred in the period from the acquisition of short-term retired stocks, etc. to the date of deemed dividends, short-term retired stocks, etc. and other stocks, etc. shall be calculated by deeming they are transferred in proportion to the number of each stock, etc., and the book value per stock or per unit of investment after the stock retirement has been made shall be in accordance with the following formula: <Amended by Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 24356, Feb. 15, 2013>
Book value per stock or per unit of investment = Aggregate of acquisition value after stock retirement has been made / Total number of stocks, etc. after stock retirement has been made.
(4) “Capital reserve prescribed by Presidential Decree” in Article 17 (2) 2 (a) of the Act, means the amount falling under each subparagraph of Article 17 (1) of the Corporate Tax Act: Provided, That the amount falling under any subparagraph of Article 12 (1) of the Enforcement Decree of the Corporate Tax Act shall be excluded therefrom. <Amended by Presidential Decree No. 23723, Apr. 13, 2012>
(5) In applying Article 17 (2) 2 (b) of the Act, where part of the revaluation reserve is transferred to the capital or the contribution amount, the amount corresponding to the revaluation spread of land under Article 13 (1) 1 of the Assets Revaluation Act shall be calculated by the following formula: <Newly Inserted by Presidential Decree No. 16664, Dec. 31, 1999; Presidential Decree No. 18705, Feb. 19, 2005>
Revaluation reserve transferred to the relevant capital or contribution × (Revaluation spread under Article 13 (1) 1 of the Assets Revaluation Act ÷ Assets revaluation spread)
(6) The value of stocks without face value in cases of paragraph (1) 1 (a) and (b) shall be the amount obtained by dividing the amount transferred to the corporation's capital by the number of shares newly issued in return for the transfer into capital. <Newly Inserted by Presidential Decree No. 17032, Dec. 29, 2000; Presidential Decree No. 25193, Feb. 21, 2014>
(7) In computing the amount disbursed for acquiring the relevant stocks under Article 17 (2) 1, 3, 4, and 6 of the Act, their face value shall be deemed the amount disbursed for acquiring such stocks, where the stockholder falls under the category of minor stockholders under Article 38 (3) of the Act, and where the computing of the amount disbursed for such acquisition is unclear as the number of stockholders holding the relevant shares is too many or as the transactions of relevant stocks are too frequent: Provided, That this shall not apply where paragraph (3) is applicable and where the relevant stockholder establishes an amount other than the face value. <Newly Inserted by Presidential Decree No. 17032, Dec. 29, 2000; Presidential Decree No. 22034, Feb. 18, 2010>
[This Article Wholly Amended by Presidential Decree No. 15969, Dec. 31, 1998]
 Article 27-2 (Scope of Conversion of Firms)
"Cases prescribed by Presidential Decree" in Article 17 (2) 3 (c) of the Act, means the cases falling under Article 120-26 of the Enforcement Decree of the Corporate Tax Act. <Amended by Presidential Decree No. 25193, Feb. 21, 2014; Presidential Decree No. 26067, Feb. 3, 2015>
1. through 3. Deleted. <by Presidential Decree No. 26067, Feb. 3, 2015>
[This Article Newly Inserted by Presidential Decree No. 20618, Feb. 22, 2008]
 Article 27-3 (Corporations, etc. Exempted, etc. from Corporate Tax)
(1) "A corporation prescribed by Presidential Decree" in Article 17 (3) 4 of the Act, means any of the following corporations: <Amended by Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 19890, Feb. 28, 2007; Presidential Decree No. 21301, Feb. 4, 2009; Presidential Decree No. 22034, Feb. 18, 2010>
(2) "Rate prescribed by Presidential Decree" in Article 17 (3) 4 of the Act, means the following rate: <Amended by Presidential Decree No. 22034, Feb. 18, 2010>
1. In cases of a corporation falling under paragraph (1) 1, 100/100;
2. In cases of a corporation falling under paragraph (1) 2, a rate calculated by the following formula (where a business year to which the provisions of paragraph (1) 2 are applied is only one business year, it shall be calculated on the basis of income in the relevant business year, and where the relevant rate exceeds 100/100, it shall be 100/100):
Aggregate of income subject to reduction or
exemption in two immediately preceding
business years
×Rate of reduction or exemption
Aggregate of gross income in two immediately preceding
business years
(3) "Dividend income prescribed by Presidential Decree" in the main sentence of Article 17 (3) of the Act, means dividend income received from a private equity fund defined in Article 9 (19) 1 of the Financial Investment Services and Capital Markets Act (limited to companies that do not fall under paragraph (1) 1). <Amended by Presidential Decree No. 22034, Feb. 18, 2010; Presidential Decree No. 26600, Oct. 23, 2015>
[This Article Wholly Amended by Presidential Decree No. 16664, Dec. 31, 1999]
 Articles 28 through 30 Deleted. <by Presidential Decree No. 22034, Feb. 18, 2010>
 Article 31 (Scope of Manufacturing Business)
When the provisions concerning business income pursuant to Article 19 of the Act apply, where a person's business meets all the requirements referred to in the following subparagraphs, and he/she manufactures products by entrusting a manufacturing company to manufacture goods, instead of directly manufacturing them, such business shall be deemed a manufacturing business pursuant to Article 19 (1) 3 of the Act:
1. He/she shall plan products to be manufactured directly (including a plan, design, sample production, etc.);
2. He/she shall manufacture such products under his/her own name;
3. He/she shall take over such products and directly sell them under his/her own responsibility.
[This Article Wholly Amended by Presidential Decree No. 22034, Feb. 18, 2010]
 Article 32 (Scope of Easement, etc.)
"Rights prescribed by Presidential Decree, such as easement, etc." in the proviso to Article 19 (1) 12 of the Act means easement and superficies (including rights established on the basement or the air).
[This Article Wholly Amended by Presidential Decree No. 22034, Feb. 18, 2010]
 Article 33 (Scope of Research and Development Business)
"Research and development business prescribed by Presidential Decree" in Article 19 (1) 13 of the Act means research and development business excluding providing research or development services for pay according to a contract, etc.
[This Article Wholly Amended by Presidential Decree No. 22034, Feb. 18, 2010]
 Article 34 Deleted. <by Presidential Decree No. 22034, Feb. 18, 2010>
 Article 35 (Scope of Educational Institutions)
"Educational institutions prescribed by Presidential Decree" in Article 19 (1) 15 of the Act means kindergartens under the Early Childhood Education Act, schools under the Elementary and Secondary Education Act and the Higher Education Act and institutions similar thereto prescribed by Ordinance of the Ministry of Strategy and Finance.
[This Article Wholly Amended by Presidential Decree No. 22034, Feb. 18, 2010]
 Article 36 (Scope of Social Welfare Service)
"Social welfare service prescribed by Presidential Decree" in Article 19 (1) 16 of the Act means the social welfare service under subparagraph 1 of Article 2 of the Social Welfare Services Act and the long-term care service under subparagraph 3 of Article 2 of the Act on Long-Term Care Insurance for the Aged. <Amended by Presidential Decree No. 24356, Feb. 15, 2013>
[This Article Wholly Amended by Presidential Decree No. 22034, Feb. 18, 2010]
 Article 37 (Scope of Service Industries related to Art, Sports, and Leisure, Association and Organization, Repair and other Personal Service Industries)
(1) Earnest money for an exclusive contract received by an entertainer, a professional sportsman, etc. in connection with his/her business activities shall be deemed business income.
(2) "Associations and organizations prescribed by Presidential Decree" in Article 19 (1) 18 of the Act means associations and organizations according to the middle classification of the Korea Standard Industry Code: Provided, That where the relevant association or organization conducts a specific business, it shall be classified according to the details of its business.
(3) Repair businesses and other personal services under Article 19 (1) 18 of the Act shall include personal services under subparagraph 1 of Article 42 of the Enforcement Decree of the Value-Added Tax Act. <Newly Inserted by Presidential Decree No. 24356, Feb. 15, 2013; Presidential Decree No. 24638, Jun. 28, 2013>
[This Article Wholly Amended by Presidential Decree No. 22034, Feb. 18, 2010]
 Article 38 (Scope of Wage and Salary Income)
(1) Wage and salary income under Article 20 of the Act shall include the following income: <Amended by Presidential Decree No. 14860, Dec. 30, 1995; Presidential Decree No. 15191, Dec. 31, 1996; Presidential Decree No. 15565, Dec. 31, 1997; Presidential Decree No. 15747, Apr. 1, 1998; Presidential Decree No. 15969, Dec. 31, 1998; Presidential Decree No. 16664, Dec. 31, 1999; Presidential Decree No. 17032, Dec. 29, 2000; Presidential Decree No. 17115, Jan. 29, 2001; Presidential Decree No. 17456, Dec. 31, 2001; Presidential Decree No. 17825, Dec. 30, 2002; Presidential Decree No. 18173, Dec. 30, 2003; Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 19010, Aug. 19, 2005; Presidential Decree No. 19327, Feb. 9, 2006; Presidential Decree No. 19890, Feb. 28, 2007; Presidential Decree No. 20618, Feb. 22, 2008; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 21301, Feb. 4, 2009; Presidential Decree No. 22034, Feb. 18, 2010; Presidential Decree No. 23987, Jul. 24, 2012; Presidential Decree No. 24356, Feb. 15, 2013; Presidential Decree No. 25193, Feb. 21, 2014; Presidential Decree No. 27829, Feb. 3, 2017>
1. Expenses paid in terms of confidential expenses (including expediency funds; hereinafter the same shall apply), social expenses, and others under similar pretexts, which are pay unclear as to whether they are used for business;
2. Money for merit, bonus, money for celebrating a business opening, school expenses, scholarships (including school expenses and scholarships which an employee's children at school received from an employer), and other similar salaries paid to an employee;
3. Labor allowance, family allowance, war bonus, price allowance, cashier's allowance, duty allowance, and other salaries similar thereto;
4. Allowances for collecting money, remuneration for concluding insurance contracts and for trade of securities or for savings, and other pay in the similar nature thereto, received by employees of an insurance company, an investment trader, investment broker, etc. under the Financial Investment Services and Capital Markets Act;
5. Meal allowance, housing allowance, clothing allowance, and other salaries similar thereto;
6. Benefits from housing provided by an employer: Provided, That where any of the following persons is provided with a house specified by Ordinance of the Ministry of Strategy and Finance by his/her employer shall be excluded herefrom:
(a) An executive who is not a stockholder or an investor;
(b) An executive who is a minority stockholder;
(c) An employee who is not an executive (including an employee of a non-profit corporation or of an individual person);
(d) A person who receives wage and salary income from the State or a local government;
7. Benefits which an employee gains by borrowing money necessary for purchasing or renting housing (including land attached thereto) at low interest or without compensation;
8. Technology allowance, health allowance, research allowance, and other wages of a similar nature;
9. Overtime allowance, commuting allowance, perfect attendance allowance, special bonus, and other wages of a similar nature;
10. Monthly or yearly wages paid in terms of travel expenses;
11. Allowance for service in an isolated area, allowance for service abroad, and other wages of a similar nature;;
12. Insurance premiums, trust installments, or mutual aid installments (hereafter referred to as "insurance premiums, etc." in this subparagraph) imposed on an employer in connection with the insurance, trust, or mutual aid whose contractor is an employee or whose beneficiary is an employee, his/her spouse, or any other family member: Provided, That the following insurance premiums, etc. shall be excluded:
(a) Deleted; <by Presidential Decree No. 17032, Dec. 29, 2000>
(b) An amount not exceeding 700,000 won per annum among insurance premiums of insurance whose insurance money is to be paid upon an employee's death, injury, or disease, and whose insured and beneficiary are employees, and whose paid-in premiums are not refundable at its maturity (hereinafter referred to as "group genuine indemnity insurance") and the insurance whose paid-in premiums are refundable within the limit not exceeding the paid-in premiums at its maturity (hereinafter referred to as "group refund-cum-guaranty insurance");
(c) and (d) Deleted; <by Presidential Decree No. 24356, Feb. 15, 2013>
(e) Insurance premiums of insurance, the insured of which is an executive or employee, and whose grounds for payment are compensation for damages incurred by an act in the course of performing duties, except for those incurred intentionally (including gross negligence) by the executive or employee;
(f) Deleted; <by Presidential Decree No. 21310, Feb. 4, 2009>
13. Retirement payment to be received, without being included to the deficit, pursuant to Article 44 (4) of the Enforcement Decree of the Corporate Tax Act;
14. Vacation bonus and other wages similar thereto;
15. Deleted; <by Presidential Decree No. 24356, Feb. 15, 2013>
16. Refund of the group refund-cum-guaranty insurance to be reverted to employees before the maturity of contract period or at maturity;
17. Profits (referring to the difference between the market price at the time of exercising stock options and the actual purchase price, and stocks with preemptive rights to new stocks) gained by executives or employees of a corporation by exercising, while serving in the relevant corporation, etc., stock options granted from a relevant corporation or a related corporation provided for in Article 87 of the Enforcement Decree of the Corporate Tax Act with the said corporation (hereafter referred to as "relevant corporation, etc." in this subparagraph);
18. Deleted; <by Presidential Decree No. 20618, Feb. 22, 2008>
19. Rank allowances paid to public officials under the Regulations on Allowances, etc. for Public Officials, the Regulations on Allowances, etc. for Local Public Officials, the Enforcement Decree of the Remuneration of Prosecutors Act, the Supreme Court Regulations, the Constitutional Court Regulations, etc.
(2) In applying paragraph (1), no wage reserved for paying retirement benefits (limited to where a worker has no option to determine the amount to be reserved and a portion of wages is reserved by the method prescribed by Ordinance of the Ministry of Strategy and Finance), shall be included in wage and salary income. <Amended by Presidential Decree No. 24356, Feb. 15, 2013; Presidential Decree No. 26067, Feb. 3, 2015>
(3) A minority stockholder specified in the proviso to paragraph (1) 6 means a stockholder who owns stocks of the lesser of the amount equivalent to 1/100 of the total amount of stocks issued or the total amount of investment of the relevant corporation (hereafter referred to as "total amount of stocks issued, etc." in this Article) or 300 million won (referring to the total amount of the face value), excluding the following stockholders: Provided, That in cases of a bank under the Banking Act, it refers to a stockholder who owns stocks less than the amount equivalent to 1/100 of the total amount of stocks issued, etc.: <Newly Inserted by Presidential Decree No. 22034, Feb. 18, 2010>
1. A stockholder (excluding a stockholder who is the State or a local government) who owns stocks at least 1/100 of the total amount of stocks issued, etc. of the relevant corporation, and the aggregate of whose stocks and those of his/her related party under Article 98 (1) accounts for the largest shares among the shareholders of the relevant corporation;
2. Related stockholders provided for in Article 98 (1).
(4) Where a person falling under a minority stockholder pursuant to paragraph (3) becomes a stockholder whose total amount of the face value of stocks he/she owns is at least 300 million won on account of capital increase of a corporation, he/she shall be deemed a minority stockholder from the date of such capital increase to the end of the year following the taxable period in which the date of capital increase falls: Provided, That this shall not apply where the total amount of the face value of stocks such person owns is at least 1/100 of the total amount of stocks issued, etc. by the relevant person after capital increase. <Newly Inserted by Presidential Decree No. 22034, Feb. 18, 2010>
 Article 39 Deleted. <by Presidential Decree No. 22034, Feb. 18, 2010>
 Article 40 (Calculation of Public Pension Income)
(1) Public pension income under Article 20-3 (1) 1 of the Act (hereinafter referred to as “public pension income”) shall be the amount, with respect to public pension income received during the taxable period concerned, calculated for each public pension payer in accordance with the following formula (hereafter referred to as “tax base amount” in this Article) based on January 1, 2002, as a base date (hereafter referred to as “tax base date” in this Article and Article 42-2 (1)):
1. Out of public pension income, the pension income under the National Pension Act and the linked old-age pension under the Act on Aggregation of National Pension and Occupational Pensions:
Amount of Pension Received during Taxable Period × Aggregate of Converted Income in Taxable Period after Tax Base Date / Aggregate of Converted Income during the Total Period of Payment
2. Other public pension income:
Amount of Pension Received during Taxable Period × Number of months in which contributions are made after Tax Base Date / Number of months in which contributions are made
(2) Where the lump sum allowance specified in Article 22 (1) 1 of the Act (limited to where the retirement income tax has been levied on the income or where the income is non-taxable) is returned and the employment periods, service periods, or subscription periods are aggregated in accordance with public pension-related Acts specified in subparagraph 4 (a) of Article 12 of the Act (hereinafter referred to as "public pension-related Acts"), the date of re-appointment or re-subscription shall be deemed the tax base date for the purposes of the subparagraphs of paragraph (1). <Newly Inserted by Presidential Decree No. 25193, Feb. 21, 2014>
(3) Notwithstanding paragraph (1), if any contribution or personal share (limited to the amount verified in accordance with Article 201-10; hereinafter referred to as “contribution, etc. exempt from taxation”) paid without deducting the pension insurance premium under Article 51-3 of the Act on or after the tax base date (or the date of re-appointment or re-subscription, if the date of re-appointment or re-subscription is deemed the tax base date under paragraph (2) for calculation purposes) exists, the public pension income shall be determined by deducting the contribution, etc. exempt from taxation from the tax base amount. If the contribution, etc. exempt from taxation exceed the tax base amount for the pertinent taxable period, the excess shall be deducted from tax base amounts for subsequent taxable periods. <Amended by Presidential Decree No. 25193, Feb. 21, 2014>
(4) Where a person whose responsibility is to pay public pension income is late in paying all or part of the pension income, along with the interest incurred due to the delayed payment, the interest concerned shall be deemed the public pension income.
(5) “Converted income” in the calculation formula under paragraph (1) 1 means the amount that standard monthly income per annum during a participation period under Article 51 (1) 2 of the National Pension Act is converted into the current value of the year preceding the commencement of pension payments by applying a revaluation rate by year as publicly announced by the Minister of Health and Welfare.
[This Article Newly Inserted by Presidential Decree No. 24356, Feb. 15, 2013]
 Article 40-2 (Pension Account, etc.)
(1) "The account specified by Presidential Decree as an account opened under the title of 'pension savings'" in the main sentence of Article 20-3 (1) 2 of the Act, means the account specified in subparagraph 1, while "the account specified by Presidential Decree as an account opened in order to receive retirement pensions" means the account specified in subparagraph 2: <Amended by Presidential Decree No. 26067, Feb. 3, 2015>
1. An account opened under the title of “pension savings” pursuant to an agreement concluded with any of the following financial companies, etc. (hereinafter referred to as “pension savings account”):
(a) A trust agreement to be concluded with a trust business entity authorized pursuant to Article 12 of the Financial Investment Services and Capital Markets Act;
(b) An agreement for intermediating collective investment securities to be concluded with an investment broker authorized pursuant to Article 12 of the Financial Investment Services and Capital Markets Act;
(c) An insurance agreement to be concluded with an institution which handles insurance agreements pursuant to Article 25 (2);
2. Any of the following accounts to be subscribed to and established in order to receive retirement pension (hereinafter referred to as “retirement pension account”):
(a) An account to be established in accordance with a defined contribution retirement pension defined in subparagraph 9 of Article 2 of the Act on the Guarantee of Workers' Retirement Benefits;
(b) An account to be established in accordance with an individual retirement pension defined in subparagraph 10 of Article 2 of the Act on the Guarantee of Workers' Retirement Benefits;
(c) An account to be established in order to receive the retirement pension payment pursuant to Article 16 (1) of the Korea Scientists and Engineers Mutual-Aid Association Act.
(2) A holder of a pension account may pay pension insurance premiums under Article 59-3 (1) of the Act (including amounts deemed paid into the pension account under Article 118-3; hereinafter referred to as “pension insurance premiums”) after fulfilling the following requirements: <Amended by Presidential Decree No. 25193, Feb. 21, 2014; Presidential Decree No. 26067, Feb. 3, 2015>
1. The holder must pay the amount not exceeding 18 million won each year (where the holder has at least two pension accounts, referring to the aggregate amount of such accounts). In such cases, although he/she may not pay the pension insurance premium for any taxable period prior to the taxable period concerned, he/she may, in cases of an insurance agreement, pay the previous pension insurance premium before 26 months lapse from the last day of the month to which the final payment date belongs;
2. The holder shall not pay the pension insurance premium after the date he/she applies for the initiation of pension payment (referring to the agreed date of initiation, if there is the agreed date of initiation of pension payment).
(3) "Withdrawn in the form of the pension, etc. prescribed by Presidential Decree" in the main sentence of Article 20-3 (1) 2 of the Act, means where a withdrawal from a pension account meets all the following requirements or is made in accordance with Article 20-2 (1) (hereinafter referred to as "receipt of pension"; any withdrawal other than the receipt of pension shall be referred to as “receipt other than pension”): Provided, That, where retirement income under Article 20-3 (1) 2 (a) of the Act is withdrawn by reason of emigration under Article 20-2 (1) 1 (b), the relevant retirement income shall be deemed the receipt of pension only where the withdrawer emigrates not earlier than three years after the date the retirement income is deposited in the pension account: <Amended by Presidential Decree No. 25193, Feb. 21, 2014; Presidential Decree No. 26067, Feb. 3, 2015; Presidential Decree No. 27829, Feb. 3, 2017>
1. A holder must, after he/she reaches 55 years of age, file his/her application with the person in charge of the pension account for initiation of pension payment and then withdraw the pension money;
2. A holder must withdraw pension money after five years from the date of his/her subscription to the pension account: Provided, That this shall not apply where the amount of money pursuant to Article 20-3 (1) 2 (a) of the Act (including where a retirement income is withdrawn directly from the pension account; hereinafter referred to as “deferred retirement income”) is in the pension account;
3. A holder shall withdraw pension money within the limit of the amount computed by the following formula (hereinafter referred to as “limit of pension payment”) as at the date of initiation of the taxable period (or the filing date of the application for the initiation of pension payment in the case of the taxable period in which the application for the initiation of pension payment is filed). In such cases, an amount withdrawn in accordance with Article 20-2 (1) shall not be included in the withdrawn amount:
Appraised value of pension account/(11 ? Number of Years of Pension Payment) × 120/100
(4) “Number of years of receiving pension” in the calculation formula under paragraph (3) 3 means the number of years aggregated from the taxable period to which the date of first pension payment belongs, and the calculation formula shall not apply where the number of years of receiving pension is at least 11 years: Provided, That in any of the following cases, the year of initial pension payment shall be as follows:
1. In cases of a pension account to which a person subscribed before March 1, 2013 (including where a person who has subscribed to the defined payment retirement pension (hereinafter referred to as “defined payment retirement pension”) before March 1, 2013, in accordance with subparagraph 8 of Article 2 of the Act on the Guarantee of Workers' Retirement Benefits, retires and the entire amount of the retirement income is transferred to the newly established pension account): Sixth year;
2. In cases of succeeding to a pension account pursuant to Article 44 (2) of the Act: The number of years of receiving pension by an inheritee as at the date of his/her death.
(5) The amount withdrawn from a pension account which exceeds the limit of pension payment shall be deemed receipt other than pension.
(6) Upon receipt of an application for initiating pension payment or for terminating a pension account from the holder of the pension account, the administrator of the pension account shall submit a statement of the initiation of pension payment or of the termination of the pension account in the form prescribed by Ordinance of the Ministry of Strategy and Finance to the head of the relevant tax office by the tenth day of the following month. <Amended by Presidential Decree No. 26067, Feb. 3, 2015>
(7) through (11) Deleted. <by Presidential Decree No. 26067, Feb. 3, 2015>
[This Article Newly Inserted by Presidential Decree No. 24356, Feb. 15, 2013]
 Article 40-3 (Order of Withdrawal, etc. from Pension Account)
(1) Where an amount of money is withdrawn partially from a pension account, the following amounts shall be deemed withdrawn in the following order: <Amended by Presidential Decree No. 25193, Feb. 21, 2014>
1. An amount not falling under any item of Article 20-3 (1) 2 of the Act (hereinafter referred to as “tax-exempted amount”);
2. Deferred retirement income;
(2) A tax-exempted amount shall be deemed withdrawn in accordance with the following order: Provided, That subparagraph 3 shall be applicable only to the amount confirmed pursuant to Article 201-10, and the amount so confirmed shall be deemed the tax-exempted amount from the date of confirmation: <Amended by Presidential Decree No. 25193, Feb. 21, 2014>
1. Pension insurance premium paid to the pension account concerned during the taxable period to which the date of withdrawal belongs;
2. An amount exceeding the maximum tax credit for pension accounts defined in the proviso to Article 59-3 (1) of the Act (hereafter referred to as "maximum tax credit for pension accounts" in this Article), of the pension insurance premiums paid in the relevant pension account, when it is supposed that only the pension account exists;
3. An amount to which no tax credit for a pension account has been applied, of the pension insurance premiums paid to the pension account, except those referred to in subparagraphs 1 and 2.
(3) Where the amount withdrawn from a pension account exceeds the limit of pension payment, it shall be deemed that the portion for pension payment be withdrawn first and then the remainder be withdrawn as the receipt other than pension.
(4) A pension insurance premium that does not exceed the maximum tax credit for pension accounts, of the pension insurance premiums paid to the pension account, shall be deemed an amount after tax credit under Article 20-3 (1) 2 (b) of the Act is applied, of the amounts referred to in paragraph (1) 3, from the beginning of the taxable period immediately following the taxable period in which the premium was paid (or the filing date of an application for the initiation of pension payment, if the application for the initiation of pension payment was filed during the taxable period in which the premium was paid). <Newly Inserted by Presidential Decree No. 25193, Feb. 21, 2014>
(5) If the amount in a pension account falls short of principal as a result of the management of the pension account, the amount left over in the pension account shall be determined by subtracting withdrawals from the principal in the order reverse of the order of withdrawal under paragraph (1). <Newly Inserted by Presidential Decree No. 26067, Feb. 3, 2015>
[This Article Wholly Amended by Presidential Decree No. 24356, Feb. 15, 2013]
 Article 40-4 (Transferring Money into Pension Account)
(1) Where the amount deposited in a pension account is transferred, before initiation of its pension payment, to another pension account, the transfer shall not be deemed withdrawal: Provided, That this shall not apply in any of the following cases: <Amended by Presidential Decree No. 26982, Feb. 17, 2016>
1. Where money is transferred between a pension savings account and a retirement pension account;
2. Where money deposited in the pension account subscribed after March 1, 2013, is transferred to the pension account subscribed before March 1, 2013;
3. Where part of the amount of money deposited in a retirement pension account is transferred.
(2) Notwithstanding the proviso to paragraph (1) and subparagraph 1 of the same paragraph, any of the following cases shall not be deemed withdrawal: <Newly Inserted by Presidential Decree No. 26982, Feb. 17, 2016>
1. Where the holder of a pension savings account, who meets the requirements under Article 40-2 (3) 1 and 2, transfers the full amount to the retirement pension account under Article 40-2 (1) 2 (b) (including where the receipt of pension has been initiated);
2. Where the holder of a retirement pension account, who meets the requirements under Article 40-2 (3) 1 and 2, transfers the full amount to the pension savings account (including where the receipt of pension has been initiated).
(3) Where the partial amount of money is transferred upon applying paragraph (1) (excluding cases falling under paragraph (1) 3), the transferring shall be deemed made in accordance with the order in each subparagraph of Article 40-3 (1).
(4) In applying paragraph (1) or (2), this Decree shall apply to the date of subscription to a pension account, based on the transferred pension account: Provided, That it may be based on the pension account opened before the transfer, if a new pension account is established and the full amount is transferred to the new account. <Amended by Presidential Decree No. 26982, Feb. 17, 2016>
(5) Where a pension account administrator is replaced due to transfer of the pension account, the transferring pension account administrator shall notify the transferred pension account administrator with the detailed statement of transferred pension account prescribed by Ordinance of the Ministry of Strategy and Finance.
[This Article Newly Inserted by Presidential Decree No. 24356, Feb. 15, 2013]
 Article 41 (Scope, etc. of other Income)
(1) "Money and other valuables received by a person, other than an author, stage performer, sound record producer, or broadcasting business operator, in consideration of transfer or use of copyrights or neighboring rights" in Article 21 (1) 5 of the Act, means considerations received by a person, to whom copyrights or neighboring rights under the Copyright Act has been inherited, donated, or transferred, by transferring or lending such copyrights or neighboring rights to another person. <Amended by Presidential Decree No. 18705, Feb. 19, 2005>
(2) "Trademark rights" in Article 21 (1) 7 of the Act means rights to trademarks under the Trademark Act, service marks, collective marks, geographical indications, homonymous geographical indication, collective marks with geographical indication, registered trademarks, and business marks. <Newly Inserted by Presidential Decree No. 19890, Feb. 28, 2007>
(3) Goodwill under Article 21 (1) 7 of the Act shall include economic interest acquired as a consequence of obtaining authorization, permission, license, etc. from an administrative authority; but shall not include goodwill transferred along with fixed assets for business (referring to assets falling under Article 94 (1) 1 and 2 of the Act). <Newly Inserted by Presidential Decree No. 19890, Feb. 28, 2007>
(4) "Rights to lease a store prescribed by Presidential Decree" in Article 21 (1) 7 of the Act, means economic interest (including other goodwill transferred along with the right to lease the store) acquired by a resident as a consequence of transferring his/her status as a lessee of a store from which he/she has earned business income (excluding business income further specified by Ordinance of the Ministry of Strategy and Finance). <Newly Inserted by Presidential Decree No. 19890, Feb. 28, 2007; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 22034, Feb. 18, 2010>
(5) Rights incidental to permission for collecting earth, sand, and rocks under Article 21 (1) 7 of the Act shall include rights incidental to permission for collecting earth, sand, and rocks, which are transferred along with a parcel of land under Article 94 (1) 1 of the Act. <Newly Inserted by Presidential Decree No. 19890, Feb. 28, 2007>
(6) Rights to develop and use ground water under Article 21 (1) 7 of the Act shall include rights to develop and use ground water, which are transferred along with a parcel of land, etc. under Article 94 (1) 1 of the Act. <Newly Inserted by Presidential Decree No. 19890, Feb. 28, 2007>
(7) "Penalty or indemnity" in Article 21 (1) 10 of the Act, means the value of money or other articles compensated for damage exceeding damages on payment itself which constitutes the original contract regardless of whatever its name may be, as compensation for damage (including compensation for damage received because payment of insurance money is delayed despite that a reason to pay insurance money has arisen) received due to the breach or the cancellation of a contract for property rights. In such cases, where the value of money, etc. received due to the breach or the cancellation of a contract does not exceed the gross amount paid originally according to a contract, it shall not be deemed the value of money, etc. exceeding damages on payment itself. <Amended by Presidential Decree No. 22034, Feb. 18, 2010>
(8) "Related person prescribed by Presidential Decree" in Article 21 (1) 13 of the Act, means any of the following related persons: <Newly Inserted by Presidential Decree No. 19890, Feb. 28, 2007; Presidential Decree No. 22034, Feb. 18, 2010; Presidential Decree No. 23588, Feb. 2, 2012>
1. A related person defined in Article 98 (1) with whom the relevant resident is related;
2. A related person defined in Article 2 (1) of the Enforcement Decree of the Adjustment of International Taxes Act with whom the relevant nonresident is related;
3. A related person defined in Article 87 of the Enforcement Decree of the Corporate Tax Act with whom the relevant corporation is related.
(9) Economic profits under Article 21 (1) 13 of the Act shall be any of the following profits: <Amended by Presidential Decree No. 22580, Dec. 30, 2010>
1. Profits an individual person receives by using the property at low consideration or free of charge, which is a source of income, to be provided as a corporation's property or for private business (hereinafter referred to as "property for business"), such as royalty to be normally paid for the use of such property or other consideration for use (where a payment is made at a price below the amount normally paid, referring to the amount less such payment), except for dividends and bonuses disposed of when a corporation files a return on its income under the Corporate Tax Act or the head of the competent tax office determines or reassesses the corporation's income;
(10) Deleted. <by Presidential Decree No. 26982, Feb. 17, 2016>
(11) "Lump sum allowance received for the cancellation of an account of mutual aid fund for small corporations or small enterprises prescribed by Presidential Decree" in Article 21 (1) 18 of the Act, means other income defined in Article 86-3 (4) of the Restriction of Special Taxation Act. <Newly Inserted by Presidential Decree No. 22034, Feb. 18, 2010>
(12) In cases of services rendered under Article 21 (1) 19 (c) of the Act, where research management expenses are managed in accordance with the relevant university's own rules, research services performed by a professor shall be included. <Newly Inserted by Presidential Decree No. 22580, Dec. 30, 2010>
(13) "Paintings, calligraphic works, and antiques prescribed by Presidential Decree" in Article 21 (1) 25 of the Act, means the following works, where the value of transfer is at least 60 million won per piece, item, or pair (referring to goods normally traded in pairs as those that at least two are used together): Provided, That works of an artist alive in the Republic of Korea on the date of transfer shall be excluded: <Newly Inserted by Presidential Decree No. 21301, Feb. 4, 2009; Presidential Decree No. 22034, Feb. 18, 2010>
1. Any of the following paintings, calligraphic works, and antiques:
(a) Pictures, drawings, pastels (limited to those drawn by hand, excluding drafts and processed goods with decoration), collage, and decorated board similar thereto;
(b) Original engravings, prints, and lithographs;
(c) Antiques (limited to those over 100 years after manufacturing);
2. Works prescribed by Ordinance of the Ministry of Strategy and Finance after the Minister of Strategy and Finance has consulted with the Minister of Culture, Sports and Tourism as paintings and calligraphic works, and curios which have historic and artistic value other than paintings, calligraphic works, and antiques specified in subparagraph 1.
(14) "Religious organizations specified by Presidential Decree" in Article 21 (1) 26 of the Act, means any of the following organizations established for the purpose of propagating or promoting a religion (including its affiliates), to which the relevant religion-related worker belongs, (hereinafter referred to as "religious organization"): <Amended by Presidential Decree No. 28511, Dec. 29, 2017>
1. A nonprofit corporation incorporated pursuant to Article 32 of the Civil Act;
2. An organization regarded as a corporation under Article 13 of the Framework Act on National Taxes;
3. An association or foundation other than a juristic person with a registration number assigned for registering real estate under Article 49 (1) 3 of the Registration of Real Estate Act.
(15) A religious organization shall keep and manage records of the amount of money paid and goods supplied to its religion-related workers (including money and goods specified in subparagraphs 3 and 5 (h) of Article 12 of the Act; hereinafter the same shall apply) by separating them from expenses disbursed in connection with other religious activities. <Newly Inserted by Presidential Decree No. 28511, Dec. 29, 2017>
(16) The income under Article 21 (1) 26 of the Act shall include the income that a religion-related worker receives on a regular or irregular basis from a religious organization in connection with his/her activities after practical retirement, in addition to the income that he/she receives from a religious organization for his/her practical retirement under Article 42-2 (4) 4. <Newly Inserted by Presidential Decree No. 26982, Feb. 17, 2016>
 Article 42 Deleted. <by Presidential Decree No. 26067, Feb. 3, 2015>
 Article 42-2 (Scope of Retirement Income)
(1) The lump sum amount under Article 22 (1) 1 of the Act means any of the following amounts (hereafter referred to as "tax base amount" in this Article): <Amended by Presidential Decree No. 25193, Feb. 21, 2014>
1. Either of the following amounts payable as the lump sum refund under the National Pension Act or the Act on Aggregation of National Pension and Occupational Pensions, whichever is smaller:
(a) The sum of contributions or personal shares (including employer charges; hereafter the same shall apply in this paragraph) paid on or after the tax base date and the interest and additional interest thereon;
(b) An amount computed by subtracting the contributions or personal shares paid on or before the tax base date from the lump sum actually paid;
2. An amount computed by the following formula in cases of a lump sum allowance other than those specified in subparagraph 1:
Lump sum received during the pertinent taxable period x Number of months of contributions paid on or after the tax base date/Total number of months of contributions paid.
(2) When employment periods, service periods, or subscription periods are aggregated in accordance with Article 40 (2), the date of re-appointment or re-subscription shall be deemed the tax base date for the purpose of applying paragraph (1). <Newly Inserted by Presidential Decree No. 25193, Feb. 21, 2014>
(3) Notwithstanding paragraph (1), if tax-exempt contributions, etc. exist, the lump sum allowance under Article 22 (1) 1 of the Act shall be determined by subtracting the tax-exempt contributions, etc. from the tax base amount. <Newly Inserted by Presidential Decree No. 25193, Feb. 21, 2014>
(4) "Income prescribed by Presidential Decree" in Article 22 (1) 3 of the Act, means any of the following amounts: <Amended by Presidential Decree No. 26982, Feb. 17, 2016>
1. Where a person who pays the income under Article 22 (1) 1 of the Act pays in delay, while paying interest for the delayed payment, entire or part of a retirement income, the interest concerned;
2. An amount of incentive for development of science and technology to be received pursuant to Article 16 (1) 3 of the Korea Scientists and Engineers Mutual-Aid Association Act;
4. Income that a religion-related worker receives from a religious organization for practical retirement.
(5) “Executives prescribed by Presidential Decree” in the proviso to Article 22 (3) of the Act, other than the calculation formula thereof, means those responsible to affairs specified in any item of Article 20 (1) 4 of the Enforcement Decree of the Corporate Tax Act.
(6) "Amount of retirement income specified by Presidential Decree, if the executive is entitled to receiving the retirement income, supposing that the executive retired on December 31, 2011" in the proviso to Article 22 (3) of the Act, means the amount computed by multiplying the amount of retirement income by the ratio of the period of service until December 31, 2011 (to be calculated by the number of months; any period of less than one month shall be deemed one month) to the entire period of service (or the amount of retirement income where an executive of a corporation, which has the articles of incorporation or regulations on the payment of retirement benefits, as delegated by the articles of incorporation, as at December 31, 2011, selects to apply the amount of retirement income to which he/she is entitled under the relevant provisions, if he/she is supposed to retire on December 31, 2011). <Newly Inserted by Presidential Decree No. 26067, Feb. 3, 2015>
[This Article Wholly Amended by Presidential Decree No. 24356, Feb. 15, 2013]
 Article 43 (Special Cases concerning Determination of Retirement)
(1) If a person has not received retirement benefits, although any of the following events occurred, the person may be deemed to have not retired in applying Article 22 (1) 2 of the Act: <Amended by Presidential Decree No. 26067, Feb. 3, 2015>
1. Where an employee becomes an executive;
2. Where there occurs a change in organizational structure, such as merger or division, a business transfer, a transfer to a corporation having a direct or indirect investment relationship, or a transfer to another place of business of the same business operator;
3. Where a standing executive of a corporation becomes a non-standing executive.
(2) Where a person has received his/her retirement payment in advance during the period of continuous employment on any of the following grounds (including income earners who are directors; hereinafter referred to as “interim payment of retirement income”), the person shall be deemed to have retired as of the date he/she received such retirement payment:
2. Deleted; <by Presidential Decree No. 26067, Feb. 3, 2015>
3. Where a retirement pension system is abolished pursuant to Article 38 of the Act on the Guarantee of Workers' Retirement Benefits.
[This Article Wholly Amended by Presidential Decree No. 24356, Feb. 15, 2013]
 Article 44 Deleted. <by Presidential Decree No. 19890, Feb. 28, 2007>
SECTION 3 Date of Receipt of Total Amount of Income
 Article 45 (Date of Receipt of Interest Income)
The date of receipt of interest income shall be any of the following dates: <Amended by Presidential Decree No. 14860, Dec. 30, 1995; Presidential Decree No. 15191, Dec. 31, 1996; Presidential Decree No. 15565, Dec. 31, 1997; Presidential Decree No. 15969, Dec. 31, 1998; Presidential Decree No. 17456, Dec. 31, 2001; Presidential Decree No. 18173, Dec. 30, 2003; Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 19890, Feb. 28, 2007; Presidential Decree No. 21301, Feb. 4, 2009; Presidential Decree No. 22034, Feb. 18, 2010; Presidential Decree No. 23588, Feb. 2, 2012; Presidential Decree No. 24356, Feb. 15, 2013; Presidential Decree No. 26067, Feb. 3, 2015>
1. Interest and discounted value under Article 16 (1) 12 and 13 of the Act: The date of redemption under agreement: Provided, That when redemption is made before the date of maturity, such date of redemption;
2. Interest and discounted value of the bearer public bonds, etc. under Article 46 (1) of the Act: The date of receipt of such payments;
3. Interest and discounted value of the non-bearer public bonds under Article 46 (1) of the Act:
The date of payment under the agreement;
4. Interest on an ordinary deposit, a fixed deposit, and an installment savings or an installment:
(a) The actual date of receipt of the interest payment;
(b) As for interest under a special contract for transferring it to the principal, the date of transfer to the principal under such special contract;
(c) The termination day, where the interest is paid due to the termination of the accounts;
(d) The date of extension, where the contract period is extended;
(e) As for the interest of a fixed deposit in cases of a fixed installment savings connected to fixed deposit, the date a fixed deposit or a fixed installment savings is terminated or a deposit period of a fixed installment savings matures;
5. Interest on the deposit at notice:
The date of withdrawal;
6. Deleted; <by Presidential Decree No. 19890, Feb. 28, 2007>
7. Marginal profits on the sale and purchase of bonds or securities under the condition of redemption:
The date of redemptive purchase or sale of the relevant bonds or securities under the agreement: Provided, That, where they are redeemably purchased or sold before their due date, the date of such redemptive purchase or sale shall be applied;
8. Marginal insurance profits of the savings insurance:
The date of payment of the insurance money or the refund money: Provided, That, where the insurance is terminated before its maturity, its termination date shall be applied;
9. Refund of the excess by a workplace mutual-aid association: The date of payment of the gain exceeding the payments under the agreement and the gain additionally accruing from the repayment: Provided, That, if the repayment is paid in installments, the date the gain exceeding the payments under a special agreement that such gain shall be transferred to the principal shall be deemed the date of payment of such gains;
9-2. Profits of non-business loans:
The date of payment of the interest under the agreement: Provided, That, where there is no agreement as to the interest payment date, or where the interest is paid before the date of payment under the agreement, or the interest excluded from the calculation of total amount of income pursuant to Article 51 (7) is received, such interest payment days shall apply;
10. Amounts equivalent to interest, etc. during the period of holding bonds, etc. under Article 193-2:
The date of sale of the relevant bonds, etc. or the date of payment of the interest, etc.;
11. Where the inherited property generating interest income under subparagraphs 1 through 10 is inherited or donated:
The date of commencement of such inheritance or the date of such donation.
 Article 46 (Date of Receipt of Dividend Income)
The date of receipt of dividend income shall be any of the following dates: <Amended by Presidential Decree No. 15191, Dec. 31, 1996; Presidential Decree No. 15969, Dec. 31, 1998; Presidential Decree No. 18173, Dec. 30, 2003; Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 19890, Feb. 28, 2007; Presidential Decree No. 21301, Feb. 4, 2009; Presidential Decree No. 22034, Feb. 18, 2010; Presidential Decree No. 23588, Feb. 2, 2012>
1. Profits or dividends of bearer securities:
The date of receipt of the said payment;
2. Dividends derived from the disposal of surplus funds:
The resolution date for the disposal of surplus funds at the relevant corporation;
3. Deleted; <by Presidential Decree No. 24356, Feb. 15, 2013>
3-2. Dividends distributed to joint investment business operators under Article 17 (1) 8 of the Act:
The last day of the taxable period;
3-3. Dividend or dividend of gains under Article 17 (1) 9 and 10 of the Act:
The date of receipt of the said payment;
4. Deemed dividends under Article 17 (2) 1, 2, and 5 of the Act:
The date on which the retirement of securities, the decrease of capital, or the capitalization is decided (referring to the date determined under Article 461 (3) of the Commercial Act, if it depends on a resolution of the board of directors), or the date on which one leaves or secedes from the corporation;
5. Deemed dividends under Article 17 (2) 3, 4, and 6 of the Act:
(a) The date on which the value of remaining property is assessed, in cases where a corporation extinguishes due to a dissolution;
(b) The date on which the merger registration is made, in cases where a corporation extinguishes due to a merger;
(c) The date on which the registration for division or for divided merger is made, in cases where a corporation extinguishes or survives as a result of the division or the divided merger;
6. Dividends distributed under the Corporate Tax Act:
The date on which the accounts are settled for the relevant business year of the relevant corporation;
7. Gains from a collective investment scheme:
The date on which the earnings of the investment trust are distributed: Provided, That it shall be the date on which the distributed amount is transferred to the principal according to a special agreement in cases where there is a special agreement to transfer it to the principal;
8. Deleted. <by Presidential Decree No. 22580, Dec. 30, 2010>
 Article 47 Deleted. <by Presidential Decree No. 22034, Feb. 18, 2010>
 Article 48 (Date of Receipt of Business Income)
The date of receipt of business income shall be any of the following dates: <Amended by Presidential Decree No. 15565, Dec. 31, 1997; Presidential Decree No. 15747, Apr. 1, 1998; Presidential Decree No. 15969, Dec. 31, 1998; Presidential Decree No. 17825, Dec. 30, 2002; Presidential Decree No. 18173, Dec. 30, 2003; Presidential Decree No. 20618, Feb. 22, 2008; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 21301, Feb. 4, 2009; Presidential Decree No. 22034, Feb. 18, 2010; Presidential Decree No. 22580, Dec. 30, 2010; Presidential Decree No. 26982, Feb. 17, 2016>
1. Sale of commodities (excluding real estate in cases of building construction business and real estate development and supplying business), products, or other manufactured goods (hereinafter referred to as "commodities, etc."):
The date the commodities, etc. are delivered;
2. Approval sales of commodities, etc.:
The date the other party expresses his/her intention to purchase: Provided, That, where such sale is settled by special contract or custom, unless he/she returns the goods or expresses his/her intent of rejection within the specified period, it shall be the expiration date of such period;
3. Consignment sale of commodities, etc.:
The date the consignee sells the consigned goods;
4. Sale of commodities, etc. under a long-term installment plan prescribed by Ordinance of the Ministry of Strategy and Finance:
The date the commodities, etc. are delivered: Provided, That during the taxable period whereto belongs the date of receipt or of agreeing to receive under such long-term installment plan, and where the amount of such receipt and the necessary costs corresponding thereto are appropriated, the date of receipt or agreed date of receipt under a long-term installment plan. In such cases, the amount received or receivable before the date of delivery shall be deemed to be received on the date of delivery, and where the business has been closed during a long-term installment period, the amount not included in the gross income amount as such date of business closure and the corresponding cost shall be included in the amount of gross income and necessary costs during the taxable period whereto belongs the date of business closure;
5. Provision of construction, manufacturing, and other services (including contracted construction and reservation sale; hereafter referred to as "construction, etc." in this subparagraph):
The date of completion of service (in cases of the delivery of an object, the date of such delivery): Provided, That if the contract period is at least one year, and it is determined by Ordinance of the Ministry of Strategy and Finance, the work progress rate determined by the same Ordinance (hereinafter referred to as "work progress rate") shall be the standard, whereas if a contract period is less than one year, and it is determined by the same Ordinance, the work progress rate may serve as a standard;
6. Deleted; <by Presidential Decree No. 15969, Dec. 31, 1998>
7. Sale by vending machines:
The time when the relevant business operator withdraws cash from the relevant vending machines;
8. Supply of personal services:
The date set to receive remuneration for services or the date the supply of services has been completed, whichever comes first: Provided, That an entertainer, professional athlete, etc. receive a lump-sum of remuneration for exclusive contract covering more than a one-year period, the amount obtained by dividing the remuneration concerned proportionally among the period of contract shall be the amount received at the end of each period of contract, and the number of months shall be counted according to the calendar, however, where a month to which the date of commencement of the term of the relevant contract belongs is less than one month, it shall be counted as one month, and where a month to which the expiration date of the term of the relevant contract belongs is less than one month, it shall not be included;
9. Deleted; <by Presidential Decree No. 15969, Dec. 31, 1998>
10. Discount of bill:
The maturity date of the bill: Provided, That, where the bill is transferred before maturity, it shall be the date the bill is transferred;
10-2. For the credit accruing from the transfer or sale of a property under a long-term installment plan pursuant to subparagraph 4, if appropriating the marginal gain on current value discount after evaluating in the current value according to business accounting standards, such marginal gain on current value discount shall not be included in the amount of gross income of the appropriated taxable period, and the amount returned or to be returned according to business accounting standards during the recovery period of relevant credit shall be included in the amount of gross income of each taxable period;
10-3. Interest and discounted value accruing from the finance and insurance business on the Korea Standard Industry Code:
The date of actual receipt;
10-4. Any of the following dates, where income accrues from the lease of an asset:
(a) Where the due date for payment is fixed by agreement or custom:
The fixed date;
(b) Where the due date for payment is not fixed by agreement or custom:
The date payment is made;
(c) For the amount equivalent to a rent for the period already elapsed (including interest for late payment and other compensation for damage) to which the owner, etc. is entitled according to judgment, compromise, etc. on a lawsuit on a lease contract (excluding lawsuits related to a claim of payable rents):
The date judgment or compromise is made: Provided, That, it shall be the date specified in item (a) in cases of an amount deposited in a court in order to pay a rent in connection with a lawsuit on a rent;
11. Sale and purchase of assets which do not fall under subparagraphs 1 through 10 and 10-2 through 10-4:
The date the purchase price is fully paid: Provided, That, where a person makes entry or registration on transfer of ownership, etc. or uses and makes profits from the relevant property before the full payment of price, the date of such entry, registration or enrolling, or use and making profits.
 Article 49 (Date of Receipt of Wage and Salary Income)
(1) The date of receipt of wage and salary income shall be any of the following dates: <Amended by Presidential Decree No. 14860, Dec. 30, 1995; Presidential Decree No. 22034, Feb. 18, 2010; Presidential Decree No. 24356, Feb. 15, 2013>
1. Salary:
The date on which one's labor is provided;
2. Bonuses derived from the disposal of surplus funds:
The date on which the disposal of surplus funds is decided;
3. Bonuses for executives or stockholders, employees and other investors of a corporation, which have occurred when the amount of income in the relevant business year is reported by such corporation, or is determined or corrected by the head of a tax office:
Days over which one's labor is provided during the relevant business year. In such cases, if days for which a monthly average amount is calculated spans two years, days over which labor is provided during the relevant business year respectively;
4. Surplus amount under the proviso to the part other than the calculation formula in Article 22 (3) of the Act:
The date paid or to be paid.
(2) Where the salary is paid under a contract for work and other similar contracts, and where the relevant salary is not fixed before the commencement date of the final return period of tax base in the relevant taxable period, it shall be deemed received on the fixed date, notwithstanding the provisions of paragraph (1) 1: Provided, That in cases of the actual receipt amount paid before such fixed date, such date of receipt shall be applied.
 Article 50 (Date of Receipt of other Income, etc.)
(1) The date of receipt of other income shall be any of the following dates: <Amended by Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 19890, Feb. 28, 2007; Presidential Decree No. 20618, Feb. 22, 2008; Presidential Decree No. 22034, Feb. 18, 2010; Presidential Decree No. 23588, Feb. 2, 2012; Presidential Decree No. 24356, Feb. 15, 2013>
1. Other income specified in Article 21 (1) 7 of the Act (excluding other income from leasing an asset or rights):
The date payment is settled, the date the asset is delivered, the date the asset is utilized, or the date the asset makes a profit, whichever occurs first: Provided, That, where the amount is not determined though the asset has been delivered, has been utilized, or has made profit before the payment is settled, it shall be the date of payment;
1-2. Where the down payment replaces the penalty or indemnity money, among the income specified in Article 21 (1) 10 of the Act:
The date a breach or rescission of the contract for other income is fixed;
2. Other income specified in Article 21 (1) 20 of the Act:
The date of the final settlement of accounts for the relevant business year of the corporation;
3. Other income specified in Article 21 (1) 21 of the Act:
The date of receipt other than pension;
4. Other incomes in addition to the above:
The date the payment is received.
(2) The retirement date shall be deemed the date of receipt of retirement income: Provided, That the date the retirement income is paid in cases of lump-sum allowances under the National Pension Act, out of those under Article 22 (1) 1 of the Act, and the retirement mutual-aid benefits under Article 42-2 (4) 3, shall be deemed the date of receipt of retirement income (or the date the first installment is paid, where such payments are paid in installments). <Amended by Presidential Decree No. 24356, Feb. 15, 2013; Presidential Decree No. 25193, Feb. 21, 2014; Presidential Decree No. 26067, Feb. 3, 2015>
(3) and (4) Deleted. <by Presidential Decree No. 19890, Feb. 28, 2007>
(5) The date of receipt of pension income shall be determined as follows: <Amended by Presidential Decree No. 24356, Feb. 15, 2013; Presidential Decree No. 25193, Feb. 21, 2014>
1. Public pension income: The date the pension is scheduled to be awarded pursuant to public pension-related Acts;
2. Pension income specified in Article 20-3 (1) 2 of the Act: The date of receipt of the pension;
3. Other pension income: The date of receipt of the relevant pension.
 Article 50-2 (Date of Receipt of Income from Enterprises in Same Line of Business)
(1) The date of receipt of an income distributed pursuant to Article 100-18 (1) of the Restriction of Special Taxation Act shall be the expiration date of the taxable year of the relevant enterprise in the same line of business.
(2) The date of receipt of an income exceeding the value of stakes as of the date of distribution from among the market prices of assets distributed pursuant to Article 100-22 (1) of the Restriction of Special Taxation Act shall be the date of distribution.
[This Article Newly Inserted by Presidential Decree No. 21301, Feb. 4, 2009]
SECTION 4 Calculation of Income
 Article 51 (Calculation of Amount of Gross Income)
(1) and (2) Deleted. <by Presidential Decree No. 22034, Feb. 18, 2010>
(3) The total amount of business income shall be calculated as follows: <Amended by Presidential Decree No. 15969, Dec. 31, 1998; Presidential Decree No. 16664, Dec. 31, 1999; Presidential Decree No. 17032, Dec. 29, 2000; Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 19010, Aug. 19, 2005; Presidential Decree No. 19327, Feb. 9, 2006; Presidential Decree No. 20618, Feb. 22, 2008; Presidential Decree No. 22034, Feb. 18, 2010; Presidential Decree No. 23588, Feb. 2, 2012; Presidential Decree No. 23987, Jul. 24, 2012; Presidential Decree No. 24356, Feb. 15, 2013>
1. The total amount of income of advance rents received for leasing of real estate shall be the total amount of the amount calculated by dividing such advance rents by the number of months of the contract period in each taxable period. In such cases, the number of months shall be calculated, as prescribed by Ordinance of the Ministry of Strategy and Finance;
1-2. The value of the returned goods and the discount on sales shall not be included in the total amount of income in the relevant taxable period: Provided, That a bounty granted to the other party based on the trading quantity and trading amount, and other amount and uncollectable accounts similar thereto shall not be deducted from the total amount of income;
1-3. The discount amount of sales in cases of settling the credit sales shall be subtracted from the calculation of the amount of gross income in a taxable period whereto belongs the payment term under an agreement with the other party of transaction (the payment date where no payment term is stipulated therein);
2. The bounty and other amounts similar thereto which are granted by the other party of a transaction shall be included in the gross amount of income;
3. Where the amount of tax paid as necessary expenses, such as the money of refunded customs duties, has been returned or is to be returned, such amount shall be included in the gross amount of income;
4. The value of an asset received without compensation in connection with the business, and the deducted amount of liabilities accruing from the exemption or extinguishment of obligations shall be included in the gross amount of income: Provided, That this shall not apply in cases falling under Article 26 (2) of the Act;
4-2. The following profits, dividends of gains, or insurance marginal profits shall be included in the gross amount of income, notwithstanding the character of such income:
(a) and (b) Deleted; <by Presidential Decree No. 24356, Feb. 15, 2013>
(c) The marginal profits from an insurance contract, or the profits or dividend of gains from the defined payment retirement pension;
(d) Gains on insurance settlement acquired due to losses of assets for business in connection with the relevant business shall be included in the gross amount of income;
5. The amount of income related to businesses, other than those under subparagraphs 1, 1-2, 1-3, 2 through 4, and 4-2, which has been reverted or is to be reverted to the relevant business operator, shall be included in the gross amount of income.
(4) Deleted. <by Presidential Decree No. 22034, Feb. 18, 2010>
(5) In applying Article 24 (2) of the Act, the calculation of amounts of income, other than money, shall be as follows: <Amended by Presidential Decree No. 15969, Dec. 31, 1998; Presidential Decree No. 20618, Feb. 22, 2008; Presidential Decree No. 20720, Feb. 29, 2008>
1. Where commodities manufactured, produced, or sold are transferred from the manufacturer, producer, or sale business operator, the sale price of such manufacturer, producer, or sale business operator;
2. Market price when commodities are transferred from those, other than their manufacturer, producer, or sale business operator;
3. Face value of stocks received as dividends from the corporation;
4. Where preemptive rights are received from the corporation issuing new shares (excluding where a stockholder receives them), the amount calculated by deducting the issue-price of relevant new stocks from the value of new stocks as of the payment date pursuant to such preemptive rights;
5. In cases, other than subparagraphs 1 through 4, the market price determined by Ordinance of the Ministry of Strategy and Finance.
(6) When the value of new stocks under paragraph (5) 4 is quoted low within one month from the date following the relevant payment date, such lowest value shall be the value of new stocks.
(7) In calculating total gains received on a non-business loan under Article 16 (1) 11 of the Act, the principal shall be subtracted from the collected amount first, if it is impossible to collect the whole or part of the principal and interest from the debtor or a third party before filing the final return on tax base under Article 70 of the Act because the non-business loan constitutes a claim defined under Article 19-2 (1) 8 of the Enforcement Decree of the Corporate Tax Act. In such cases, if such amount recovered is less than the principal, no income received is deemed existent. <Newly Inserted by Presidential Decree No. 15969, Dec. 31, 1998; Presidential Decree No. 22034, Feb. 18, 2010; Presidential Decree No. 23588, Feb. 2, 2012; Presidential Decree No. 25193, Feb. 21, 2014>
(8) In calculating the amount of revenue from a business for cutting down or transferring forestry trees on a parcel of forest land, the income accrued from the transfer of the forest land, when the trees are transferred along with the parcel of forest land, shall not be included in the calculation of gross amount of revenue. In such cases, the price for acquisition or transfer shall be calculated in accordance with the following guidelines if it is impracticable to separate the price for acquisition or transfer of the parcel of forest land from that for the trees thereof: <Newly Inserted by Presidential Decree No. 19890, Feb. 28, 2007; Presidential Decree No. 24356, Feb. 15, 2013>
1. As to the forest trees: The standard market price under Article 4 (1) 5 of the Enforcement Decree of the Local Tax Act;
2. As to the forest land: The balance after deducting the price for acquisition or transfer of forest trees calculated in accordance with subparagraph 1 from the total price for the acquisition or transfer. In such cases, it shall be deemed that there is no price for acquisition or transfer of the forest land if there is no balance remains.
(9) The revenue amount acquired from transferring a right under a forestation contract for profit sharing or the revenue amount that a party to a forestation contract for profit sharing has earned from cutting down trees or transferring the forest, which is the subject matter of such contract, in accordance with the sharing ratio under the contract shall be included in the gross revenue amount of the business for cutting down or transferring trees in forest land. <Newly Inserted by Presidential Decree No. 19890, Feb. 28, 2007>
 Article 52 Deleted. <by Presidential Decree No. 19890, Feb. 28, 2007>
 Article 53 (Special Cases concerning Calculation of Gross Amount of Income)
(1) and (2) Deleted. <by Presidential Decree No. 22034, Feb. 18, 2010>
(3) The amount to be included in the total amount of income pursuant to the main sentence of Article 25 (1) of the Act shall be calculated according to the following classification. In such cases, when the amount to be included in the total amount of income is less than zero, it shall be deemed nil, and the cumulative number may be calculated by multiplying the remainder of the deposit, etc. under the main sentence of Article 25 (1) of the Act (hereafter referred to as "deposit, etc." in this Article) as of the end of each month by the number of days elapsed: <Amended by Presidential Decree No. 22034, Feb. 18, 2010>
1. In cases of lease of a house and land annexed thereto (excluding cases leasing land annexed to a house only):
The amount to be included in the total amount of income = Cumulative number of {Deposits, etc. in the relevant taxable period - 300 million won (where deposits are paid on two or more houses, the deposit of a house, the cumulative number of the deposit of which is largest shall be deducted in order)} × 60/100 × 1/365 (366 in cases of a leap year) × Interest rate prescribed by Ordinance of the Ministry of Strategy and Finance in view of the interest rate of fixed deposit of a financial company, etc. (hereafter referred to as "interest rate of a fixed deposit" in this Article) - The total amount of interest earned, discount fees and dividends generated from the relevant rental business in the relevant taxable period;
2. Cases, other than those under subparagraph 1:
The amount to be included in the total amount of income = (Cumulative number of the deposit, etc. in the relevant taxable period - Cumulative number of the amount equivalent to the cost of construction of real estate for rent) × 1/365 (366 in cases of a leap year) × Interest rate of a fixed deposit - The total amount of interest received, discount fees and dividends generated from the relevant rental business in the relevant taxable period.
(4) Where the amount of income is reported in estimation pursuant to the main sentence of Article 45 (4) of the Act or is estimated, investigated and determined pursuant to the proviso to Article 80 (3) of the Act, notwithstanding paragraph (3), the amount calculated according to the following classification shall be included in the total amount of income: <Amended by Presidential Decree No. 22034, Feb. 18, 2010>
1. In cases of lease of a house and land annexed thereto (excluding cases leasing land annexed to a house only):
The amount to be included in the total amount of income = Cumulative number of {Deposits, etc. in the relevant taxable period - 300 million won (where deposits are paid on two or more houses, the deposit of a house, the cumulative number of the deposit of which is largest shall be deducted first in order)} × 60/100 × 1/365 (366 in cases of a leap year) × Interest rate of a fixed deposit;
2. Cases, other than those under subparagraph 1:
The amount to be included in the total amount of income = Cumulative number of the deposit, etc. in the relevant taxable period × 1/365 (366 in case of a leap year) × Interest rate of a fixed deposit.
(5) "Amount corresponding to the construction costs of real estate for lease" in paragraph (3) means any of the following amounts: <Amended by Presidential Decree No. 15191, Dec. 31, 1996; Presidential Decree No. 15747, Apr. 1, 1998; Presidential Decree No. 17456, Dec. 31, 2001; Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 20618, Feb. 22, 2008; Presidential Decree No. 20720, Feb. 29, 2008>
1. Where constructing an underpass and making an adoption of donation to the State or a local government under the State Property Act and other Acts and subordinate statutes, and where leasing it after obtaining a permit for the underpass occupation (limited to the first occupation permit without compensation), the amount corresponding to the construction costs for underpass determined by Ordinance of the Ministry of Strategy and Finance;
2. In cases of the real estate for lease other than under subparagraph 1, the amount corresponding to the costs for constructing the relevant real estate for lease determined by Ordinance of the Ministry of Strategy and Finance (excluding the land value).
(6) The interest earned, discount fee and dividend accrued from the rental business part under paragraph (3) shall be limited to those accrued from the financial property which is confirmed to have been acquired as the relevant deposits for lease, etc. by reference to books kept and entered or the evidentiary documents. <Amended by Presidential Decree No. 17456, Dec. 31, 2001>
(7) When formulas referred to in paragraphs (3) and (4) apply, where real estate is subleased on a deposit basis or subleased, the amount to be included in the deposit, etc. of the relevant real estate shall be the amount calculated based on the following formula: <Amended by Presidential Decree No. 24356, Feb. 15, 2013>
The amount to be included in the deposit, etc. = [Cumulative number of the deposit, etc., received for sublease on a deposit basis or sublease - {Cumulative number of the deposit, etc., paid to be leased on a deposit basis or leased × Percentage of the size of the real estate for sublease on a deposit basis or sublease out of the size of the real estate for the lease on a deposit basis or lease (in cases of sublease on a deposit basis or sublease including business facilities, percentage of such value)}] × 1/365 (366 in cases of a leap year).
(8) When the proviso to Article 25 (1) of the Act applies, Article 8-2 (2) through (4) shall apply mutatis mutandis to a house and land annexed thereto and the calculation of the number of houses. <Newly Inserted by Presidential Decree No. 22034, Feb. 18, 2010>
(9) Article 51 (5) shall apply mutatis mutandis to the calculation of the value at the time of consumption or payment under Article 25 (2) of the Act. <Amended by Presidential Decree No. 22034, Feb. 18, 2010>
 Article 54 (Exclusion from Total Amount of Income)
(1) Deleted. <by Presidential Decree No. 22034, Feb. 18, 2010>
(2) "Amount of income carried forward from the preceding taxable period" in Article 26 (3) of the Act means income of each taxable period which has already been taxed is re-included in the income of the relevant taxable period. <Amended by Presidential Decree No. 22034, Feb. 18, 2010>
 Article 55 (Calculation of Necessary Expenses for Business Income)
(1) Necessary expenses corresponding to the total amount of income in each taxable period of business income are as follows, except as otherwise expressly provided for in the Act and this Decree: <Amended by Presidential Decree No. 14860, Dec. 30, 1995; Presidential Decree No. 15565, Dec. 31, 1997; Presidential Decree No. 15969, Dec. 31, 1998; Presidential Decree No. 17032, Dec. 29, 2000; Presidential Decree No. 17456, Dec. 31, 2001; Presidential Decree No. 18173, Dec. 30, 2003; Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 19327, Feb. 9, 2006; Presidential Decree No. 19890, Feb. 28, 2007; Presidential Decree No. 20618, Feb. 22, 2008; Presidential Decree No. 21214, Dec. 31, 2008; Presidential Decree No. 21301, Feb. 4, 2009; Presidential Decree No. 22034, Feb. 18, 2010: Presidential Decree No. 22075, Mar. 15, 2010; Presidential Decree No. 22580, Dec. 30, 2010; Presidential Decree No. 23356, Dec. 8, 2011; Presidential Decree No. 24356, Feb. 15, 2013; Presidential Decree No. 24638, Jun. 28, 2013; Presidential Decree No. 25193, Feb. 21, 2014; Presidential Decree No. 26067, Feb. 3, 2015; Presidential Decree No. 26982, Feb. 17, 2016; Presidential Decree No. 27829, Feb. 3, 2017>
1. Purchase price (excluding a reduction of purchase or a purchase discount) of raw materials for commodities or products sold and expenses incidental thereto. In such cases, the original purchase price and expenses incidental thereto shall be applicable, if the relevant business has consumed such for business use, as have been purchased for other purposes;
1-2. Incidental expenses in connection with sale, such as storage, packing charges, carriage, sales bounty, sales benefit, etc. of goods and products sold (in cases of sales bounty and sales benefit, including where they are paid without a prior agreement);
2. The book value of real estate at the time of its transfer (only applicable to cases of building construction business and real estate development and supply business). In such cases, with regard to real estate acquired for purposes, other than business, but has been used for business, the acquisition value calculated by applying Article 89 mutatis mutandis at the time of original acquisition by the relevant business operator shall be the book value:
3. Expenses for forestry business:
(a) Purchase expenses for seeds, seedlings, and fertilizers;
(b) Expenses for afforestation;
(c) Management expenses;
(d) Expenses for deforestation;
(e) Equipment expenses;
(f) Improvement expenses;
(g) Expenses for selling forest trees;
4. Expenses for sericultural business:
(a) Purchase expenses;
(b) Breeding expenses;
(c) Management expenses;
(d) Equipment expenses;
(e) Improvement expenses;
(f) Sales expenses;
5. Expenses for livestock and poultry:
(a) Expenses for hatchery eggs;
(b) Delivery expenses;
(c) Breeding expenses;
(d) Equipment expenses;
(e) Improvement expenses;
(f) Sales expenses;
6. Employees' salaries;
7. Expenses for assets for business:
(a) Repair expenses for maintaining current status of assets for business (including a part of idle facilities attached to the relevant business);
(b) Expenses for management and maintenance;
(c) Rent for assets for business;
(d) Non-life insurance premiums of assets for business;
7-2. The book value of a passenger vehicle for business use at the time of selling the vehicle (referring to the amount computed by subtracting an amount excluded from the amount of business use, out of the depreciation costs under Article 33-2 (1) of the Act, in computing the book value, if the depreciation costs include such amount), where a person liable to double-entry bookkeeping under Article 160 (3) of the Act (hereinafter referred to as "person liable to double-entry bookkeeping") includes the sale price for the passenger vehicle for business use in gross revenue pursuant to Article 25 (3) of the Act;
8. Taxes and public charges related to business:
9. Deleted; <by Presidential Decree No. 22034, Feb. 18, 2010>
10. Mutual aid installments paid by a mutual aid business operator to the Construction Workers Retirement Mutual Aid Association pursuant to the Act on the Employment Improvement, etc. of Construction Workers;
10-2. Charges which an employer defrays under the Act on the Guarantee of Workers' Retirement Benefits;
10-3. Contributions from small and medium enterprises as defined under subparagraph 1 of Article 35-3 of the Special Act on Support for Human Resources of Small and Medium Enterprises;
11. Insurance premiums or charges which an employer defrays under the National Health Insurance Act, the Employment Insurance Act, and the Act on Long-Term Care Insurance for Older Persons;
11-2. Insurance premiums of an employer himself, which are defrayed as an employment-provided policyholder under the National Health Insurance Act and the Act on Long-Term Care Insurance for Older Persons;
11-3. Insurance premiums borne as a regional insured under the National Health Insurance Act and the Act on Long-Term Care Insurance for Older Persons;
12. Insurance premiums for a group genuine guaranty insurance and group refund-cum-guaranty insurance;
13. Interest paid on the debt incurred directly for gaining the gross amount of income;
14. Depreciation costs of fixed assets for business;
15. Appraisal losses on assets;
16. Irrecoverable bad debts (including bad debts to which a tax credit has not been applied under Article 45 of the Value-Added Tax Act, of irrecoverable receivables of the output value-added tax);
17. Bounties and other amounts similar thereto paid to any other party according to trade quantity or transaction amount;
18. Where the purchasing costs of those items destroyed by disaster, from among purchased commodities, products, real estate, and forest, are included among necessary expenses in the calculation of the amount of income in the taxable period which the relevant disaster occurs, the relevant costs;
19. Amounts paid for employees as expenses of sports activities and cultural activities at work, expenses for supporting family planning programs, expenses for employees’ get-together, etc.;
20. Value for free medical treatment paid by free treatment tickets determined by the Minister of Health and Welfare;
21. Expenses for inspection and training overseas which are related to business duties;
22. Operating expenses for special classes or middle or high schools attached to the industrial enterprises for working teenagers established under the Elementary and Secondary Education Act;
23. Operating expenses for child care centers at work established under the Infant Care Act;
24. Expenses paid for a geological survey, drilling, or digging galleries for prospecting minerals, and expenses for the relevant development;
24-2. Deleted; <by Presidential Decree No. 20618, Feb. 22, 2008>
25. Expenses (in cases of goods (excluding goods worth not exceeding 10,000 won per piece) donated to a specific person, limited to an amount not exceeding 30,000 won a year) paid for samples, calendars, diaries, cups, fans, and other similar articles to be donated to many and unspecified persons for purposes of advertisement and publicity;
26. Membership fees paid to organizations constituted by business operators, which are juristic persons, or the cooperatives or associations registered with the competent authorities;
27. Expenses that meet the requirements prescribed by Ordinance of the Ministry of Strategy and Finance, out of expenses paid in a lump sum to surviving family members after death of an employee, such as schooling expenses;
28. Expenses related to the relevant gross revenue, out of expenses similar in nature to those specified in subparagraphs 1 through 27.
(2) Bad debts specified in paragraph (1) 16 shall be those falling under any of Article 19-2 (1) 1 through 11 of the Enforcement Decree of the Corporate Tax Act. <Amended by Presidential Decree No. 22580, Dec. 30, 2010>
(3) Among the charges to be included in necessary expenses pursuant to paragraph (1) 10-2, all the amount of charge paid by an employer to a retirement pension account shall be included in necessary expenses, and the maximum amount of the charge paid to the defined payment retirement pension shall be the amount obtained by deducting in the order the following amounts from the estimated amount pursuant to Article 57 (2); and where at least two charges exist, a charge of the retirement pension whose subscription agreement was first concluded shall first be included in necessary expenses: <Amended by Presidential Decree No. 22034, Feb. 18, 2010; Presidential Decree No. 22185, Jun. 8, 2010; Presidential Decree No. 22580, Dec. 30, 2010; Presidential Decree No. 23987, Jul. 24, 2012; Presidential Decree No. 24356, Feb. 15, 2013>
1. Reserves for retirement benefits as of the date of termination of taxable period concerned;
2. Amount of charge paid until the date of termination of immediately preceeding taxable period.
(4) A business operator that has included charges in necessary expenses under paragraph (1) 10-2, shall submit a written report on a final tax base along with a statement of adjusted retirement pension charges determined by Ordinance of the Ministry of Strategy and Finance to the head of the competent tax office having jurisdiction over the place for tax payment. <Amended by Presidential Decree No. 15565, Dec. 31, 1997; Presidential Decree No. 15747, Apr. 1, 1998; Presidential Decree No. 19327, Feb. 9, 2006; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 22580, Dec. 30, 2010>
(5) Where a business operator who has included charges under paragraph (3) in necessary expenses falls under any of the following cases, the amount stipulated in the respective subparagraph shall be included in the gross amount of income, in calculating the amount of income during the taxable period wherein such causes have occurred: <Amended by Presidential Decree No. 15565, Dec. 31, 1997; Presidential Decree No. 19327, Feb. 9, 2006; Presidential Decree No. 22580, Dec. 30, 2010; Presidential Decree No. 23987, Jul. 24, 2012; Presidential Decree No. 24356, Feb. 15, 2013>
1. Deleted; <by Presidential Decree No. 24356, Feb. 15, 2013>
2. Where an insurance contract or trust contract is terminated: Amount of money to be reverted to a business operator;
3. Deleted; <by Presidential Decree No. 24356, Feb. 15, 2013>
4. Where the reserves revert to an employer under each subparagraph of Article 24 of the Enforcement Decree of the Act on the Guarantee of Workers' Retirement Benefits: The relevant reserves.
(6) Where a resident who engages in a business of manufacturing, wholesale, or retail of food or daily necessities defined in subparagraphs 1 and 1-2 of Article 2 of the Act on Donation Encouragement of Food, Etc., (hereafter in this Article referred to as "food, etc.") donates, free of charge, surplus food, etc. left over from the business to a business operator specified in subparagraph 5 of Article 2 of the same Act or a person designated by such business operator, the book value of such donated food, etc. shall be included in necessary expenses. In such cases, the amount shall not be included in donations under Article 79 (1) 1. <Amended by Presidential Decree No. 22034, Feb. 18, 2010; Presidential Decree No. 27829, Feb. 3, 2017>
(7) Bad debts specified in paragraph (2) shall be necessary expenses for the taxable period to which any of the dates prescribed by subparagraphs of Article 19-2 (3) of the Enforcement Decree of the Corporate Tax Act belongs. <Newly Inserted by Presidential Decree No. 22580, Dec. 30, 2010>
 Article 56 (Calculation of Necessary Expenses for Allowances for Bad Debts)
(1) Allowances for bad debts to be included in necessary expenses pursuant to Article 28 (1) of the Act shall be the larger of the amount equivalent to 1/100 of the aggregate of credit account receivable, accounts due, and other claims related to the business (hereafter referred to as "credit balance" in this Article) as of the end of the relevant taxable period, or the amount obtained by multiplying the credit balance by the actual ratio of bad debts. <Amended by Presidential Decree No. 15969, Dec. 31, 1998; Presidential Decree No. 22034, Feb. 18, 2010>
(2) The credit balance under paragraph (1) shall be that falling under any of the following subparagraphs: <Amended by Presidential Decree No. 15747, Apr. 1, 1998; Presidential Decree No. 15969, Dec. 31, 1998; Presidential Decree No. 20720, Feb. 29, 2008>
1. Uncollected balance of the sale price of commodities and products, and uncollected balance of processing fees and service charges;
2. Uncollected balance of the claims accruing from normal business trades, and of the output tax of value-added tax, and those determined by Ordinance of the Ministry of Strategy and Finance.
(3) The actual ratio of bad debts under paragraph (1) shall be the ra- tio calculated as follows:
Actual ratio of bad debt = Bad debts in the relevant taxable period / Credit balance as of the closing date of the immediately preceding taxable period.
(4) The balance of the allowance for bad debts to be included in the amount of gross income in calculating the amount of income in the following taxable period pursuant to Article 28 (2) of the Act, shall be the amount remaining after off-setting the bad debts incurred in each taxable period. <Amended by Presidential Decree No. 22034, Feb. 18, 2010>
(5) The amount recovered from bad debts included in necessary expenses pursuant to Article 55 (1) 16 or the bad debts which have offset the allowance for bad debts, shall be included in the total amount of income of the taxable period in which such recovery date falls. <Amended by Presidential Decree No. 22034, Feb. 18, 2010>
(6) Any business operator who intends to be governed by Article 28 of the Act shall submit a final return on the tax base with a detailed statement of the adjustment of allowance for bad debts and bad debts prescribed by Ordinance of the Ministry of Strategy and Finance attached thereto to the head of a tax office having jurisdiction over the place for tax payment. <Amended by Presidential Decree No. 22034, Feb. 18, 2010>
(7) Matters necessary for the calculation of the allowance for bad debts other than those under paragraphs (1) through (6) shall be determined by Ordinance of the Ministry of Strategy and Finance. <Amended by Presidential Decree No. 15747, Apr. 1, 1998; Presidential Decree No. 15969, Dec. 31, 1998; Presidential Decree No. 20720, Feb. 29, 2008>
 Article 57 (Calculation of Reserves for Retirement Benefits as Necessary Expenses)
(1) Reserves for retirement benefits to be included in necessary expenses pursuant to Article 29 of the Act shall be limited to the maximum amount equivalent to 5/100 of the gross wages paid in the relevant taxable period to the employees who are eligible to receive retirement benefits (excluding those who have joined a retirement pension account; hereafter the same shall apply in this Article). <Amended by Presidential Decree No. 17456, Dec. 31, 2001; Presidential Decree No. 19327, Feb. 9, 2006; Presidential Decree No. 22034, Feb. 18, 2010; Presidential Decree No. 24356, Feb. 15, 2013>
(2) The accumulated amount of reserves for retirement benefits to be included in necessary expenses pursuant to paragraph (1) shall be limited to the amount multiplied by any of the following rates to the amount estimated to be paid as retirement benefits where the incumbent employees as of the end of the relevant taxable period retire in whole: <Newly Inserted by Presidential Decree No. 17456, Dec. 31, 2001; Presidential Decree No. 19327, Feb. 9, 2006; Presidential Decree No. 22034, Feb. 18, 2010; Presidential Decree No. 22580, Dec. 30, 2010>
1. Where the taxable period is from January 1, 2010 to December 31, 2010: 30/100;
2. Where the taxable period is from January 1, 2011 to December 31, 2011: 25/100;
3. Where the taxable period is from January 1, 2012 to December 31, 2012: 20/100;
4. Where the taxable period is from January 1, 2013 to December 31, 2013: 15/100;
5. Where the taxable period is from January 1, 2014 to December 31, 2014: 10/100;
6. Where the taxable period is from January 1, 2015 to December 31, 2015: 5/100;
7. Where the taxable period begins on and after January 1, 2016: 0/100.
(3) Deleted. <by Presidential Decree No. 24356, Feb. 15, 2013>
(4) When a business operator that appropriates reserves for retirement benefits to necessary expenses pays the retirement benefits to an employee, he/she shall first offset it by reserves for retirement benefits.
(5) Even though the amount calculated by deducting retirement benefits paid to an employee during the period following the taxable period in which the reserve for retirement benefits arrives from the cumulative reserve for retirement benefits included in necessary expenses within the limits falling under each subparagraph of paragraph (2) exceed the amount calculated by multiplying the estimate amount under paragraph (2) by the rates under each subparagraph of the same paragraph, such excess shall not be reversed for total income. <Newly Inserted by Presidential Decree No. 22580, Dec. 30, 2010>
(6) Any business operator who intends to be governed by Article 29 of the Act shall submit a final return on tax base, along with a detailed statement on the reserve for retirement benefits determined by Ordinance of the Ministry of Strategy and Finance to the head of the competent tax office having jurisdiction over the place for tax payment. <Amended by Presidential Decree No. 15747, Apr. 1, 1998; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 22580, Dec. 30, 2010>
 Article 58 Deleted. <by Presidential Decree No. 15969, Dec. 31, 1998>
 Article 59 (Calculation of Gain on Insurance Claim for Acquisition of Fixed Assets as Necessary Expenses)
(1) The gains from insurance claim to be included in necessary expenses under Article 31 (1) of the Act shall be appropriated for the temporary depreciation reserve.
(2) "Fixed assets of the same kind" in Article 31 (1) of the Act means those same as the fixed assets whose usage or purpose is extinguished. <Amended by Presidential Decree No. 22034, Feb. 18, 2010>
(3) The depreciation cost of fixed assets acquired by gains from insurance claim shall be offset for the temporary depreciation reserve within the limit of the temporary depreciation reserve under paragraph (1).
(4) Any business operator who intends to be governed by Article 31 (2) of the Act shall submit a final return on tax base along with plans for the use of the insurance money determined by Ordinance of the Ministry of Strategy and Finance to the head of competent tax office having jurisdiction over the place for tax payment. <Amended by Presidential Decree No. 15747, Apr. 1, 1998; Presidential Decree No. 20720, Feb. 29, 2008>
 Article 60 (Calculation of National Subsidies for Acquisition of Fixed Assets as Necessary Expenses)
(1) The amount to be included in necessary expenses under Article 32 (1) of the Act shall be the expenses spent to acquire or improve the fixed assets for business from among paid national subsidies, and such amount shall be appropriated for the temporary depreciation reserves or the advanced depreciation reserves according to the following classifications:
1. Assets to be depreciated: Temporary depreciation reserves;
2. Other assets: Advanced depreciation reserves.
(2) The depreciation cost of fixed assets for business acquired with national subsidies shall be offset for the temporary depreciation reserves within the limit of the temporary depreciation reserves under paragraph (1): Provided, That in cases of disposing the assets concerned, the amount remained after setoff shall be included in the total amount of revenue of the taxable period to which the date of such disposition belongs. <Amended by Presidential Decree No. 24356, Feb. 15, 2013>
(3) Any business operator who intends to be governed by Article 32 (2) of the Act shall submit a final return on tax base, along with plans for the use of national subsidies determined by Ordinance of the Ministry of Strategy and Finance, to the head of the competent tax office having jurisdiction over the place for tax payment. <Amended by Presidential Decree No. 15747, Apr. 1, 1998; Presidential Decree No. 20720, Feb. 29, 2008>
(4) "Extenuating circumstances prescribed by Presidential Decree" in the latter part of Article 32 (2) of the Act means any of the following cases: <Newly Inserted by Presidential Decree No. 20618, Feb. 22, 2008>
1. Where the permission, authorization, etc. of construction are delayed;
2. Where the period of construction is extended because the place in which construction shall be executed is not determined, etc.;
3. Where litigation on compensation, etc. for a site is under way;
4. Where any circumstance corresponding to those under subparagraphs 1 through 3 has occurred.
 Article 61 (Expenses Related to Domestic Affairs, etc.)
(1) "Expenses for domestic affairs prescribed by Presidential Decree, and expenses related thereto" in Article 33 (1) 5 of the Act means those falling under any of the following subparagraphs: <Amended by Presidential Decree No. 15747, Apr. 1, 1998; Presidential Decree No. 16664, Dec. 31, 1999; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 22034, Feb. 18, 2010>
1. Expenses confirmed as used by the business in connection with domestic affairs. In such cases, expenses related to the houses corresponding to Article 98 (2) 2 (proviso) shall be deemed expenses incurred in connection with domestic affairs;
2. In cases where the total amount of assets for business falls short of the total amount of liabilities, the amount calculated as interest paid on the debt equivalent to such amount of short-fall under conditions prescribed by Ordinance of the Ministry of Strategy and Finance.
(2) Deleted. <by Presidential Decree No. 22034, Feb. 18, 2010>
 Article 62 (Calculation of Depreciation Costs as Necessary Expenses)
(1) Where the depreciation costs of fixed assets for business (excluding invested assets) are appropriated to necessary expenses, the depreciation cost under Article 33 (1) 6 of the Act (hereinafter referred to as "depreciation amount") shall be appropriated as necessary expenses in calculating the income amounts within the limit of the amount calculated by such means as returned in each taxable period by fixed asset to the head of the competent tax office (hereinafter referred to as "scope of depreciation"). In such cases, if the business is opened or closed in the relevant taxable period, or if the assets subject to depreciation are acquired or transferred in the relevant taxable period, the scope of depreciation shall be computed by dividing such amount by 12 as is obtained by multiplying the scope of depreciation by the number of months spent for business in the relevant taxable period; and the number of months shall be computed according to the calendar, treating the number of days not exceeding a month as one month. <Amended by Presidential Decree No. 17032, Dec. 29, 2000>
(2) "Fixed assets for business" in paragraph (1) means the following assets used directly for the said business (excluding assets, the value of which does not decrease over time; hereinafter referred to as "depreciable assets"): <Amended by Presidential Decree No. 17456, Dec. 31, 2001; Presidential Decree No. 17825, Dec. 30, 2002; Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 18903, Jun. 30, 2005; Presidential Decree No. 27972, Mar. 29, 2017>
1. Any of the following tangible fixed assets:
(a) Buildings (including appurtenant facilities) and structures (hereinafter referred to as "structures");
(b) Vehicles and transportation equipment, tools, instruments and furnishings;
(c) Ships and aircraft;
(d) Machines and apparatuses;
(e) Animals and plants;
(f) Tangible fixed assets similar to items (a) through (e);
2. Any of the following intangible fixed assets:
(a) Goodwill, design right, utility model right, trademark right;
(b) Patent right, fishing rights, gathering rights under the Submarine Mineral Resources Development Act, toll road management rights, water utilization rights, rights to utilize electricity and gas supply facilities, rights to use water supply facilities for industry, rights to utilize tap water facilities, rights to use heat supply facilities;
(c) Mining rights, rights to use exclusive telecommunications and telephone facilities, rights to utilize exclusive sidetracks, rights to manage sewage terminal treatment plants, rights to manage tap water facilities;
(d) Rights to use dam;
(e) Deleted; <by Presidential Decree No. 17825, Dec. 30, 2002>
(f) Development expenses: Expenses incurred in applying the outcome of research or related knowledge for planning or designing in order to create or remarkably improve material, apparatus, products, process, system, or service before commercial production or uses, which have been appropriated for development expenses by the relevant business operator (including the amount paid by any member of the Industrial Technology Research Cooperatives under the Industrial Technology Research Cooperatives Support Act for the research and development and the acquisition of research facilities, etc. to the relevant Cooperatives);
(g) Value of donated assets for beneficial use: Book value of relevant assets in cases where any use is made of the relevant assets or any profits accrue therefrom after the assets, other than money, are donated;
(h) Rights to utilize frequencies and rights to manage airport facilities: Rights to utilize frequency under Article 14 of the Radio Waves Act, and rights to manage airport facilities under Article 26 of the Airport Facilities Act.
(3) In applying paragraph (1), fixed assets acquired under conditions of long-term installment, etc. shall be included in depreciable assets, irrespective of whether the payment is settled or the ownership is transferred; and assets corresponding to the financial lease under Article 24 (5) of the Enforcement Decree of the Corporate Tax Act shall also be included in depreciable assets of the business operator who is the user of such lease. <Amended by Presidential Decree No. 18705, Feb. 19, 2005>
(4) A business operator may appropriate in each taxable period the book value of relevant depreciable assets, without reducing it, to the accumulated depreciation amounts; and may include such depreciation costs in necessary expenses. In such cases, the accumulated depreciation amounts shall be appropriated by each individual asset; and if the specification on the adjustment of depreciation cost under Article 73-2 is made and preserved, the total depreciation costs may be appropriated to the accumulated depreciation amounts. <Amended by Presidential Decree No. 22034, Feb. 18, 2010>
(5) The amount in excess of the scope of depreciation from among the depreciation costs appropriated to necessary expenses during each taxable period of a business operator (hereafter referred to as "amount of disapproved depreciation" in this Article) shall, where the depreciation costs appropriated to necessary expenses during the taxable periods thereafter fall short of the scope of depreciation, be appropriated to necessary expenses within the limit of such short-fall amount (hereafter referred to as "approved short-fall amount" in this Article) which is calculated by the business operator in the subsequent taxable year. In such cases, when a business operator fails to appropriate any depreciation costs to necessary expenses, the amount of disapproved depreciation shall be ratified as necessary expenses within the limit of scope of depreciation. <Amended by Presidential Decree No. 22034, Feb. 18, 2010>
(6) The approved short-fall amount cannot be appropriated to the dis- approved amount of depreciation during the taxable period thereafter.
(7) In applying the latter part of paragraph (1), if a part of depreciable assets is transferred, the accumulated amount of depreciation, the disapproved depreciation amount, or the approved short-fall amount for the relevant transferred asset shall be calculated by multiplying the accumulated amount of depreciation, the disapproved amount of depreciation, or the approved short-fall amount for the entire relevant depreciable assets by the ratio which the value of transferred parts occupies out of the entire values of relevant depreciable assets. In such cases, the relevant value shall be the book value at the time of acquisition. <Amended by Presidential Decree No. 17032, Dec. 29, 2000>
(8) Where a business operator makes concurrently the depreciation and the evaluation increase on the depreciable assets, the scope of depreciation shall be calculated by considering that the depreciation has been conducted first, and the evaluation increase is made thereafter.
[This Article Wholly Amended by Presidential Decree No. 15969, Dec. 31, 1998]
 Article 63 (Useful Life and Depreciation Rate)
(1) Useful life of a depreciable asset, and the depreciation rate according to the relevant useful life, shall be as follows: <Amended by Presidential Decree No. 17456, Dec. 31, 2001; Presidential Decree No. 17825, Dec. 30, 2002; Presidential Decree No. 20720, Feb. 29, 2008>
1. Assets for laboratory tests determined by Ordinance of the Ministry of Strategy and Finance and intangible fixed assets provided for in Article 62 (2) 2 (a) through (d): Useful life determined by Ordinance of the Ministry of Strategy and Finance, and the consequential depreciation rate by depreciation method determined by Ordinance of the Ministry of Strategy and Finance (hereinafter referred to as "depreciation rate");
2. Depreciable assets (excluding intangible fixed assets provided for in Article 62 (2) 2 (f) through (h)) other than assets subject to subparagraph 1: Useful life as reported by a business operator to the head of the competent tax office having jurisdiction over the place for tax payment (hereinafter referred to as "reported useful life") by selecting and applying within the scope of useful life determined by Ordinance of the Ministry of Strategy and Finance (hereinafter referred to as "scope of useful life"), with the increase or decrease of 25/100 of the relevant standard useful life from the standard useful life determined by Ordinance of the Ministry of Strategy and Finance by structure, asset, or business type (hereinafter referred to as "standard useful life"), and the corresponding depreciation rate (the standard useful life and the corresponding deprecation rate, if it is failed to report within the reporting term under any of the subparagraphs of paragraph (2)).
(2) A report on the useful life under paragraph (1) or (5) shall be filed with the head of the competent tax office having jurisdiction over the place for tax payment in the form prescribed by Ordinance of the Ministry of Strategy and Finance by not later than the deadline for filing the final return on tax base of the global income tax for the taxable period pertinent to either of the following dates (it may be filed via the Home Tax Service): <Amended by Presidential Decree No. 18312, Mar. 17, 2004; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 24823, Nov. 5, 2013>
1. In cases of a business operator who commences a new business, the commencement date of such business;
2. Where a business operator, other than those falling under subparagraph 1, newly acquires a depreciable asset whose the standard useful life by classification of asset or business type is different, or commences a business of a new type, the date of such acquisition or the commencement date of said business.
(3) A reported useful life or standard useful life that a business operator has applied for each type of asset and each line of business in accordance with paragraph (1) 2 or (5) shall continue to be applied in subsequent taxable periods thereafter. <Amended by Presidential Decree No. 22034, Feb. 18, 2010; Presidential Decree No. 24823, Nov. 5, 2013>
(4) A useful life reported under paragraph (1) 2, (2), or (5) shall be indicated by the year. <Amended by Presidential Decree No. 22034, Feb. 18, 2010; Presidential Decree No. 24823, Nov. 5, 2013>
(5) Notwithstanding paragraph (1) 2, where a small or medium enterprise defined in Article 2 of the Enforcement Decree of the Restriction of Special Taxation Act (hereafter in this paragraph and paragraph (6), referred to as "small or medium enterprise") acquires any of the following assets (hereafter in this paragraph and paragraph (6), referred to as "asset for facilities investment") during the period between October 1, 2014 and June 30, 2016, the small or medium enterprise may select to determine the useful life of such asset within the maximum (a period of less than one year shall be rounded down) computed by adding or subtracting 50/100 of the standard useful life to or from the standard useful life of the asset for the relevant type of business when it files a report thereon with the head of the tax office having jurisdiction over the place for tax payment: Provided, That the foregoing shall not apply where the total value of assets for facilities investment during the relevant taxable period is smaller that the total value of assets for facilities investment during the immediately preceding taxable period: <Newly Inserted by Presidential Decree No. 24823, Nov. 5, 2013; Presidential Decree No. 25641, Sep. 26, 2014; Presidential Decree No. 26982, Feb. 17, 2016>
1. Vehicles and transports: Provided, That such assets are limited to those used for transportation business or rental business for the purpose of rental;
2. Ships and aircraft: Provided, That such assets are limited to those used for fishery, transportation business, or rental business for the purpose of rental;
3. Tools, instruments, and furniture;
4. Machinery and equipment.
(6) To receive tax credits under paragraph (5), a small or medium enterprise shall file an application for special consideration in useful life in the form prescribed by Ordinance of the Ministry of Strategy and Finance with the head of the tax office having jurisdiction over the place for tax payment by the deadline for filing the final return on the tax base of the global income tax for the taxable period in which the relevant asset for facilities investment was acquired (it may be filed via the Home Tax Service). <Newly Inserted by Presidential Decree No. 24823, Nov. 5, 2013; Presidential Decree No. 25641, Sep. 26, 2014>
[This Article Wholly Amended by Presidential Decree No. 15969, Dec. 31, 1998]
 Article 63-2 (Special Cases concerning Useful Life)
(1) In any of the following cases, notwithstanding Article 63 (1) 2 and (3), a business operator may apply useful life different from the range of the useful life or change useful life which he/she has applied, with approval from the commissioner of the regional tax office having jurisdiction over the place for tax payment for each place of business, by adding or subtracting 50/100 of the standard useful life to or from the standard useful life: <Amended by Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 22034, Feb. 18, 2010; Presidential Decree No. 25193, Feb. 21, 2014>
1. Where the assets are remarkably corroded, abraded, or damaged due to characteristics of the place of business;
2. As a business operator in whose case three years have passed after the commencement of his/her business, where the operating rate prescribed by Ordinance of the Ministry of Strategy and Finance (hereinafter referred to as "operating rate") of production facilities in the relevant taxable period (excluding buildings; hereinafter referred to as "production facilities") has remarkably increased above the average operating rate during the preceding three taxable periods;
3. Where the existing production facilities are in need of accelerated depreciation due to the development and diffusion of new production technology and new products;
4. Where manufacturing is suspended or the operating rate of production facilities is decreased due to the fluctuation in economic conditions.
(2) Where a business operator intends to obtain approval for useful life or approval for change therof pursuant to paragraph (1), he/she shall file an application for approval for (change of) useful life (including submission by the Home Tax Service) prescribed by Ordinance of the Ministry of Strategy and Finance with the commissioner of the competent regional tax office through the head of the competent tax office having jurisdiction over the place for tax payment by the date when three months have passed from the date referred to in the subparagraphs of Article 63 (2) or the date when three months have passed before the end of the first taxable period. In such cases, an application for approval of useful life or for approval of change thereof shall be filed by the year. <Amended by Presidential Decree No. 22034, Feb. 18, 2010>
(3) The head of the competent tax office having jurisdiction over the place for tax payment who has received an application pursuant to paragraph (2) shall notify the applicant of the approval or disapproval notified by the commissioner of the competent regional tax office by the end of the taxable period in which the date of receipt of an application falls (where a period from the date of receipt of an application to the end of the taxable period is less than three months, referring to the date three months have passed from the date of receipt of the application). <Amended by Presidential Decree No. 22034, Feb. 18, 2010>
(4) Where approval for useful life or for change thereof is obtained after the expiration of taxable period in which the acceptance date of a written application under paragraph (2) falls, useful life newly approved or approved with changes shall be applied from the taxable period in which the date of such approval or modified approval falls.
(5) If a business operator who has changed (including a re-change) useful life of depreciable assets under paragraph (1) intends to further change useful life of the relevant assets, he/she shall do so only after three years have elapsed from the expiration of taxable period whereto the previously- changed useful life have been applied for the first time.
[This Article Newly Inserted by Presidential Decree No. 15969, Dec. 31, 1998]
 Article 63-3 (Useful Life of Used Assets)
(1) Where a business operator acquires an asset determined by Ordinance of the Ministry of Strategy and Finance whose standard useful life have partially or fully elapsed (hereafter referred to as "used assets" in this Article), he/she may have such useful life as selected and reported by him/himself within the scope between the years corresponding to 50/100 of the standard useful life (in cases of the asset by business kind, referring to such standard useful life as applied to the acquisitor's business kind) and the relevant standard useful life, as the useful life of the relevant used assets, notwithstanding Article 63 (1) 2. <Amended by Presidential Decree No. 20720, Feb. 29, 2008>
(2) Where a business operator intends to file a report on useful life under paragraph (1), a report on useful life under Article 63 (2) shall be submitted to the head of the competent tax office having jurisdiction over the place for tax payment by not later than the term for the final return on the tax base of gross income tax during the taxable period in which the acquisition date of used assets falls.
[This Article Newly Inserted by Presidential Decree No. 17032, Dec. 29, 2000]
 Article 64 (Reporting on Depreciation Methods)
(1) The depreciation cost of each depreciable asset shall be computed by the depreciation methods that the relevant business operator reports to the head of the tax office having jurisdiction over the place for tax payment, from among the following depreciation methods: <Amended by Presidential Decree No. 15969, Dec. 31, 1998; Presidential Decree No. 17456, Dec. 31, 2001; Presidential Decree No. 17825, Dec. 30, 2002; Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 26067, Feb. 3, 2015>
1. Structures and intangible fixed assets (excluding assets specified in subparagraphs 3 and 6 through 8): Straight line method;
2. Tangible fixed assets other than structures (excluding assets specified in subparagraph 4): Declining balance method or straight line method;
3. Mining right (including gathering rights under the Submarine Mineral Resources Development Act), waste landfill facilities (referring to landfill facilities defined in subparagraph 2 (a) of attached Table 3 to the Enforcement Decree of the Wastes Control Act): Units of production method or straight line method;
4. Tangible fixed assets for mining industry: Units of production method, declining balance method, or straight line method;
5. Deleted; <by Presidential Decree No. 17825, Dec. 30, 2002>
6. Development expenses: Method to depreciate in proportion to the number of elapsed months by each business year pursuant to useful life reported in a unit of year, within the period of 20 years from the point of time when the sale or use of related products is possible;
7. Value of donated assets for use benefits: Method to write off the proportionally distributed amount (where the relevant donated asset is destroyed or a contract is terminated, the relevant remaining value) according to the use benefit period of the relevant assets (where there is no special agreement on the relevant period, reported useful life);
8. Right to utilize frequency and right to manage airport facilities: Method to write off equal amount according to the period of use within the period which has been publicly announced by the competent administrative office or whose registration has been made in the said office.
(2) When a business operator intends to report on a depreciation method under paragraph (1), he/she shall submit a written report on depreciation methods determined by Ordinance of the Ministry of Strategy and Finance (including submitting it by means of the Home Tax Service) to the head of the competent tax office having jurisdiction over the place for tax payment, by selecting one method by asset under classification listed in each subparagraph of the said paragraph, by not later than the final tax base return deadline for the taxable period in which the date listed in each of the following subparagraphs falls: <Amended by Presidential Decree No. 17456, Dec. 31, 2001; Presidential Decree No. 18312, Mar. 17, 2004; Presidential Decree No. 20720, Feb. 29, 2008>
1. Where a business operator commences a new business, the date of commencement of the relevant business;
2. Where a business operator, other than those specified in subparagraph 1, newly acquires fixed assets with classification different from each subparagraph of paragraph (1), the date of such acquisition.
(3) The depreciation method reported by a business operator under paragraph (1) (where failed to file a report on the depreciation methods, referring to the depreciation methods prescribed in paragraph (4) 1 through 5), shall be applied continuously throughout subsequent taxable periods. <Newly Inserted by Presidential Decree No. 15969, Dec. 31, 1998; Presidential Decree No. 17456, Dec. 31, 2001>
(4) Where a business operator fails to make a report under paragraph (1), the scope of depreciation for the relevant depreciable assets shall be computed under any of the following depreciation methods: <Amended by Presidential Decree No. 15969, Dec. 31, 1998; Presidential Decree No. 17456, Dec. 31, 2001; Presidential Decree No. 17825, Dec. 30, 2002>
1. With respect to assets falling under paragraph (1) 1, the straight line method;
2. With respect to assets falling under paragraph (1) 2, the declining balance method;
3. With respect to assets falling under paragraph (1) 3 and 4, the units of production method;
4. With respect to assets falling under paragraph (1) 6, the method to calculate depreciation an equal amount each year for a period of five years from the point of time when the related products are available for sale or use;
5. With respect to assets falling under paragraph (1) 7 and 8, the method prescribed in the said subparagraph;
6. Deleted. <by Presidential Decree No. 17825, Dec. 30, 2002>
(5) Where a business operator has changed the relevant depreciation method without obtaining approval for change thereof under Article 65 (1), the scope of depreciation shall be calculated by the depreciation method applicable prior to such change. <Newly Inserted by Presidential Decree No. 17825, Dec. 30, 2002>
 Article 65 (Changes of Depreciation Methods)
(1) Where a business operator falls under any of the following cases, he/she may change the relevant depreciation methods by obtaining approval from the head of the competent tax office having jurisdiction over the place for tax payment, notwithstanding Article 64 (3): <Amended by Presidential Decree No. 15565, Dec. 31, 1997; Presidential Decree No. 15969, Dec. 31, 1998; Presidential Decree No. 18705, Feb. 19, 2005>
1. When he/she operates a business jointly with another business operator with a different depreciation method;
2. When he/she acquires or succeeds to the business of another business operator with a different depreciation method;
3. When a foreign investor acquires or holds at least 20/100 of the total shares under the Foreign Investment Promotion Act;
4. When he/she intends to change the depreciation methods due to the business fluctuations in overseas markets or due to the changes in economic conditions.
(2) Any business operator who wishes to obtain approval under paragraph (1) shall file an application for changing the depreciation methods in the form prescribed by Ordinance of the Ministry of Strategy and Finance (such application may be filed through the Home Tax Service network) with the head of the tax office having jurisdiction over the place for tax payment by the end of the initial taxable period to which the business operator intends to apply the depreciation methods to be changed. <Amended by Presidential Decree No. 15747, Apr. 1, 1998; Presidential Decree No. 15969, Dec. 31, 1998; Presidential Decree No. 18312, Mar. 17, 2004; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 22034, Feb. 18, 2010; Presidential Decree No. 26067, Feb. 3, 2015>
(3) Upon receipt of an application under paragraph (2), the head of the tax office having jurisdiction over the place for tax payment shall determine whether to approve it and notify the applicant of his/her determination by not later than one month after the end of the taxable period in which the application is filed. <Newly Inserted by Presidential Decree No. 15969, Dec. 31, 1998; Presidential Decree No. 26067, Feb. 3, 2015>
(4) When the head of the competent tax office having jurisdiction over the place for tax payment intends to grant approval for changing depreciation method due to the causes under paragraph (1) 4, he/she shall comply with the standards determined by the Commissioner of the National Tax Service.
(5) When a business operator changes the depreciation method under paragraph (1), Article 27 (6) of the Enforcement Decree of the Corporate Tax Act shall apply mutatis mutandis to the calculation of the scope of depreciation. <Amended by Presidential Decree No. 15969, Dec. 31, 1998; Presidential Decree No. 18705, Feb. 19, 2005>
 Article 66 (Definition of Declining Balance Method, Straight Line Method, etc.)
The terms used in Article 64 shall be defined as follows: <Amended by Presidential Decree No. 15969, Dec. 31, 1998; Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 22034, Feb. 18, 2010; Presidential Decree No. 26067, Feb. 3, 2015; Presidential Decree No. 26982, Feb. 17, 2016>
1. "Declining balance method" means a depreciation method where the scope of depreciation in each taxable period, as calculated by multiplying the balance obtained by deducting the amount already included in necessary expenses (including the amount not included in necessary expenses under Article 33-2 (1) and (2) of the Act out of the depreciation cost of passenger vehicles for business use under Article 33-2 (1) of the Act (hereinafter referred to as "passenger vehicles for business use")), as depreciation costs from the acquisition value of relevant depreciable assets by the depreciation rate according to the useful life of relevant assets, diminishes successively each year;
2. "Straight line method" means a depreciation method where the scope of depreciation in each taxable period is computed by applying the depreciation rate according to useful life of the relevant assets to the acquisition value of relevant depreciable assets (referring to the acquisition value computed by applying mutatis mutandis Article 72 of the Enforcement Decree of the Corporate Tax Act; hereafter the same shall apply in this Article), becomes equal each year;
3. "Units of production method" means a depreciation method where any of the following amounts is determined as the scope of depreciation for each taxable period:
(a) An amount computed by multiplying the amount obtained by dividing the acquisition value of the relevant depreciable assets by the total expected amount to be mined from the mining area to which such asset belongs by the quantity extracted from the mining area during the relevant taxable period;
(b) An amount computed by multiplying the amount calculated by dividing the acquisition value of the relevant depreciable assets by the expected quantity of landfill to be dumped in the waste landfill facilities comprising the assets by the quantity of landfill dumped in the waste landfill facilities during the relevant taxable period.
 Article 67 (Legal Fiction of Immediate Depreciation)
(1) When a business operator appropriates to necessary expenses such amount as has been disbursed for the acquisition of depreciable assets and that as corresponding to the capital expenditure on the depreciable assets, the scope of depreciation shall be calculated by deeming it has already been depreciated. <Amended by Presidential Decree No. 15969, Dec. 31, 1998>
(2) "Capital expenditure" in paragraph (1) means the repair cost disbursed to extend the useful life of the depreciable asset owned by a business operator or to increase the actual value of the relevant asset, and it shall be deemed that any disbursement for any of the followings is also included: <Newly Inserted by Presidential Decree No. 15969, Dec. 31, 1998>
1. Remodeling to change the original use thereof;
2. Installing elevators or apparatuses for heating and cooling;
3. Installing emergency exits in buildings, etc.;
4. Restoring those which have lost the usefulness of original purposes of the relevant assets because buildings, machines, facilities, etc. have been damaged or lost due to disasters, etc.;
5. Others similar to those specified in subparagraphs 1 through 4, such as improvement, expansion, enlargement, etc.
(3) When the repair costs disbursed by a business operator during each taxable period falls under any of the following cases, and the relevant repair costs have been appropriated to necessary expenses, it shall not be deemed to be included in the capital expenditure under paragraph (2): <Newly Inserted by Presidential Decree No. 15969, Dec. 31, 1998; Presidential Decree No. 24356, Feb. 15, 2013>
1. Where the amount disbursed as repair cost by individual asset is less than three million won;
2. Where the amount disbursed as repair cost by individual asset is short by 5/100 of the asset value on the statement of financial position as of the expiration of immediately preceding taxable period (referring to the amount obtained by subtracting the accumulated depreciation costs from the acquisition value);
3. Where the disbursement is made for the periodic repair of less than three years.
(4) The depreciable assets whose acquisition value does not exceed one million won per transaction unit shall be appropriated to necessary expenses for the taxable period in which the date of provision of such assets for business falls, notwithstanding Article 62 (1): Provided, That this shall not apply to any of the following cases: <Amended by Presidential Decree No. 15969, Dec. 31, 1998; Presidential Decree No. 22034, Feb. 18, 2010>
1. Assets possessed in large quantities due to the nature of relevant original business;
2. Assets acquired for the commencement or expansion of the relevant business.
(5) "Transaction unit" in paragraph (4) means that its acquirer may use it independently and directly for the relevant business. <Amended by Presidential Decree No. 15969, Dec. 31, 1998>
(6) In any of the following cases, the difference between book value and disposition value of the relevant asset may be included in necessary expenses for the relevant taxable period: <Amended by Presidential Decree No. 22034, Feb. 18, 2010; Presidential Decree No. 27829, Feb. 3, 2017>
1. Where production facilities are partially scrapped due to the replacement of facilities or outdated technology;
2. Where facilities are removed in order to reinstate a leased place of business according to the relevant lease contract upon the closure of business.
(7) Notwithstanding paragraph (4), with respect to any of the following properties, only those appropriated to necessary expenses in the taxable period in which the date of using them for such business falls, shall be included in necessary expenses: <Amended by Presidential Decree No. 4860, Dec. 30, 1995; Presidential Decree No. 15191, Dec. 31, 1996; Presidential Decree No. 15747, Apr. 1, 1998; Presidential Decree No. 15969, Dec. 31, 1998; Presidential Decree No. 16664, Dec. 31, 1999; Presidential Decree No. 22580, Dec. 30, 2010>
1. Fishing gear used for fisheries (including implements for fishing boats);
2. Motion picture films, tools (including metal molds), furniture, electric appliances, gas apparatus, home appliances and furnishings, clock, experiment apparatus, measurements, and billboards;
3. Acquisition price of individual property is less than 300 thousand won, such as video tapes for a lending business and the compact discs for music;
4. Telephones (including mobile phones) and personal computers (including its peripheral devices).
 Article 68 (Legal Fiction of Depreciation)
(1) Where any business operator who conducts business for which income tax on income in the relevant taxable period is exempted or reduced obtains income tax exemption or reduction, he/she shall calculate the depreciation cost on the depreciable assets pursuant to Articles 62, 63, 63-2, 63-3, 64 through 67, and 70, 71 and 73, and then appropriate it for necessary expenses. <Amended by Presidential Decree No. 22034, Feb. 18, 2010>
(2) Any business operator who has failed to appropriate the depreciation cost on depreciable assets for necessary expenses pursuant to paragraph (1), shall calculate the scope of depreciation by adopting, as the basic value, the remaining balance which deducts the amount corresponding to the depreciation costs from the value of assets which are to form the basis for the calculation of the scope of depreciation in the taxable period thereafter: Provided, That if revaluation pursuant to the Assets Revaluation Act is made, the scope of depreciation shall be calculated on the basis of the reappraised value. <Amended by Presidential Decree No. 15969, Dec. 31, 1998; Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 22034, Feb. 18, 2010>
 Article 69 Deleted. <by Presidential Decree No. 15969, Dec. 31, 1998>
 Article 70 (Depreciation of Idle Facilities)
The value of assets which form the basis for the calculation of the amount of scope of depreciation shall include the value of idle facilities for business, but it shall not include the value of the assets under construction. <Amended by Presidential Decree No. 15969, Dec. 31, 1998>
 Article 71 (Residual Value)
The residual value of depreciable assets in calculation of the amount of scope of depreciation under Article 62 (1) shall be zero: Provided, That in cases of calculating the amount of scope of depreciation by declining balance method, the amount equivalent to 5/100 of the acquisition value shall be its residual value; but, such amount shall be added to the scope of depreciation in the taxable period wherein the non-depreciated balance of the relevant depreciable asset first becomes 5/100 or less of the acquisition value. <Amended by Presidential Decree No. 15969, Dec. 31, 1998; Presidential Decree No. 17456, Dec. 31, 2001; Presidential Decree No. 22034, Feb. 18, 2010>
 Article 72 Deleted. <by Presidential Decree No. 15969, Dec. 31, 1998>
 Article 73 (Disapproval of Depreciation of Appraised Assets and Transferred Assets)
(1) In cases where a business operator makes an evaluation increase of depreciable assets, the disapproved amount of depreciation shall be ratified as necessary expenses, while deemed that up to the ceiling of evaluation increase has been included in the total revenue amounts; and those which exceed the ceiling of evaluation increase shall be calculated as the disapproved amount of depreciation to be carried forward to the taxable period thereafter. In such cases, the approved short-fall amount shall be deemed nil. <Amended by Presidential Decree No. 15969, Dec. 31, 1998; Presidential Decree No. 22034, Feb. 18, 2010>
(2) through (4) Deleted. <by Presidential Decree No. 15969, Dec. 31, 1998>
 Article 73-2 (Submission of Specification regarding Depreciation Costs)
(1) Where a business operator has appropriated the depreciation costs to necessary expenses in each taxable period, he/she shall prepare and retain specification on the adjustment of depreciation costs determined by Ordinance of the Ministry of Strategy and Finance by classifying them by individual asset, and submit the written report under Article 70 of the Act to the head of the competent tax office having jurisdiction over the place for tax payment, along with an aggregate table of specifications of adjustment of depreciation costs, specification of approved or denied depreciation costs, and specification of adjustment of depreciation costs of the acquired or transferred assets determined by Ordinance of the Ministry of Strategy and Finance. <Amended by Presidential Decree No. 20720, Feb. 29, 2008>
(2) Matters necessary for the calculation of depreciation costs of depre- ciable assets shall be determined by Ordinance of the Ministry of Strategy and Finance. <Amended by Presidential Decree No. 20720, Feb. 29, 2008>
[This Article Newly Inserted by Presidential Decree No. 15969, Dec. 31, 1998]
 Article 74 (Inclusion of VAT Input Tax in Necessary Expenses)
"The amount of tax in cases prescribed by Presidential Decree" in Article 33 (1) 9 of the Act means any tax amount specified below: <Amended by Presidential Decree No. 15747, Apr. 1, 1998; Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 22034, Feb. 18, 2010; Presidential Decree No. 24356, Feb. 15, 2013; Presidential Decree No. 24638, Jun. 28, 2013>
1. Input tax amount under Article 39 (1) 5 of the Value-Added Tax Act (excluding an amount corresponding to capital expenditure under Article 67 (2));
1-2. Input tax amount under Article 39 (1) 6 of the Value-Added Tax Act;
2. Other input tax amount determined by Ordinance of the Ministry of Strategy and Finance proved as payable by the relevant business operator.
 Article 75 (Calculation of Interest of Construction Funds)
(1) "Interest on a loan appropriated for construction funds prescribed by Presidential Decree" in Article 33 (1) 10 of the Act means interest paid on the loan (excluding loans obscure as to whether used for the construction of fixed assets) used for the purchase, manufacturing or construction (hereafter referred to as "construction" in this Article) of fixed assets for the relevant business regardless of the pretexts, or means expenditures similar to such payments. <Amended by Presidential Decree No. 22034, Feb. 18, 2010>
(2) Interest or expenditure under paragraph (1) shall be added to the relevant principal as capital expenditure until the completion date of construction determined by Ordinance of the Ministry of Strategy and Finance (in cases where land is purchased, until the date when such land price is paid in full; and in cases where such land is provided for the business before the land price is paid in full, until the date of such provision of land): Provided, That the interest earned from the temporary deposit of the loan under paragraph (1) shall be subtracted from the capital expenditure to be added to the principal. <Amended by Presidential Decree No. 15191, Dec. 31, 1996; Presidential Decree No. 15747, Apr. 1, 1998; Presidential Decree No. 20720, Feb. 29, 2008>
(3) In cases where a part of borrowed construction funds are diverted into the operative funds, the interest paid corresponding thereto shall be deemed necessary expenses.
(4) In cases where interest which has accrued due to arrears in repayment of construction funds borrowed is added to the principal, such added amount shall be deemed capital expenditure in the relevant taxable period and interest paid on the amount added to the principal shall be deemed necessary expenses. <Amended by Presidential Decree No. 22034, Feb. 18, 2010>
(5) The interest on the loan which has remained, out of the loan under the pretext of construction funds, after the completion of such construction, shall be deemed necessary expenses in each taxable period. <Amended by Presidential Decree No. 22034, Feb. 18, 2010>
(6) In the calculation of capital expenditure or necessary expenses under paragraphs (1) through (5), interest under Article 33 (1) 11 of the Act shall not be counted as capital expenditure or necessary expenses. <Amended by Presidential Decree No. 22034, Feb. 18, 2010>
 Article 76 (Interest on Loan, Creditor of which is Obscure)
"Interest on any loan, the creditor of which is obscure" in Article 33 (1) 11 of the Act means interest on loans falling under any of the following subparagraphs (including money or goods provided after loaning regardless of pretexts, such as brokerage charges, honorarium, etc.): Provided, That in cases where the creditor, whose residence has been confirmed as of the payment date by photocopy of resident registration card, becomes missing after receiving a reimbursement of the loan, this shall not be applicable: <Amended by Presidential Decree No. 15969, Dec. 31, 1998>
1. Loan with its creditor's name and whereabouts unknown;
2. Loan whose creditor cannot be recognized to have lent such loan, determined based on his/her financial ability and property status;
3. Loan for which the details of financial transactions with the creditor and its contents are obscure.
 Article 77 Deleted. <by Presidential Decree No. 17032, Dec. 29, 2000>
 Article 78 (Expenditure not Related to Business)
"Expenses deemed not directly related to such business" in Article 33 (1) 13 of the Act shall be any of the following expenses: <Amended by Presidential Decree No. 15747, Apr. 1, 1998; Presidential Decree No. 16664, Dec. 31, 1999; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 22034, Feb. 18, 2010; Presidential Decree No. 22580, Dec. 30, 2010>
1. Acquisition expenses, maintenance expenses, repairing expenses, and necessary expenses related thereto which are generated by a business operator by an acquisition or management of asset not related to his/her business;
2. Maintenance expenses, repairing expenses, rental fees, and expenditures related thereto for land and buildings which are not used by a business operator directly for his/her business, and mainly used by other persons (excluding his/her employees);
3. The interest paid on the amount borrowed by a business operator for acquiring assets not connected to his/her proper business;
4. Entertainment expenses paid by a business operator without any connection to his/her proper business;
4-2. The aggregate of money, assets other than money, and economic interest that constitute a bribe under the Criminal Act or the Act on Combating Bribery of Foreign Public Officials in International Business Transactions, provided by a business operator;
4-3. Pay a business operator pays, in violation of Article 24 (2) and (4) of the Trade Union and Labor Relations Adjustment Act;
5. Expenditure corresponding to subparagraphs 1 through 4, 4-2 and 4-3 which are determined by Ordinance of the Ministry of Strategy and Finance.
 Article 78-2 (Order to Exclude Paid Interest from Necessary Expenses)
(1) In applying Article 33 (2) of the Act, if Articles 61, 75, 76 and 78 are concurrently applicable with respect to exclusion of paid interest from necessary expenses, orders under the following subparagraphs shall be observed:
1. Interest on loans, the creditor of which is obscure, under Article 76;
2. Interest on the amount of a loan, appropriated for construction funds under Article 75 (1);
3. Paid interest computed under Article 61 (1) 2;
4. Paid interest computed under subparagraph 3 of Article 78.
(2) In applying each subparagraph of paragraph (1), if there concurrently exist such interest as subject to mutually different interest rates, those subject to an application of higher interest rate shall be first excluded from appropriation to necessary expenses.
[This Article Newly Inserted by Presidential Decree No. 17032, Dec. 29, 2000]
 Article 78-3 (Special Cases concerning Exclusion of Expenses, etc. Related to Business-Use Passenger Vehicles from Necessary Expenses)
(1) "Passenger vehicles specified by Presidential Decree" in Article 33-2 (1) of the Act, means any of the following vehicles:
1. Passenger vehicles used directly for the type of business specified in any subparagraph of Article 19 of the Enforcement Decree of the Value-Added Tax Act or the facility leasing business defined in subparagraph 9 of Article 2 of the Specialized Credit Finance Business Act;
2. Passenger vehicles specified by Ordinance of the Ministry of Strategy and Finance, similar to those specified in subparagraph 1.
(2) "Expenses specified by Presidential Decree" in Article 33-2 (1) of the Act, means expenses paid for acquiring and maintaining business-use passenger vehicles (hereafter in this Article, referred to as "expenses incurred in relation to business-use passenger vehicles"), including depreciation costs, rental charges, fuel expenses, insurance premiums, repair expenses, automobile tax, tolls, and interest expenses of finance lease liabilities for business-use passenger vehicles.
(3) Notwithstanding Articles 63 (1) 2 and 64 (1) 2, the straight line method prescribed in subparagraph 2 of Article 66 shall be the depreciation method that a person liable to double-entry bookkeeping shall apply in calculating depreciation costs of business-use passenger vehicles, and the amount calculated for the useful life of five years shall be included, as depreciation cost, in necessary expenses.
(4) "Amount of use for business purpose specified by Presidential Decree" in Article 33-2 (1) of the Act, means the amount calculated by multiplying expenses incurred in relation to business-use passenger vehicles by the business use ratio. In such cases, the business use ratio shall be the ratio of the business use mileage to total mileage verified by operation records, etc. specified by Ordinance of the Ministry of Strategy and Finance (hereafter in this Article, referred to as "operation records, etc.").
(5) A business operator who wishes to be eligible for the application of paragraph (4) shall prepare and keep operation records, etc. for each business-use passenger vehicle and promptly submit them upon receipt of a request from the head of the tax office having jurisdiction over the place for tax payment.
(6) If a business operator fails to prepare and keep operation records, etc., the business use ratio of the relevant business-use passenger vehicle shall be either of the following ratios, notwithstanding paragraph (4):
1. Where expenses incurred in relation to the business-use passenger vehicle during the relevant taxable period do not exceed ten million won: 100/100;
2. Where expenses incurred in relation to the business-use passenger vehicle during the relevant taxable period exceed ten million won: The ratio calculated by dividing ten million won by expenses incurred in relation to the business-use passenger vehicle during the relevant taxable period.
(7) "Method prescribed by Presidential Decree" in the main sentence of Article 33-2 (2) of the Act, means either of the following methods by which the maximum amount calculated is carried over and included in necessary expenses:
1. The carried-over amount of depreciation cost of each business-use passenger vehicle: If the depreciation cost, out of the business use amount of the relevant business-use passenger vehicle for the taxable period following the relevant taxable period does not reach eight million won, such maximum amount of depreciation cost shall be recognized afterwards as necessary expenses;
2. The carried-over amount of the amount equivalent to depreciation cost under paragraph (8) out of rental charges of each business-use passenger vehicle: If the amount equivalent to depreciation cost, out of the business use amount of the relevant business-use passenger vehicle for the taxable period following the relevant taxable period does not reach eight million won, such maximum amount of depreciation cost shall be included in necessary expenses: Provided, That the remainder in the taxable period in which ten years from the end of rental elapse shall be fully included in necessary expenses.
(8) "Amount equivalent to the depreciation cost specified by Presidential Decree" in Article 33-2 (2) 2 of the Act, means the amount specified by Ordinance of the Ministry of Strategy and Finance by excluding insurance premiums, automobile tax, etc. from rental charges for a business-use passenger vehicle.
(9) "Method prescribed by Presidential Decree" in Article 33-2 (3) of the Act, means the method where eight million won is included in equal installments as necessary expenses for the taxable period following the relevant taxable period, but the balance is fully included in necessary expenses for the taxable period in which ten years elapse after the taxable period in which the remainder is less than eight million won or after the day the relevant business-use passenger vehicle is disposed of.
(10) A person liable to double-entry bookkeeping who includes expenses incurred in relation of a business-use passenger vehicle or losses on the disposition of a business-use passenger vehicle, shall submit a statement of expenses incurred in relation of the business-use passenger vehicle, etc. to the head of the tax office having jurisdiction over the place for tax payment in the form prescribed by Ordinance of the Ministry of Strategy and Finance when the person files a return under Article 70 of the Act or submits a certificate of confirmation of compliant filing under Article 70-2 of the Act.
(11) Except as otherwise expressly provided for in paragraphs (1) through (10), the scope of use for business purpose and other necessary matters shall be prescribed by Ordinance of the Ministry of Strategy and Finance.
[This Article Newly Inserted by Presidential Decree No. 26982, Feb. 17, 2016]
 Article 79 (Scope of Donations)
(1) Donations under Article 34 of the Act shall include any of the following amounts: <Amended by Presidential Decree No. 23588, Feb. 2, 2012>
1. The value of donated property which a business operator has given free to a person who is not in special relations under Article 98 (1), with no direct connection to his/her business;
2. The amount deemed to have been substantially donated out of such differences as are caused by either transferring the property at a price lower than arm's length price to a person who is not in special relations under Article 98 (1), or purchasing it at a price higher than normal from him/her, without justifiable grounds. In such cases, the arm's length price shall be the value within the scope of 30/100 above or below of the market price.
(2) Donations under Article 24 (2) 1 of the Corporate Tax Act shall include such value of money and goods donated again to the State or local governments by the recipient without delay after an individual has donated the property to a corporation or another individual. <Amended by Presidential Decree No. 22580, Dec. 30, 2010>
(3) Deleted. <by Presidential Decree No. 22580, Dec. 30, 2010>
(4) In applying Article 34 (3) of the Act, the amount of designated donation under paragraph (1) of the same Article (hereinafter referred to as "designated donation") which exceeds the ceiling of appropriation to necessary expenses, shall be appropriated to necessary expenses within the scope of the short-fall only when the designated and legal donation disbursed in each taxable period falls short of the ceiling of appropriation to necessary expenses under paragraphs (1) and (2) of the same Article in each taxable period carried over. <Newly Inserted by Presidential Decree No. 15969, Dec. 31, 1998; Presidential Decree No. 17456, Dec. 31, 2001; Presidential Decree No. 24356, Feb. 15, 2013>
(5) When a business operator disburses designated and legal donation, he/she shall submit a final return on tax base along with a detailed statement of donations determined by Ordinance of the Ministry of Strategy and Finance to the head of the competent tax office. <Amended by Presidential Decree No. 15747, Apr. 1, 1998; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 24356, Feb. 15, 2013>
 Article 79-2 Deleted. <by Presidential Decree No. 22580, Dec. 30, 2010>
 Article 80 (Scope of Designated Donations)
(1) "Donations prescribed by Presidential Decree" in the main sentence of Article 34 (1) of the Act, means the following donations: <Amended by Presidential Decree No. 17032, Dec. 29, 2000; Presidential Decree No. 17456, Dec. 31, 2001; Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 20618, Feb. 22, 2008; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 22034, Feb. 18, 2010: Presidential Decree No. 22580, Dec. 30, 2010; Presidential Decree No. 23588, Feb. 2, 2012; Presidential Decree No. 24441, Mar. 23, 2013; Presidential Decree No. 25193, Feb. 21, 2014; Presidential Decree No. 25751, Nov. 19, 2014; Presidential Decree No. 28211, Jul. 26, 2017>
1. Donations falling under each subparagraph of Article 36 (1) of the Enforcement Decree of the Corporate Tax Act;
2. Any of the following membership fees:
(a) Membership fees paid by a person who has joined a trade union established under the Trade Union and Labor Relations Adjustment Act or the Act on the Establishment, Operation, etc. of Teachers' Unions;
(b) Membership fees paid by a person who has joined a teachers' organization under Article 15 of the Framework Act on Education;
(c) Membership fees paid by a person who has joined a public officials' council established under the Act on the Establishment and Operation of Public Officials' Councils;
(d) Membership fees paid by a person who has joined a trade union established under the Act on the Establishment, Operation, etc. of Public Officials' Labor Unions;
3. The amounts trusted in a trust meeting all the following requirements and established by a resident on condition that the trusted property of the trustor shall be donated to a public-service corporation, etc. under Article 16 (1) of the Inheritance Tax and Gift Tax Act upon the trustor's death or the expiration of the term of the relevant trust contract:
(a) It shall be established by a resident on condition that the trusted property of the trustor shall be donated to public-service corporations, etc. under Article 16 (1) of the Inheritance Tax and Gift Tax Act if the trustor dies or the period of the trust contract agreed ends before the death of the trustor;
(b) It shall be specified in contract terms that a contract shall not be canceled, or a principal shall not be partially returned after a trust is established;
(c) A trustor and a public-service corporation, etc. under item (a) shall not be related, as prescribed by subparagraph 13 of Article 20 of the Enforcement Decree of the Framework Act on National Taxes;
(d) Trust shall be established in money;
4. Deleted; <by Presidential Decree No. 22034, Feb. 18, 2010>
5. Donations granted to non-profit organizations meeting all the following requirements and registered under the Assistance for Non-Profit, Non-Governmental Organizations Act and designated by the Minister of Strategy and Finance upon recommendation by the Minister of the Interior and Safety (hereafter in this Article, referred to as "private organizations eligible for donations"): Provided, That such donations granted to private organizations eligible for donations shall be limited to donations granted during the period of five years from January 1 of the taxable period in which a private organization is designated as an eligible organization:
(a) The articles of incorporation shall include a clause that the ownership of residual property upon dissolution shall vest in the State, a local government, or a nonprofit organization for similar objectives;
(b) The ratio of membership fees and donations from individuals to income (excluding subsidies received from the State or a local government) shall exceed the ratio prescribed by Ordinance of the Ministry of Strategy and Finance;
(c) Income specified in the articles of incorporation shall be used for public interest, rather than for the members’ interest, such as mutual friendship, and direct beneficiaries of a project shall be many, unspecified people;
(d) Income, such as membership fees and donations, has been managed in a bankbook in the name of the non-profit organization for at least one year retrospectively from the end of the taxable period immediately prior to the taxable period intended for designation;
(e) It shall agree to disclosing statements of accounts by taxable period;
(f) The articles of incorporation shall include clauses that an Internet web-site is open as of the date of recommendation of the Minister of the Interior and Safety and that the annual amount of donations collected and the use thereof shall be disclosed by March 31 each year through the Internet web-site and the web-site of the National Tax Service;
(g) There is no record confirmed by an authorized agency that the private organization eligible for donations was involved in the conduct of election campaigns specified in Article 58 (1) of the Public Official Election Act, for a particular political party or individual under the name of the organization or its representative during the taxable period in which it intends to be designated or the immediately preceding taxable period;
6. Deleted. <by Presidential Decree No. 22034, Feb. 18, 2010>
(2) Where any private organization eligible for donations falls under any of the following cases, the Commissioner of the National Tax Service may request the Minister of Strategy and Finance to revoke the designation of such private organization after giving the organization an opportunity to present opinion thereon. Upon receipt of such request, the Minister of Strategy and Finance may revoke the designation of the relevant private organization eligible for donations: <Newly Inserted by Presidential Decree No. 19890, Feb. 28, 2007; Presidential Decree No. 20618, Feb. 22, 2008; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 21214, Dec. 31, 2008; Presidential Decree No. 22034, Feb. 18, 2010; Presidential Decree No. 24441, Mar. 23, 2013; Presidential Decree No. 25193, Feb. 21, 2014; Presidential Decree No. 25751, Nov. 19, 2014; Presidential Decree No. 28211, Jul. 26, 2017>
1. Where the inheritance tax or gift tax is additionally collected from the private organization eligible for donations under Article 48 (2) or (3) of the Inheritance Tax and Gift Tax Act;
2. Where the head of the competent administrative agency (including the Minister of the Interior and Safety) notifies the Commissioner of the National Tax Service of an act committed by the private organization eligible for donations in violation of public purposes, such as business activities not for its objectives or a breach of a condition for permission for its establishment;
3. Where it falls under unfaithful donation-receiving organizations pursuant to Article 85-5 of the Framework Act on National Taxes and the list thereof is revealed;
4. Where the private organization eligible for donations violates any requirement listed under paragraph (1) 5 or any business actually operated by it does not meet the relevant requirement;
5. Where the private organization eligible for donations is dissolved;
6. and 7. Deleted. <by Presidential Decree No. 22034, Feb. 18, 2010>
(3) Private organizations eligible for donations shall submit a statement of accounts of the relevant taxable period to the Minister of the Interior and Safety within three months from the end of the relevant taxable period. <Amended by Presidential Decree No. 20618, Feb. 22, 2008; Presidential Decree No. 21214, Dec. 31, 2008; Presidential Decree No. 24441, Mar. 23, 2013; Presidential Decree No. 25751, Nov. 19, 2014; Presidential Decree No. 28211, Jul. 26, 2017>
(4) When the Minister of the Interior and Safety has received a statement of accounts pursuant to paragraph (3), he/she may reveal the following matters: <Newly Inserted by Presidential Decree No. 20618, Feb. 22, 2008; Presidential Decree No. 21214, Dec. 31, 2008; Presidential Decree No. 24441, Mar. 23, 2013; Presidential Decree No. 25751, Nov. 19, 2014; Presidential Decree No. 28211, Jul. 26, 2017>
1. Ratio of membership fees and donations of individuals to total income;
2. Total amount and number of cases of donations and the detailed statement of use thereof.
(5) Private organizations eligible for donations shall submit a statement of income in the form prescribed by Ordinance of the Ministry of Strategy and Finance to the head of the competent tax office within three months from the end of the relevant taxable period. <Newly Inserted by Presidential Decree No. 20618, Feb. 22, 2008; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 26067, Feb. 3, 2015; Presidential Decree No. 27829, Feb. 3, 2017>
(6) An organization whose designation has been revoked under paragraph (2) may be re-designated after a lapse of three years from the date of revocation. <Newly Inserted by Presidential Decree No. 20618, Feb. 22, 2008; Presidential Decree No. 25193, Feb. 21, 2014>
(7) Necessary matters, such as the procedures for designating private organizations eligible for donations, methods of verifying the requirements listed under paragraph (1) 5, and documents to submit, shall be prescribed by Ordinance of the Ministry of Strategy and Finance. <Newly Inserted by Presidential Decree No. 20618, Feb. 22, 2008; Presidential Decree No. 20720, Feb. 29, 2008>
[This Article Wholly Amended by Presidential Decree No. 16664, Dec. 31, 1999]
 Article 81 (Calculation of Donations, Entertainment Expenses, etc.)
(1) When a business operator makes deferred appropriation of donations under Article 34 of the Act as an advance, it shall be deemed a donation in the taxable period wherein it has been given. <Amended by Presidential Decree No. 22034, Feb. 18, 2010>
(2) When a business operator has appropriated a donation under Article 34 of the Act as an unpaid amount, such donation shall not be included in necessary expenses until it is actually paid.
(3) Where a business operator offers any asset, other than money, as a donation or entertainment expenses under Article 34 or 35 of the Act, the valuation of such asset shall be based on its market price (or its book value if the market price is lower than the book value) at the time it is offered: Provided, That the valuation of a donation under Article 34 (2) 1 of the Act shall be based on its book value, while the value of a donation made to a national museum or a national art gallery, as defined in the Museum and Art Gallery Support Act, shall be determined by the committee established as an organ of the Ministry of Culture, Sports and Tourism for appraising donated artifacts. <Amended by Presidential Decree No. 19890, Feb. 28, 2007; Presidential Decree No. 22580, Dec. 30, 2010; Presidential Decree No. 25193, Feb. 21, 2014>
(4) Where a business operator has made a donation under Article 34 of the Act and a donation under Articles 76 and 88-4 (13) of the Restriction of Special Taxation Act, he/she shall include the relevant donations in necessary expenses in order within the limit of the amount by the following classifications: <Newly Inserted by Presidential Decree No. 17456, Dec. 31, 2001; Presidential Decree No. 18173, Dec. 30, 2003; Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 20618, Feb. 22, 2008; Presidential Decree No. 21301, Feb. 4, 2009; Presidential Decree No. 22034, Feb. 18, 2010; Presidential Decree No. 22580, Dec. 30, 2010; Presidential Decree No. 24356, Feb. 15, 2013>
1. In cases of donations under Article 76 of the Restriction of Special Taxation Act (hereafter referred to as "political funds donation" in this paragraph) or legal donation, the amount calculated by the following formula:
The amount of income in the relevant taxable period (referring to the amount of income before donations are included in necessary expenses; hereafter the same shall apply in this paragraph) - Loss carried forward (referring to the aggregate of loss carried forward pursuant to Article 45 (3) of the Act; hereafter the same shall apply in this paragraph);
2. Deleted; <by Presidential Decree No. 22580, Dec. 30, 2010>
2-2. In cases of donations under Article 88-4 (13) of the Restriction of Special Taxation Act (hereafter referred to as "donations of an employee stock ownership association" in this paragraph), the amount calculated by the following formula:
(The amount of income in the relevant taxable period - Loss carried forward - Political funds donations - Legal donations) × 30/100;
3. In cases of designated donations, the amount calculated by a formula under item (a) or (b). In such cases, where the total amount of losses carried forward, political funds donations, legal donations, and donations to an employee stock ownership association (hereafter referred to as "total amount of donations, etc." in this subparagraph) is deducted from income for the relevant taxable period, the deduction shall be made in the order of losses carried forward, political funds donations, legal donations, and donations to an employee stock ownership association:
(a) Where there is an amount donated to a religious organization:
(The amount of income in the relevant taxable period - The total amount of donations, etc.) × 10/100 + [The smaller of (Income in the relevant taxable period - The total amount of donations, etc.) × 20/100, or the amount paid to organizations, other than religious organizations];
(b) Cases other than those falling under item (a):
(Income in the relevant taxable period - The total amount of donations, etc.) × 30/100.
(5) The value of voluntary services under Article 34 (2) 2 of the Act (hereinafter referred to as "voluntary services") shall be the total of the amounts calculated pursuant to the following subparagraphs: <Newly Inserted by Presidential Decree No. 18173, Dec. 30, 2003; Presidential Decree No. 22034, Feb. 18, 2010; Presidential Decree No. 22580, Dec. 30, 2010>
1. The amount obtained by multiplying 50 thousand won to the number of service days calculated by the following formula (the portion below the decimal point shall be calculated by regarding it as one day). In such cases, in cases of a private business operator, it shall be limited to the portion of his/her own services):
Number of service days = Total service hours ÷ 8 hours;
2. Direct expenses, such as oil expenses and material expenses, incurred incidental to the relevant voluntary services:
Market values or book value at the time of providing them.
(6) In applying Article 34 (2) 2 of the Act, the relevant voluntary service (including the voluntary service rendered in the same area before a special disaster area is declared) shall be confirmed by issuing a written confirmation of donation prescribed by Ordinance of the Ministry of Strategy and Finance by the head of a local government of a special disaster area (including the head of an organization delegated by the head of the relevant local government or the head of the voluntary service center established in the relevant local government). <Amended by Presidential Decree No. 22034, Feb. 18, 2010; Presidential Decree No. 22580, Dec. 30, 2010; Presidential Decree No. 24356, Feb. 15, 2013>
(7) Where a person entitled to the legal reserve of inheritance claims a return of his/her trust property under Article 1115 of the Civil Act and receives such trust property after the death of the trustor who added donations under Article 80 (1) 3 to the necessary expenses or had tax credits for such donations, the head of the tax office having jurisdiction over the domicile of the person entitled to the legal reserve shall collect the amount determined by multiplying the amount specified in subparagraph 1 by the relevant rate specified in subparagraph 2 from the person entitled to the legal reserve: <Amended by Presidential Decree No. 22580, Dec. 30, 2010; Presidential Decree No. 25193, Feb. 21, 2014>
1. The amount of income tax equivalent to the amount that the relevant resident added donations to the necessary expenses or had tax credits for the donations, before a person entitled to the legal reserve of inheritance has the legal reserve returned, for a taxable period during the period in which he/she was eligible for the exclusion from national taxes under Article 26-2 of the Framework Act on National Taxes;
2. The amount redeemed by a person entitled to legal reserve/the amount of trusted properties as at the time of redemption of legal reserve by a person entitled to the legal reserve.
 Article 82 Deleted. <by Presidential Decree No. 15969, Dec. 31, 1998>
 Article 83 (Scope of Entertainment Expenses)
(1) "Small and medium enterprises prescribed by Presidential Decree" in Article 35 (1) 1 of the Act means enterprises stipulated in Article 2 of the Enforcement Decree of the Restriction of Special Taxation Act. <Amended by Presidential Decree No. 14860, Dec. 30, 1995; Presidential Decree No. 15191, Dec. 31, 1996; Presidential Decree No. 15969, Dec. 31, 1998; Presidential Decree No. 16664, Dec. 31, 1999; Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 22034, Feb. 18, 2010>
(2) "Expense prescribed by Presidential Decree" in Article 35 (4) of the Act means, where the relevant association or organization is a corporation, expenses disbursed to such corporation, and where the relevant association or organization is not a corporation, it shall be deemed expenses in relation to assets owned by such business operator. <Amended by Presidential Decree No. 22034, Feb. 18, 2010>
(3) Deleted. <by Presidential Decree No. 15969, Dec. 31, 1998>
(4) Deleted. <by Presidential Decree No. 14860, Dec. 30, 1995>
(5) The number of months in Article 35 (1) 1 of the Act shall be computed according to the calendar, but the number of days less than one month shall be deemed one month. <Newly Inserted by Presidential Decree No. 15191, Dec. 31, 1996>
(6) "Amount prescribed by Presidential Decree" in the main sentence of the part other than the subparagraphs of Article 35 (2) of the Act means the amount by classifications under the following subparagraphs: <Newly Inserted by Presidential Decree No. 15969, Dec. 31, 1998; Amended by Presidential Decree No. 19327, Feb. 9, 2006; Presidential Decree No. 19890, Feb. 28, 2007; Presidential Decree No. 21301, Feb. 4, 2009; Presidential Decree No. 22034, Feb. 18, 2010>
1. Expenses for congratulations or condolence: 200 thousand won;
2. Cases other than subparagraph 1: Ten thousand won.
(7) Deleted. <by Presidential Decree No. 21301, Feb. 4, 2009>
 Article 84 (Calculation, etc. of Amount of Income)
(1) "Amount of income prescribed by Presidential Decree" in the main sentence of Article 35 (1) 2 of the Act means the turnover computed according to corporate accounting standards. <Amended by Presidential Decree No. 22034, Feb. 18, 2010>
(2) Deleted. <by Presidential Decree No. 15969, Dec. 31, 1998>
(3) "Related person prescribed by Presidential Decree" in the proviso to Article 35 (1) 2 of the Act, other than its Table, means the related party under Article 98 (1). <Amended by Presidential Decree No. 23588, Feb. 2, 2012>
(4) "Expenditure prescribed by Presidential Decree" in the proviso to the Article 35 (2) of the Act, other than its subparagraph, means each of the following expenditures: <Newly Inserted by Presidential Decree No. 23588, Feb. 2, 2012>
1. Expenditure in relevant overseas areas where it is difficult to be provided with evidentiary documents referred to in the subparagraphs of Article 35 (2) of the Act since methods of payment, other than cash, are not accepted in the place where entertainment expenses are paid (including similar places within an area where such place is located);
2. Expenditure where the farmers and fishermen (referring to the persons engaging in farm products cultivation, livestock industry, complex farming, forestry or fishing industry among the agricultural industry classified according to the Korea Standard Industry Code) directly supply goods and the payment for the goods is made through the financial company, etc. under subparagraph 1 of Article 2 of the Act on Real Name Financial Transactions and Confidentiality (limited to where a business operator has submitted, to the head of a tax office having jurisdiction over the place for tax payment, the final return on the tax base with a letter of detailed remittances attached which specifies records of remittance, when he/she files the final return on the tax base of global income under Article 70 of the Act).
(5) "Those prescribed by Presidential Decree" in Article 35 (2) 1 (a) of the Act means any of the following: <Amended by Presidential Decree No. 20618, Feb. 22, 2008; Presidential Decree No. 22034, Feb. 18, 2010>
2. Credit cards issued in a foreign country;
3. Registered prepaid cards, electronic direct payment means, registered prepaid electronic payment means or registered electronic cash IC under Article 126-2 (1) 4 of the Restriction of Special Taxation Act;
4. Deleted. <by Presidential Decree No. 22034, Feb. 18, 2010>
(6) "Withholding tax receipt prescribed by Presidential Decree" in Article 35 (2) 2 of the Act means a withholding tax receipt issued pursuant to Articles 144 and 145 of the Act after having received services from any person who has not made registration of business pursuant to Article 168 of the Act. <Newly Inserted by Presidential Decree No. 21301, Feb. 4, 2009>
(7) Deleted. <by Presidential Decree No. 17456, Dec. 31, 2001>
 Article 85 (Calculation of Maximum Limit of Entertainment Expenses for Business Operators with at least Two Places of Business)
(1) Where a business operator with at least two places of business has kept books of account and records in a manner that details of transactions can be distinguished by each place of business pursuant to Article 160 (5) of the Act, the entertainment expenses paid by each place of business during the relevant taxable period, which are eligible for inclusion in necessary expenses when the amount of revenue by each place of business is calculated, shall be limited to the aggregate of amounts calculated under each of the following (hereafter in this Article, referred to as "maximum limit of entertainment expenses"): <Amended by Presidential Decree No. 22580, Dec. 30, 2010>
1. Amount calculated by the following formula:
Amount under Article 35 (1) 1 of the Act
×Amount of revenue of each place of business for the relevant taxable period
Aggregate amount of revenue of each place of business for the relevant taxable period
2. Amount of revenue of each place of business for the relevant taxable period × Applicable rate under Article 35 (1) 2 of the Act (hereafter referred to as "applicable rate" in this Article).
(2) In applying paragraph (1) 1, where any place of business exists wherein a business is newly commenced or is discontinued in the middle of the relevant taxable period, from among at least two places of business, the amount under Article 35 (1) 1 of the Act shall be calculated on the basis of the number of months of the place of business, whose number of business months for the relevant taxable period is greatest, but whether or not falling under small or medium enterprises shall be determined by its principal business type (referring to the business type having the largest amount of revenue).
(3) In applying paragraph (1) 2, the applicable rate shall be decided by the aggregate of amount of revenue of each place of business for the relevant taxable period, and where the aggregate of amount of revenue of each place of business exceeds ten billion won, the priority order of the applicable rate may be selected at will by each place of business.
(4) In applying paragraph (1), when such cases take place respectively, as cases where entertainment expenses paid by each place of business in at least two places of business fails to meet a maximum amount of entertainment expenses, or as cases where the said entertainment expenses exceed such limit, such short-fall amount and excess amount shall not be aggregated. <Amended by Presidential Decree No. 22580, Dec. 30, 2010>
(5) Where a decision on estimation investigation or a revision has been made on the amount of revenue of a part of at least two places of business, the place of business subject to the decision on estimation investigation or the revision shall be deemed to have no revenue amount in applying Article 35 (1) 2 of the Act and paragraph (1) of this Article. <Amended by Presidential Decree No. 22580, Dec. 30, 2010>
(6) Where any amount of revenue exists accrued from a transaction with a person in special relations under Article 98 (1) (hereafter referred to as "revenue amount related to special relations" in this paragraph), the amount under paragraph (1) 2 shall be calculated by the following formula: <Amended by Presidential Decree No. 23588, Feb. 2, 2012; Presidential Decree No. 27829, Feb. 3, 2017>
{(Gross revenue amount × Applicable rate) - (Revenue amount related to special relations) × Applicable rate} + {(Revenue amount related to special relations × Applicable rate) × 10/100}
[This Article Newly Inserted by Presidential Decree No. 17825, Dec. 30, 2002]
 Article 86 Deleted. <by Presidential Decree No. 15969, Dec. 31, 1998>
 Article 87 (Calculation of Necessary Expenses for other Income)
"Cases prescribed by Presidential Decree" in Article 37 (2) 2 of the Act, means the following cases: <Amended by Presidential Decree No. 24823, Nov. 5, 2013; Presidential Decree No. 26982, Feb. 17, 2016>
1. In cases of any of the following other income, an amount equivalent to 80/100 of an amount received by a resident shall be necessary expenses: Provided, That if necessary expenses actually involved exceed an amount equivalent to 80/100, such excess shall be also included in necessary expenses:
(a) Among other income under Article 21 (1) 1 of the Act, prize and supplementary prize awarded by a public interest corporation governed by the Act on the Establishment and Operation of Public Interest Corporations, with authorization from the competent administrative authority, and prize and supplementary prize received by a winner at a contest where a multiple number of persons compete with each other;
(c) Damages for delay in moving into a house, among compensation for breach of contract and damages under Article 21 (1) 10 of the Act;
(d) Deleted; <by Presidential Decree No. 26982, Feb. 17, 2016>
2. In cases of other income under Article 21 (1) 25 of the Act, an amount equivalent to 80/100 (or 90/100 where the holding period of calligraphic works, paintings, and antiques is at least ten years) of an amount received by the resident shall be necessary expenses: Provided, That, if necessary expenses actually involved exceed an amount equivalent to 80/100 (or 90/100 where the holding period of calligraphic works, paintings, and antiques is at least ten years) of the amount, such excess shall also be included in necessary expenses;
3. With regard to a religious person's income under Article 21 (1) 26 of the Act (hereinafter referred to as "religious person's income"), the amount calculated as follows, out of the amount that the religion-related worker received during the relevant taxable period (excluding non-taxable income under subparagraph 5 (h) of Article 12 of the Act; hereafter the same shall apply in this subparagraph), shall be necessary expenses: Provided, That, if necessary expenses actually incurred exceed the relevant amount in the following table, such excess shall be also included in necessary expenses:
Amount Received by a Religion-Related WorkerNecessary Expenses
Not exceeding 20 million won80/100 of the amount received by the religion-related worker
More than 20 million won, but not exceeding 40 million won16 million won + (50/100 of the amount exceeding 20 million won)
More than 40 million won, but not exceeding 60 million won 26 million won + (30/100 of the amount exceeding 40 million won)
More than 60 million won32 million won + (20/100 of the amount exceeding 60 million won)
[This Article Wholly Amended by Presidential Decree No. 22580, Dec. 30, 2010]
 Article 88 Deleted. <by Presidential Decree No. 19890, Feb. 28, 2007>
 Article 89 (Acquisition Value of Assets, etc.)
(1) The acquisition value of assets under Article 39 (2) of the Act shall be determined as follows: <Amended by Presidential Decree No. 15969, Dec. 31, 1998; Presidential Decree No. 17032, Dec. 29, 2000; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 26067, Feb. 3, 2015>
1. In cases of assets purchased from another person, the amount obtained by adding acquisition tax, registration and license tax, and other incidental expenses to the acquisition value;
2. In cases of assets acquired by one's own manufacturing, production, construction, etc., the aggregate of the cost of raw materials, labor expenses, freight, stevedoring expenses, insurance premium, commission, public charges (including acquisition tax and registration and license tax), installation expenses, and other incidental expenses;
3. In cases of assets falling under subparagraph 1 or 2 whose acquisition price is obscure, and assets, other than those falling under subparagraph 1 or 2, such amount obtained by adding acquisition tax, registration and license tax, and other incidental expenses to the market price at the time of acquisition prescribed by Ordinance of the Ministry of Strategy and Finance.
(2) The acquisition value prescribed in paragraph (1) shall not include any of the following amounts: <Amended by Presidential Decree No. 15747, Apr. 1, 1998; Presidential Decree No. 15969, Dec. 31, 1998; Presidential Decree No. 20720, Feb. 29, 2008>
1. Where a business operator has evaluated, according to the corporate accounting standards, the debt brought about by a purchase of asset on a long-term installation basis, and appropriated it as the discounted debt estimated by the present value, the relevant discounted debt estimated based on its present value;
2. In cases of the yearly paid income determined by Ordinance of the Ministry of Strategy and Finance, the amount appropriated as the paid interest, by separating it from the acquisition value under paragraph (1);
3. The amount in excess of the market value under Article 98 (2) 1.
(3) In applying paragraph (1), the acquisition value shall be either the revaluation value when a revaluation has been made under the Assets Revaluation Act, or when there is an amount equivalent to the capital expenditure, the amount to be obtained by adding such amount. <Amended by Presidential Decree No. 18705, Feb. 19, 2005>
(4) The amount of deemed input tax deducted under Article 42 of the Value-Added Tax Act and the amount of input tax deducted under Article 108 (1) of the Restriction of Special Taxation Act shall be deducted from the purchase price of the relevant raw material. <Amended by Presidential Decree No. 15969, Dec. 31, 1998; Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 24638, Jun. 28, 2013>
(5) Articles 127, 156, 164, and 164-2 of the Act shall not apply to the amount of depreciation of discounted debts estimated by present value under paragraph (2) 1 and the paid interest under paragraph (2) 2. <Newly Inserted by Presidential Decree No. 15969, Dec. 31, 1998; Presidential Decree No. 25193, Feb. 21, 2014>
 Article 90 Deleted. <by Presidential Decree No. 15969, Dec. 31, 1998>
 Article 91 (Valuation Methods of Inventory Assets)
(1) In applying Article 39 of the Act, the valuation methods of inventory assets (excluding securities) shall be any of the following subparagraphs:
1. Cost method;
2. Lower of cost or market method.
(2) In valuation by cost method under paragraph (1) 1, it shall be governed by a valuation method falling under any of the following subparagraphs: <Amended by Presidential Decree No. 15969, Dec. 31, 1998>
1. Specific identification method;
2. First-In, First-Out (FIFO) method;
3. Last-In, First-Out (LIFO) method;
4. Weighted average method;
5. Moving average method;
6. Gross profit method.
(3) Where inventory assets are appraised pursuant to paragraphs (1) and (2), the relevant assets may be appraised respectively by different methods by each kind and place of business according to the classification referred to in the following subparagraphs: <Amended by Presidential Decree No. 22034, Feb. 18, 2010>
1. Manufactured goods and merchandise (including a business operator who conducts building construction business or real estate development and supply business);
2. Half-finished goods and work in progress;
3. Raw materials;
4. Stored goods.
(4) Deleted. <by Presidential Decree No. 22034, Feb. 18, 2010>
 Article 92 (Definitions of Valuation Methods of Inventory Assets)
(1) The definitions of the terms used in Article 91 (1) shall be as follows: <Amended by Presidential Decree No. 15747, Apr. 1, 1998; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 22034, Feb. 18, 2010>
1. "Cost method" means the method of using the acquisition value of inventory assets as the assessed amount of such assets under the method falling under each subparagraph of Article 91 (2);
2. "Lower of cost or market method" means the method of using the lower value between the appraised value of inventory assets by cost method or by fair market value method prescribed by Ordinance of the Ministry of Strategy and Finance as the appraised value of inventory assets as of the expiration date of such taxable period.
(2) The definitions of the terms used in Article 91 (2) shall be as follows: <Amended by Presidential Decree No. 15969, Dec. 31, 1998; Presidential Decree No. 22034, Feb. 18, 2010>
1. "Specific identification method" means the method of using the amount computed respectively according to an acquisition value of each inventory asset as the assessment value of the relevant asset;
2. "First-In, First-Out (FIFO) method" means the method of valuation of inventory assets as of the end of the relevant taxable period, deeming that the first asset purchased has been successively taken out of inventory;
3. "Last-In, First-Out (LIFO) method" means the method of valuation of inventory assets as of the end of the relevant taxable period, deeming that the last asset purchased has been successively taken out of inventory;
4. "Weighted average method" means the method of valuation of inventory assets as of the end of the relevant taxable period according to the average unit price, which is obtained by dividing the total amount of the aggregate of the acquisition value of inventory assets as of the commencement date of the relevant taxable period, and of the aggregate of the acquisition value of assets acquired in the relevant taxable period, by the total quantity of such assets by each kind and item of inventory assets;
5. "Moving average method" means the method of valuation of inventory assets as of the end of the relevant taxable period according to the average unit price computed in the end, after computing the average unit price by the method of dividing the book amount on hand by the book quantity on hand upon each acquisition of assets;
6. "Gross profit method" means the method of valuation of inventory assets as of the end of the relevant taxable period according to the amount computed by deducting the estimated margin at the end of the relevant taxable period from the estimated sale prices of each kind of inventory assets as of the end of the relevant taxable period.
 Article 93 (Methods of Valuation of Securities Purchased for Trade or Short-Term Investment)
For the purpose of applying Article 39 of the Act, the value of securities purchased for trading or short-term investment (including securities deposited by an investment trader or an investment broker under the Financial Investment Services and Capital Markets Act in an exchange) shall be appraised in accordance with the method reported by each business operator, from among the following methods: <Amended by Presidential Decree No. 21301, Feb. 4, 2009; Presidential Decree No. 24697, Aug. 27, 2013>
1. Specific identification method (limited to bonds);
2. Weighted average method;
3. Moving average method.
[This Article Wholly Amended by Presidential Decree No. 15191, Dec. 31, 1996]
 Article 94 (Reports on Method of Valuation of Inventory Assets, etc.)
(1) A business operator shall report (including report by means of the Home Tax Service) the valuation method of inventory assets and securities under Articles 91 and 93 (hereinafter referred to as "valuation method of inventory assets, etc.") by the deadline for final return on the tax base of the taxable period in which the date of commencing the relevant business arrives, in a return form on the valuation method of inventory assets, etc., prescribed by Ordinance of the Ministry of Strategy and Finance, to the head of the competent tax office having jurisdiction over the place for tax payment.
(2) Where any person who has reported the valuation method of inventory assets, etc., intends to alter such method, he/she shall submit a report of change of the valuation method of inventory assets, etc., prescribed by Ordinance of the Ministry of Strategy and Finance to the head of the competent tax office having jurisdiction over the place for tax payment by the date three months before the expiration date of the first taxable period to be governed by the valuation method to be changed.
[This Article Wholly Amended by Presidential Decree No. 22034, Feb. 18, 2010]
 Article 95 (Valuation Method when Report on Valuation Method of Inventory Assets, etc. not Made)
(1) The head of the competent tax office having jurisdiction over the place for tax payment shall, where falling under any of the following subparagraphs, valuate inventory assets and securities purchased for the trade or short-term investment by the First-In, First-Out (FIFO) method under Article 91 (2) 2 (the gross average method in cases of securities; the valuation by specific identification method in cases of the real estate owned for trade): Provided, That in cases where the valuation is made by a method other than the reported valuation method or it falls under subparagraph 2, if the value by the reported valuation method is larger than the value by the First-In, First-Out (FIFO) method, it shall be governed by the reported valuation method:
1. When the valuation method of inventory assets, etc. has not been reported within the term under Article 94 (1), or when it has not been governed by the reported valuation method;
2. When the valuation method has been changed without reporting the change in the valuation method of inventory assets, etc. within the term under Article 94 (2).
(2) In cases where the valuation method of inventory assets, etc. is reported after the deadline specified in Article 94 (1) and (2), paragraph (1) shall apply mutatis mutandis to the portion of the taxable period in which the date of such report falls, and the reported valuation method shall be applied to the portion of the taxable period thereafter. <Amended by Presidential Decree No. 22034, Feb. 18, 2010>
 Article 96 (Valuation Loss of Inventory Assets and Fixed Assets)
(1) "Method prescribed by Presidential Decree" in the part other than the subparagraphs of Article 39 (4) of the Act means the method that reduces the book value of assets pursuant to the subparagraphs of the same paragraph to the value disposable as of the end of the taxable period in which a reason for such reduction has arisen, and appropriates such reduced amount for necessary expenses.
(2) "Reasons prescribed by Presidential Decree" in Article 39 (4) 2 of the Act means cases falling under any of the following subparagraphs:
1. Fire;
2. Expropriation, etc. under Acts and subordinate statutes;
3. The closure of a mine because it can no longer be operated.
(3) Damage or destruction pursuant to Article 39 (4) 2 of the Act shall include cases where the relevant assets cannot be used for their inherent purpose.
[This Article Newly Inserted by Presidential Decree No. 22034, Feb. 18, 2010]
 Article 97 (Profits and Losses, etc. from Redemption of Assets and Debts in Foreign Currency)
(1) In applying Article 39, a profit or loss from the difference between the book value of foreign assets or liabilities in Korean won, which is redeemed by or to a business operator at the time of their acquisition or borrowing, and the amount in Korean won to be redeemed by or to a business operator, shall be included in the total income or necessary expenses for the taxable period in which the date of such redemption arrives.
(2) Any business operator who has increased or reduced the book value by appraising assets or debts in foreign currency shall attach a detailed statement of adjustment prescribed by Ordinance of the Ministry of Strategy and Finance to a final return on the tax base.
[This Article Wholly Amended by Presidential Decree No. 22034, Feb. 18, 2010]
 Article 98 (Disaffirmation of Calculation by Wrongful Acts)
(1) "Related persons" in Articles 41 and 101 of the Act means the persons in relation under Article 1-2 (1), (2) or (3) 1 of the Enforcement Decree of the Framework Act on National Taxes. <Amended by Presidential Decree No. 23588, Feb. 2, 2012>
(2) Cases deemed that a tax burden has been reduced unreasonably in Article 41 of the Act shall be any of the following cases: Provided, That subparagraphs 1 through 3 and 5 (only applicable to acts similar to subparagraphs 1 through 3) shall apply only to cases where the difference between the market price and the trade value is at least 300 million won, or more than the amount equivalent to 5/100 of the market price: <Amended by Presidential Decree No. 22034, Feb. 18, 2010; Presidential Decree No. 23588, Feb. 2, 2012>
1. Where a person purchases assets from a related person at the price higher than the market price or transfers assets to a related person at the price lower than the market price;
2. Where a person lends or provides money, other assets or services free of charge or at the low interest rate, etc., to a related person: Provided, That cases where he/she allows his/her lineal ascendant or descendant to use a house gratuitously and his/her lineal ascendant or descendant actually lives in the house shall be excluded;
3. Where a person borrows or receives money or other assets or services at the high interest rate, etc., from a related person;
4. Where a person purchases non-profit assets from his/her related person, and bears the expense for such assets;
5. Where a person is deemed to have reduced a tax burden unreasonably in the calculation of his/her total income or necessary expenses in the relevant taxable period on account of transactions with his/her related person.
(3) Article 89 (1) and (2) of the Enforcement Decree of the Corporate Tax Act shall apply mutatis mutandis to a calculation of the market price under paragraph (2) 1. <Newly Inserted by Presidential Decree No. 15969, Dec. 31, 1998; Presidential Decree No. 18705, Feb. 19, 2005>
(4) Article 89 (3) through (5) of the Enforcement Decree of the Corporate Tax Act shall apply mutatis mutandis to a calculation of the amount of income under paragraph (2) 2 through 5. <Newly Inserted by Presidential Decree No. 15969, Dec. 31, 1998; Presidential Decree No. 18705, Feb. 19, 2005>
 Article 99 (Special Case of Calculation of Amount of Income on Trade with Nonresident, etc.)
The provisions of Article 17 of the Enforcement Decree of the Adjustment of International Taxes Act shall apply mutatis mutandis to the application procedure for the adjustment of amount of income under Article 42 of the Act. <Amended by Presidential Decree No. 18705, Feb. 19, 2005>
[This Article Wholly Amended by Presidential Decree No. 14860, Dec. 30, 1995]
 Article 100 (Cumulative Taxation for Joint Business, etc.)
(1) "Joint investment business operators prescribed by Presidential Decree" in Article 43 (1) of the Act means a person who does not fall under any of the following and who does not participate in the management of the joint business, but merely makes an investment therein: <Newly Inserted by Presidential Decree No. 19890, Feb. 28, 2007; Presidential Decree No. 22034, Feb. 18, 2010>
1. A person who allows the joint business to use his/her name or trade name;
2. A person who agrees to assume unlimited liability for the obligations incurred in the joint business.
(2) "Related person prescribed by Presidential Decree" in Article 43 (3) of the Act means persons who are related to one resident as prescribed in Article 1-2 (1) through (3) of the Enforcement Decree of the Framework Act on National Taxes and make their living with him/her. <Amended by Presidential Decree No. 22034, Feb. 18, 2010; Presidential Decree No. 23588, Feb. 2, 2012>
(3) The conditions as of the end of the relevant taxable period shall govern whether one corresponds to a person in special relations under paragraph (2). <Amended by Presidential Decree No. 19890, Feb. 28, 2007; Presidential Decree No. 23588, Feb. 2, 2012>
(4) "Reasons prescribed by Presidential Decree, such as determining the ratio of profit-loss distribution falsely, etc." in Article 43 (3) of the Act means any of the following cases: <Newly Inserted by Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 19890, Feb. 28, 2007; Presidential Decree No. 22034, Feb. 18, 2010>
1. Where the written report and the attached documents submitted by a joint business operator under Articles 43 (2) of the Act (hereinafter referred to as "joint business operator") in accordance with Article 70 (4) of the Act, stating the type of business, details of revenue amount, equity ratio, agreed allocation ratio of profit and loss and relations among joint business operators, etc., are remarkably different from the facts;
2. Where it is verified that joint business operators conduct the business for avoiding taxes, in light of the management participation, business relations, ratio of profit and loss and the financial status, etc., such as assets and debts.
(5) "Person prescribed by Presidential Decree" in Article 43 (3) of the Act means persons according to order referred to in the following: <Newly Inserted by Presidential Decree No. 19890, Feb. 28, 2007; Presidential Decree No. 22034, Feb. 18, 2010>
1. A person whose gross income, except income from joint business, is greater;
2. A person whose gross income during the preceding taxable period is greater in cases where the amount of gross income except the income from the joint business is the same;
3. A person who has filed a tax return on the tax base of gross income from the relevant business in cases where the amount of gross income during the preceding taxable period is the same: Provided, That the head of the competent tax office having jurisdiction over the place for tax payment shall designate a person in cases where all joint business operators filed or did not file a tax return on the tax base of gross income from the relevant business.
 Article 100-2 (Succession, etc. of Pension Account)
(1) Where an heir succeeds a pension account pursuant to Article 44 (2) of the Act, he/she shall be deemed to have subscribed to the pension account on the date he/she succeeds the income amount in the pension account concerned: Provided, That the date of subscription to the pension account under Article 40-2 (3) 2 shall be deemed the date of subscription by the deceased.
(2) An heir who intends to succeed to a pension account pursuant to Article 44 (2) of the Act shall file his/her application for succession with the pension account administrator within six months from the last day of the month to which the date of the deceased’s death belongs. In such cases, the heir shall be deemed to have succeeded the pension account from the date of the deceased’s death.
(3) A pension account administrator who received an application for succession pursuant to the former part of paragraph (2) shall deem the amount withdrawn from the date of death until the date of said application as the income withdrawn by the deceased, and shall make settlement of tax amount if there is any difference between the tax previously withheld and the tax on the amount withdrawn by the heir.
(4) Where no application for succession has been filed under the former part of paragraph (2) after the death of the subscriber to a pension account, the deceased's income tax shall be determined by subtracting the tax amount already withheld for the period between the date of death and the date of confirmation of death (referring to the date the relevant pension account administrator confirms the death; the end of the deadline for application, if the date of confirmation of death is not later than the deadline for the application for succession; or the date of withdrawal, if the inheritor withdraws an amount before the deadline for the application; hereafter the same shall apply in this paragraph) from the tax amount calculated under the supposition that the aggregate of the following amounts is withdrawn on the date of death: <Amended by Presidential Decree No. 25193, Feb. 21, 2014>
1. Income withdrawn from the date of death until the date of confirmation of death;
2. Income deposited in the pension account as of the date of confirmation of death.
[This Article Newly Inserted by Presidential Decree No. 24356, Feb. 15, 2013]
 Article 101 (Deduction of Losses and Losses Carried Forward)
(1) "Rights prescribed by Presidential Decree, such as easement, etc." in Article 45 (2) 1 of the Act means easement and superficies (including rights established on the basement or the air).
(2) "Business prescribed by Presidential Decree" in Article 45 (2) 3 of the Act means business a mining right holder, a person who has the mining right by lease or a subcontractor of mining (hereafter referred to as "mining right holder, etc." in this paragraph) lends a mine together with mining facilities: Provided, That cases where a mining right holder, etc. lends a mining right, a mining right by lease or a right to mine, and receives a share given as mining rent from a subcontractor of mining or a subcontractor of mining in a lower tier on condition that he/she provides all or part of capital expenditure or revenue expenditure shall be excluded.
(3) A loss carried forward appropriated pursuant to Article 26 (2) of the Act shall be excluded from a loss carried forward to be deducted from the amount of income.
[This Article Wholly Amended by Presidential Decree No. 22034, Feb. 18, 2010]
 Article 102 (Scope, etc. of Bonds, etc.)
(1) "Securities prescribed by Presidential Decree" in Article 46 (1) of the Act, means securities which accrue interest or discounted amount (including the any of the following securities, but excluding bonds, etc. exempted from income tax by the law): <Amended by Presidential Decree No. 15191, Dec. 31, 1996; Presidential Decree No. 15747, Apr. 1, 1998; Presidential Decree No. 16664, Dec. 31, 1999; Presidential Decree No. 18173, Dec. 30, 2003; Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 19890, Feb. 28, 2007; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 21301, Feb. 4, 2009; Presidential Decree No. 21934, Dec. 31, 2009; Presidential Decree No. 22034, Feb. 18, 2010; Presidential Decree No. 22580, Dec. 30, 2010>
1. Certificates of deposit issued by a financial company, etc., or certificates similar thereto: Provided, That those prescribed by Ordinance of the Ministry of Strategy and Finance shall be excluded;
2. Deleted; <by Presidential Decree No. 22580, Dec. 30, 2010>
3. Deleted; <by Presidential Decree No. 21301, Feb. 4, 2009>
4. Bills (including bills issued, sold, or mediated by a financial company, etc., but excluding commercial bills).
(2) Even if securities specified in paragraph (1) are incorporated into the trust estate, etc., Article 46 of the Act shall apply. <Amended by Presidential Decree No. 17032, Dec. 29, 2000; Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 21301, Feb. 4, 2009; Presidential Decree No. 22034, Feb. 18, 2010>
(3) The amount equivalent to interest, etc. under Article 46 (1) of the Act means the amount equivalent to interest, etc. which belongs to the relevant resident by his/her holding period from among the amount of interest, etc. in the holding period referred to in Article 193-2 (3). <Amended by Presidential Decree No. 22034, Feb. 18, 2010; Presidential Decree No. 22580, Dec. 30, 2010>
(4) "Cases prescribed by Presidential Decree, such as repurchase agreement" in Article 46 (1) of the Act, means any of the following transactions or any mixture of the following transactions: <Newly Inserted by Presidential Decree No. 22185, Jun. 8, 2010; Presidential Decree No. 26982, Feb. 17, 2016>
1. A transaction by which a resident sells bonds, etc. on condition that he/she shall repurchase them at a certain price in a given period (including where a series of such transactions are made successively), where the transaction is verified through an account in the Korea Securities Depository pursuant to Article 294 of the Financial Investment Services and Capital Markets Act;
2. A transaction by which a resident lends bonds on condition that he/she shall have them returned in the same quantity of the same kind in a given period (including where a series of such transactions are made successively), where the transaction is verified through a trading ledger (including an electronic ledger) prepared by a bond borrowing and lending intermediary institution (referring to the Korea Securities Depository, a security financial company, an investment trader, or an investment broker under the Financial Investment Services and Capital Markets Act; hereinafter the same shall apply).
(5) Articles 46 and 133-2 of the Act shall apply to a transaction under paragraph (4), deeming that the amount equivalent to interest income accruing from bonds, etc., during the period from the date the bonds, etc., are sold or lent to the date the bonds, etc. are repurchased or returned, belongs to the seller or lender (referring to the initial seller or initial lender, where a series of such transactions are made successively or where a mixture of transactions referred to in paragraph (4) are made concurrently). <Newly Inserted by Presidential Decree No. 22185, Jun. 8, 2010; Presidential Decree No. 23588, Feb. 2, 2012; Presidential Decree No. 26982, Feb. 17, 2016>
(6) and (7) Deleted. <by Presidential Decree No.22034, Feb. 18, 2010>
(8) The holding period under Article 46 (2) of the Act shall be proven by the following methods: <Amended by Presidential Decree No. 15747, Apr. 1, 1998; Presidential Decree No. 17032, Dec. 29, 2000; Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 22034, Feb. 18, 2010>
1. Where bonds, etc. are traded through an account opened in a financial company, etc.:
Verification by the electronic data processing system or the original passbook of the relevant financial company, etc.;
2. In other cases than those under subparagraph 1:
If bonds, etc. are purchased from a corporation, it shall be proven by the sale verification of bonds, etc. determined by Ordinance of the Ministry of Strategy and Finance and issued by such corporation; and if bonds, etc. are purchased from an individual, it shall be proven by notarial deed prepared by a notary public under the Notary Public Act (limited to such deeds which include the name, domicile, and resident registration number of the parties to the transaction, the date of trade, and the kind, issue number, and face value of the bonds, etc.).
(9) Deleted. <by Presidential Decree No. 18705, Feb. 19, 2005>
(10) In applying Articles 46 and 133-2 of the Act, if bonds, etc. are sold with approval from a financial company, etc., it shall be deemed that the relevant financial company, etc. has mediated such sale. <Amended by Presidential Decree No. 22034, Feb. 18, 2010>
(11) and (12) Deleted. <by Presidential Decree No. 18705, Feb. 19, 2005>
[This Article Wholly Amended by Presidential Decree No. 14860, Dec. 30, 1995]
 Article 102-2 Deleted. <by Presidential Decree No. 18705, Feb. 19, 2005>
 Article 102-3 Deleted. <by Presidential Decree No. 22185, Jun. 8, 2010>
 Article 103 Deleted. <by Presidential Decree No. 20618, Feb. 22, 2008>
 Article 104 (Wage and Salary Income Deductions)
(1) Deleted. <by Presidential Decree No. 22034, Feb. 18, 2010>
(2) Deleted. <by Presidential Decree No. 22580, Dec. 30, 2010>
(3) The amount of wage and salary income deduction for a worker employed on a daily basis under Article 47 (2) of the Act, shall be deducted from the amount of daily wages of the date on which such worker provides his/her labor. <Amended by Presidential Decree No. 15969, Dec. 31, 1998>
 Article 105 (Years of Continuous Service)
(1) Upon applying Articles 48 (1) 2 and 55 (2) of the Act, the years of continuous service shall be calculated from the date of initiating service or from the following date of interim payment of retirement income until the date of retirement: Provided, That the period not included in the service period when a retirement payment is calculated shall be excluded from the years of continuous service. <Newly Inserted by Presidential Decree No. 24356, Feb. 15, 2013>
(2) "The number of years calculated by the method prescribed by Presidential Decree" in Article 48 (1) 2 of the Act, means the number of years under any of the following. In such cases, if the number of years of payment or the tenure of office is less than one year, it shall be deemed one year: <Newly Inserted by Presidential Decree No. 17456, Dec. 31, 2001; Presidential Decree No. 17825, Dec. 30, 2002; Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 19327, Feb. 9, 2006; Presidential Decree No. 22034, Feb. 18, 2010; Presidential Decree No. 24356, Feb. 15, 2013; Presidential Decree No. 25193, Feb. 21, 2014; Presidential Decree No. 26067, Feb. 3, 2015>
1. In cases of lump-sum money to be paid under the National Pension Act, the number of deposit years calculated by dividing the total number of deposit months of pension premiums by 12;
2. In cases of lump-sum money to be paid under the Public Officials Pension Act, the Military Pension Act, the Pension for Private School Teachers and Staff Act, or the Special Post Offices Act, the incumbent service period to be applied in computing the retirement benefits by the respective relevant Act;
3. Where, of the retirement income under Article 22 (1) 1 of the Act, the lump-sum amount under the Public Officials Pension Act, the Military Pension Act, the Pension for Private School Teachers and Staff Act, or the Special Post Offices Act, and the retirement income under Article 22 (1) 2 are paid all at once, the longer period between the service period to be applied in computation of the retirement benefits under each relevant Act and the actual service period;
4. Notwithstanding subparagraphs 2 and 3, in cases of a lump-sum amount to be received after returning the lump-sum allowance under Article 40 (2) and aggregating employment periods, service periods, or subscription periods, the employment period after the date of re-appointment or re-subscription.
(3) The number of years of continuous service for retirement mutual-aid benefits under Article 42-2 (4) 3 shall be determined with the number of years of payment obtained by dividing the number of months of payment of the mutual-aid installments calculated under Article 14 (4) of the Act on the Employment Improvement, etc. of Construction Workers by 12. <Amended by Presidential Decree No. 24356, Feb. 15, 2013; Presidential Decree No. 25193, Feb. 21, 2014; Presidential Decree No. 26067, Feb. 3, 2015>
 Article 106 (Personal Deduction for Dependents, etc.)
(1) Where a person entitled to a personal deduction of a resident (hereinafter referred to as "family member entitled to deduction") concurrently falls under a family member entitled to a deduction of another resident, the family member shall be deemed a family member entitled to deduction of one of them, based on the matters indicated either on the final return on the tax base in the relevant taxable period, the report on income deductions and tax credits from wage and salary income prescribed by Ordinance of the Ministry of Strategy and Finance under Article 140 of the Act (hereinafter referred to as "report on income deductions and tax credits from wage and salary income"), a report on income deductions and tax credits from pension income under Article 143-6 (1) of the Act (hereinafter referred to as "report on income deductions and tax credits from pension income") or a report on income deductions and tax credits under Article 201-12. <Amended by Presidential Decree No. 14860, Dec. 30, 1995; Presidential Decree No. 15191, Dec. 31, 1996; Presidential Decree No. 15747, Apr. 1, 1998; Presidential Decree No. 19890, Feb. 28, 2007; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 22034, Feb. 18, 2010; Presidential Decree No. 22185, Jun. 8, 2010; Presidential Decree No. 22580, Dec. 30, 2010; Presidential Decree No. 25193, Feb. 21, 2014>
(2) Where at least two residents enter family members entitled to deduction under paragraph (1) in a return as his/her eligible family members for deduction, or where it is uncertain as to who is entitled to deduction for such family members, he/she shall meet the following standards: <Amended by Presidential Decree No. 22034, Feb. 18, 2010>
1. Where the spouse entitled to deduction of a resident falls under another resident's dependent entitled to deduction, the former status shall prevail;
2. Where a resident's dependent entitled to deduction falls under another resident's dependent entitled to deduction, such dependent shall be deemed a dependent entitled to deduction of the resident who has been entitled to personal deduction as a dependent in the preceding taxable period: Provided, That where no personal deduction as a dependent in the preceding taxable period has been made, he/she shall be deemed a dependent of the resident who has the largest gross income in the relevant taxable period;
3. Where a person entitled to an additional deduction of a resident falls under a person entitled to an additional deduction of another resident, he/she shall be deemed a person entitled to an additional deduction of the resident who makes a basic deduction under subparagraphs 1 and 2.
(3) Where a family member entitled to deduction of a resident who has either died in the middle of the relevant taxable period or left Korea to permanently reside in a foreign country, and who falls under a family member entitled to deduction of another resident, such as a successor, he/she shall be deemed a family member entitled to deduction of the decedent or the resident who left Korea. <Amended by Presidential Decree No. 22034, Feb. 18, 2010>
(4) If the personal deduction for a decedent or a resident who left Korea exceeds the amount of income in cases falling under paragraph (3), the amount in excess may be deducted from the amount of income of the heir or other resident in the relevant taxable period. <Amended by Presidential Decree No. 22034, Feb. 18, 2010>
(5) "Person prescribed by Presidential Decree" in Article 50 (1) 3 (a) of the Act means a person verified that he/she is married (excluding the de facto marriage) with the lineal ascendent of the relevant resident. <Newly Inserted by Presidential Decree No. 18173, Dec. 30, 2003; Presidential Decree No. 22034, Feb. 18, 2010>
(6) "Person prescribed by Presidential Decree" in Article 50 (1) 3 (b) of the Act means any of the following persons: <Newly Inserted by Presidential Decree No. 18173, Dec. 30, 2003; Presidential Decree No. 22034, Feb. 18, 2010>
1. A lineal descendent of the resident;
2. Where the spouse of a resident has remarried, any person who has been delivered of during the marriage (excluding the de facto marriage) of the relevant spouse with the previous spouse.
(7) "Adoptee prescribed by Presidential Decree, living together" in Article 50 (1) 3 (b) of the Act means a child adopted under the Civil Act or the Act on Special Cases concerning Adoption, and a person who is actually in the adopted status and makes his/her living with the resident. <Newly Inserted by Presidential Decree No. 15191, Dec. 31, 1996; Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 22034, Feb. 18, 2010; Presidential Decree No. 24017, Aug. 3, 2012>
(8) "Any person prescribed by Presidential Decree" in Article 50 (1) 3 (d) of the Act means recipients defined in subparagraph 2 of Article 2 of the National Basic Living Security Act. <Newly Inserted by Presidential Decree No. 14860, Dec. 30, 1995; Presidential Decree No. 17032, Dec. 29, 2000; Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 21301, Feb. 4, 2009; Presidential Decree No. 22034, Feb. 18, 2010>
(9) "Any person prescribed by Presidential Decree" in Article 50 (1) 3 (e) of the Act means entrusted children whom a resident has brought up in person for at least six months in the relevant taxable period: Provided, That where he/she has not received income deduction in the preceding taxable period, income deduction shall be computed including an entrusted period for the relevant entrusted children of the preceding taxable period. <Newly Inserted by Presidential Decree No. 21301, Feb. 4, 2009; Presidential Decree No. 22034, Feb. 18, 2010>
(10) Where a resident intends to receive the global income deduction for persons falling under any of paragraphs (5) through (9), he/she shall submit documents prescribed by Ordinance of the Ministry of Strategy and Finance, as prescribed by the subparagraphs of Article 107 (2). <Amended by Presidential Decree No. 15191, Dec. 31, 1996; Presidential Decree No. 15747, Apr. 1, 1998; Presidential Decree No. 17032, Dec. 29, 2000; Presidential Decree No. 18173, Dec. 30, 2003; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 21301, Feb. 4, 2009>
 Article 107 (Scope of Persons with Disability)
(1) Disabled persons falling under Article 51 (1) 2 of the Act shall be any of the following: <Amended by Presidential Decree No. 15486, Sep. 30, 1997; Presidential Decree No. 17456, Dec. 31, 2001; Presidential Decree No. 18705, Feb. 19, 2005>
1. Disabled persons defined under the Act on Welfare of Persons with Disabilities;
2. Injured persons defined under the Act on the Honorable Treatment and Support for Persons, etc. of Distinguished Services to the State, and persons similar thereto without any ability to work;
3. Deleted; <by Presidential Decree No. 17456, Dec. 31, 2001>
4. Persons with serious illnesses in need of constant medical treatment, other than those referred to in subparagraphs 1 through 3.
(2) Where any person falling under any subparagraph of paragraph (1) intends to take a deduction for a disabled person, he/she shall submit a certificate for a person with a disability prescribed by Ordinance of the Ministry of Strategy and Finance by any of the following methods: Provided, That with regard to any person with a certificate for an injured person under the Act on the Honorable Treatment and Support for Persons, etc. of Distinguished Services to the State, or any person who has been issued a certificate of registration for a disabled person under the Act on Welfare of Persons with Disabilities, a copy of the relevant certificate, certificate of registration for persons with a disability, or other documents proving the disability shall be submitted, and if any of the foregoing documents were submitted, a certificate for a person with a disability need not be submitted: <Amended by Presidential Decree No. 15191, Dec. 31, 1996; Presidential Decree No. 15486, Sep. 30, 1997; Presidential Decree No. 15747, Apr. 1, 1998; Presidential Decree No. 16664, Dec. 31, 1999; Presidential Decree No. 17456, Dec. 31, 2001; Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 22034, Feb. 18, 2010; Presidential Decree No. 24356, Feb. 15, 2013; Presidential Decree No. 25193, Feb. 21, 2014>
1. When filing a final return on tax base, he/she shall submit it along with such return to the head of the competent tax office having jurisdiction over the place for tax payment;
2. A person who has wage and salary income (excluding wage and salary income specified in any item of Article 127 (1) 4 of the Act) shall submit it, along with a report on income deductions and tax credits from wage and salary income, to the withholding agent who makes the year-end tax settlement;
3. A person who has business income to be adjusted at the year-end pursuant to Article 144-2 of the Act shall submit it, along with the return on income deductions and tax credits, to the withholding agent who makes the year-end tax settlement.
(3) Where the disabled person, whose condition of the relevant disability is expected to last for at least one year, submits a certificate of persons with a disability stating the period of disability under paragraph (2), he/she need not resubmit the certificate during the period of such disability: Provided, That when the competent tax office or the employer has been changed during the period of relevant disability, the certificate of disabled person shall be submitted pursuant to paragraph (2). <Amended by Presidential Decree No. 17456, Dec. 31, 2001>
(4) In cases falling under the proviso to paragraph (3), he/she may have such certificate of disability, as has already been submitted, returned from the head of the competent tax office having jurisdiction over the former place for tax payment or the former withholding agent, and submit it. <Amended by Presidential Decree No. 17456, Dec. 31, 2001>
 Article 108 (Deduction, etc. for Women)
In applying Article 51 (1) of the Act, the fact as to whether a person has a spouse, or is a householder with dependents, shall be governed by a certified transcript of resident registration card or a certificate of a register of familial relationship as of the expiration of the relevant taxable period. In such cases, the head of the competent tax office having jurisdiction over the place for tax payment shall confirm a certified transcript of resident registration card by mutual use of the administrative information provided for in Article 36 (1) of the Electronic Government Act, and where the resident refuses to agree to such confirmation or it cannot be determined by his/her certified transcript of resident registration card whether he/she has a spouse or he/she is a householder with any dependent family members or any wage and salary income earner files a return on the income deduction pursuant to 140 of the Act, the head of the competent tax office having jurisdiction over the place for tax payment shall have each of them to submit a certified transcript of resident registration card or a certificate of a register of familial relationship. <Amended by Presidential Decree No. 14860, Dec. 30, 1995; Presidential Decree No. 19507, Jun. 12, 2006; Presidential Decree No. 21215, Dec. 31, 2008; Presidential Decree No. 22151, May 4, 2010>
 Article 108-2 Deleted. <by Presidential Decree No. 25193, Feb. 21, 2014>
 Article 108-3 (Deduction of Interest Expenses for Mortgage-Backed Retirement Pension)
(1) "Mortgage-backed retirement pension that meets the requirements prescribed by Presidential Decree" in Article 51-4 (1) of the Act means a pension that meets all the following requirements: <Amended by Presidential Decree No. 21430, Apr. 21, 2009; Presidential Decree No. 22034, Feb. 18, 2010; Presidential Decree No. 24356, Feb. 15, 2013>
1. It shall be a mortgage-backed retirement pension in which the pension has been paid under the guarantee for the mortgage-backed retirement pension under subparagraph 8-2 of Article 2 of the Korea Housing Finance Corporation Act or a mortgage-backed retirement pension of the financial institutions under subparagraph 11 of Article 2 of the same Act;
2. Deleted; <by Presidential Decree No. 21430, Apr. 21, 2009>
3. The standard market value of the residential house under Article 99 (1) of the Act (including a residential house registered in the name of the spouse of the resident who has the pension income), which is the subject matter of institution of the mortgage at the time of being admitted to the mortgage-backed retirement pension, shall not exceed 900 million won.
(2) Where a mortgage-backed retirement pension was paid, the amount equivalent to the interest accrued from the pension shall be the amount stated in the certificate of interest expenses for the mortgage-backed retirement pension issued by a financial company, etc. that paid the pension or the Korea Housing Finance Corporation under the Korea Housing Finance Corporation Act, as prescribed by Ordinance of the Ministry of Strategy and Finance. <Amended by Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 22034, Feb. 18, 2010>
(3) A person who wishes to be eligible for the deduction of interest expenses for the mortgage-backed retirement pension under Article 51-4 of the Act shall submit a final return on tax base along with the certificate of interest expenses for the mortgage-backed retirement pension pursuant to paragraph (2) to the head of the competent tax office having jurisdiction over the place for tax payment.
[This Article Newly Inserted by Presidential Decree No. 19890, Feb. 28, 2007]
 Articles 109 through 110 Deleted. <by Presidential Decree No. 25193, Feb. 21, 2014>
 Article 110-2 Deleted. <by Presidential Decree No. 15969, Dec. 31, 1998>
 Article 110-3 Deleted. <by Presidential Decree No. 25193, Feb. 21, 2014>
 Article 111 Deleted. <by Presidential Decree No. 20618, Feb. 22, 2008>
 Article 112 (Deduction for Housing Funds)
(1) "A household prescribed by Presidential Decree" in the main sentence of Article 52 (4) of the Act, means a household all inclusive of a resident and his/her spouse, lineal ascendants and descendants (including their spouses) and siblings of the resident and of his/her spouse, who make a living together at the same domicile or place of residence as that of the resident. In such cases, the resident and his/her spouse shall be deemed to be in the same household, even where the resident and his/her spouse do not make a living together. <Newly Inserted by Presidential Decree No. 21301, Feb. 4, 2009; Presidential Decree No. 22034, Feb. 18, 2010; Presidential Decree No. 26067, Feb. 3, 2015>
(2) "A house not larger than the size specified by Presidential Decree" in the main sentence of Article 52 (4) of the Act, means a house in the national standard housing scale under the Housing Act (including officetels defined in subparagraph 4 of Article 4 of the Enforcement Decree of the Housing Act). In such cases, if the relevant house is a multi-unit house, the size shall be based on the exclusive area for each household. <Amended by Presidential Decree No. 22034, Feb. 18, 2010; Presidential Decree No. 24709, Sep. 9, 2013; Presidential Decree No. 26067, Feb. 3, 2015; Presidential Decree No. 27444, Aug. 11, 2016>
(3) "The multiplying factor specified by Presidential Decree" in the main sentences of Article 52 (4) and (5) of the Act, means the multiplying factors classified as follows: <Amended by Presidential Decree No. 22034, Feb. 18, 2010; Presidential Decree No. 24709, Sep. 9, 2013; Presidential Decree No. 26067, Feb. 3, 2015>
1. Land in an urban area under Article 6 of the National Land Planning and Utilization Act: Five times;
2. Other land: Ten times.
(4) "The house lease loan specified by Presidential Decree" in the main sentence of Article 52 (4) of the Act, means any of the following loans: Provided, That in cases of a loan referred to in subparagraph 2, it refers only to a loan borrowed by a person whose total pay in the relevant taxable period does not exceed 50 million won: <Amended by Presidential Decree No. 22034, Feb. 18, 2010; Presidential Decree No. 23588, Feb. 2, 2012; Presidential Decree No. 25193, Feb. 21, 2014; Presidential Decree No. 26067, Feb. 3, 2015>
1. A loan borrowed from a lending institution pursuant to attached Table 1-2, which meets all the following requirements:
(a) The loan shall be borrowed within three months before or after the move-in date stipulated in the lease contract under Article 3-2 (2) of the Housing Lease Protection Act (hereafter in this Article, referred to as "lease contract") or the move-in date stated in the certified copy of the relevant resident registration card, whichever is earlier. In such cases, if the loan is borrowed when the lease contract is extended or renewed, the loan borrowed within three months before or after the date of extension or renewal of the contract shall be included, and the loan borrowed within three months before or after the date of moving in to the old house or the move-in date stated in the certified copy of the relevant resident registration card, whichever is earlier, shall be included, if a person who has been receiving tax credits on the principal and interest paid for the house lease loan moves to another house;
(b) The loan shall be deposited in the account of a lessor directly from a lending institution pursuant to attached Table 1-2;
2. Money borrowed from a resident who does not conduct credit business, etc. defined in Article 2 of the Act on Registration of Credit Business, etc. and Protection of Finance Users, which meets all the following requirements:
(a) The loan shall be borrowed within one month before or after the move-in date stipulated in the lease contract or the move-in date stated in the certified copy of the relevant resident registration card, whichever is earlier. In such cases, if the loan is borrowed when the lease contract is extended or renewed, the loan borrowed within one month before or after the date of extension or renewal of the contract shall be included, and the loan borrowed within one month before or after the date of moving in to the old house or the move-in date stated in the certified copy of the relevant resident registration card, whichever is earlier, shall be included, if a person who has been receiving tax credits on the principal and interest paid for the house lease loan moves to another house;
(b) The loan shall not be money borrowed at the rate of interest lower than the rate of interest prescribed by Ordinance of the Ministry of Strategy and Finance.
(5) and (6) Deleted. <by Presidential Decree No. 26067, Feb. 3, 2015>
(7) Deleted. <by Presidential Decree No. 25193, Feb. 21, 2014>
(8) "The long-term mortgage loan specified by Presidential Decree" in the main sentence of Article 52 (5) of the Act, means a loan that meets all the following requirements and shall be computed from the time when the preceding owner of the relevant house initially borrowed the loan, for the purpose of calculating the period for repayment of the loan under the proviso to Article 52 (5) and Article 52 (6) 1 through 3 of the Act, where the buyer assumes obligations for the long-term mortgage loan secured by the mortgage on the house and borrowed by the preceding owner when acquiring the house. In such cases, if the loan ceases to meet any of the relevant requirements, Article 52 (5) of the Act shall not apply to the loan from the date the relevant event occurs: <Amended by Presidential Decree No. 18173, Dec. 30, 2003; Presidential Decree No. 21301, Feb. 4, 2009; Presidential Decree No. 22034, Feb. 18, 2010; Presidential Decree No. 24709, Sep. 9, 2013; Presidential Decree No. 26067, Feb. 3, 2015>
1. Deleted; <by Presidential Decree No. 26067, Feb. 3, 2015>
2. The long-term housing mortgage loan is required to be borrowed within three months from the date the registration for passage of title for house or the preservation registration has been made;
3. The obligor of long-term housing mortgage loan is required to be the owner of the house over which the relevant mortgage has been created.
(9) "The fixed interest rate specified by Presidential Decree" in Article 52 (6) 1 of the Act, means where the interest on the principal equivalent to at least 70/100 of a borrowed loans is paid at a fixed interest rate during its period of repayment (including where the interest rate is changed in an interval of at least five years), while "installments with no grace period specified by Presidential Decree” means where a borrowed loan of at least the amount calculated by the following formula is repaid each year from the taxable period following the taxable period in which the loan is borrowed until the taxable period in which the period of repayment of the loan ends. In such cases, any period of repayment of a loan less than a year shall be deemed one year: <Amended by Presidential Decree No. 23588, Feb. 2, 2012; Presidential Decree No. 24709, Sep. 9, 2013; Presidential Decree No. 26067, Feb. 3, 2015>
70/100 of Borrowed Money
-----------------------------------------------------
Number of Years of Redemption Period
(10) In any of the following cases, the relevant loan shall be construed as "long-term mortgage loan specified by Presidential Decree" in the main sentence of Article 52 (5) of the Act, notwithstanding paragraph (8): Provided, That in cases falling under subparagraph 2 or 4, the balance of the existing loan shall be its upper limit: <Amended by Presidential Decree No. 17456, Dec. 31, 2001; Presidential Decree No. 17825, Dec. 30, 2002; Presidential Decree No. 18146, Nov. 29, 2003; Presidential Decree No. 18173, Dec. 30, 2003; Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 19890, Feb. 28, 2007; Presidential Decree No. 21301, Feb. 4, 2009; Presidential Decree No. 21430, Apr. 21, 2009; Presidential Decree No. 22034, Feb. 18, 2010; Presidential Decree No. 24709, Sep. 9, 2013; Presidential Decree No. 26067, Feb. 3, 2015; Presidential Decree No. 26369, Jun. 30, 2015>
1. Where such fact of borrowing is verified that a person who first acquires a newly-built house subject to deduction of or exemption from capital gains tax under Article 99 of the Restriction of Special Taxation Act has borrowed the loan from a financial company, etc. or the Housing and Urban Fund created under the Housing and Urban Fund Act for purchasing the relevant house;
2. Where the borrower of a long-term housing mortgage loan under paragraph (8) transfers the long-term housing mortgage loan within the relevant financial company, etc. or to another financial company, etc. (limited to where the relevant financial company, etc. or the other financial company, etc. directly repays the remaining amount of the existing long-term housing mortgage loan and have the long-term housing mortgage loan transferred by mortgaging the house). In such cases, the period of repayment of the loan shall be at least 15 years, and the calculation of the period of repayment shall be based on the date the pre-existing long-term housing mortgage loan is initially borrowed;
3. Where the ownership is transferred to the residence transferee immediately after the said transferee borrows the loan repayable in at least 15 years from a financial company, etc. or the Housing and Urban Fund created under the Housing and Urban Fund Act by mortgaging the resident transferor's residence;
4. Where the borrower of a loan, the term of repayment of which is less than 15 years which falls under the requirements of paragraph (8) 2 and 3 pursuant to Article 52 (5) of the Act extends the term of repayment to at least 15 years, or repays the existing loan with a new loan borrowed with the term of repayment of at least 15 years by mortgaging the relevant house, and the standard market price of the house under Article 99 (1) of the Act at the time of extending the term of repayment or borrowing the new loan or the sale price of the house under paragraph (15) does not exceed 400 million won. In such cases, for the purpose of applying paragraph (8) 2 to a new loan, the date of borrowing the existing loan initially shall be the reference date;
5. Where a person who first acquires a house subject to favorable tax rates for capital gains tax under Article 98-3 of the Restriction of Special Taxation Act during the period from February 12, 2009 to February 11, 2010, has borrowed the loan from a financial company, etc. or the Housing and Urban Fund created under the Housing and Urban Fund Act for purchasing the relevant house with the term of redemption of at least five years. In such cases, the relevant loan shall fulfill the requirements of paragraph (8) 2 and 3.
(11) When applying paragraph (8), if a transferee of the relevant house assumes the liability for long-term housing mortgage loan in connection with the house acquisition, the requirement of subparagraph 2 of the same paragraph shall not apply. <Amended by Presidential Decree No. 21301, Feb. 4, 2009; Presidential Decree No. 24709, Sep. 9, 2013>
(12) With respect to persons entitled to a tax credit for the interest on borrowings of housing fund under Article 92-4 of the Act on Regulation of Tax Reduction and Exemption prior to amendment by the Act on Regulation of Tax Reduction and Exemption (Act No. 5584), a loan related to the acquisition of the relevant house during the relevant taxable period shall not be deemed "long-term housing mortgage loan prescribed by Presidential Decree" under the main sentence of Article 52 (5) of the Act, notwithstanding paragraph (8). <Newly Inserted by Presidential Decree No. 17032, Dec. 29, 2000; Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 21301, Feb. 4, 2009; Presidential Decree No. 22034, Feb. 18, 2010; Presidential Decree No. 24709, Sep. 9, 2013>
(13) Deleted. <by Presidential Decree No. 22034, Feb. 18, 2010>
(14) When applying paragraph (11), if the standard market price of a house under Article 99 (1) of the Act exceeds 400 million won at the time a transferee of the house acquires the house, the relevant loan shall not be deemed "long-term mortgage loan specified by Presidential Decree" in the main sentence of Article 52 (5) of the Act. <Newly Inserted by Presidential Decree No. 19327, Feb. 9, 2006; Presidential Decree No. 21301, Feb. 4, 2009; Presidential Decree No. 24709, Sep. 9, 2013; Presidential Decree No. 25193, Feb. 21, 2014>
(15) "Price prescribed by Presidential Decree" in the main sentence of Article 52 (5) 4 of the Act, means any of the following prices: <Newly Inserted by Presidential Decree No. 19327, Feb. 9, 2006; Presidential Decree No. 21301, Feb. 4, 2009; Presidential Decree No. 22034, Feb. 18, 2010>
1. Parcelling-out right of a house under the main sentence of Article 52 (5) 4 of the Act excluding association member's relocation rights under subparagraph 2: Parcelling-out price;
2. Association member's relocation rights under the main sentence of Article 89 (2) of the Act:
(a) Where settlement balance is paid:
Assess value of the existing building and land appurtenant thereto + Settlement balance paid;
(b) Where settlement balance is received:
Assess value of the existing building and land appurtenant thereto - Settlement balance received.
[This Article Wholly Amended by Presidential Decree No. 16988, Oct. 23, 2000]
 Article 112-2 Deleted. <by Presidential Decree No. 25193, Feb. 21, 2014>
 Article 113 (Special Income Deductions and Special Tax Credits)
(1) Any person who wishes to be eligible for the application of Article 52 or 59-4 of the Act shall submit the documents prescribed by Ordinance of the Ministry of Strategy and Finance by any of the following dates to the withholding agent, a taxpayers' association, or the head of the competent tax office having jurisdiction over the place for tax payment: Provided, That this shall not apply to insurance premiums under Article 52 (1) of the Act and donations which a withholding agent deducts from the amount of pay in a lump sum: <Amended by Presidential Decree No. 15191, Dec. 31, 1996; Presidential Decree No. 15747, Apr. 1, 1998; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 21301, Feb. 4, 2009; Presidential Decree No. 22034, Feb. 18, 2010; Presidential Decree No. 25193, Feb. 21, 2014>
1. In cases of any person with wage and salary income (excluding a person who has not joined a taxpayers' association, among those with wage and salary income falling under any item of Article 127 (1) 4 of the Act), the date he/she receives pay for February of the year following the relevant taxable period (where he/she has retired from office, referring to the date he/she receives pay for the month in which the date he/she has retired falls);
2. In cases of any person who has not joined a taxpayers' association among those with wage and salary income falling under any item of Article 127 (1) 4 of the Act, the deadline for a final return on the tax base of global income.
(2) Where documents evidencing income deductions and tax credits are to be submitted to the Commissioner of the National Tax Service under Article 216-3, a person who wishes to be eligible for the application of Article 52 or 59-4 of the Act may submit the documents specified by Ordinance of the Ministry of Strategy and Finance (including submission through the Home Tax Service network), notwithstanding the main sentence of paragraph (1). <Newly Inserted by Presidential Decree No. 19327, Feb. 9, 2006; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 25193, Feb. 21, 2014; Presidential Decree No. 26982, Feb. 17, 2016>
(3) Article 47 (5) of the Act shall apply mutatis mutandis to special income deductions and special tax credits: Provided, That insurance premiums under Article 52 (1) of the Act shall be deducted by a withholding agent who pays wages which serve as a basis for the calculation of the relevant insurance premiums. <Amended by Presidential Decree No. 22034, Feb. 18, 2010; Presidential Decree No. 22580, Dec. 30, 2010; Presidential Decree No. 25193, Feb. 21, 2014>
 Article 113-2 Deleted. <by Presidential Decree No. 25193, Feb. 21, 2014>
 Article 114 (Scope of Those who Withdraw Temporarily)
(1) "Reasons prescribed by Presidential Decree" in Article 53 (2) of the Act means where a resident or his/her family living together (excluding a lineal descendant and an adoptee) leaves temporarily his/her original domicile or place of residence to enter school, receive medical treatment for a disease, or under any circumstances of service or business. <Amended by Presidential Decree No. 22034, Feb. 18, 2010>
(2) A person who wishes to be eligible for global income deductions and special tax credits for a person who has left temporarily under Article 53 (2) of the Act, shall submit a list of family members living together with the person who has left temporarily prescribed by Ordinance of the Ministry of Strategy and Finance (hereinafter referred to as "list of family members living together with a person who has left temporarily"), along with any of the following documents (including submission via the Home Tax Service), to the relevant withholding agent or to the head of the competent tax office having jurisdiction over the place for tax payment: <Amended by Presidential Decree No. 15747, Apr. 1, 1998; Presidential Decree No. 18312, Mar. 17, 2004; Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 19507, Jun. 12, 2006; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 25193, Feb. 21, 2014>
1. Where a person has left temporarily to enter school, the certificate of enrollment issued by the head of the relevant school (including a teaching institute, etc.);
2. Where a person has left temporarily for medical treatment and rehabilitation from a disease, the certificate of medical treatment issued by the head of the relevant medical institution;
3. Where a person has left temporarily for his/her work, the certificate of employment issued by the head of the relevant place of business;
4. Deleted. <by Presidential Decree No. 19507, Jun. 12, 2006>
(3) Upon receipt of an application under paragraph (2), the head of the competent tax office having jurisdiction over the place for tax payment shall verify the following documents using administrative information shared under Article 36 (1) of the Electronic Government Act and shall require the applicant to submit such documents, if the relevant resident does not consent to such verification or if the relevant income earner files a return on income deductions and tax credits under Article 140 of the Act: <Newly Inserted by Presidential Decree No. 19507, Jun. 12, 2006; Presidential Decree No. 21215, Dec. 31, 2008; Presidential Decree No. 22151, May 4, 2010; Presidential Decree No. 25193, Feb. 21, 2014>
1. A certified copy of resident registration card of his/her original domicile and temporary address;
2. A copy of his/her business registration certificate (limited to where he/she has left temporarily for business).
(4) The provisions of Article 113 (1) shall apply mutatis mutandis to the submission of the list of family members living together with a person who has left temporarily under paragraphs (2) and (3). <Amended by Presi- dential Decree No. 19507, Jun. 12, 2006>
SECTION 5 Tax Rate and Deduction of Amount of Tax
 Article 115 Deleted. <by Presidential Decree No. 24356, Feb. 15, 2013>
 Article 116 Deleted. <by Presidential Decree No. 19890, Feb. 28, 2007>
 Article 116-2 (Calculation Method of Dividend Income Subject to Deduction of Dividend Tax)
In applying Article 62 of the Act, the amount of dividend income exceeding the standard tax base of global taxation on interest income, etc. under Article 56 (4) of the Act, shall be computed by successively aggregating the following amounts in the stated order: <Amended by Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 26067, Feb. 3, 2015>
1. If interest income and dividend income concurrently exist, the interest income shall be added first;
2. In applying subparagraph 1, if dividend income subject to the proviso to Article 17 (3) of the Act and other dividend income concurrently exist, the other dividend income shall be added first, and the dividend income under Article 104-27 (1) of the Restriction of Special Taxation Act, if any, shall be added subsequently.
[This Article Newly Inserted by Presidential Decree No. 15191, Dec. 31, 1996]
 Article 116-3 (Tax Credit for Bookkeeping)
(1) Deleted. <by Presidential Decree No. 22034, Feb. 18, 2010>
(2) "Unavoidable causes prescribed by Presidential Decree, such as a natural disaster" in the proviso to Article 56-2 (2) 2 of the Act means cases falling under any of the following subparagraphs: <Amended by Presidential Decree No. 22034, Feb. 18, 2010>
1. Force majeure;
2. Meeting a disaster, such as fire or war, or faced with theft;
3. Other cases wherein such causes have occurred as equivalent to sub- paragraphs 1 and 2.
(3) Persons who intend to take tax credit for bookkeeping under Article 56-2 of the Act shall apply to the head of the competent tax office having jurisdiction over the place for tax payment by submitting the final return on tax base along with an application for tax credit for bookkeeping, determined by Ordinance of the Ministry of Strategy and Finance. <Amended by Presidential Decree No. 20720, Feb. 29, 2008>
[This Article Newly Inserted by Presidential Decree No. 15969, Dec. 31, 1998]
 Article 116-4 (Special Cases concerning Tax Credit for Transmission of Issued Electronic Invoices)
(1) "The amount specified by Presidential Decree" in the former part of Article 56-3 (1) of the Act, means 200 won.
(2) The maximum deduction limit under the latter part of Article 56-3 (1) of the Act, shall be one million won per year.
[This Article Newly Inserted by Presidential Decree No. 26067, Feb. 3, 2015]
 Article 117 (Foreign Tax Credit)
(1) "Foreign income tax prescribed by Presidential Decree" in Article 57 (1) of the Act and in the former part of Article 129 (4) of the Act, means the following tax amounts (excluding penalty taxes and surcharges) assessed by a foreign government: <Amended by Presidential Decree No. 14860, Dec. 30, 1995; Presidential Decree No. 15969, Dec. 31, 1998; Presidential Decree No. 21301, Feb. 4, 2009; Presidential Decree No. 22034, Feb. 18, 2010>
1. Amount of tax assessed by making the individual amount of income as the tax base, and additional amount of tax thereto;
2. Amount of tax assessed by making revenue other than income, and others equivalent thereto, as the tax base, which fall under the tax item similar to subparagraph 1.
(2) "Ratio prescribed by Presidential Decree" in Article 57 (1) 1 of the Act, means the following ratio: <Amended by Presidential Decree No. 22034, Feb. 18, 2010>
(Foreign source income - The amount prescribed by Ordinance of the Ministry of Strategy and Finance among the foreign source income) / Global income in the relevant taxable period.
(3) An amount of tax paid in a foreign country under Article 57 (1) of the Act, shall be deducted from an amount of tax computed in the taxable period when the relevant income generated from foreign source is included in the tax base or shall be included in necessary expenses. In such cases, any person who intends to get a deduction on tax paid in a foreign country or to have it included in necessary expenses, shall file an application for foreign tax credit (including necessary expenses) prescribed by Ordinance of the Ministry of Strategy and Finance with the head of the competent tax office having jurisdiction over the place for tax payment or a withholding agent, when he/she makes the final return on tax base of the taxable period in which an income generated from foreign source is included or the year-end tax settlement. <Amended by Presidential Decree No. 21301, Feb. 4, 2009; Presidential Decree No. 22034, Feb. 18, 2010>
(4) If a resident is unable to submit an application under paragraph (3), along with the final return on tax base, due to causes, such as a delay in notification of the determination of a foreign government on income tax on foreign source income, or the difference in taxable periods, the resident may submit it within three months from the date he/she received the notice of such determination. <Amended by Presidential Decree No. 15969, Dec. 31, 1998; Presidential Decree No. 26067, Feb. 3, 2015; Presidential Decree No. 27829, Feb. 3, 2017>
(5) Paragraph (4) shall apply mutatis mutandis to where any change has occurred in the paid amount of foreign tax as the foreign government rectified its decision on the income tax for the foreign source income. In such cases, when an amount of tax to be refunded occurs, it may be appropriated or refunded pursuant to Article 51 of the Framework Act on National Taxes. <Amended by Presidential Decree No. 15969, Dec. 31, 1998; Presidential Decree No. 21301, Feb. 4, 2009>
(6) Foreign tax paid on global income, other than business income under Article 19 of the Act, shall be deducted by method under Article 57 (1) 1 of the Act. <Amended by Presidential Decree No. 22034, Feb. 18, 2010>
(7) In calculating the limit of deduction under Article 57 (1) 1 of the Act, if a business operator has overseas places of business in at least two foreign countries, the business operator may calculate the limit of deduction separately for each country. <Amended by Presidential Decree No. 26067, Feb. 3, 2015>
(8) "Conditions prescribed by Presidential Decree are satisfied" in Article 57 (4) of the Act, means any of the following cases: <Newly Inserted by Presidential Decree No. 22580, Dec. 30, 2010>
1. Where income of a foreign corporation is derived in a country where its headquarters or principal place of business is located (hereafter referred to as "resident country" in this paragraph): Where a resident, who is a shareholder or an investor, other than a foreign corporation, bears tax liabilities for income of the foreign corporation under the tax law of the resident country;
2. Where income of a foreign corporation is derived in a country, other than the resident country (hereafter referred to as "source country" in this paragraph): Where all of the following requirements are satisfied:
(a) A resident, who is a shareholder or an investor, other than a foreign corporation, shall bear tax liabilities for income of the foreign corporation under the tax law of the resident country;
(b) A resident, who is a shareholder or an investor, other than a foreign corporation, shall bear tax liabilities for income of the foreign corporation under the tax law of the source country.
(9) "The amount, computed as prescribed by Presidential Decree" in Article 57 (4) of the Act, shall be the amount computed by the following formula: <Newly Inserted by Presidential Decree No. 22580, Dec. 30, 2010>
Amount of income tax borne by a resident for income of a foreign corporation in the relevant business year×





Dividend income
(Foreign corporation’s income for the relevant business year × Resident’s profit sharing ratio for the relevant business year)-Amount of income tax borne by a resident for income of a foreign corporation in the relevant business year
(10) The foreign source income to which Article 57 (1) of the Act applies shall, as an income generated in a foreign country, be the amount calculated by applying mutatis mutandis the provisions concerning calculating a resident’s global income or retirement income. In such cases, the foreign source income to which foreign income tax deduction applies pursuant to Article 57 (1) of the Act shall be the amount obtained by deducting any amount which is directly or indirectly corresponding to the foreign source income and is included in necessary expenses upon calculating one’s global income in the relevant taxable period, and Article 57 (2) of the Act shall not apply to the aforementioned deducted amount. <Newly Inserted by Presidential Decree No. 24356, Feb. 15, 2013>
 Article 118 (Tax Credit for Loss by Disasters)
(1) "Assets prescribed by Presidential Decree" in the former part of the main body of Article 58 (1) of the Act means those falling under any of the following subparagraphs: <Amended by Presidential Decree No. 20618, Feb. 22, 2008>
1. Assets for business (excluding the land);
2. Lost assets owned by others, for which the relevant business operator is liable for making up for such loss;
3. In cases where the amount of interest income or that of dividend in- come is contained in the tax base amount for the income tax subject to the tax credit for losses by disasters, the bank deposit, stocks and other assets related to such amounts of income.
(2) In applying Article 58 (1) of the Act, the rate of occurrence of the disasters shall be calculated by the book value as of the date of disaster occurrence; and if the book value is not be discernible due to destruction by fire or loss of the account book, such rate shall be calculated by the value as of the date the disaster occurred, which has been investigated and verified by the head of the competent tax office having jurisdiction over the place over tax payment.
(3) Persons who intend to receive tax credit for losses by disasters under Article 58 (1) of the Act shall submit an application for tax credit for losses by disaster determined by Ordinance of the Ministry of Strategy and Finance (including submitting it by means of the Home Tax Service) to the head of the competent tax office having jurisdiction over the place for tax payment within the period falling under any of the following subparagraphs: <Amended by Presidential Decree No. 15747, Apr. 1, 1998; Presidential Decree No. 17825, Dec. 30, 2002; Presidential Decree No. 18312, Mar. 17, 2004; Presidential Decree No. 20720, Feb. 29, 2008>
1. In cases of income tax for which the deadline for a final return on tax base has not expired, its return deadline: Provided, That if the period from the date the disaster occurred to the deadline for return is less than one month, it shall be one month from the date of disaster occurrence;
2. In cases of unpaid income tax, and that payable, as of the date of disaster occurrence other than those of subparagraph 1, one month from the date the disaster occurred.
(4) The head of the competent tax office of disaster area shall investigate the loss rate of assets under Article 58 (7) of the Act, and obtain approval from the commissioner of the competent regional tax office. <Amended by Presidential Decree No. 14860, Dec. 30, 1995>
 Article 118-2 (Tax Credit for Pension Accounts)
(1) A person who wishes to be eligible for the application of Article 59-3 (1) of the Act shall submit a certificate of payments into pension accounts in the form prescribed by Ordinance of the Ministry of Strategy and Finance to the relevant withholding agent, taxpayers' association, or the head of the competent tax office having jurisdiction over the place for tax payment, by the date specified in the subparagraphs of Article 113 (1).
(2) When applying paragraph (1), if documents evidencing tax credits have been submitted to the Commissioner of the National Tax Service under Article 216-3, the documents specified by Ordinance of the Ministry of Strategy and Finance may be submitted by the date specified in the subparagraphs of Article 113 (1).
[This Article Newly Inserted by Presidential Decree No. 25193, Feb. 21, 2014]
 Article 118-3 (Special Provisions concerning Conversion of Payments Exceeding Maximum Tax Credit for Pension Accounts into Payments for Pertinent Year)
(1) If a subscriber to a pension account requests the relevant pension account administrator to convert the whole or some of the amount on which no tax credit for the pension account has been granted under Article 59-3 of the Act, of the pension insurance premiums paid into the pension account during the preceding taxable period, the amount requested to be converted shall be deemed a pension insurance premium withdrawn from the pension account first and then paid into the pension account on the filing date of the request for the purpose of applying Article 59-3 of the Act, notwithstanding Article 40-3 (2). In such cases, the amount requested to be converted shall meet the requirements of Article 40-2 (2) as it is deemed a pension insurance premium paid into the relevant pension account on the filing date of the request.
(2) Matters necessary to request conversion of pension insurance premiums paid under paragraph (1) shall be prescribed by Ordinance of the Ministry of Strategy and Finance.
[This Article Newly Inserted by Presidential Decree No. 25193, Feb. 21, 2014]
 Article 118-4 (Tax Credit for Insurance Premiums)
(1) “Insurance premiums for an insurance product specified by Presidential Decree for the protection only of a disabled person" in Article 59-4 (1) 1 of the Act means insurance premiums or mutual-aid premiums for an insurance product or a mutual aid contract referred to in any subparagraph of paragraph (2) and indicated as an insurance product or a mutual aid contract for the protection only of a disabled person on an insurance or mutual aid contract or on a receipt of the payment of insurance premiums or mutual-aid premiums.
(2) "Insurance premiums for an insurance product specified by Presidential Decree" in Article 59-4 (1) 2 of the Act means insurance premiums or mutual-aid premiums for the following insurance products or mutual aid contracts prescribed by Ordinance of the Ministry of Strategy and Finance:
1. Life insurance;
2. Personal injury insurance;
3. Non-life insurance for insuring damage caused by a fire, theft, or other cause to a family;
5. Mutual aid contracts under the Military Personnel Mutual Aid Association Act, the Korean Teachers' Credit Union Act, the Public Officials Benefit Association Act, the Police Mutual Aid Association Act, or the Korea Fire Officials Credit Union Act.
[This Article Newly Inserted by Presidential Decree No. 25193, Feb. 21, 2014]
 Article 118-5 (Tax Credit for Medical Expenses)
(1) "Medical expenses specified by Presidential Decree" in Article 59-4 (2) of the Act, means the following medical expenses directly borne by an income earner:
1. Expenses paid to a medical institution defined in Article 3 of the Medical Service Act for diagnosis, medical treatment, or prevention of a disease;
2. Expenses paid to purchase medicine defined in Article 2 of the Pharmaceutical Affairs Act (including oriental herbal medicine; hereinafter the same shall apply) for medical treatment or care;
3. Expenses paid to directly purchase or rent an assistive device for persons with disabilities (referring to an assistive device listed under Article 105 of the Enforcement Decree of the Restriction of Special Taxation Act) or a medical device (referring to a medical device defined in Article 2 (1) of the Medical Devices Act) according to prescriptions from a doctor, dentist, oriental doctor, etc.;
4. Expenses paid to purchase dioptric glasses or contact lenses, not exceeding 500,000 won per year per person eligible for basic deduction under Article 50 (1) of the Act (regardless of the age and limitations on income);
5. Expenses paid to purchase hearing aids;
6. The beneficiary's pro rata share actually paid in accordance with Article 40 (1) of the Act on Long-Term Care Insurance for Older Persons.
(2) Expenses referred to in paragraph (1) shall not include costs for a cosmetic or plastic surgery and costs for purchasing medicine for health enhancement.
(3) When a withholding agent submits a statement of payment of earned income of an income earner who has medical expenses eligible for special tax credit at the time of the year-end tax settlement for wage and salary income under Article 137, 137-2, or 138 of the Act, the withholding agent shall submit a statement of payment of medical expenses of the income earner to the head of the competent tax office on computerized magnetic tapes or diskettes.
(4) "Infertility treatment expenses specified by Presidential Decree" in the main sentence of Article 59-4 (2) 3 of the Act, means expenses specified by Ordinance of the Ministry of Strategy and Finance as those incurred in assisted reproductive technology (including internal or external artificial insemination). <Newly Inserted by Presidential Decree No. 26067, Feb. 3, 2015; Presidential Decree No. 27829, Feb. 3, 2017>
[This Article Newly Inserted by Presidential Decree No. 25193, Feb. 21, 2014]
 Article 118-6 (Tax Credit for Educational Expenses)
(1) "Education expenses specified by Presidential Decree" in the main sentence of Article 59-4 (3) of the Act, means the following educational expenses: <Amended by Presidential Decree No. 27829, Feb. 3, 2017>
1. Tuition fees, admission fees, chid-care fees, lecture fees, and other school fees;
2. Meal charges paid to a school, kindergarten, day-care center, or a private teaching institute or a sports facility specified in Article 59-4 (3) 1 (d) of the Act (applicable only to preschoolers) that provides meals under the School Meals Act, the Early Childhood Education Act, the Infant Care Act, etc.;
3. The costs of textbooks purchased from schools defined in Article 2 of the Elementary and Secondary Education Act;
4. The costs of school uniforms (applicable only to students enrolled in a secondary or high school, but the maximum amount eligible for a tax credit is 500,000 won per year per student);
5. Tuition fees and special activity expenses for an after-class schooling program or course provided by the following schools, etc. (including the costs of books purchased from schools, etc. and books purchased outside school for an after-class schooling course provided by an elementary, secondary, or high school):
(b) A kindergarten defined in subparagraph 2 of Article 2 of the Early Childhood Education Act;
(c) A day-care center defined in subparagraph 3 of Article 2 of the Infant Care Act;
(d) A private teaching institute or a sports facility specified in Article 59-4 (3) 1 (d) of the Act (applicable only to preschoolers);
6. Expenses paid for field practice classes conducted as part of the curriculum of a school defined in Article 2 of the Elementary and Secondary Education Act (limited to 300,000 won per year per student).
(2) "Education expenses specified by Presidential Decree" in the proviso to Article 59-4 (3) of the Act, means the following scholarships or financial aids (hereafter in this paragraph, referred to as "scholarships, etc.") received during the pertinent taxable period:
1. Scholarships, etc. received from an intra-company labor welfare fund established under the Framework Act on Labor Welfare;
2. Scholarships, etc. received from the enrolled school;
3. Scholarships, etc. that a student who is an income earner has received from his/her employer;
4. Other scholarships, etc. received from various organizations.
(3) "Educational courses specified by Presidential Decree" in Article 59-4 (3) 1 (b) (ii) of the Act, means educational courses evaluated and recognized by the Minister of Education as courses of study for credits recognizable under Article 3 (1) of the Act on Recognition of Credits, Etc. and educational courses defined in Article 9 (1) 4 of the Enforcement Decree of the Act on the Acquisition of Academic Degrees through Self-Education. <Amended by Presidential Decree No. 26067, Feb. 3, 2015>
(4) "Overseas educational institutions specified by Presidential Decree" in Article 59-4 (3) 1 (c) of the Act, means educational institutions in a foreign country, which correspond to kindergartens under the Early Childhood Education Act and schools under the Elementary and Secondary Education Act or the Higher Education Act in the Republic of Korea.
(5) "Students specified by Presidential Decree" in Article 59-4 (3) 1 (c) of the Act, means students whose educational expenses are paid by residents who are citizens of the Republic of Korea as at the end of the pertinent taxable period (limited to persons described below, in cases of preschoolers and students enrolled in an elementary or secondary school):
1. A person qualified for studying abroad at his/her own expense under Article 5 of the Regulations on Studying Abroad;
2. A person studying abroad under Article 15 of the Regulations on Studying Abroad while living together with a person under obligation to support him/her for at least one year.
(6) "Sports facilities specified by Presidential Decree" in Article 59-4 (3) 1 (d) of the Act, means any of the following facilities:
1. A sports facility operated by a sports facility business operator under the Installation and Utilization of Sports Facilities Act (including sports facility business operators specified by Ordinance of the Ministry of Strategy and Finance);
2. A sports facility operated by the State, a local government, or a person who operates (including commissioned operation) a facility permitted or registered as a juvenile training facility under the Juvenile Activity Promotion Act.
(7) "Amount specified by Presidential Decree" in Article 59-4 (3) 1 (d) of the Act, means the amount of tuition fees that a preschooler has paid for a monthly lesson program (limited to programs that provide at least one lesson per week) of a private teaching institute under the Act on the Establishment and Operation of Private Teaching Institutes and Extracurricular Lessons or a sports facility under paragraph (6).
(8) "Subsidy, etc. specified by Presidential Decree" in the proviso to Article 59-4 (3) 2 (c) of the Act, means subsidy for developing workplace skills of workers under Article 43 of the Enforcement Decree of the Employment Insurance Act.
(9) "Student loans specified by Presidential Decree" in the main sentence of Article 59-4 (3) 2 (d) of the Act, means the following student loans (limited to loans for tuition fees): <Newly Inserted by Presidential Decree No. 27829, Feb. 3, 2017>
1. Income contingent loans defined in subparagraph 2 of Article 2 of the Act on the Establishment, etc. of Korea Student Aid Foundation, and general student loans defined in subparagraph 3 of the same Article;
2. Student loans granted through a program for providing student loans under Article 17 (1) 4 of the Enforcement Decree of the Special Act on the Quality Improvement of Life of Farmers and Fishers and Development Promotion of Agricultural and Fishing Villages;
3. Student loans that financial institutions transfer to the Korea Housing Finance Corporation incorporated under the Korea Housing Finance Corporation Act;
4. Student loans specified by Ordinance of the Ministry of Strategy and Finance as similar to those specified in subparagraphs 1 through 3.
(10) "Amount of the payments specified by Presidential Decree, including the amount additionally paid due to the late repayment of a loan" in the proviso to Article 59-4 (3) 2 (d) of the Act, means any of the following amounts: <Newly Inserted by Presidential Decree No. 27829, Feb. 3, 2017>
1. An amount additionally paid due to late repayment of principal and interest of a student loan under paragraph (9);
2. An amount fully or partially exempted, out of principal and interest of a student loan under paragraph (9);
3. An amount repaid with a subsidy from a local government or a public institution for a student loan, out of principal and interest of a student loan under paragraph (9).
(11) "Special education expenses specified by Presidential Decree" in Article 59-4 (3) 3 of the Act, means expenses paid for the educational rehabilitation of persons with disabilities (excluding the amount of subsidies provided by the State or a local government under the Act on Welfare Support for Children with Disabilities).
(12) "Social welfare facility or a non-profit corporation specified by Presidential Decree" in Article 59-4 (3) 3 (a) of the Act, means the following facility or corporation:
1. A social welfare facility under the Social Welfare Services Act;
2. A nonprofit corporation established pursuant to the Civil Act and recognized by the Minister of Health and Welfare as an institution that provides educational programs for rehabilitating persons with disabilities.
(13) "Institution specified by Presidential Decree" in Article 59-4 (3) 3 (b) of the Act, means an institution designated by a local government under Article 21 (3) of the Act on Welfare Support for Children with Disabilities to provide developmental rehabilitation services.
(14) "Institutions specified by Presidential Decree" in the former part of Article 59-4 (7) of the Act, means any of the following institutions: <Newly Inserted by Presidential Decree No. 27829, Feb. 3, 2017; Presidential Decree No. 28511, Dec. 29, 2017>
1. The Korea Student Aid Foundation established under Article 6 of the Act on the Establishment, etc. of Korea Student Aid Foundation;
2. The Korea Housing Finance Corporation incorporated under the Korea Housing Finance Corporation Act;
3. A corporation that holds a claim for reimbursement purchased under Article 49-8 of the Act on the Establishment, etc. of Korea Student Aid Foundation.
(15) "Data specified by Presidential Decree, such as details of student loans and of repayment of principal and interest thereon" in the former part of Article 59-4 (7) of the Act, means the following data: <Newly Inserted by Presidential Decree No. 27829, Feb. 3, 2017>
1. Details of student loans and repayment of principal and interest by year;
2. Data deemed necessary by the Commissioner of the National Tax Service in connection with the applicability of deduction of educational expenses under Article 59-4 (3) of the Act.
[This Article Newly Inserted by Presidential Decree No. 25193, Feb. 21, 2014]
 Article 118-7 (Tax Credit, etc. for Donations)
(1) Articles 79 (4) and 81 (3) through (6) shall apply mutatis mutandis where the amount of deductable donations made by a resident is deducted from the calculated tax amount for global income under Article 59-4 (4) of the Act. <Amended by Presidential Decree No. 26067, Feb. 3, 2015>
(2) When a withholding agent submits a statement of payments for a resident to whom the a charitable tax deduction has been given at the time of the year-end tax settlement of wage and salary income tax under Article 137, 137-2, or 138 of the Act or the year-end settlement of business income tax under Article 144-2 of the Act, the withholding agent shall submit the statement of donations of the resident to the head of the competent tax office on computerized magnetic tapes or diskettes.
(3) "Persons specified by Presidential Decree, such as those specified in Article 73 (1) 4" in Article 59-4 (4) of the Act, means business operators referred to in Article 73 (1) 4 of the Act. <Amended by Presidential Decree No. 26067, Feb. 3, 2015>
(4) If a resident who wishes to be eligible for a tax credit under Article 59-4 (4) of the Act has business income, the amount of his/her global income shall be based on the amount of income before adding donations to the necessary expenses for the purpose of calculating the maximum limit under Article 59-4 (4) 2 (a) of the Act.
(5) Deleted. <by Presidential Decree No. 26067, Feb. 3, 2015>
[This Article Newly Inserted by Presidential Decree No. 25193, Feb. 21, 2014]
 Article 118-8 (Scope of Compliant Business Operators)
(1) "A business operator who meets the requirements specified by Presidential Decree with regard to the reporting of business accounts, etc." in the main sentence of Article 59-4 (9) of the Act means a business operator who meets all the following requirements:
1. A business operator who meets any of the following requirements:
(a) A business operator who has membership as both a credit card member store and store that issues a credit card sales slip under Articles 162-2 and 162-3 of the Act: Provided, That a business operator who has been notified of his/her violation of Article 162-2 (2) or 162-3 (3) or (4) of the Act by the head of the competent tax office during the pertinent taxable period under the latter part of Article 162-2 (4) or the latter part of Article 162-3 (6) shall be excluded herefrom;
(b) A business operator specified by Ordinance of the Ministry of Strategy and Finance, such as a business operator who has introduced a system for enterprise resources planning under subparagraph 1 of Article 5-2 of the Restriction of Special Taxation Act or a point-of-sale information management system under the Distribution Industry Development Act;
2. A business operator who records and keeps books of accounts in accordance with Article 160 (1) or (2) of the Act and files a tax return based on the amount of income calculated by such books of accounts (if a decision to estimate, investigate, and determine the amount of income under the proviso to Article 80 (3) of the Act is rendered, excluding the pertinent taxable period);
3. A business operator who reports a business account in accordance with Article 160-5 (3) of the Act and uses such account for transactions of at least two-thirds of the amount for which the business account shall be used under Article 160-5 (1) of the Act during the pertinent taxable period.
(2) Matters necessary to make judgment on whether a person meets the requirement of paragraph (1) 1 shall be prescribed by Ordinance of the Ministry of Strategy and Finance.
[This Article Newly Inserted by Presidential Decree No. 25193, Feb. 21, 2014]
 Article 119 (Calculation of Common Profits and Losses)
Where a person concurrently engages in business eligible for income tax reduction or exemption pursuant to Article 59-5 (1) of the Act or other Acts and other business, the common necessary expenses and common income for the tax-reduced or tax-exempt business and such other business shall be calculated separately, as prescribed by Ordinance of the Ministry of Strategy and Finance. <Amended by Presidential Decree No. 25193, Feb. 21, 2014>
[This Article Newly Inserted by Presidential Decree No. 22034, Feb. 18, 2010]
 Article 119-2 (Scope of Income from Overseas Navigation)
"Income obtained from overseas navigation business of ships and airplanes prescribed by Presidential Decree" in the main sentence of Article 59-5 (1) 2 of the Act means any of the following income: <Amended by Presidential Decree No. 25193, Feb. 21, 2014>
1. Income generated from normal business with the purpose of overseas navigation only;
2. Income generated from overseas navigation of ships or airplanes owned by a business operator under the time charter of a ship or time charter of an airplane (excluding bareboat charter or bareplane charter).
[This Article Newly Inserted by Presidential Decree No. 22185, Jun. 8, 2010]
 Article 119-3 (Methods of Application where Tax Exemption or Reduction or Tax Credit Exceeds Calculated Tax Amount)
(1) "The calculated tax amount on global income for the resident's wage and salary income specified by Presidential Decree" in Article 61 (1) of the Act, means an amount calculated by multiplying the calculated tax amount on global income for the relevant taxable period by the ratio of the earned income to the global income for the relevant taxable period.
(2) "The calculated tax amount specified by Presidential Decree" in the main sentence of Article 61 (2) of the Act, means an amount calculated by multiplying the calculated tax amount on global income for the relevant taxable period by the ratio of the sum of the interest income and dividend income subject to the withholding tax rate under Article 62 of the Act to the global income for the relevant taxable period.
[This Article Newly Inserted by Presidential Decree No. 26067, Feb. 3, 2015]
SECTION 6 Special Cases in Calculation of Amount of Tax
 Article 120 (Special Cases concerning Calculations of Tax on Excess Repayment from Workplace Mutual-Aid Association)
(1) Where the repayment from a workplace mutual-aid association is made in installments, the calculated tax amount on the gain exceeding payments shall be calculated for the gain exceeding payments in accordance with Article 63 (1) of the Act (hereinafter referred to as "calculated tax amount on the gain exceeding payments").
(2) The calculated tax amount on the additional gain on repayment for each installment shall be computed by multiplying the amount of subparagraph 1 below by the rate of subparagraph 2 below:
1. The additional gain accruing from repayment for each installment during the period of payment in installments;
2. The rate calculated by dividing the calculated tax amount on the gain exceeding payments by the gain exceeding payments.
[This Article Wholly Amended by Presidential Decree No. 26067, Feb. 3, 2015]
 Article 121 Deleted. <by Presidential Decree No. 17825, Dec. 30, 2002>
 Article 121-2 Deleted. <by Presidential Decree No. 18173, Dec. 30, 2003>
 Article 122 (Special Cases in Calculation of Amount of Tax for Realty Dealers)
(1) "Real estate trading business prescribed by Presidential Decree" in the part other than the subparagraphs of Article 64 (1) of the Act means non-residential building construction business (only applicable to cases where he/she constructs and sells buildings for himself/herself) and real estate development and supply business according to the Korea Standard Industry Code: Provided, That residential building development and supply business (excluding cases of reselling purchased residential buildings; hereinafter referred to as "residential building development and supply business") in accordance with the Korea Standard Industry Code shall be excluded. <Newly Inserted by Presidential Decree No. 22034, Feb. 18, 2010; Presidential Decree No. 22580, Dec. 30, 2010>
(2) Marginal profits from the sale of a residential house, etc. under Article 64 (1) of the Act shall be the amount calculated by subtracting the following amounts from the selling price of the house or parcel of land: <Amended by Presidential Decree No. 19890, Feb. 28, 2007; Presidential Decree No. 24356, Feb. 15, 2013>
1. Necessary expenses of the transferred property calculated under the provisions of Article 163 (1) through (5);
2. Basic deduction amount of capital gains under the provisions of Article 103 of the Act;
3. Amount of special deduction for long-term holding under Article 95 (2) of the Act.
(3) In applying the proviso to paragraph (1), residential buildings shall include land appurtenant thereto, the area of which is of the larger between the following two cases: <Newly Inserted by Presidential Decree No. 22580, Dec. 30, 2010>
1. Total floor space of a building (excluding the area of basement level, and parking lot on the ground floor, areas for evacuation and safety zones under Article 34 (3) of the Enforcement Decree of the Building Act, and areas of common residential facilities under subparagraph 3 of Article 2 of the Regulations on Standards, etc. of Housing Construction;
2. The area equivalent to five times the area on which a building is founded (in cases of land outside the urban areas under subparagraph 1 of Article 6 of the National Land Planning and Utilization Act, it shall be ten times).
(4) In applying the proviso to paragraph (1), where buildings for other purposes, such as stores installed at a part of a residential building, or buildings with the same lot number (including other lot numbers within the complex equipped with the same residential conditions) for other purposes (hereafter referred to as "building for other purposes" in this paragraph), stand together with the relevant building, buildings for other purposes and land appurtenant thereto shall be deemed excluded from the category of residential building under the proviso to paragraph (1); and in any of the following cases, the building for other purposes and the land thereto shall be, in whole, deemed residential building under the proviso to paragraph (1). In such cases, Article 154 (4) shall apply mutatis mutandis to the computation of the areas of land appurtenant to building: <Newly Inserted by Presidential Decree No. 22580, Dec. 30, 2010>
1. Where a residential building and a building for other purposes are traded by each unit of sales and purchase, and the area of a building for other purposes does not exceed 10/100 of that of the residential building;
2. Where a building for other purposes, appurtenant to a residential building and a residential building are traded as a single unit of sales and purchase, and the area of a building for other purposes is less than that of a residential building.
(5) Where a residential building and a building for other purposes are newly built to be sold, each of such event shall be separately recorded in a book, and where necessary expenses are commonly involved, such expenses shall be apportioned, as prescribed by Ordinance of the Ministry of Strategy and Finance. <Newly Inserted by Presidential Decree No. 22580, Dec. 30, 2010>
(6) The calculation of amount of tax under Article 64 of the Act and other necessary matters shall be prescribed by Ordinance of the Ministry of Strategy and Finance. <Amended by Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 22580, Dec. 30, 2010>
[This Article Newly Inserted by Presidential Decree No. 18173, Dec. 30, 2003]
 Article 122-2 (Special Cases concerning Calculation of Business Income with respect to House Rental Income subject to Separate Taxation)
In calculating the final tax amount on global income with respect to house rental income subject to separate taxation under Article 64-2 (2) of the Act, the business income under Article 64-2 (1) 2 (a) of the Act shall be calculated by subtracting 60/100 of gross revenue from gross revenue.
[This Article Newly Inserted by Presidential Decree No. 26067, Feb. 3, 2015]
SECTION 7 Interim Prepayment, Preliminary Return, and Payment of Tax
 Article 123 (Payment of Tax by Interim Prepayment)
"Income prescribed by Presidential Decree" in the former part of Article 65 (1) of the Act means income falling under the following subparagraphs: <Amended by Presidential Decree No. 14860, Dec. 30, 1995; Presidential Decree No. 15747, Apr. 1, 1998; Presidential Decree No. 17032, Dec. 29, 2000; Presidential Decree No. 19890, Feb. 28, 2007; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 22034, Feb. 18, 2010>
1. Interest income, dividend income, wage and salary income, pension income or other income;
2. Income generated from clerical support service business in accordance with the Korea Standard Industry Code, such as shorthand, typewriting, etc., from among business income;
3. Income subject to occasional taxation under Article 82 of the Act from among business income;
4. Other income determined by Ordinance of the Ministry of Strategy and Finance.
 Article 124 (Notice of Amount of Tax by Interim Prepayment)
A notice of the amount of tax by interim prepayment under Article 65 (1) of the Act shall be issued by a written notice under the National Tax Collection Act. <Amended by Presidential Decree No. 17032, Dec. 29, 2000>
 Article 125 (Report on Estimated Amount of Interim Prepayment, and Investigation and Decision)
(1) Persons who intend to report on the estimated amount of interim prepayment under Article 65 (3) or (5) of the Act shall submit a report on the estimated amount of interim prepayment determined by Ordinance of the Ministry of Strategy and Finance to the head of the competent tax office having jurisdiction over the place for tax payment. <Amended by Presidential Decree No. 15747, Apr. 1, 1998; Presidential Decree No. 17032, Dec. 29, 2000; Presidential Decree No. 20720, Feb. 29, 2008>
(2) In cases where persons who are to report on the amount of gross income during the period of interim prepayment under Article 65 (5) of the Act have failed to make such report, the head of the competent tax office having jurisdiction over the place for tax payment may investigate and determine the relevant amount of gross income by applying mutatis mutandis Article 80 of the Act. <Amended by Presidential Decree No. 17032, Dec. 29, 2000>
 Article 126 Deleted. <by Presidential Decree No. 15191, Dec. 31, 1996>
 Article 127 (Preliminary Return on Profit Margin from Sale and Purchase of Land, etc. and Payment by Real Estate Brokers)
(1) Any person who intends to report profit margin from the sale and purchase of land, etc. under Article 69 (1) of the Act shall submit a preliminary return on profit margin from the sale and purchase of land, etc. determined by Ordinance of the Ministry of Strategy and Finance to the head of the competent tax office having jurisdiction over the place for tax payment. <Amended by Presidential Decree No. 15747, Apr. 1, 1998; Presidential Decree No. 20720, Feb. 29, 2008>
(2) In cases where a real estate broker intends to pay the preliminary tax on profit margin from sale and purchase of land, etc., he/she shall pay it to the competent tax office having jurisdiction over the place for tax payment, the Bank of Korea (including its agents; hereinafter the same shall apply) or a postal service office, submitting a return on profit margin from sale and purchase of land, etc., under paragraph (1) along with a written calculation of payment for preliminary return on profit margin from sale and purchase of land, etc. prescribed by Ordinance of the Ministry of Strategy and Finance. <Amended by Presidential Decree No. 15747, Apr. 1, 1998; Presidential Decree No. 18173, Dec. 30, 2003; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 22034, Feb. 18, 2010>
 Article 128 (Calculation of Profit Margin from Sale and Purchase of Land, etc.)
(1) Profit margin from sale and purchase of land, etc. under Article 69 (3) of the Act shall be the amount calculated by deducting the amount falling under the following subparagraphs from the sale price of land, etc.: <Amended by Presidential Decree No. 15969, Dec. 31, 1998; Presidential Decree No. 22034, Feb. 18, 2010>
1. The amount equivalent to necessary expenses for asset transferred, calculated pursuant to Article 163 (1) through (5);
2. The interest on the amount apportioned to the construction on the relevant land, etc. calculated pursuant to Article 75;
3. The public imposts pursuant to the laws on account of sale of land, etc.;
4. The amount of special deduction for long-term retention under Article 95 (2) of the Act.
(2) When the book value of the land, etc. is revised by an evaluation increase, profit margin from sale and purchase thereof shall be calculated by the book value not revised by such evaluation increase.
(3) Every real estate broker shall, where concurrently trading the land, etc. and other assets, separately enter them in the account book, and shall, where necessary expenses paid for common purposes exist, make a proportional allocation pursuant to the value of relevant assets.
 Article 129 (Determination, Revision and Notification of Profit Margin from Sale and Purchase of Land, etc. and Amount of Tax)
(1) Profit margin from sale and purchase of land, etc. under Article 69 of the Act shall be calculated as follows: <Amended by Presidential Decree No. 17032, Dec. 29, 2000; Presidential Decree No. 22034, Feb. 18, 2010>
1. It shall be calculated based on documentary evidence which a real estate broker submits when making the preliminary return on profit margin from sale and purchase of land, etc., or by an account book kept and entered and other documentary evidence;
2. In cases falling under any subparagraph of Article 143 (1), it shall be the amount calculated by applying the provisions of paragraph (3) of the same Article to the sale price.
(2) Upon applying paragraph (1) 2, if it is possible to confirm the actual transaction price of sold land, etc., the actual transaction price shall be the sale price, and if it is impossible to confirm the actual transaction price, the amount of money obtained by calculating after applying in order the methods under each subparagraph of Article 176-2 (3) shall be the sale price. In such cases, if the amount of transaction examples under Article 176-2 (3) 1 or the appraisal price under Article 176-2 (3) 2 is objectively deemed unfair as in cases such as the amount pursuant to the transaction with the related person under Article 98 (1), such amount concerned shall not be taken into account. <Amended by Presidential Decree No. 23588, Feb. 2, 2012>
(3) With respect to those who have filed a preliminary return on profit margin from sale and purchase of land, etc., or paid preliminary tax on profit margin from sale and purchase of land, etc., pursuant to Article 69 (1) of the Act, the head of the competent tax office having jurisdiction over the place for tax payment shall determine within one month from the date he/she files such return or pays such tax, and, with respect to those who have failed to file a preliminary return on profit margin from sale and purchase, shall immediately determine such profit margin from sale and purchase and the tax payable, and shall notify the relevant real estate broker thereof by applying Article 149 mutatis mutandis. <Amended by Presidential Decree No. 22034, Feb. 18, 2010>
SECTION 8 Final Return on Tax Base and Voluntary Payment
 Article 130 (Final Return on Tax Base of Global Income)
(1) A final return on the tax base of global income under Article 70 (1) of the Act shall be based on the final return on the tax base of global income and the calculation of tax for payment prescribed by Ordinance of the Ministry of Strategy and Finance. <Amended by Presidential Decree No. 22034, Feb. 18, 2010>
(2) "Documents prescribed by Presidential Decree" in Article 70 (4) 1 of the Act means those falling under any of the following: <Amended by Presidential Decree No. 14860, Dec. 30, 1995; Presidential Decree No. 15191, Dec. 31, 1996; Presidential Decree No. 19890, Feb. 28, 2007; Presidential Decree No. 22034, Feb. 18, 2010; Presidential Decree No. 22580, Dec. 30, 2010>
1. Deleted; <by Presidential Decree No. 19507, Jun. 12, 2006>
1-2. Documents under Article 106 (10);
2. A certificate for persons with a disability under Article 107 (2);
2-2. Documents under Article 108-3 (2);
3. Documents under Article 113 (1);
4. List of persons who have left temporarily and family members living together under Article 114 (2);
5. Documents under Articles 80 (4) and 80-2 (6) of the Enforcement Decree of the Restriction of Special Taxation Act.
(3) "Documents prescribed by Presidential Decree" in Article 70 (4) 2 of the Act means the documents prescribed by Ordinance of the Ministry of Strategy and Finance, such as a detailed statement of calculation of the amount of income, etc. <Amended by Presidential Decree No. 22034, Feb. 18, 2010>
(4) In cases of filing a report electronically under Article 5-2 of the Framework Act on National Taxes, the submission of the standard statement of financial position, the standard income statement, the standard particulars of costs, the standard total remaining amount, and the written calculation of adjustment prescribed by Ordinance of the Ministry of Strategy and Finance may substitute the submission of the statement of financial position, the income statement and its attached documents, the trial balance of total remaining amount and the written calculation of adjustment under the provisions of Article 70 (4) 3 of the Act. <Newly Inserted by Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 24356, Feb. 15, 2013>
(5) The head of the competent tax office having jurisdiction over the place for tax payment, upon receipt of a final return on tax base of the global income pursuant to Article 70 of the Act, shall confirm a certified transcript of resident registration card of a filer as of the end date of the relevant taxable period by using the administrative information sharing service under Article 36 (1) of the Electronic Government Act: Provided, That where the filer does not consent to the confirmation or it is unascertainable, by his/her certified transcript of resident registration card, as to whether he/she has any dependent family member, the head of the competent tax office having jurisdiction over the place for tax payment shall have the person attach his/her certified transcript of resident registration card or certificate of a register of familial relationship thereto. <Amended by Presidential Decree No. 21215, Dec. 31, 2008; Presidential Decree No. 22034, Feb. 18, 2010; Presidential Decree No. 22151, May 4, 2010>
 Article 131 (Statement of Adjustment)
(1) A statement of adjustment defined in the main sentence of Article 70 (4) 3 of the Act (hereafter referred to as "statement of adjustment" in this Article), shall be documents prescribed by Ordinance of the Ministry of Strategy and Finance, which are prepared to adjust the difference between the Act and corporate accounting in calculating the amount of income, such as the timing for attribution of income and necessary expenses, the acquisition and appraisal of assets and liabilities. <Newly Inserted by Presidential Decree No. 22185, Jun. 8, 2010>
(2) Deleted. <by Presidential Decree No. 26982, Feb. 17, 2016>
(3) Documents prescribed by Ordinance of the Ministry of Strategy and Finance shall be attached to a statement of adjustment. <Amended by Presidential Decree No. 15747, Apr. 1, 1998; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 22185, Jun. 8, 2010>
(4) Deleted. <by Presidential Decree No. 26982, Feb. 17, 2016>
(5) Any business operator who attaches a statement of adjustment prepared by a certified tax accountant, and who satisfies the requirements prescribed by Ordinance of the Ministry of Strategy and Finance, may omit attaching the documents determined by the Commissioner of the National Tax Service among the documents under paragraph (3) to the statement of adjustment. In such cases, they shall be submitted if the head of the competent tax office or the commissioner of the competent regional tax office having jurisdiction over the place for tax payment, makes by a written request for submission of the documents which are not attached, as he/she deems them necessary for the analyses, etc. of the details of returns. <Newly Inserted by Presidential Decree No. 15565, Dec. 31, 1997; Presidential Decree No. 15747, Apr. 1, 1998; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 22185, Jun. 8, 2010>
 Article 131-2 (Scope of Business Operators subject to External Tax Adjustment)
(1) "The business operators specified by Presidential Decree" in Article 70 (6) of the Act, means the following business operators (hereafter in this Article, referred to as "business operators subject to external tax adjustment"):
1. A business operator whose revenue for the immediately preceding taxable period is at least the standard amount of revenue for each of the following types of business. In such cases, the revenue of a business operation who concurrently engages in at least two types of business referred to in items (a) through (c) or who has at least two places of business shall be computed by applying Article 208 (7) mutatis mutandis:
(a) Agriculture, forestry, fisheries, mining, wholesale, retail business (excluding brokerage of commodities), real estate trading business under Article 122 (1), or any business that does not fall under item (b) or (c): 600 million won;
(b) Manufacturing business, lodging or restaurant business, electricity, gas, steam, or water supply business, sewage or waste treatment, raw material recycling business, environmental restoration business, construction business (excluding construction business for non-residential buildings, but including the business of developing and supplying residential buildings), transportation business, publishing, video, broadcasting and communications, or information service business, financial or insurance business, or commodity brokerage business: 300 million won;
(c) Real estate leasing business under Article 45 (2) of the Act, service business related to real estate, rental business (excluding real estate leasing business), specialized, scientific, and technical service business, business of management and support of business facilities, educational service business, public health business, social welfare service business, service business related to arts, sports, or recreation, an association or organization of such businesses, repair business or other personal service business, or intra-household employment activities: 150 million won;
2. Any of the following business operators subject to double-entry bookkeeping:
(a) A person whose tax base and amount of income tax on income for the immediately taxable period became subject to an estimated decision or estimated correction;
(b) A business operator who commenced business operations during the immediately preceding taxable period: Provided, That the business operators who fall under Article 208 (5) 2, among those referred to in Article 147-3 hereof or Article 109 (2) 7 of the Enforcement Decree of the Value-Added Tax Act, shall be excluded herefrom;
(c) A business operator who became eligible for tax credits, tax reductions, or income deductions for the tax base and amount of income tax under the Restriction of Special Taxation Act: Provided, That any business operator who became eligible for the application of only one of Articles 7, 86-3, and 104-8 of the Restriction of Special Taxation Act, shall be excluded herefrom.
(2) Any business operator who does not fall under paragraph (1) 1 or 2 may submit an adjusted account statement prepared by the persons referred to in any subparagraph of Article 70 (6) of the Act (hereinafter referred to as "certified tax accountants, etc.") in order to ensure accurate tax adjustment, along with a final return filed for tax base of global income.
[This Article Newly Inserted by Presidential Decree No. 26982, Feb. 17, 2016]
 Article 131-3 (Adjustment Team)
(1) "The adjustment team specified by Presidential Decree" in Article 70 (6) of the Act (hereafter in this Article, referred to as "adjustment team"), means any of the following persons designated by the commissioner of the competent regional tax office with a representative appointed by themselves. In such cases, certified tax accountants, etc. shall belong to only one adjustment team:
1. A least two certified tax accountants, etc.;
2. A tax firm;
3. An accounting firm.
(2) A firm referred to in paragraph (1) 2 or 3 shall have at least two certified accountants, etc. who belong to it in preparing an adjusted account statement under Article 70 (4) 3 of the Act.
(3) The application for, designation of, designation, revocation of designation of, the period of validity of, an adjustment team referred to in paragraph (1), and other necessary matters, shall be prescribed by Ordinance of the Ministry of Strategy and Finance.
[This Article Newly Inserted by Presidential Decree No. 26982, Feb. 17, 2016]
 Article 132 (Detailed Statement of Received Receipts, Etc.)
(1) Deleted. <by Presidential Decree No. 15969, Dec. 31, 1998>
(2) Deleted. <by Presidential Decree No. 23588, Feb. 2, 2012>
(3) The specification of the reception of receipts under Article 70 (4) 5 of the Act shall be the detailed statement including receipts exceeding 30,000 won per transaction other than bills, tax invoices, credit card sales slips, and cash receipts under each subparagraph of Article 160-2 (2) of the Act as prescribed by Ordinance of the Ministry of Strategy and Finance. <Amended by Presidential Decree No. 21301, Feb. 4, 2009>
(4) "Small-scale business operator prescribed by Presidential Decree" in Article 70 (4) 5 of the Act means any of the following business operators: <Newly Inserted by Presidential Decree No. 19890, Feb. 28, 2007; Presidential Decree No. 22034, Feb. 18, 2010>
1. Any business operator who has commenced a new business during the pertinent taxable period;
2. Any business operator whose amount of business income in the preceding taxable period (including the amount of income increased by determination or correction) is less than 48 million won;
3. Any business operator to whom Article 73 (1) 4 of the Act is applicable.
 Article 133 (Submission of Certificate of Confirmation of Compliant Filing)
(1) "Business operator whose income for each type of business exceeds a certain level prescribed by Presidential Decree " in Article 70-2 (1) of the Act, means a business operator whose aggregate amount of income in the relevant taxable period exceeds the amount classified as follows (hereafter referred to as "business operator subject to confirmation of compliant filing" in this Article): Provided, That in cases of business operators engaging in enterprise services under attached Table 3-3 among those who engage in business falling under subparagraph 1 or 2, it refers to the business operators of at least the amount specified in subparagraph 3: <Amended by Presidential Decree No. 23588, Feb. 2, 2012; Presidential Decree No. 24356, Feb. 15, 2013; Presidential Decree No. 24574, Jun. 11, 2013>
1. Agriculture, forestry, fishery, mining, wholesale and retail business (excluding commodities brokerage service), real estate sale business under Article 122 (1), and any other business not falling under subparagraph 2 or 3: Two billion won;
2. Manufacturing business, lodging and restaurant business, electric power, gas, steam, and water service business, sewage, waste disposal, raw material recycling and environment rehabilitation business, construction business (excluding non-residential building construction business, but including residential building development and supply business), transportation business, publication, film, broadcasting and telecommunications business, information service business, financial business and insurance business, and commodities brokerage service: One billion won;
3. Real estate leasing service under Article 45 (2) of the Act, real estate-related service, leasing service (excluding real estate leasing service), specialized, scientific, and technical services, business facility management and business support services, educational services, health and social welfare services, art, sports, and leisure-related services, associations and organizations, repair and other personal services, and activities employing family members: 500 million won.
(2) In applying paragraph (1), if a business operator concurrently engages in at least two of types of business referred to in paragraph (1) 1 through 3, or has at least two places of business, Article 208 (7) shall apply mutatis mutandis to the calculation of revenue. <Amended by Presidential Decree No. 27829, Feb. 3, 2017>
(3) "Person prescribed by Presidential Decree, such as a tax accountant" in Article 70-2 (1) of the Act, means a certified tax accountant (including a certified public accountant registered pursuant to Article 20-2 of the Certified Tax Accountant Act; hereafter the same shall apply in this Article), tax firm, or accounting firm (hereafter referred to as "tax accountant, etc." in this Article).
(4) Where a tax accountant corresponds to a business operator subject to confirmation of compliant filing, he/she shall not prepare and submit the certificate of confirmation of compliant filing with respect to the propriety of his/her business income.
(5) A business operator subject to confirmation of compliant filing shall appoint a tax accountant, etc. to confirm the compliant filing and report such appointment in the form prescribed by Ordinance of the Ministry of Strategy and Finance by April 30 of the following year of the relevant taxable period to the head of the competent tax office having jurisdiction over the place for tax payment. <Amended by Presidential Decree No. 25193, Feb. 21, 2014>
(6) Necessary matters concerning the form and submission of a certificate of compliant filing, other than those prescribed in paragraphs (1) through (5), shall be prescribed by the Minister of Strategy and Finance.
[This Article Newly Inserted by Presidential Decree No. 22950, Jun. 3, 2011]
 Article 134 (Additional Return and Payment)
(1) Where a person who has not been liable to file a final return on the tax base of global income, any person who is not required to file a final return on the tax base, or any person who has filed a final return on the tax base is liable to pay income tax additionally because there is a change in the amount of income on account of disposition of the amount included in the earnings as dividends, bonuses or other income for which a corporation files a return on the tax base of a corporate tax under the Corporate Tax Act after the expiry of the deadline for the final return on the tax base of global income or the head of a tax office determines or corrects the tax base of corporate tax, if the relevant corporation (where a resident receives the notification pursuant to the proviso to the main sentence of Article 192 (1), referring to such resident) has filed an additional return and made payment by the end of two months after the month in which the date of receipt of a notice on the change in the amount of income under Article 192 (1) arrives (where the amount of income is changed due to a tax return filed by a corporation pursuant to the Corporate Tax Act, referring to the date of return on a corporate tax by such corporation), it shall be deemed to have filed a return and made payment by the deadline under Article 70 or 74 of the Act. <Amended by Presidential Decree No. 22034, Feb. 18, 2010>
(2) Where a person who has filed a final return on the tax base of gross income makes an additional report as a change has occurred in the gross income amounts of the relevant revenue after the expiry of report deadline, among the matters reported within the relevant report deadline, because the price of goods has been raised by the permission, authorization or approval of the Government, it shall be deemed to have been reported under Article 70 or 74 of the Act.
(3) When any person who has filed a final return on the tax base of global income in accordance with the statement of payment of other income provided by the Commissioner of the National Tax Service pursuant to Article 164 (9) of the Act files an additional return and pays income tax due to errors, etc. in such details provided (including cases where a person, upon receiving a notice under the latter part of Article 215 (7), files an additional return and pays the tax before the end of two months after the month in which the date of receipt of such notice falls), he/she shall be deemed to have filed the return and paid the tax by the deadline under Article 70 or 74 of the Act. <Amended by Presidential Decree No. 22034, Feb. 18, 2010>
(4) Where a person who has filed the final return on the tax base of global income becomes obliged, after the deadline of the final return elapsed, to pay additional income tax due to altered income amount caused by receiving at a time his/her salary for the period of unfair dismissal pursuant to the court’s decision, reconciliation, etc. and he/she has additionally returns and pays by the last day of the month after next of the month to which the date of receipt of the withholding tax receipts for wage and salary income pursuant to the court’s decision, etc. belongs, he/she shall be deemed to have returned and paid by the deadline under Article 70 or 74. <Newly Inserted by Presidential Decree No. 23588, Feb. 2, 2012>
(5) Where a person applies for reduction or exemption of tax when filing an additional return and paying tax pursuant to paragraphs (1) through (4), he/she shall be deemed to have applied for the tax reduction or exemption pursuant to Article 75 (1) of the Act. <Amended by Presidential Decree No. 22034, Feb. 18, 2010; Presidential Decree No. 23588, Feb. 2, 2012>
 Article 135 (Final Return on Tax Base of Retirement Income)
Any person who intends to file a final return on the tax base of retirement income pursuant to Article 71 (1) of the Act shall submit the final return on the tax base of retirement income and the statement of payment prescribed by Ordinance of the Ministry of Strategy and Finance to the head of the competent tax office having jurisdiction over the place for tax payment.
[This Article Wholly Amended by Presidential Decree No. 22034, Feb. 18, 2010]
 Article 136 Deleted. <by Presidential Decree No. 19890, Feb. 28, 2007>
 Article 137 (Exception to Final Return on Tax Base)
(1) "Business income prescribed by Presidential Decree" in Article 73 (1) 4 of the Act means the relevant business income received by any person subject to simple bookkeeping under Article 160 (3) of the Act, who falls under any of the following: Provided, That business income received by a business operator under subparagraphs 2 and 3 shall be only applicable to business income for which the relevant withholding agent has made the year-end tax settlement pursuant to Article 144-2 of the Act and Article 201-11 of this Decree: <Amended by Presidential Decree No. 17032, Dec. 29, 2000; Presidential Decree No. 22034, Feb. 18, 2010; Presidential Decree No. 22185, Jun. 8, 2010; Presidential Decree No. 22580, Dec. 30, 2010; Presidential Decree No. 24356, Feb. 15, 2013>
1. Any person who provides with an independent qualification such services as inviting the subscription to insurances and those incidental thereto, and receives the solicitation allowance, etc. according to his/her achievements;
2. Any person who performs the door-to-door distributing business on behalf of a door-to-door distributor under the Door-to-Door Sales, etc. Act, and receives the sales allowances, etc. according to his/her performances or who joins a sponsor door-to-door distributing business organization as a sales clerk and receives sales allowances for performing the sponsor door-to-door distributing business;
3. Any person who receives sales allowances, etc. according to his/her sales performances in return for providing a contracted sales and delivery service for which he/she independently delivers a beverage to general consumers without opening a business place for such sales and delivery service.
(2) through (4) Deleted. <by Presidential Decree No. 22580, Dec. 30, 2010>
 Article 137-2 (Special Cases concerning Final Return on Tax Base)
(1) Any taxpayer wishing to file a return on the tax base of the inheritee pursuant to the main sentence of Article 74 (1) of the Act shall submit documents prescribed by Ordinance of the Ministry of Strategy and Finance with the final return on tax base to the head of the competent tax office having jurisdiction over place for tax payment. <Amended by Presidential Decree No. 24356, Feb. 15, 2013>
(2) Where two or more inheritors exist, they may submit a single return under paragraph (1) with joint signature of each inheritor placed thereon, or with other inheritors' names written thereon by each inheritor.
[This Article Newly Inserted by Presidential Decree No. 22580, Dec. 30, 2010]
 Article 138 (Application for Tax Reduction or Exemption)
(1) Any person who intends to have tax on income generated from overseas navigation business reduced or exempted under Articles 59-5 (1) 2 and 75 (1) of the Act shall submit to the head of the competent tax office having jurisdiction over the place for tax payment an application for tax reduction or exemption in the form prescribed by Ordinance of the Ministry of Strategy and Finance, along with the final return on the tax base. <Amended by Presidential Decree No. 22034, Feb. 18, 2010; Presidential Decree No. 25193, Feb. 21, 2014>
(2) Any person who intends to have tax on income from wages and salaries reduced or exempted under Articles 59-5 (1) 1 and 75 (2) of the Act shall submit an application for tax reduction or exemption prescribed by Ordinance of the Ministry of Strategy and Finance to the head of the competent tax office responsible for charging withholding tax, through the person who pays wage and salary income in the Republic of Korea, by not later than the tenth day of the month following the month in which such reduction or exemption is sought. <Amended by Presidential Decree No. 15747, Apr. 1, 1998; Presidential Decree No. 15969, Dec. 31, 1998; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 22034, Feb. 18, 2010; Presidential Decree No. 25193, Feb. 21, 2014>
 Article 139 (Payment of Tax by Final Return on Tax Base)
(1) Any person who file a final return on the tax base and pays a tax pursuant to Article 76 (1) of the Act shall pay it to the head of the competent tax office having jurisdiction over the place for tax payment, along with the final return on the tax base, or pay it to the Bank of Korea or a postal service office, submitting a statement of payment under the National Tax Collection Act. <Amended by Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 21301, Feb. 4, 2009; Presidential Decree No. 22034, Feb. 18, 2010>
(2) Deleted. <by Presidential Decree No. 21301, Feb. 4, 2009>
 Article 140 (Installment Payment of Income Tax)
Taxes which may be paid in installments under Article 77 of the Act shall be as follows:
1. In cases where the amount of tax payable does not exceed 20 million won, the amount exceeding 10 million won;
2. In cases where the amount of tax payable exceeds 20 million won, the amount which is 50/100 or less of such amount of tax.
SECTION 9 Report and Verification on Current Status of Places of Business
 Article 141 (Reporti on Present Condition of Places of Business and Investigation and Verification thereon)
(1) The report on the current status of the place of business under Article 78 of the Act shall be made on the report form on the current status of the place of business determined by Ordinance of the Ministry of Strategy and Finance, and in cases of the place of business which the Commissioner of the National Tax Service deems necessary for the management of the characteristics of business type or of tax resources, the relevant documents shall be attached with the particulars of amount of revenue and the related data. <Amended by Presidential Decree No. 14860, Dec. 30, 1995; Presidential Decree No. 15747, Apr. 1, 1998; Presidential Decree No. 15969, Dec. 31, 1998; Presidential Decree No. 20720, Feb. 29, 2008>
(2) "Matters prescribed by Presidential Decree" in Article 78 (2) 4 of the Act means the following matters: <Newly Inserted by Presidential Decree No. 19890, Feb. 28, 2007; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 22034, Feb. 18, 2010>
1. Details of the means of paying the amount of revenue;
2. Details of receipts of account statements, tax invoices, credit card sales slips, and cash receipts;
3. Details of expenses, including rents, purchase prices, and labor cost;
4. Other matters concerning the current statues of the place of business prescribed by Ordinance of the Ministry of Strategy and Finance.
(3) A business operator having two or more places of business shall make the report on current status of place of business by place of business. <Amended by Presidential Decree No. 15969, Dec. 31, 1998; Presidential Decree No. 19890, Feb. 28, 2007>
(4) Deleted. <by Presidential Decree No. 23588, Feb. 2, 2012>
(5) The head of the competent tax office having jurisdiction over the relevant place of business or the commissioner of the competent regional tax office may investigate and confirm the current status of place of business in cases where there exist any of the following causes: <Amended by Presidential Decree No. 15565, Dec. 31, 1997; Presidential Decree No. 15969, Dec. 31, 1998; Presidential Decree No. 19890, Feb. 28, 2007>
1. Where a report on the current status of place of business under Article 78 of the Act is not made;
2. Where it is admitted that the important parts of basic matters, such as the current status of facilities, personnel expenses, revenue amount from among the contents of a report on the current status of place of business, are insufficient or false;
3. Where it is admitted that the particulars of giving and receiving the statement of sale and purchase are significantly different from the facts;
4. Where a business operator suspends or closes his/her business.
SECTION 10 Determination, Revision, Collection and Refund
 Article 142 (Determination and Revision of Tax Base and Amount of Tax)
(1) The determination and reassessment of the tax base and the amount of tax under Article 80 of the Act shall be made in principle by the final return on the tax base and its attached documents, or by the actual investigations.
(2) The determination under Article 80 (1) of the Act shall be completed within one year from the deadline for the final return on the tax base: Provided, That the same shall not apply in cases where the Commissioner of the National Tax Service separately decides the investigation period or where obtaining approval from the Commissioner of the National Tax Service due to extenuating circumstances.
(3) "Unjustifiable means prescribed by Presidential Decree, such as receiving false receipts, etc." in Article 80 (2) 3 of the Act means cases falling under any of the following subparagraphs: <Newly Inserted by Presidential Decree No. 20618, Feb. 22, 2008; Presidential Decree No. 22034, Feb. 18, 2010>
1. Preparation and submission of fraudulent evidentiary data or fraudulent documents;
2. Receipt (limited to receipt knowing that it is fraudulent) and submis- sion of fraudulent evidentiary data or fraudulent documents.
 Article 143 (Determination and Revision Based on Estimation)
(1) "Reasons prescribed by Presidential Decree" in the proviso to Article 80 (3) of the Act, means any of the following cases: <Amended by Presidential Decree No. 22034, Feb. 18, 2010>
1. Where books of account and documentary evidence necessary for calculating the tax base are missing or important parts thereof are insufficient or false;
2. Where it is obvious that the details of bookkeeping are false, determining based on the scale of facilities, number of employees, market price of raw materials, merchandize, or products, and various dues and charges;
3. Where it is obvious that the details of bookkeeping are false, determining based on the volume of raw materials used, volume of electricity used, and other operational conditions.
(2) Where the tax base is determined or corrected according to estimation under the proviso to Article 80 (3) of the Act, the amount of tax base shall be calculated by making personal deductions and special income deductions under Articles 50, 51, and 52 of the Act from the amount of income assessed under paragraph (3). <Amended by Presidential Decree No. 25193, Feb. 21, 2014>
(3) Where the amount of income is determined and reassessed by estimation pursuant to the proviso to Article 80 (3) of the Act, it shall be by the following methods: Provided, That subparagraph 1-2 shall apply only to those subject to the simplified expense rate: <Amended by Presidential Decree No. 14860, Dec. 30, 1995; Presidential Decree No. 17032, Dec. 29, 2000; Presidential Decree No. 17825, Dec. 30, 2002; Presidential Decree No. 19327, Feb. 9, 2006; Presidential Decree No. 20618, Feb. 22, 2008; Presidential Decree No. 22034, Feb. 18, 2010; Presidential Decree No. 22185, Jun. 8, 2010; Presidential Decree No. 22580, Dec. 30, 2010; Presidential Decree No. 24356, Feb. 15, 2013; Presidential Decree No. 26982, Feb. 17, 2016>
1. The method of determining or revising, as the relevant amount of income (hereafter in this Article, referred to as "standard amount of income"), the amount obtained by deducting the following amounts from the amount of income. In such cases, if the amount to be deducted exceeds the amount of income, such excess shall be deemed non-existent: Provided, That, where the standard amount of income exceeds the amount calculated by multiplying the amount of income under subparagraph 1-2 by the multiplying factor prescribed by Ordinance of the Ministry of Strategy and Finance, the amount calculated by multiplication of such magnitude may be determined as the amount of income until the amount of income is determined or reassessed for the taxable period in which December 31, 2018 arrives:
(a) Purchase costs (excluding those for fixed assets for business; hereafter the same shall apply in this Article) and rent expenses on fixed assets for business paid or payable based on documentary evidence;
(b) Pays, wages, and retirement benefits for employees paid or payable based on documentary evidence;
(c) The amount obtained by multiplying income by standard expense rate: Provided, That in cases of a person liable to double-entry bookkeeping, the amount of income, multiplied by 1/2 of standard expense rate;
1-2. The method of determining or revising, as the relevant amount of income, the amount obtained by deducting the outcome of multiplying the amount of income by a simplified expense rate from the income amount;
1-3. The method of determining or revising the amount calculated by multiplying the amount of business income prescribed in Article 73 (1) 4 of the Act (hereinafter referred to as "business income subject to the year-end tax settlement") by the income rate for business income subject to the year-end tax settlement prescribed in Article 201-11 (4) as the amount of such income;
2. The method of determining or revising the relevant amount of income by referring to the amount of income of other business operators in the same business type deemed to make the most accurate bookkeeping, where the standard expense rate or the simplified expense rate is undetermined, or where the books of account or other documentary evidence is missing or destroyed due to natural disasters and other force majeure: Provided, That the amount of income shall be determined or revised by the return under Article 70 of the Act and its attached documents where no business operator exists in the same business type and where the books of account, etc. are missing or destroyed after the final return on tax base, and by the income rate during the immediately preceding taxable period where the books of account, etc. are missing or destroyed before the final return on tax base;
3. Other methods which the Commissioner of the National Tax Service deems reasonable.
(4) "Persons subject to simplified expense rate" in the proviso to paragraph (3), means any of the following business operators: <Newly Inserted by Presidential Decree No. 17032, Dec. 29, 2000; Presidential Decree No. 19890, Feb. 28, 2007; Presidential Decree No. 20618, Feb. 22, 2008; Presidential Decree No. 22034, Feb. 18, 2010; Presidential Decree No. 22580, Dec. 30, 2010; Presidential Decree No. 22950, Jun. 3, 2011; Presidential Decree No. 24356, Feb. 15, 2013>
1. Any business operator who has commenced a business anew in the relevant taxable period, and whose income for the relevant taxable period is below the amount specified in each item of Article 208 (5) 2;
2. Any business operator whose aggregate of amount of income in the preceding taxable period (including the amount of income increased by a determination or revision) is below the following amounts:
(a) Agriculture, forestry, fishery, mining, wholesale and retail business (excluding commodities brokerage service), real estate sale business under Article 122 (1), and any other business not falling under item (b) or (c): 60 million won;
(b) Manufacturing business, lodging and restaurant business, electric power, gas, steam, and water service business, sewage, waste disposal, raw material recycling and environment rehabilitation business, construction business (excluding non-residential building construction business, but including residential building development and supply business), transportation business, publication, image, broadcast and telecommunications, and information service business, financial business and insurance business, and commodities brokerage services: 36 million won;
(c) Real estate leasing service under Article 45 (2) of the Act, real estate-related service, leasing service (excluding real estate leasing service), specialized, scientific, and technical services, business facility management and business support service, educational services, health and social welfare services, service industry related to art, sports, and leisure, associations and organizations, repair and other personal services, and family-employed activity: 24 million won.
(5) The Commissioner of the National Tax Service shall determine the scope of purchase costs and rental expenses for fixed assets for business under paragraph (3) 1 (a) and the kinds of documentary evidence under paragraph (3) 1 (a) and (b). <Newly Inserted by Presidential Decree No. 17032, Dec. 29, 2000>
(6) In applying paragraph (4) 2, if a person concurrently operates at least two of types of business falling under paragraph (4) 2 (a) through (c) or has at least two places of business, it shall be governed by the amount of income computed by applying Article 208 (7) mutatis mutandis. <Newly Inserted by Presidential Decree No. 17032, Dec. 29, 2000; Presidential Decree No. 19327, Feb. 9, 2006; Presidential Decree No. 20618, Feb. 22, 2008>
(7) Notwithstanding paragraph (4), none of the following business operators shall be included in persons eligible for a simplified expense rate: <Newly Inserted by Presidential Decree No. 19890, Feb. 28, 2007; Presidential Decree No. 21301, Feb. 4, 2009; Presidential Decree No. 22034, Feb. 18, 2010; Presidential Decree No. 24638, Jun. 28, 2013>
1. A business operator falling under Article 147-3;
2. A person who engages in business falling under Article 109 (2) 7 of the Enforcement Decree of the Value-Added Tax Act;
3. A business operator who is not an Issuer of Cash Receipts, although he/she is obligated to register as an Issuer of Cash Receipts in accordance with Article 162-3 (1) of the Act (limited to the taxable period during which he/she holds no membership);
4. A business operator who violates Article 162-2 (2), 162-3 (3) or (4) of the Act in the relevant taxable period and is notified by the head of the competent tax office at least three times and the aggregate of such amount exceeds one million won, or at least five times in the relevant taxable period pursuant to the latter part of Article 162-2 (4) or the latter part of Article 162-3 (6) of the Act (limited to the relevant taxable period in which the date of such notification falls).
(8) When the amount of income of those who have the appropriated money and reserve funds to be included in the total amount of income under the Act or other Acts, is determined or revised through estimation pursuant to the proviso to Article 80 (3) of the Act, the appropriated money and reserve funds to be included in the total amount of income in the relevant taxable period shall be added to the amount of income assessed pursuant to paragraph (3). <Amended by Presidential Decree No. 14860, Dec. 30, 1995; Presidential Decree No. 19890, Feb. 28, 2007; Presidential Decree No. 22034, Feb. 18, 2010>
(9) Where a person fails to submit evidentiary documents in accordance with paragraph (3) 1 (a), he/she shall submit a detailed statement on expenditure of major expenses prescribed by Ordinance of the Ministry of Strategy and Finance. <Newly Inserted by Presidential Decree No. 24356, Feb. 15, 2013>
 Article 144 (Calculation of Amount of Income at Time of Estimation, Determination, and Revision)
(1) Where the amount of income of a business operator cannot be calculated by the books and other documentary evidences, such amount of income shall be governed by the amount calculated by any of the following methods: <Amended by Presidential Decree No. 15565, Dec. 31, 1997; Presidential Decree No. 15969, Dec. 31, 1998>
1. The method of calculation by referring to the amount of income of other business operators of the same business condition, which has been investigated and determined by the record-keeping deemed accurate;
2. Where there exists any business efficiency set forth by the Commissioner of the National Tax Service to define the relations between the volume or price of personal or physical facilities related to the business (such as employees, guest rooms, place of business, vehicles, tap water, and electricity) and the turnover in view of the type and area of the business, the method of calculation by applying such business efficiency;
3. The method of calculation by applying the market price of quantity sold during the relevant taxable period to the amount of quantity produced calculated by applying the production rate, which has been investigated by the Commissioner of the National Tax Service on the input raw materials by business kind;
4. The method of calculation by any of the following criteria set forth by the Commissioner of the National Tax Service by type and area of business:
(a) Input quantity per unit of won, which defines the relation between the partial or whole quantity, from among raw or secondary materials input for production, and the quantity of production;
(b) Expense-related ratio which defines the relation between the partial or whole expenses, from among labor costs, rent, material cost, water, heat and light expenses, and other operating expenses, and the turnover;
(c) Turnover ratio of merchandizes, which defines the relation between the average inventory amount during a specified period, and the turnover or cost of sales;
(d) Gross profit ratio of sales, which defines the ratio between the turnover and the gross profit of sales, during a specified period;
(e) Value-added rate, which defines the ratio between the turnover and the value-added amount, during a specified period;
5. Where the ratio of subparagraphs 2 through 4 may be computed on a business operator subject to estimation, determination, and revision, the method of calculation by applying it thereto;
6. For business types mainly targeting end-users, the method of calculation by the criteria for observed investigation set forth by the Commissioner of the National Tax Service.
(2) Where the amount of other income specified in Article 21 (1) 7 of the Act cannot be assessed by the books and other documentary evidences, such income amount shall be governed by any of the following amounts: <Newly Inserted by Presidential Decree No. 14860, Dec. 30, 1995; Presidential Decree No. 15191, Dec. 31, 1996; Presidential Decree No. 15565, Dec. 31, 1997; Presidential Decree No. 18173, Dec. 30, 2003; Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 19890, Feb. 28, 2007>
1. Deleted; <by Presidential Decree No. 18173, Dec. 30, 2003>
2. In cases of the goodwill (excluding the right to lease a store), the amount evaluated under Article 59 (2) of the Enforcement Decree of the Inheritance Tax and Gift Tax Act;
3. In cases of the right to lease a store, the amount calculated by deducting the amount calculated by item (b) from the amount calculated by item (a):
(a) Amount equivalent to the security money for lease at the time of transfer + Appraised value of the goodwill of the business operator transferring the relevant asset;
(b) Amount equivalent to the security money for lease at the time of acquisition + (Amount assessed by item (a) - Amount equivalent to the security money for lease at the time of acquisition) × 1/2;
4. In cases of assets or rights (excluding goodwill and the right to lease a store) under Article 21 (1) 7 of the Act, the amount evaluated under Article 59 (4) through (6) of the Enforcement Decree of the Inheritance Tax and Gift Tax Act. of the Inheritance Tax and Gift Tax Act.
(3) The amount of income provided for in paragraph (1) shall be the aggregate of the following amounts: <Newly Inserted by Presidential Decree No. 17825, Dec. 30, 2002; Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 24638, Jun. 28, 2013>
1. Subsidies or bounties granted by the State or local governments in connection with the relevant projects;
2. Subsidies or bounties granted by a fellow business operators' organization or the customers in connection with the relevant projects;
3. The value-added tax amount deducted by issuing a credit card sales slip under Article 46 (1) of the Value-Added Tax Act.
(4) Where the amount of income may be calculated by the books and other documentary evidence kept by a resident in making the estimation, determination or revision under paragraphs (1) through (3), the tax base and amount of tax of relevant taxable period shall be determined or revised by actual investigation. <Amended by Presidential Decree No. 14860, Dec. 30, 1995; Presidential Decree No. 17825, Dec. 30, 2002>
 Article 145 (Standard and Simplified Expense Rates)
(1) Standard expense rate or simplified expense rate, and multiplying factor under Article 143 (3) shall be expense rates, which has been determined by the Commissioner of the National Tax Service in view of the average expense rate investigated according to the business type and company peculiarity, against the enterprises which are of average business scale and condition, after undergoing a review by the Deliberation Committee of Standard Expense Rate. <Amended by Presidential Decree No. 17032, Dec. 29, 2000; Presidential Decree No. 17825, Dec. 30, 2002; Presidential Decree No. 22185, Jun. 8, 2010>
(2) The Deliberation Committee of Standard Expense Rate under paragraph (1) shall be established at the National Tax Service, and the Deputy Commissioner of the National Tax Service shall be its chairperson; and its members shall consist of eleven persons commissioned by the Commissioner of the National Tax Service at the recommendation of business colleges and universities, academic research organizations, economic organizations and financial companies, etc., and the public officials prescribed by Ordinance of the Ministry of Strategy and Finance. <Amended by Presidential Decree No. 15747, Apr. 1, 1998; Presidential Decree No. 17032, Dec. 29, 2000; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 22034, Feb. 18, 2010>
(3) The Commissioner of the National Tax Service shall decide and announce the expense rate and estimation method to be applied to the relevant taxable period (in cases of deciding two or more estimation methods, including matters concerning the application therof) through a review by the Deliberation Committee of Standard Expense Rate by not later than one month prior to the commencement of the period for a final return on tax base for the relevant taxable period. <Amended by Presidential Decree No. 17032, Dec. 29, 2000; Presidential Decree No. 20618, Feb. 22, 2008; Presidential Decree No. 22185, Jun. 8, 2010; Presidential Decree No. 24356, Feb. 15, 2013>
(4) Matters necessary for the organization and operation of the Deliberation Committee of Standard Expense Rate shall be determined by the Commissioner of the National Tax Service. <Amended by Presidential Decree No. 17032, Dec. 29, 2000>
 Articles 146 and 146-2 Deleted. <by Presidential Decree No. 19890, Feb. 28, 2007>
 Article 147 (Calculation of Penalty Tax for Unfaithful Report)
(1) "Cases of obscurity prescribed by Presidential Decree" in Article 81 (1) 2 of the Act means any of the following cases: <Amended by Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 19890, Feb. 28, 2007; Presidential Decree No. 20618, Feb. 22, 2008; Presidential Decree No. 22034, Feb. 18, 2010; Presidential Decree No. 24356, Feb. 15, 2013>
1. The domicile, name, tax payment number (in cases of substitution by the resident registration number, the resident registration number) or the business operator's registration number, the types of income, the reversion fiscal year of income or paid amount have not been stated or falsely stated in the statement of payment submitted, and the fact of payment is incapable of verification;
2. Where the securities standard code has not been stated or falsely stated on the statement of payment submitted and the payment specifications of interest and dividend income and thereby the issuer of securities is not identifiable;
3. Where the deferred retirement income tax pursuant to Article 202-2 (1) has not been stated or falsely stated on the submitted detailed statement of payment.
(2) The payment amount falling under the following subparagraphs shall not be included in the amount of obscurity under paragraph (1): <Amended by Presidential Decree No. 15969, Dec. 31, 1998>
1. The amount paid to a person who receives the tax payment number, or to a person who receives a business registration certificate, as of the payment date;
2. The payment amount other than those of subparagraph 1, for which it is confirmed that whereabouts of such receiver becomes unknown after the payment.
(3) In applying Article 81 (1) of the Act, pension income and retirement income under Articles 20-3 (2) and 22 (2) of the Act shall be deemed the paid amount in cases of pension income and retirement income. <Newly Inserted by Presidential Decree No. 17456, Dec. 31, 2001; Presidential Decree No. 19890, Feb. 28, 2007>
(4) "Items prescribed by Presidential Decree" in the main sentence of Article 81 (3) 1 of the Act means items mentioned under Article 211 (1) 1 through 4 (hereafter referred to as "necessary entries" in this paragraph), and where the fact of transaction is verified in view of other entries on the relevant account statement while a part of the necessary entry field on the issued account statement is made erroneously, it shall not be deemed an account statement which is entered incorrectly under Article 81 (3) 1 of the Act. <Newly Inserted by Presidential Decree No. 15191, Dec. 31, 1996; Presidential Decree No. 15969, Dec. 31, 1998; Presidential Decree No. 19890, Feb. 28, 2007; Presidential Decree No. 22034, Feb. 18, 2010>
(5) Items to be entered in the aggregate table of invoices by seller and the aggregate table of invoices by purchaser in the main sentence of Article 81 (3) 2 of the Act means the registration number and the value of supply by customer, and "amount of sales or purchase, the transaction of which may be verified as prescribed by Presidential Decree" in the proviso to the same subparagraph, means the value of sale or purchase of the portion of transactions confirmed by the statements of account which have been issued or received. <Amended by Presidential Decree No. 22034, Feb. 18, 2010>
(6) "Amount of purchase, the transaction of which may be verified as prescribed by Presidential Decree" in the proviso to Article 81 (3) 3 of the Act means the value of purchase of the portion of transactions confirmed with a tax invoice issued accordingly. <Newly Inserted by Presidential Decree No. 19890, Feb. 28, 2007; Presidential Decree No. 22034, Feb. 18, 2010>
 Article 147-2 (Penalty Taxes for Failure to Receive Evidence and Failure to Submit Specification of Receiving Receipts)
(1) Article 81 (4) of the Act shall not apply to entertainment expenses which are not included in necessary expenses under Article 35 (2) of the Act. <Amended by Presidential Decree No. 19890, Feb. 28, 2007>
(2) "Small-scale business operator prescribed by Presidential Decree" in the proviso to Article 81 (4), and paragraphs (5) and (8) of the same Article of the Act means a business operator who falls under any subparagraph of Article 132 (4). <Amended by Presidential Decree No. 22034, Feb. 18, 2010>
(3) "Person whose amount of income is estimated, as prescribed by Presidential Decree" in the proviso to Article 81 (4), and (5) of the Act means a person whose income is estimated in accordance with Article 143 (3): Provided, That the foregoing shall apply only to the portion of income estimated out of the amount that constitutes expenses except those under paragraph (3) 1 (a) and (b) of the same Article in cases of any person other than those subject to the simplified expense rate under Article 143 (4). <Newly Inserted by Presidential Decree No. 19890, Feb. 28, 2007; Presidential Decree No. 22034, Feb. 18, 2010>
(4) "Cases prescribed by Presidential Decree" in Article 81 (5) of the Act means cases in which the fact of transaction cannot be confirmed because such matters have not been entered or entered differently from the fact as the trade name of counterpart of trade, name, business registration number (residents registration number in cases it substitutes for such number), date of transaction and payment amount on the submitted specification of receiving receipts. <Amended by Presidential Decree No. 19890, Feb. 28, 2007; Presidential Decree No. 22034, Feb. 18, 2010>
[This Article Newly Inserted by Presidential Decree No. 15969, Dec. 31, 1998]
 Article 147-3 (Penalty Tax for Unfaithful Reporting on Current Status of Business Place)
"Business operator prescribed by Presidential Decree" in Article 81 (6) of the Act means a business operator who engages in medical services under the Medical Service Act, veterinarian services under the Veterinarians Act, or pharmaceutical services with a pharmacy established under Pharmaceutical Affairs Act. <Amended by Presidential Decree No. 22034, Feb. 18, 2010>
[This Article Wholly Amended by Presidential Decree No. 19890, Feb. 28, 2007]
 Article 147-4 (Penalty Tax for Unfaithful Registration of Joint Business Place)
"Cases prescribed by Presidential Decree" in Article 81 (7) 2 of the Act means cases that fall under any of the following subparagraphs: <Amended by Presidential Decree No. 22034, Feb. 18, 2010>
1. Where any person other than a joint business operator is reported as a joint business operator;
2. Where a person who falls within the category of the joint investment business operator under Article 100 (1) (hereinafter referred to as "joint investment business operator") has not been reported, or a person reported as a joint investment business operator is not in fact a joint investment business operator;
3. Where the allocation ratio of profit and loss as reported is different from the terms and conditions agreed upon between the joint business operators;
4. Where any of joint business operators or joint investment business operators, or the allocation ratio of profit and loss was changed, but such change has not been reported in accordance with Article 87 (5) of the Act.
[This Article Newly Inserted by Presidential Decree No. 19890, Feb. 28, 2007]
 Article 147-5 (Special Applicability concerning Penalty Tax in Case of Revision, etc.)
(1) In cases where a business operator ceases to correspond to a business operator under Article 208 (5) as his/her amount of income has been increased due to a determination, revision under Article 80 of the Act or amended return under Article 45 of the Framework Act on National Taxes, he/she shall be deemed a person subject to simple bookkeeping by not later than the taxable period whereto belongs the date of such determination, revision or amended return in applying the latter part of Article 70 (4) and Article 160-5 (3) of the Act: Provided, That, where a business operator is converted to a person subject to double-entry bookkeeping before the taxable period whereto belongs the date of such determination, revision or amended return, he/she shall be deemed a person subject to simple bookkeeping by not later than the taxable period immediately preceding that wherein he/she has been converted to a person subject to double-entry bookkeeping. <Amended by Presidential Decree No. 18173, Dec. 30, 2003; Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 19890, Feb. 28, 2007; Presidential Decree No. 22580, Dec. 30, 2010>
(2) Article 81 (11) 1 of the Act shall also apply to cases where a business operator is obligated to register as an Issuer of Cash Receipts under Article 162-3 (1) of the Act as a result of the determination or rectification under Article 80 of the Act. <Newly Inserted by Presidential Decree No. 19890, Feb. 28, 2007>
[This Article Newly Inserted by Presidential Decree No. 15969, Dec. 31, 1998]
 Article 147-6 (Surtax on Failure to Submit Calculation Statement of Reserved Income of Specific Foreign Corporation)
"If the calculated statement so submitted is found vague on any ground specified by Presidential Decree" in Article 81 (14) of the Act means where the distributable amount reserved income is erroneously calculated because of a complete or partial omission or erroneous calculation of any amount that must be stated for the calculation.
[This Article Newly Inserted by Presidential Decree No. 25193, Feb. 21, 2014]
 Article 148 (Occasional Imposition)
(1) The head of the competent tax office having jurisdiction over the place of business (with respect to persons other than business operators, the head of the competent tax office having jurisdiction over the place for tax payment), shall determine the tax base and the amount of tax under Article 82 (1) of the Act, by applying mutatis mutandis Article 142 (1). <Amended by Presidential Decree No. 14860, Dec. 30, 1995>
(2) The head of a tax office who intends to impose taxes occasionally pursuant to Article 82 (4) of the Act shall promptly notify the relevant resident of such purport with approval by the commissioner of the competent regional tax office. <Amended by Presidential Decree No. 22034, Feb. 18, 2010>
(3) When a business operator receives income from the United Nations' forces in the Republic of Korea or a foreign institution in the foreign exchange certificate or won currency through a foreign exchange bank, the head of a tax office may determine, under Article 82 of the Act, the tax base for the amount to be received.
(4) and (5) Deleted. <by Presidential Decree No. 20618, Feb. 22, 2008>
(6) Matters necessary for the calculation of the amount of tax in the occasional imposition under Article 82 of the Act shall be determined by Ordinance of the Ministry of Strategy and Finance. <Amended by Presidential Decree No. 15747, Apr. 1, 1998; Presidential Decree No. 20720, Feb. 29, 2008>
 Article 149 (Notification of Amount of Tax and Tax Base)
(1) In cases where the head of the competent tax office or the commissioner of the competent regional tax office having jurisdiction over the place for tax payment intends to notify the tax base and the amount of tax under Article 83 of the Act, he/she shall notify the tax base, tax rate, amount of tax and other necessary matters in writing. In such cases, if there is no tax payable, the same shall apply.
(2) In cases where the head of the competent tax office or the commissioner of the competent regional tax office having jurisdiction over the place for tax payment imposes income tax on the income of a decedent on two or more heirs, he/she shall divide the tax base and amount of tax pro rata one's share, and notify by heir respectively.
(3) Deleted. <by Presidential Decree No. 17825, Dec. 30, 2002>
 Article 149-2 (Refund from Loss Carryback)
(1) "Small and medium enterprise prescribed by Presidential Decree" in the former part of Article 85-2 (1) of the Act means an enterprise prescribed in Article 2 of the Enforcement Decree of the Restriction of Special Taxation Act; and "amount of income tax prescribed by Presidential Decree" means the settled tax amount of global income of the relevant small and medium enterprise for the preceding taxable period. <Amended by Presidential Decree No. 15969, Dec. 31, 1998; Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 22034, Feb. 18, 2010>
(2) "Amount calculated, as prescribed by Presidential Decree" in the former part of Article 85-2 (1) of the Act means the amount obtained by deducting the amount specified in subparagraph 2 from the amount specified in subparagraph 1 (hereinafter referred to as "amount of loss carryback"): <Amended by Presidential Decree No. 22034, Feb. 18, 2010>
1. The amount of calculated tax on global income for the relevant small and medium enterprise in the immediately preceding taxable period;
2. The amount of calculated tax on global income for the relevant small and medium enterprise computed by applying the tax rate of the preceding taxable period to the amount obtained by deducting the amount of loss carried forward under Article 45 (3) of the Act intended for retrospective deduction (the tax base of global income of the preceding taxable period shall be the limit), from the tax base of global income of the preceding taxable period.
(3) A person who intends to claim a refund from loss carryback under Article 85-2 (2) of the Act shall submit an application for loss carryback refund determined by Ordinance of the Ministry of Strategy and Finance to the head of the competent tax office having jurisdiction over the place for tax payment. <Amended by Presidential Decree No. 15747, Apr. 1, 1998; Presidential Decree No. 20720, Feb. 29, 2008>
(4) Where a business operator who has been refunded of retrospective deduction amount of tax for loss falls under the reason in any subparagraph of Article 85-2 (5) of the Act, the head of the competent tax office having jurisdiction over the place for tax payment shall, collect pursuant to Article 85-2 (5) of the Act as income tax on the aggregate amount of those computed by the following formula (hereinafter referred to as " amount of cancelled tax refund"), and the amount corresponding to the interest on the amount of tax whose refund is cancelled which are computed by multiplying the period from the date of making a refund of loss carryback to the date of deciding the refund cancellation by the rate pursuant to Article 27-4 of the Enforcement Decree of the Framework Act on National Taxes: Provided, That where only a part of loss under Article 45 (3) of the Act is carried back, it shall be deemed that the loss, which has not been carried back, shall be reduced first: <Amended by Presidential Decree No. 22034, Feb. 18, 2010; Presidential Decree No. 23588, Feb. 2, 2012>
Refund amount of tax under Article 85-2 (3) of the Act×Amount of loss reduced in excess of the loss not subject to carryback
Amount of loss carried back
(5) Where the tax base for gross income and the amount of tax for the immediately preceding taxable period, which forms the basis for a computation of the amount of loss carryback, is changed due to revisions, etc., the head of the competent tax office having jurisdiction over the place for tax payment shall immediately re-determine the original amount of refund, and refund or collect the difference between the amount of tax refunded from loss carryback, and the refund amount of tax re-determined; and in cases where the amount of tax refunded exceeds the amount of re-determined refund, and such excess is collected, he/she shall collect such amount by aggregating interest which is computed by applying mutatis mutandis paragraph (4).
(6) The calculation of amount of tax to be refunded from a loss carryback and other necessary matters shall be determined by Ordinance of the Ministry of Strategy and Finance. <Amended by Presidential Decree No. 15747, Apr. 1, 1998; Presidential Decree No. 20720, Feb. 29, 2008>
[This Article Newly Inserted by Presidential Decree No. 15191, Dec. 31, 1996]
SECTION 11 Special Cases for Places of Joint Business
 Article 150 (Special Cases for Joint Place of Business)
(1) "Representative joint business operator" in Article 87 (4) of the Act, means any of the following persons who are not a joint investment business operator: <Newly Inserted by Presidential Decree No. 19890, Feb. 28, 2007>
1. A person appointed from among joint business operators;
2. A person whose allocation ratio of profit and loss is the largest, if the representative joint business operator is not appointed: Provided, That such person shall be designated by the head of the competent tax office having jurisdiction over the place of business, if the allocation ratios of profit and loss are the same.
(2) The determination or revision of the amount of income from the joint business under Article 87 of the Act shall be made by the head of the competent tax office having jurisdiction over the domicile of the representative joint business operator under Article 87 (4) of the Act (hereafter referred to as "representative joint business operator" in this Article): Provided, That the matters which the Commissioner of the National Tax Service deems especially important shall be determined by the head of the competent tax office having jurisdiction over the place of business or the commissioner of the competent regional tax office having jurisdiction over the domicile of the representative joint business operator. <Amended by Presidential Decree No. 19890, Feb. 28, 2007>
(3) The business registration for the place of joint business under Article 87 (4) of the Act shall be made by the representative joint business operator to the head of the competent tax office having jurisdiction over the relevant place of business by a report on the relocated joint place of business, etc. determined by Ordinance of the Ministry of Strategy and Finance. <Amended by Presidential Decree No. 15747, Apr. 1, 1998; Presidential Decree No. 19890, Feb. 28, 2007; Presidential Decree No. 20720, Feb. 29, 2008>
(4) The representative joint business operator shall, when there is any change in the descriptions reported in accordance with Article 87 (4) of the Act, report such change to the head of the competent tax office having jurisdiction over the relevant place of business in the form of the report on the relocation of joint place of business, etc. prescribed by Ordinance of the Ministry of Strategy and Finance, within 15 days from the end of the taxable period on which the day when such cause or event occurred falls. <Newly Inserted by Presidential Decree No. 19890, Feb. 28, 2007; Presidential Decree No. 20720, Feb. 29, 2008>
(5) In applying Articles 64 and 94, the head of the competent tax office having jurisdiction over the place for tax payment of the place of joint business shall be the head of the competent tax office having jurisdiction over the domicile of the representative joint business operator. <Amended by Presidential Decree No. 19890, Feb. 28, 2007>
(6) Where a joint business operator files a final return on tax base, he/she shall submit an account statement separating the income accruing from the relevant place of joint business and income other than that along with the final return on tax base. In such cases, the representative joint business operator shall submit the specification of distribution by joint place of business, of the income accruing from the relevant joint place of business, penalty taxes, and the amount of tax collected by withholding. <Amended by Presidential Decree No. 19890, Feb. 28, 2007>
(7) Where Article 41 (1) of the Act shall apply to calculating income of a place of joint business, the joint business operators shall be deemed residents. <Newly Inserted by Presidential Decree No. 27829, Feb. 3, 2017>
(8) Except as otherwise expressly provided for in paragraphs (1) through (7), matters necessary for places of joint business shall be prescribed by Ordinance of the Ministry of Strategy and Finance. <Amended by Presidential Decree No. 15747, Apr. 1, 1998; Presidential Decree No. 19890, Feb. 28, 2007; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 27829, Feb. 3, 2017>
CHAPTER II-2 (Articles 150-2 through 150-10) Deleted.
CHAPTER III RESIDENT'S TAX LIABILITIES FOR CAPITAL GAINS
SECTION 1 Definition of Transfer
 Article 151 (Scope of Transfer)
(1) In applying subparagraph 1 of Article 88 of the Act, if the debtor makes a contract for the transfer of assets to guarantee the repayment of debts, and submits a copy of the contract satisfying all the following requirements, along with the final return of tax base of capital gains, it shall not be deemed a transfer: <Amended by Presidential Decree No. 27829, Feb. 3, 2017>
1. There shall be a manifestation of intention between the parties concerned to the effect that such transfer is made to guarantee the repayment of debts;
2. There shall be a manifestation of intention to the effect that the debtor shall use the relevant assets and receive profits therefrom as originally intended;
3. There shall be an agreement on the principal, interest rate, period of repayment, means of repayment, etc.
(2) When one breaches any of requirements of paragraph (1) after entering into a contract thereunder or the relevant asset is appropriated for the repayment due to a non-performance of obligation, such asset shall be deemed transferred.
(3) "The amount of debt in a gift of encumbered property prescribed by Presidential Decree" in the latter part of subparagraph 1 of Article 88 of the Act, means the portion equivalent to the amount of debt, out of the value of the gift, where a donee assumes the debt of the donor at the time of granting a gift of encumbered property: Provided, That an amount of debt shall be excluded herefrom, if it is presumed that the debt is not assumed by the donee under the main sentence of Article 47 (3) of the Inheritance Tax and Gift Tax Act in cases of a gift of encumbered property between spouses or between lineal ascendants and descendents (including where it is presumed to be a gift under Article 44 of the Inheritance Tax and Gift Tax Act). <Newly Inserted by Presidential Decree No. 27829, Feb. 3, 2017>
 Article 152 (Definition of Land Substitution, etc.)
(1) “Land substitution” in subparagraph 1 (a) of Article 88 of the Act, means cases where a project implementor for an urban development project under the Urban Development Act, a project for rearrangement of agricultural production infrastructure under the Rearrangement of Agricultural and Fishing Villages Act, or a project under any other Act exchanges (including division, merger, or exchange according to the implementation of the project) the parcels of land or buildings owned or possessed by land owners or other interested persons within the project zone with other parcels of land in the zone or part of buildings and shares in the land on which such buildings are situated, of which the project implementor has the power to dispose, after completing the project. <Amended by Presidential Decree No. 15191, Dec. 31, 1996; Presidential Decree No. 17032, Dec. 29, 2000; Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 21887, Dec. 15, 2009; Presidential Decree No. 23588, Feb. 2, 2012; Presidential Decree No. 26067, Feb. 3, 2015; Presidential Decree No. 27829, Feb. 3, 2017>
(2) "Reserved land" in Article subparagraph 1 (a) of 88 of the Act, means land that a project implementor specified in paragraph (1) has reserved pursuant to the relevant Acts in order to use it as land for any of the following purposes without designating it as land for substitution: <Amended by Presidential Decree No. 23588, Feb. 2, 2012; Presidential Decree No. 26067, Feb. 3, 2015; Presidential Decree No. 27829, Feb. 3, 2017>
1. Land for public use pursuant to relevant Acts;
2. Land alloted by the authorities in compensation for development outlays where the land owner or the related persons in the business area bears the project costs with the land in the business area pursuant to the relevant Acts.
(3) "Where a parcel of land is exchanged with another parcel of land according to any of the methods and procedures prescribed by Presidential Decree, such as the partition of land under Article 79 of the Act on the Establishment, Management, etc. of Spatial Data" in subparagraph 1 (b) of Article 88 of the Act, means the exchange of parcels of land, which meets all the following requirements: <Newly Inserted by Presidential Decree No. 26067, Feb. 3, 2015; Presidential Decree No. 26302, Jun. 1, 2015; Presidential Decree No. 27829, Feb. 3, 2017>
1. The parcels of land shall be partitioned and exchanged in accordance with the Act on the Establishment, Management, etc. of Spatial Data or any other Act in order to rationally change ground boundaries unreasonable for land use;
2. The total area of the land partitioned under subparagraph 1 shall not exceed 20/100 of the total area of the land before partitioned.
(4) In cases falling under subparagraph 1 (b) of Article 88 of the Act, the land owner shall submit documents demonstrating that the exchange of land meets all the requirements under paragraph (3) to the head of the tax office having jurisdiction over the place for tax payment. <Newly Inserted by Presidential Decree No. 26067, Feb. 3, 2015; Presidential Decree No. 27829, Feb. 3, 2017>
(5) The timing to submit documents under paragraph (4) and other necessary matters shall be determined and publicly notified by the Commissioner of the National Tax Service. <Newly Inserted by Presidential Decree No. 26067, Feb. 3, 2015>
 Article 152-2 (Scope of Securities Depository Receipts)
"Securities depository receipts prescribed by Presidential Decree" in subparagraph 2 of Article 88 of the Act, means instruments which are issued by a person who receives equity securities referred to in Article 4 (2) 2 of the Financial Investment Services and Capital Markets Act in a country other than the country where such equity securities were issued and on which a right related to the securities deposited is indicated.
[This Article Newly Inserted by Presidential Decree No. 27829, Feb. 3, 2017]
 Article 152-3 (Scope of One Household)
"Cases specified by Presidential Decree" in the proviso to subparagraph 6 of Article 88 of the Act, means any of the following cases:
1. Where the relevant resident is at least 30 years of age;
2. Where the spouse is dead or divorced;
3. Where the income specified in Article 4 of the Act is at least 40/100 of the standard median income defined in subparagraph 11 of Article 2 of the National Basic Living Security Act, and it is possible to maintain livelihood independently, while managing and maintaining the house or land owned: Provided, That minors are excluded herefrom, but the foregoing shall not apply where it is inevitable to form one household due to marriage of a minor, death of any family member, or any other cause or event specified by Ordinance of the Ministry of Strategy and Finance.
[This Article Newly Inserted by Presidential Decree No. 27829, Feb. 3, 2017]
SECTION 2 Non-Taxation and Tax Reduction or Exemption for Capital Gains
 Article 153 (Non-Taxation of Farmland)
(1) "Cases prescribed by Presidential Decree" in Article 89 (1) 2 of the Act, means where any of the following farmland (excluding farmland falling under any subparagraph of paragraph (4)) is exchanged, divided, or combined, and where the difference of land value of both sides of such exchange, division, or combining does not exceed 1/4 of the larger value: <Amended by Presidential Decree No. 14860, Dec. 30, 1995; Presidential Decree No. 17032, Dec. 29, 2000; Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 19254, Dec. 31, 2005; Presidential Decree No. 19463, Apr. 28, 2006; Presidential Decree No. 21565, Jun. 26, 2009; Presidential Decree No. 22034, Feb. 18, 2010>
1. Farmland exchanged, divided, or combined due to a project implemented by the State or a local government;
2. Farmland exchanged, divided, or combined with land owned by the State or a local government;
3. Farmland exchanged due to the need for cultivation: Provided, That it shall be confined to cases where one cultivates farmland newly acquired by such exchange while residing for at least three years in the location of such farmland;
(2) Deleted. <by Presidential Decree No. 19254, Dec. 31, 2005>
(3) "Location of farmland" in the proviso to paragraph (1) 3, means any of the following areas (including the area which has corresponded to the relevant area at the time of commencement of cultivation, but ceases to correspond thereto due to a reorganization of administrative districts, etc.): <Amended by Presidential Decree No. 14860, Dec. 30, 1995; Presidential Decree No. 17456, Dec. 31, 2001; Presidential Decree No. 19254, Dec. 31, 2005; Presidential Decree No. 20618, Feb. 22, 2008; Presidential Decree No. 24356, Feb. 15, 2013; Presidential Decree No. 26067, Feb. 3, 2015; Presidential Decree No. 26922, Jan. 22, 2016>
1. An area within a Si (including an administrative Si established pursuant to Article 10 (2) of the Special Act on the Establishment of Jeju Special Self-Governing Province and the Development of Free International City; hereafter the same shall apply in this paragraph)/Gun/Gu (referring to an autonomous Gu; hereafter the same shall apply in this paragraph) where the farmland is located;
2. An area within a Si/Gun/Gu adjacent to an area prescribed in subparagraph 1;
3. An area within a 30 kilometer radius from farmland.
(4) Farmland excluded from that prescribed in paragraph (1) shall be as follows: <Amended by Presidential Decree No. 14860, Dec. 30, 1995; Presidential Decree No. 15191, Dec. 31, 1996; Presidential Decree No. 15747, Apr. 1, 1998; Presidential Decree No. 17825, Dec. 30, 2002; Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 19254, Dec. 31, 2005; Presidential Decree No. 20618, Feb. 22, 2008; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 24356, Feb. 15, 2013; Presidential Decree No. 26922, Jan. 22, 2016>
1. Farmland in a residential area, commercial area, or industrial area under the National Land Planning and Utilization Act among that located as of the transfer date in the Special Metropolitan City, a Metropolitan City (excluding Guns in a Metropolitan City), Special Self-Governing City (excluding Eup/Myeon areas within the Special Self-Governing City), Special Self-Governing Province (excluding Eup/Myeon areas within an administrative Si established pursuant to Article 10 (2) of the Special Act on the Establishment of Jeju Special Self-Governing Province and the Development of Free International City), or a Si area (excluding an Eup/Myeon area of a Si in an urban and rural complex form under Article 3 (4) of the Local Autonomy Act), for which three years have elapsed from the date of its incorporation into these areas: Provided, That in any of the following cases, it shall be excluded:
(a) Where at least one thousand land owners exist within a project area, or where three years have passed since farmland was incorporated into a residential area, commercial area, or industrial area pursuant to the National Land Planning and Utilization Act due to the gradual execution of project or delay in compensation by a project executor following the execution of development project in the development project area (referring to the single project execution area whose date of notice of project authorization is the same) whose scale of project execution is larger than that prescribed by Ordinance of the Ministry of Strategy and Finance;
(b) In cases of extenuating circumstances prescribed by Ordinance of the Ministry of Strategy and Finance, where farmland is incorporated into a residential area, commercial area, or industrial area pursuant to the National Land Planning and Utilization Act due to the execution of development project in the development project area by a project executor, such as the State, local government, or public agency prescribed by Ordinance of the Ministry of Strategy and Finance;
2. Where land to be substituted is designated as land, other than farmland, prior to a disposal of substituted land, with respect to the relevant farmland, and for which three years have elapsed from the date of designating the relevant land to be substituted.
(5) In applying paragraphs (1) 3, if the newly acquired farmland is purchased by consultation or expropriated under the Act on Acquisition of and Compensation for Land, etc. for Public Works Projects or expropriated under other Acts, within three years after its acquisition, such land shall be deemed cultivated while residing for at least three years in the location of farmland. <Amended by Presidential Decree No. 17825, Dec. 30, 2002; Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 19254, Dec. 31, 2005>
(6) In applying paragraphs (1) 3, if the owner of farmland dies within three years after the acquisition of new farmland, and the heir continues to cultivate while residing in the location of farmland, the years of cultivation by the decedent and those of the heir shall be aggregated. <Newly Inserted by Presidential Decree No. 15191, Dec. 31, 1996; Presidential Decree No. 19254, Dec. 31, 2005>
 Article 154 (Scope of One House for One Household)
(1) "Criteria prescribed by Presidential Decree" in Article 89 (1) 3 (a) of the Act, means the requirements that one household shall own one house in the Republic of Korea as at the date of transfer and that the period of owning the house shall be at least two years (in cases of a house in an area subject to adjustment under paragraph (2) as at the time of acquisition, the period of owning the house shall be at least two years (or three years in cases of the house of a resident who falls under paragraph (8) 2) and the period of residence in the house shall be at least two years): Provided, That one household owning one house in the Republic of Korea as at the time of transfer shall not be subject to restriction on the period of owning the house and the period of residence in the house, in cases falling under any of subparagraphs 1 through 3; but shall not be subject to restriction on the period of residence in the house, in cases falling under subparagraph 4 or 5: <Amended by Presidential Decree No. 14860, Dec. 30, 1995; Presidential Decree No. 15747, Apr. 1, 1998; Presidential Decree No. 16664, Dec. 31, 1999; Presidential Decree No. 17751, Oct. 1, 2002; Presidential Decree No. 17825, Dec. 30, 2002; Presidential Decree No. 18127, Nov. 20, 2003; Presidential Decree No. 18173, Dec. 30, 2003; Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 19254, Dec. 31, 2005; Presidential Decree No. 19327, Feb. 9, 2006; Presidential Decree No. 20618, Feb. 22, 2008; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 22034, Feb. 18, 2010; Presidential Decree No. 22950, Jun. 3, 2011; Presidential Decree No. 23887, Jun. 29, 2012; Presidential Decree No. 24356, Feb. 15, 2013; Presidential Decree No. 25193, Feb. 21, 2014; Presidential Decree No. 26763, Dec. 28, 2015; Presidential Decree No. 27829, Feb. 3, 2017; Presidential Decree No. 28293, Sep. 19, 2017>
1. Where a private housing unit built for rental defined in subparagraph 2 of Article 2 of the Special Act on Private Rental Housing, or a public housing unit built for rental defined in subparagraph 1-2 of Article 2 of the Special Act on Public Housing, is transferred to another person after at least five years from the date a person acquired it and all members of the household began to reside in it (including where some of family members are unable to live together due to schooling, workplace situations, medical care for a disease, or any other inevitable cause specified by Ordinance of the Ministry of Strategy and Finance) during the period from the date of rental of the housing unit built for rental to the date of transfer of the housing unit;
2. In any of the following cases. In such cases, the remaining house and its appurtenant land transferred within five years from the relevant transfer date or expropriation date shall be deemed to be included, in cases falling under item (a):
(a) Where the whole or part of the house and its appurtenant land (limited to the house and its appurtenant land purchased prior to the public notice date for the project approval) are purchased by consultation or expropriated under the Act on Acquisition of and Compensation for Land, etc. for Public Works Projects or expropriated under other Acts;
(b) Where all members of a household emigrated from Korea due to emigration under the Emigration Act: Provided, That it is limited to the transfer made within two years from the date of departure where one house was held as at the date of departure;
(c) Where all members of a household have left Korea due to such conditions as study or work needing continuous overseas residence for at least a year: Provided, That it is limited to the transfer made within two years from the date of departure where one house was held as at the date of departure;
3. Where a house used for at least one year is transferred due to school, work, medical treatment and recuperation, or any other inevitable cause determined by Ordinance of the Ministry of Strategy and Finance;
4. Where a resident has completed the registration under Article 168 (1) of the Act and the registration of a rental business entity under Article 5 of the Special Act on Private Rental Housing: Provided, That the foregoing shall not apply where the house is transferred to another person during the mandatory rental period, in violation of Article 43 of the Special Act on Private Rental Housing;
5. Where the fact that a sale and purchase agreement was entered into and down payment was paid before the date of public announcement of the area under the proviso to paragraph (2) is verified by evidencing documents and the household to which the relevant resident did not own any house as at the date of payment of down payment.
(2) An area subject to adjustment shall be any of those listed in the following table: Provided, That if the Minister of Land, Infrastructure and Transport designates and publicly announces an arear subject to adjustment under Article 63-2 (1) 1 of the Housing Act (Act No. 14866) pursuant to Article 63-2 of the same Act, "area subject to adjustment" means the designated area: <Newly Inserted by Presidential Decree No. 28293, Sep. 19, 2017>
1. Seoul Special Metropolitan CityWhole area
2. Busan Metropolitan CityHaeundae-gu, Yeonje-gu, Dongrae-gu, Nam-gu, Busanjin-gu, Suyeong-gu, and Gijang-gun
3. Gyeonggi-do

Gwacheon-si, Gwangmyeong-si, Seongnam-si, Goyang-si, Namyangju-si, Hanam-si, and Hwaseong-si (limited to the area designated as a housing site development zone in Bansong-dong, Seoku-dong and Geumgok-ri, Mok-ri, Banggyo-ri, Sancheock-ri, Song-ri, Sin-ri, Yeongcheong-ri, Osan-ri, Jangji-ri, Jung-ri, and Cheonggye-ri in Dongtan-myeon)
4. Other regionsThe prearranged area defined in subparagraph 2 of Article 2 of the Special Act on the Construction of Administrative City in Yeongi-Gongju Area for Follow-Up Measures for New Administrative Capital
(3) In applying Article 89 (1) 3 of the Act, where one building consists of a housing area and non-residential area, and where the non-residential building is located on land appurtenant to a house, such whole construction shall be deemed a house: Provided, That, where the total floor space of a house is smaller than or equal to the total floor space of a part other than a house, the part other than a house shall not be deemed a house. <Amended by Presidential Decree No. 19254, Dec. 31, 2005; Presidential Decree No. 22034, Feb. 18, 2010>
(4) In cases falling under the proviso to paragraph (3), land appurtenant to a house shall be calculated by multiplying the area of the whole land by the ratio of the total floor space of a house to the total floor space of a building. <Amended by Presidential Decree No. 22034, Feb. 18, 2010>
(5) The calculation of the period of owning a house under paragraph (1) shall be governed by Article 95 (4) of the Act, and the period of residence under the same paragraph shall be governed by the period from the moving-in date to the date of moving out as recorded on the resident registration card. <Amended by Presidential Decree No. 14860, Dec. 30, 1995>
(6) Deleted. <by Presidential Decree No. 27829, Feb. 3, 2017>
(7) "Multiples prescribed by Presidential Decree by region" in Article 89 (1) 3 of the Act, means the following: <Amended by Presidential Decree No. 18173, Dec. 30, 2003; Presidential Decree No. 19254, Dec. 31, 2005; Presidential Decree No. 22034, Feb. 18, 2010; Presidential Decree No. 23588, Feb. 2, 2012; Presidential Decree No. 25193, Feb. 21, 2014>
1. Land located in an urban area under subparagraph 1 of Article 6 of the National Land Planning and Utilization Act: Five times;
2. Other land: Ten times.
(8) In calculating the period of residence or the period of owning a house pursuant to paragraph (1), the following periods shall be aggregated: <Amended by Presidential Decree No. 20618, Feb. 22, 2008; Presidential Decree No. 22580, Dec. 30, 2010; Presidential Decree No. 28293, Sep. 19, 2017>
1. The period of residing in, or owning a destroyed house and reconstructed house where the house is reconstructed due to loss by fire, collapse, wear, tear, etc. during the period of residing in, or owning it;
2. The period of residing in, or owning a house where a nonresident owns the relevant house for at least three years and is converted into a resident while residing in the house;
3. Where a house is inherited, and the inheritor and inheritee are in the same household as at the time of commencement of inheritance, the period of residing in, and owning the relevant house for the inheritor and inheritee in the same household prior to the commencement thereof.
(9) In applying Article 89 (1) 3 of the Act, if at least two houses are transferred on the same day, such transfer of houses shall be deemed made in accordance with the order selected by the relevant resident. <Newly Inserted by Presidential Decree No. 18173, Dec. 30, 2003; Presidential Decree No. 19254, Dec. 31, 2005>
(10) Where one house for one household under paragraph (1) meets all of the following requirements, paragraph (1) shall apply as if the relevant household owns one house in the Republic of Korea only for the period after the date of transfer of the immediately preceeding residential house under the latter part of Article 155 (20): <Newly Inserted by Presidential Decree No. 23218, Oct. 14, 2011; Presidential Decree No. 26763, Dec. 28, 2015; Presidential Decree No. 27829, Feb. 3, 2017>
1. Such house should have been registered as a rental house under Article 5 of the Special Act on Private Rental Housing;
2. Such household should have had one immediately preceeding residential house under the latter part of Article 155 (20) during the period of owing the relevant house.
(11) "Houses specified by Presidential Decree" in Article 89 (1) 3 (b) of the Act, means the houses that meet the requirements for the application of special provisions concerning one house for one household under Article 155 and thus are governed by this Article. <Newly Inserted by Presidential Decree No. 25193, Feb. 21, 2014>
 Article 154-2 (Calculation of Number of Houses Owned Jointly)
Where many people own one house jointly, each joint owner shall be deemed to own such house when calculating the number of houses, except as otherwise prescribed in this Decree.
[This Article Newly Inserted by Presidential Decree No. 22034, Feb. 18, 2010]
 Article 155 (Special Cases concerning One House for One Household)
(1) Where one household owning one house in the Republic of Korea temporarily becomes the owner of two houses by acquiring another house (including where it acquires by constructing a new one by itself) before it transfers the former house (hereafter in this paragraph, referred to as “former house”), if it acquires another house after at least one year from the date of acquisition of the former house and then transfers the former house within three years (including cases falling under paragraph (18)) from the date of acquiring another house, Article 154 (1) shall apply as if the household owns only one house. In any case falling under Article 154 (1) 1, 2 (a), or 3, the requirements of acquiring another house after at least one year from the date of acquiring the former house shall not apply, and where part of the former house and land appurtenant thereto is purchased through negotiations or expropriated under Article 154 (1) 2 (a), if the relevant remaining house and land appurtenant thereto are transferred within five years from the date of such transfer or expropriation, the transfer of such remaining house and land appurtenant thereto shall be deemed to be included in the transfer or expropriation of the former house and land appurtenant thereto. <Amended by Presidential Decree No. 17555, Mar. 30, 2002; Presidential Decree No. 17825, Dec. 30, 2002; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 21138, Nov. 28, 2008; Presidential Decree No. 23887, Jun. 29, 2012; Presidential Decree No. 24356, Feb. 15, 2013; Presidential Decree No. 27829, Feb. 3, 2017>
(2) Where one household that owns one inherited house (including a newly-built house acquired after completion of a project with an association member's relocation right inherited under the main sentence of Article 89 (2) of the Act (hereinafter referred to as "association member's relocation right"); referring to one house according to the order as listed in the following, where the decedent owns at least two houses at the time of commencement of inheritance) and any other house (limited to the house owned at the time of commencement of inheritance or the newly built house acquired after completion of a project by exercising an association member's relocation right owned at the time of commencement of inheritance; hereafter in this paragraph, referred to as "general house") respectively in the Republic of Korea, transfers the general house, Article 154 (1) shall apply as if the household owns one house in the Republic of Korea: Provided, That, if the heir and the decedent belong to one and the same household and the household owns two houses as a consequence of combination of the household of a person who owns one house and also forms one household with the former household in oder to support a lineal ascendant (including the spouse's lineal ascendant, but limited to where any or all of lineal ascendants are at least 60 years old and the person owns only one house), living together, only the house that the former household has owned since before the combination (hereafter in paragraphs (3) and (7) 1 and Article 156-2 (7) 1, the same shall apply), shall be deemed an inherited house: <Amended by Presidential Decree No. 15565, Dec. 31, 1997; Presidential Decree No. 17751, Oct. 1, 2002; Presidential Decree No. 17825, Dec. 30, 2002; Presidential Decree No. 20618, Feb. 22, 2008; Presidential Decree No. 22034, Feb. 18, 2010; Presidential Decree No. 23588, Feb. 2, 2012; Presidential Decree No. 24356, Feb. 15, 2013; Presidential Decree No. 25193, Feb. 21, 2014; Presidential Decree No. 27829, Feb. 3, 2017>
1. One house for which the holding period by the decedent is the longest;
2. One house for which the period of residence by the decedent is the longest, when there are at least two houses for which the holding period by the decedent has been equal;
3. One house in which the decedent has resided at the time of commencing an inheritance, when there are at least two houses for which the holding period and period of residence by the decedent are all equal;
4. One house whose standard market price is highest (when the standard market prices are the same, one house chosen by the heir), when there are at least two houses in which the decedent has never resided, and for which the holding periods are the same.
(3) In applying Article 154 (1), where any house, other than the co-inherited house (referring to one house owned jointly by many persons by inheritance, but referring to one house in the order listed in paragraph (2), if the decedent owns at least two houses when inheritance commences), is transferred, the co-inherited house shall not be deemed the relevant resident's house: Provided, That the foregoing shall not apply to the heir whose share in inheritance is greatest, but any of the following persons shall be deemed to own the co-inherited house in the order listed in the following, among at least two persons, if heirs who have the greatest share in inheritance are at least two persons: <Amended by Presidential Decree No. 14860, Dec. 30, 1995; Presidential Decree No. 27829, Feb. 3, 2017>
1. A person who resides in the relevant house;
2. Deleted; <by Presidential Decree No. 20618, Feb. 22, 2008>
3. The oldest person.
(4) Where a person owning one house and forming one household comes to combine the households in order to live together and support a lineal ascendent (including his/her spouse's lineal ascendents and further including where one of his/her or spouse’s lineal ascendents is less than 60 years old; hereafter the same shall apply in this Article) of at least 60 years old owning one house, and consequently, one household comes to own two houses, the house first transferred within five years from the combining date shall be deemed one house for one household, and be governed by Article 154 (1). <Amended by Presidential Decree No. 15191, Dec. 31, 1996; Presidential Decree No. 16664, Dec. 31, 1999; Presidential Decree No. 17751, Oct. 1, 2002; Presidential Decree No. 21301, Feb. 4, 2009; Presidential Decree No. 23588, Feb. 2, 2012>
(5) Where a person owning one house comes to own two houses by marrying another person owning one house or where a person owning no house who serves, by living together, his/her lineal ascendant aged at least 60 years old who owns a house comes to own two houses by marrying another person having one house, the house first transferred within five years from the wedding day shall respectively be deemed one house for one household, and be governed by Article 154 (1). <Amended by Presidential Decree No. 15191, Dec. 31, 1996; Presidential Decree No. 16664, Dec. 31, 1999; Presidential Decree No. 17032, Dec. 29, 2000; Presidential Decree No. 17751, Oct. 1, 2002; Presidential Decree No. 20301, Feb. 4, 2009; Presidential Decree No. 23588, Feb. 2, 2012>
(6) Where one household owning any of the following houses and another house (hereafter in this paragraph, referred to as "general house"), each in the Republic of Korea, transfers the general house, such household shall be deemed to own one house in the Republic of Korea, and be governed by Article 154 (1): <Amended by Presidential Decree No. 17825, Dec. 30, 2002; Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 20222, Aug. 17, 2007; Presidential Decree No. 22034, Feb. 18, 2010; Presidential Decree No. 22560, Dec. 29, 2010>
1. Designated cultural property under Article 2 (2) of the Cultural Heritage Protection Act and registered cultural property under Article 53 (1) of the same Act;
2. and 3. Deleted. <by Presidential Decree No. 16112, Feb. 8, 1999>
(7) Where one household owning one of the following houses located in the area of an Eup (excluding an area within an urban area) or Myeon (hereafter in this Article, referred to as "house in an agricultural or fishing village") among the areas outside of the Seoul Metropolitan area defined in subparagraph 1 of Article 2 of the Seoul Metropolitan Area Readjustment Planning Act (hereafter in this Article, referred to as "Seoul Metropolitan area"), and another house (hereafter in this paragraph and paragraphs (11) through (13), referred to as "general house"), each in the Republic of Korea, transfers the general house, such household shall be deemed to own one house in the Republic of Korea, and Article 154 (1) shall apply to the household: Provided, That the same paragraph shall apply to the house referred to in subparagraph 3, only where such general house is transferred to another person within five years from the date of acquisition of the house: <Amended by Presidential Decree No. 18173, Dec. 30, 2003; Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 21138, Nov. 28, 2008; Presidential Decree No. 26982, Feb. 17, 2016>
1. An inherited house (limited to where the decedent has resided therein for at least five years after acquisition);
2. A house of a person abandoning farming (including persons abandoning fisheries; hereafter in this Article the same shall apply), which he/she has resided for at least five years after the date of acquisition;
3. A house of a person returning to a rural area, which he/she acquires for the purpose of farming or fisheries.
(8) Where a household that acquired and owns a house outside of the Seoul Metropolitan area and another house (hereafter in this paragraph, referred to as "general house") due to education prescribed by Ordinance of the Ministry of Strategy and Finance, circumstances for the job, medical treatment of a disease, or any other unavoidable cause or reason (hereafter in this paragraph, referred to as “unavoidable cause”), transfers the general house to someone within three years from the date the unavoidable cause is resolved, such household shall be deemed to own one house in the Republic of Korea and Article 154 (1) shall apply to the household. <Newly Inserted by Presidential Decree No. 21138, Nov. 28, 2008; Presidential Decree No. 23588, Feb. 2, 2012>
(9) "House of a person abandoning farming" in paragraph (7) 2, means a house in which the whole or part of family members living with a resident or his/her spouse, cannot reside any longer because those who have once engaged in farming or fishing have moved into any other Si (including an administrative Si established pursuant to Article 10 (2) of the Special Act on the Establishment of Jeju Special Self-Governing Province and the Development of Free International City), Gu (referring to a Gu in the Special Metropolitan City or a Metropolitan City), Eup, or Myeon due to change of their job, and which is owned by those who have ceased farming. <Amended by Presidential Decree No. 14860, Dec. 30, 1995; Presidential Decree No. 24356, Feb. 15, 2013; Presidential Decree No. 26922, Jan. 22, 2016>
(10) "House of a person returning to a rural area" in paragraph (7) 3, means a house a person who intends to engage in farming or fishing acquired (including houses acquired before returning to a rural area) and has resided, meeting the following conditions: <Amended by Presidential Decree No. 15747, Apr. 1, 1998; Presidential Decree No. 17825, Dec. 30, 2002; Presidential Decree No. 19890, Feb. 28, 2007; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 21301, Feb. 4, 2009; Presidential Decree No. 25193, Feb. 21, 2014; Presidential Decree No. 26982, Feb. 17, 2016; Presidential Decree No. 27074, Mar. 31, 2016>
1. Deleted; <by Presidential Decree No. 26982, Feb. 17, 2016>
2. A house shall not fall under an expensive house under Article 156;
3. The plottage shall not exceed 660 square meters;
4. Any of the following houses shall be acquired for farming or fishing:
(a) A house shall be located in farmland of an area of at least 1,000 square meters (referring to the location of farmland under Article 153 (3) of the Act; hereafter in this Article the same shall apply) and acquired by the person who owns the farmland;
(b) A house shall be situated in the location of farmland of an area of at least 1,000 square meters and acquired within one year before the relevant person owns the farmland;
(c) A house shall be acquired by a fisherman specified by Ordinance of the Ministry of Strategy and Finance;
5. All family members shall move into and reside in the house (including where some of the family members are unable to live together due to schooling, workplace situations, medical care for a disease, or any other inevitable cause specified by Ordinance of the Ministry of Strategy and Finance).
(11) Where the whole household members move into a house in an agricultural or fishing village due to return to farming, the provisions of the main sentence of paragraph (7) shall apply only to one general house first transferred after a return to farming.
(12) Where the owner of a house as a returned farmer or fisherman eligible for the application of paragraph (7) fails to engage in farming or fishing continually for at least three years from the day he/she returns for farming or fishing (referring to the day he/she transfers his/her resident registration to the house owned as a returned farmer or fisherman and begins to reside in the house, or referring to the day he/she acquires farmland after he/she transfers his/her resident registration to the house owned as a returned farmer and begins to reside in the house, if the person acquires farmland after he/she acquires the house under paragraph (10) 4 (b)) or does not reside in the relevant house for the period, the transferred general house shall not be deemed one house for one household, and the owner of the house owned as a returned farmer or fisherman shall report and pay the amount computed by the following formula as capital gains tax within two months from the end of the month in which he/she ceases to engage in farming or fishing for at least three years or ceases to reside in the house for the period. In such cases, if inheritance commences during such period, the period of farming or fishing by the decedent and the period of farming or fishing by the heir shall be aggregated in calculating the period of three years. <Amended by Presidential Decree No. 24356, Feb. 15, 2013; Presidential Decree No. 27074, Mar. 31, 2016>
Capital gain tax to be paid = Amount of tax that would have been paid, had paragraph (7) not applied at the time of transferring the general house - Amount of tax that was paid according to paragraph (7) at the time of transferring the general house
(13) Anyone who intends to be eligible for the application of paragraph (7) shall file an application of the special case of one house for one household that is prescribed by Ordinance of the Ministry of Strategy and Finance, accompanied by documents prescribed by Ordinance of the Ministry of Strategy and Finance, within the deadline for filing a return on the tax base of capital gains tax provided for in Article 105 or 110 of the Act. In such cases, the head of the competent tax office having jurisdiction over the place for tax payment shall confirm the following documents by mutual use of the administrative information provided for in Article 36 (1) of the Electronic Government Act, and where the person who has made the report does not consent to such confirmation in cases falling under subparagraph 1, the head of the competent tax office having jurisdiction over the place for tax payment shall request him/her to submit such documents: <Amended by Presidential Decree No. 19507, Jun. 12, 2006; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 21215, Dec. 31, 2008; Presidential Decree No. 22151, May 4, 2010; Presidential Decree No. 23588, Feb. 2, 2012>
1. The certified copy/abstract of his/her resident registration card;
2. The certified copy of the land/building ledger and register of his/her general house;
3. The certified copy of the land/building ledger and register of his/her house in an agricultural and fishing village;
4. The certified copy of the register of acquired agricultural land.
(14) In applying paragraphs (7) through (13), matters necessary for the scope of houses in an agricultural and fishing village shall be determined by Ordinance of the Ministry of Strategy and Finance. <Amended by Presidential Decree No. 15747, Apr. 1, 1998; Presidential Decree No. 20720, Feb. 29, 2008>
(15) In applying Article 154 (1), each divided unit of a multi-family house under subparagraph 1 (c) of attached Table 1 to the Enforcement Decree of the Building Act shall be deemed one housing unit, if one household can dwell independently in the unit: Provided, That, if each divided unit of a multi-family house is not sold separately, but the house is wholly sold as one unit for sale, the whole of the house shall be deemed one house. <Amended by Presidential Decree No. 23588, Feb. 2, 2012; Presidential Decree No. 26067, Feb. 3, 2015>
(16) In applying paragraph (1), "three years" in paragraph (1) shall be construed as "five years", where a corporation located in the Seoul Metropolitan area or a public agency defined in subparagraph 9 of Article 2 of the Special Act on Balanced National Development is relocated to an area outside of the Seoul Metropolitan area and another house acquired by a household of which an executive or employee of the corporation, or a worker of the public agency is a member, is situated in the Si (including a Special Self-Governing City, a Metropolitan City, and an administrative Si established pursuant to Article 10 (2) of the Special Act on the Establishment of Jeju Special Self-Governing Province and the Development of Free International City; hereafter the same shall apply in this paragraph) or Gun to which the public agency or corporation is relocated or an area of another Si/Gun adjoining to the Si/Gun. In such cases, the requirement of acquiring another house after at least one year from the date of acquisition of the previous house shall not apply to the one household concerned. <Amended by Presidential Decree No. 23887, Jun. 29, 2012; Presidential Decree No. 24356, Feb. 15, 2013; Presidential Decree No. 25249, Mar. 11, 2014; Presidential Decree No. 26922, Jan. 22, 2016>
(17) "Where the value of the right to acquire a house as an association member exceeds the standard specified by Presidential Decree" in the proviso to Article 89 (1) 4 of the Act, means where the sum of actual trading price at the time of transferring the right to acquire a house as an association member exceeds 900 million won. <Amended by Presidential Decree No. 27829, Feb. 3, 2017>
(18) "Causes specified by Presidential Decree" in Article 89 (1) 4 (b) of the Act, means the following cases as at the third anniversary of the date of acquisition of another house where a house is transferred by sale or through any of the following transactions: <Newly Inserted by Presidential Decree No. 27829, Feb. 3, 2017>
2. A petition for an auction is filed with a court;
3. A public auction under the National Tax Collection Act is pending;
4. Where a lawsuit filed by an owner of land, etc. who is entitled to a payment in cash under Article 47 of the Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents for implementing a housing redevelopment project or a housing reconstruction project under the same Act is pending to seek the payment in cash from the project implementor or where proceedings for a lawsuit were completed but the relevant payment has not been settled.
(19) In applying paragraphs (2) and (3), where an inherited house fails to be divided in consultation to be registered pursuant to Article 1013 of the Civil Act by the time a house, other than an inherited house, is transferred, it shall be deemed that the inheritor owns the inherited house, as designated by his/her share of inheritance under Articles 1009 and 1010 of the same Act: Provided, That, where he/she divides the inherited house in consultation and registers it, after transferring a house, other than the inherited house, within the period of limitation for imposition of national taxes under Article 26-2 of the Framework Act on National Taxes, a person who has to additionally pay capital gain tax because Article 154 (1) was previously applied to him/her pursuant to paragraphs (2) and (3) before the said registration and the said Article 154 (1) became not applied after the registration shall report and pay the amount, as a capital gains tax, calculated in accordance with the below formula within two months from the last day of the month to which the date of registration belongs: <Amended by Presidential Decree No. 24356, Feb. 15, 2013>
Capital gain tax to be paid = Amount of tax that would have been paid had paragraph (2) or (3) not applied at the time of transferring a general house - Amount of tax that was paid after application of paragraph (2) or (3) at the time of transferring a general house
(20) Where one household owning a house under Article 167-3 (1) 2 (hereafter in this Article, referred to as "long-term rental house") and another house in the Republic of Korea meets the following requirements and transfers the other house (hereafter in this Article, referred to as "residing house"), Article 154 (1) shall apply as if the household owns one house in the Republic of Korea. In such cases, where the residing house has been registered as a rental house under Article 5 of the Special Act on Private Rental Housing and the household had another residing house (referring to the house sold the most lately, if a household sold at least two residing houses during the period of owning a still another house; hereinafter referred to as "immediately preceding residing house") in addition to a residing house (hereafter in this paragraph, referred to as "house owned in addition to the immediately preceding residing house"), Article 154 (1) shall apply, only for the period after the date of transfer of the immediately preceding residing house, as if the household owns one house in the Republic of Korea during the same period. <Newly Inserted by Presidential Decree No. 23218, Oct. 14, 2011; Presidential Decree No. 23588, Feb. 2, 2012; Presidential Decree No. 24356, Feb. 15, 2013; Presidential Decree No. 26067, Feb. 3, 2015; Presidential Decree No. 26763, Dec. 28, 2015; Presidential Decree No. 27829, Feb. 3, 2017>
1. Residing house: The period of residence (referring to the period of residence after the date when the relevant household completes business registration under Article 168 of the Act and registration as a rental house business operator under Article 5 of the Special Act on Private Rental Housing with respect to the house owned in addition to the immediately preceding residing house) shall be at least two years;
2. Long-term rental house: The household shall be registered as a business operator under Article 168 of the Act as at the date of transfer and has a long-term rental house registered as a private rental house and rented under Article 5 of the Special Act on Private Rental Housing.
(21) Even where one household transfers its residential house before meeting the lease period requirements for a long-term rental house (hereafter in this Article, referred to as "lease period requirements"), Article 20 shall apply by deeming that the relevant rental house is a long-term rental house. <Newly Inserted by Presidential Decree No. 23218, Oct. 14, 2011; Presidential Decree No. 27829, Feb. 3, 2017>
(22) Where one household is no longer able to meet the lease period requirements after being subject to paragraph (21) (including where the period during which it fails to meet the required number of leased units for a long-term rental has elapsed six months), the amount calculated pursuant to the formula under subparagraph 1 shall be reported and paid within two months from the last day of the month to which the date of failure to meet the lease period requirements belongs. In such cases, where falling under the special cases of calculation of lease period requirements in subparagraph 2, the relevant provisions thereof shall govern: <Amended by Presidential Decree No. 23588, Feb. 2, 2012; Presidential Decree No. 24356, Feb. 15, 2013; Presidential Decree No. 27829, Feb. 3, 2017>
1. Calculation formula for the capital gains tax to be paid:
Amount of tax that should have been paid where not regarding the relevant rental house as a long-term rental house at the time of transfer of the residential house - Amount of tax that has been paid by applying paragraph (20) at the time of transfer of the residential house;
2. Special cases of calculation of lease period requirements:
(a) Where a household becomes unable to meet the lease period requirements or where unable to lease the number of units required to be leased due to unavoidable causes prescribed by Ordinance of the Ministry of Strategy and Finance, such as expropriation under the Act on Acquisition of and Compensation for Land, etc. for Public Works Projects, it shall be deemed to lease the relevant rental house continuously;
(b) Where there is a ground for a house redevelopment project under the Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents (hereinafter referred to as "house redevelopment project") or a house reconstruction project pursuant to the same Act (hereinafter referred to as "house reconstruction project"), in order to calculate the period not leasing the units required to be leased, the period from six months before the date of authorizing a plan for management disposal of the house concerned until six months after the date of completion of such house shall not be included.
(23) Any person who intends to be governed by Article 20 shall submit a report of tax base for the taxable period to which the date of transfer of the residential house belongs and an application prescribed by Ordinance of the Ministry of Strategy and Finance, together with the following documents, to the head of the competent tax office having jurisdiction over the place for tax payment: <Newly Inserted by Presidential Decree No. 23218, Oct. 14, 2011; Presidential Decree No. 23588, Feb. 2, 2012; Presidential Decree No. 26763, Dec. 28, 2015; Presidential Decree No. 27829, Feb. 3, 2017>
1. A certificate of registration as a rental business operator under Article 4 (4) of the Enforcement Decree of the Special Act on Private Rental Housing;
2. A copy of the lease contract of the long-term rental house;
3. A certified copy or a copy of resident registration record card of the lessee;
4. Other documents prescribed by Ordinance of the Ministry of Strategy and Finance.
(24) The head of the competent tax office having jurisdiction over the place for tax payment in receipt of a report under paragraph (23) shall verify the following documents by sharing administrative information provided for in Article 36 (1) of the Electronic Government Act and, if the applicant does not consent to the verification of the document mentioned in subparagraph 1, he/she shall request the applicant to submit the document: <Newly Inserted by Presidential Decree No. 23218, Oct. 14, 2011; Presidential Decree No. 23588, Feb. 2, 2012; Presidential Decree No. 27829, Feb. 3, 2017>
1. A certified copy/extract of resident registration record card;
2. Certified copies of land/building ledger and register of the residential house;
3. A certified copy of register of a long-term rental house or certified copies of land/building ledger.
 Article 155-2 (Special Cases concerning One House for One Household on House of Long-Term Security)
(1) Where one household owning one house in the Republic of Korea transfers a house offered as security for long-term mortgage (hereafter referred to as "house for long-term mortgage" in this Article) after concluding a loan contract with a long-term mortgage equipped with requirements of each of the following subparagraphs, in applying the provisions of Article 154 (1), it shall not be subject to the restrictions on residing period: <Amended by Presidential Decree No. 20720, Feb. 29, 2008>
1. The participant who has offered a house for security as of the date of concluding a contract shall be over 60 years of age;
2. A period of a contract for long-term mortgage is over 10 years, and it shall be on condition that the loan money shall be received until maturity each month, each quarter, or other methods prescribed by Ordinance of the Ministry of Strategy and Finance;
3. It shall be on condition of contract that the loan shall be refunded at one time by disposing of relevant house at maturity.
(2) Where a person owning one house and consisting one household be- comes to own two houses by one household as he/she joins the house- holds in order to serve, by living together, the lineal ascendants owning a house on long-term mortgage (including the lineal ascendants of spouse), with regard to the house transferred first, it shall be deemed to have one house in the Republic of Korea and the provisions of Article 154 (1) shall apply, but the house on long-term mortgage shall not be subject to a restriction on residing period.
(3) Where one household transfers a house on long-term mortgage before expiration of contract period under paragraph (1), the provisions of paragraphs (1) and (2) shall not be applicable.
(4) Anyone who intends to be eligible for the application of the provisions of paragraph (2) shall make a report on the application of the special case for a long-term mortgaged house that is prescribed by Ordinance of the Ministry of Strategy and Finance, accompanied by the loan contract referred to in the provisions of paragraph (1), for the long-term mortgaged house, within the deadline for filing a return on the tax base of capital gains tax provided for in Article 105 or 110 of the Income Tax Act. In such cases, the head of the competent tax office having jurisdiction over the place for tax payment shall confirm the following documents by common use of the administrative information provided for in Article 36 (1) of the Electronic Government Act: <Amended by Presidential Decree No. 19507, Jun. 12, 2006; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 21215, Dec. 31, 2008; Presidential Decree No. 22151, May 4, 2010>
1. The certified copy of the land and building register of other house than the long-term mortgaged house;
2. The certified copy of the land and building register of the long-term mortgaged house.
[This Article Newly Inserted by Presidential Decree No. 18705, Feb. 19, 2005]
 Article 156 (Scope of High-Priced Houses)
(1) "High-priced house, the value of which exceeds the standard prescribed by Presidential Decree" in the part other than the subparagraphs of Article 89 (1) 3 of the Act, means a house, including land appurtenant thereto, whose aggregate of actual trade values at the time of transfer [referring to the amount obtained by dividing the total of actual transaction price by the ratio of the area of the part that is transferred (including the part held by another person) to the total area of the house where a house and part of land appurtenant thereto are transferred or the part is held by another person] exceeds 900 million won. <Amended by Presidential Decree No. 19254, Dec. 31, 2005; Presidential Decree No. 20618, Feb. 22, 2008; Presidential Decree No. 21062, Oct. 7, 2008; Presidential Decree No. 22034, Feb. 18, 2010; Presidential Decree No. 25193, Feb. 21, 2014>
(2) In applying the provisions of paragraph (1), the actual trade values falling under the portion deemed a house under the main sentence of Article 154 (3) (including the land appurtenant thereto) shall be included.
(3) In cases of a multi-family house deemed a single house under Article 155 (15), the provisions of paragraph (1) shall apply by deeming the whole of them one house.
[This Article Wholly Amended by Presidential Decree No. 17825, Dec. 30, 2002]
 Article 156-2 (Special Cases concerning One House for One Household in Cases of Owning House and Association Member's Relocation Right)
(1) Deleted. <by Presidential Decree No. 27829, Feb. 3, 2017>
(2) "Circumstances specified by Presidential Decree" in the proviso to Article 89 (2) of the Act, means cases falling under paragraphs (3) through (11). <Amended by Presidential Decree No. 22034, Feb. 18, 2010>
(3) Where one household owning one house in the Republic of Korea comes to temporarily own one house and one association member's relocation right by acquiring the association member's relocation right before transferring the relevant house (hereafter referred to as “previous house” in this paragraph), and where the previous house is transferred within three years from the date of acquiring the association member's relocation right which was acquired at least one year after the date of acquiring the previous house (including cases corresponding to the reasons prescribed by Ordinance of the Ministry of Strategy and Finance, which is cases where it may not be transferred within three years), it shall be deemed one house for one household, and Article 154 (1) shall apply. In such cases, where falling under Article 154 (1) 1, 2 (a), and 3, the requirement of acquisition of the association member's relocation right at least one year after the date of acquiring the previous house shall not apply. <Amended by Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 21138, Nov. 28, 2008; Presidential Decree No. 23887, Jun. 29, 2012; Presidential Decree No. 24356, Feb. 15, 2013>
(4) Where one household owning one house in the Republic of Korea comes to own temporarily one house and one association member's relocation right by acquiring the association member's relocation right before transferring the relevant house, and where the previous house is transferred after three years elapse from the date of acquiring the association member's relocation right, and when all the following requirements are satisfied, it shall be deemed one house for one household, and Article 154 (1) shall apply: <Amended by Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 21138, Nov. 28, 2008; Presidential Decree No. 23588, Feb. 2, 2012; Presidential Decree No. 23887, Jun. 29, 2012>
1. All members of a household shall move (including where some of constituents of a household may not be moved by entering school prescribed by Ordinance of the Ministry of Strategy and Finance, status in work, medical treatment of diseases, and other inevitable reasons) into a house within two years after the completion of the house acquired according to a management disposal plan of the house redevelopment project or the house reconstruction project, and continuously reside in the house for at least one year;
2. The previous house shall be transferred within two years before or after the completion of a house acquired under a management disposal plan for the house redevelopment project or house reconstruction project.
(5) Where one household owning one house in the Republic of Korea has acquired another house (hereafter referred to as "substitute house" in this paragraph) for residing for the period of implementation of the house redevelopment project or the house reconstruction project for the relevant house, and transfers the substitute house by meeting all the following requirements, it shall be deemed one house for one household, and Article 154 (1) shall apply thereto. In such cases, the restrictions of holding period or residing period under Article 154 (1) shall not apply: <Amended by Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 21138, Nov. 28, 2008; Presidential Decree No. 22034, Feb. 18, 2010; Presidential Decree No. 23588, Feb. 2, 2012; Presidential Decree No. 25193, Feb. 21, 2014>
1. It shall reside for at least one year by acquiring the substitute house after the approval date of project implementation of the house redevelopment project or the house reconstruction project;
2. It shall reside for a continuous period of at least one year after all members of a household moving (including where some of the family members are unable to live together due to schooling, workplace situations, medical care for a disease, or any other inevitable cause specified by Ordinance of the Ministry of Strategy and Finance) into the relevant house within two years after the completion of house acquired under the management disposal plans for the house redevelopment project or the house reconstruction project: Provided, That where all members of a household depart from the Republic of Korea because they need to live in a foreign country for a continuous period of at least one year on account of entering school or work within two years after the completion of a house, they shall live in a house for a continuous period of at least one year after returning home when there is no reason for departure from the Republic of Korea (only applicable where such need for departure ceases to exist within three years after departure);
3. It shall transfer the substitute house within two years before or after the completion of house acquired under the management disposal plans for the house redevelopment project or the house reconstruction project.
(6) Where one household owning the succeeded association member's relocation right (only applicable to the succeeded association member's relocation right where the inheritee does not own a house at the time of commencement of inheritance and only applicable to one association member's relocation right in the order of the following where the inheritee holds at least two association member's relocation rights at the time of commencement of inheritance) and another house (applicable only to the house owned at the time of commencement of inheritance or the newly built house acquired after the completion of a project by exercising an association member's relocation right owned at the time of commencement of inheritance; hereafter referred to as "general house" in this paragraph) respectively in the Republic of Korea transfers the general house, it shall be deemed to have one house in the Republic of Korea, and Article 154 (1) shall apply: Provided, That where an inheritor and an inheritee form one household at the time of commencement of inheritance, it shall be deemed an association member's relocation right inherited only where any person who owns one house and forms one household becomes the owner of two houses by combining households to provide for his/her lineal ascendants (including lineal ascendants of his/her spouse; only applicable where any one or all of them are aged 60 and over and own one house as of the date of unification), and such house owned before combining households is changed to an association member's relocation right (hereafter the same shall apply in paragraph (7) 2): <Amended by Presidential Decree No. 22034, Feb. 18, 2010; Presidential Decree No. 23588, Feb. 2, 2012; Presidential Decree No. 24356, Feb. 15, 2013; Presidential Decree No. 25193, Feb. 21, 2014>
1. One association member's relocation right for which the inheritee's holding period (referring to the aggregate period of the period of owning a house and the period of owning an association member's relocation right; hereafter the same shall apply in this paragraph) is the longest;
2. Where at least two association member's relocation rights exist for which the holding period of an inheritee is the same, one association member's relocation right for which the inheritee's residing period (referring to the period of residing in the house; hereafter the same shall apply in this paragraph) is the longest;
3. Where at least two association member's relocation rights exist for which the holding period of the inheritee and that resided by him/her are all same, one association member's relocation right selected by the inheritor.
(7) Where one household owning one house under subparagraph 1, or one association member's relocation right under subparagraph 2, one house acquired by the reason other than inheritance (hereafter referred to as "general house" in this paragraph) and one member's relocation right acquired by the reason other than inheritance respectively in the Republic of Korea transfers the general house, it shall be deemed to have the general house and the association member's relocation right acquired by reason other than inheritance in the Republic of Korea, and the provisions of paragraphs (3) through (5) shall apply. In such cases, the general house subject to application of paragraphs (3) and (4) shall be limited to the house owned at the time of initiation of inheritance: <Amended by Presidential Decree No. 24356, Feb. 15, 2013>
1. Inherited house. In such cases, where an inheritee owns at least two houses at the time of commencing the inheritance, it shall be limited to one house under the order of each subparagraph of Article 155 (2);
2. Inherited association member's relocation right where an inheritee does not own any house at the time of commencing the inheritance. In such cases, where the inheritee owns at least two association member's relocation rights at the time of commencing inheritance, it shall be limited to one association member's relocation right under the order under each subparagraph of paragraph (6).
(8) Where one household owns one house and one association member's relocation right, one house and two association member's relocation rights, two houses and one association member's relocation right, or two houses and two association member's relocation rights, as a person falling under subparagraph 1 unites the households in order to care for a person falling under subparagraph 2 by living together, and where the house first transferred (hereafter referred to as "house first transferred" in this paragraph and paragraph (9)) within five years from the date of unity falls under any of the houses under subparagraph 3, 4, or 5, it shall be deemed one house for one household, and Article 154 (1) shall apply: <Amended by Presidential Decree No. 21301, Feb. 4, 2009; Presidential Decree No. 23588, Feb. 2, 2012; Presidential Decree No. 24356, Feb. 15, 2013>
1. A person who constitutes one household and owns any of the following:
(a) One house;
(b) One association member's relocation right;
(c) One house and one association member's relocation right;
2. A lineal ascendant (including lineal ascendants of one’s spouse and includes where any one of them is less than 60 years old) of at least 60 years old who owns any of the following:
(a) One house;
(b) One association member's relocation right;
(c) One house and one association member's relocation right;
3. A house which a person falling under subparagraph 1 (a) or 2 (a) owns before the date of unity;
4. A house which a person falling under subparagraph 1 (c) or 2 (c) owns before the date of unity: Provided, That it shall be limited to where any of the following requirements has been fulfilled:
(a) Where an association member's relocation right he/she owns before the date of unity (referring to an association member's relocation right owned by the person who owns the first transferred house before the date of unity; hereafter referred to as "association member's relocation right before the unity" in this paragraph) is what acquired first due to approval of management disposal plans under the provisions of Article 48 of the Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents (hereafter referred to as "first association member's relocation right" in paragraph (9)), the first transferred house shall be acquired after the approval date of project implementation for residing in during the implementation period of such house redevelopment project or house reconstruction project and it shall have been resided in for at least one year after acquisition;
(b) Where an association member's relocation right before the unity is what has been acquired in succession due to a transaction, etc., the first transferred house shall be what has been owned before acquisition of association member's relocation right before the unity;
5. A house to be acquired, thanks to the one association member's relocation right owned by a person falling under subparagraph 1 (b) or 2 (b) before the date of unity, after the date of unity in accordance with a management disposal plan for the house redevelopment project or the house reconstruction project.
(9) Where a person falling under subparagraph 1 is married with another person falling under subparagraph 1, one household owns one house and one association member's relocation right, one house and two association member's relocation rights, two houses and one association member's relocation right, or two houses and two association member's relocation rights, and the first transferred house within five years from the date of marriage falls under any of the houses under subparagraph 2, 3, or 4, it shall be deemed one house for one household, and Article 154 (1) shall apply: <Amended by Presidential Decree No. 21301, Feb. 4, 2009; Presidential Decree No. 24356, Feb. 15, 2013>
1. A person who owns any of the following:
(a) One house;
(b) One association member's relocation right;
(c) One house and one association member's relocation right;
2. A house which a person falling under subparagraph 1 (a) owns before the date of marriage;
3. A house which a person falling under subparagraph 1 (c) owns before the date of marriage: Provided, That it shall be limited to where any of the following requirements is met:
(a) Where an association member's relocation right he/she owns before the date of marriage (referring to an association member's moving right possessed by a person who has owned the first transferred house before the date of marriage; hereafter referred to as "association member's relocation right before the marriage" in this paragraph) is the first association member's relocation right, the first transferred house is what has been acquired after the approval date of project implementation for residing during the period of implementing a house redevelopment project or house reconstruction project, and it shall be resided in for at least one year after acquisition;
(b) Where an association member's relocation right before marriage is what has been acquired in succession due to a transaction, etc., the first transferred house is what has been owned before the acquisition of association member's relocation right before marriage;
4. A house to be acquired, thanks to the one association member's relocation right owned by a person falling under subparagraph 1 (b) before the date of marriage, after the date of marriage in accordance with a management disposal plan for the house redevelopment project or the house reconstruction project.
(10) Where one household owning one house falling under Article 155 (6) 1, another house (hereafter referred to as "general house" in this paragraph), and one association member's relocation right in the Republic of Korea respectively transfers the general house, it shall be deemed to own the general house and the association member's relocation right in the Republic of Korea, and the provisions of paragraphs (3) through (5) shall apply.
(11) Where one household owning, from among houses in an agricultural and fishing village under the provisions of Article 155 (7), one house for ceasing farming under Article 155 (7) 2 and another house (hereafter referred to as "general house" in this Article) and one association member's relocation right in the Republic of Korea respectively transfers the general house, it shall be deemed to own the general house and the association member's relocation right in the Republic of Korea, and the provisions of paragraphs (3) through (5) shall apply.
(12) A person intending to be subject to paragraphs (3) through (11) shall submit a written report on special case application for one house for one household for the owner of an association member's relocation right, prescribed for by Ordinance of the Ministry of Strategy and Finance, together with the following documents within the deadline for the tax base report of capital gains tax under the provisions of Article 105 or 110 of the Act: <Amended by Presidential Decree No. 19507, Jun. 12, 2006; Presidential Decree No. 20720, Feb. 29, 2008>
1. The copy of the resident registration certificate (limited to where it is impossible to confirm based on the resident registration card);
2. Deleted; <by Presidential Decree No. 19507, Jun. 12, 2006>
3. The certified copy of the land and building register of a house before conversion into an association member's relocation right: Provided, That it shall be limited to a person subject to an application of the provisions of paragraph (5) (including cases subject to an application of paragraph (5) pursuant to the provisions of paragraphs (7) through (11));
4. Deleted; <by Presidential Decree No. 19507, Jun. 12, 2006>
5. Other documents prescribed by Ordinance of the Ministry of Strategy and Finance.
(13) When one household subjected to an application of the provisions of paragraph (4) or (5) (including one household subjected to the provisions of paragraph (4) or (5) pursuant to paragraph (7), (10), or (11)) fails to meet the requirements of paragraph (4) 1 or (5) 2, it shall report and pay the amount of tax that would have been paid if the household had not subjected to application of paragraph (4) or (5) at the time of transfer of house, as capital gains tax, within two months from the last day of the month to which the date the cause has occurred belongs. <Amended by Presidential Decree No. 24356, Feb. 15, 2013>
(14) The head of the competent tax office having jurisdiction over the place over tax payment, who receives a written report on special case application of one house for one household for the owner of an association member's relocation right pursuant to paragraph (12), shall confirm the following documents by mutual use of the administrative information provided for in Article 36 (1) of the Electronic Government Act: Provided, That where a person who has made the report does not consent to the confirmation in cases falling under subparagraph 1, the head of the competent tax office having jurisdiction over the place for tax payment shall request him/her to submit such documents: <Newly Inserted by Presidential Decree No. 19507, Jun. 12, 2006; Presidential Decree No. 21215, Dec. 31, 2008; Presidential Decree No. 22151, May 4, 2010>
1. The certified copy of his/her resident registration card;
2. The certified copy of the land and building register of his/her house transferred;
3. The certified copy of the land and building register of his/her house in an agricultural and fishing village (limited to cases falling under paragraph (11)).
[This Article Newly Inserted by Presidential Decree No. 19254, Dec. 31, 2005]
SECTION 3 Calculation of Amount of Capital Gains
 Article 157 (Scope of Majority Stockholders of Listed Corporations)
(1) Deleted. <by Presidential Decree No. 27829, Feb. 3, 2017>
(2) and (3) Deleted. <by Presidential Decree No. 17032, Dec. 29, 2000>
(4) "A majority stockholder of any of the listed corporations specified by Presidential Decree" in Article 94 (1) 3 (a) (i) of the Act, means any of the following persons (hereafter in this Article and Article 167-8, referred to as "majority stockholder of a listed corporation"): <Amended by Presidential Decree No. 16664, Dec. 31, 1999; Presidential Decree No. 17032, Dec. 29, 2000; Presidential Decree No. 18705, Feb. 19, 2005; Presidential Decree No. 18988, Aug. 5, 2005; Presidential Decree No. 21301, Feb. 4, 2009; Presidential Decree No. 22580, Dec. 30, 2010; Presidential Decree No. 23588, Feb. 2, 2012; Presidential Decree No. 24356, Feb. 15, 2013; Presidential Decree No. 24640, Jun. 28, 2013; Presidential Decree No. 24697, Aug. 27, 2013; Presidential Decree No. 26982, Feb. 17, 2016; Presidential Decree No. 27074, Mar. 31, 2016; Presidential Decree No. 27829, Feb. 3, 2017>
1. Where the ratio (hereafter in this Article and Article 167-8, referred to as "ratio of stock holdings") of the sum of stocks, etc. held by one stockholder or one investor (hereafter in this Chapter, referred to as "one stockholder") holding stocks, etc. of a corporation and the following persons (hereafter in this Chapter, referred to as "other related stockholders"), as at the end of the business year immediately preceding the business year in which stocks, etc. are transferred, to the total number of stocks, etc. of the corporation is at least 1/100, the relevant stockholder and other related stockholders. In such cases, when the ratio is less than 1/100 as at the end of the immediately preceding business year, but it becomes at least 1/100 as a result of acquiring stocks, etc. later, the relevant stockholder and other related stockholders after the date of acquisition shall be included herein:
(a) Where the ratio of stock holdings of one stockholder and persons who have a special relationship defined in Article 43 (8) 1 of the Enforcement Decree of the Corporate Tax Act, (hereafter in this Article, referred to as "one stock holder, etc.") is the greatest, among those of one stockholder, etc. of the relevant corporation: Any of the following persons:
(b) Where the ratio of stock holdings of one stockholder, etc. is not the greatest, among those of one stockholder, etc. of the relevant corporation: Any of the following persons:
(i) A lineal ascendant or descendant;
2. Where the total market price of stocks, etc. of the relevant corporation (hereafter in this Article and Article 167-8, referred to as "total market price"), which are owned by one stockholder and other related stockholders at the end of the business year immediately preceding the business year such stocks, etc. are transferred, is at least any of the following amounts, the relevant stockholder and other related stockholders:
(a) Where stocks, etc. are transferred on or before March 31, 2018: 2.5 billion won;
(b) Where stocks, etc. are transferred during the period from April 1, 2018 to March 31, 2020: 1.5 billion won;
(c) Where stocks, etc. are transferred on or after April 1, 2020: One billion won.
(5) Notwithstanding paragraph (4) 1 and 2, if the ratio or total market price of stock holdings of one stockholder and other related persons falls under any of the following criteria, the relevant stockholder and other related stockholders shall be deemed majority stockholders. In such cases, when the ratio of stock holdings falls short of the criteria as at the end of the immediately preceding business year but meets the criteria later by acquiring stocks, etc., the relevant stockholder and other related stockholder from the date of acquisition of stocks, etc. on shall be included in majority stockholders: <Newly Inserted by Presidential Decree No. 26982, Feb. 17, 2016; Presidential Decree No. 27829, Feb. 3, 2017>
1. In cases of stocks, etc. of a KOSDAQ-listed corporation (referring to a corporation that has issued stock certificates listed on the KOSDAQ market under Article 8 of the Addenda to the Enforcement Decree of the Financial Investment Services and Capital Markets Act (Presidential Decree No. 24697) (hereinafter referred to as "KOSDAQ")): Where the ratio of stock holdings is at least 2/100 or the total market price is at least any of the following amounts:
(a) Where stocks, etc. are transferred on or before March 31, 2018: Two billion won;
(b) Where stocks, etc. are transferred during the period from April 1, 2018 to March 31, 2020: 1.5 billion won;
(c) Where stocks, etc. are transferred on or after April 1, 2020: One billion won;
2. In cases of stocks, etc. of a KONEX-listed corporation (referring to a corporation that has issued stock certificates listed on the KONEX market under Article 11 (2) of the Enforcement Decree of the Financial Investment Services and Capital Markets Act (hereinafter referred to as "KONEX")): Where the ratio of stock holdings is at least 4/100 or the total market price is at least one billion won;
3. Deleted. <by Presidential Decree No. 27829, Feb. 3, 2017>
(6) The total market price under paragraphs (4) 2 and (5) shall be determined with the final market price as at the end of the business year immediately preceding the business year in which stocks, etc. are transferred: Provided, That it shall be determined with the final market value on the immediately preceding trading day, if no final market price at the end of the immediately preceding business year is unavailable. <Amended by Presidential Decree No. 27829, Feb. 3, 2017>
(7) When applying paragraphs (4) and (6), if a stockholder of a merged corporation has been issued new stocks of a merging corporation in the course of the merger and transfers such stocks in the business year to which the date of registration of merger belongs, the scope of majority stockholders, etc. shall be based on the present status of stockholding as of the date of registration of merger of the relevant merged corporation. <Newly Inserted by Presidential Decree No. 22034, Feb. 18, 2010>
(8) In applying paragraphs (4) and (6), where a stockholder of a divided corporation receives new shares of the corporation newly established after division and transfers the shares in the business year to which the date of incorporation-registration of the newly established corporation belongs or transfers shares of the divided corporation after the date of division-registration during the business year to which the date of the division-registration belongs, concerning the scope, etc. of majority stockholders, it shall be governed by the share ownership status as of the date of division-registration of the corporation existed before the division concerned. <Newly Inserted by Presidential Decree No. 24356, Feb. 15, 2013>
(9) Where a stockholder lends stocks, etc. on the condition of redemption of the stocks, etc. after certain period with the same quantity and kind, the stocks, etc. shall be deemed owned by the lender during the period from the date of renting until the date of returning the stocks, etc. and paragraphs (4) and (6) shall apply thereto. <Newly Inserted by Presidential Decree No. 24356, Feb. 15, 2013>
(10) Where a resident acquires stocks, etc. of a corporation through the private offering collective investment scheme pursuant to the Financial Investment Services and Capital Markets Act, the stocks, etc. (limited to the portion calculated in proportion to the investment rate of the private offering collective investment scheme) shall be deemed owned by the resident and paragraphs (4) and (6) shall apply thereto. <Newly Inserted by Presidential Decree No. 24356, Feb. 15, 2013>
 Article 158 (Scope, etc. of Oligopolistic Stockholders)
(1) "The stockholder specified by Presidential Decree, taking into consideration the ratio of stocks, etc. held by the stockholder" in the main sentence of Article 94 (1) 4 (c) of the Act, means a specific stockholder and other stockholders of a corporation (hereinafter referred to as "oligopolistic stockholder"), where the sum of stocks, etc. held by the specific stockholder and such other stockholders is at least 50/100 of the sum of stocks, etc. of the corporation. <Amended by Presidential Decree No. 27829, Feb. 3, 2017>
(2) Where oligopolistic stockholders transfer stocks, etc. over several times, the number of stocks, etc. transferred the oligopolistic stockholders within three years retrospectively from the date any of them transfers the stocks, etc. shall be aggregated, in applying Article 94 (1) 4 (c) of the Act. In such cases, judgment on whether the relevant case falls under Article 94 (1) 4 (c) shall be based on the sum of stocks, etc. or the total assets of the relevant corporation as at the date of the initial transfer during the period in which the number of the stocks, etc. shall be aggregated retrospectively from the date any of them transfers the stocks, etc. <Amended by Presidential Decree No. 25193, Feb. 21, 2014; Presidential Decree No. 27829, Feb. 3, 2017>
(3) The amount of total assets under Article 94 (1) 4 (c) and (d) of the Act and paragraphs (1) and (2) of this Article shall be determined with the book value of the relevant corporation (where the standard market value of the relevant asset, as prescribed by Article 94 (1) 1 of the Income Tax Act, is greater the book value thereof, its standard market value). In such cases, the following amounts shall not be included in the amount of total assets: <Amended by Presidential Decree No. 15191, Dec. 31, 1996; Presidential Decree No. 15969, Dec. 31, 1998; Presidential Decree No. 17456, Dec. 31, 2001; Presidential Decre