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ENFORCEMENT DECREE OF THE ADJUSTMENT OF INTERNATIONAL TAXES ACT

Presidential Decree No. 14870, Dec. 30, 1995

Amended by Presidential Decree No. 15196, Dec. 31, 1996

Presidential Decree No. 15325, Mar. 29, 1997

Presidential Decree No. 15970, Dec. 31, 1998

Presidential Decree No. 17045, Dec. 29, 2000

Presidential Decree No. 17832, Dec. 30, 2002

Presidential Decree No. 18312, Mar. 17, 2004

Presidential Decree No. 18628, Dec. 31, 2004

Presidential Decree No. 18706, Feb. 19, 2005

Presidential Decree No. 19650, Aug. 24, 2006

Presidential Decree No. 20331, Oct. 23, 2007

Presidential Decree No. 20494, Dec. 31, 2007

Presidential Decree No. 20720, Feb. 29, 2008

Presidential Decree No. 21066, Oct. 7, 2008

Presidential Decree No. 21299, Feb. 4, 2009

Presidential Decree No. 21634, Jul. 22, 2009

Presidential Decree No. 21939, Dec. 31, 2009

Presidential Decree No. 22040, Feb. 18, 2010

Presidential Decree No. 22394, Sep. 20, 2010

Presidential Decree No. 22574, Dec. 30, 2010

Presidential Decree No. 23600, Feb. 2, 2012

Presidential Decree No. 24365, Feb. 15, 2013

Presidential Decree No. 25200, Feb. 21, 2014

Presidential Decree No. 26078, Feb. 3, 2015

Presidential Decree No. 26546, Sep. 25, 2015

Presidential Decree No. 26958, Feb. 5, 2016

Presidential Decree No. 27472, Aug. 31, 2016

Presidential Decree No. 27837, Feb. 7, 2017

Presidential Decree No. 27958, Mar. 27, 2017

Presidential Decree No. 28643, Feb. 13, 2018

CHAPTER I GENERAL PROVISIONS
 Article 1 (Purpose)
The purpose of this Decree is to provide for matters delegated by the Adjustment of International Taxes Act and matters necessary to enforce said Act.
[This Article Wholly Amended by Presidential Decree No. 23600, Feb. 2, 2012]
 Article 2 (Detailed Standards concerning Special Relationship)
(1) "Special relationship" referred to in Article 2 (1) 8 of the Adjustment of International Taxes Act (hereinafter referred to as the "Act") means any of the following relationships:
1. A relationship between a domestic corporation or domestic place of business, and a person residing or located in a foreign country (including a stockholder and an investor; hereinafter referred to as "foreign stockholder"), under which the foreign stockholder owns, directly or indirectly, at least 50/100 of the voting stocks (including the equity shares; hereinafter the same shall apply) of the domestic corporation or the foreign corporation having the domestic place of business;
2. A relationship between a resident, domestic corporation or domestic place of business, and another foreign corporation, under which the resident, domestic corporation, or foreign corporation having the domestic place of business owns, directly or indirectly, at least 50/100 of the voting stocks of such other foreign corporation;
3. A relationship between a domestic corporation or a domestic place of business, and a third party foreign corporation (including a domestic place of business of the foreign corporation), under which a person, who owns, directly or indirectly, at least 50/100 of the voting stocks of the domestic corporation or the foreign corporation having the domestic place of business, also owns, directly or indirectly, at least 50/100 of the voting stocks of the third party foreign corporation;
4. A relationship between a resident, a domestic corporation, or a domestic place of business and a nonresident, a foreign corporation or its overseas place of business, under which they have common interest in adjusting income through investments in capital, trades of goods or service, grant of a loan, etc. between either party and the other party, and either party has a substantial power to decide on the whole or essential part of the other party's business policy by any of the following means:
(a) The representative director or the executive officers corresponding to the majority of all executive officers of one corporation shall assume the positions of executive officers or employees of the other corporation, or shall have assumed said positions within three years retroactively from the end of the pertinent business year;
(b) One party shall own at least 50/100 of the voting stocks of the other party, through an association or trust;
(c) One party shall depend on the trade with the other party for at least 50/100 of its business activities;
(d) One party shall borrow at least 50/100 of the funds required for its business activities from the other party or shall raise them through a payment guarantee of the other party;
(e) One party shall depend on the intellectual property right provided by the other party for at least 50/100 of its business activities;
5. A relationship between a resident, a domestic corporation, or a domestic place of business and a nonresident, a foreign corporation or its overseas place of business, under which they have a common interest in adjusting income through investments in capital, trade of goods or service, grant of loans, etc., between either party and the other party, if the relationship between one party, the other party, and a third party falls under any of the following:
(a) A relationship between one party, at least 50/100 of whose voting stocks are owned, directly or indirectly, by a resident, a domestic corporation, or a domestic place of business, and the other party in a relationship set forth in any item of subparagraph 4 with the resident, domestic corporation, or domestic place of business;
(b) A relationship between one party, at least 50/100 of whose voting stocks are owned, directly or indirectly, by a nonresident, a foreign corporation, or its overseas place of business, and the other party in a relationship set forth in any item of subparagraph 4 with the nonresident, foreign corporation, or its overseas place of business;
(c) A relation between one party, which is an affiliated company of an enterprise group as defined in any of the subparagraphs of Article 3 of the Enforcement Decree of the Monopoly Regulation and Fair Trade Act, and the other party, at least 50/100 of whose voting stocks are owned, directly or indirectly, by another affiliated company of said enterprise group;
(d) A relationship between parties to a transaction, if a third party has a substantial power to decide on the whole or essential part of the business policies of both parties by means set forth in any item of subparagraph 4.
(2) The indirect ownership ratio of shares referred to in paragraph (1) 1 through 3 and 5 shall be calculated according to any of the following classification:
1. Where one corporation owns at least 50/100 of voting stocks of a corporation, which is a stockholder of the other corporation (hereinafter referred to as the "stockholding corporation"), the ratio occupied by the voting stocks of the other corporation, which are owned by the stockholding corporation, in the voting stocks of the relevant other corporation (hereinafter referred to as "stockholding ratio of the stockholding corporation") shall be the indirect ownership ratio of one corporation against the other corporation: Provided, That at least two stockholding corporations exist, the ratio computed by aggregating those calculated by the stockholding corporation shall be the indirect ownership ratio of one corporation against the other corporation;
2. Where one corporation owns less than 50/100 of voting stocks of a stockholding corporation of the other corporation, the ratio by multiplying the relevant holding ratio by stockholding ratio of the stockholding corporation shall be the indirect ownership ratio of one corporation against the other corporation: Provided, That where at least two stockholding corporations are involved, the ratio computed by aggregating those calculated by stockholding corporation shall be the indirect ownership ratio of one corporation against the other corporation;
3. The calculation methods provided for in subparagraphs 1 and 2 shall also apply mutatis mutandis where at least one corporation interposes between one corporation and a stockholding corporation of the other corporation, and where these corporations are linked through the stock ownership.
[This Article Wholly Amended by Presidential Decree No. 23600, Feb. 2, 2012]
 Article 3 (Scope of Foreign Controlling Stockholders)
(1) A foreign controlling stockholder of a domestic corporation referred to in Article 2 (1) 11 (a) of the Act means any of the following persons as at the end of each business year:
1. A foreign stockholder who, directly or indirectly, owns at least 50/100 of voting stocks of a domestic corporation;
2. A foreign corporation, at least 50/100 of whose voting stocks are owned, directly or indirectly, by a foreign stockholder described in subparagraph 1;
3. A foreign stockholder having a relationship under Article 2 (1) 4 with a domestic corporation.
(2) A foreign stockholder who controls a domestic place of business of a foreign corporation under Article 2 (1) 11 (b) of the Act means any of the following:
1. The head office or a branch office (referring to an overseas branch office; hereinafter the same shall apply) of a foreign corporation having a domestic place of business;
2. A foreign stockholder who, directly or indirectly, owns at least 50/100 of the voting stocks of a foreign corporation pursuant to subparagraph 1;
3. A foreign corporation, at least 50/100 whose voting stocks are owned, directly or indirectly, by a head office under subparagraph 1 or a foreign stockholder under subparagraph 2.
(3) Article 2 (2) shall apply mutatis mutandis to the indirect ownership ratio of shares described in paragraphs (1) and (2).
[This Article Wholly Amended by Presidential Decree No. 23600, Feb. 2, 2012]
 Article 3-2 (Applicable Scope of Rejection of Unfair Act and Calculation)
"Donation, etc. of assets prescribed by Presidential Decree" referred to in the proviso to Article 3 (2) of the Act means any of the following:
1. Conveying an asset without consideration (excluding conveying it at a substantially low price) or discharging an obligation;
2. Purchasing yieldless asset, receiving such asset as a contribution in kind, or bearing expenses for such asset;
3. Bearing contributions by proxy;
4. Other trade of capital which falls under any of the items of Article 88 (1) 8 of the Enforcement Decree of the Corporate Tax Act or under subparagraph 8-2 of the same Article 88 (1).
[This Article Wholly Amended by Presidential Decree No. 23600, Feb. 2, 2012]
CHAPTER II ADJUSTMENT OF TAXATION ON TRANSACTIONS WITH FOREIGN RELATED PARTY
 Article 4 (Arm's Length Price Computation Methods)
(1) The profit split method shall be applied pursuant to Article 5 (1) 5 of the Act, based upon the following matters:
1. Net trade profits created by both parties to a transaction shall be an amount computed by deducting the sales cost and operating expenses (referring to the expenses for sales and general administration; hereinafter the same shall apply) from the amount of sales created through transactions with a third party;
2. Reasonable allocation standards shall be measured by the following standards and the level of importance of such standards for creating the net trade profits:
(a) The relative value of the function that the parties to a transaction have performed, measured by taking into account the assets used and risks borne;
(b) Operating assets, tangible and intangible assets, or used capital;
(c) Expenses incurred in relation to, or invested in core areas, such as research and development, design, and marketing;
(d) Other reasonably measurable allocation standards concerning the creation of the net trade profits, such as increased sales volume, the number of employees for core areas or work hours input, and store sizes;
3. When the net trade profits are allocated according to the levels of relative contribution, it includes where the proper basic income of the parties to transactions is preferentially distributed by transaction type;
4. Relative contribution levels shall be measured with the allocation standard deemed applicable to the transactions under similar conditions between independent business operators not in special relationship.
(2) The transactional net margin method shall be applied pursuant to Article 5 (1) 5 of the Act, based upon the following matters:
1. The ratio of an ordinary transactional net margin shall be calculated based on the following:
(a) The ratio of net trading profits to sales;
(b) The ratio of net trading profits to assets;
(c) The ratio of net trading profits to sales costs and sales expenses;
(d) The ratio of gross sales profit (referring to the sum of net trading profits and operating expenses; hereinafter the same shall apply) to operating expenses;
(e) Other transactional net margins deemed reasonable;
2. Where a resident (including a domestic corporation and a domestic place of business; hereafter the same shall apply in this Chapter) has not conducted a transaction similar to an international transaction between a resident and a foreign related party with an unrelated party, the transactional net margin of a transaction under conditions similar to those of the relevant transaction, among the following transactions, may be used:
(a) Transaction between a foreign related party and an unrelated party;
(b) Transaction between unrelated third parties.
(3) "Other methods recognized as appropriate by Presidential Decree" referred to in Article 5 (1) 6 of the Act means the methods (including those prescribed in Article 6-2 (3)) deemed recognized as appropriate in light of the substance and trade practices, other than the computation methods prescribed by the Act. <Amended by Presidential Decree No. 24365, Feb. 15, 2013>
[This Article Wholly Amended by Presidential Decree No. 23600, Feb. 2, 2012]
 Article 5 (Selection of Arm's Length Price Computation Methods)
(1) In computing the arm's length price under Article 5 (1) of the Act, the most reasonable method shall be selected by taking into account the following standards: <Amended by Presidential Decree No. 23600, Feb. 2, 2012>
1. High comparability shall exist the international transactions among the related parties and the transactions among the unrelated parties. In such cases, "high comparability" means any of the following cases:
(a) Where a difference in the compared circumstances has no serious effect upon the comparative trade price or net trading profit;
(b) Even where the difference in the comparative circumstances has a serious effect upon the compared trade price or net trading profit, a reasonable adjustment, capable of resolving a difference due to the relevant effect, is possible;
2. It shall be highly likely to secure and use the data to be used;
3. The level of realism shall be high for an assumption on the economic conditions, business environment, etc. established in order to compare the international transactions among the related parties with the transactions among the unrelated parties;
4. Errors in the data to be used or in the established assumption shall have little effect on the calculated arm's length price;
5. Conformity between the transactions between related parties and the method of computing the arm's length price shall be high.
(2) In assessing whether high comparability exists as provided in paragraph (1) 1, matters which may affect prices or profits, such as types and features of goods or services, functions of business activities, risks accompanying transactions, assets to be used, contractual terms and conditions, economic situations, and business strategies, shall be analyzed, as prescribed by Ordinance of the Ministry of Strategy and Finance. <Amended by Presidential Decree No. 23600, Feb. 2, 2012>
(3) In assessing whether high compatibility exists as provided in paragraph (1) 5, which indicators, among the price, profit and net trading profit, are easier to measure in transactions among related parties, whether the factor to discriminate the transactions among related parties is goods or services being dealt with or features of the function being conducted, and the interrelation between the transactional net margin indicators and business activities in the case of applying the transactional net margin method shall be analyzed, as prescribed by Ordinance of the Ministry of Strategy and Finance. <Amended by Presidential Decree No. 23600, Feb. 2, 2012>
(4) Deleted. <by Presidential Decree No. 22574, Dec. 30, 2010>
(5) Where a transaction between unrelated parties shall not be treated as a normal transaction because it is willfully fabricated by the parties involved, the tax authority need not select said transaction as a comparable transaction. <Amended by Presidential Decree No. 23600, Feb. 2, 2012>
 Article 6 (Supplement, etc. to Arm's Length Price Computation Methods)
(1) In calculating an arm's length price by selecting the most reasonable method as provided in Article 5 (1), such arm's length price shall be determined through analysis procedures such as the analyzing of the business environment of a taxpayer and transactions between related parties, collecting data on internal and external comparable transactions, selecting an arm's length price computation method and computing the price, profit, or net trading profit, selecting comparable transactions and making reasonable adjustment of difference, as prescribed by Ordinance of the Ministry of Strategy and Finance.
(2) In calculating an arm's length price under Article 5 of the Act, if any difference occurs in the applicable price, profit or net trading profit, on account of differences in the factors of comparability analysis under Article 5 (2), the relevant difference in the price, profit, or net trading profit shall be reasonably adjusted.
(3) Where deemed necessary for calculating a reasonable arm’s length price, the resale price method pursuant to Article 5 (1) 2 of the Act may be applied to intra-group services and other international transactions.
(4) In calculating an arm's length price under Article 5 of the Act, the scope of the arm's length price may be computed on the basis of at least two transactions between unrelated parties, and it may be applied to an adjudication of whether a tax adjustment is to be made pursuant to the arm's length price under Article 4 of the Act.
(5) Where a tax authority adjust a tax assessment under Article 4 of the Act to a trade price deviating from the scope of arm's length price, it shall be based on the average price, median price, mode price and other rational specific prices, computed in transactions within the relevant scope of arm's length price.
(6) In calculating an arm's length price for an intangible asset, the following elements shall be considered according to its characteristics:
1. The scale of revenues added or expenses reduced which are expected with such an intangible asset;
2. Whether there is a limitation on the exercise of rights therein;
3. Whether it is allowable to convey such intangible asset to another person or grant a license to reuse it.
(7) The normal interest rate for money transactions applicable to international transaction between a resident and a foreign related party shall be any of the following interest rates. In such cases, monetary transactions between the resident and the foreign related party shall include de facto monetary transactions such as collection of bonds and payment of debts which exceed ordinary periods of collection or payment: <Amended by Presidential Decree No. 27837, Feb. 7, 2017>
1. An interest rate applicable or deemed applicable to ordinary monetary transactions between unrelated persons, taking the following matters into consideration:
(a) Amount of the obligation;
(b) Maturity of the obligation;
(c) Whether the obligation is secured;
(d) Credit rating of the obligor;
2. An interest rate construed as a normal interest rate as prescribed by Ordinance of the Ministry of Strategy and Finance, in consideration of the transaction amount and the prevailing interest rate in the international financial market.
(8) In applying an arm's length price computation method pursuant to Article 5 (1) of the Act, if it is unreasonable to compute the price, profit or net trading profit by individual transaction because the individual transactions are closely linked or consecutively conducted, those individual transactions may be assessed in a consolidated manner.
(9) In applying an arm's length price computation method pursuant to Article 5 (1) of the Act, if it is not reasonable to compute the price, profit or net trading profit from the pertinent business year’s data alone, since it has been affected by economic conditions, business strategies, etc. over a number of years, data of such a number of business years may be used.
[This Article Wholly Amended by Presidential Decree No. 23600, Feb. 2, 2012]
 Article 6-2 (Arm's Length Price for Intra-Group Services)
(1) Where the price for intra-group service (referring to business management, financial advising, payment guarantee, computing or technical support, or any other intra-group service deemed necessary for business; hereafter the same shall apply in this Article) between a resident and a foreign related party is one for intra-group service that meets all the following criteria, such a price shall be deemed an arm's length price and recognizable as a deductible expense:
1. The service provider shall make an agreement in advance and actually provide such service in accordance with the agreement;
2. The person who has been provided with such service shall expect an additional profit or a reduction in expenses from that service;
3. The price for the service provided shall be computed in accordance with Article 5 of the Act and Articles 4 through 6 of this Decree. In such cases, it shall be computed in accordance with the following guidelines, when the cost plus method under Article 5 (1) 3 of the Act or the transactional net margin method under Article 4 (2) 1 (c) of this Decree is applied:
(a) The cost incurred shall include all expenses incurred directly or indirectly in providing the service;
(b) Where the service provider requests a third party to perform all or part of the service on his/her behalf pays the price therefor in lump sum, and then claims such expenses to the person to whom the service is provided, the service provider shall add an ordinary profit to the cost incurred from the activities that the service provider performs on his/her own in connection with the service: Provided, That the foregoing shall not apply, if deemed reasonable in light of the substance of the service, status of the transaction, and customary practices;
4. Documents shall be prepared and preserved for verifying the facts set forth in subparagraphs 1 through 3.
(2) Notwithstanding paragraph (1), it shall not be deemed intra-group service under paragraph (1), where a specially-related party itself performs the same service as the one provided to a person who has the service provided, or where an unrelated person provides the service for other specially-related party; Provided, That in cases where the service provided is temporarily overlapped on any reasonable grounds, such as reorganization of the business or organizational structure, restructuring, an effort to reduce errors in making decisions on business management, it shall be deemed an intra-group service under paragraph (1).
(3) In computing an arm's length price for an intra-group payment guarantee between a resident and a foreign related party, any of the following methods shall apply: <Newly Inserted by Presidential Decree No. 24365, Feb. 15, 2013>
1. Computing the arm's length price based on the anticipated risks of, and expenses to be incurred by, the guarantor;
2. Computing the arm's length price based on the expected benefits of the principal debtor;
3. Computing the arm's length price based on the expected risks of, and expenses to be incurred by, the guarantor and the expected benefits of the principal debtor.
(4) Where either of the following amounts is applied by a resident for the price for an intra-group payment guarantee in the application of paragraph (3), such amount shall be deemed the arm's length price: <Newly Inserted by Presidential Decree No. 24365, Feb. 15, 2013>
1. The amount of fees computed by the relevant finance company based on the difference in interest rates that depend on the existence of a payment guarantee when concluding the payment guarantee contract (applicable only to the amount of fees confirmed by a statement on the difference in interest rates prepared by the relevant finance company);
2. The amount of fees computed as prescribed by the Commissioner of the National Tax Service, applying the method under paragraph (3) 2.
(5) Detailed matters concerning the computation of expected risks and expenses, expected benefits, etc. for the purposes of paragraphs (3) and (4) shall be prescribed by Ordinance of the Ministry of Strategy and Finance. <Newly Inserted by Presidential Decree No. 24365, Feb. 15, 2013>
[This Article Wholly Amended by Presidential Decree No. 23600, Feb. 2, 2012]
 Article 7 (Submission, etc. of Methods of Computing Arm's Length Prices)
(1) A resident shall select the most reasonable arm's length price computation method in accordance with the criteria provided for in Article 5, and shall submit the selected method and the grounds therefor to the head of the tax office having jurisdiction over the place for tax payment when filing a final return on the tax base and tax amount: Provided, That this shall not apply where the amount of international transactions during the pertinent business year falls under any of the following cases: <Amended by Presidential Decree No. 26078, Feb. 3, 2015>
1. Where the total amount of transactions of goods does not exceed five billion won and the total amount of intra-group service transactions does not exceed one billion won;
2. Where the total amount of transactions of goods for each foreign related party does not exceed one billion won and the total amount of transactions of services does not exceed 200 million won.
(2) Where an actual trade price differs from the arm's length price computed by an arm's length price method, the resident may file a return on the tax base and tax amount adjusted by deeming the arm's length price to be the trade price, and make a request for rectification thereof within any of the following deadlines, along with a written report on trade price adjustment in the form prescribed by Ordinance of the Ministry of Strategy and Finance. In such cases, Articles 15, 15-2, 16 and 18 shall apply mutatis mutandis to the income amount so adjusted: <Amended by Presidential Decree No. 24365, Feb. 15, 2013>
2. The deadline for filing a revised return pursuant to Article 45 of the Framework Act on National Taxes;
3. The deadline for filing a request for correction under Article 45-2 (1) of the Framework Act on National Taxes.
(3) Where a resident is unable to submit the arm's length price computation method and the grounds therefor under paragraph (1) due to any of the grounds referred to in the subparagraphs of Article 21 when filing a final return on the tax base and tax amount, he/she may file with the head of the tax office having jurisdiction over the place for tax payment an application for extension of the deadline for submission in the form prescribed by Ordinance of the Ministry of Strategy and Finance by not later than 15 days before said deadline.
(4) Upon receipt of an application under paragraph (3), the head of the tax office having jurisdiction over the place for tax payment shall determine whether to approve an extension of the deadline for submission within the maximum period of up to one year and notify the applicant of such decision within seven days after receipt of the application. In such case, if he/she fails to give notification within the seven days, the deadline for submission shall be deemed extended until the time requested by the applicant.
[This Article Wholly Amended by Presidential Decree No. 23600, Feb. 2, 2012]
 Article 8 (Calculation of Normal Profits)
(1) The normal profits of a purchaser pursuant to Article 5 (1) 2 of the Act means an amount calculated by multiplying the sale price of assets, which is charged by the purchaser to an unrelated party, by a sale-based normal profit ratio. In such cases, the sale-basis normal profit ratio means the gross profit margin realized in the transactions between the purchaser and unrelated parties, which are similar to the relevant transaction in light of the functions performed, the assets used and the degree of risk assumed.
(2) The normal profits of the seller of asset or the service provider pursuant to Article 5 (1) 3 of the Act means an amount calculated by multiplying each of the following costs by a cost-basis normal profit ratio. In such cases, the “cost-basis normal profit ratio” means the ratio of gross profits to the costs incurred in the transactions, between the seller of assets or the service provider and the unrelated parties, which are similar to the relevant transaction in light of the functions performed, the assets used and the degree of risks assumed:
1. Costs incurred in purchasing, constructing or manufacturing the relevant property at the arm's length prices by the seller of assets;
2. Costs incurred at the arm's length prices in the course of providing the relevant services by the service provider.
(3) Where the purchaser of assets under Article 5 (1) 2 of the Act or the seller of assets or the service provider under subparagraph 3 of the same paragraph is unable to compute the pertinent normal profit ratio from the transactions with the unrelated parties, the normal profit ratio realized in the third transactions between the unrelated parties, which are similar to the relevant transactions in light of the functions performed, the assets used and the degree of risk assumed, may be used as the sale-based normal profit ratio in paragraph (1) or the cost-based normal profit ratio in paragraph (2).
[This Article Wholly Amended by Presidential Decree No. 23600, Feb. 2, 2012]
 Article 9 (Application for Advance Pricing Agreement and Other Relevant Matters)
(1) A resident who intends to file an application for an advance pricing agreement with the Commissioner of the National Tax Service under Article 6 (1) of the Act (hereafter referred to as the "applicant" in this Chapter) shall submit, to said Commissioner, two copies of the following documents about all or some of his/her international transactions by the day before the commencement of the first taxable year during the term subject to application for the advance pricing agreement. In such cases, the data referred to in subparagraph 4 may be submitted in an electronic data storage medium: <Amended by Presidential Decree No. 26958, Feb. 5, 2016; Presidential Decree No. 28643, Feb. 13, 2018>
1. A written application for advance pricing agreement in the form provided by Ordinance of the Ministry of Strategy and Finance, specifying the covered term, the covered international transactions, the parties to the transactions and the arm's length price computation method;
2. Data explaining the business history, business details, organization, investment relationships, etc. of the parties to the transactions;
3. Financial statements, copies of tax returns, and copies of the contract for the international transactions, and other accompanying documents of the parties to the transactions for the latest three years;
4. Data showing the details of the arm's length price computation method involved, as follows:
(a) The methods to assess comparability and to adjust the difference by factor as provided for in Articles 5 (2) and 6 (2);
(b) Where the financial statements of enterprises subject to comparison are employed, the difference in the accounting standards employed and the method for adjustment thereof;
(c) Where the financial data or cost data classified by transaction are employed, the criteria for preparation thereof;
(d) Where at least two transactions subject to comparison are employed, the range of arm's length price and its inducing method;
(e) Data explaining the conditions or assumptions to form a premise for the arm's length price computation method;
5. Where Article 7 (2) is applied, the explanatory data on how to adjust the difference between the actual trade price and the arm's length price;
6. Where an application is filed for mutual agreement with the other Contracting State about the arm’s length price computation method involved, an application for commencing the mutual agreement procedure in the form provided by Ordinance of the Ministry of Strategy and Finance;
7. Other data attesting the propriety of the arm’s length price computation method involved.
(2) Where the documents submitted to the competent authority of the other Contracting State are different from those submitted under paragraph (1), the documents submitted to the competent authority of the other Contracting State shall be additionally submitted.
(3) The period subject to application for advance pricing agreement shall be the period during which the taxpayer intends to apply for an advance pricing agreement.
(4) The applicant may amend the details of his/her application, or withdraw his/her application before obtaining prior approval from the Commissioner of the National Tax Service. In this regard, when the application is withdrawn, the Commissioner of the National Tax Service shall return all data submitted under paragraph (1) or (2) to the applicant.
(5) The Commissioner of the National Tax Service shall not use any data submitted under paragraph (1) or (2) other than for reviewing applications for prior approval, ex post facto management, and exchange of information with the competent authority of the other Contracting State. <Amended by Presidential Decree No. 28643, Feb. 13, 2018>
[This Article Wholly Amended by Presidential Decree No. 23600, Feb. 2, 2012]
 Article 10 (Review of Application for Advance Pricing Agreement)
(1) In reviewing an application for advance pricing agreement, the Commissioner of National Tax Service may refer to the opinion of the head of the tax office having jurisdiction over the place for tax payment of the applicant and the commissioner of the regional tax office.
(2) In reviewing an application for advance pricing agreement, the Commissioner of National Tax Service may designate a specialist who is in a neutral relationship with the applicant if the latter consents thereto, and refer to evaluating opinion of the specialist on the arm's length price computation method involved. In this regard, the Commissioner of the National Tax Service may require the applicant to bear some of the relevant expenses if the applicant consents thereto.
(3) The specialist under the former part of paragraph (2) shall not provide or disclose any information related to the application for advance pricing agreement to any person other than the applicant, his/her agent, and the Commissioner of the National Tax Service.
[This Article Wholly Amended by Presidential Decree No. 23600, Feb. 2, 2012]
 Article 11 (Procedures of Advance Pricing Agreement Based on Mutual Agreement)
(1) Where the Commissioner of National Tax Service does not accept an application for advance pricing agreement as he/she deems that the application for advance pricing agreement is inappropriate, he/she shall return to the applicant all data submitted under Article 9 (1) or (2).
(2) Where the applicant applies to commence a mutual agreement procedure at the time of applying for advance pricing agreement, the Commissioner of National Tax Service shall request the competent authority of the other Contracting State to commence the mutual agreement procedure, and notify the applicant of the request.
(3) Where an agreement is made with the other Contracting State in the mutual agreement procedure under paragraph (2), the Commissioner of the National Tax Service shall notify the applicant of the provisions of the agreement within 15 days from the data following the completion of the mutual agreement procedure. Accordingly, the applicant shall submit in writing whether he/she consents thereto to the Commissioner of the National Tax Service within two months from the date of receiving a notification on the details of agreement.
(4) Where the applicant fails to notify the Commissioner of the National Tax Service of whether he/she consents thereto by the deadline specified under the latter part of paragraph (3), it shall be deemed that he/she has not consented, and the original application for advance pricing agreement shall be deemed withdrawn by the applicant.
(5) Even if the details agreed under the mutual agreement procedure are not identical with the original content of the application for advance pricing agreement, it shall be deemed that the applicant has applied for the relevant details from the outset, where the applicant consents to the agreed details under paragraph (3).
(6) Upon receipt of a letter of consent to the details of mutual agreement from the applicant pursuant to the latter part of paragraph (3), the Commissioner of the National Tax Service shall accept the application for advance pricing agreement within 15 days from the date of receiving the letter, and notify the applicant thereof.
(7) In any of the following cases, the Commissioner of the National Tax Service shall notify the applicant of discontinuation of the mutual agreement procedure within 15 days:
1. Where no agreement can be reached within three years from the date of receipt of the application for advance pricing agreement, the Commissioner of the National Tax Service discontinues the mutual agreement procedure at his/her discretion;
2. Where it is agreed to conclude the mutual agreement procedure with the other Contracting State, because the parties cannot reach an agreement under the mutual agreement procedure.
(8) A resident who has obtained an advance pricing agreement in accordance with paragraph (6) shall file a revised return or a request for rectification pursuant to Article 17 (1). In such cases, Articles 15, 15-2, 16, and 18 shall apply mutatis mutandis to the income amount to be adjusted.
[This Article Wholly Amended by Presidential Decree No. 23600, Feb. 2, 2012]
 Article 11-2 (Procedure for Unilateral Advance Pricing Agreement)
(1) "Cases prescribed by Presidential Decree" in the proviso to Article 6 (2) of the Act means any of the following cases:
1. Where a taxpayer fails to request a mutual agreement procedure at the time of applying for an advance pricing agreement under Article 9 (1);
2. Where a mutual agreement procedure for an arm's length price computation method is discontinued due to a cause falling under any subparagraph of Article 11 (7).
(2) Where any of the subparagraphs of paragraph (1) applies, the Commissioner of the National Tax Service may accept a unilateral advance pricing agreement without undergoing a mutual agreement procedure (hereinafter referred to as "unilateral advance pricing agreement"). In such cases, the Commissioner of the National Tax Service may attach the condition that a unilateral advance pricing agreement may be cancelled upon commencement of a relevant mutual agreement procedure.
(3) Where a taxpayer intends to apply for unilateral advance pricing agreement due to the cause specified in paragraph (1) 2, he/she shall present his/her intention in writing to the Commissioner of the National Tax Service within 15 days from the date he/she is notified thereof. In this regard, where the applicant fails to present his/her opinion in writing, the original application for unilateral advance pricing agreement shall be deemed withdrawn.
(4) Where an applicant applies for a unilateral advance pricing agreement, the Commissioner of the National Tax Service shall determine whether to accept it, within two years from the date of application.
(5) Article 11 (1) and (3) through (6) shall apply mutatis mutandis respectively to the return of documents submitted as regards a unilateral advance pricing agreement; the notification of details of a decision on such agreement and whether the applicant consents to such decision; the withdrawal of an application for such agreement; the validity of modified approval of such agreement; and notification of such agreement.
(6) A resident who has obtained an advance pricing agreement shall file a revised return or request for rectification pursuant to Article 17 (2). In such cases, Articles 15, 15-2, 16, and 18 shall apply mutatis mutandis to the income amount to be adjusted.
[This Article Wholly Amended by Presidential Decree No. 23600, Feb. 2, 2012]
 Article 12 (Submission, etc. of Annual Reports)
(1) Where a resident has obtained an advance pricing agreement, he/she shall file an annual report reflecting the details of the agreement, with the head of the tax office having jurisdiction over the place for tax payment, by the deadline referred to in Article 7 (2) 1 and shall submit to the Commissioner of the National Tax Service under Article 6 (5) of the Act, four copies of the annual report stating the following matters [(including submitting them via the national tax information and communications networks (referring to the national tax information and communications networks referred to in subparagraph 19 of Article 2 of the Framework Act on National Taxes; hereinafter the same shall apply)] within six months after the filing deadline. In such cases, Articles 15, 15-2, 16, and 18 shall apply mutatis mutandis to the amount of income to be adjusted: <Amended by Presidential Decree No. 26078, Feb. 3, 2015; Presidential Decree No. 26958, Feb. 5, 2016>
1. Whether the grounds or assumptions, on which the agreed arm’s length price computation method is based, are realized;
2. The arm's length price computed by applying the agreed arm’s length price computation method, and the relevant computation process;
3. Where the actual trade price differs from the arm's length price, the details of resolving the relevant difference;
4. Other matters stipulated to be stated in the annual report at the time the advance pricing agreement is made.
(2) Where the Commissioner of the National Tax Service requires additional data when reviewing the annual report submitted under paragraph (1), he/she may request such data from the relevant resident.
[This Article Wholly Amended by Presidential Decree No. 23600, Feb. 2, 2012]
 Article 13 (Cancellation, etc. of Advance Pricing Agreement)
(1) "Cases prescribed by Presidential Decree" in the proviso to Article 6 (4) of the Act means any of the following cases:
1. Where a significant portion of data required under Article 9 or 12 is not submitted or falsified;
2. Where the resident fails to comply with the details or conditions of the advance pricing agreement;
3. Where a significant part of the conditions or assumptions, which form a premise for the advance pricing agreement made, is not realized;
4. Where the details of the advance pricing agreement is no longer applicable due to changes in relevant statutes or tax treaties.
(2) Where any subparagraph of paragraph (1) is applicable, the Commissioner of the National Tax Service may cancel or withdraw the advance pricing agreement.
(3) Where paragraph (1) 3 or 4 applies, a resident may apply to amend the details of the original advance pricing agreement by no later than the deadline for filing a final return on tax base and tax amount for a taxable year in which the relevant cause occurs, with respect to the remaining covered period thereafter including the relevant taxable year. In such cases, Articles 9 through 11, 11-2, and 12 shall apply mutatis mutandis, but the data to be furnished under Article 9 (1) shall be limited to the changed portions.
(4) Where the Commissioner of the National Tax Service cancels or withdraws an advance pricing agreement, he/she shall notify the competent authority of the other Contracting State, of such fact without delay.
[This Article Wholly Amended by Presidential Decree No. 23600, Feb. 2, 2012]
 Article 14 (Utilization of Advance Pricing Agreement Application Filed to the Other Contracting State)
Where a resident or a foreign related party applies for an advance pricing agreement corresponding to Article 6 of the Act to the competent authority of the other Contracting State, and where it is necessary to commence a mutual agreement procedure with the Republic of Korea, the relevant resident shall apply for an advance pricing agreement, without delay, in accordance with Article 9 to the Commissioner of the National Tax Service.
[This Article Wholly Amended by Presidential Decree No. 23600, Feb. 2, 2012]
 Article 14-2 (Computation, etc. of Arm's Length Cost Sharing to Develop Intangible Property)
(1) The intangible property referred to in Article 6-2 (1) of the Act means:
1. Any of the following:
(a) Patent rights registered under the Patent Act;
(b) Utility model rights registered under the Utility Model Act;
(c) Design rights registered under the Design Protection Act;
(d) Trademark rights or service mark rights registered under the Trademark Act;
(e) Copyrights registered under the Copyright Act;
2. Any other intangible property, including a design, model, and knowhow, useable as it is or conveyable or licensable for use by a third party.
(2) The arm's length cost apportionment referred to in Article 6-2 (1) of the Act means an allocated amount applicable or deemed applicable to an agreement that a resident makes with a foreign unrelated party on the apportionment of ordinary cost, expenses, and risks (hereinafter referred to as "cost, etc."), and the cost, etc. for developing an intangible property, which shall be allocated in proportion to the benefits expected from the intangible property under Article 14-3 (1): Provided, That consideration for using any intangible property owned by the party to the agreement on the sharing of cost, etc. and the interest paid for loans to pay such shared amount shall be excluded from the arm's length cost share. <Amended by Presidential Decree No. 26078, Feb. 3, 2015>
(3) The arm's length cost share shall be included in deductible expenses when computing the taxable income of a resident, only where the resident makes an agreement on the arm's length cost apportionment and subsequently bears the allocated cost, etc.
[This Article Wholly Amended by Presidential Decree No. 23600, Feb. 2, 2012]
 Article 14-3 (Scope and Computation Method of Expected Benefits)
(1) Anticipated benefits referred to in Article 6-2 (2) of the Act means the benefits expected from an intangible property and falling under any of the following subparagraphs:
1. Cost reduction;
2. Increase in any of the following caused by making use of the intangible property:
(a) Sales;
(b) Operating profit;
(c) Quantity consumed, produced, or sold.
(2) Anticipated benefits shall be computed based upon the benefits under each subparagraph of paragraph (1), which are estimated to be realized after joint development of the intangible asset.
[This Article Wholly Amended by Presidential Decree No. 23600, Feb. 2, 2012]
 Article 14-4 (Adjustment of Participants’ Shares and Cost Shares Following Change in Expected Benefits)
(1) "Where ... subsequently changed at a rate equivalent to or higher than that prescribed by Presidential Decree" in Article 6-2 (2) of the Act means the case where the resident's expected benefits out of the total benefits expected originally at the time of making an agreement increase or decrease by at least 20/100 in comparison with the benefits realized after the development of the intangible asset.
(2) Where the share of the resident as a participant is adjusted in accordance with Article 6-2 (2) of the Act, the shared cost, etc. borne excessively by re-computing the total shared cost, etc. borne by the resident shall be recalculated in proportion to the resident's share as adjusted, and the excess cost share, if any, shall be adjusted when calculating the tax base for the business year in which such change occurred.
(3) Where a change in expected benefits under paragraph (1) reoccurs after the shared cost, etc. was adjusted in accordance with paragraph (2), a report or a request for rectification may be filed by no later than the deadline falling under any subparagraph of Article 7 (2). In such cases, Articles 15, 15-2, 16, and 18 shall apply mutatis mutandis to the income so adjusted.
(4) Where a tax authority seeks to determine or rectify a resident's tax base or tax amount pursuant to Article 6-2 (2) of the Act, it shall not adjust the resident's tax base and tax amount for more than five years from the date following the deadline for filing a return on tax base for the taxable year in which the date the joint development of an intangible asset is completed falls.
[This Article Wholly Amended by Presidential Decree No. 23600, Feb. 2, 2012]
 Article 14-5 (Determination, etc. on Tax Base for Price Received from or Paid to Later Participants or Early Withdrawers)
With regard to the price received for expected benefits that a person, who newly participates in or withdraws from an agreement on the sharing of cost, etc. under Article 14-2 (2), gets through such participation or the price paid for expected benefits that other participants get as a consequence of such withdrawal from such an agreement, the tax authority may determine or rectify the resident's tax base and tax amount based on the arm's length price, if the price is less than or exceeds the arm's length price.
[This Article Wholly Amended by Presidential Decree No. 23600, Feb. 2, 2012]
 Article 14-6 (Submission of Statement of Apportionment Adjustment)
(1) A resident who seeks the benefit of Article 14-2 or 14-4 shall submit, to the competent tax authority, a statement of apportionment adjustment as prescribed by Ordinance of the Ministry of Strategy and Finance, along with a return under Article 70 or 70-2 of the Income Tax Act, or Article 60 or 76-17 (1) of the Corporate Tax Act. <Amended by Presidential Decree No. 24365, Feb. 15, 2013>
(2) Where a resident is unable to submit a statement of apportionment adjustment under paragraph (1) for a reason specified in any subparagraph of Article 21, he/she may file, with the competent tax authority, an application for extension of the deadline for submission in the form prescribed by Ordinance of the Ministry of Strategy and Finance until 15 days prior to said deadline.
(3) Upon receipt of the application under paragraph (2), the competent tax authority shall determine whether to approve an extension of deadline for submission within the maximum period of up to one year, and notify the applicant of such decision within seven days from the date of receipt of the application. In such cases, if no notification is given within seven days, the deadline for submission shall be deemed extended by the time requested by the applicant.
[This Article Wholly Amended by Presidential Decree No. 23600, Feb. 2, 2012]
 Article 14-7 Deleted. <by Presidential Decree No. 28643, Feb. 13, 2018>
 Article 14-8 (Procedures, etc. for Pre-Adjustment)
(1) The Commissioner of the National Tax Service shall commence procedures for pre-adjustment under Article 6-3 (2) of the Act and notify the applicant of such fact within 90 days after receipt of the application for pre-adjustment filed under paragraph (1) of the same Article: Provided, That when the data required under Article 9 (1) and (2) are not submitted or falsely prepared or other grounds exist that make it impractical to commence procedures for pre-adjustment, the Commissioner of the National Tax Service shall notify the applicant of such grounds. <Amended by Presidential Decree No. 28643, Feb. 13, 2018>
(2) Upon receipt of notification that the Commissioner of the National Tax Service is unable to commence the procedures for pre-adjustment under the proviso to paragraph (1), the applicant may, within 30 days after receipt of such notification, supplement the data in question or notify the Commissioner of the National Tax Service whether he/she will separately follow the procedures for an advance pricing agreement under the proviso to Article 6 (2) of the Act and for prior examination of the matter referred to in Article 37 (1) 3 of the Customs Act. In such cases, the Commissioner of the National Tax Service shall, without delay, inform the Commissioner of the Korea Customs Service of the matters so notified. <Amended by Presidential Decree No. 28643, Feb. 13, 2018>
(3) The Commissioner of the National Tax Service and the Commissioner of the Korea Customs Service may jointly organize and operate a council to conduct pre-adjustment. <Newly Inserted by Presidential Decree No. 28643, Feb. 13, 2018>
(4) Articles 9, 10, 11-2, 12, and 13 of this Decree and Article 31 of the Enforcement Decree of the Customs Act shall apply mutatis mutandis to the method, procedure, etc. for filing applications for pre-adjustment under Article 6-3 (5) of the Act and other matters.
(5) Except as otherwise provided for in paragraph (1) through (4), matters necessary for conducting pre-adjustment, and other matters necessary for pre-adjustment, shall be determined by Ordinance of the Minister of Strategy and Finance. <Amended by Presidential Decree No. 28643, Feb. 13, 2018>
[This Article Newly Inserted by Presidential Decree No. 26078, Feb. 3, 2015]
 Article 15 (Temporary Secondary Adjustment and Other Relevant Adjustment)
(1) Where seeking to make a secondary income adjustment or tax adjustment pursuant to Article 9 of the Act, the tax authority shall make a temporary secondary adjustment until it is verified that the return has been properly done pursuant to Article 15-2.
(2) Where making a temporary secondary adjustment pursuant to paragraph (1), the tax authority shall do so upon serving a notice of temporary secondary adjustment prescribed by Ordinance of the Ministry of Strategy and Finance by applying mutatis mutandis Article 192 (1) and (4) of the Enforcement Decree of the Income Tax Act.
(3) Notwithstanding paragraph (1), a disposition or adjustment shall be made in accordance with each of the subparagraphs of Article 16 (1) without undergoing a temporary secondary adjustment if any of the following applies: <Amended by Presidential Decree No. 25200, Feb. 21, 2014>
1. Where the statute of limitations on tax assessment expires within four months from the date when the tax base and tax amount have been determined or rectified, as prescribed in Article 4 or 6-2 of the Act;
2. Where a written request to dispose of transferred income prescribed by Ordinance of the Ministry of Strategy and Finance is filed;
3. Where the relevant domestic corporation closes its business (including de facto business closure).
(4) Where the cause specified in paragraph (3) 2 or 3 occurs after making a temporary secondary adjustment under paragraph (1), a new disposition or adjustment shall be made in accordance with each of the subparagraphs of Article 16 (1). <Newly Inserted by Presidential Decree No. 25200, Feb. 21, 2014>
[This Article Wholly Amended by Presidential Decree No. 23600, Feb. 2, 2012]
 Article 15-2 (Verification, etc. of Return of Amount to Be Included in Gains)
(1) "Where it is not verified that ... the amount has been returned as prescribed by Presidential Decree" in Article 9 (1) of the Act means the cases where a document (referring to a certificate of return of transferred income prescribed by Ordinance of the Ministry of Strategy and Finance) certifying that the amount intended by a foreign related party to return to a domestic corporation out of the amount to be included in the gains as prescribed in Article 4 or 6-2 of the Act plus interests for return calculated in accordance with the following formula were returned has not been submitted to the tax authority within 90 days from the date a notice of temporary secondary adjustment made under Article 15 was received or from the date a revised return on the tax base and tax amount was filed: Provided, That in cases falling under Article 15 (3), it refers to the cases where the amount to be included in gains at the time the tax base and tax amount were determined or rectified as prescribed in Article 4 or 6-2 of the Act has not been verified to be returned to a domestic corporation by a foreign related party: Interests for return = amount to be returned × period from the day following the end of the business year in which the transaction date falls, to the date transferred income is returned × interest rate determined by the Ordinance of the Ministry of Strategy and Finance, considering the prevailing interest rate in the international financial market / 365 (366 for a leap year)
(2) Where some of the amount to be included in the gains as prescribed in Article 4 or 6-2 of the Act is returned to a domestic corporation by a foreign related party, an amount (including interest for return thereof) accrued earlier in the order of accrual of the amount to be included in the gains shall be deemed returned. <Newly Inserted by Presidential Decree No. 24365, Feb. 15, 2013>
[This Article Wholly Amended by Presidential Decree No. 23600, Feb. 2, 2012]
 Article 16 (Disposition, Adjustment, etc. of Return Not Verified for Return)
(1) If the return under Article 15-2 is not verifiable, the amount of which the return has not been verified shall be disposed of or adjusted in accordance with any of the following methods:
1. If the foreign related party, who is the other party to an international transaction, is one of stockholders of the relevant domestic corporation (including cases where the party falls under Article 2 (1) 1), it shall be treated as a dividend vested in the foreign related party;
2. If the foreign related party, who is the other party to an international transaction, is a corporation in which the relevant domestic corporation invests (including cases where the party falls under Article 2 (1) 2), it shall be treated as an increased investment in the foreign related party;
3. If the foreign related party, who is the other party to an international transaction, is a person exempt from subparagraphs 1 and 2, it shall be treated as a dividend vested in the foreign related party.
(2) Where making a disposition or adjustment under paragraph (1), the tax authority shall notify the fact by serving a notice of transferred income prescribed by Ordinance of the Ministry of Strategy and Finance within 15 days from the expiry of deadline for submitting a certificate of return of transferred income under Article 15-2 (the day when tax base and tax amount were determined or rectified as prescribed in Article 4 or 6-2 of the Act in the cases falling under Article 15 (3)) by applying Article 192 (1) and (4) of the Enforcement Decree of the Income Tax Act mutatis mutandis. In such cases, the dividend shall be deemed paid on the date the notice arrives.
(3) Where a taxpayer submits a certificate of return of transferred income under Article 15-2 within 90 days from the date he/she receives a notice under paragraph (2) after the tax authority made a disposition or adjustment under Article 15 (3), it shall be deemed that no disposition or adjustment under Article 15 (3) was made.
(4) The amount disposed as a domestic corporation’s retained earnings, which was deemed a loan to a foreign related party under paragraph (1) 3 before May 24, 2006, because it had not been returned by the foreign related party concerned to a domestic corporation, may be disposed of by the domestic corporation as a dividend under paragraph (1) 3.
[This Article Wholly Amended by Presidential Decree No. 23600, Feb. 2, 2012]
 Article 17 (Special Application Procedure for Income Adjustment)
(1) A resident who intends to have his/her amount of income and final amount of tax adjusted under Article 10 (1) of the Act shall file a revised return or a request for rectification (including a request filed via the national tax information and communications networks), with the head of a tax office having jurisdiction over the place for tax payment, using a special application for income adjustment in the form provided for by Ordinance of the Ministry of Strategy and Finance, together with the notice of the conclusion of mutual agreement procedures issued by the Commissioner of the National Tax Service pursuant to Article 42 (2), within two months from the date of receiving a notification under Article 27 (2) of the Act.
(2) Where a resident who has obtained a unilateral advance pricing agreement under Article 11-2 (2) intends to have his/her amount of income and final amount of tax adjusted, he/she shall file a revised return or a request for rectification with the head of a tax office having jurisdiction over the place for tax payment, using a special application for income adjustment in the form provided by Ordinance of the Ministry of Strategy and Finance, together with a notice issued by the Commissioner of the National Tax Service, within two months from the date of receipt of such notice issued by said Commissioner under paragraph (5) of the said Article.
(3) Upon receipt of a request for rectification under paragraphs (1) and (2), the head of a tax office having jurisdiction over the place for tax payment may rectify the tax base and tax amount within two months from the date of request for the application for rectification. In this regard, if no ground exists for making a rectification, he/she shall notify the relevant person who filed the request thereof.
[This Article Wholly Amended by Presidential Decree No. 23600, Feb. 2, 2012]
 Article 17-2 (Rectification Claim for Adjustment of Arm's Length Prices for National Taxes and Customs Duties)
A person who intends to file a claim for rectification pursuant to Article 10-2 (1) of the Act shall submit (including submission via the national tax information and communications networks) a request for rectification stating each of the following matters, with evidentiary materials attached:
1. Name, and address or residence of the person who files the request;
2. Tax base and amount of the corporate tax or income tax before its rectification;
3. Tax base and amount of the corporate tax or income tax after its rectification;
4. Grounds for filing a request for rectification;
5. Other necessary matters.
[This Article Newly Inserted by Presidential Decree No. 23600, Feb. 2, 2012]
 Article 17-3 (Establishment, Operation, etc. of Tax Adjustment Review Committee for International Trade Price)
(1) To deliberate on matters about recommendations for tax adjustment of international trade price pursuant to Article 10-3 of the Act, a Tax Adjustment Review Committee for International Trade Price (hereinafter referred to as “Tax Adjustment Review Committee”) shall be established under the jurisdiction of the Minister of Strategy and Finance.
(2) The Tax Adjustment Review Committee shall be comprised of up to 15 members, including one chairperson.
(3) The head of the Tax and Customs Office under the jurisdiction of the Ministry of Strategy and Finance shall be the chairperson and the following persons shall be the committee members:
1. A person nominated by the chairperson from among Grade III public officials of the Ministry of Strategy and Finance or the public officials of the Senior Executive Service;
2. A person recommended by the Commissioner of the National Tax Service from among Grade III public officials of the National Tax Service or the public officials of the Senior Executive Services;
3. A person recommended by the Commissioner of Korea Customs Service from among Grade III public officials of the Korea Customs Service or the public officials of the Senior Executive Service;
4. A person commissioned by the chairperson from among the attorney-at-laws, certified public accountants, tax accountants or licensed customs brokers having abundant experience in computing arm's length prices for national taxes and customs duties, or from among university professors who teach tax law, accounting, etc.
(4) The chairperson shall convene and preside over meetings of the Tax Adjustment Review Committee, and exercise overall control over the affairs thereof.
(5) Where the chairperson is unable to perform his/her duties due to an inevitable reason, a member predesignated by the chairperson from among the members referred to in paragraph (3) 1 shall act on his/her behalf.
(6) The term of office of a member shall be two years, and the chairperson may rescind commission of such member during his/her term of office if he/she is deemed unfit to serve as a committee member due to a mental disorder, neglect of duties, loss of dignity, or other reasons.
(7) No meetings of the Tax Adjustment Review Committee shall be open to the public: Provided, That they may be open to the public where the chairperson deems it necessary to do so.
(8) Each meeting of the Tax Adjustment Review Committee shall be comprised of the chairperson and seven to ten members designated by the chairperson for each such meeting, and shall include at least three members under paragraph (3) 4.
(9) Each meeting of the Tax Adjustment Review Committee shall be held by attendance of a majority of all members under paragraph (8) and shall pass resolutions on proposals for adjustment recommendation with the concurrent votes of a majority of the members present.
(10) The Minister of Strategy and Finance shall recommend an adjustment for the relevant tax authority or the head of a customhouse in accordance with the proposal for adjustment recommendation pursuant to paragraph (9), except in the absence of special circumstances.
(11) A tax authority or the head of a customhouse in receipt of an adjustment recommendation pursuant to paragraph (10) shall submit, without delay, an implementation plan therefor to the Minister of Strategy and Finance.
(12) Except as otherwise provided for in paragraphs (1) through (11), matters necessary for organization, operation, etc. of the Tax Adjustment Review Committee shall be determined by Ordinance of the Minister of Strategy and Finance.
[This Article Newly Inserted by Presidential Decree No. 23600, Feb. 2, 2012]
[This Article shall remain valid until June 30, 2022 pursuant to Article 2 of the Addenda to Presidential Decree No. 23600, Feb. 2, 2012]
 Article 17-4 (Applications, etc. for Adjustment of Taxation on International Trade Price)
(1) A taxpayer who intends to apply for adjustment of taxation on international trade price pursuant to Article 10-3 (1) of the Act shall submit an application for tax adjustment, stating the following matters, accompanied by relevant evidentiary materials:
1. Name, and address or residence of the applicant;
2. Details of disposition for rectification issued by the head of a customhouse;
3. Grounds for, and details of, the application filed for tax adjustment;
4. Other necessary matters.
(2) Where any of the following applies to a transaction for which an application for tax adjustment is filed, the chairperson referred to in Article 17-3 (3) (hereafter referred to as “chairperson” in this Article) need not review the relevant transaction. In such cases, he/she shall notify the relevant taxpayer thereof:
1. Where regarding the relevant transaction, an objection, a request for examination, or a request for ruling is filed under Article 55 of the Framework Act on National Taxes and Article 119 of the Customs Act, or a request for examination is filed under Article 43 of the Board of Audit and Inspection Act, or an administrative suit is pending under the Administrative Litigation Act;
2. Where the relevant transaction has been subject to the advance pricing agreement under Article 6 of the Act and the prior examination of the method of determining dutiable value under Article 37 of the Customs Act;
3. Where the mutual agreement procedure under Article 22 of the Act and a tax treaty is pending or completed regarding the relevant transaction;
4. Where the Tax Adjustment Review Committee deems it impracticable to deliberate on the relevant transaction due to reasons such as a difference in computation methods between the arm's length price for the national tax and dutiable value.
(3) If the chairperson deems the details of an application for tax adjustment pursuant to paragraph (1) are inappropriate for deliberation but can be corrected, he/she may request the taxpayer, the Commissioner of the National Tax Service, or the Commissioner of Korea Customs Service to correct the fact relations, appropriateness of dutiable value, etc. setting a reasonable period therefor. In such cases, the period for correction shall not be excluded from the period for adjustment set under Article 10-3 (1) of the Act. <Amended by Presidential Decree No. 26078, Feb. 3, 2015>
(4) Upon filing a request for correction with the Commissioner of the National Tax Service, or the Commissioner of Korea Customs Service under the former part of paragraph (3), the chairperson shall notify the relevant taxpayer thereof. <Newly Inserted by Presidential Decree No. 26078, Feb. 3, 2015>
[This Article Newly Inserted by Presidential Decree No. 23600, Feb. 2, 2012]
[This Article shall remain valid until June 30, 2022 pursuant to Article 2 of the Addenda to Presidential Decree No. 23600, Feb. 2, 2012]
 Article 18 (Method of Tax Adjustment Following Special Cases of Income Computation)
(1) Out of the amount of a domestic corporation's income reduced due to an adjustment under Article 10 (1) of the Act, the amount that is retained in the corporation without being returned to any foreign related party shall be treated as the gross income carried forward under subparagraph 2 of Article 18 of the Corporate Tax Act, and shall be excluded from the gains of the domestic corporation.
(2) No amount of income to be reduced due to an adjustment of the income amount of a resident who is not a domestic corporation under Article 10 (1) of the Act, and not to be returned to any foreign related party shall be deemed an amount of income of the relevant resident.
[This Article Wholly Amended by Presidential Decree No. 23600, Feb. 2, 2012]
 Article 19 (Scope of Data Requested by Tax Authorities, and Method of Submission thereof)
(1) Data that a tax authority may require a taxpayer to submit pursuant to Article 11 (4) of the Act shall be any of the following data concerning the taxpayer or his/her foreign related party: <Amended by Presidential Decree No. 26958, Feb. 5, 2016; Presidential Decree No. 28643, Feb. 13, 2018>
1. Various relevant contract documents concerning the transfer, purchase, etc. of assets;
2. Price list of products;
3. Statement of manufacturing costs;
4. Schedule of transaction by item, in which related and unrelated parties are separately assorted;
5. Documents corresponding to subparagraphs 1 through 4, in the case of supply of services or other transactions;
6. Organizational chart of a corporation and a table of assignment of office duties;
7. Data for determining international trade prices;
8. Internal guidelines for pricing applicable to transactions among the related transactions;
9. Accounting standards and methods relating to the relevant transactions;
10. Details of business activities of the parties involved in the relevant transactions;
11. Current status of mutual investments with related parties;
12. Forms or items omitted when filing returns on the corporate tax and income tax;
13. Data with which it is possible to grasp the details of transactions intra-group services under Article 6-2, as specified by Ordinance of the Ministry of Strategy and Finance;
14. Data specified further by Ordinance of the Ministry of Strategy and Finance, including an agreement on cost sharing, in connection with the tax adjustment by arm's length cost sharing under Article 6-2 of the Act;
15. Other data necessary for computing appropriate prices.
(2) Data falling under paragraph (1) shall be prepared and submitted in Korean: Provided, That where a tax authority permit to do so, the data prepared in English maybe submitted.
[This Article Wholly Amended by Presidential Decree No. 23600, Feb. 2, 2012]
 Article 19-2 (Scope of Provision of Information on International Transactions)
“Information or data prescribed by Presidential Decree” referred to in Article 11-2 (1) of the Act means:
1. Information for taxation referred to in Article 116 (1) of the Customs Act;
2. Other data relevant to the determination or rectification of dutiable value.
[This Article Newly Inserted by Presidential Decree No. 23600, Feb. 2, 2012]
 Article 20 (Application for Extension of Deadline to Submit Statements of International Transactions, etc. and Notification of Decision thereof)
(1) A person who intends to apply for an extension of the deadline for submission pursuant to Article 11 (3) and (5) (proviso) of the Act shall submit (including submission via the national tax information and communications networks) to the tax authority an application for extending the deadline for submission in the form as provided by Ordinance of the Ministry of Strategy and Finance, by no later than 15 days before the deadline for submission. <Amended by Presidential Decree No. 26958, Feb. 5, 2016; Presidential Decree No. 28643, Feb. 13, 2018>
(2) The tax authority shall, within 7 days from the date of receiving an application for extending the deadline for submission under paragraph (1), notify the applicant of whether such extension is to be granted. In such cases, where no notification has been given within 7 days, the deadline of submission shall be deemed extended up to the deadline requested for extension.
[This Article Wholly Amended by Presidential Decree No. 23600, Feb. 2, 2012]
 Article 21 (Causes for Extension of Deadline to Submit Statements of International Transactions and Other Relevant Data)
"Extenuating circumstances prescribed by Presidential Decree" referred to in Article 11 (3) of the Act, and "good cause prescribed by Presidential Decree" referred to in the proviso to Article 11 (5) of the Act, paragraph (6) of the same Article, and in the part other than the subparagraphs of Article 12 (1) of the Act mean any of the following cases, respectively: <Amended by Presidential Decree No. 26078, Feb. 3, 2015; Presidential Decree No. 26958, Feb. 5, 2016; Presidential Decree No. 28643, Feb. 13, 2018>
1. Where a taxpayer is unable to submit the relevant data due to a fire, disaster, robbery, etc.;
2. Where it is extremely impracticable for a taxpayer to submit the relevant data due to a serious business crisis;
3. Where the relevant books and documents are seized or held provisionally by a competent authority;
4. Where the closing date of the taxable year of a foreign related party has not yet arrived;
5. Where it is impossible for a taxpayer to submit the relevant data by the deadline, as it will take a substantial time to collect and compile such data;
6. Where it is deemed impossible to submit the data by the deadline, on any grounds corresponding to subparagraphs 1 through 5.
[This Article Wholly Amended by Presidential Decree No. 23600, Feb. 2, 2012]
 Article 21-2 (Submission of Consolidated Reports on International Transaction Information)
(1) "Requirements prescribed by Presidential Decree" in Article 11 (2) of the Act means the requirements classified as follows: <Amended by Presidential Decree No. 27837, Feb. 7, 2017; Presidential Decree No. 28643, Feb. 13, 2018>
1. A domestic corporation, or a foreign corporation having a domestic place of business: It shall meet all of the following criteria:
(a) The total volume of transactions of goods, etc. prescribed by Ordinance of the Ministry of Strategy and Finance, with a foreign related party in the relevant taxable year, shall exceed 50 billion won;
(b) The turnover in the relevant taxable year shall exceed 100 billion won;
2. A taxpayer classified as follows: He/she shall meet the criteria specified in the relevant item:
(a) A taxpayer determined and publicly notified by the Minister of Strategy and Finance (hereafter referred to as "domestically controlling enterprise" in this Article): The turnover on the consolidated financial statements for the immediately preceding taxable year shall exceed one trillion won;
(b) A tax payer who has a foreign controlling stockholder determined and publicly notified by the Minister of Strategy and Finance: He/she shall fall under either of the following conditions:
(i) He/she shall not have an obligation to submit a report by country in accordance with the statutes of the country in which the foreign controlling stockholder is located;
(ii) It shall be impossible to exchange reports by country, due to reasons such as that no tax treaty is concluded with the state in which the foreign controlling stockholder is located.
(2) "Consolidated business report, individual business reports, and reports by country prescribed by Presidential Decree" in Article 11 (2) of the Act means the reports classified as follows: <Amended by Presidential Decree No. 27837, Feb. 7, 2017; Presidential Decree No. 28643, Feb. 13, 2018>
1. Consolidated business report: A report prescribed by Ordinance of the Ministry of Strategy and Finance, which includes all of the following information the taxpayer and the corporations in special relationship prescribed by Ordinance of the Ministry of Strategy and Finance with the taxpayer:
(a) Organizational structure;
(b) Details of business;
(c) Details of intangible assets;
(d) Financing activities;
(e) Financial status;
2. Individual business report: The taxpayer's report prescribed by Ordinance of the Ministry of Strategy and Finance, which includes the following information: Provided, That where an advance pricing agreement is accepted under Article 6 of the Act, the details of the relevant international transactions conducted during the period for which the advance pricing agreement applies, may be excluded from the individual business report:
(a) Organizational structure;
(b) Details of business;
(c) Itemization of transactions with his/her foreign related party;
(d) Information on calculation of the price pertaining to the transactions referred to in item (c);
(e) Financial status;
3. Report by country: A report prescribed by Ordinance of the Ministry of Strategy and Finance, which includes the following matters of the taxpayer and corporations, etc. in the special relationship prescribed by Ordinance of the Ministry of Strategy and Finance with the taxpayer:
(a) Itemization of profit by country;
(b) Pre-tax profit or loss by country;
(c) Amount of tax payment by country;
(d) Capital by country;
(e) Major business activities by country.
(3) Pursuant to Article 11 (2) of the Act, a taxpayer who meets the requirements pursuant to the subparagraphs of paragraph (1) shall submit a report classified as follows: <Newly Inserted by Presidential Decree No. 27837, Feb. 7, 2017; Presidential Decree No. 28643, Feb. 13, 2018>
1. Where he/she meets the criteria prescribed in paragraph (1) 1: A consolidated business report and individual business reports;
2. Where he/she meet the criteria prescribed in paragraph (1) 2: Reports by country.
(4) Where more than one taxpayer meets the requirements prescribed in paragraph (1) 1, a consolidated business report referred to in paragraph (2) 1 may be submitted by any one of those taxpayers as prescribed by Ordinance of the Ministry of Strategy and Finance. <Amended by Presidential Decree No. 27837, Feb. 7, 2017>
(5) A report referred to in each of the subparagraphs of paragraph (2) shall be submitted [including being submitted through the information and communications networks defined in subparagraph 18 of Article 2 of the Framework Act on National Taxes (hereafter referred to as "information and communications networks" in this Article)] after being prepared in the manner classified as follows: <Amended by Presidential Decree No. 27837, Feb. 7, 2017>
1. Individual business reports and a consolidated business report: in Korean;
2. Reports by country: in Korean and English.
(6) Notwithstanding paragraph (5) 1, a consolidated business report referred to in paragraph (2) 1 may be prepared and submitted in English. In such cases, a Korean version of the consolidated business report shall be additionally submitted within one month after the submission of the English version. <Amended by Presidential Decree No. 27837, Feb. 7, 2017>
(7) A domestic controlling enterprise and a taxpayer who has a foreign controlling stockholder determined and publicly notified by the Minister of Strategy and Finance shall submit the data prescribed by Ordinance of the Ministry of Strategy and Finance as those pertaining to the person obligated to submit reports by country to the head of the tax office having jurisdiction over the place for tax payment (including submitting them via the information and communications networks), within six months from the last day of the month in which the end date of each business year falls. <Newly Inserted by Presidential Decree No. 27837, Feb. 7, 2017>
(8) Where a taxpayer who has a foreign controlling stockholder determined and publicly notified by the Minister of Strategy and Finance fails to submit the data referred to in paragraph (7) before the expiration of the deadline prescribed in the same paragraph, he/she shall submit reports by country within 12 months from the last day of the month in which the end date of the business year falls. <Newly Inserted by Presidential Decree No. 27837, Feb. 7, 2017>
(9) Necessary matters for the method of calculating the turnover and the total volume of transactions of goods, etc. in the relevant year and for the detailed method of preparing the consolidated report on international transaction information under Article 11 (2) of the Act, other than those provided for in paragraphs (1) through (8), shall be prescribed by Ordinance of the Ministry of Strategy and Finance. <Newly Inserted by Presidential Decree No. 28643, Feb. 13, 2018>
[This Article Newly Inserted by Presidential Decree No. 26958, Feb. 5, 2016]
 Article 22 Deleted. <by Presidential Decree No. 22574, Dec. 30, 2010>
 Article 23 (Judgment on Negligence, etc. of Taxpayers)
(1) When determining whether a taxpayer has been negligent as prescribed in Article 13 (1) 1 of the Act, the taxpayer shall be deemed not to have been negligent if he/she falls under the following requirements:
1. The taxpayer shall demonstrate the process through which he/she selected the most reasonable method, from among those as provided in Article 5 (1) of the Act, by means of the documents prepared at the time of the final return on tax base and tax amount;
2. The taxpayer shall actually apply the method selected under subparagraph 1;
3. The taxpayer shall keep and retain the data required in connection with the arm's length price computation method under subparagraphs 1 and 2.
(2) Data verifying the method of computing an arm’s length price pursuant to Article 13 (1) 2 of the Act refer to the data referred to in the following subparagraphs, and a taxpayer shall, upon request by the tax authority, submit the data within 30 days from the date of receipt of such request: <Amended by Presidential Decree No. 28643, Feb. 13, 2018>
1. Data describing the outline of business (including the data analyzing the elements that have influence over the prices of assets and services);
2. Data describing the structures, etc. with foreign related parties and other relevant persons having influence over the transfer pricing;
3. The following data showing the details how the arm's length price computation method adopted in a return was selected:
(a) Data analyzing and predicting economy, which have served as a basis for selecting the arm's length price computation method adopted in the return;
(b) Data describing the numerical values being the objects used for computing the arm's length price and the details of adjustment in the course of comparison and appraisal of the numerical values;
(c) Data describing the arm's length price computation method that could have been applied as an alternative and the reason the alternative was not selected;
(d) Relevant data, etc. added in order to compute the arm's length price after the expiration of the taxable period until filing a return on the income tax or corporate tax.
(3) Whether a taxpayer has determined reasonably under Article 13 (1) 2 of the Act shall be judged in consideration of the requirements in the following criteria:
1. The numerical values being the objects of comparison, which have been collected at the time of expiration of the taxable period, shall be representative data, and none of the particular numerical values being the objects of comparison which must be included has been omitted, thus not obtaining any results favorable to the taxpayer;
2. The arm's length price computation method has been selected and applied after systematically analyzing the collected data;
3. There shall be an appropriate reason for selecting and applying an arm's length price computation method if such method has been selected and applied through though there was another arm's length price computation method agreed through an advance pricing agreement in the previous taxable year, or selected in the course of tax audit by the tax authority.
(4) Where a resident who has made an advance pricing agreement under Articles 11 (6) and 11-2 (2) files a revised return on the tax base and tax amount of the corporate tax under Article 17, no penalty shall be assessed pursuant to Article 13 of the Act.
(5) Where important data related to an arm's length price computation method that could not be confirmed at the time of filing a return is confirmed after the report deadline, no penalty shall be assessed pursuant to Article 13 of the Act if the person who made the return files a revised return on the tax base and tax amount of the corporate tax within 60 days from the time he/she becomes aware of such fact. In such cases, paragraphs (2) and (3) shall apply mutatis mutandis to the revised return.
[This Article Wholly Amended by Presidential Decree No. 23600, Feb. 2, 2012]
CHAPTER III ADJUSTMENT OF TAXATION ON INTEREST PAID TO FOREIGN CONTROLLING STOCKHOLDERS
 Article 24 (Scope of Borrowings)
(1) The scope of borrowings referred to in Article 14 (1) of the Act shall be the liabilities which generate the interest and discount fees: Provided, That the fund borrowed in a foreign currency by a domestic branch of a foreign bank under the Banking Act upon request of the Government (including the Bank of Korea under the Bank of Korea Act), or the amount deposited by and borrowed from, in foreign currency, the head office or branch office of the relevant foreign bank in order to use it by one of the following methods, shall be excluded:
1. Method to deposit or lend in foreign currency to a nonresident or a foreign exchange bank under the Foreign Exchange Transactions Act;
2. Method to accept or trade the bonds in foreign currency issued by a nonresident or a foreign exchange bank under the Foreign Exchange Transactions Act.
(2) For the purposes of paragraph (1), where it is unclear that the amount is deposited by or borrowed from, in foreign currency, the head office or branch office of the foreign bank, and where it may be discriminated by the source ratio of funds stated on the statement of financial position (based on the annual average balance), etc. for the relevant business year, the amount computed by applying the said ratio shall be deemed the amount borrowed from the head office or branch office. In such cases, the annual average balances may be calculated daily or monthly.
(3) For the purposes of Article 14 (1) of the Act, where a foreign stockholder under Article 3 (1) 1 and a foreign corporation under subparagraph 2 of the same paragraph are both included in a foreign controlling stockholder, the amount borrowed from the foreign corporation and the amount borrowed from a third party according to the payment guarantee (including substantial guarantee of payment, such as provision of security, etc; hereinafter the same shall apply) of the foreign corporation shall be aggregated to the amount borrowed from the foreign stockholder and the amount borrowed from a third party according to the payment guarantee of the foreign stockholder.
(4) For the purposes of Article 14 of the Act, the amount borrowed by a domestic corporation from a foreign controlling stockholder or from a third party under the payment guarantee issued by a foreign controlling stockholder shall be converted by applying the base exchange rate or arbitrated exchange rate pursuant to the Foreign Exchange Transactions Act as at the end of the business year concerned.
(5) Notwithstanding paragraph (4), a domestic corporation engaged in the financial industry under the Korean Standard Industrial Classification announced by the Commissioner of the Korea National Statistical Office (hereinafter referred to as "financial industry") under Article 22 of the Statistics Act, in converting the amount borrowed, may select and apply any of the following exchange rates. In such cases, the conversion method selected and applied shall be continuously applied for at least five years from the first day of the relevant business year:
1. Basic exchange rate or arbitrated exchange rate under the Foreign Exchange Transactions Act as at the end of the business concerned;
2. Daily basic exchange rate or arbitrated exchange rate under the Foreign Exchange Transactions Act.
[This Article Wholly Amended by Presidential Decree No. 23600, Feb. 2, 2012]
 Article 24-2 (Scope of Related Parties Subject to Addition of Funds Borrowed from Foreign Controlling Stockholders)
"Related party to a foreign controlling stockholder prescribed by Presidential Decree, including relatives" referred to in the former part of in Article 14 (1) of the Act means a person in such a relationship as provided for in subparagraph 20 (a) or (b) of the Framework Act on National Taxes with a foreign controlling stockholder.
[This Article Newly Inserted by Presidential Decree No. 26078, Feb. 3, 2015]
 Article 25 (Method for Calculating Non-Deductible Expenses)
(1) The amount deemed not included in deductible expenses under Article 14 (1) of the Act shall be the amount of interest and discount fees computed by aggregating each total from multiplying respective debts by respective loans by relevant interest rates in order from the highest interest rate (where at least two loans to which the same interest rate applies exist, in order of the latest loan shall apply) among total loans of a domestic corporation from its foreign controlling stockholder, and the limit on such sum shall be the time the accumulated amount of loans from the loan of the highest interest rate reaches the excess accumulated, and the accumulated amount of the last loan when the accumulated amount surpasses the accumulated excess, which exceeds the accumulated excess shall be excluded. In such case, the accumulated excess shall be calculated according to the following formula; <Amended by Presidential Decree No. 26078, Feb. 3, 2015>
Accumulated excess = Accumulated amount of total loans of a domestic corporation (including a domestic place of business a foreign corporation; hereinafter the same shall apply in this Chapter) from its foreign controlling stockholder (including a third party providing loans to the domestic corporation under guarantee issued by the foreign controlling stockholder; hereafter the same shall apply in this Chapter) (accumulated amount of equity investment of foreign controlling stockholder in the domestic corporation × standard multiplier (two times or multipliers by industry as provided for in Article 26))
(2) The scope of interest and discount fees to be aggregated as provided for in paragraph (1) shall include every item as all interest income generated from the loans under Article 24, the economic substance of which corresponds to interest, such as the amortization of bond discounts and discount charges on accommodation bills, which a domestic corporation must pay to its foreign controlling stockholder: Provided, That the interest on construction capital funds shall be excluded from the scope of interest and discount fees.
(3) The equity investment of a foreign controlling stockholder in a domestic corporation pursuant to paragraph (1) and Article 27 (2) means an amount computed by multiplying the larger of the amounts provided for in the following subparagraphs, by the ratio of the capital paid by the foreign controlling stockholder (if a foreign stockholder and a foreign corporation whose loans are aggregated pursuant to Article 24 (3) are all included in a foreign controlling stockholder, the ratio of the foreign stockholder's paid-in capital shall be deemed that of the paid-in capital of the foreign stockholder and the foreign corporation) to the total amount of paid-in capital of the relevant domestic corporation as at the end of the relevant business year: Provided, That for a domestic place of business, such amount means an amount computed by deducting the total liabilities from the total assets on the statement of financial position of the place of business as at the end of each business year:
1. An amount computed by deducting the total liabilities (including reserves and excluding the unpaid corporate tax) from the total assets on the statement of financial position as at the end of the relevant business year;
2. The paid-in capital calculated using the following formula as at the end of the relevant business year:
Amount of capital + (amount in excess of par value of stocks issued and gains from capital reduction) - (discount on capital stock and loss arising from capital reduction)
(4) Notwithstanding paragraph (3), if a change occurs in capital due to a merger or division, or increase or reduction of capital during the relevant business year, the sum of multiplied numbers, which are calculated separately into the period starting from the first day of the relevant business year to the day before the date of the change in capital and the period from the date of such change to the last day of the relevant business year, shall be the multiple as referred to in paragraph (3) 1, or the multiplied paid-in capital as referred to in subparagraph 2 of the same paragraph.
(5) For the purposes of paragraph (3), where a foreign controlling stockholder indirectly owns a domestic corporation’s stocks, the ratio of the foreign controlling stockholder’s paid-in capital to the total paid-in capital shall be calculated by the following methods:
1. Where one or more corporations interpose between a foreign controlling stockholder and the domestic corporation by means of stock ownership, and all of them correspond to the relationship connected in tandem (hereinafter referred to as "tandem investment relationship"), the ratio of foreign controlling stockholder's paid-in capital in the domestic corporation shall be computed by multiplying all equity ratios in every phase: Provided, That where a foreign stockholder and a foreign corporation whose loans are aggregated as prescribed in Article 24 (3) are all included in the tandem investment relationship, it shall be computed by applying Article 2 (2) mutatis mutandis. In such cases, "indirect ownership ratio" shall be construed as "ratio of paid-in capital";
2. Where at least two tandem investment relationships exist between a foreign controlling stockholder’s and the domestic corporation, the ratio of foreign controlling stockholder's paid-in capital in the domestic corporation shall be computed by aggregating all paid-in capital ratios computed in the respective tandem investment relationships.
(6) For the purposes of Article 14 (1) of the Act, the interest on a loan obtained from a foreign controlling stockholder, which is excluded from deductible expenses, shall be deemed disposed of as a dividend under Article 67 of the Corporate Tax Act, and the interest on a loan obtained from a related party under Article 24-2 or from a third party under a payment guarantee issued by a foreign controlling stockholder, which is excluded from deductible expenses, shall be deemed disposed of as other outflows from the relevant corporation under Article 67 of the Corporate Tax Act. <Amended by Presidential Decree No. 26078, Feb. 3, 2015>
[This Article Wholly Amended by Presidential Decree No. 23600, Feb. 2, 2012]
 Article 26 (Multiplier by Industry)
The multiplier of a loan against equity in investment held by a foreign controlling stockholder, which applies to the finance industry pursuant to Article 14 (2) of the Act, shall be six times.
[This Article Wholly Amended by Presidential Decree No. 21939, Dec. 31, 2009]
 Article 27 (Loans under Ordinary Terms and Conditions)
(1) Where a domestic corporation, whose multiplier of loans exceeds a foreign controlling stockholder's equity investment by as much as two times, intends to seek the benefit of Article 14 (3) of the Act, it shall submit the following data to the competent tax authority by the deadline for filing a return under Article 60 (1) or 76-17 (1) of the Corporate Tax Act: <Amended by Presidential Decree No. 24365, Feb. 15, 2013; Presidential Decree No. 26078, Feb. 3, 2015>
1. Data attesting that the relevant loans are not actual capital contribution, based on the interest rate, maturity, payment method, possibility of conversion into capital, priority over other claims, etc.;
2. Data on the multiplier of loans against the equity capital of a comparable corporation carrying on the same business type as that of the relevant domestic corporation (hereinafter referred to as "comparable multiplier"). In such cases, the comparable corporation means a corporation having a representative nature based on its multiplier of loans among domestic corporations having a scale of business and managerial conditions, etc. similar to those of the relevant domestic corporation.
(2) Where the multiplier of loans against a foreign controlling stockholder's equity investment in a domestic corporation exceeds the comparable multiplier, Article 25 (1) shall apply to the method of computing the non-deductible expense of the domestic corporation. In such cases, "standard multiplier" shall be construed as "comparable multiplier"
[This Article Wholly Amended by Presidential Decree No. 23600, Feb. 2, 2012]
 Article 28 (Adjustment of Withholding Taxes)
Subsequent to an offset of a withholding tax pursuant to Article 14 (4) of the Act, if a domestic corporation has an amount of tax payable, it shall pay the amount of tax to the head of the tax office having jurisdiction over the place for tax payment by no later than the tenth day of the month following the month in which the deadline for filing a return pursuant to Article 60 (1) or 76-17 (1) of the Corporate Tax Act falls, and if it has a refundable tax amount, it may request the head of the tax office having jurisdiction over the place for tax payment to refund the relevant amount. <Amended by Presidential Decree No. 24365, Feb. 15, 2013>
[This Article Wholly Amended by Presidential Decree No. 23600, Feb. 2, 2012]
 Article 28-2 (Submission of Forms)
A domestic corporation which has borrowed funds (including a payment guarantee) from a foreign controlling stockholder shall submit a specification of adjustment of interests payable to a foreign controlling stockholder and a specification of adjustment of withholding tax, as provided in Ordinance of the Ministry of Strategy and Finance, to the head of the tax office having jurisdiction over the place for tax payment at the time of filing a final return of tax base and tax amount of corporate tax under Article 60 (1) or 76-17 (1) of the Corporate Tax Act. <Amended by Presidential Decree No. 24365, Feb. 15, 2013>
[This Article Wholly Amended by Presidential Decree No. 23600, Feb. 2, 2012]
 Article 28-3 (Exclusion of Interest Expense Exceeding Income, from Deductible Expenses)
(1) The net interest expense pursuant to Article 15-2 (1) 1 of the Act refers to the total amount of interest and discount fees paid on the total funds borrowed by a domestic corporation from all its foreign related parties less the total amount of interest income received by the domestic corporation from the foreign related parties (if the resulting value is negative, it shall be regarded as zero).
(2) For the purpose of paragraph (1), Article 25 (2) shall apply mutatis mutandis to the scope of interest and discount fees.
(3) For the purpose of Article 15-2 (1) 2 of the Act, the depreciation cost shall be the depreciation cost counted as deductible expense in accordance with Article 23 of the Corporate Tax Act.
(4) For the purpose of Article 15-2 (1) of the Act, the interest and discount fees paid to foreign related parties as regards at least two debts to which the same interest rate applies shall be excluded from deductible expenses in order of the interest and discount fees paid on the latest debts.
(5) “Domestic corporation prescribed by Presidential Decree” in Article 15-2 (2) of the Act means a domestic corporation that engages in financial and insurance activities pursuant to the Korean Standard Industrial Classification publicly notified by the Commissioner of the Korea National Statistical Office under Article 22 of the Statistics Act.
(6) Any domestic corporation that has borrowed funds from any foreign related party shall submit a statement of adjustment of the net interest expenses paid to the foreign related party in the form prescribed by Ordinance of the Ministry of Strategy and Finance to the head of the tax office having jurisdiction over the place for tax payment, along with a final return on the tax base and tax amount of corporate tax pursuant to Articles 60 (1) and 76-17 (1) of the Corporate Tax Act.
[This Article Newly Inserted by Presidential Decree No. 28643, Feb. 13, 2018]
<<Enforcement Date: Jan. 1, 2019>>
 Article 28-4 (Exclusion of Interest Expenses Incurred in Hybrid Financial Instrument Transactions from Deductible Expenses)
(1) “Financial instruments prescribed by the Presidential Decree” in Article 15-3 (1) of the Act means financial instruments that satisfy all the requirements described in the following subparagraphs: Provided, That the foregoing shall not apply to financial instruments issued by any domestic corporation that engages in financial and insurance activities pursuant to the Korean Standard Industrial Classification publicly notified by the Commissioner of the Korea National Statistical Office under Article 22 of the Statistics Act:
1. For the Republic of Korea: The interest and discount fees paid by a domestic corporation to a foreign corporation (hereafter in this Article referred to as “counter-party to transaction”) that is a foreign related party in relation to financial instrument transactions shall be treated as interest expenses, classifying the financial instruments as liabilities in accordance with the Korean tax law;
2. For a country where the counter-party to transaction is located: The interest and discount fees received by the counter-party to transaction from the domestic corporation shall be treated as dividend income, classifying the financial instruments as capital in accordance with the country’s tax law.
(2) “Period of time prescribed by Presidential Decree” in Article 15-3 (1) of the Act means the period between the end of a business year in which a domestic corporation pays interest and discount fees in relation to financial instrument transactions pursuant to paragraph (1) and the end of the business year of the counter-party to transaction that commences within 12 months therefrom.
(3) The scope of the non-taxable amount pursuant to Article 15-3 (1) of the Act shall be the dividend income not included in taxable income in cases where the dividend income falls under any of the following subparagraphs as the interest and discount fees received from a domestic corporation are teated as dividend income according to the tax law of the country where the counter-party to transaction is located:
1. Where the dividend income is not included in the taxable income of the counter-party to transaction;
2. Where less than 10/100 of the dividend income is included in the taxable income.
(4) The amount to be excluded from deductible expenses in calculating the amount of income for the pertinent business year pursuant to Article 15-3 (1) of the Act shall be an amount calculated by multiplying the amount in subparagraph 1 by the ratio in subparagraph 2:
1. The amount of interest and discount fees paid by a domestic corporation to the counter-party to transaction;
2. The ratio of the non-taxable amount pursuant to paragraph (3) to the amount of dividend income received by the counter-party to transaction from the domestic corporation.
(5) Article 15-3 (2) of the Act shall apply where at least 10/100 of the amount of dividend income received by the counter-party to transaction from the domestic corporation is included in the taxable income of the counter-party to transaction; in this case, an amount calculated in accordance with paragraph (4) may be included in the deductible expenses.
(6) The amount to be included in gains in accordance with the former part of Article 15-3 (3) of the Act shall be an amount calculated in accordance with paragraph (4).
(7) “Amount equivalent to interest calculated pursuant to Presidential Decree” in the latter part of Article 15-3 (3) of the Act means an amount calculated by multiplying the amount in subparagraph 1 by the ratio in subparagraph 2:
1. The difference in corporate tax arising from inclusion of an amount calculated in accordance with paragraph (4) in deductible expenses in a business year for which the interest and discount fees paid to the counter-party to transaction are included in the deductible expenses;
2. The ratio of 3/10,000 per day for the period between the commencement of the business year following the business year for which inclusion in deductible expenses is made and the end of the business year for which inclusion in gains is made.
(8) A domestic corporation that engages in financial instrument transactions pursuant to paragraph (1) shall submit a statement of adjustment of the interest expenses involved in hybrid financial instruments prescribed by Ordinance of the Ministry of Strategy and Finance to the head of the tax office having jurisdiction over the place for tax payment, along with a final return on the tax base and tax amount of corporate tax pursuant to Articles 60 (1) and 76-17 (1) of the Corporate Tax Act.
[This Article Newly Inserted by Presidential Decree No. 28643, Feb. 13, 2018]
CHAPTER IV ACCUMULATIVE TAXATION OF RETAINED EARNINGS OF SPECIFIC FOREIGN CORPORATIONS
 Article 29 (Scope of Income Actually Earned)
(1) The scope of income actually earned by a corporation under Article 17 (1) of the Act refers to the net income per book before deducting the corporate tax, which has been computed under the generally accepted accounting principles upon preparation of financial statements in a country or region where the head office or principal office of the relevant corporation is located (hereafter in this Chapter, referred to as "state of residence"): Provided, That where the accounting principles generally accepted in the residency status are remarkably different from the Korean corporate accounting principles, the net income per book before deducting the corporate tax on the financial statements computed based upon the Korean corporate accounting principles shall be deemed the income actually earned.
(2) The net income per book before deducting the corporate tax under paragraph (1) refers to the net income before deducting the taxes assessed on the corporate income pursuant to the tax laws of the residency status of the relevant foreign corporation, and other taxes incidental thereto.
(3) Where the appraised gain or loss (hereafter referred to as "appraised gain or loss" in this Article) in an asset specified by Ordinance of the Ministry of Strategy and Finance has been reflected in the net income per book before deducting the corporate tax pursuant to paragraph (1), the appraised gain shall be subtracted, while the appraised loss shall be added, but where such asset is sold or a dividend or distribution generated from such asset is received in the pertinent business year, any appraised gain or loss in the asset that has arisen before the pertinent business year shall be included: Provided, That the appraised gain or loss shall not be added nor subtracted if all or part of the appraised gain or loss is reflected in the relevant residency status at the time of calculating the taxable income of the corporation.
[This Article Wholly Amended by Presidential Decree No. 23600, Feb. 2, 2012]
 Article 30 (Country or Region in which Corporation's Tax Burden Does Not Exceed 15/100 of Income Actually Earned)
(1) A country or region in which the tax burden does not exceed 15/100 of the income actually earned by the corporation as referred to in Article 17 (1) of the Act means a country or region in which the total amount of tax assessed on the aggregate of the net income per book before deducting the corporate tax of the relevant corporation for the latest three business years including the pertinent business year (in cases of the business year when the net income per book before deducting the corporate tax is a deficit, the deficit shall be deemed nil; hereafter the same shall apply in this Article) under the tax laws of the residency status does not exceed 15/100 of the aggregate of the net income per book before deducting the corporate tax of the relevant corporation for the latest three business years. In such cases, the amount of tax actually borne shall include the amount of tax on the corporation's actually earned income paid to the country other than the relevant residency status. <Amended by Presidential Decree No. 27837, Feb. 7, 2017>
(2) In computing the latest three business years referred to in paragraph (1), only the period during which the business that falls under the types of business referred to in the subparagraphs of Article 18 (1) of the Act has been performed shall be computed, and if such period is less than three business years, only the period until the relevant business year shall be reflected in the computation. <Newly Inserted by Presidential Decree No. 27837, Feb. 7, 2017>
[This Article Wholly Amended by Presidential Decree No. 23600, Feb. 2, 2012]
 Article 30-2 (Scope, etc. of Related Parties)
(1) "Related party to a Korean national prescribed by Presidential Decree, including relatives" referred to in Article 17 (1) of the Act means a related party in any of the following relationships (hereafter in this Article, referred to as "related party"): <Amended by Presidential Decree No. 26078, Feb. 3, 2015>
1. A person in such a relationship as prescribed in subparagraph 20 (a) or (b) of Article 2 of the Framework Act on National Taxes to a Korean national;
2. A person in a special relationship defined in Article 2 (1) 8 of the Act to a Korean national.
(2) Where the percentage of shares indirectly owned by a related party is calculated under Article 2 (2), shares indirectly owned by a related party through the relevant national shall be excluded. <Amended by Presidential Decree No. 26078, Feb. 3, 2015>
[This Article Newly Inserted by Presidential Decree No. 24365, Feb. 15, 2013]
 Article 31 (Computation of Distributable Retained Earnings)
(1) The retained earnings disputable as at the end of each business year under Article 17 (1) of the Act shall be an amount computed by deducting each of the following amounts from the amount derived from adjusting matters provided under Ordinance of the Ministry of Strategy and Finance in the unappropriated earned surplus (including interim dividends that have accrued from the appropriation of earned surplus executed in the relevant business year; hereafter the same shall apply in this Article) computed based upon the generally accepted accounting principles at the time of preparing financial statements in the residency status of the relevant specific foreign corporation: Provided, That where the accounting principles generally accepted in the residency status are substantially different from the Korean corporate accounting principles, an amount computed by deducting each of the following amounts from the amount derived from adjusting matters provided under Ordinance of the Ministry of Strategy and Finance in the unappropriated earned surplus computed under the Korean corporate accounting principles shall be deemed the distributable retained earnings: <Amended by Presidential Decree No. 24365, Feb. 15, 2013>
1. Dividends of profits (including interim dividends that have accrued from the appropriation of earned surplus executed in the relevant business year) or distributions of surplus funds, out of the amount of earned surplus appropriated in the relevant business year;
2. Bonus, severance pay, and any other outflows from the relevant corporation, out of the amount of earned surplus appropriated in the relevant business year;
3. Obligatory reserves or obligatory appropriation of earned surplus as determined by the statutes of the relevant state of residence, out of the amount of earned surplus appropriated in the relevant business year;
4. The amount of earned surplus set forth in subparagraph 1 that has not been appropriated, out of that already taxed after deemed distributed to the relevant Korean national pursuant to Article 17 (1) of the Act before the date the relevant business year commences;
5. The amount of earned surplus set forth in subparagraphs 1 and 2 that has not been appropriated, out of the earned surplus (excluding the amount set forth in subparagraph 6) accrued when Article 17 of the Act was not applied;
6. The amount of appraised gains yet unattained as at the end of the relevant business year, out of those set forth in Article 29 (3);
7. Deleted; <by Presidential Decree No. 24365, Feb. 15, 2013>
8. The amount set forth in Article 34-2.
(2) Where a specific foreign corporation has retained any income distributable, as computed under paragraph (1), before the enforcement date of the amended Enforcement Decree of the Adjustment of International Taxes Act (Presidential Decree No. 15196) and the amount computed under paragraph (1) 4 and 5 before the commencement date of the pertinent business year, it shall be deemed that said amounts have been appropriated preferentially as earned surplus in the order of accrual, when the earned surplus under paragraph (1) 1 and 2 is appropriated. <Amended by Presidential Decree No. 24365, Feb. 15, 2013>
[This Article Wholly Amended by Presidential Decree No. 23600, Feb. 2, 2012]
 Article 32 (Computation of Amount Deemed Dividends)
(1) An amount deemed a dividend under Article 17 (1) of the Act shall be calculated by multiplying the distributable retained earnings of a specific foreign corporation by a stockholding ratio of relevant Korean national in the specific foreign corporation.
(2) Where one or more corporations interpose between a Korean national and a specific foreign corporation by means of stock ownership, and all of them are connected in a tandem investment relationship, the stockholding ratio of the Korean national in the specific foreign corporation shall be computed by multiplying all equity ratios in every phase.
(3) Where two or more tandem investment relationships exist between a Korean national and a specific foreign corporation, the stockholding ratio of the Korean national in the specific foreign corporation shall be computed by aggregating all stockholding ratios computed at the respective tandem investment relationships.
(4) For the purposes of paragraph (2), where one or more domestic corporations interpose between a Korean national and a specific foreign corporation by means of stock ownership, no amount deemed a dividend shall be computed among Korean nationals.
[This Article Wholly Amended by Presidential Decree No. 23600, Feb. 2, 2012]
 Article 33 (Conversion of Amount Deemed Dividends by Foreign Currency)
For the purposes of Article 32, an amount deemed a dividend shall be converted by applying an exchange rate, as prescribed by Ordinance of the Ministry of Strategy and Finance, as at the 60th day following the end of each business year of the relevant specific foreign corporation.
[This Article Wholly Amended by Presidential Decree No. 23600, Feb. 2, 2012]
 Article 34 (Scope, etc. of Related Parties to Be Included when Judging Scope of Korean Nationals Subject to Assumption of Distribution of Dividends)
(1) For the purposes of Article 17 (2) of the Act, Article 2 (2) shall apply mutatis mutandis to the calculation of the indirect stockholding ratio.
(2) "Person prescribed by Presidential Decree" in the latter part of Article 17 (2) of the Act means a Korean national or a person in a relationship set forth in subparagraph 20 (a) or (b) of Article 2 of the Framework Act on National Taxes. <Newly Inserted by Presidential Decree No. 24365, Feb. 15, 2013>
[This Article Wholly Amended by Presidential Decree No. 23600, Feb. 2, 2012]
 Article 34-2 (Computation of Amount Excluded from Scope of Income Actually Earned)
"Amount specified by Presidential Decree" referred to in Article 17 (3) of the Act means an amount computed by converting an amount computed under Article 29 (1) through (3) by the base exchange rate or the arbitrated exchange rate under the Foreign Exchange Transactions Act as at the end of each business year, which shall not exceed 200 million won. In such cases, the amount shall be computed using the following formula if the pertinent business term is less than one year:
(200 million won ÷ 12) × the number of months in the pertinent business year
[This Article Wholly Amended by Presidential Decree No. 23600, Feb. 2, 2012]
 Article 35 (Requirements for Determining Scope of Application)
(1) Deleted. <by Presidential Decree No. 24365, Feb. 15, 2013>
(2) "Requirements prescribed by Presidential Decree" referred to in Article 18 (1) 1 of the Act means: <Amended by Presidential Decree No. 24365, Feb. 15, 2013>
1. The aggregate of the revenue or of the purchase costs generated from any of the lines of business listed in Article 18 (1) 1 of the Act shall exceed 50/100 of the total revenue or the total purchase cost: Provided, That in the case of wholesale trade, it shall be based on the average amount during the latest three business years (where the period falls short of three business years, during the period up to the pertinent business year);
2. The amount of transactions with a person in a special relationship, out of the aggregate of the revenues or of the purchase costs generated from the any of the lines of business listed in Article 18 (1) 1 of the Act, shall exceed 50/100 of the aggregate of the revenues or of the purchase costs generated from said line of business. In such cases, when Article 2 applies to such special relationship "domestic corporation" shall be construed as "specific foreign corporation".
[This Article Wholly Amended by Presidential Decree No. 23600, Feb. 2, 2012]
 Article 36 (Decision of Primary Business)
The primary business pursuant to Article 18 (1) 2 of the Act and the part other than the subparagraphs of Article 18-2 of the Act means a business that generates more than 50/100 of the total revenue amount of the relevant specific foreign corporation.
[This Article Wholly Amended by Presidential Decree No. 23600, Feb. 2, 2012]
 Article 36-2 (Special Scope of Application to Wholesale Trade)
"Where ... meets the requirements prescribed by Presidential Decree" in Article 18 (4) of the Act means where the amount of sales by a specific foreign corporation to a person not in a special relationship who is in the same country, etc. referred to in Article 18 (4) of the Act exceeds 50/100 of total sales. In such cases, when Article 2 applies to such special relationship, "domestic corporation" shall be construed as "specific foreign corporation" when Article 2 is applied to a special relationship. <Amended by Presidential Decree No. 24365, Feb. 15, 2013>
[This Article Wholly Amended by Presidential Decree No. 23600, Feb. 2, 2012]
 Article 36-3 (Special Cases of Computing Distributable Retained Earnings)
(1) "Where the income earned ... satisfies the criterion prescribed by Presidential Decree" in the part other than the subparagraphs of Article 18 (5) of the Act means where the total amount of income generated from the activities referred to in the subparagraphs of Article 18 (5) of the Act exceeds 5/100 of the aggregate of the revenues of the relevant specific foreign corporation: Provided, That where the relevant specific foreign corporation holds at least 10/100 of stocks of a foreign corporation operating a business other than those referred to in the subparagraphs of Article 18 (1) of the Act, the dividend generated from such stocks shall be excluded from the total amount of income. <Amended by Presidential Decree No. 27837, Feb. 7, 2017>
(2) Distributable retained earnings to which Article 17 of the Act applies pursuant to Article 18 (5) of the Act shall be an amount calculated by dividing by the multiple of the amount referred to in subparagraph 1 and the amount referred to in subparagraph 2, by the amount referred to in subparagraph 3:
1. The distributable retained earnings under Article 31;
2. The total amount of income generated from the activities referred to in the subparagraphs of Article 18 (5) of the Act excluding the dividend referred to in the proviso to paragraph (1);
3. The total amount of income of the specific foreign corporation.
[This Article Newly Inserted by Presidential Decree No. 25200, Feb. 21, 2014]
 Article 36-4 (Requirements, etc. for Affiliated Company)
(1) "Requirements prescribed by Presidential Decree" in the part other than the subparagraphs of Article 18-2 of the Act means: <Amended by Presidential Decree No. 24365, Feb. 15, 2013>
1. The specific foreign corporation shall own at least 40/100 of the total outstanding stocks or of the total equity investment;
2. It shall not be subject to Article 17 (1) of the Act.
(2) "Ratio prescribed by Presidential Decree" in subparagraph 2 of Article 18-2 of the Act means 90/100.
[This Article Wholly Amended by Presidential Decree No. 23600, Feb. 2, 2012]
 Article 36-5 (Requests for Rectification)
(1) A person that intends to be subject to Article 19 (2) of the Act shall re-compute the tax base and tax amount of income tax or corporate tax of the taxable year for which the amount deemed a dividend was included in gains according to Article 19 (1) of the Act; and shall file a request for rectification concerning the refund of the same amount along with a statement of foreign tax credit prescribed by Ordinance of the Ministry of Strategy and Finance. <Amended by Presidential Decree No. 24365, Feb. 15, 2013>
(2) Where a person intending to request rectification under paragraph (1) cannot file a request for rectification at the time of filing the return on income tax or corporate tax because of delay in determination and notice of the tax amount for the dividend income by the foreign government, difference in the taxable period, etc., he/she may file a request for rectification along with evidentiary documents within 45 days from the date the foreign government notifies him/her of the determination of the tax amount for the overseas dividend income.
[This Article Wholly Amended by Presidential Decree No. 23600, Feb. 2, 2012]
 Article 36-6 (Method of Non-Inclusion of Actually Distributed Dividends in Taxable Gains)
(1) Where a specific foreign corporation has actually paid dividends (including dividends or distributions referred to in the subparagraphs of Article 16 (1) of the Corporate Tax Act) to a Korean national, the actual dividends shall be deemed paid from retained earnings in the order of accrual of the distributable retained earnings.
(2) Where a Korean national has invested in a foreign corporation, and said foreign corporation (hereinafter referred to as "intermediate corporation") has invested in a specific foreign corporation, if the intermediate corporation actually pays dividends to the national, such dividends shall be deemed the gross income carried forward under subparagraph 2 of Article 18 of the Corporate Tax Act; or one that does not constitute dividend income under Article 17 (1) of the Income Tax Act (hereinafter referred to as "carried forward gross income, etc."): Provided, That the carried forward gross income, etc. shall not exceed the amount calculated using the following formula:
The aggregate of [the retained earnings (including the dividends or distributions under each subparagraph of Article 16 of the Corporate Tax Act) actually paid by a specific foreign corporation, as dividends, to an intermediate corporation × the stockholding ratio of the Korean national to the intermediate corporation as at the time of actual dividend)] - The amount already paid by the intermediate corporation, as dividends, to the Korean national during the bygone business year and thereby deemed the carried forward gross income, etc.
(3) Where at least two intermediate corporations interpose between a Korean national and a specific foreign corporation, the dividends shall be subject to paragraph (2).
[This Article Wholly Amended by Presidential Decree No. 23600, Feb. 2, 2012]
 Article 37 (Submission of Data for Tax Assessment)
(1) Pursuant to Article 20-2 of the Act, a Korean national subject to Article 17, 18 (limited to those subject to Article 17), 19, or 20 of the Act shall submit the following documents to the head of the tax office having jurisdiction over the place for tax payment:
1. Financial statements of a specific foreign corporation:
2. A corporate tax return and supporting documents (referring to supporting documents requested by the tax authority of a country or region where a specific foreign corporation is located) of a specific foreign corporation;
3. A statement on calculation of retained earnings of a specific foreign corporation prescribed by Ordinance of the Ministry of Strategy and Finance;
4. A statement on judgment of accumulative taxation on retained earnings of a specific foreign corporation prescribed by Ordinance of the Ministry of Strategy and Finance;
5. A statement on judgment of the scope of application of accumulative taxation on retained earnings of a specific foreign corporation prescribed by Ordinance of the Ministry of Strategy and Finance;
6. A statement on overseas investment prescribed by Ordinance of the Ministry of Strategy and Finance.
(2) Pursuant to Article 20-2 of the Act, a Korean national subject to the main body of Article 18 (1) of the Act, paragraph (4) of the same Article, and Article 18-2 of the Act, but excluded from the application of Article 17 of the Act, shall submit the documents referred to in paragraphs (1) 4 through 6 to the head of the tax office having jurisdiction over the place for tax payment.
[This Article Wholly Amended by Presidential Decree No. 25200, Feb. 21, 2014]
CHAPTER V SPECIAL CASES OF ASSESSING GIFT TAX ON OVERSEAS DONATION
 Article 38 (Computation, etc. of Market Price of Overseas Donated Property)
(1) In computing the market price of the property donated pursuant to the main sentence of Article 21 (2) of the Act, where any of the following values is verified, such value shall be deemed the market price of the donated property:
1. Actual sale price realized within six months before and after the date of donation of the relevant property;
2. Value appraised by a creditworthy appraisal institution within six months before and after the date of donation of the relevant property;
3. Price for compensating the donated property, fixed through an expropriation, etc. within six months before and after the date of donation of the relevant property.
(2) "Method specified by Presidential Decree" referred to in the proviso to Article 21 (2) of the Act means an evaluation of the donated property by applying mutatis mutandis Articles 61 through 65 of the Inheritance Tax and Gift Tax Act: Provided, That where the method of evaluation is inappropriate, it refers to an evaluation by an appraisal business operator defined in subparagraph 4 of Article 2 of the Act on Appraisal and Certified Appraisers. <Amended by Presidential Decree No. 26078, Feb. 3, 2015; Presidential Decree No. 27472, Aug. 31, 2016>
(3) The method of evaluation under Article 63 of the Inheritance Tax and Gift Tax Act shall apply mutatis mutandis to computation of the value of securities.
[This Article Wholly Amended by Presidential Decree No. 23600, Feb. 2, 2012]
 Article 38-2 (Foreign Tax Credits)
(1) The amount of gift tax to be deducted from the amount of gift tax computed under Article 21 (3) of the Act, shall be the aggregate of following amounts (excluding a penalty and a surcharge) actually paid by a gift taxpayer to a foreign government (including a local government; hereinafter the same shall apply) under Article 21 (1) of the Act (hereafter in this Article, referred to as "foreign tax paid"):
1. An amount of tax levied, on a donation, under the statutes of the foreign state based on the value of the donated property (including taxes substantially similar thereto);
2. An amount of surtax on the amount of tax referred to in subparagraph 1.
(2) Foreign tax paid shall be deducted from the gift tax by up to the amount computed by multiplying the amount of gift tax computed under the Inheritance Tax and Gift Tax Act, by the rate computed by the following formula. In such cases, if the rate computed by the following formula exceeds one, it shall be deemed one:
Tax base of the donated property on which the gift tax is paid under the statutes of a foreign state (referring to the tax base of property acquired by donation under the statutes of the relevant foreign state)
_____________________________________________________________
Tax base of property acquired by donation provided for in the Inheritance Tax and Gift Tax Act
(3) For the purposes of paragraph (1) or (2), the tax base of the donated property shall be converted into Korean currency based on the basic exchange rate or arbitrage exchange rate under the Foreign Exchange Transactions Act as at the date of donation; and the foreign tax paid shall be converted into Korean currency, as prescribed by Ordinance of the Ministry of Strategy and Finance.
(4) A person intending to obtain a foreign tax credit under paragraphs (1) through (3), shall submit an application for foreign tax credit with evidentiary documents prescribed by Ordinance of the Ministry of Strategy and Finance to the head of the tax office having jurisdiction over the place for tax payment when filing a return on the tax base of property acquired by donation.
(5) Notwithstanding paragraph (4), where it is impossible to submit evidentiary documents when filing a return on the tax base of property acquired by donation due to delayed assessment and notice of gift tax by the relevant foreign government, difference in the payment deadline, etc., the relevant person may submit an application for foreign tax credit and evidentiary documents referred to in paragraph (4) to the head of the tax office having jurisdiction over the place for tax payment within two months of receipt of the notice of the assessment of gift tax from the foreign government.
(6) Paragraph (5) shall also apply mutatis mutandis where a foreign tax paid is changed because the relevant foreign government has rectified the amount of gift tax assessed on the donated property. In such cases, refundable tax, if any, may be appropriated or refunded pursuant to Article 51 of the Framework Act on National Taxes.
[This Article Newly Inserted by Presidential Decree No. 26078, Feb. 3, 2015]
CHAPTER VI MUTUAL AGREEMENT PROCEDURES
 Article 39 (Applications, etc. for Commencing Mutual Agreement Procedures)
(1) Any taxation that does not coincide with the provisions of a tax treaty under Article 22 (1) 2 of the Act shall contain the following:
1. Unjustifiable taxation by the other Contracting State, which does not coincide with the provisions of a tax law; or is based on an erroneous assessment method;
2. Unjustifiable taxation by the other Contracting State, which is substantially inequitable or assessed discriminately.
(2) Any Korean national, resident, domestic corporation, nonresident, or foreign corporation intending to apply for commencing a mutual agreement procedure pursuant to Article 22 (1) of the Act (hereafter referred to as "applicant" in this Chapter) shall submit the following documents to the Minister of Strategy and Finance or the Commissioner of the National Tax Service: <Amended by Presidential Decree No. 27837, Feb. 7, 2017>
1. An application for commencing the mutual agreement procedure in the form provided by Ordinance of the Ministry of Strategy and Finance;
2. A statement of accounts and a tax return relevant to an application for commencing the mutual agreement procedure;
3. An appeal, if any, filed by the applicant or his/her foreign related party;
4. and 5. Deleted. <by Presidential Decree No. 24365, Feb. 15, 2013>
(3) Pursuant to Article 22 (3) and (5) of the Act, the Commissioner of the National Tax Service shall submit, to the Minister of Strategy and Finance, a quarterly report on the current status of application to commence, and progresses, the mutual agreement procedure, as prescribed by the Minister of Strategy and Finance within 15 days from the expiration of each quarter. In such cases, the current status of progress shall include the status of progress of the mutual agreement procedure requested by the other Contracting State.
(4) Upon receipt of an application to commence the mutual agreement procedure pursuant to Article 22 (1) of the Act, the Minister of Strategy and Finance or the Commissioner of the National Tax Service shall review whether to accept such application, taking consideration of the following matters:
1. Whether the application falls under Article 22 (1) 1 through 3 of the Act;
2. Whether the tax authority is able to reasonably adjust it by taking necessary measures, without bothering with commencing the mutual agreement procedure.
(5) Where the requirements for applying for the mutual agreement procedure are found not to be met as a result of review pursuant to paragraph (4), the Minister of Strategy and Finance or the Commissioner of the National Tax Service may request the applicant to supplement and re-file said application.
(6) Even after receiving an application to commence the mutual agreement procedure, the Minister of Strategy and Finance or the Commissioner of the National Tax Service may refrain from requesting the other Contracting State to commence the mutual agreement procedure, or discontinue the mutual agreement procedure that has commenced, if the applicant consents thereto.
(7) Upon rejection of an application to commence the mutual agreement procedure, the Minister or Strategy and Finance or the Commissioner of the National Tax Service shall notify the applicant and the other Contracting State thereof. <Newly Inserted by Presidential Decree No. 27837, Feb. 7, 2017>
[This Article Wholly Amended by Presidential Decree No. 23600, Feb. 2, 2012]
 Article 40 (Special Case of Deferment of Collection, etc.)
(1) and (2) Deleted. <by Presidential Decree No. 19650, Aug. 24, 2006>
(3) A person who intends to be subject to special cases of deferment of notice, deferment of tax collection, or deferment of disposition for arrears under Article 24 (2) and (3) of the Act, shall submit an application therefor to the head of a tax office having jurisdiction over the place for tax payment or the head of the local government along with any of the following documents: <Amended by Presidential Decree No. 23600, Feb. 2, 2012>
1. A written application for the special case concerning deferment of collection, etc., as provided by Ordinance of the Ministry of Strategy and Finance;
2. A copy of the notification of commencing the mutual agreement procedure issued by the Commissioner of the National Tax Service.
(4) For the purposes of Article 24 (2) and (3) of the Act, the head of a tax office having jurisdiction over the place for tax payment or the head of a local government in receipt of an application under paragraph (3) shall not grant to the deferment of notice, deferment of tax collection, or deferment of disposition for arrears in any of the following cases. In such cases, if the deferment of tax payment notice, deferment of tax collection, or deferment of disposition for arrears has already been granted, such deferment shall be canceled without delay, and the tax amount and delinquent tax related to such deferment shall all be collected in lump sum: <Amended by Presidential Decree No. 23600, Feb. 2, 2012>
1. Where the applicant has been in arrears for his/her tax;
2. Where the applicant fails to comply with an obligation to submit the data under Article 11 of the Act;
3. Where it is highly likely to lose a taxation right.
 Article 41 (Method of Calculating Additional Amount Equivalent to Interest)
Where any deferment of tax collection or deferment of disposition for arrears is granted under Article 24 (5) of the Act, an amount equivalent to the interest to be added to national tax or local tax shall be calculated as follows:
Additional amount equivalent to interest = Relevant national tax or local tax subject to the deferment of tax collection or the deferment of disposition for arrears (where an adjustment is made under the mutual agreement procedure, the adjusted amount) × the number of days either the day after the deadline for tax payment or the commencement date of the mutual agreement procedure, whichever comes later, until the closing date of the mutual agreement procedure × the rate provided in Article 27-4 of the Enforcement Decree of the Framework Act on National Taxes.
[This Article Wholly Amended by Presidential Decree No. 23600, Feb. 2, 2012]
 Article 41-2 (Notification of Deferring Notice, etc.)
Where any deferment of notice, notice of installment payment, deferment of tax collection, or deferment of disposition for arrears (hereafter referred to as the "deferment of notice, etc." in this Article) is applied on the amount of income tax or corporate tax pursuant to Article 24 (7) of the Act, if a taxpayer is notified of the deferment of notice, etc., such notification shall also be given to the head of a local government having jurisdiction over the local tax to be added to the relevant amount of income tax or corporate tax, by applying mutatis mutandis Article 24 of the Enforcement Decree of the National Tax Collection Act.
[This Article Wholly Amended by Presidential Decree No. 23600, Feb. 2, 2012]
 Article 42 (Reporting on and Notice of Terms and Conditions Mutually Agreed)
(1) When the mutual agreement procedure is closed, the Commissioner of the National Tax Service shall submit a copy of the mutual agreement to the Minister of Strategy and Finance, without delay as prescribed in Article 27 (1) of the Act
(2) Notice of closing the mutual agreement procedure under Article 27 (2) of the Act shall be given using the form specified by Ordinance of the Ministry of Strategy and Finance.
(3) When making a levying disposition or a decision on rectification or taking other necessary action pursuant to Article 27 (3) of the Act, the competent tax authority or the head of the relevant local government shall notify the Minister of Strategy and Finance or the Commissioner of the National Tax Service thereof, within 15 days after taking such measures.
[This Article Wholly Amended by Presidential Decree No. 23600, Feb. 2, 2012]
 Article 42-2 (Extended Application, etc. of Terms and Conditions Mutually Agreed Upon)
(1) A person who intends to apply for extended application of the terms and conditions mutually agreed upon in accordance with Article 27-2 (1) of the Act shall file the following documents with the competent tax authority or the head of the relevant local government:
1. An application for extended application of terms and conditions mutually agreed upon, prescribed by Ordinance of the Ministry of Strategy and Finance;
2. Documents evidencing that all of the requirements under the subparagraphs of Article 27-2 (1) of the Act are met.
(2) "Requirements prescribed by Presidential Decree" in Article 27-2 (1) 3 of the Act means that the normal profit or ordinary transactional net margin as applied at the time of computing the arm's length price shall be identical.
[This Article Wholly Amended by Presidential Decree No. 23600, Feb. 2, 2012]
CHAPTER VII INTERNATIONAL COOPERATION IN TAX AFFAIRS
 Article 43 (Procedures for Issuing Residence Certificates)
(1) A person who intends to submit a residence certificate to the other Contracting State in order to be subject to limited tax rate in the other Contracting State under Article 29 (2) of the Act shall submit an application for the issuance of residence certificate as provided in Ordinance of the Ministry of Strategy and Finance to the head of the tax office having jurisdiction over the place for tax payment.
(2) Upon receipt of an application for issuance of residence certificate pursuant to paragraph (1), the head of the tax office having jurisdiction over the place for tax payment shall issue a residence certificate prescribed by Ordinance of the Ministry of Strategy and Finance after inquiring into relevant facts: Provided, That where he/she is requested to issue the residence certificate in a form issued by the government of the other Contracting State, he/she may issue it in such form.
[This Article Wholly Amended by Presidential Decree No. 23600, Feb. 2, 2012]
 Article 44 (Procedures for Entrustment of Tax Collection)
(1) Where the head of a tax office having jurisdiction over the place for tax payment or of local government requests, pursuant to Article 30 (1) of the Act, the Commissioner of the National Tax Service to ask the other Contracting State to take measures necessary to collect tax pursuant to Article 30 (1) of the Act, he/she shall submit the following documents: Provided, That the documents described in subparagraph 2 shall be limited to those collectable in the Republic of Korea: <Amended by Presidential Decree No. 27958, Mar. 27, 2017>
1. A written request to entrust tax collection between countries as provided by Ordinance of the Ministry of Strategy and Finance;
2. Documents concerning the nationality, status of residence, and status of domestic and overseas property ownership of the following persons:
(a) A taxpayer;
(b) A person jointly and severally liable for tax payment pursuant to Article 25 of the Framework Act on National Taxes or Article 44 of the Framework Act on Local Taxes;
(2) Upon receipt of a request to entrust the tax collection under paragraph (1), the Commissioner of the National Tax Service shall determine whether to accept such request after reviewing the following:
1. The nationality, status of residence, and status of property ownership of a taxpayer;
2. Status of the joint and several tax liability and of security for tax payment;
3. Possibility for losing the taxation rights;
4. Extinctive prescription of taxation right;
5. Other matters necessary to collect taxes.
(3) Where the Commissioner of the National Tax Service decides to entrust tax collection pursuant to paragraph (2), the Commissioner of the National Tax Service shall request the competent authority of the other Contracting State to collect the relevant tax.
(4) Upon receipt of a notification of the results of entrusted tax collection from the other Contracting State, the Commissioner of the National Tax Service shall notify the head of the tax office having jurisdiction over the place for tax payment or the head of the local government of the details of such notification.
[This Article Wholly Amended by Presidential Decree No. 23600, Feb. 2, 2012]
 Article 45 (Procedures for Entrusted Tax Collection)
(1) When the Minister of Strategy and Finance is entrusted with tax collection by the competent authority of the other Contracting State, he/she shall delegate it to the Commissioner of the National Tax Service. In such cases, the Commissioner of the National Tax Service shall report on the results of performance to the Minister of Strategy and Finance.
(2) The Commissioner of the National Tax Service to whom tax collection is entrusted by the competent authority of the other Contracting State or is delegated by the Minister of Strategy and Finance pursuant to paragraph (1) shall without delay notify the person subject to tax collection, who resides in the Republic of Korea, of such fact. In such cases, the Commissioner of the National Tax Service may request said person to submit data to vindicate himself/herself.
(3) The Commissioner of the National Tax Service may require the competent authority of the other Contracting State to provide the data verifying the liability of the person subject to tax collection, such as a court ruling and results of an appeal related to the entrusted tax collection.
(4) Where the Commissioner of the National Tax Service examines whether he/she will cooperate in tax collection for the other Contracting State, he/she shall take consideration of any of the following:
1. Data secured pursuant to paragraphs (2) and (3);
2. Matters provided in each subparagraph of Article 44 (2);
3. Whether the other Contracting State cooperates with the Republic of Korea in tax collection, according to the principle of reciprocity.
(5) If deemed necessary for an examination under paragraph (4), the Commissioner of the National Tax Service may request the other Contracting State to consult with him/her with regard thereto.
(6) Where the Commissioner of the National Tax Service decides to cooperate with the other Contracting State for tax collection, he/she shall without delay instruct the head of the tax office having jurisdiction over the place for tax payment to collect the relevant tax.
(7) The head of tax office instructed to collect tax under paragraph (6) shall collect the relevant tax, as provided for in the National Tax Collection Act, and report the result thereof to the Commissioner of the National Tax Service. In such cases, any expenses incurred exceeding the regular collection expense in connection with such tax collection shall be deducted from the collected tax and paid to the National Treasury, and the details of such calculation shall be reported to the Commissioner of the National Tax Service.
[This Article Wholly Amended by Presidential Decree No. 23600, Feb. 2, 2012]
 Article 46 (Remittance of Collected Taxes)
(1) The Commissioner of the National Tax Service in receipt of the report from the head of the tax office under Article 45 (7) shall notify the other Contracting State of the results of the entrusted tax collection, together with the details of deducted collection expenses.
(2) The method of remitting the other Contracting State's taxes collected in the Republic of Korea or the Korean taxes collected in the other Contracting State shall be determined through consultation with the competent authority of the other Contracting State.
(3) Upon receipt of a remittance of Korean taxes collected in the other Contracting State, the Commissioner of the National Tax Service shall revert it to the National Treasury or to the revenue account of the relevant local government.
[This Article Wholly Amended by Presidential Decree No. 23600, Feb. 2, 2012]
 Article 47 (Exchange of Tax and Financial Information)
(1) Deleted. <by Presidential Decree No. 22040, Feb. 18, 2010>
(2) Where a competent authority requests financial information pursuant to Article 31 (2) and (3) of the Act, such request shall be made in the standard form prescribed in Article 4 (2) of the Act on Real Name Financial Transactions and Confidentiality (hereafter in this Article, referred to as "request for financial transaction information"). In such cases, when the financial information on a group that is unable to specify the personal information of the title holder related to a specific financial transaction is requested under Article 31 (2) of the Act, or when the personal information of the title holder is unable to be specified at the time of requesting the regular provision of financial information under Article 31 (3) of the Act, the personal information of the title holder need not be included in the request for financial transaction information. <Amended by Presidential Decree No. 23600, Feb. 2, 2012; Presidential Decree No. 24365, Feb. 15, 2013; Presidential Decree No. 25200, Feb. 21, 2014>
(3) Where the competent authority provides tax or financial information of a specific taxpayer upon request of the competent authority of the other Contracting State pursuant to Article 31 (1) or (2) of the Act, it shall notify the relevant taxpayer or his/her agent of the fact of providing such information; the details of information provided; etc., using a notice of the details of information prescribed by Ordinance of the Ministry of Strategy and Finance, within ten days from the date of such provision (where the notification is deferred under paragraph (4), from the date the deferment period ends). <Amended by Presidential Decree No. 23600, Feb. 2, 2012>
(4) When the competent authority receives a request to defer notification from the other Contracting State on any of the following grounds, it may defer the notification for the period of deferment requested (if the period of deferment requested on the ground specified in subparagraph 2 or 3 is at least six months, for six months), notwithstanding paragraph (3): <Amended by Presidential Decree No. 23600, Feb. 2, 2012>
1. Where such notification is likely to jeopardize a person's life or body;
2. Where it is evident that such notification is likely to obstruct the fair progress of judicial proceedings, such as the destruction of evidence or a threat to a witness;
3. Where it is evident that such notification is likely to obstruct or excessively delay the progress of administrative procedures, such as inquiry and examination.
(5) Where the competent authority requests the regular provision of financial information under Article 31 (3) of the Act, a period may be set in the first request for financial transaction information to substitute for the requests to be made during the relevant period, except where any change occurs in the details of the request or in the finance company, etc. (referring to any finance company, etc. as defined in subparagraph 1 of Article 2 of the Act on Real Name Financial Transactions and Confidentiality; hereinafter the same shall apply) subject to the request. <Newly Inserted by Presidential Decree No. 24365, Feb. 15, 2013>
(6) A person working for a finance company, etc. that provides financial information under Article 31 (3) of the Act shall submit such financial information to the head of the tax office having jurisdiction over the place for tax payment of the head office of the relevant finance company, etc. within three months from the date the competent authority requests the relevant financial information (in cases falling under paragraph (5), by the date specified in the first request for financial transaction information for the regular provision of information) through the information and communications networks provided for in subparagraph 18 of Article 2 of the Framework Act on National Taxes after preparing it at said head office in accordance with the statement on provision of information prescribed by Ordinance of the Ministry of Strategy and Finance. <Newly Inserted by Presidential Decree No. 24365, Feb. 15, 2013; Presidential Decree No. 26078, Feb. 3, 2015; Presidential Decree No. 26958, Feb. 5, 2016>
(7) Personal information that the head of a finance company, etc. shall verify when providing financial information under Article 31 (3) of the Act and personal information that he/she can request from a counter-party to the financial transactions under Article 31 (10) of the Act are as follows: <Newly Inserted by Presidential Decree No. 25200, Feb. 21, 2014; Presidential Decree No. 26958, Feb. 5, 2016>
1. For an individual: His/her name, address, taxpayer identification number (referring to the date of birth where no taxpayer identification number exists) in the other Contracting State, and other matters prescribed by the relevant tax treaty to verify the personal information;
2. For a corporation: Corporate name, address of the head office or principal office, de facto controller, and other matters prescribed by the relevant tax treaty to verify the personal information.
(8) Where the competent authority acknowledges that any obvious error exists in the information received from a finance company, etc. under Article 31 (3) of the Act; or where the competent authority receives a request from the competent authority of the other Contracting State, based on the relevant tax treaty, to correct an error in the information exchanged under the said paragraph, it shall request, without delay, the head of a finance company, etc. to correct such error. <Newly Inserted by Presidential Decree No. 25200, Feb. 21, 2014; Presidential Decree No. 26958, Feb. 5, 2016>
(9) The head of a finance company, etc. in receipt of a request for correction pursuant to paragraph (8) shall submit the corrected information through the information and communications networks defined in subparagraph 18 of Article 2 of the Framework Act on National Taxes to the competent authority that has requested the correction or vindicate non-existence of the error, within 30 days from the date the request for correction is received. <Newly Inserted by Presidential Decree No. 26958, Feb. 5, 2016>
(10) Where it is impossible to submit corrected information or vindicate the non-existence of error by the deadline prescribed in paragraph (9) due to the ground referred to in any subparagraph of Article 50-2 (3), the head of the relevant finance company, etc. may request the competent authority that has requested the correction to extend the deadline for submission within 30 days. <Newly Inserted by Presidential Decree No. 26958, Feb. 5, 2016>
(11) Except as otherwise provided for in paragraphs (1) through (10), matters necessary to verify personal information shall be determined and publicly notified by the Minister of Strategy and Finance. In such cases, the Minister of Strategy and Finance shall have prior consultation with the Chairperson of the Financial Services Commission and the Commissioner of the National Taxation Administration at any time the relevant public notification is enacted or amended. <Newly Inserted by Presidential Decree No. 25200, Feb. 21, 2014; Presidential Decree No. 26958, Feb. 5, 2016>
[This Article Wholly Amended by Presidential Decree No. 17832, Dec. 30, 2002]
 Article 48 (Cooperation in Tax Audit)
A competent authority may consult with the competent authority of the other Contracting State on matters necessary for cooperation in a tax audit between the countries, such as the procedure, method and scope, etc. of the cooperation in the tax audit.
[This Article Wholly Amended by Presidential Decree No. 23600, Feb. 2, 2012]
CHAPTER VIII REPORTING, ETC. ON OVERSEAS FINANCIAL ACCOUNTS
 Article 49 (Reporting, etc. on Overseas Financial Accounts)
(1) "Amount prescribed by Presidential Decree" in the part other than the subparagraphs of Article 34 (1) of the Act means five hundred million won. <Amended by Presidential Decree No. 28643, Feb. 13, 2018>
(2) "Finance company prescribed by Presidential Decree" in Article 34 (2) of the Act means any finance company, etc. or similar finance company, etc. established under any foreign finance-related statutes. <Amended by Presidential Decree No. 24365, Feb. 15, 2013>
(3) Deleted. <by Presidential Decree No. 24365, Feb. 15, 2013>
(4) “Manner prescribed by Presidential Decree” under Article 34 (5) 1 of the Act means the method of calculating the period of residence in accordance with Article 4 (1), (2), and (4) of the Enforcement Decree of the Income Tax Act. <Amended by Presidential Decree No. 26958, Feb. 5, 2016>
(5) "Person who meets the requirements prescribed by Presidential Decree, including where the information on his/her overseas financial account is verifiable through a report by a third person under the joint name" in Article 34 (5) 4 of the Act means a person whose information on all overseas financial accounts becomes available to the head of the tax office having jurisdiction over the place for tax payment, as any of the persons related to the overseas financial account pursuant to Article 34 (4) of the Act submits the information on his/her overseas financial account together under Article 50 (6).
(6) "Institution prescribed by Presidential Decree" in Article 34 (5) 5 of the Act means any of the following:
1. An institution related to financial investment business, a collective investment scheme, a fund rating company, or a bond rating company pursuant to Financial Investment Services and Capital Markets Act;
2. A financial holding company under the Financial Holding Companies Act;
3. A foreign exchange agency and foreign exchange brokerage company under the Foreign Exchange Transactions Act;
4. A credit information company under the Credit Information Use and Protection Act.
[This Article Wholly Amended by Presidential Decree No. 23600, Feb. 2, 2012]
 Article 50 (Standards, etc. for Determining Persons Required to Report)
(1) Residents and domestic corporations referred to in Article 34 (1) of the Act shall be determined as at the last day of the year in which they are required to report.
(2) The balance of the account of a person liable to file a report under Article 34 (1) of the Act (hereinafter referred to as "person required to report") as at the last day of each month shall be computed by aggregating the amounts calculated according to the following classification as to the assets of each overseas financial account (including all accounts held throughout the relevant year, including those with no transaction history or those closed during the relevant year, but excluding insurance products provided for in the Insurance Business Act and similar overseas insurance products, the financial accounts of which constitute insurance products, the financial accounts of which constitute insurance contracts and the net premium of which is comprised only of risk premiums) held by the person liable to report after converting them respectively at the exchange rate (referring to a daily base or arbitrated exchange rate under the Foreign Currency Exchange Transactions Act) of the relevant nominal currencies: <Amended by Presidential Decree No. 24365, Feb. 15, 2013; Presidential Decree No. 26078, Feb. 3, 2015>
1. Cash: Balance as at the closing time of the last day of each relevant month;
2. Stocks listed on the securities market under the Financial Investment Services and Capital Markets Act or on similar overseas securities markets, and depository receipts issued on the basis of such stocks: Quantity as at the closing hour of the last date of each relevant month × final price on the last day of each relevant month (final price on the immediately preceding transaction date, if the last day of each relevant month is not a business day);
3. Bonds listed on the securities market under the Financial Investment Services and Capital Markets Act or on similar overseas securities markets: Quantity as at the closing time of the last day of each relevant month × final price on the last day of each relevant month (final price on the immediately preceding transaction date, if the last day of each relevant month is not a business day);
4. Collective investment securities under the Financial Investment Services and Capital Markets Act or similar foreign collective investment securities: Quantity as at the closing hour of the last day of each relevant month × base price on the last day of each relevant month (redemption price as at the last day of each relevant month or base price on the most closest date before the last day of each relevant month, if no base price on the last day of each relevant month exists;
5. Insurance products under the Insurance Business Act or similar foreign insurance products: Amount paid as at the closing hour of the last day of each relevant month;
6. Assets, other than those listed in subparagraphs 1 through 5: Quantity as at the closing time of the last day of each relevant month × market price on the last day of each relevant month (acquisition price, if calculating the market price is impracticable).
(3) A person required to report shall file a report on overseas financial account in the form provided for in 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 reporting deadline.
(4) An actual holder of an account in Article 34 (4) of the Act refers to a person who de facto manages the relevant account in transactions involving the account, regardless of being the nominal holder of the relevant account, in such manner as taking the economic risks, acquiring the interest gains or dividends, or having the right to dispose of the relevant account (including a domestic corporation, if it owns, directly or indirectly, 100/100 of the voting stocks of a foreign corporation; however, this shall not apply in cases determined by the Minister of Strategy and Finance, considering whether a tax treaty has been concluded, etc.): Provided, That none of the following persons shall be deemed an actual holder: <Amended by Presidential Decree No. 24365, Feb. 15, 2013; Presidential Decree No. 26078, Feb. 3, 2015>
1. Where the nominal holder of the relevant overseas financial account is a collective investment scheme under Article 9 (18) of the Financial Investment Services and Capital Markets Act or a collective investment scheme similar thereto, established in a foreign country (limited to those registered with the Financial Services Commission under Article 279 (1) of the Financial Investment Services and Capital Markets Act), a person who has invested in such collective investment scheme;
2. Where the nominal holder of the relevant overseas financial account is an investment broker under Article 8 (3) of the Financial Investment Services and Capital Markets Act or the Korea Securities Depository under Article 294 of the same Act, a person who has invested in the relevant overseas financial asset;
3. Where the nominal holder of the relevant overseas financial account is a trust business entity of money trusts under Article 103 of the Enforcement Decree of the Financial Investment Services and Capital Markets Act, a person who has invested in the relevant overseas financial asset;
4. Where the nominal holder of the relevant overseas financial account is a small and medium enterprise establishment investment association under Article 20 of the Support for Small and Medium Enterprise Establishment Act, a person who has invested in the relevant overseas financial asset;
5. Where the nominal holder of the relevant overseas financial account is the Korea Venture Fund established under Article 4-3 of the Act on Special Measures for the Promotion of Venture Businesses, a person who has invested in the relevant overseas financial asset.
(5) Persons related to an overseas financial account in Article 34 (4) of the Act shall each be deemed to have the entire balance of the relevant account.
(6) A person required to report shall also submit the information on persons related to his/her overseas financial account, in addition to that on himself/herself, as described in the report on overseas financial account under paragraph (3).
[This Article Wholly Amended by Presidential Decree No. 23600, Feb. 2, 2012]
 Article 50-2 (Methods of Explanation and Extension of Period for Explanation)
(1) Where a person required to report, who has been requested to submit an explanation under Article 34-3 (1) of the Act intends to explain the source of the amount unreported in violation of the obligation to report, he/she shall submit a certificate of the source of the unreported amount of overseas financial account in the form prescribed by Ordinance of the Ministry of Strategy and Finance to the head of the tax office having jurisdiction over the place for tax payment.
(2) Where a person required to report, who has been requested to submit an explanation pursuant to Article 34-3 (1) of the Act, explains the source of at least 80/100 of the unreported amount of the relevant overseas financial account, he/she shall be deemed substantiating all the unreported amount for which the explanation has been requested.
(3) "Where the person required to report requests an extension of the period for explanation due to any extenuating circumstances prescribed by Presidential Decree, such as where collecting and preparing data require considerable time" in the proviso to Article 34-3 (2) of the Act means any of the following cases:
1. Where the person required to report is unable to submit data due to a fire, disaster, theft, etc.;
2. Where it is very impracticable for the person required to report to submit data because his/her business is in serious crisis;
3. Where the relevant books or documents are confiscated or kept in custody by a competent authority;
4. Where it is unable to submit data by the deadline because the collection and preparation of data requires considerable time;
5. Where it is deemed impossible to submit data by the deadline due to any cause similar to that falling under any of subparagraphs 1 through 4.
[This Article Newly Inserted by Presidential Decree No. 25200, Feb. 21, 2014]
 Article 50-3 (Revised and After-Deadline Reports of Overseas Financial Accounts)
(1) A person that intends to file a revised report of an overseas financial account pursuant to Article 37 (1) of the Act shall submit a revised report of overseas financial account in the form determined by Ordinance of the Ministry of Strategy and Finance to the head of the tax office having jurisdiction over the place for tax payment, indicating:
1. Information on the overseas financial account reported for the first time;
2. Information on the overseas financial account to be reported with its revised report.
(2) A person that intends to report information on his/her overseas financial account after the reporting deadline pursuant to Article 37 (2) of the Act shall submit a later report on overseas financial account in the form determined by Ordinance of the Ministry of Strategy and Finance to the head of the tax office having jurisdiction over the place for tax payment.
[This Article Newly Inserted by Presidential Decree No. 23600, Feb. 2, 2012]
 Article 50-4 (Income and Property Subject to Voluntary Reporting)
Income and property which may be voluntarily reported under Article 38 (1) of the Act (hereinafter referred to as "voluntary reporting system") shall satisfy each of the following criteria as at the date a voluntary report is filed (referring to the date written notice of intent to file a voluntary report is submitted, where submitted under Article 50-6 (2); hereinafter referred to as "voluntary reporting date"): <Amended by Presidential Decree No. 26958, Feb. 5, 2016>
1. Income or property shall be any of the following, unreported by the statutory reporting deadline under tax law or the amount of which is under-reported:
(a) Income referred to in Article 4 (1) of the Income Tax Act, generated from international transactions or overseas;
(b) Income referred to in under Article 3 (1) of the Corporate Tax Act, generated from international transactions or overseas;
(c) Overseas property inherited pursuant to subparagraph 1 of Article 3 of the Inheritance Tax and Gift Tax Act;
(e) Overseas property subject to gift tax, donated by a resident to a nonresident under Article 21 of the Act;
(f) Property in the form of an overseas financial account, subject to reporting under Article 34 of the Act;
(g) Property that constitutes an overseas direct investment, or overseas real estate or rights related thereto, that constitutes a capital transaction subject to reporting under Article 165-2 of the Income Tax Act or Article 121-2 of the Corporate Tax Act;
2. The statute of limitations on national tax assessment by tax item provided for in each subparagraph of Article 26-2 (1) of the Framework Act on National Taxes, shall not have expired in connection with any income and property referred to in subparagraph 1.
[This Article Newly Inserted by Presidential Decree No. 26546, Sep. 25, 2015]
[This Article remains valid until December 31, 2016 under Article 2 of the Addenda to Presidential Decree No. 26545 (Sep. 25, 2015)]
 Article 50-5 (Persons Excluded from Voluntary Reporting)
"Persons prescribed by Presidential Decree, such as those undergoing a relevant tax audit or investigation" in Article 38 (1) of the Act, means any of the following persons as at the voluntary reporting date: Provided, That no person who seeks to file a voluntary report on any other income or property unrelated to the tax item, taxable period, or reporting period of the income or property subject to a tax audit, inspection, investigation, or examination, or an administrative fine shall be deemed any of the following:
1. A person in receipt of prior notice of an administrative fine to be assessed under Article 35 of the Act or undergoing an investigation under Article 34-2 of the Act, for failing to report an overseas financial account;
2. A person in receipt of notice of a tax investigation under Article 81-7 (1) of the Framework Act on National Taxes, in connection with a national tax;
3. A person undergoing an investigation on suspicion of tax evasion under Article 3 of the Punishment of Tax Offenses Act, or Article 8 of the Act on the Aggravated Punishment, etc. of Specific Crimes, in connection with a national tax;
4. A person in receipt of prior notice of an inspection to be conducted under Article 20 (3) of the Foreign Exchange Transactions Act, or undergoing an investigation for failing to fulfill an obligation to report under the Foreign Exchange Transactions Act, in connection with income and property subject to reporting under tax law.
[This Article Newly Inserted by Presidential Decree No. 26546, Sep. 25, 2015]
[This Article remains valid until December 31, 2016 under Article 2 of the Addenda to Presidential Decree No. 26545 (Sep. 25, 2015)]
 Article 50-6 (Voluntary Reporting)
(1) A person who intends to file a report under the voluntary reporting system shall file a voluntary report on overseas income and property in the form prescribed by Ordinance of the Ministry of Strategy and Finance (hereinafter referred to as "voluntary report"), either in person or by mail, with the Minister of Strategy and Finance through the commissioner of the regional tax office having jurisdiction over the place for tax payment under tax law, by the deadline for filing voluntary reports set by the Minister of Strategy and Finance under Article 38 (1) of the Act (hereinafter referred to as "deadline for filing voluntary reports").
(2) A person who intends to notify his/her intention to file a voluntary report before filing such voluntary report pursuant to paragraph (1), may first submit a written notice of intent to file a voluntary report in the form prescribed by Ordinance of the Ministry of Strategy and Finance, to the Minister of Strategy and Finance through the commissioner of the regional tax office having jurisdiction over the place for tax payment under tax law, within one month from the first day of the period for filing voluntary reports.
(3) A person who has made a mistake on a voluntary report under paragraph (1), such as under-reporting the income and property below the income and property that must be reported under tax law, may file an amended voluntary report, either in person or by post, with the Minister of Strategy and Finance through the commissioner of the regional tax office having jurisdiction over the place for tax payment under tax law by the deadline for filing voluntary reports.
[This Article Newly Inserted by Presidential Decree No. 26546, Sep. 25, 2015]
[This Article remains valid until December 31, 2016 under Article 2 of the Addenda to Presidential Decree No. 26545 (Sep. 25, 2015)]
 Article 50-7 (Payment of Tax Amount Voluntarily Reported)
(1) A person who has filed a voluntary report under Article 50-6 (1) (including a person who has filed an amended report under Article 50-6 (3)) shall pay in cash the aggregate tax amount of both a tax computed based on the tax base of the relevant income and property (referring to the tax amount after deducting a tax reduction or exemption or tax credit, if any; the same shall apply hereinafter) under each tax law and a penalty for unconscientious payment levied under Article 47-4 of the Framework Act on National Taxes (hereinafter referred to as "voluntarily reported tax"; the same shall apply hereinafter), to the tax office having jurisdiction over the place for tax payment, the Bank of Korea, or a postal agency, by the deadline for filing voluntary reports.
(2) For the purposes of paragraph (1), Articles 77 and 112 of the Income Tax Act, Article 64 (2) of the Corporate Tax Act, and Articles 70 (2), 71, and 73 of the Inheritance Tax and Gift Tax Act shall not apply: Provided, That where a voluntarily reported tax under paragraph (1) exceeds 100 million won, an amount not exceeding 30/100 of the voluntarily reported tax may be paid in installments within three months after the deadline for filing voluntary reports.
(3) A person who has filed an amended voluntary report under Article 50-6 (3), shall additionally pay a shortfall by the deadline for filing voluntary reports, if the amount of tax he/she has paid is less than the amount of tax payable based on the amended voluntary report.
[This Article Newly Inserted by Presidential Decree No. 26546, Sep. 25, 2015]
[This Article remains valid until December 31, 2016 under Article 2 of the Addenda to Presidential Decree No. 26545 (Sep. 25, 2015)]
 Article 50-8 (Examination of Persons Eligible to Report)
(1) The Minister of Strategy and Finance shall examine whether a person who has filed a voluntary report falls under any subparagraph of Article 50-5 as at the voluntary reporting date, considering opinions of the heads of relevant agencies, such as the Ministry of Justice, the National Tax Service, the Korea Customs Service, the Financial Supervisory Service, and other relevant agencies (hereinafter referred to as "relevant agencies").
(2) The Minister of Strategy and Finance shall determine persons eligible to report according to the results of an examination conducted under paragraph (1), and notify the Commissioner of the National Tax Service of a list of such persons.
[This Article Newly Inserted by Presidential Decree No. 26546, Sep. 25, 2015]
[This Article remains valid until December 31, 2016 under Article 2 of the Addenda to Presidential Decree No. 26545 (Sep. 25, 2015)]
 Article 50-9 (Verification of Amount of Tax Payable)
(1) The Commissioner of the National Tax Office shall ascertain whether any error exists in the calculation of the amount of tax voluntarily reported by each person eligible to report under Article 50-8 (2), and notify the head of the tax office having jurisdiction over the place for tax payment, of any findings as to error, within two months after the deadline for filing voluntary reports.
(2) Upon receipt of notification under paragraph (1), the head of the tax office having jurisdiction over the place for tax payment shall notify a person found to have under-reported the tax payable through verification under paragraph (1), of the amount of tax to be voluntarily reported by the prescribed deadline for payment, along with the calculation statement.
(3) The Commissioner of the National Tax Service shall verify whether each person eligible to report under Article 50-8 (2) has fully paid the amount of tax payable (referring to the amount of tax voluntarily reported and the amount of tax notified under paragraph (2)), and notify the Minister of Strategy and Finance of the results of such verification.
[This Article Newly Inserted by Presidential Decree No. 26546, Sep. 25, 2015]
[This Article remains valid until December 31, 2016 under Article 2 of the Addenda to Presidential Decree No. 26545 (Sep. 25, 2015)]
 Article 50-10 (Measures Following Voluntary Reporting)
(1) Where the Minister of Strategy and Finance is notified of a list of persons who have fully paid the amount of tax payable, pursuant to Article 50-9 (3), he/she shall determine to exempt them from the following penalties and administrative fines and to exclude them from a list of delinquent taxpayers subject to publication:
1. A penalty levied under the Framework Act on National Taxes or other tax law on the income and property reported and the tax on which has been paid under Article 38 (1) of the Act (Provided, That excluded herefrom shall be any penalty for unconscientious payment under Article 47-4 of the Framework Act on National Taxes);
2. An administrative fine levied under the Framework Act on National Taxes or other tax law on the income and property reported and the tax on which has been paid under Article 38 (1) of the Act;
3. An administrative fine levied under Article 32 of the Foreign Exchange Transactions Act on the income and property reported and the tax on which has been paid under Article 38 (1) of the Act;
4. A list of delinquent taxpayers subject to publication under Article 85-5 of the Framework Act on National Taxes in connection with the income and property reported and the tax on which has been paid under Article 38 (1) of the Act.
(2) The Minister of Strategy and Finance shall notify each person who has filed a voluntary report, of a determination made under paragraph (1).
[This Article Newly Inserted by Presidential Decree No. 26546, Sep. 25, 2015]
[This Article remains valid until December 31, 2016 under Article 2 of the Addenda to Presidential Decree No. 26545 (Sep. 25, 2015)]
 Article 50-11 (Objections)
(1) Where a person in receipt of notification from the Minister of Strategy and Finance under Article 50-10 (2) has an objection to any of the details of the notification, he/she may file an objection with the Minister of Strategy and Finance, within 15 days of receipt of such notification.
(2) The Minister of Strategy and Finance shall review an objection filed under paragraph (1), considering opinions of the relevant agencies.
(3) The Minister of Strategy and Finance shall notify a person who has filed an objection of the results of review under paragraph (2), within one month of the receipt of the objection.
[This Article Newly Inserted by Presidential Decree No. 26546, Sep. 25, 2015]
[This Article remains valid until December 31, 2016 under Article 2 of the Addenda to Presidential Decree No. 26545 (Sep. 25, 2015)]
 Article 50-12 (Disposition by Relevant Agencies)
(1) Upon completion of administrative procedure prescribed in Article 50-11, the Minister of Strategy and Finance shall notify the heads of relevant agencies of a list of persons who have filed voluntary reports, including whether they are exempted from penalties and administrative fines, and excluded from a list of delinquent taxpayers subject to publication, reflecting the results of reviewing objections.
(2) Pursuant to Article 38 (2) of the Act, the heads of relevant agencies shall exempt persons exempted from penalties and administrative fines, and excluded from a list of delinquent taxpayers subject to publication, based on a notification given under paragraph (1), from the disposition prescribed in the subparagraphs of Article 50-10 (1).
[This Article Newly Inserted by Presidential Decree No. 26546, Sep. 25, 2015]
[This Article remains valid until December 31, 2016 under Article 2 of the Addenda to Presidential Decree No. 26545 (Sep. 25, 2015)]
 Article 50-13 (Pre-Eligibility Reviews)
(1) A Korean national may apply for review of his/her eligibility under any subparagraph of Article 50-5 with the Minister of Strategy and Finance by no later than two months prior to the deadline for filing voluntary reports. In such cases, the Korean national shall file an application for pre-eligibility review in the form prescribed by Ordinance of the Ministry of Strategy and Finance, with the Minister of Strategy and Finance through the commissioner of the regional tax office having jurisdiction over the place for tax payment.
(2) The Minister of Strategy and Finance shall review whether an applicant for pre-eligibility review falls under any subparagraph of Article 50-5 as at the date his/her application is filed (referring to the date of a written notice of intent to file a voluntary report is submitted if submitted under Article 50-6 (2)), seeking opinions of the heads of relevant agencies.
(3) Upon receipt of the personal information of an applicant for pre-eligibility falls under review from the Minister of Strategy and Finance, the head of a relevant agency shall notify the Minister of Strategy and Finance of the tax item and taxable period of the income and property of the applicant subject to a tax audit, inspection, or investigation, or an administrative fine.
(4) The Minister of Strategy and Finance shall notify an applicant for pre-eligibility review of the results of review within one month from the date the application for pre-eligibility review is filed under paragraph (1).
[This Article Newly Inserted by Presidential Decree No. 26546, Sep. 25, 2015]
[This Article remains valid until December 31, 2016 under Article 2 of the Addenda to Presidential Decree No. 26545 (Sep. 25, 2015)]
 Article 50-14 (Processing of Personally Identifiable Information)
(1) The Minister of Strategy and Finance may process data containing resident registration numbers or alien registration numbers referred to in subparagraph 1 or 4 of Article 19 of the Enforcement Decree of the Personal Information Protection Act, if it is essential to operate the voluntary reporting system.
(2) The Minister of Strategy and Finance shall destroy data referred to in paragraph (1) and transfer original copies thereof to relevant agencies, within ten months after the deadline for filing voluntary reports expires.
[This Article Newly Inserted by Presidential Decree No. 26546, Sep. 25, 2015]
[This Article remains valid until December 31, 2016 under Article 2 of the Addenda to Presidential Decree No. 26545 (Sep. 25, 2015)]
 Article 50-15 (Offices for Voluntary Reporting on Offshore Income and Property)
An office for voluntary reporting on offshore income and property, comprised of public officials of the Ministry of Strategy and Finance and executive officers and employees of relevant agencies, shall be established under the jurisdiction of the Ministry of Strategy and Finance to efficiently operate the voluntary reporting system.
[This Article Newly Inserted by Presidential Decree No. 26546, Sep. 25, 2015]
[This Article remains valid until December 31, 2016 under Article 2 of the Addenda to Presidential Decree No. 26545 (Sep. 25, 2015)]
CHAPTER IX SUPPLEMENTARY PROVISIONS
 Article 51 (Guidelines, etc. for Assessing Administrative Fines)
(1) The guidelines for imposition of administrative fines under Article 12 (1) of the Act shall be as follows: <Amended by Presidential Decree No. 26078, Feb. 3, 2015; Presidential Decree No. 26958, Feb. 5, 2016; Presidential Decree No. 27837, Feb. 7, 2017; Presidential Decree No. 28643, Feb. 13, 2018>
1. Where a person fails to submit all or any of the statements of international transactions under Article 11 (1) of the Act or submits a false statement of international transactions: 5 million won per each foreign related party;
1-2. Where a person fails to submit all or any of a consolidated business report, individual business reports, and reports by country pursuant to Article 11 (2) of the Act or submits a false individual business report: 30 million won per report;
2. Where a person fails to submit all or some of the data referred to in Article 19 (1) 1 through 5, 7 through 9, 13, and 14 or submits any false data: 50 million won;
3. Where a person fails to submit all or some of the data referred to in Article 19 (1) 6, 10, and 11 or submits any false data: 30 million won;
4. Where a person fails to submit all or some of the data referred to in Article 19 (1) 12 or submits any false data: 70 million won.
(2) The guidelines for assessing administrative fines under Article 31-4 (1) of the Act are as follows: Provided, That where the head of a finance company, etc. makes a correction by a deadline in accordance with the request for correction made by the competent authority under Article 47 (8), the finance company, etc. may be exempted from the relevant administrative fine: <Amended by Presidential Decree No. 25200, Feb. 21, 2014; Presidential Decree No. 26958, Feb. 5, 2016>
1. Where a finance company, etc. fails to provide all of the financial information requested by the competent authority or provides any false financial information: 20 million won;
2. Where a finance company, etc. fails to provide part of the financial information requested by the competent authority: 10 million won.
(3) The guidelines for assessing administrative fines under Article 35 (1) of the Act are as follows: <Amended by Presidential Decree No. 26078, Feb. 3, 2015>
1. Where the amount unreported or under-reported does not exceed 2 billion won: 10/100 of the relevant amount;
2. Where the amount unreported or under-reported is more than 2 billion won but not more than 5 billion won: 200 million won + 15/100 of an amount exceeding 2 billion won out of the relevant amount;
3. Where the amount unreported or under-reported exceeds 5 billion won: 650 million won + 20/100 of the amount exceeding 5 billion won out of the relevant amount.
(4) An administrative fine computed under paragraphs (1) and (3) and Article 35 (2) of the Act may be reduced or increased by up to half thereof, based on the severity; frequency; motive and consequence; etc. of the relevant violation: Provided, That where increased, the administrative fine shall not exceed the maximum limit on administrative fine under Articles 12 (1), 31-4 (1), and 35 (1) and (2) of the Act. <Amended by Presidential Decree No. 25200, Feb. 21, 2014; Presidential Decree No. 26958, Feb. 5, 2016>
(5) Where an administrative fine computed pursuant to paragraphs (3) and (4) falls under any of the following, the amount thereof shall be determined by applying the mitigation ratio prescribed in each subparagraph: <Amended by Presidential Decree No. 26078, Feb. 3, 2015>
1. Where a revised report is filed pursuant to Article 37 (1) of the Act after the filing deadline (hereafter referred to as “filing deadline” in this Article) prescribed in Article 34 (1) of the Act (excluding where a person files such report knowing in advance that an administrative fine will be imposed by the tax authority), the ratios in each of the following:
(a) Where a revised report is filed within six months after its filing deadline: 70/100 of the amount of the relevant administrative fine;
(b) Where a revised report was filed within a period of more than six months but not more than one year after its filing deadline: 50/100 of the amount of the relevant administrative fine;
(c) Where a revised report is filed within a period of more than two years but not more than four years after its filing deadline: 20/100 of the amount of the relevant administrative fine;
(d) Where a revised report is filed within a period of more than two years but not more than four years after its filing deadline: 10/100 of the amount of the relevant administrative fine;
2. Where a later report is filed pursuant to Article 37 (2) of the Act after the filing deadline (excluding where a person files such report knowing in advance that an administrative fine will be imposed by the tax authority), the ratios in each of the following:
(a) Where a later report is filed within one month after its filing deadline: 70/100 of the amount of the relevant administrative fine;
(b) Where a later report is filed within a period of more than one month but not more than six months after its filing deadline: 50/100 of the amount of the relevant administrative fine;
(c) Where a later report is filed within a period of more than six months but not more than one year after its filing deadline: 20/100 of the amount of the relevant administrative fine;
(d) Where a later report is filed within a period of more than six months but not more than two years after its filing deadline: 10/100 of the amount of the relevant administrative fine.
(6) When assessing an administrative fine under paragraph (1), a person submitting data fails to submit some of the data due to a minor mistake or makes negligible errors in certain items, the tax authority may decide not to assess the administrative fine after receiving supplementary materials, and if he/she fails to submit the data referred to in Article 19 (1) 15, it shall not assess the administrative fine. <Amended by Presidential Decree No. 27837, Feb. 7, 2017>
(7) When assessing an administrative fine under paragraph (3), if there exists a reason to believe that a failure of reporting occurs due to a minor mistake, including an error in aggregating the balance of the accounts held, the relevant person may be exempted from the administrative fine, and an administrative fine to be assessed when an additional account unreported or under-reported has been found shall be an amount obtained by deducting the administrative fine already assessed from the administrative fine to be assessed on the basis of the total amount unreported or under-reported.
(8) "Where there exists good cause prescribed by Presidential Decree, such as a natural disaster" referred to in Article 35 (2) of the Act means where it is impossible for a person required to report to explain the source of the amount unreported due to an act of God, such as a natural disaster, or situation of the country where the overseas financial account is located. <Newly Inserted by Presidential Decree No. 25200, Feb. 21, 2014>
[This Article Wholly Amended by Presidential Decree No. 23600, Feb. 2, 2012]
ADDENDA
Article 1 (Enforcement Date)
This Decree shall enter into force on January 1, 1996: Provided, That the provisions of Articles 9 through 14, and 24 through 37 shall enter into force on January 1, 1997; but where a business year commences on January 1, 1997, for the purposes of Article 9 (1), the applicant shall submit the relevant documents within one month after the business year commences.
Article 2 (Applicable Cases concerning Income Calculation)
The provisions of this Decree concerning incomes shall begin to apply from the portion of income accruing for the first time on or after the enforcement date of this Decree.
Article 3 Omitted.
ADDENDA <Presidential Decree No. 15196, Dec. 31, 1996>
(1) (Enforcement Date) This Decree shall enter into force on January 1, 1997.
(2) (Applicable Cases concerning Income Calculation) The provisions of this Decree concerning incomes shall begin to apply from the portion of income accruing for the first time on or after the enforcement date of this Decree.
ADDENDA <Presidential Decree No. 15325, Mar. 29, 1997>
(1) (Enforcement Date) This Decree shall enter into force on the date of its promulgation.
(2) (Applicability) This Decree shall apply from the fist business year closed on or after the enforcement date of this Decree.
ADDENDA <Presidential Decree No. 15970, Dec. 31, 1998>
Article 1 (Enforcement Date)
This Decree shall enter into force on January 1, 1999. (Proviso Omitted.)
Articles 2 through 19 Omitted.
ADDENDA <Presidential Decree No. 17045, Dec. 29, 2000>
Article 1 (Enforcement Date)
This Decree shall enter into force on January 1, 2001: Provided, That the amended provisions of Articles 30 (3) and 37 (2) shall enter into force on January 1, 2002.
Article 2 (General Applicability)
This Decree shall begin to apply from the first taxable year commencing on or after the enforcement date of this Decree.
Article 3 (Applicable Cases concerning Detailed Standards for Special Relationship)
The amended provisions of Article 2 (1) 4 (a) shall apply to the cases where an ex-executive officer or ex-employee of one corporation first becomes the representative director, or an executive officer, of the other corporation on or after the enforcement date of this Decree.
Article 4 (Applicable Cases concerning Advance Pricing Agreements)
(1) The amended provisions of Articles 9 (1) through (3), 10 (1), 11 (8),11-2, 13 (1), and 17 shall apply where an advance pricing agreement is filed on or after the enforcement date of this Decree.
(2) The amended provisions of Article 23 (2) shall apply to the cases where an advance pricing agreement is filed on or after the enforcement date of this Decree.
Article 5 (Applicable Cases concerning Return of Amounts to Be Included in Gains)
The amended provisions of Article 16 shall begin to apply from the final return, determination to make a rectification, revised return, or request for rectification filed with respect to tax base made for the first time on or after the enforcement date of this Decree.
Article 6 (Applicable Cases concerning Application for Extension of Deadline for Submission of Statements, etc. of International Transactions)
The amended provisions of Articles 20 (1) and 21 shall apply from the first taxable year for which a tax return is filed on or after the enforcement date of this Decree.
Article 7 (Applicable Cases concerning Submission of Forms by Domestic Corporation which has Borrowed Funds from Foreign Controlling Stockholders)
The amended provisions of Article 28-2 shall apply from the first taxable year for which a relevant final return is filed on or after the enforcement date of this Decree.
ADDENDA <Presidential Decree No. 17832, Dec. 30, 2002>
Article 1 (Enforcement Date)
This Decree shall enter into force on January 1, 2003.
Article 2 (General Applicability)
This Decree shall apply from the first taxable year commencing on or after the enforcement date of this Decree.
Article 3 (Applicable Cases concerning Scope, etc. of Special Relationship)
The amended provisions of Article 2 (1) and (2) shall begin to apply from a transaction made for the first time on or after the enforcement date of this Decree.
Article 4 (Applicable Cases concerning Scope of Foreign Controlling Stockholders)
The amended provisions of Article 3 shall begin to apply from a loan obtained for the first time on or after the enforcement date of this Decree.
Article 5 (Applicable Cases concerning Applicable Scope of Rejection of Unfair Act and Calculation)
The amended provisions of Article 3-2 shall begin to apply from a transaction made for the first time on or after the enforcement date of this Decree.
Article 6 (Applicable Cases concerning Notice of Amount of Transferred Income, etc.)
The amended provisions of Article 16 (1) 1 and (4) shall begin to apply from a determination or adjustment of income for the first time made on or revised on or after the enforcement date of this Decree.
Article 7 (Applicable Cases concerning Applicable Scope of Tax Haven)
The amended provisions of Article 35 (2) shall begin to apply from a transaction made for the first time on or after the enforcement date of this Decree.
ADDENDUM <Presidential Decree No. 18312, Mar. 17, 2004>
This Decree shall enter into force on the date of its promulgation.
ADDENDA <Presidential Decree No. 18628, Dec. 31, 2004>
(1) (Enforcement Date) This Decree shall enter into force on January 1, 2005.
(2) (Applicability) This Decree shall begin to apply from the taxable year commencing on or after the enforcement date of this Decree.
ADDENDA <Presidential Decree No. 18706, Feb. 19, 2005>
Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation. (Proviso Omitted.)
Articles 2 through 16 Omitted.
ADDENDA <Presidential Decree No. 19650, Aug. 24, 2006>
Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation.
Article 2 (General Applicability)
This Decree shall begin to apply from the taxable year in which the enforcement date of this Decree falls.
Article 3 (Applicability to Arm's Length Price Computation Methods)
Subparagraph 3 of Article 4, and Article 5 (3) and (4) as amended shall begin to apply from a portion transacted for the first time on or after the enforcement date of this Decree.
Article 4 (Applicable Cases concerning Supplementation, etc. of Arm's Length Price Computation Methods)
Article 6 (6) and (7) as amended shall begin to apply from a portion transacted for the first time made on or after the enforcement date of this Decree.
Article 5 (Applicable Cases concerning Matters to Be Considered in Selecting and Applying Arm's Length Prices Computation Methods for Intra-Group Services)
Article 6-2 as amended shall begin to apply from a transaction made for the first time on or after the enforcement date of this Decree.
Article 6 (Applicable Cases concerning Submission, etc. of Arm's Length Price Computation Methods)
The proviso to Article 7 (1) as amended shall begin to apply from a portion submitted for the first time on or after the enforcement date of this Decree.
Article 7 (Applicable Cases concerning Scope of Data Requested by Tax Authorities and Method of Submission thereof)
Article 19 (1) 13 and 14 as amended shall begin to apply from a portion requested by a relevant tax authority for the first time on or after the enforcement date of this Decree.
Article 8 (Applicability to Identification of Tax Havens)
Article 30 (1) as amended shall begin to apply from a country or region designated and publicly notified for the first time on or after the enforcement date of this Decree.
Article 9 (Applicable Cases concerning Requirements for Determining Scope of Application)
The proviso to Article 35 (1) 1 as amended shall begin to apply from the business year in which the enforcement date of this Decree falls and to subsequent years.
Article 10 (Applicable Cases concerning Requests for Rectification)
Article 36-4 as amended shall begin to apply from a portion of dividend actually distributed to Korean nationals by a specific foreign corporation on or after the enforcement date of this Decree.
Article 11 (Applicability to Non-Inclusion of Actual Dividends in Gains)
Article 36-5 (1) and (2) as amended shall begin to apply from a portion of dividend actually paid to Korean nationals by a specific foreign corporation for the first time on or after the enforcement date of this Decree.
Article 12 (Applicable Cases concerning Exchange of Tax or Financial Information)
Article 47 (3) as amended shall begin to apply from a portion of tax or financial information provided for the first time on or after the enforcement date of this Decree.
ADDENDA <Presidential Decree No. 20331, Oct. 23, 2007>
Article 1 (Enforcement Date)
This Decree shall enter into force on October 28, 2007. (Proviso Omitted.)
Articles 2 and 3 Omitted.
ADDENDA <Presidential Decree No. 20494, Dec. 31, 2007>
Article 1 (Enforcement Date)
This Decree shall enter into force on January 1, 2008.
Articles 2 (General Applicability)
This decree shall apply from the first taxable year commencing after this Decree enters into force.
Article 3 (Applicable Cases concerning Method of Calculating Additional Amount Equivalent to Interest)
The amended provisions of Article 41 shall begin to apply from a portion of calculations of an additional amount equivalent to interest performed, due to the deferral of tax collection or deferment of disposition for arrears, for the first time after this decree enters into force.
ADDENDA <Presidential Decree No. 20720, Feb. 29, 2008>
Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation. (Proviso Omitted.)
Articles 2 through 8 Omitted.
ADDENDA <Presidential Decree No. 21066, Oct. 7, 2008>
Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation.
Article 2 (General Applicability)
This Decree shall apply to the taxable year in which the enforcement date of this Decree falls and to subsequent years.
ADDENDA <Presidential Decree No. 21299, Feb. 4, 2009>
Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation.
Article 2 (General Applicability)
This Decree shall apply to the taxable year in which the enforcement date of this Decree falls and to subsequent years.
Article 3 (Applicable Cases concerning Submission of Arm's Length Price Computation Methods)
The amended provisions of Article 7 (1) shall begin to apply from a portion submitted for the first time after this Decree enters into force.
Article 4 (Applicable Cases concerning Disposition or Adjustment of Amount of Return Not Verified)
The amended provisions of Articles 15 (2) and (3) and 16 shall begin to apply from a disposition or adjustment made for the first time after this Decree enters into force.
Article 5 (Applicable Cases concerning Verification of Return of Amount to Be Included in Gains)
The amended provisions of Article 15-2 shall begin to apply from a portion returned for the first time after this Decree enters into force.
ADDENDA <Presidential Decree No. 21634, Jul. 22, 2009>
Article 1 (Enforcement Date)
This Decree shall enter into force on July 23, 2009. (Proviso Omitted.)
Articles 2 through 4 Omitted.
ADDENDA <Presidential Decree No. 21939, Dec. 31, 2009>
Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation.
Article 2 (Applicable Cases concerning Conversion of Amount Borrowed in Foreign Currency Related to Scope of Borrowings)
The amended provisions of Article 24 (5) shall apply to the taxable year for which a tax return is filed for the first time after this Decree enters into force and to subsequent years.
ADDENDA <Presidential Decree No. 22040, Feb. 18, 2010>
Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation.
Article 2 (Applicability)
This Decree shall apply to the taxable year in which the enforcement date of this Decree falls and to subsequent years.
ADDENDA <Presidential Decree No. 22394, Sep. 20, 2010>
Article 1 (Enforcement Date)
This Decree shall enter into force on January 1, 2011.
Articles 2 through 13 Omitted.
ADDENDA <Presidential Decree No. 22574, Dec. 30, 2010>
Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation.
Article 2 (General Applicability)
This Decree shall apply to the taxable year commencing after this Decree enters into force and to subsequent years.
Article 3 (Applicable Cases concerning Arm's Length Price Computation Method, etc.)
The amended provisions of Articles 4 through 6 and 6-2 shall apply to the taxable year for which a tax return is filed for the first time after this Decree enters into force and to subsequent years.
Article 4 (Applicable Cases concerning Cases Not Subject to Temporary Secondary Adjustment)
The amended provisions of Article 15 (3) 2 amended shall begin to apply from the case where a request for secondary adjustment of the transferred amount is submitted for the first time after this Decree enters into force.
Article 5 (Applicable Cases concerning Judgment on Negligence, etc. of Taxpayers)
The amended provisions of Article 23 (5) shall begin to apply from a rectification report filed for the first time after this Decree enters into force.
Article 6 (Applicable Cases concerning Calculation Method for Calculating Non-Deductible Expenses)
The amended provisions of Articles 25 (1) and 27 (2) shall begin to apply from a portion not included in deductible expenses for the first time after this Decree enters into force.
Article 7 (Applicable Cases concerning Procedure for Issuance of Residence Certificates)
The amended provisions of Article 43 (2) shall begin to apply from the case where a residence certificate is issued for the first time after this Decree enters into force.
Article 8 (Applicable Cases concerning Administrative Fines)
The amended provisions of Article 51 (1) shall begin to apply from the case where a request to submit data is received for the first time after this Decree enters into force.
Article 9 (Special Cases concerning Assessing Administrative Fines on Overseas Accounts Held in 2010)
For the purposes of the amended provisions of Article 51 (2), an administrative fine up to 50/100 of the amount computed under each subparagraph of Article 51 (2) shall be assessed on an overseas financial account held in 2010.
ADDENDA <Presidential Decree No. 23600, Feb. 2, 2012>
Article 1 (Enforcement Date)
This Act shall enter into force on the date of its promulgation: Provided, That the amended provisions of Article 17-2 through 17-4 shall enter into force on July 1, 2012.
Article 2 (Term of Existence of the Tax Adjustment Review Committee for International Trade Price)
The amended provisions of Articles 17-3 and 17-4 concerning the Tax Adjustment Review Committee for International Trade Price shall remain in force until June 30, 2022. <Amended by Presidential Decree No. 27837, Feb. 7, 2017>
Article 3 (General Applicability)
This Decree shall apply to the taxable year in which the enforcement date of this Decree falls and to subsequent years.
Article 4 (Applicable Cases concerning Scope of Relevant Foreign Corporations Excluded from Retained Earnings-Cumulative Taxation)
The requirements, pursuant to the amended provisions of Article 36-3 (1), concerning the scope of the relevant foreign corporations not subject to the method of cumulative taxation that aggregates retained earnings shall begin to apply from the taxable year for which a tax return is filed for the first time after this Decree enters into force.
Article 5 (Applicable Cases concerning Limit of Carried Forward Gross Income upon Distributing Dividends to Nationals by Intermediate Corporation)
The amended provisions of Article 36-5 (2) shall apply to the taxable year for which a tax return is filed for the first time after this Decree enters into force and to subsequent years.
Article 6 (Applicable Cases concerning Application, etc. for Commencement of mutual agreement procedure)
The amended provisions of Article 39 (3) shall begin to apply from the case where the application for commencement of a mutual agreement procedure is received for the first time after this Decree enters into force.
Article 7 (Applicable Cases concerning Provision of Financial Information)
The amended provisions of Article 47 (2) shall apply the case where a request to provide financial information is filed for the first time after this Decree enters into force.
Article 8 (Applicable Cases concerning Exemption from Obligation to Report Overseas Financial Accounts)
The amended provisions of Article 50 (4) shall begin to apply from an overseas financial account held in the year 2011.
Article 9 (Applicable Cases concerning Guidelines for Assessing Administrative Fines for Failure to Submit Data)
The amended provisions of Article 51 (1) shall begin to apply from the case where a request to submit data is filed for the first time after this Decree enters into force.
Article 10 (Applicable Cases concerning Guidelines for Assessing Administrative Fines for Failure to Report Overseas Financial Accounts)
The amended provisions of Article 51 (3) shall begin to apply from an overseas financial account held in the year 2011.
Article 11 (Applicable Cases concerning Application of Ratio of Mitigation of Administrative Fines Pursuant to After-Deadline Report, etc. of Overseas Financial Accounts)
The amended provisions of Article 51 (5) shall begin to apply from an the overseas financial account held in the year 2010 for which a later or revised report is filed for the first time after this Decree enters into force.
Article 12 (Transitional Measures concerning Verification, etc. of Return of Amount to Be Included in Gains)
Notwithstanding the amended provisions of Article 15-2, with respect to the taxable year before the taxable year in which the enforcement date of this Decree falls, the previous provisions shall prevail.
ADDENDA <Presidential Decree No. 24365, Feb. 15, 2013>
Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation.
Article 2 (General Applicability)
This Decree shall apply to the taxable year in which the enforcement date of this Decree falls and to subsequent years.
Article 3 (Applicable Cases concerning Arm's Length Price Computation Methods for Intra-Group Payment Guarantee Services)
The amended provisions of Article 6-2 (3) through (5) shall apply to payment guarantees provided after this Decree enters into force.
Article 4 (Applicable Cases concerning Order of Return of Amount to Be Included in Gains)
The amended provisions of Article 15-2 (2) shall begin to apply from the case where any of the amount to be included in gains is refunded after this Decree enters into force.
Article 5 (Applicable Cases concerning Application for Commencement of Mutual Agreement Procedures)
The amended provisions of Article 39 (2) shall begin to apply from an application for the mutual agreement filed after this Decree enters into force.
Article 6 (Applicable Cases concerning Request, etc. to Provided Financial Information)
The amended provisions of Article 47 (2), (5) and (6) shall begin to apply from the case where a request to provide financial information is made after this Decree enters into force.
Article 7 (Applicable Cases concerning Reports on Overseas Financial Accounts)
The amended provisions of Article 50 (2) and (4) 1 shall begin to apply from the case where filing a report on an overseas financial account held as of 2013 is required in 2014.
ADDENDA <Presidential Decree No. 25200, Feb. 21, 2014>
Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation: Provided, That the amended provisions of Article 36-3 shall enter into force on January 1, 2015.
Article 2 (General Applicability)
This Decree shall apply from the taxable year in which the enforcement date of this Decree falls.
Article 3 (Applicability to Secondary Income Adjustments or Tax Adjustments)
The amended provisions of Article 15 (3) and (4) shall apply to cases where a secondary income adjustment or tax adjustment is made under the subparagraphs of Article 16 (1) after this Decree enters into force.
Article 4 (Applicability to Request, etc. to Provide Financial Information)
The amended provisions of Articles 47 (2) and (7) through (9) and 51 (2) shall begin to apply from a portion of financial information exchanged with another Contracting State after this Decree enters into force.
ADDENDA <Presidential Decree No. 26078, Feb. 3, 2015>
Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation.
Article 2 (General Applicability)
This Decree shall apply to the taxable year that begins on or after January 1, 2015 and to subsequent years.
Article 3 (Applicability concerning Expanded Scope of Appraisal Institutions for Computation, etc. of Market Price of Overseas Donated Property)
The amended provisions of Article 38 (2) shall apply to appraisals conducted after this Decree enters into force.
Article 4 (Applicability to Method of Providing Information Related to Exchange of Tax and Financial Information)
The amended provisions of Article 47 (6) shall apply to information submitted after this Decree enters into force.
Article 5 (Applicability concerning Actual Holders, etc. under Standards for Determination of Persons Required to Report)
The amended provisions of the main sentence of Article 50 (4) and Article 50 (4) 3 through 5 shall apply to cases where a report is required to be filed about an overseas financial account held in the year in which the enforcement date of this Decree falls.
Article 6 (Applicability concerning Amendment of Standards for Assessing Administrative Fines and Ratio of Exemption or Reduction)
(1) The amended provisions of Article 51 (3) 1 through 3 shall apply to cases where a report is required to be filed about an overseas financial account held in the year in which the enforcement date of this Decree falls.
(2) The amended provisions of Article 51 (5) 1 and 2 shall apply to cases where a revised or later report is filed after this Decree enters into force.
ADDENDA <Presidential Decree No. 26546, Sep. 25, 2015>
Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation.
Article 2 (Period of Validity)
The amended provisions of Articles 50-4 through 50-15 shall remain valid until December 31, 2016.
ADDENDA <Presidential Decree No. 26958, Feb. 5, 2016>
Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation.
Article 2 (General Applicability)
This Decree shall apply from the taxable year commencing on or after January 1, 2016 and to subsequent years.
Article 3 (Applicability to Reports, etc. on Overseas Financial Accounts)
The amended provisions of Article 49 (4) shall begin to apply regarding cases where a report is filed after this Decree enters into force.
Article 4 (Transitional Measures concerning Request, etc. for Provision of Financial Information)
Notwithstanding the amended provisions of Article 47 (6), cases where the provision of financial information is requested before this Decree enters into force shall be governed by the former provisions.
Article 5 (Transitional Measures concerning Public Notice Given Pursuant to Former Provisions)
The public notice given by the Financial Services Commission pursuant to the former Article 47 (9) before this Decree enters into force shall be construed as public notice given by the Minister of Strategy and Finance pursuant to the amended provisions of Article 47 (11).
ADDENDA <Presidential Decree No. 27472, Aug. 31, 2016>
Article 1 (Enforcement Date)
This Decree shall enter into force on September 1, 2016.
Articles 2 through 7 Omitted.
ADDENDA <Presidential Decree No. 27837, Feb. 7, 2017>
Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation.
Article 2 (Applicability concerning Supplement, etc. to Arm's Length Price Computation Methods)
The amended provisions of Article 6 (7) 2 shall apply to cases where a money transaction is conducted between a resident and a foreign related party after this Decree enters into force.
Article 3 (Applicability to Applications, etc. for Commencing Mutual Agreement Procedure)
The amended provisions of Article 39 (7) shall apply where applications to commence the mutual agreement procedure are filed after this Decree enters into force.
Article 4 (Transitional Measures concerning Administrative Fines)
The application of administrative fines for offenses committed before this Decree enters into force shall be governed by the former provisions.
ADDENDA <Presidential Decree No. 27958, Mar. 27, 2017>
Article 1 (Enforcement Date)
This Decree shall enter into force on March 28, 2017.
Articles 2 through 9 Omitted.
ADDENDA <Presidential Decree No. 28643, Feb. 13, 2018>
Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation: Provided, That the amended provisions of Articles 14-7 and 14-8 shall enter into force on July 1, 2018, and the amended provisions of Article 28-3 on January 1, 2019.
Article 2 (Applicability to Application for Advance Pricing Agreement and Other Relevant Matters)
The amended provisions of Article 9 (5) shall apply where information is exchanged with the competent authority of the other Contracting State after this Decree enters into force.
Article 3 (Applicability to Reporting, etc. on Overseas Financial Accounts)
The amended provisions of Article 49 (1) shall apply to reporting on overseas financial accounts held during the year in which the enforcement date of this Decree falls.