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ENFORCEMENT DECREE OF THE CORPORATE TAX ACT

Wholly Amended by Presidential Decree No. 15970, Dec. 31, 1998

Amended by Presidential Decree No. 15967, Dec. 31, 1998

Presidential Decree No. 16658, Dec. 31, 1999

Presidential Decree No. 16703, Feb. 7, 2000

Presidential Decree No. 16762, Mar. 28, 2000

Presidential Decree No. 16810, May 16, 2000

Presidential Decree No. 17033, Dec. 29, 2000

Presidential Decree No. 17338, Aug. 14, 2001

Presidential Decree No. 17457, Dec. 31, 2001

Presidential Decree No. 17791, Dec. 5, 2002

Presidential Decree No. 17826, Dec. 30, 2002

Presidential Decree No. 18146, Nov. 29, 2003

Presidential Decree No. 18174, Dec. 30, 2003

Presidential Decree No. 18312, Mar. 17, 2004

Presidential Decree No. 18324, Mar. 22, 2004

Presidential Decree No. 18706, Feb. 19, 2005

Presidential Decree No. 18736, Mar. 8, 2005

Presidential Decree No. 19328, Feb. 9, 2006

Presidential Decree No. 19422, Mar. 29, 2006

Presidential Decree No. 19494, May 30, 2006

Presidential Decree No. 19815, Dec. 30, 2006

Presidential Decree No. 19891, Feb. 28, 2007

Presidential Decree No. 20619, Feb. 22, 2008

Presidential Decree No. 20720, Feb. 29, 2008

Presidential Decree No. 20763, Apr. 3, 2008

Presidential Decree No. 20799, jun. 5, 2008

Presidential Decree No. 20849, jun. 20, 2008

Presidential Decree No. 20930, Jul. 24, 2008

Presidential Decree No. 21025, Sep. 22, 2008

Presidential Decree No. 21063, Oct. 7, 2008

Presidential Decree No. 21302, Feb. 4, 2009

Presidential Decree No. 21431, Apr. 21, 2009

Presidential Decree No. 21526, jun. 8, 2009

Presidential Decree No. 21528, jun. 9, 2009

Presidential Decree No. 21566, jun. 26, 2009

Presidential Decree No. 21698, Aug. 21, 2009

Presidential Decree No. 21881, Dec. 14, 2009

Presidential Decree No. 21935, Dec. 31, 2009

Presidential Decree No. 21972, Dec. 31, 2009

Presidential Decree No. 21744, 1 , 2009

Presidential Decree No. 21748, 9 , 2009

Presidential Decree No. 22035, Feb. 18, 2010

Presidential Decree No. 22073, Mar. 9, 2010

Presidential Decree No. 22075, Mar. 15, 2010

Presidential Decree No. 22184, jun. 8, 2010

Presidential Decree No. 22220, jun. 28, 2010

Presidential Decree No. 22282, Jul. 21, 2010

Presidential Decree No. 22356, Aug. 25, 2010

Presidential Decree No. 22390, Sep. 20, 2010

Presidential Decree No. 22395, Sep. 20, 2010

Presidential Decree No. 22467, Nov. 2, 2010

Presidential Decree No. 22493, Nov. 15, 2010

Presidential Decree No. 22516, Dec. 7, 2010

Presidential Decree No. 22577, Dec. 30, 2010

Presidential Decree No. 22626, Jan. 17, 2011

Presidential Decree No. 22687, Mar. 2, 2011

Presidential Decree No. 22812, Mar. 31, 2011

Presidential Decree No. 22951, jun. 3, 2011

Presidential Decree No. 23220, Oct. 14, 2011

Presidential Decree No. 23356, Dec. 8, 2011

Presidential Decree No. 23527, Jan. 25, 2012

Presidential Decree No. 23589, Feb. 2, 2012

Presidential Decree No. 23724, Apr. 13, 2012

Presidential Decree No. 24017, Aug. 3, 2012

Presidential Decree No. 24018, Aug. 3, 2012

Presidential Decree No. 24357, Feb. 15, 2013

Presidential Decree No. 24441, Mar. 23, 2013

Presidential Decree No. 24575, jun. 11, 2013

Presidential Decree No. 25194, Feb. 21, 2014

Presidential Decree No. 25279, Mar. 24, 2014

Presidential Decree No. 25640, Sep. 26, 2014

Presidential Decree No. 25751, Nov. 19, 2014

Presidential Decree No. 25945, Dec. 30, 2014

Presidential Decree No. 26068, Feb. 3, 2015

Presidential Decree No. 26302, jun. 1, 2015

Presidential Decree No. 26369, jun. 30, 2015

Presidential Decree No. 26416, Jul. 20, 2015

Presidential Decree No. 26600, Oct. 23, 2015

Presidential Decree No. 26763, Dec. 28, 2015

Presidential Decree No. 26922, Jan. 22, 2016

Presidential Decree No. 26981, Feb. 12, 2016

Presidential Decree No. 27037, Mar. 11, 2016

Presidential Decree No. 27115, Apr. 29, 2016

Presidential Decree No. 27205, May 31, 2016

Presidential Decree No. 27245, jun. 21, 2016

Presidential Decree No. 27322, Jul. 6, 2016

Presidential Decree No. 27445, Aug. 11, 2016

Presidential Decree No. 27444, Aug. 11, 2016

Presidential Decree No. 27472, Aug. 31, 2016

Presidential Decree No. 27619, Nov. 29, 2016

Presidential Decree No. 27828, Feb. 3, 2017

Presidential Decree No. 27972, Mar. 29, 2017

Presidential Decree No. 28074, May 29, 2017

Presidential Decree No. 28211, Jul. 26, 2017

Presidential Decree No. 28640, Feb. 13, 2018

CHAPTER I GENERAL PROVISIONS
 Article 1 (Definition)
(1) "Partnership corporations, etc., prescribed by Presidential Decree" in subparagraph 2 (b) of Article 1 of the Corporate Tax Act means the following corporations: <Amended by Presidential Decree No. 16658, Dec. 31, 1999; Presidential Decree No. 17457, Dec. 31, 2001; Presidential Decree No. 18706, Feb. 19, 2005; Presidential Decree No. 19328, Feb. 9, 2006; Presidential Decree No. 22951, Jun. 3, 2011; Presidential Decree No. 24357, Feb. 15, 2013; Presidential Decree No. 27828, Feb. 3, 2017>
1. Cooperatives (including corporations for joint projects of cooperatives) and the National Agricultural Cooperative Federation established under the Agricultural Cooperatives Act;
2. Cooperatives established under the Consumer Cooperatives Act, their federation, and the national federation of such cooperatives;
3. Cooperatives (including fishing fraternities and corporations for joint projects of cooperatives) and the National Federation of Fisheries Cooperatives established under the Fisheries Cooperatives Act;
4. Forestry cooperatives (including forestry fraternities) and the National Forestry Cooperatives Federation established under the Forestry Cooperatives Act;
5. Tobacco producers' cooperatives and the National Federation of Tobacco Producers Cooperatives established under the Tobacco Producers Cooperatives Act;
6. and 7. Deleted; <by Presidential Decree No. 16658, Dec. 31, 1999>
8. Cooperatives, their federation, and the National Federation established under the Small and Medium Enterprise Cooperatives Act;
9. Credit cooperatives, their federation, and the National Federation established under the Credit Unions Act;
10. Community credit cooperatives and their federation established under the Community Credit Cooperatives Act;
11. The Korea Salt Manufacture's Association established under the Salt Manufacture Act.
(2) "Corporation that meets the standards prescribed by Presidential Decree" in subparagraph 3 of Article 1 of the Corporate Tax Act means any of the following organizations: <Newly Inserted by Presidential Decree No. 24357, Feb. 15, 2013>
1. An organization endowed with legal personality pursuant to the law of the state in which it was incorporated;
2. An organization formed only with limited partners;
3. An organization that owns an asset, becomes a party to a lawsuit, or directly holds a right or owes an obligation, independent of its members;
4. Other foreign organization, if a domestic organization, whose type of business is the same as, or similar to, the type of business of such foreign organization, is a corporation under the Commercial Act or any other Act of the Republic of Korea.
(3) The Commissioner of the National Tax Service may publicly notify a list of foreign corporations referred to in paragraph (2) by category. <Newly Inserted by Presidential Decree No. 24357, Feb. 15, 2013>
(4) The application of the criteria for foreign corporations specified in paragraph (2) shall not affect the determination of whether a treaty on taxation is applicable. <Newly Inserted by Presidential Decree No. 24357, Feb. 15, 2013>
 Article 2 (Scope of Profit-Making Business)
(1) "Business specified by Presidential Decree" in Article 3 (3) 1 of the Corporate Tax Act (hereinafter referred to as the "Act") means a business that generates revenue, among businesses classified in accordance with the Korean Standard Industrial Classification, published by the Commissioner of the National Statistical Office (hereinafter referred to as the "Korean Standard Industrial Classification"): Provided, That the following shall be excluded herefrom: <Amended by Presidential Decree No. 16658, Dec. 31, 1999; Presidential Decree No. 17457, Dec. 31, 2001; Presidential Decree No. 17826 Dec. 30, 2002; Presidential Decree No. 18174, Dec. 30, 2003; Presidential Decree No. 18706, Feb. 19, 2005; Presidential Decree No. 19328, Feb. 9, 2006; Presidential Decree No. 19891, Feb. 28, 2007; Presidential Decree No. 20619, Feb. 22, 2008; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 20799, Jun. 5, 2008; Presidential Decree No. 21302, Feb. 4, 2009; Presidential Decree No. 22035, Feb. 18, 2010; Presidential Decree No. 22577, Dec. 30, 2010; Presidential Decree No. 23356, Dec. 8, 2011; Presidential Decree No. 23589, Feb. 2, 2012; Presidential Decree Nos. 24017 & 24018, Aug. 3, 2012; Presidential Decree No. 24357, Feb. 15, 2013; Presidential Decree No. 24638, Jun. 28, 2013; Presidential Decree No. 25279, Mar. 24, 2014; Presidential Decree No. 28074, May 29, 2017; Presidential Decree No. 28640, Feb. 13, 2018>
1. The livestock industry (including livestock-related service business) and agriculture, excluding landscaping management and service business;
2. Research and development business (excluding business of rendering research and development services in return for a price under a contract, etc.);
2-2. Ship classification and survey services rendered in the Republic of Korea by a non-profit foreign corporation (limited to where such non-profit foreign corporation does not have any place for substantially managing its business in the Republic of Korea), the headquarters or main office of which is located in a foreign country, if the domestic non-profit corporation provides such ship classification and survey services in the foreign country that does not impose the corporate tax on such domestic non-profit corporation;
3. Business of operating kindergartens referred to in the Early Childhood Education Act; schools referred to in the Elementary and Secondary Education Act and Higher Education Act; foreign educational institutions referred to in the Special Act on Establishment and Management of Foreign Educational Institutions in Free Economic Zones and Jeju Free International City (excluding where a school may remit or actually remits its surplus fund to its main school in a foreign country pursuant to its articles of incorporation, etc.); lifelong educational facilities in the form of major colleges referred to in Article 31 (4) of the Lifelong Education Act; and lifelong educational facilities in the form of distance colleges referred to in Article 33 (3) of the same Act among the educational service business;
4. Social welfare services provided by any of the following social welfare facilities, among health service providers and social welfare service providers:
(a) A social welfare halls, a facility for vagrants and the homeless, or a facility for those suffer from tuberculosis and Hansen's disease among the social welfare facilities referred to in Article 34 of the Social Welfare Services Act;
(b) A Central Self-Support Center and a Regional Self-Support Center referred to in Articles 15-2 (1) and 16 (1) of the National Basic Living Security Act;
(c) A child welfare facility referred to in Article 52 (1) of the Child Welfare Act;
(d) A welfare facility for older persons (excluding medical welfare institutions for older persons) referred to in Article 31 of the Welfare of Older Persons Act;
(e) A long-term care institution referred to in subparagraph 4 of Article 2 of the Long-Term Care Insurance Act;
(f) A welfare facility for persons with disabilities, established pursuant to Article 58 (1) of the Act on Welfare of Persons with Disabilities, or a facility operated by a welfare organization for persons with disabilities under Article 63 (1) of said Act to manufacture products by persons with severe disabilities under Article 2 (2) of the Special Act on the Preferential Purchase of Products Manufactured by Persons with Severe Disability;
(g) A single-parent family welfare facility referred to in Article 19 (1) of the Single-Parent Family Support Act;
(h) A childcare center referred to in Article 10 of the Infant Care Act;
(i) A supporting institution and a counseling center for victims of commercial sex acts referred to in Articles 6 (2) and 10 (2) of the Act on the Prevention of Commercial Sex Acts and Protection, etc. of Victims;
(j) A mental health sanatorium and mental health rehabilitation facility referred to in subparagraphs 6 and 7 of Article 3 of the Act on the Improvement of Mental Health and the Support for Welfare Services for Mental Patients;
(k) A counseling center for victims of sexual violence and a protection facility of victims of sexual violence referred to in Articles 10 (2) and 12 (2) of the Sexual Violence Prevention and Victims Protection Act;
(l) An adoption institution referred to in Article 20 (1) of the Act on Special Cases concerning Adoption;
(m) A counseling center related to domestic violence and a protection facility for victims of domestic violence referred to in Articles 5 (2) and 7 (2) of the Act on the Prevention of Domestic Violence and Protection, etc. of Victims;
(n) A support center for multi-cultural families referred to in Article 12 (1) of the Multicultural Families Support Act;
5. The following pension or mutual aid business:
(a) The national pension services under the National Pension Act;
(b) Business operated by an organization established under any special Act or upon approval or authorization of the Government (limited to fundraising and benefit services);
6. Medical insurance services under the National Health Insurance Act and industrial accident compensation insurance services under the Industrial Accident Compensation Insurance Act among social security insurance services;
7. Business of providing services exempt from value-added tax under Article 26 (1) 18 of the Value-Added Tax Act among services provided by religious organizations (including their affiliated organizations) registered with the competent authorities;
8. The following service business related to finance and insurance:
(a) Business of operating deposit insurance systems, such as deposit insurance through the Deposit Insurance Fund and the Redemption Fund for Deposit Insurance Fund Bonds established under the Depositor Protection Act, and funding or debt settlement related thereto;
(b) Business of operating deposit protection systems, such as deposit insurances and funding, through the Mutual Finance Depositor Protection Fund established under the Act on the Structural Improvement of Agricultural Cooperatives and the Fisheries Cooperatives Act;
(c) Business of operating deposit protection systems, such as deposit insurance and funding through the Depositor Protection Reserve Fund established under the Community Credit Cooperatives Act;
(d) Any business related to the acquisition and liquidation of non-performing assets, etc. through the Structural Adjustment Fund established under the Act on the Efficient Disposal of Non-Performing Assets, etc. of Financial Companies and the Establishment of Korea Asset Management Corporation;
(e) Business of operating deposit insurance systems, such as deposit insurance and funding through the Credit Union Depositor Protection Fund established under the Credit Unions Act;
(f) Business of operating deposit insurance systems, such as deposit insurance and funding through the Mutual Finance Depositor Protection Fund established under the Forestry Cooperatives Act;
9. Blood services provided by the Korean National Red Cross established under the Organization of the Republic of Korea National Red Cross Act;
10. Business of operating the guarantee system of reverse mortgage loan-backed old age pension through the account of guarantee on the reverse mortgage loan-backed old age pension pursuant to the Korea Housing Finance Corporation Act (limited to the guarantee business and business of paying reverse mortgage loan-backed old age pensions);
11. Business of lending money for business start-up, etc. to persons prescribed by Ordinance of the Ministry of Strategy and Finance, such as persons eligible for assistance and the next needy class as defined in Article 2 of the National Basic Living Security Act, and which meet the requirements prescribed by Ordinance of the Ministry of Strategy and Finance;
12. Any business conducted by a non-profit corporation (limited to a corporation established for the purposes of construction and expansion of private school buildings, expansion of facilities thereof and improvement of an educational environment) for providing school facilities to the operators of foreigners' schools;
13. Business of promoting test of Dan, Geup and Poom by sports organizations affiliated with the Korea Sports Council established under Article 33 of the National Sports Promotion Act and by the Kukkiwon established under the Act on the Promotion of Taekwondo and Creation of Taekwondo Park;
14. Any business related to treatment of waste which is conducted by Sudokwon Landfill Site Management Corporation established under the Act on the Establishment and Management of Sudokwon Landfill Site Management Corporation;
15. Other business similar to those referred to in subparagraphs 1, 2, 2-2, 3 through 14 and prescribed by Ordinance of the Ministry of Strategy and Finance.
(2) "Revenues specified by Presidential Decree" in the proviso to Article 3 (3) 5 of the Act means revenues accruing from the disposal of fixed assets that have been continuously used for the proper purpose business specified in relevant statutes or articles of incorporation (excluding the businesses that generate revenue under paragraph (1)) for at least three years until the date of disposal of relevant fixed assets (referring to the date of relocation of a public institution, in cases of a public institution relocated pursuant to Article 18 of the Special Act on Balanced National Development). In such cases, assets from which incidental revenues, such as ticket prices and admission fees, from maintaining and managing relevant fixed assets shall also be deemed fixed assets directly used for the proper purpose business; where a non-profit corporation disposes of a fixed asset used for any business that generates revenue after transferring such fixed asset to the proper purpose business, the market value appraised at the time of such transfer shall be deemed the acquisition price of the fixed asset for the purpose of calculating the revenue from the disposal of such fixed asset. <Amended by Presidential Decree No. 28640, Feb. 13, 2018>
(3) "Revenues prescribed by Presidential Decree" in Article 3 (3) 7 of the Act means profits (referring to profits on sale of bonds, etc., less losses from sale of bonds, etc.) on sale of bonds, etc. (excluding interest income exempt from corporate tax) referred to in Article 46 (1) of the Income Tax Act: Provided, That excluded herefrom shall be profits on sale of the bonds, etc., belonging to the business referred to in Article 2 (1) 8. <Amended by Presidential Decree No. 17826, Dec. 30, 2002; Presidential Decree No. 18706, Feb. 19, 2005; Presidential Decree No. 21302, Feb. 4, 2009; Presidential Decree No. 22035, Feb. 18, 2010; Presidential Decree No. 22184, Jun. 8, 2010>
 Article 3 (Start Date of Business Year)
(1) The start date of the first business year of a corporation shall be any of the followings: <Amended by Presidential Decree No. 18706, Feb. 19, 2005; Presidential Decree No. 24357, Feb. 15, 2013>
1. For a domestic corporation, the registration date of its incorporation: Provided, That it shall be any of the following dates with respect to an organization deemed a corporation under subparagraph 2 (c) of Article 1 of the Act (hereinafter referred to as "organization deemed a corporation"):
(a) For an organization established under Acts and subordinate statutes, the date of establishment of which is prescribed by such Acts and subordinate statutes, the date of establishment;
(b) For an organization which requires permission or authorization of the competent authorities for establishment and an organization which has registered with the competent authorities under Acts and subordinate statutes, the date of permission, authorization, or registration;
(c) For an unregistered organization, which is a foundation having endowments donated for the public interest, the date such endowments are donated;
(d) For an organization which has obtained approval from the head of the tax office having jurisdiction over the place of tax payment under Article 13 (2) of the Framework Act on National Taxes, the date of approval;
2. For a foreign corporation, the date it establishes a domestic place of business (hereinafter referred to as "domestic place of business") under Article 94 of the Act (if it has no domestic place of business, the date on which it initially earns the income specified in Article 6 (4) of the Act).
(2) In applying paragraph (1), where profits and losses generated before the start date of the first business year actually have reverted to a corporation and there is no concern about tax evasion, such profits and losses may be included in the profits and losses for the first business year of the corporation, as long as the period of the first business year does not exceed one year. In such cases, the start date of the first business year shall be the date on which the earnings and losses that have reverted to the relevant corporation are first generated.
 Article 4 (Reports on Change of Business Year)
A corporation which intends to report a change in its business year under Article 7 (1) of the Act shall file a report on change of business year (including submission through the national tax information and communications network) to the head of the tax office having jurisdiction over the place of tax payment by the filing deadline, in the form stipulated by Ordinance of the Ministry of Strategy and Finance. <Amended by Presidential Decree No. 18312, Mar. 17, 2004; Presidential Decree No. 20720, Feb. 29, 2008>
 Article 5 (Scope of Registration Dates, etc. of Mergers)
(1) "The registration date of a merger" referred to in the Act and this Decree means any of the following dates:
1. For a corporation surviving a merger, the registration date of change;
2. For a corporation established through a merger, the registration date of incorporation.
(2) "The registration date of a division" referred to in the Act and this Decree means any of the following dates:
1. For a corporation surviving a division (including a division and merger; hereinafter the same shall apply), the registration date of change;
2. For a corporation established through a division, the registration date of incorporation.
 Article 6 (Scope of Place of Tax Payment)
(1) "Place prescribed by Presidential Decree" referred to in the proviso to Article 9 (1) of the Act means the location of the place of business of an organization, and for an organizations, the main income of which is real estate rental income, it means the location of the real estate. In such cases, for an organization with at least two places of business or real estate, it means the location of the main place of business or primary real estate, and for an organization with no place of business, it means the location of its main office stipulated in the articles of incorporation of the relevant organization (for an organization that has not stipulated its main office in the articles of incorporation, it means the address of its representative or manager). <Presidential Decree No. 22951, Jun. 3, 2011>
(2) "Location of the main place of business or primary real estate" referred to in paragraph (1) means the location of the place of business or the real estate generating the largest amount of business revenue provided in subparagraph 1 of Article 11 (hereinafter referred to as "amount of business revenue") in the immediately preceding business year.
(3) "Location of the main place of business prescribed by Presidential Decree" referred to in Article 9 (3) of the Act means the location determined by applying mutatis mutandis paragraph (2): Provided, That this shall apply only when the place of tax payment is first determined. <Amended by Presidential Decree No. 17826, Dec. 30, 2002; Presidential Decree No. 22951, Jun. 3, 2011>
(4) "Place prescribed by Presidential Decree" referred to in Article 9 (3) of the Act means the place reported as the place of tax payment by a foreign corporation among places where domestic source income is generated. In such cases, the foreign corporation shall file a report on the place of tax payment in the form stipulated by Ordinance of the Ministry of Strategy and Finance to the head of the tax office having jurisdiction over the place of tax payment within one month from the date on which at least two domestic source income is generated. <Amended by Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 22951, Jun. 3, 2011>
(5) Where it is impractical to determine the domestic place of business of a foreign corporation engaged in the construction industry, etc. as the place of tax payment because the domestic place of business of such corporation is on in the territorial waters or on other grounds, the place of tax payment of such corporation shall be its domestic location in the register: Provided, That no location is entered in the register, the place in which overall management of the business is performed in the Republic of Korea shall be the place of tax payment. <Newly Inserted by Presidential Decree No. 21302, Feb. 4, 2009>
 Article 7 (Place of Tax Payment for Persons Liable for Withholding)
(1) "The location of the relevant person liable for withholding prescribed by Presidential Decree" in the main sentence of Article 9 (4) of the Act means any of the following places: <Amended by Presidential Decree No. 16658, Dec. 31, 1999; Presidential Decree No. 18706, Feb. 19, 2005; Presidential Decree No. 19328, Feb. 9, 2006; Presidential Decree No. 19891, Feb. 28, 2007; Presidential Decree No. 20619, Feb. 22, 2008; Presidential Decree No. 21302, Feb. 4, 2009; Presidential Decree No. 24357, Feb. 15, 2013; Presidential Decree No. 24638, Jun. 28, 2013>
1. Where the relevant person liable for withholding is an individual, it means the location provided in Article 7 (1) 1 or 2 of the Income Tax Act;
2. Where the relevant person liable for withholding is a corporation, it means the location of its headquarters or main office, or the actual business management place where its headquarters or main office is not located in the Republic of Korea (hereinafter referred to as "headquarters, etc.") of the relevant corporation (referred to the location provided in Article 6 (1) in the case of an organization deemed a corporation; the location of the main domestic place of business in the case of a foreign corporation): Provided, That where a branch, business office, or other place of business of a corporation keeps separate accounting under the self-supporting accounting system, it means the location of the relevant place of business (excluding the location of the place of business if it is located in any foreign country);
3. Notwithstanding the proviso to subparagraph 2, if a corporation collectively computes the amount of tax withheld on the income paid through its branches, business offices, and other places of business by an electronic computer system in its headquarters, etc., has filed a report thereon with the head of the tax office having jurisdiction over its headquarters, etc., and has registered each of business establishments with the head of the competent tax office in accordance with Article 8 (3) and (4) of the Value-Added Tax Act, the corporation may designate its headquarters as the place of tax payment for corporate tax withheld from the relevant income. In such cases, matters necessary for the procedures for filing a report on the collective payment at the headquarters of the relevant corporation shall be determined by Ordinance of the Ministry of Strategy and Finance.
(2) "The place prescribed by Presidential Decree" in the proviso to Article 9 (4) of the Act means any of the following places: <Amended by Presidential Decree No. 20619, Feb. 22, 2008; Presidential Decree No. 21302, Feb. 4, 2009; Presidential Decree No. 24357, Feb. 15, 2013>
1. Where income from the transfer of stocks, etc. under subparagraph 7 (b) of Article 93 of the Act or other income specified in any subparagraph of Article 132 (8) of this Decree accrues, it means the location of the domestic place of business of a domestic corporation or foreign corporation which has issued the relevant securities;
2. In cases other than those under subparagraph 1, it means the place designated by the Commissioner of the National Tax Service.
 Article 8 (Designation of and Notices on Place of Tax Payment)
(1) "Circumstances prescribed by Presidential Decree" referred to in Article 10(1) of the Act means any of the following cases: <Presidential Decree No. 22951, Jun. 3, 2011>
1. Where the location of the headquarters, etc. of a domestic corporation is not the same as its registered address;
2. Where the location of the headquarters, etc. of a domestic corporation is separate from its assets or place of business and thus tax evasion could occur;
3. Where the location of the main place of business of a foreign corporation with at least two domestic places of business cannot be determined under Article 6 (3);
4. Where a foreign corporation with at least two property falling under the proviso to Article 9 (2) of the Act does fail to file a report under Article 6 (4).
(2) In cases falling under any subparagraph of paragraph (1), the commissioner of the competent regional tax office may designate the place of tax payment under Article 10 (1) of the Act. In such cases, where the place of tax payment to be designated is in another jurisdiction, the Commissioner of the National Tax Service may designate the place of tax payment.
(3) A notice on the designation of the place of tax payment under Article 10 (2) of the Act shall be given within 45 days from the end date of the relevant business year of the relevant corporation.
(4) Where a notice referred to in paragraph (3) is not given within the deadline, the previous place of tax payment shall be the place of tax payment of the relevant corporation.
 Article 9 (Report on Change of Place of Tax Payment)
(1) Where a corporation reports a change of its place of tax payment under Article 11 (1) of the Act, it shall submit a report (including submission through the national tax information and communications network) on the change of the place of tax payment in the form stipulated by Ordinance of the Ministry of Strategy and Finance to the head of the tax office having jurisdiction over the place of tax payment after the change. <Amended by Presidential Decree No. 17826, Dec. 30, 2002; Presidential Decree No. 18312, Mar. 17, 2004; Presidential Decree No. 20720, Feb. 29, 2008>
(2) The head of a tax office in receipt of a report on the change of the place of tax payment under Article 11(1) of the Act shall inform the head of a tax office having jurisdiction over the place of tax payment before the change of the details of the report.
(3) Where any corporation disappears in a merger or division during a business year, the place of payment for corporate tax on the income (including transfer gains or losses due to a merger or division) of a merged corporation, a divided corporation, or a counterpart corporation to a disappearing corporation through a division and merger (hereinafter referred to as "merged corporation, etc.") during the business year may be the place of corporate tax payment of the surviving corporation, the corporation established through the division, or the counterpart corporation to the merger and division (hereinafter referred to as "surviving corporation, etc.") (in the case of a division, it means the place of tax payment of the corporation which succeeds to the highest assets value). In such cases, a report on the change of the place of tax payment shall be filed under Article 11 (1) of the Act. <Amended by Presidential Decree No. 17457, Dec. 31, 2001; Presidential Decree No. 22184, Jun. 8, 2010>
CHAPTER II CORPORATE TAX ON INCOME OF DOMESTIC CORPORATION FOR EACH BUSINESS YEAR
SECTION 1 Tax Base and Calculation
Subsection 1 Common Provisions
 Article 10 (Deduction of Losses)
(1) "Corporations specified by Presidential Decree, such as enterprises in the course of performing a rehabilitation plan" in the proviso to Article 13 of the Act means the following corporations: <Newly Inserted by Presidential Decree No. 26981, Feb. 12, 2016; Presidential Decree No. 27115, Apr. 29, 2016; Presidential Decree No. 27828, Feb. 3, 2017>
1. A corporation in the course of performing a rehabilitation plan approved by a court pursuant to Article 245 of the Debtor Rehabilitation and Bankruptcy Act;
2. A corporation in the course of performing a corporate improvement plan under an agreement concluded to perform the corporate improvement plan pursuant to Article 14 (1) of the Corporate Restructuring Promotion Act;
3. A corporation in the course of performing a business normalization plan under an agreement concluded to perform the business normalization plan with any financial company, etc., as defined in subparagraph 1 of Article 2 of the Act on Real Name Financial Transactions and Confidentiality, among those that have claims against the corporation;
4. A corporation who meets all the following requirements, among corporations established with an objective to issue securities under the Financial Investment Services and Capital Markets Act or to borrow funds (hereafter in this paragraph referred to as "securitization"), based on receivables, real estate, or other property rights (hereafter in this paragraph referred to as "securitized assets"):
(a) The corporation shall be either a stock company or limited company under the Commercial Act or any other Act;
(b) The corporation shall be established for a limited duration with no full-time executive or employee;
(c) The corporation's articles of incorporation, etc., shall limit its business operations to those necessary for securitization and shall prohibit a merger, liquidation, or dissolution not prearranged in securitization;
(d) A contract for outsourcing business process and a contract for outsourcing asset management shall be signed to manage and operate the company's assets for securitization;
(e) The acquisition of securitized assets shall be completed by December 31, 2015;
5. A domestic company that falls under any subparagraph of Article 51-2 (1) of the Act.
(2) In deducting losses under subparagraph 1 of Article 13 of the Act, the losses shall be deducted sequentially beginning with the losses first generated in the relevant business year.
(3) In applying subparagraph 1 of Article 13 of the Act, any of the following losses shall be deemed deducted from the tax base for each business year: <Amended by Presidential Decree No. 19328, Feb. 9, 2006; Presidential Decree No. 22812, Mar. 31, 2011>
1. Losses appropriated under Article 17 (2) of the Act;
2. Losses carried forward that is appropriated by the value of assets gratuitously acquired or the amount of reduced debts due to exemption from or expiration of debts under subparagraph 6 of Article 18 of the Act;
3. Losses deducted under Article 72 (1) of the Act.
(4) Losses referred to in subparagraph 1 of Article 13 of the Act shall include any amount within the limit of succeeded losses referred to in under Articles 81 (2) and 83 (2). <Amended by Presidential Decree No. 22184, Jun. 8, 2010>
(5) Where any loss incurs in a business year of a corporation which has included a loss exceeding the allocation limit referred to in Article 100-18 (2) of the Enforcement Decree of the Restriction of Special Taxation Act in deductible expenses, the loss additionally allocated or the loss of the business year, whichever is smaller, shall be deemed the loss incurred in the business year in which the last day of the business year of a partnership enterprise which has generated a loss exceeding the allocation ends, falls for purposes of paragraph (2). <Newly Inserted by Presidential Decree No. 21302, Feb. 4, 2009; Presidential Decree No. 26981, Feb. 12, 2016>
Subsection 2 Calculation of Gross Income
 Article 11 (Scope of Earnings)
Except as otherwise expressly provided in the Act and this Decree, earnings provided in Article 15 (1) of the Act shall be as prescribed in the following: <Amended by Presidential Decree No. 17033, Dec. 29, 2000; Presidential Decree No. 19328, Feb. 9, 2006; Presidential Decree No. 19891, Feb. 28, 2007; Presidential Decree No. 20619, Feb. 22, 2008; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 21302, Feb. 4, 2009; Presidential Decree No. 22035, Feb. 18, 2010; Presidential Decree No. 23589, Feb. 2, 2012>
1. The amount of income [including the amount of a contract, sales proceeds, and insurance premiums, but excluding the amounts of sales overcharge and sales discount calculated under the corporate accounting standards (referring to the accounting standards referred to in the subparagraphs of Article 79; hereinafter the same shall apply); hereinafter the same shall apply] generating from the business, industries or services under the Korean Standard Industrial Classification: Provided, That the amount of income from security deposits or deposit money in real estate rent when making estimations under the proviso to Article 66 (3) of the Act shall be calculated by multiplying the interest rate prescribed by Ordinance of the Ministry of Strategy and Finance in consideration of the term deposits of financial companies, etc. (hereinafter referred to as "term deposits interest rate(s)");
2. The amount of assets transferred;
2-2. The amount of treasury stocks (including where a surviving corporation acquires the stocks of the surviving corporation held by a merged corporation following a merger);
3. Property rental fees;
4. Marginal profits from the evaluation of assets;
5. The value of assets gratuitously received;
6. The amount (including the amount computed under the proviso to Article 17 (1) 1 of the Act) of debts reduced due to exemption from, or expiration of debts;
7. The returned amount included in deductible expenses;
8. The amount of reserve funds appropriated as deductible expenses and not treated under the disposition of profits;
9. Profits distributed from a related party through capital transactions referred to in the items of Article 88 (1) 8 and subparagraph 8-2 of the same paragraph;
9-2. Any of the following provisional payments as referred to in Article 28 (1) 4 (b) of the Act and interest thereon (hereafter referred to as "provisional payment, etc." in this Article): Provided, That where any justifiable grounds prescribed by Ordinance of the Ministry of Strategy and Finance exists, such as where collection is impossible due to litigation about claims or debts:
(a) Provisional payment, etc. (excluding the interest included in the gross income under item (b)) not collected until the date of termination of the special relationship referred to in Article 87 (1);
(b) Interest accrued where the special relationship under Article 87 (1) is not terminated and where the interest on the provisional payment referred to in Article 28 (1) 4 (b) of the Act is not collected by the first anniversary of the end date of the business year in which the interest accrual date falls;
10. Other earnings reverted or to be reverted to a corporation.
 Article 12 (Scope, etc. of Surpluses Untaxed upon Capitalization)
(1) "An amount prescribed by Presidential Decree" in Article 16 (1) 2 (a) of the Act means the amount specified in any subparagraph of Article 17 (1) of the Act: Provided, That the following amounts shall be excluded therefrom: <Amended by Presidential Decree No. 23724, Apr. 13, 2012; Presidential Decree No. 24357, Feb. 15, 2013>
1. An excess referred to in the proviso to Article 17 (1) 1 of the Act;
2. Profits accruing by retiring treasury stocks or investment shares (excluding the capitalized amount after the secondary anniversary of the date of the retirement if the market price referred to in Article 52 (2) of the Act does not exceed the acquisition value at the time of retirement);
3. In the case of a merger in which transfer gains or losses are deemed nil as it falls under Article 44 (2) or (3) of the Act (hereinafter referred to as "qualified merger"), the amount referred to in items (a), (c) (limited to surpluses referred to in the main sentence other than the items of Article 16 (1) 2 of the Act) and (d) (in the case of a corporation, other than a stock company, referring to the amount computed by applying this mutatis mutandis) calculated in the following sequential order until it reaches the amount computed under Article 17 (1) 5 of the Act (hereafter referred to as "marginal profit from a merger" in this Article):
(a) The sum of an asset adjustment account provided in Article 44-3 (1) of the Act and Article 80-4 (1) of this Decree;
(b) Where the sum of the costs of a merger referred to in Article 16 (1) 5 of the Act (in the case of stocks, it shall be the revalued amount based on the par value) falls short of the capital of a merged corporation, such shortage;
(c) The amount computed sequentially from the surpluses, other than those referred to in the main sentence other than the items of Article 16 (1) 2 of the Act, from among the capital surplus prescribed by Ordinance of the Ministry of Strategy of Finance of a merged corporation;
(d) The amount equivalent to the earned surplus of a merged corporation;
4. In the case of a merger in which transfer gains or losses are deemed nil as it falls under Article 46 (2) of the Act (hereinafter referred to as "qualified division"), the amount referred to in (a), (c) (limited to surpluses referred to in the main sentence other than the items of Article 16 (1) 2 of the Act) and (d) (in the case of a corporation other than a stock company, referring the amount computed by applying this mutatis mutandis) calculated sequentially until it reaches the amount computed under Article 17(1) 6 of the Act (hereafter referred to as "marginal profit from a division" in this Article):
(a) The sum of an asset adjustment account provided in Article 46-3 (1) of the Act and Article 82-4 (1) of this Decree;
(b) Where the sum of the costs of a division referred to in Article 16 (1) 6 of the Act (in the case of stocks, it shall be the revalued amount based on the par value) falls short of the capital of the divided corporation or the disappearing counterpart corporation to a merger and division (hereinafter referred to as "divided corporation, etc."), such shortage;
(c) The amount computed sequentially from surpluses, other than surpluses referred to in the main sentence other than the items of Article 16 (1) 2 of the Act, from among the capital surplus prescribed by Ordinance of the Ministry of Strategy and Finance of a divided corporation, etc.;
(d) The amount equivalent to the earned surplus of an divided corporation, etc.
(2) In applying paragraph (1) 3 and 4, where some of marginal profits from a merger or marginal profits from a division is converted into capital or investment, such marginal profits from a merger or marginal profits from a division shall be deemed to be converted according to the order of each item of the relevant subparagraph.
(3) In applying paragraph (1) 3 and 4, although reserve funds are succeeded to under Article 459 (2) of the Commercial Act, surpluses shall be calculated, deeming such reserve funds are not succeeded.
(4) Where some of the revaluation reserve referred to in Article 16 (1) 2 (b) of the Act are converted into capital or investment, it shall be deemed that conversion is made based on the rate of the amount to which Article 13 (1) 1 of the Assets Revaluation Act applies and other amount.
[This Article Wholly Amended by Presidential Decree No. 23589, Feb. 2, 2012]
 Article 13 (Timing for Constructive Dividend Payment or Distribution of Surpluses)
The date on which profit dividends or surpluses are distributed under Article 16 (1) of the Act means any of the following dates: <Amended by Presidential Decree No. 18706, Feb. 19, 2005; Presidential Decree No. 28640, Feb. 13, 2018>
1. In cases falling under Article 16 (1) 1 through 3 of the Act, the date on which a general meeting of stockholders, general meeting of employees, or meeting of the board of directors adopts a resolution to retire stocks, reduce capital or financing, or convert surpluses into capital or financing (referring to the date determined under Article 461 (3) of the Commercial Act in cases of a resolution by the board of directors: Provided, That it refers to the record date under Article 354 of the Commercial Act, if stockholders on the date of resolution on the cancellation of stocks or the reduction of capital or investment are different from the stockholders on the record date under said Article of said Act) or the date of retirement or withdrawal of an employee;
2. In cases falling under Article 16 (1) 4 of the Act, the date on which the value of the residual assets of the relevant corporation is determined;
3. In cases falling under Article 16 (1) 5 of the Act, the registration date the relevant corporation is merged;
4. In cases falling under Article 16 (1) 6 of the Act, the registration date of the division of the relevant corporation.
 Article 14 (Evaluation, etc. of Values of Assets)
(1) The value of an asset, other than cash, which has been acquired under any subparagraph of Article 16 (1) of the Act shall be determined as follows: <Amended by Presidential Decree No. 17033, Dec. 29, 2000; Presidential Decree No. 17457, Dec. 31, 2001; Presidential Decree No. 18174, Dec. 30, 2003; Presidential Decree No. 18706, Feb. 19, 2005; Presidential Decree No. 21302, Feb. 4, 2009; Presidential Decree No. 22184, Jun. 8, 2010; Presidential Decree No. 23589, Feb. 2, 2012; Presidential Decree No. 26981, Feb. 12, 2016; Presidential Decree No. 27828, Feb. 3, 2017; Presidential Decree No. 28640, Feb. 13, 2018>
1. Where the acquired assets are stocks or investment shares (hereinafter referred to as "stocks, etc."), the following amounts:
(a) In cases of stocks, etc., referred to in Article 16 (1) 2 and 3 of the Act: the par value or the amount of investment: Provided, That in cases of stocks, etc. acquired by a corporation referred to in Article 51-2 (1) 2 of the Act (hereafter referred to as "investment company, etc." in this Article, Articles 70, 75, and 86-2), the amount shall be deemed nil;
(b) In cases of stocks, etc., referred to in Article 16 (1) 5 and 6 of the Act: Where the requirements referred to in Article 44 (2) 1 and 2 (excluding the part related to holding of stocks, etc.) or Article 46 (2) 1 and 2 (excluding the part related to holding of stocks, etc.) are met or in cases falling under Article 44 (3) of the Act, the previous book value (it refers to the market value, if a portion of costs of a merger or a division under Article 16 (1) 5 or 6 of the Act is paid in cash or by any other asset and the appraised market price of the stocks, etc. acquired through the merger or division is smaller than the previous book value): Provided, That the amount of stocks, etc. acquired by an investment company, etc. shall be deemed nil;
(c) Issue price in cases of a stock dividend referred to in Article 462-2 of the Commercial Act (if an investment company, etc. is given with any stock dividend, such stock dividend shall be deemed nil);
(d) The market price at the time of acquisition provided for in Article 52 of the Act (hereinafter referred to as "market price") in other circumstances: Provided, That where profits are distributed from an affiliated person under Article 88 (1) 8, it shall be the amount less the profits;
1-2. Where the acquired assets are stocks, etc. that meet all of the following requirements, the previous book value (it refers to market value, if costs of a merger under Article 16 (1) 5 of the Act is partially paid in cash or by any other asset and the appraised market value of the stocks, etc. acquired through the merger is smaller than the previous book value):
(a) Where a foreign corporation holds the total number of outstanding stocks of another foreign corporation or the total amount of investment and is merged to the latter foreign corporation; or where a domestic corporation holds the total number of outstanding stocks of, or the total amount of investment in, two separate foreign corporations and the separate foreign corporations are merged with each other (including cases where the sum of stocks, etc. of a foreign corporation held respectively by a domestic corporation and by another foreign corporation whose total number of outstanding stocks or whose total amount of investment is held by the domestic corporation equals to the total number of outstanding stocks of, or the total amount of investment in, the former foreign corporation and the two foreign corporations are merged with each other);
(b) The surviving corporation and the merged corporation are corporations in one and the same state with which the Republic of Korea has signed a tax treaty;
(c) The state referred to in item (b) does not levy corporate tax on any domestic corporation that is a stockholder of the merged corporation or defers the levying of corporate tax on such domestic corporation;
(d) The corporation shall submit the documents that can prove the matters referred to in items (a) through (c) to the head of the tax office having jurisdiction over the place of tax payment;
2. Where the acquired assets are not stocks, etc., the market price of the assets at the time of acquisition.
(2) Where stocks, etc. are acquired under the proviso to Article 16 (1) 2 of the Act, the book value of one stock or share of new or old stocks, etc. shall be as follows:
Book value of one stock or share=Book value of one stock or share
of old stock, etc.
1 + number of one stock or share of old stock, etc. allotted to one share of new stock, etc.
(3) In applying Article 16 (1) 1 of the Act, where stocks, etc. referred to in the proviso to Article 16 (1) 2 are acquired within two years prior to the retirement of stocks, etc. (including the reduction of capital or financing; hereafter in this paragraph the same shall apply), such stocks, etc. shall be deemed retired first, and the initial acquisition value of such stocks, etc. shall be deemed nil, notwithstanding paragraph (2). In such cases, where some stocks, etc. are disposed of during this period, such stocks, etc. are deemed disposed of in proportion of such stocks, etc. to other stocks, etc., and the book value of one stock or share after the retirement of the stocks, etc. shall be the aggregate of book values after the retirement divided by the total number of stocks, etc. after the retirement, notwithstanding paragraph (2).
(4) In cases of paragraph (1) 1 (a), the value of non-par-value stocks shall be calculated by dividing the amount transferred to the capital on the date specified in any subparagraph of Article 13 by the number of the stocks newly issued in return for the amount transferred to capital. <Amended by Presidential Decree No. 25194, Feb. 21, 2014>
 Article 15 (Amount in Excess of Par Value of Issued Stocks, etc.)
(1) Deleted. <by Presidential Decree No. 24357, Feb. 15, 2013>
(2) and (3) Deleted. <by Presidential Decree No. 22184, Jun. 8, 2010>
(4) "Amounts prescribed by Presidential Decree" in Article 17 (2) of the Act means the following amounts: <Newly Inserted by Presidential Decree No. 19328, Feb. 9, 2006; Presidential Decree No. 22951, Jun. 3, 2011; Presidential Decree No. 27115, Apr. 29, 2016; Presidential Decree No. 27828, Feb. 3, 2017>
1. The amount of stocks issued in excess of the market price of such stocks, etc. (or the par value if the market price is less than the par value), if any corporation whose rehabilitation plan to convert its debts to investments has been approved under the Debtor Rehabilitation and Bankruptcy Act converts its debts to investments;
2. An amount in excess of the market price (or the par value if the market price is less than the par value) of the relevant stocks, etc., if any enterprise that shows the sign of insolvency and has signed an agreement to implement a corporate improvement plan aimed at converting its debts into investments converts its debts into investments under the Corporate Restructuring Promotion Act;
3. An amount in excess of the market price (or the par value if the market price is less than the par value) of the relevant stocks, etc., if any corporation converts its debts to investments after having signed an agreement to implement a management normalization program aimed at converting its debts to investments with any financial institution defined in subparagraph 1 of Article 2 of the Act on Real Name Financial Transactions and Confidentiality, which holds its claims against the relevant corporation;
4. An amount in excess of the market price (or par value, if the market price is less than par value) of the relevant stocks, etc., if a corporation that has a corporate restructuring plan approved under Article 10 of the Special Act on the Corporate Revitalization converts debts into investments.
(5) Where any domestic corporation discontinues its business or is dissolved before appropriating the total amount excluded from the gross income to cover losses under Article 17 (2) of the Act, the total amount that is not appropriated to cover losses shall be included in the gross income when calculating the amount of income of the business year in which the relevant grounds arise. <Newly Inserted by Presidential Decree No. 19328, Feb. 9, 2006>
 Article 16 (Gross Income Carried Forward)
"Gross income carried forward" referred to in subparagraph 2 of Article 18 of the Act means the amount of income already taxed as income for each business year (including non-taxable income or tax-exempt income under the Act and other statutes) re-included in the gross income for the relevant business year.
 Article 17 Deleted. <by Presidential Decree No. 19891, Feb. 28, 2007>
 Article 17-2 (Non-Inclusion of Holding Companies' Dividend Income in Gross Income)
(1) A holding company referred to in Article 18-2 (1) of the Act shall be a domestic corporation reported as a holding company under the Monopoly Regulation and Fair Trade Act, the Financial Holding Companies Act, the Technology Transfer and Commercialization Promotion Act and the Industrial Education Enhancement and Industry-Academia-Research Cooperation Promotion Act as at the end date of each business year: Provided, That where a person for whom the deadline for reporting the establishment or conversion of a holding company under the relevant Acts does not arrive as at the end date of the relevant business year reports his/her company as a holding company under the relevant Act by no later than the filing deadline of the tax base specified under Article 60 with respect to the income of each business year, such person shall be construed as a holding company. <Newly Inserted by Presidential Decree No. 23589, Feb. 2, 2012>
(2) "Domestic corporation which meets the requirements prescribed by Presidential Decree" referred to in the part other than the subparagraphs of Article 18-2 (1) of the Act means domestic corporations meeting all of the following requirements (hereafter referred to as "subsidiary" in this Article): <Amended by Presidential Decree No. 17033, Dec. 29, 2000; Presidential Decree No. 18174, Dec. 30, 2003; Presidential Decree No. 18706, Feb. 19, 2005; Presidential Decree No. 19328, Feb. 9, 2006; Presidential Decree No. 20619, Feb. 22, 2008; Presidential Decree No. 21302, Feb. 4, 2009; Presidential Decree No. 22951, Jun. 3, 2011>
1. A corporation, the holding company referred to in Article 18-2 (1) of the Act of which has continued to directly hold at least 40/100 [20/100 in the case of a listed stock corporation as defined in the Financial Investment Services and Capital Markets Act (hereinafter referred to as "listed corporation") or a venture business as defined in Article 2 (1) of the Act on Special Measures for the Promotion of Venture Businesses] of the total number of issued stocks or total investment amount of the domestic corporation for at least three months as at the ex-dividend date of such domestic corporation;
2. Any of the following domestic corporations:
(a) A financial institution as defined in Article 2 (1) 1 of the Financial Holding Companies Act (including a corporation that falls under Article 2 (2) of the Enforcement Decree of the same Act) where the holding company of the relevant domestic corporation is a financial holding company incorporated under the same Act;
(b) A domestic corporation which is not engaged in the finance business or insurance business classified under the Korea Standard Industrial Classification where the holding company of the relevant domestic corporation is a holding company, other than a financial holding company defined in the Financial Holding Companies Act.
(3) In applying Article 18-2 (1) 1 and 2 of the Act, the ratio of investment made by a holding company in its subsidiary shall be calculated based on the stocks, etc. of the subsidiary that such holding company has continued to hold for at least three months as at the ex-dividend date of such subsidiary: Provided, That if the preemptive right and the conversion privilege that are granted before the subsidiary becomes a wholly-controlled subsidiary of the holding company are exercised to increase the total number of stocks issued by the subsidiary after such subsidiary becomes a wholly-controlled subsidiary of the holding company, such stocks issued (limited to stocks issued within three months before the ex-dividend date) shall be calculated based on the number of stocks, etc. held by such subsidiary as at the ex-dividend date. <Amended by Presidential Decree No. 17457, Dec. 31, 2001>
(4) In applying Article 18-2 (1) 3 of the Act, any borrowings and interest thereon shall be deemed not to include interest on borrowings equivalent to the amount loaned by a financial holding company incorporated under the Financial Holding Companies Act to its subsidiary at the interest rate higher than that applied as at the time of borrowing and the amount not included in deductible expenses under Article 55. <Amended by Presidential Decree No. 19891, Feb. 28, 2007>
(5) "Amount calculated, as prescribed by Presidential Decree" referred to in Article 18-2 (1) 3 of the Act means the amount computed by multiplying the interest on borrowings by the ratio of the sum of amounts computed under subparagraphs 1 and 2 to the amount computed under subparagraph 3: <Amended by Presidential Decree No. 17033, Dec. 29, 2000; Presidential Decree No. 19891, Feb. 28, 2007; Presidential Decree No. 20619, Feb. 22, 2008; Presidential Decree No. 22577, Dec. 30, 2010; Presidential Decree No. 22951, Jun. 3, 2011>
1. The sum of the book value of stocks, etc. of a subsidiary to which Article 18-2 (1) 1 of the Act applies × 100/100;
2. The sum of the book value of stocks, etc. of a subsidiary to which Article 18-2 (1) 2 of the Act applies × 80/100;
3. The total amount of assets on the statement of financial position of the relevant holding company as at the end of the business year: Provided, That where any loan is provided by a financial holding company incorporated under the Financial Holding Companies Act to its subsidiary at the interest rate higher than that applied as at the time of borrowing, it means the amount computed by subtracting the relevant amount from the total amount of assets.
(6) Where a holding company referred to in Article 18-2 (1) of the Act (hereafter referred to as "divided holding company" in this paragraph) establishes another holding company (hereinafter referred to as "newly established holding company") by means of spin-off [limited to where the transfer marginal profits are included in deductible expenses under Article 47 (1) of the Act (hereinafter referred to as "qualified spin-off")], the book value of stocks, etc. of a subsidiary succeeded to by a newly established holding company following such qualified spin-off shall be the book value of such stocks, etc. of a divided holding company prior to the registration date of the division for the purposes of calculating the book value of the stocks, etc. of a subsidiary under subparagraphs 1 and 2 of Article 5. <Newly Inserted by Presidential Decree No. 23589, Feb. 2, 2012>
(7) The value of stocks, etc. and the total amount of asset of a subsidiary referred to in the subparagraphs of paragraph (5) shall be calculated based on the accumulated amounts during the corresponding period. <Amended by Presidential Decree No. 21302, Feb. 4, 2009>
(8) Deleted. <by Presidential Decree No. 21302, Feb. 4, 2009>
(9) Any corporation that intends to applicable under Article 18-2 (1) of the Act shall submit the written statement of dividend income in the form stipulated by Ordinance of the Ministry of Strategy and Finance to the head of the tax office having jurisdiction over the place of tax payment, along with the report provided in Article 60 of the Act. <Newly Inserted by Presidential Decree No. 17033, Dec. 29, 2000; Presidential Decree No. 20720, Feb. 29, 2008>
(10) In applying paragraph (3) and Article 18-2 (2) 1 of the Act, if some stocks, etc. of the same kind are transferred, the stocks, etc. first acquired shall be deemed the stocks, etc. first transferred. <Newly Inserted by Presidential Decree No. 19328, Feb. 9, 2006>
(11) "Corporation prescribed by Presidential Decree" referred to in Article 18-2 (2) 2 of the Act means any of the following corporations: <Newly Inserted by Presidential Decree No. 19328, Feb. 9, 2006; Presidential Decree No. 21302, Feb. 4, 2009; Presidential Decree No. 22951, Jun. 3, 2011>
1. A corporation to which Article 51-2 of the Act applies;
2. A corporation (limited to the business year during which the reduction or exemption rate is 100/100) to which Articles 63-2, 121-8 and 121-9 of the Restriction of Special Taxation Act applies;
3. A corporation to which special taxation to partnership enterprises under Article 100-15 (1) of the Restriction of Special Taxation Act applies.
[This Article Newly Inserted by Presidential Decree No. 16658, Dec. 31, 1999]
 Article 17-3 (Non-Inclusion of General Corporations' Dividend Income from Gross Income)
(1) In applying Article 18-3 (1) 1 and 2 of the Act, the ratio of equity investment made by a domestic corporation in another domestic corporation shall be calculated based on the latter's stocks, etc. that the invested domestic corporation has held for at least three months as at the ex-dividend date of the invested domestic corporation. In such cases, in calculating the number of the retained shares, etc., if some stocks of the same kind are transferred, the stocks, etc. first acquired shall be deemed the stocks, etc. first transferred. <Amended by Presidential Decree No. 19328, Feb. 9, 2006>
(2) In applying Article 18-3(1) 3 of the Act, the borrowings and interest thereon shall not include the amounts excluded from deductible expenses under Article 55.
(3) "amount computed, as prescribed by Presidential Decree" referred to in Article 18-3 (1) 3 of the Act means the amount computed by multiplying interest on borrowings by the ratio of the sum of amounts computed under subparagraphs 1 through 3 to the amount computed under subparagraph 4: <Amended by Presidential Decree No. 19328, Feb. 9, 2006; Presidential Decree No. 22577, Dec. 30, 2010; Presidential Decree No. 22951, Jun. 3, 2011>
1. The sum of the book values of stocks, etc. of the other domestic corporation that is subject to the main sentence of Article 18-3 (1) 1 of the Act × 50/100;
2. The sum of the book value of shares, etc. of the other domestic corporation that is subject to the proviso to Article 18-3 (1) 1 of the Act × 100/100;
3. The sum of the book values of stocks, etc. of the other domestic corporation that is subject to Article 18-3 (1) 2 of the Act × 30/100;
4. The total amount of assets on the statement of financial position of the relevant domestic corporation as at the end of the business year.
(4) A non-profit domestic corporation referred to in the part other than the subparagraphs of Article 18-3 (1) of the Act shall be limited to a non-profit domestic corporation that does not include reserve funds for proper purpose business in deductible expenses under Article 29 of the Act. <Amended by Presidential Decree No. 21302, Feb. 4, 2009>
(5) The value of stocks, etc. and the total amount of asset of a domestic corporation referred to in paragraph (3) 1 through 4 shall be calculated based on the accumulated amounts during the corresponding period <Amended by Presidential Decree No. 21302, Feb. 4, 2009>
(6) Any corporation that intends to be applicable under Article 18-3 (1) of the Act shall submit the written statement of dividend income in the form stipulated by Ordinance of the Ministry of Strategy and Finance to the head of the tax office having jurisdiction over the place of tax payment, along with the report provided in Article 60 of the Act. <Amended by Presidential Decree No. 20720, Feb. 29, 2008>
[This Article Newly Inserted by Presidential Decree No. 17033, Dec. 29, 2000]
 Article 18 (Losses Carried Forward)
(1) "Carried forward losses prescribed by Presidential Decree" in subparagraph 6 of Article 18 of the Act means the following losses: <Amended by Presidential Decree No. 17033, Dec. 29, 2000; Presidential Decree No. 18174, Dec. 30, 2003; Presidential Decree No. 18706, Feb. 19, 2005; Presidential Decree No. 19328, Feb. 9, 2006; Presidential Decree No. 22184, Jun. 8, 2010; Presidential Decree No. 22812, Mar. 31, 2011; Presidential Decree No. 27115, Apr. 29, 2016>
1. Losses referred to in Article 14 (2) of the Act (excluding losses succeeded to under Article 44-3 (2) or 46-3 (2) of the Act) that is not deducted when calculating the tax base for each business year thereafter under subparagraph 1 of Article 13 of the Act;
2. Any of the following losses referred to in Article 14 (2) of the Act among those excluded from the tax base reported under Article 60 of the Act for each business year:
(a) Losses of a corporation whose rehabilitation plan is approved under the Debtor Rehabilitation and Bankruptcy Act, which are confirmed by a court;
(b) Deleted; <by Presidential Decree No. 19328, Feb. 9, 2006>
(c) Losses determined by a creditor financial institution council as those of a corporation that has signed an agreement to implement a corporate improvement plan under the Corporate Restructuring Promotion Act.
(2) Article 10 (2) and (3) shall apply mutatis mutandis to the calculation of carried forward losses referred to in paragraph (2). <Amended by Presidential Decree No. 26981, Feb. 12, 2016>
Subsection 3 Calculation of Deductible Expenses
 Article 19 (Scope of Deductible Expenses)
Deductible expenses referred to in Article 19 (1) of the Act are as follows, except as otherwise expressly provided for in the Act and this Decree: <Amended by Presidential Decree No. 17033, Dec. 29, 2000; Presidential Decree No. 17457, Dec. 31, 2001; Presidential Decree No. 17826, Dec. 30, 2002; Presidential Decree No. 18706, Feb. 19, 2005; Presidential Decree No. 19328, Feb. 9, 2006; Presidential Decree No. 19891, Feb. 28, 2007; Presidential Decree No. 20619, Feb. 22, 2008; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 21302, Feb. 4, 2009; Presidential Decree No. 22035, Feb. 18, 2010; Presidential Decree No. 22075, Mar. 15, 2010; Presidential Decree No. 22516, Dec. 7, 2010; Presidential Decree No. 23527, Jan. 25, 2012; Presidential Decree No. 23589, Feb. 2, 2012; Presidential Decree No. 24575, Jun. 11, 2013; Presidential Decree No. 24638, Jun. 28, 2013; Presidential Decree No. 25194, Feb. 21, 2014; Presidential Decree No. 26068, Feb. 3, 2015; Presidential Decree No. 27828, Feb. 3, 2017; Presidential Decree No. 28640, Feb. 13, 2018>
1. The purchase value (excluding the amount of purchase allowances and the discounted purchase amount computed according to the Korea Financial Accounting Standards) of raw materials of products or goods sold and incidental expenses;
1-2. Incidental expenses relating to sale, such as expenses for storage, packing or transportation, sales subsidies, and sales allowances of products or goods sold (including payment of sales subsidies and sales allowances without a prior arrangement);
2. The book value of transferred assets as at the time of transfer;
3. Labor costs;
4. Repair expenses of fixed assets;
5. Depreciation costs of fixed assets;
5-2. An amount equivalent to the depreciation costs calculated by applying mutatis mutandis Articles 24 through 34 to the following amounts, if the value of fixed assets recorded in the accounting books according to the Korea Financial Accounting Standards is lower than the market price, while such fixed assets are acquired from an affiliated person:
(a) The difference between the market price and the amount recorded in the accounting books, where the actual acquisition value is higher than the market price;
(b) The difference between the actual acquisition value and the amount recorded in the accounting books, where the actual acquisition value is lower than the market price;
6. Property rental fees;
7. Interest on loans;
8. Irrecoverable amount receivables of output value-added tax (limited to the one which has not been subject to bad debts tax credits under Article 45 of the Value-Added Tax Act);
9. Losses from evaluation of assets;
10. Various taxes and public charges;
11. Membership fees paid to corporations, or associations or unions registered with the competent authorities, which are organizations established by business operators;
12. Exploring expenses in the mining industry (including expenses for developing areas for exploring);
13. The value of free medical examinations and treatment provided by free medical care vouchers or New Village medical care vouchers prescribed by the Minister for Health and Welfare;
13-2. The book value (the amount in this case shall not be included in the donations referred to in subparagraph 1 of Article 35) of surplus food donated by a domestic corporation engaging in the manufacturing, wholesale, or retail business of food and necessities of life defined in subparagraphs 1 and 1-2 of Article 2 of the Act on Encouragement the Donation of Food, Etc. (hereafter in this subparagraph referred to as "food, etc."), where the domestic corporation gratuitously donates surplus food, etc., left over in the course of its business operations to a provider defined in subparagraph 4 of Article 2 of the same Act, or a person designated by such provider;
14. Expenses for business-related overseas inspections and training;
15. Any of the following operational expenses or allowances:
(a) Expenses incurred in operating special classes or middle and high schools affiliated to industrial enterprises, which are established under the Elementary and Secondary Education Act for working teenagers;
(b) Expenses incurred in operating vocational training courses, departments, etc. on conditions that graduates are hired under agreements concluded between educational institutions and the relevant corporations under Article 8 of the Industrial Education Enhancement and Industry-Academia-Research Cooperation Promotion Act;
(c) Allowances paid to students participating in field training pursuant to Article 7 of the Vocational Education and Training Promotion Act;
(d) Allowances paid to students participating in field training classes pursuant to Article 22 of the Higher Education Act;
16. The book value of stocks of a company that contributes to an employee stock ownership association under the Framework Act on Labor Welfare (hereinafter referred to as "employee stock ownership association") or money and goods contributed to such association;
17. The acquisition value (limited to the one worth less than 5 million won for each transaction) of an artwork, where the acquisition value of an artwork exhibited at all times in a space open to the public, such as an office and corridor, for the purpose of decoration or beautification, is counted as a deductible expense for the business year in which such artwork is acquired;
18. The purchase cost of articles donated for advertisement and publicity (up to 30 thousand won annually in cases of an article (excluding an article worth 10,000 won or less per piece) donated to a specific person);
19. Where an executive or employee exercises any of the following stock options or receive the bonus, paid with stocks or money equivalent to the value of the stocks, which is prescribed by Ordinance of the Ministry of Strategy and Finance (hereinafter referred as "share-based payment"), the amount compensated as the exercise or payment expenses to the relevant corporation that has offered stock options or made the share-based payment (hereinafter referred as "stock options, etc."):
(a) Stock options, etc. granted or offered from a financial holding company incorporated under the Financial Holding Companies Act (only applicable to stock options granted under Article 542-3 of the Commercial Act);
(b) Stock options, etc. granted or offered from an overseas parent corporation prescribed by Ordinance of the Ministry of Strategy and Finance, which are prescribed by Ordinance of the Ministry of Strategy and Finance;
19-2. The price of stock options or an amount of money received pursuant to Article 340-2 of the Commercial Act, Article 16-3 of the Act on Special Measures for the Promotion of Venture Businesses or Article 15 of the Act on Special Measures for the Promotion of Specialized Enterprises, etc. for Materials and Components in any of the following cases: Provided, That only cases where the value of stock options given or the amount of money paid does not exceed 10/100 of the total number of outstanding stocks of the relevant corporation are included herein:
(a) The price of stock options received in either of the following cases:
(i) The amount of money or the price of stocks of the relevant corporation, where the difference between the agreed purchase price of the stocks at the agreed time of purchase of the stocks and the market price of such stocks is paid in cash or by stocks of the relevant corporation;
(ii) The difference between the actual purchase price and the market price of stocks, where stocks are issued at a price lower than the market price in response to the exercise of stock options at the agreed time of purchase of the stocks;
(b) The amount of money if paid in shared-based payment;
21. The amount of money paid temporarily to the bereaved family of an executive (excluding the controlling stockholder, etc. referred to in Article 43 (7)) or an employee for school expenses, etc. after the death of the executive or employee and that meets the criteria prescribed by Ordinance of the Ministry of Strategy and Finance;
22. Other deductible expenses imputed or to be imputed to the relevant corporation.
 Article 19-2 (Non-Inclusion of Bad Debts in Deductible Expenses)
(1) "Irrecoverable claims due to grounds prescribed by Presidential Decree" in Article 19-2 (1) of the Act means any of the following: <Amended by Presidential Decree No. 22035, Feb. 18, 2010; Presidential Decree No. 22577, Dec. 30, 2010; Presidential Decree No. 28211, Jul. 26, 2017>
1. Accounts receivables and outstanding amounts, the extinctive prescription of which has lapsed under the Commercial Act;
2. Bills, the extinctive prescription of which has lapsed under the Bills of Exchange and Promissory Notes Act;
3. Checks, the extinctive prescription of which has lapsed under the Check Act;
4. Loans and advance money, the extinctive prescription of which has lapsed under the Civil Act;
5. Claims determined as irrecoverable based on the determination to authorize a rehabilitation plan or a court ruling of discharge under the Debtor Rehabilitation and Bankruptcy Act;
6. Seized claims for which auction on the property of a debtor is cancelled under Article 102 of the Civil Execution Act;
7. Claims accruing from export of goods or provision of services in a foreign country, which is exempt from the obligation to collect claims from the Governor of the Bank of Korea or the President of a foreign exchange bank under the statutes relating to foreign exchange transactions;
8. Irrecoverable claims because of bankruptcy of a debtor, forcible execution, execution of punishment, discontinuance of business, death, missing or unknown whereabouts of a debtor;
9. Checks, or bills in relation to which at least six months have passed since it was dishonored, or accounts receivable (limited to accounts receivable of small and medium enterprises, which have occurred before the date of dishonor): Provided, That this shall not apply where the relevant corporation has taken the property of a debtor as security;
10. Deleted; <by Presidential Decree No. 24357, Feb. 15, 2013>
11. Claim, the value of which does not exceed 200,000 won (based on the total value of claims by debtor) among the claims for which at least six months have passed since the deadline for collection;
12. The following claims (limited to claims to a new technology business operator in cases of a new technology financial business operator which is a specialized credit finance business company referred to in Article 61 (2) 13) among claims of a financial company, etc. referred to in the proviso to Article 61 (2):
(a) What has been approved as bad debts by the Governor of the Financial Supervisory Service for a financial company, etc., according to the standards for bad debts disposition procedures determined by the Governor of the Financial Supervisory Service upon consultation with the Minister of Strategy and Finance;
(b) What has been counted as bad debts by a financial company, etc., being claims requested by the Governor of the Financial Supervisory Service to dispose of as bad debts, because he/she recognizes that they meet the standards referred to in item (a);
13. Claims to the founder of a small and medium enterprise start-up investment company defined in the Support for Small and Medium Enterprise Establishment Act, which are recognized to meet the standards determined by the Minister of Small and Medium Enterprises (SMEs) and Startups upon consultation with the Minister of Strategy and Finance.
(2) The date a check or bill is dishonored under paragraph (1) 9 is the date of payment (referring to the date of confirmation, if the relevant check or bill is presented to a financial company, etc. before the date of payment and confirmed as being dishonored) of a dishonored check or bill in possession. In such cases, the amount countable in deductible expenses as bad debts shall be an amount computed by subtracting 1,000 won from the amount of the relevant claim uncollected as at the end of the relevant business year. <Amended by Presidential Decree No. 22035, Feb. 18, 2010>
(3) Bad debts referred to in any subparagraph of paragraph (1) shall be counted as deductible losses for the business year under which the following dates fall:
1. The date the relevant grounds have arisen in any case falling under paragraph (1) 1 through 7;
2. The date such bad debts are counted as deductible expenses, because the relevant grounds have arisen in cases, other than those falling under subparagraph 1.
(4) Notwithstanding paragraph (3) 2, where a corporation merges with another corporation or splits off, but fails to count bad debts referred to in paragraph (1) 8 through 13 in deductible losses by the business year in which the registration date of the merger or the registration date of the division falls, such bad debts shall be deemed deductible losses for the business year under which the registration date of merger or the registration date of division falls.
(5) Where a domestic corporation counts the difference between the book value and the present value of claims following readjustment of claims according to the Korea Financial Accounting Standards, it shall be included in the deductible losses, and the amount counted in the deductible losses shall be included in the gross income by the method of transfer under the Korea Financial Accounting Standards.
(6) "Debt guarantees prescribed by Presidential Decree, such as debt guarantees referred to in any of the subparagraphs of Article 10-2 (1) of the Monopoly Regulation and Fair Trade Act" in Article 19-2 (2) 1 of the Act means any of the following debt guarantees: <Amended by Presidential Decree No. 22035, Feb. 18, 2010; Presidential Decree No. 27828, Feb. 3, 2017; Presidential Decree No. 28640, Feb. 13, 2018>
1. Debt guarantees provided for in any subparagraph of Article 10-2 (1) of the Monopoly Regulation and Fair Trade Act;
2. Debt guarantees provided by a financial company, etc. referred to in any subparagraph of Article 61 (2);
3. Debt guarantees provided by a corporation engaging in credit guarantee business under any Act;
4. Debt guarantees provided by an entrusting enterprise provided for in the Act on the Promotion of Mutually Beneficial Cooperation between Large Enterprises and Small and Medium Enterprises for an entrusted enterprise, which is a member of the council of entrusted enterprises;
5. Debt guarantees provided by a domestic corporation engaging in construction business or telecommunications business for a person, other than an affiliated person provided for in Article 87 in direct connection with a construction project (including securitization referred to in Article 10 (1) 4 based on unsold housing units): Provided, That debt guarantees for the persons specified by Ordinance of the Ministry of Strategy and Finance, including a concessionaire defined in subparagraph 7 of Article 2 of the Act on Public-Private Partnerships in Infrastructure, shall include debt guarantees for affiliated persons provided for in Article 87.
(7) Losses from disposal of claims subject to Article 19-2 (2) of the Act shall be excluded from deductible expenses.
(8) An amount (referring to the amount less the amount appropriated as claims for indemnity among the amount paid by subrogation) appropriated by a corporation referred to in Article 63 (2) as deductible expenses in the relevant business year among the amount which the corporation makes payment by subrogation under a credit guarantee agreement shall be deemed a claim for indemnity and shall be excluded from the calculation of deductible expenses. In such cases, the amount excluded from deductible expenses shall be included in deductible expenses, when the amount of income in the business year in which any ground provided for in each subparagraph of subparagraph (1) arises. <Newly Inserted by Presidential Decree No. 22577, Dec. 30, 2010>
(9) A domestic corporation that intends to qualify for Article 19-2 (1) of the Act shall submit a detailed adjustment statement on appropriation for bad debts and on bad debts 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 of tax payment, accompanied by the report referred to in Article 60 of the Act.
[This Article Newly Inserted by Presidential Decree No. 21302, Feb. 4, 2009]
 Article 20 (Range of Margins from Issuance of Stocks at Below Par Value)
"Margins from the issuance of stocks at below par value" in subparagraph 3 of Article 20 of the Act means the sum of the deficiency and the cost of issuing new stocks, where stocks are issued at a price below par value pursuant to Article 417 of the Commercial Act.
[This Article Wholly Amended by Presidential Decree No. 28640, Feb. 13, 2018]
 Article 21 (Scope of Non-Performance of Duties)
The non-performance duties as referred to in subparagraph 1 of Article 21 of the Act means a failure to collect indirect national taxes, a failure to pay taxes, and other non-performance of duties.
 Article 22 (Inclusion, etc. of Input Tax of Value-Added Tax in Deductible Expenses)
(1) "The amount of tax in circumstances prescribed by Presidential Decree" in subparagraph 1 of Article 21 of the Act means any of the following amounts: <Amended by Presidential Decree No. 18706, Feb. 19, 2005; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 22184, Jun. 8, 2010; Presidential Decree No. 22951, Jun. 3, 2011; Presidential Decree No. 24357, Feb. 15, 2013; Presidential Decree No. 24638, Jun. 28, 2013>
1. The amount of input tax referred to in Article 39 (1) 5 of the Value-Added Tax Act (excluding those that constitute capital expenditures defined in Article 31 (2));
2. The amount of input tax referred to in Article 39 (1) 6 of the Value-Added Tax Act;
3. Other amounts of input tax verified as being actually borne by the relevant corporation, and stipulated by Ordinance of the Ministry of Strategy and Finance.
(2) The fictitious input tax amount deducted under Article 42 of the Value-Added Tax Act and the amount of input tax deducted under Article 108 of the Restriction of Special Taxation Act shall be deducted from the purchase price of the relevant raw materials in calculating the amount of income of the relevant corporation for the business year. <Amended by Presidential Decree No. 18706, Feb. 19, 2005; Presidential Decree No. 24638, Jun. 28, 2013>
 Article 23 (Scope of Punitive Damages, etc.)
"Amount specified by Presidential Decree" in Article 21-2 of the Act means either of the following amounts (hereafter referred to as "punitive damages excluded from deductible expenses" in this Article):
1. An amount exceeding the amount of damage actually incurred, among the damages paid under any of the following provisions of the relevant Acts:
2. An amount exceeding the amount of damage actually incurred, where damages are paid in excess of the damage actually incurred among the damages paid pursuant to any statute of a foreign country.
(2) If the amount of damage actually incurred is unclear in applying paragraph (1), the amount calculated by multiplying the damages paid by a domestic corporation by 2/3 shall be deemed damages excluded from deductible expenses.
[This Article Newly Inserted by Presidential Decree No. 28640, Feb. 13, 2018]
 Article 24 (Scope of Depreciable Assets)
(1) "Assets prescribed by Presidential Decree, such as buildings, machinery, equipment, and patent rights" referred to in Article 23 (3) of the Act means any of the following fixed assets (excluding assets referred to in paragraph (3); hereinafter referred to as "depreciable assets"): <Amended by Presidential Decree No. 17457, Dec. 31, 2001; Presidential Decree No. 17826, Dec. 30, 2002; Presidential Decree No. 18706, Feb. 19, 2005; Presidential Decree No. 18903, Jun. 30, 2005; Presidential Decree No. 22184, Jun. 8, 2010; Presidential Decree No. 22577, Dec. 30, 2010; Presidential Decree No. 23589, Feb. 2, 2012; Presidential Decree No. 27972, Mar. 29, 2017; Presidential Decree No. 28640, Feb. 13, 2018>
1. Any of the following tangible fixed assets:
(a) Buildings (including auxiliary facilities) and structures (hereinafter referred to as "buildings");
(b) Vehicles, transportation equipment, instruments, tools and furnishings;
(c) Ships and aircraft;
(d) Machinery and equipment;
(e) Animals and plants;
(f) Other tangible fixed assets similar to the assets referred to in items (a) through (e);
2. Any of the following intangible fixed assets:
(a) Goodwill (excluding goodwill appropriated by a surviving corporation, etc. due to a merger or division), design rights, utility model rights, and trademark rights;
(b) Patent rights, fishing rights, extraction rights defined in the Submarine Mineral Resources Development Act, toll road management rights, irrigation rights, rights to use electricity and gas provision facilities, rights to use industrial waterworks, rights to use waterworks, and rights to use heating provision facilities;
(c) Mining rights, rights to use telephone and telegraph exclusive-use facilities, rights to use exclusive rail lines, rights to manage sewage treatment and disposal plants, and waterworks facility management rights;
(d) Dam usage rights;
(e) Deleted; <by Presidential Decree No. 17826, Dec. 30, 2002>
(f) Development costs: Costs incurred in applying the outcomes of research or related knowledge to planning or design in order to create or substantially improve the materials, apparatus, products, processes, systems or services prior to commercial production or use, which have been appropriated for development costs by the relevant corporation (including an amount expended by members of the Industrial Technology Research Cooperatives established under the Industrial Technology Research Cooperatives Support Act for research and development and the acquisition of research facilities, etc. to the relevant Cooperatives);
(g) The value of assets donated for use and profiting therefrom: The book value of assets, other than money, donated to the State or any local government, any corporation referred to in Article 24 (2) 4 through 6 of the Act or any corporation provided in Article 36 (1) 1 of this Decree, if such assets are used or profits are generated therefrom;
(h) Rights to utilize frequencies under Article 14 of the Radio Waves Act, and rights to manage airport facilities under Article 26 of the Airport Facilities Act;
(i) Rights to manage harbor facilities under Article 16 of the Harbor Act.
(2) "Intangible fixed assets with indefinite service life prescribed by Presidential Decree" referred to in the part other than the subparagraphs of Article 23 (2) of the Act means any of the following: <Newly Inserted by Presidential Decree No. 22577, Dec. 30, 2010; Presidential Decree No. 23589, Feb. 2, 2012>
1. Intangible fixed assets, the service life of which cannot be determined and applied when the depreciation costs are appropriated as deductible expenses among the intangible fixed assets (hereinafter referred to as "service life for settlement of accounts") which meet all requirements prescribed by Ordinance of the Ministry of Strategy and Finance;
2. Goodwill referred to in Article 24 (1) 2 (a) acquired prior to the business year during which the international accounting standards are first applied.
(3) Depreciable assets shall not include any of the following:
1. Those not used for business (excluding idle facilities);
2. Those under construction;
3. Those whose value does not decline over time.
(4) Where a corporation appropriates the total value of fixed assets purchased on a long-term installment plan, etc. under Article 68 (4) as assets and uses them for business, they shall be included as depreciable assets, regardless of whether full payments have been made or ownership has been transferred. <Amended by Presidential Decree No. 22577, Dec. 30, 2010>
(5) In applying paragraph (1), among the assets (hereafter referred to as "lease assets" in this paragraph) lent by a person who runs a facilities leasing business (hereafter referred to as "lease corporation" in this paragraph), assets for financial lease prescribed by the corporate accounting standards (hereafter referred to as "financial lease" in this paragraph) shall be the depreciable assets of a lease user, and lease assets, other than those for financial lease, shall be the depreciable assets of a lease corporation. <Amended by Presidential Decree No. 18706, Feb. 19, 2005; Presidential Decree No. 19891, Feb. 28, 2007; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 22577, Dec. 30, 2010>
(6) In applying paragraph (5), where a special purpose company for the asset securitization defined in the Asset-Backed Securitization Act assumes charge of assets for financial lease under its asset securitization plan submitted under the same Act, such assets shall be deemed the depreciable assets of a lease user. <Newly Inserted by Presidential Decree No. 17033, Dec. 29, 2000; Presidential Decree No. 18706, Feb. 19, 2005>
 Article 25 (Method of Appropriating Depreciation Costs as Deductible Expenses)
(1) Where a corporation appropriates the depreciation costs of depreciable assets as deductible expenses in each business year under Article 23 (1) of the Act or includes them in deductible expenses under Article 23 (2) of the Act, it shall choose either the method of directly reducing the book value of the relevant depreciable assets or the method of appropriating them in the cumulative total amount of depreciation, instead of reducing the book value. <Amended by Presidential Decree No. 22577, Dec. 30, 2010>
(2) Where a corporation appropriates the depreciation costs in the cumulative total amount of depreciation, it shall separately appropriate such depreciation costs for each item of asset, and where the corporation keeps a detailed statement on the settlement of depreciation costs separately prepared for each item of asset under Article 33, it may appropriate the total amount of depreciation costs in a lump-sum as the cumulative total amount of depreciation.
 Article 26 (Calculation of Allowable Depreciation)
(1) "Amount computed, as prescribed by Presidential Decree" in Article 23 (1) of the Act means the amount computed by the method (hereinafter referred to as "allowable depreciation") reported by a corporation to the head of the tax office having jurisdiction over the place of tax payment, among the following depreciation methods for respective depreciable assets: <Amended by Presidential Decree No. 17457, Dec. 31, 2001; Presidential Decree No. 17826 Dec. 30, 2002; Presidential Decree No. 18706, Feb. 19, 2005; Presidential Decree No. 21302, Feb. 4, 2009; Presidential Decree No. 23589, Feb. 2, 2012; Presidential Decree No. 26068, Feb. 3, 2015; Presidential Decree No. 27972, Mar. 29, 2017>
1. Buildings and intangible fixed assets (excluding assets referred to in subparagraphs 3 and 6 through 8): The straight-line method;
2. Tangible fixed assets, other than buildings (excluding any tangible fixed assets used for mining under subparagraph 4): The declining balance method or the straight-line method;
4. Tangible fixed assets used for mining: The units-of-production method, the straight-line method, or the declining balance method;
5. Deleted; <by Presidential Decree No. 17826, Dec. 30, 2002>
6. Development costs: The method of depreciating in proportion to the number of elapsed months by each business year based on the annually reported service life within the period of 20 years from the point of time when the sale or use of related products becomes possible;
7. The value of assets donated for use and profiting therefrom: The method of depreciating the amount (referring to the balance thereof if the relevant donated assets are destroyed or a contract thereof is rescinded) that is equally divided for the period (referring to the reported service life, if there is no any provisions stipulating such period) during which the relevant assets are used and generate profits;
8. Rights to utilize frequencies under Article 14 of the Radio Waves Act, rights to manage the airport facilities under Article 26 of the Airport Facilities Act, and rights to manage harbor facilities under Article 16 of the Harbor Act: The method of depreciating the equal amount for the period of use within the period publicly announced by or registered to the competent authorities.
(2) The depreciation methods referred to in paragraph (1) are as follows: <Amended by Presidential Decree No. 22577, Dec. 30, 2010; Presidential Decree No. 26068, Feb. 3, 2015; Presidential Decree No. 26981, Feb. 12, 2016>
1. The straight-line method: Depreciation method of uniformly applying the allowable depreciation for each business year, calculated by multiplying the acquisition value of the relevant depreciable asset (referring to the acquisition value provided for in Article 72; hereafter in this Article the same shall apply) by the depreciation rate based on the service life of such asset;
2. The declining balance method: Depreciation method of annually reducing the allowable depreciation for each business year, as calculated by multiplying the balance (hereinafter referred to as "undepreciated balance") after deducting the amount included as depreciation costs in deductible expenses (including the amount not included in deductible expenses under Article 27-2 (2) and (3) of the Act in cases of passenger vehicles for business use under Article 27-2 (1) of the Act (hereinafter referred to as "passenger vehicles for business use")) from the acquisition value of the relevant depreciable asset by the depreciation rate for the service life of such assets;
3. The units-of-production method: Depreciation method of determining the amount of allowable depreciation for each business year by multiplying the amount specified in either of the following items by the mining output from the relevant mining area during the relevant business year:
(a) The amount calculated by dividing the acquisition value of the relevant depreciable assets by the estimated total mining output of the mining area and then multiplying the amount so calculated by the mining output from the mining area during the relevant business year;
(b) The amount calculated by dividing the acquisition value of the relevant depreciable asset by the estimated total landfill volume in the waste landfill facility, which is the relevant asset, and then multiplying the amount so calculated by the landfill volume in the waste landfill facility during the relevant business year.
(3) Where a corporation intends to report depreciation methods under paragraph (1), it shall choose one method for each item of asset provided for in the same paragraph and submit a report on depreciation methods (including submission through the national tax information and communications network) in the form stipulated by Ordinance of the Ministry of Strategy and Finance, to the head of the tax office having jurisdiction over the place of tax payment by the filing deadline of the corporate tax base for the business year in which any of the following dates falls: <Amended by Presidential Decree No. 18312, Mar. 17, 2004; Presidential Decree No. 20720, Feb. 29, 2008>
1. For newly established corporations and non-profit corporations which have newly started profit-making business, the start date of the business;
2. For corporations, other than those referred to in subparagraph 1, which have acquired new fixed assets further classified under each subparagraph of paragraph (1), the date of acquisition.
(4) Where a corporation fails to submit a report on depreciation methods under paragraph (3), the allowable depreciation for the relevant depreciable asset shall be calculated in the following depreciation methods: <Amended by Presidential Decree No. 17457, Dec. 31, 2001; Presidential Decree No. 17826 Dec. 30, 2002>
1. The straight-line method in cases of assets referred to in paragraph (1);
2. The declining balance method in cases of assets referred to in paragraph (1) 2;
3. The units-of-production method in cases of assets referred to in paragraph (1) 3 and 4;
4. The method of depreciating an equal amount in each year for five years from the time when the sale or use of related products becomes possible in cases of assets referred to in paragraph (1) 6;
5. The methods prescribed in paragraph (1) 7 and 8 in cases of assets referred to in the same subparagraphs.
(5) Each corporation shall continue to apply the depreciation method reported under paragraph (3) (where the depreciation method is not reported, the depreciation method referred to in each subparagraph of paragraph (4)) in the subsequent business years.
(6) In calculating the allowable depreciation, the residual value of depreciable assets shall be deemed zero: Provided, That where the allowable depreciation is calculated by the declining balance method, it shall be the amount equivalent to 5/100 of the acquisition value, and that amount shall be added to the allowable depreciation of the business year, which the undepreciated balance of the relevant depreciable assets first does not exceed 5/100 of the acquisition value.
(7) For depreciable assets, the depreciation of which ends, the lesser amount of 5/100 of the acquisition value or 1,000 won shall be the book value of the relevant depreciable assets, notwithstanding paragraph (6), and such amount shall be excluded from deductible expenses of the relevant corporation.
(8) In applying paragraph (1), where the business year referred to in Article 7 or 8 of the Act is less than one year, the allowable depreciation shall be the amount calculated by multiplying the allowable depreciation by the number of months in the relevant business year and dividing it by 12. In such cases, the number of months shall be calculated based on the calendar months, and the number of days that falls short of one month shall be deemed one month.
(9) In applying paragraph (1), the allowable depreciation of any depreciable assets acquired to use for business during a business year shall be calculated based on the number of months from the day on which such assets are used for business to the end date of the relevant business year. In such cases, the number of months shall be calculated based on the calendar months, and the number of days that falls short of one month shall be deemed one month. <Amended by Presidential Decree No. 17457, Dec. 31, 2001>
 Article 26-2 (Calculation, etc. of Previous Depreciation Costs)
(1) Assets referred to in Article 23 (2) 1 of the Act shall be depreciable assets acquired by a corporation on or before December 31, 2013 (hereafter referred to as "currently owned assets" in this Article and Article 26-3) before the business year immediately preceding the business year (hereafter referred to as "reference year" in this Article and Article 26-3) during which the corporate accounting standards referred to in Article 13 (1) 1 of the Act on External Audit of Stock Companies (hereinafter referred to as "international accounting standards") are first applied and the same type (according to the classification of depreciable assets prescribed by Ordinance of the Ministry of Strategy and Finance; hereafter the same shall apply in this Article and Article 26-3) of assets as the currently owned assets, which shall be used for the same type of business (according to the classification of type of business prescribed by Ordinance of the Ministry of Strategy and Finance, and it shall be limited to where the relevant corporation continuously conducts the relevant business after adopting the international accounting standards; hereafter the same shall apply in this Article and Article 26-3) as the currently owned assets (hereafter referred to as "same type of assets" in this Article and Article 26-3). <Amended by Presidential Decree No. 25194, Feb. 21, 2014>
(2) Depreciation costs of the depreciable assets referred to in Article 23 (2) 1 of the Act shall be included in deductible expenses within the amount computed under subparagraph 1 in which the total amount of depreciation costs of each item of asset additionally included in deductible expenses under Article 23 (2) of the Act per same type of assets does not exceed the amount computed under subparagraph 2 (hereafter referred to as "ceiling on inclusion in calculation of deductible expenses" in this Article): <Amended by Presidential Decree No. 25194, Feb. 21, 2014>
1. Depreciation cost ceilings of each item of asset: The following amounts:
(a) Where the depreciation method applied when appropriating the depreciation costs as deductible expenses with respect to the same type of asset as the relevant assets in the business year immediately preceding the business year during which the international accounting standards are first applied (hereinafter referred to as "depreciation method for settlement of accounts") is the straight-line method: An amount computed by multiplying the acquisition value of depreciable assets by the depreciation rate prior to adoption of the international accounting standards (hereafter referred to as "standard depreciation rate" in this Article and Article 26-3);
(b) Where the depreciation method for settlement of accounts with respect to the same type of asset as the relevant assets in the reference year is the declining balance method: An amount computed by multiplying the undepreciated balance by the standard depreciation rate. In such cases, the proviso to Article 26 (6) shall apply mutatis mutandis to the calculation of the allowable depreciation;
2. Depreciation cost ceilings of the same type of assets: The following amounts (if the amount is less than zero, it shall be deemed zero):
(a) In cases falling under subparagraph 1 (a): An amount computed by the following formula (Sum total of the acquisition value of the same type of assets, the depreciation costs of which are appropriated as deductible expenses under Article 23 (1) of the Act in the relevant business year x standard depreciation rate) - Sum total of depreciation costs included in deductible expenses under Article 23 (1) of the Act with respect to the same type of assets in the relevant business year;
(b) In cases falling under subparagraph 1 (b): An amount computed by the following formula (sum total of undepreciated balance of the same type of assets, the depreciation costs of which are appropriated as deductible expenses under Article 23 (1) of the Act in the relevant business year x standard depreciation rate) - Sum total of depreciation costs included in deductible expenses under Article 23 (1) of the Act with respect to the same type of asset in the relevant business year.
(3) In applying each subparagraph of paragraph (2), where the depreciation costs of the same type of asset as the relevant assets are not appropriated as deductible expenses in the reference year, the depreciation method for settlement of accounts in the business year in which the depreciation costs of the same type of asset as the relevant assets are lastly appropriated as deductible expenses prior to the reference year shall be the depreciation method for settlement for accounts in the reference year.
(4) In applying each subparagraph of paragraph (2), the standard depreciation rate shall be the average of the rates calculated under the following subparagraphs for the reference year and the respective two preceding business years. In such cases, where a corporation is newly established, merged or divided in the reference year and respective two preceding business years, the depreciation method changes under Article 27, or the service life is applied differently from the scope of service life under Article 29 or the applied service life is changed, the depreciation rate shall be calculated upon excluding the business year which ends before the relevant grounds arise:
1. In cases falling under paragraph 2 (1) (a): The rate of the total depreciation costs of the same type of assets included in deductible expenses to the total acquisition value of the same type of assets;
2. In cases falling under paragraph 2 (1) (b): The rate of the total depreciation costs of the same type of assets included in deductible expenses to the total undepreciated balance of the same type of assets.
(5) In applying Article 23 (2) of the Act and paragraphs (1) through (4) of this Article, where a domestic corporation prepares the comparative financial statements by applying mutatis mutandis the international accounting standards in the business year immediately preceding the business year during which it first applies the international accounting standards and changes the depreciation method for settlement of accounts and the service life for settlement of accounts in the relevant business year same as the depreciation method and the service life used in preparing the comparative financial statements, it shall be deemed first applied the international accounting standards in the relevant business year.
(6) The depreciation costs of assets under paragraph (1) (hereafter referred to as "assets acquired through a qualified merger, division or spin-off" in this Article), which are acquired by a qualified merger, qualified division or qualified spin-off (hereinafter referred to as "assets acquired by a qualified merger, division or spin-off") in the business year during which a corporation shall apply the international accounting standards and in subsequent business years thereafter may be included in deductible expenses by the following methods: <Amended by Presidential Decree No. 23589, Feb. 2, 2012; Presidential Decree No. 28640, Feb. 13, 2018>
1. Where corporations holding the same type of assets are merged through a qualified merger (including a division and merger constituting a qualified division; hereafter the same shall apply in this Article): Recalculating the standard depreciation rate of the same type of assets under paragraph (4) as in the business year immediately preceding the business year in which the merger is registered and then including the depreciation costs calculated by applying the recalculated standard depreciation rate in deductible expenses under paragraph (2). In such cases, in applying each subparagraph of paragraph (4), the total depreciation costs of the same type of assets included in deductible expenses shall be the total depreciation costs of the relevant same type of assets included in the deductible expenses by a corporation that transfers (hereafter referred to as "transferor corporation" in this Article) the assets acquired through the qualified merger, division or spin-off and a corporation that assumes the charge of such assets (hereafter referred to as "transferee corporation" in this Article), the total acquisition value of the same type of assets shall be the sum total of the acquisition value of the relevant same type of assets appropriated by the transferor corporation and the transferee corporation, and the total undepreciated balance of the same type of assets shall be the sum total of the undepreciated balance of the same type of assets appropriated by the transferor corporation and the transferee corporation;
2. In cases of assets that a corporation newly established through a qualified division or spin-off acquired through such qualified division or spin-off, where corporations that do not hold the same type of assets are merged through a qualified merger: The following methods:
(a) Where the transferor corporation includes the depreciation costs of the relevant assets in deductible expenses under Article 23 (2) of the Act by applying the international accounting standards in and before the business year in which the registration date of the merger or division (hereafter referred to as "registration date of the merger or division" in this Article) falls: Including depreciation costs in deductible expenses under paragraph (2) by applying the standard depreciation rate already calculated by the transferor corporation for the relevant assets;
(b) In cases other than item (a): Recalculating the standard depreciation rate under paragraph (4) by the type of business and type upon classifying the assets acquired through qualified merger, division or spin-off from other assets held by the transferee corporation with the business year immediately preceding the business year in which the registration date of the merger, division or spin-off falls and then including depreciation costs in the deductible expenses under paragraph (2) by applying the re-calculated depreciation rate. In such cases, in applying each subparagraph of paragraph (4), the depreciation costs of the same type of assets included in the deductible expenses shall be the depreciation costs included in the deductible expenses by the transferor corporation with respect to the assets acquired through a qualified merger, division or spin-off and the acquisition value and the undepreciated balance shall be the acquisition value of the assets acquired through the qualified merger, division or spin-off and the undepreciated balance appropriated by the transferor corporation, respectively.
(7) In applying paragraph (1) when the depreciation costs of the assets acquired through a qualified merger, division or spin-off are included in the deductible expenses under paragraph (6), the date the transferor corporation acquires such assets shall be deemed the date of acquisition of the assets acquired through the qualified merger, division or spin-off and where the transferor corporation applies the international accounting standards prior to the business year in which the registration date of the merger, division or spin-off falls, paragraph (6) shall not apply to the assets, other than the same type of assets as the currently owned assets by the transferor corporation.
(8) In applying paragraph (2) when the depreciation costs of the assets acquired through a qualified merger, division or spin-off are included in the deductible expenses under paragraph (6), the acquisition value of the assets acquired through the qualified merger, division or spin-off shall be the acquisition value by the transferor corporation and the undepreciated balance shall be the balance calculated by deducting the amount already included by the transferee corporation in the deductible expenses as depreciation costs from the book value (referring to the amount computed by subtracting the asset adjustment account under Article 80-4 (1) or 82-4 (1) from the market value as at the time of transfer) as at the time of transfer by the transferor corporation. <Amended by Presidential Decree No. 28640, Feb. 13, 2018>
(9) In calculating the standard depreciation rate of the assets acquired by a qualified merger, division or spin-off and the ceiling on inclusion of such assets in deductible expenses under paragraph (6) 1 and 2, where the depreciation method for settlement of accounts of a transferor corporation or a transferee corporation has changed after the business year during which the international accounting standards are first applied, the depreciation method for settlement of accounts prior to such change shall be the depreciation method for settlement of accounts in the reference year and paragraphs (2) and (4) shall apply accordingly, and in applying paragraph (6) 1, where the depreciation method for settlement of accounts between corporations is different, the method of calculating the standard depreciation rate and the ceiling on inclusion in deductible expenses shall be prescribed by Ordinance of the Ministry of Strategy and Finance.
(10) Where a corporation which has included the depreciation costs of the assets acquired by a qualified merger, division or spin-off under paragraph (6) in the deductible expenses falls under Article 44-3 (3) of the Act in cases of a qualified merger, Article 46-3 (3) in cases of a qualified division, or Article 47 (2) of the Act in cases of a qualified spin-off (hereafter referred to as "ground for violation of qualified requirements" in this Article and Article 29-2), the depreciation costs included in the deductible expenses shall be calculated by deeming that paragraph (6) is not applied in the business year during which paragraph (6) is first applied and the subsequent business years in calculating the amount of income after the business year in which the relevant grounds arise, and the amount calculating by subtracting the amount computed under subparagraph (2) from the amount computed under subparagraph (1) shall be included in the gross income in calculating the amount of income in the business year in which the ground for violation of qualified requirements arises: <Amended by Presidential Decree No. 28640, Feb. 13, 2018>
1. Total depreciation costs included in the deductible expenses from the business year during which paragraph (6) is first applied to the business year immediately preceding the relevant business year;
2. Total depreciation costs recalculated by deeming that paragraph (6) is not applied from the business year during which paragraph (6) is first applied to the business year immediately preceding the relevant business year.
(11) Except as otherwise expressly provided for in paragraphs (1) through (10), matters necessary for calculating the standard depreciation rates and the ceilings on inclusion in deductible expenses shall be prescribed by Ordinance of the Ministry of Strategy and Finance.
[This Article Newly Inserted by Presidential Decree No. 22577, Dec. 30, 2010]
 Article 26-3 (Calculation of Standard Depreciation Costs)
(1) Assets referred to in Article 23 (2) 2 of the Act mean currently owned assets and assets of the same type that a corporation acquires as depreciable assets on or after January 1, 2014.
(2) The depreciation costs of depreciable assets provided for in paragraph (1) shall be included in deductible expenses to the extent that the aggregate of depreciation costs of individual assets of the same type additionally included in deductible expenses under Article 23 (2) of the Act within the amount specified in subparagraph 1 does not exceed the amount specified in subparagraph 2 or 3, whichever is smaller: <Amended by Presidential Decree No. 26981, Feb. 12, 2016>
1. Standard depreciation costs of an individual asset: An amount calculated by applying the depreciation method for the settlement of accounts for the relevant business year per asset and the standard service life stipulated by Ordinance of the Ministry of Strategy and Finance (hereinafter referred to as "standard service life");
2. Ceiling on the depreciation costs of assets of the same type in consideration of the standard depreciation costs (if the amount is smaller than zero, it shall be deemed zero): The aggregate of depreciation costs of assets of the same type for the relevant business year, calculated by applying the depreciation method applicable to the settlement of accounts for the relevant business year and the standard service life ? The aggregate of depreciation costs of assets of the same type, included in deductible expenses for the relevant business year under Article 23 (1) of the Act;
3. Ceiling on the depreciation costs of assets of the same type in consideration of the previous standard depreciation cost: Either of the following amounts (if the amount is smaller than zero, it shall be deemed zero):
(a) If the depreciation method for the settlement of accounts for the reference year is the straight-line method: (The aggregate of acquisition prices of assets of the same type for which depreciation costs are included in deductible expenses for the relevant business year under Article 23 (1) of the Act × Standard depreciation rate) - The aggregate of depreciation costs of assets of the same type, included in deductible expenses for the relevant business year under Article 23 (1) of the Act;
(b) If the depreciation method for the settlement of accounts for the reference year is the declining balance method: (The aggregate of the undepreciated balance of assets of the same type for which depreciation costs are included in deductible expenses for the relevant business year under Article 23 (1) of the Act × Standard depreciation rate) - The aggregate of depreciation costs of assets of the same type, included in deductible expenses for the relevant business year under Article 23 (1) of the Act.
(3) Notwithstanding paragraph (2), if the amount equivalent to 25/100 of the amount computed under paragraph (2) 3 is greater than the amount computed under paragraph (2) 2, the depreciation costs additionally included in deductible expenses under Article 23 (2) of the Act for individual assets may be included additionally in deductible expenses to the extent that the aggregate of depreciation costs of assets of the same type does not exceed 25/100 of the amount under paragraph (2) 3.
(4) Article 26-2 (3) through (10) shall apply mutatis mutandis to the calculation of depreciation costs under paragraphs (2) and (3).
[This Article Newly Inserted by Presidential Decree No. 25194, Feb. 21, 2014]
 Article 27 (Change of Depreciation Method)
(1) In any of the following circumstances, a corporation may change the depreciation method upon obtaining approval from the head of the tax office having jurisdiction over the place of tax payment, notwithstanding Article 26 (5): <Amended by Presidential Decree No. 18706, Feb. 19, 2005; Presidential Decree No. 22577, Dec. 30, 2010>
1. Where corporations with different depreciation methods merge (including a merger and division);
2. Where a corporation assumes charge of, or succeeds to, the business of a business operator with a different depreciation method;
3. Where a foreign investor as defined in the Foreign Investment Promotion Act assumes charge of or holds at least 20/100 of the stocks, etc., of a domestic corporation;
4. Where the previous depreciation method needs to be changed due to changing business conditions or economic conditions of overseas markets;
5. Where the depreciation method for settlement of accounts has changed due to a change in the accounting policy prescribed by Ordinance of the Ministry of Strategy and Finance (limited to where it has changed in the same method as the changed depreciation method for settlement of account).
(2) A corporation which intends to obtain approval to change the depreciation method under paragraph (1) shall submit an application (including submitting such application through the national tax information and communications network) to change the method of depreciation in the form stipulated by Ordinance of Ministry of Strategy and Finance, to the head of the tax office having jurisdiction over the place of tax payment by the end date of the first business year in which it intends to apply the changed depreciation method. <Amended by Presidential Decree No. 18312, Mar. 17, 2004; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 22577, Dec. 30, 2010>
(3) Upon receipt of an application submitted under paragraph (2), the head of the tax office having jurisdiction over the place of tax payment shall determine whether to grant approval and notify the relevant corporation thereof within one month from the end date of the business year in which the application is submitted. <Amended by Presidential Decree No. 22577, Dec. 30, 2010>
(4) Where the head of the tax office having jurisdiction over the place of tax payment intends to approve the change of the depreciation method on the grounds falling under paragraph (1) 4, he/she shall observe the standards determined by the Commissioner of the National Tax Service.
(5) Where a corporation changes its depreciation method without obtaining approval required under paragraph (1), the allowable depreciation shall be calculated in the depreciation method before the change.
(6) Where the depreciation method is changed under paragraph (1), the allowable depreciation shall be calculated by any of the following formulae. In such cases, the estimated total mining output in the formula referred to in subparagraph 3 means the total mining output recognized by the Korea Resources Corporation established under the Korea Resources Corporation Act, and the estimated total landfill volume means the total landfill volume approved by the Minister of Environment of the relevant Mayor/Do Governor at the time of granting a license for a waste treatment business under Article 25 (3) of the Waste Control Act: <Amended by Presidential Decree No. 16658, Dec. 31, 1999; Presidential Decree No. 18706, Feb. 19, 2005; Presidential Decree No. 21566, Jun. 26, 2009; Presidential Decree No. 24824, Nov. 5, 2013; Presidential Decree No. 26068, Feb. 3, 2015>
1. A change from the declining balance method or the units-of-production method to the straight-line method: The allowable depreciation = (the book value after deduction of the cumulative total amount of depreciation + the amount in excess of the depreciation limit carried forward from the previous period) × the depreciation rate determined by the straight-line method for the reported service life under the main sentence of Article 28 (1) 2 and (6) (the standard service life in cases falling under the proviso to Article 28 (1) 2);
2. A change from the straight-line method or the units-of-production method to the declining balance method: The allowable depreciation = (the book value after deduction of the cumulative total amount of depreciation + the amount in excess of the depreciation limit carried forward from the previous period) × the depreciation rate determined by the declining balance method for the reported service life under the main sentence of Article 28 (1) 2 and (6) (the standard service life in cases falling under the proviso to Article 28 (1) 2);
3. A change from the declining balance method or the straight-line method to the units-of-production method:
The allowable depreciation = (the book value after deduction of the cumulative total amount of depreciation + the amount in excess of the depreciation limit carried forward from the preceding term) × the mining output or landfill volume in the relevant business year / the estimated total mining output or landfill volume - the total mining output or landfill volume until the business year before the change.
 Article 28 (Service Life and Depreciation Rates)
(1) The service life of depreciable assets and the corresponding depreciation rate based on the service life shall be as follows: <Amended by Presidential Decree No. 17457, Dec. 31, 2001; Presidential Decree No. 17826 Dec. 30, 2002; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 22577, Dec. 30, 2010; Presidential Decree No. 26981, Feb. 12, 2016>
1. For assets used for testing and research prescribed by Ordinance of the Ministry of Strategy and Finance and intangible fixed assets provided for in Article 24 (1) 2 (a) through (d): The service life prescribed by Ordinance of the Ministry of Strategy and Finance and the corresponding depreciation rate determined by the depreciation method prescribed by Ordinance of the Ministry of Strategy and Finance (hereinafter referred to as "depreciation rate");
2. For depreciable assets (excluding intangible fixed assets provided for in Article 24 (1) 2 (f) through (i)), other than those referred to in subparagraph 1: The service life chosen by a corporation and reported to the head of the tax office having jurisdiction over the place of tax payment (hereinafter referred to as "reported service life") within the scope of the standard service life (hereinafter referred to as "scope of service life") by adding or reducing 25/100 of the standard service life to or from such standard service life by structure or by type of asset or type of business, and the corresponding depreciation rate: Provided, That where no report is filed by the deadline specified under each subparagraph of paragraph (3), the standard service life and the corresponding depreciation rate shall apply.
(2) In applying paragraph (1), where the business year referred to in Article 6 of the Act falls short of one year, it shall be in accordance with the service life calculated by the following formula and the corresponding depreciation rate. In such cases, the number of months shall be calculated based on the calendar months, and the number of days that falls short of one month shall be deemed one month:
(service life, reported service life,
or standard service life)
×12
number of months in a business year
(3) When a corporation reports the service life under paragraph (1) 2 or (6), it shall submit the service life report (including submission via the national tax information and communications network) in the form stipulated by Ordinance of the Ministry of Strategy and Finance to the head of the tax office having jurisdiction over the place of tax payment by the deadline for reporting the tax base of corporate tax for the business year in which any of the following dates falls: <Amended by Presidential Decree No. 18312, Mar. 17, 2004; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 24824, Nov. 5, 2013>
1. For newly established corporations and non-profit domestic corporations which have newly started profit-making business, the start date of the business;
2. For corporations, other than those referred to in subparagraph 1, where they acquire fixed assets with a different standard service life based on categories by type of assets or type of business or newly start a different type of business, the acquisition date of such assets or the start date of such business.
(4) A corporation shall continue to apply the reported service life or standard service life by type of asset or type of business applied under paragraph (1) 2 or (6) in the subsequent business years. <Amended by Presidential Decree No. 24824, Nov. 5, 2013>
(5) A report on the service life referred to in paragraphs (1) 2, (3), and (6) shall be submitted annually. <Amended by Presidential Decree No. 24824, Nov. 5, 2013>
(6) Notwithstanding the main sentence of paragraph (1) 2, if a small or medium enterprise defined in Article 2 of the Enforcement Decree of the Restriction of Special Taxation Act (hereafter referred to as “small or medium enterprise” in this paragraph and paragraph (7)) acquires any of the following assets (hereafter referred to as “assets invested in plants” in this paragraph and paragraph (7)) during the period beginning on October 1, 2014 and ending on June 30, 2016, it may elect to add or subtract up to 50/100 of the standard service life (a period of less than one year shall be deemed nil) to or from the standard service life of each asset and for each type of business in reporting the service life to the head of the tax office having jurisdiction over the place of tax payment: Provided, That the foregoing shall not apply where the aggregate acquisition value of assets invested in plants acquired by a small or medium enterprise in the relevant business year is less than the aggregate acquisition value of such assets acquired in the immediately preceding business year: <Newly Inserted by Presidential Decree No. 24824, Nov. 5, 2013; Presidential Decree No. 25640, Sep. 26, 2014; Presidential Decree No. 26981, Feb. 12, 2016>
1. Vehicles and transports: Provided, That they shall be limited to those used for transportation business or for rental business for the purpose of rental;
2. Ships and aircraft: Provided, That they shall be limited to those used for transportation business or for rental business for the purpose of rental;
3. Tools, instruments, and fixtures;
4. Machines and devices.
(7) A small or medium enterprise that wishes to qualify for paragraph (6) shall file a request for the application of the special exception to service life for small and medium enterprises (including filing through the national tax information and communications network) with the head of the tax office having jurisdiction over the place of tax payment by the deadline set for reporting the tax base of corporate tax for the business year in which it acquires the relevant asset. <Newly Inserted by Presidential Decree No. 24824, Nov. 5, 2013>
 Article 29 (Special Cases and Changes of Service Life)
(1) In any of the following circumstances, a corporation may apply the service life different from the scope of service life or change the applied service life for a particular place of business within the scope of the period calculated by adding or reducing 50/100 (25/100 in cases falling under subparagraphs 5 and 6) of the standard service life to/from the standard service life upon obtaining approval from the commissioner of the competent regional tax office having jurisdiction over the place of tax payment, notwithstanding Article 28 (1) 2 and (4): <Amended by Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 22577, Dec. 30, 2010; Presidential Decree No. 25194, Feb. 21, 2014>
1. Where the degree of corrosion, wear and tear, or deterioration of the assets is obvious due to the characteristics of the place of business;
2. For a corporation for which three years have passed since the starting of business, where the rate of operation prescribed by Ordinance of the Ministry of Strategy and Finance (hereafter referred to as "rate of operation" in this paragraph) of production facilities (excluding buildings; hereinafter referred to as "production facilities") for the relevant business year is substantially higher than the average rate of operation for the immediately preceding three business years;
3. Where accelerated depreciation of existing production facilities is required on the grounds of the development, distribution, etc. of new production technology and new products;
4. Where operations are suspended or the rate of operation of production facilities is reduced due to changing economic conditions;
5. Where the service life for settlement of accounts in the business year during which the international accounting standards are first applied to the depreciable asset falling under Article 28 (1) 2 has changed (limited to where the service life for settlement of accounts is extended, the service life shall be extended and the service life for settlement of accounts is reduced, the service life shall be reduced, but it is impossible to change the service life to the service life shorter than the service life for settlement of accounts);
6. Where the standard service life of the depreciable asset falling under Article 28 (1) 2 has changed: Provided, That in the case of reducing the service life, where the service life for settlement of accounts is within the scope of adding or reducing 25/100 of the changed standard service life, it is impossible to change it to the service life shorter than the service life for settlement of accounts.
(2) When a corporation intends to obtain approval of the service life or to change the service life under paragraph (1), it shall submit an application (including submitting such application through the national tax information and communications network) for approval of service life (or approval to change the service life) in the form stipulated by Ordinance of the Ministry of Strategy and Finance to the commissioner of the regional tax office through the head of the competent tax office within three months from the date referred to in each subparagraph of Article 28 (3) or to the end date of the first business year in which it intends to apply the changed service life. In such cases, an application for approval of service life or approval to change the service life shall be annually submitted. <Amended by Presidential Decree No. 18312, Mar. 17, 2004; Presidential Decree No. 19328, Feb. 9, 2006; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 22577, Dec. 30, 2010>
(3) Upon receipt of an application submitted under paragraph (2), the head of the tax office having jurisdiction over the place of tax payment shall notify the applicant as to whether the commissioner of the competent regional tax office grants approval within one month from the end date of the business year in which the application was submitted. <Amended by Presidential Decree No. 19328, Feb. 9, 2006; Presidential Decree No. 22577, Dec. 30, 2010>
(4) Deleted. <by Presidential Decree No. 22577, Dec. 30, 2010>
(5) Where a corporation which has changed (including re-change) the service life of the depreciable assets under paragraph (1) intends to re-change the service life of the relevant assets, it shall wait until three years pass from the end date of the business year during which the changed service life was first applied.
 Article 29-2 (Allowable Depreciation of Used Assets, etc.)
(1) Where a domestic corporation acquires (including succession of assets through a merger or division) assets (hereafter referred to as "used assets" in this Article), at least 50/100 of the standard service life (referring to the standard service life applied to the relevant domestic corporation) of which has lapsed from any other corporation or business operator provided in Article 28 of the Income Tax Act, the service life equivalent to 50/100 of the standard service life of such assets and the service life chosen in the scope of the standard service life, on which a report is filed with the head of the tax office having jurisdiction over the place of tax payment (hereafter referred to as "revised service life" in this Article) may be deemed the service life. In such cases, the service life not exceeding one year in calculating the revised service life shall be dropped. <Amended by Presidential Decree No. 17457, Dec. 31, 2001; Presidential Decree No. 18706, Feb. 19, 2005; Presidential Decree No. 22035, Feb. 18, 2010; Presidential Decree No. 22577, Dec. 30, 2010>
(2) In determining the allowable depreciation of the assets acquired by a qualified merger or qualified division (hereafter referred to as "qualified merger or division" in this Article), the acquisition value referred to in each subparagraph of Article 26 (2) and (6) shall be the acquisition value of a corporation which transfers the assets through a qualified merger or division (hereafter referred to as "transferor corporation" in this Article); and the undepreciated balance shall be the balance calculated by deducting the amount already included by the corporation that acquired such assets (hereafter referred to as "transferee corporation" in this Article) in deductible losses as depreciation costs from the book value as at the time of transfer (referring to the amount computed by subtracting the asset adjustment account referred to in Articles 80-4 (1) or 82-4 (1) from the market value as at the time of transfer) by the transferor corporation, and the allowable depreciation of the relevant assets may be determined by any of the following methods. In such cases, such chosen method shall continue to apply in the subsequent business years: <Newly Inserted by Presidential Decree No. 22577, Dec. 30, 2010; Presidential Decree No. 22812, Mar. 31, 2011; Presidential Decree No. 23589, Feb. 2, 2012; Presidential Decree No. 25194, Feb. 21, 2014>
1. The method of succeeding to the allowable depreciation of the transferor corporation: In such cases, the allowable depreciation amount shall be the amount computed by the depreciation method and the service life applied by the transferor corporation under the Act and this Decree;
2. The method of succeeding to the allowable depreciation of the transferee corporation: In such cases, the allowable depreciation shall be the amount computed by the depreciation method and the service life applied by the transferee corporation under the Act and this Decree.
(3) Where a corporation to which paragraph (2) applies falls under the ground for violation of qualified requirements, Article 26-2 (10) shall apply mutatis mutandis to the calculation of the amount of income and the depreciation costs included in the calculation of deductible expenses in the business year in which the relevant grounds arise and in the subsequent business years. In such cases, where an amount computed by subtracting the amount computed under Article 26-2 (10) 2 from an amount computed under subparagraph 1 of the same paragraph is smaller than zero, the amount shall be deemed zero, and the corporation shall file a report on the revised service life on the used assets among the assets acquired by the qualified merger or division under paragraph (1), along with the report provided in Article 60 of the Act in the business year during which the relevant grounds arise, and if it fails to do so, the transferee corporation shall be deemed reported the service life for the relevant asset as prescribed in Article 28 (1). <Newly Inserted by Presidential Decree No. 22577, Dec. 30, 2010>
(4) Paragraph (1) shall only apply where a domestic corporation files a report on the revised service life in the form prescribed by Ordinance of the Ministry of Strategy and Finance by the following deadlines: <Amended by Presidential Decree No. 17457, Dec. 31, 2001; Presidential Decree No. 20720, Feb. 29, 2008>
1. In cases of acquisition of any used assets, the filing deadline of the tax base on corporate tax for the business year in which the date of such acquisition falls;
2. In cases of succession of any assets through a merger or division, the filing deadline of the tax base on corporate tax for the business year in which the date of such merger or division falls.
[This Article Newly Inserted by Presidential Decree No. 17033, Dec. 29, 2000]
 Article 30 (Constructive Depreciation)
(1) Where a corporation that operates business eligible for full or partial exemption from corporate tax on income for each business year is fully or partially exempted from corporate tax, it shall include depreciation costs in deductible expenses or include them in deductible expenses up to the allowable depreciation under the main sentence of Article 23 (1) of the Act: Provided, That a corporation that applies the international accounting standards may include depreciation costs of individual assets additionally in deductible expenses pursuant to Article 23 (2) of the Act. <Amended by Presidential Decree No. 28640, Feb. 13, 2018>
(2) Where a determination by estimation or a correction is made under the proviso to Article 66 (3) of the Act, the depreciation cost of depreciated assets shall be deemed included in deductible expenses. <Newly Inserted by Presidential Decree No. 28640, Feb. 13, 2018>
[This Article Wholly Amended by Presidential Decree No. 25194, Feb. 21, 2014]
 Article 31 (Constructive Instant Depreciation)
(1) Where a corporation appropriates the amount paid to acquire depreciable assets and the amounts constituting capital expenditures for the depreciable assets as deductible expenses, it shall be deemed depreciation in the calculation of the allowable depreciation.
(2) For purposes of paragraph (1), "capital expenditures" means repair costs expended by a corporation to extend the service life of its depreciable assets or to raise the real value of such assets, and includes expenditures for any of the following:
1. Remodeling to change the original use;
2. Installation of elevators or cooling/heating equipment;
3. Installation of evacuation facilities, etc. in a building, etc.;
4. Reinstatement of buildings, machinery, facilities, and equipment damaged or destroyed by a disaster or accident to the extent that they cannot be used for their original purposes;
5. Other improvements, expansions, or installations which are similar in nature to those referred to in subparagraphs 1 through 4.
(3) Where any of the following repair costs expended by a corporation in a business year are appropriated as deductible expenses for the business year, they shall not be included in capital expenditures, notwithstanding paragraph (2): <Amended by Presidential Decree No. 22577, Dec. 30, 2010>
1. Where the amount expended as repair costs for each item of asset does not exceed 3,000,000 won;
2. Where the amount expended as repair costs for each item of asset does not exceed 5/100 of the property value on the statement of financial position (referring to the balance of the cumulative total amount of depreciation deducted from the acquisition value) as at the end date of the immediately preceding business year;
3. Where repairs costs are periodically expended at intervals of less than three years.
(4) Except the following assets, where the acquisition value of any depreciable assets is 1,000,000 won or less per unit of transaction, such acquisition value shall be included in deductible expenses, limited to those appropriated as deductible expenses for the business year in which they were used for business:
1. Assets held in large quantities by the nature of the proper business;
2. Assets acquired to start or expand the business.
(5) For purposes of paragraph (4), "unit of transaction" means the unit of acquired assets which the acquiring corporation may use independently and directly for its business.
(6) Notwithstanding paragraph (4), any of the following assets shall be included in deductible expenses, limited to those appropriated as deductible expenses for the business year in which they were used for the business: <Amended by Presidential Decree No. 16658, Dec. 31, 1999; Presidential Decree No. 22577, Dec. 30, 2010>
1. Fishing tools used in the fisheries industry (including tools used for fishing boats);
2. Movie film, tools (including molds), furniture, electrical appliances, gas machinery, household appliances and fixtures, clocks, test equipment, measurement equipment, and signboards;
3. Videotapes for rental business and compact disks for music play, the acquisition value of each of which shall be less than 300,000 won;
4. Telephones (including cellular phone) and personal computers (including its peripherals).
(7) Where part of the production facilities is discarded due to the replacement of facilities or outdated technology, the amount of the book value of the relevant assets minus 1,000 won may be included in deductible expenses for the business year in which the date of discard falls.
(8) Where the market value of depreciable assets is rapidly declining due to their obsolescence, physical damage, etc. and a corporation appropriates impairment losses according to the corporate account standards (excluding cases falling under Article 42 (3) 2 of the Act), the relevant amount shall be deemed to have been appropriated in deductible expenses as depreciation costs and Article 23 (1) of the Act shall apply accordingly. <Newly Inserted by Presidential Decree No. 22577, Dec. 30, 2010>
 Article 32 (Disposition of Disallowed Amount of Depreciation)
(1) Among the depreciation costs appropriated as deductible expenses for each business year by a corporation, the amount in excess of the allowable depreciation (hereafter referred to as "disallowed amount of depreciation" in this Article) shall be confirmed as deductible expenses if the depreciation costs appropriated as deductible expenses by the corporation for the following business year falls short of the allowable depreciation, limited to the amount of the shortfall (hereafter referred to as "approved shortfall" in this Article). In such cases, the disallowed amount of depreciation shall be confirmed as deductible expenses up to the limit of the allowable depreciation even where the corporation fails to appropriate the depreciation costs as deductible expenses.
(2) An approved shortfall may not be allocated for the disallowed amount of depreciation in any subsequent business year.
(3) Where a corporation increases the book value of depreciable assets under Article 42 (1) 1 of the Act (hereafter referred to as "evaluation increase" in this Article), the disallowed amount of depreciation for the relevant depreciable assets shall be deemed to have been included in gross income up to the limit of the evaluation increase and confirmed as deductible expenses, and the amount in excess of the evaluation increase shall be deemed the disallowed amount of depreciation to be carried forward to the following business year. In such cases, any approved shortfall shall be deemed erased. <Amended by Presidential Decree No. 22577, Dec. 30, 2010>
(4) Where a corporation concurrently carries out the depreciation and evaluation increase of depreciable assets, the corporation shall be deemed to have carried out depreciation first and then evaluation increase, and the allowable depreciation shall be calculated accordingly.
(5) Where depreciable assets are transferred, the disallowed amount of depreciation of the relevant assets shall be included in deductible losses for the business year in which the date of the transfer falls.
(6) In applying paragraph (5), where some of depreciable assets is transferred, the cumulative total amount of depreciation and the disallowed amount of depreciation or the approved shortfall of the relevant transferred assets shall be the amount computed by multiplying the cumulative total amount of depreciation and the disallowed amount of depreciation or the approved shortfall of all depreciable assets by the ratio of the value of the relevant transferred depreciable assets to their total value. In such cases, the total value shall be based on the book value as at the time of acquisition.
 Article 33 (Detailed Statements on Depreciation Costs)
Where a corporation appropriates depreciation costs as deductible expenses for each business year under Article 23 (1) of the Act or includes depreciation costs in deductible expenses under Article 23 (2) of the Act, it shall prepare and keep a detailed statement on the settlement of depreciation costs of each item of asset in the form stipulated by Ordinance of the Ministry of Strategy and Finance, and submit, to the head of the tax office having jurisdiction over the place of tax payment, the aggregate balance sheet of detailed statements on the settlement of depreciation costs, the detailed statement on the disallowed and approved depreciation costs, and the detailed statement on the settlement of depreciation costs of the acquired and transferred assets in the forms prescribed by Ordinance of the Ministry of Strategy and Finance, along with the report provided in Article 60 of the Act. <Amended by Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 22577, Dec. 30, 2010>
 Article 34 (Detailed Regulations concerning Depreciation Costs)
Other matters necessary for calculating the depreciation costs of depreciable assets shall be prescribed by Ordinance of the Ministry of Strategy and Finance. <Amended by Presidential Decree No. 20720, Feb. 29, 2008>
 Article 35 (Scope of Donations)
Donations referred to in Article 24 (1) of the Act shall be designated donations as provided in Article 36 and any of the following: <Amended by Presidential Decree No. 23589, Feb. 2, 2012>
1. The value of the donation of any asset gratuitously made by a corporation to a person, other than a related party provided in Article 87, with no direct connection with the business of the corporation;
2. Where a corporation transfers any asset to a person, other than a related party provided in Article 87, at a price below the arm's length price or purchases any asset from such person at a price above the arm's length price without any reasonable grounds, the amount of the difference that is recognized as an actual donation. In such cases, the arm's length price shall be within 30/100 higher or lower than the market price.
 Article 36 (Scope, etc. of Designated Donations)
(1) "Donations prescribed by Presidential Decree" in Article 24 (1) of the Act means any of the following: <Amended by Presidential Decree No. 17033, Dec. 29, 2000; Presidential Decree No. 17457, Dec. 31, 2001; Presidential Decree No. 18706, Feb. 19, 2005; Presidential Decree No. 19328, Feb. 9, 2006; Presidential Decree No. 19891, Feb. 28, 2007; Presidential Decree No. 20619, Feb. 22, 2008; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 21302, Feb. 4, 2009; Presidential Decree No. 22035, Feb. 18, 2010; Presidential Decree No. 22356, Aug. 25, 2010; Presidential Decree No. 22577, Dec. 30, 2010; Presidential Decree No. 22812, Mar. 31, 2011; Presidential Decree No. 23589, Feb. 2, 2012; Presidential Decree No. 24018, Aug. 3, 2012; Presidential Decree No. 24357, Feb. 15, 2013; Presidential Decree No. 25194, Feb. 21, 2014; Presidential Decree No. 26981, Feb. 12, 2016; Presidential Decree No. 27828, Feb. 3, 2017; Presidential Decree No. 28074, May 29, 2017; Presidential Decree No. 28640, Feb. 13, 2018>
1. For the following non-profit corporations (including organizations and foreign non-profit corporations; hereafter in this Article referred to as "designated organizations, etc. receiving donations"), donations paid as proper purpose business expenses of the relevant designated organizations, etc. receiving donations: Provided, That donations paid to any corporation designated and publicly notified under item (f) shall be limited to donations paid for six years from January 1 of the year in which the date of such designation falls (hereafter referred to "period of designation" in this Article):
(a) Social welfare corporations established under the Social Welfare Services Act;
(b) Child-care centers established pursuant to the Infant Care Act;
(c) Kindergartens established pursuant to the Early Childhood Education Act; schools established pursuant to the Elementary and Secondary Education Act and the Higher Education Act; technical colleges established pursuant to the Act on the Development of Vocational Skills of Workers; lifelong educational facilities established in the form of a major college pursuant to Article 31 (4) of the Lifelong Education Act; and lifelong educational facilities established in the form of a distance college pursuant to Article 33 (3) of the same Act;
(d) Medical corporations under the Medical Service Act;
(e) Non-profit corporations (including organizations affiliated thereto) established for the purpose of missionary work and for other evangelical purposes with the permission of the Minister of Culture, Sports and Tourism or the head of a local governments pursuant to Article 32 of the Civil Act;
(f) Juristic persons designated and publicly notified by the Minister of Strategy and Finance upon recommendation of competent authorities as those that meet all the follow requirements among non-profit corporations established with permission from competent authorities pursuant to Article 32 of the Civil Act (hereafter referred to as "non-profit corporations under the Civil Act" in this Article), social cooperatives established pursuant to Article 85 of the Framework Act on Cooperatives (hereafter referred to as "social cooperatives" in this Article), public institutions under Article 4 of the Act on the Management of Public Institutions (excluding public enterprises referred to in Article 4 of said Act; hereafter referred to as "public institutions' in this Article) and institutions established directly pursuant to any Act:
(i) Requirements for each category of juristic person:
a. A non-profit corporation under the Civil Act or a foreign non-profit corporation: Its articles of incorporation shall stipulate that revenues shall be used not for members’ interest but for public interest and that persons benefitting directly from its business shall be many and unspecified people (In cases of a foreign non-profit corporation, it is additionally required that the objective of such corporation shall be to provide cooperation and assistance to overseas Koreans defined in the Act on the Immigration and Legal Status of Overseas Koreans, conduct promotional activities for the Republic of Korea or promote international exchange and cooperation);
b. A social cooperative: Its articles of incorporation shall stipulate that it engages in any of the business activities specified in Article 93 (1) 1 through 3 of the Framework Act on Cooperatives;
c. A public institution or an institution established directly pursuant to any Act: The purpose of its establishment shall be to conduct activities for public interest, such as social welfare, charity, culture, arts, education, science or scholarship;
(ii) The articles of incorporation shall stipulate that, upon dissolution, residual assets shall vest in the State, a local government, or another non-profit corporation established for a similar purpose;
(iii) A non-profit corporation shall operate a website; its articles of incorporation shall stipulate that it shall disclose the amount of donations annually collected and details of the use of such donations on the website; and it shall have disclosed donations annually collected and details of the use of such donations within three months after the end of each business year on the websites of the non-profit corporation and the National Tax Service, in cases of re-designation;
(iv) A non-profit corporation shall have no record confirmed by any authorized agency that it has been involved in an election campaign prescribed in Article 58 (1) of the Public Official Election Act, for a particular political party or person in the name of the non-profit corporation or its representative during the year in which it was designated as a non-profit corporation and the immediately preceding year;
(v) Three years shall have passed since the date of revocation, if designation was revoked under paragraph (13), or three years shall have passed since the expiration of a period of designation, if a juristic person fails to obtain re-designation under the same paragraph: Provided, That the foregoing shall not apply where designation was revoked or a juristic person failed to obtain re-designation only on the ground that it breached the obligation under paragraph (5) 1;
2. The following donations:
(a) Donations paid as scholarships or education or research expenses to individuals recommended by the heads of kindergartens referred to in the Early Childhood Education Act, the principals of schools referred to in the Elementary and Secondary Education Act and the Higher Education Act, the deans of technical colleges established under the Act on the Development of Vocational Skills of Workers or the presidents of lifelong educational facilities in the form of major colleges referred to in Article 31 (4) of the Lifelong Education Act, and lifelong educational facilities in the form of distance colleges referred to in Article 33 (3) of the same Act;
(b) Donations placed in the trust for public interest that meets any of the subparagraph of Article 14 (1) of the Enforcement Decree of the Inheritance Tax and Gift Tax Act;
(c) Donations designated and publicly notified by the Minister of Strategy and Finance as those to be used for public interest, such as social welfare, culture, arts, education, religion, charity and science;
3. Deleted; <by Presidential Decree No. 28640, Feb. 13, 2018>
4. The value of money and other valuables donated to any facility or institution which can be used gratuitously or at a reasonable cost among any of the following social welfare facilities or institutions: Provided, That where a person who has established an institution for the aged among the welfare facilities for the aged referred to in item (b) (i) bears any costs incurred in establishing and operating the relevant facility, the amount to the extent of any loss incurred in operating the relevant facility among the charges (referring to the amount of loss for the relevant taxable period calculated according to the corporate accounting standards) shall be included:
(a) Child welfare facilities referred to in Article 52 (1) of the Child Welfare Act;
(b) Facilities, other than the following facilities, among welfare facilities for older persons referred to in Article 31 of the Welfare of Older Persons Act:
(i) Institutions for older persons, communal living home for older persons, and welfare houses for older persons for which the inmates pay all expenses for admission among the residential welfare facilities for the aged referred to in Article 32 (1) of the Welfare of Older Persons Act;
(ii) Intermediate care institutions for older persons, medical treatment and communal living home for older persons and special hospitals for older persons among the medical welfare institutions for older persons for which the inmates pay all expenses for admission referred to in Article 34 (1) of the Welfare of Older Persons Act;
(iii) Facilities for which the users pay all costs for using welfare at home among welfare institutions for older persons at home referred to in Article 38 of the Welfare of Older Persons Act;
(c) Welfare facilities for persons with disabilities referred to in Article 58 (1) of the Act on Welfare of Persons with Disabilities: Provided, That the following facilities shall be excluded herefrom:
(i) Communal living home for persons with disabilities operated by a person, other than non-profit corporations (including a social welfare foundation established under Article 16 (1) of the Social Welfare Services Act);
(ii) Facilities selling products manufactured by persons with disabilities under Article 36 of the Enforcement Decree of the Act on Welfare of Persons with Disabilities;
(iii) Paid welfare facilities for person with disabilities;
(d) Single-parent family welfare facilities referred to in Article 19 (1) of the Single-Parent Family Support Act;
(e) Mental health sanatoriums and mental health rehabilitation facilities referred to in subparagraphs 6 and 7 of Article 3 of the Act on the Improvement of Mental Health and the Support for Welfare Services for Mental Patients;
(f) Supporting institutions and counseling centers for victims of commercial sex acts referred to in Articles 6 (2) and 10 (2) of the Act on the Prevention of Commercial Sex Acts and Protection, etc. of Victims;
(g) Counseling centers related to domestic violence and protection facilities for victims of domestic violence referred to in Articles 5 (2) and 7 (2) of the Act on the Prevention of Domestic Violence and Protection, etc. of Victims;
(h) Counseling centers for victims of sexual violence and protection facilities of victims of sexual violence referred to in Articles 10 (2) and 12 (2) of the Sexual Violence Prevention and Victims Protection Act;
(i) Social welfare halls and facilities for vagrants and the homeless, among the social welfare facilities referred to in Article 34 of the Social Welfare Services Act;
(j) Domiciliary long-term care institutions referred to in Article 32 of the Long-Term Care Insurance Act;
(k) Support centers for multicultural families referred to in Article 12 of the Multicultural Families Support Act;
5. Deleted; <by Presidential Decree No. 28640, Feb. 13, 2018>
6. Donations paid to the international organizations specified and publicly notified by the Minister of Strategy and Finance as international organizations that meet all the following requirements:
(a) Such organizations shall engage in business activities for public interest, such as social welfare, culture, art, education, religion, charity, or scholarship;
(b) The Republic of Korea shall be a member of such organizations.
(2) The amount of income generated by the profit-making business of organizations, other than organizations designated to make donations provided for in each subparagraph of Article 56 (1) among organizations deemed corporations, which is used for proper purpose business expenses, shall be deemed a donation provided for in the main sentence of paragraph (1). <Amended by Presidential Decree No. 17457, Dec. 31, 2001; Presidential Decree No. 18174, Dec. 30, 2003; Presidential Decree No. 18706, Feb. 19, 2005>
(3) "Proper purpose business expenses" referred to in the main sentence of paragraph (1) 1 and paragraph (2) means an amount to be used for any business operated by the relevant non-profit corporation or organization to accomplish objectives provided for in statutes concerning the relevant non-profit corporation or organization or the articles of incorporation of the non-profit corporation or organization, other than profit-making businesses specified in Article 2 (1) (excluding health service providers, among health service providers and social welfare service providers). <Amended by Presidential Decree No. 17457, Dec. 31, 2001; Presidential Decree No. 28640, Feb. 13, 2018>
(4) Where a corporation which has disbursed donations intends to include such donations in deductible expenses under Article 24 of the Act, it shall keep a donation receipt determined by Ordinance of the Ministry of Strategy and Finance. <Newly Inserted by Presidential Decree No. 18174, Dec. 30, 2003; Presidential Decree No. 20720, Feb. 29, 2008>
(5) The designated organizations, etc. receiving donations, referred to in paragraph (1) 1 (excluding item (e)), shall perform the following obligations during the period of designation (including the year immediately preceding the year in which such organizations, etc. are designated in cases of subparagraph 4): <Newly Inserted by Presidential Decree No. 25194, Feb. 21, 2014; Presidential Decree No. 26981, Feb. 12, 2016; Presidential Decree No. 28640, Feb. 13, 2018>
1. A designated organization or corporation receiving donations shall meet all the requirements prescribed in paragraph (1) 1 (f) (i) through (iii) (limited to juristic persons referred to in paragraph (1) 1 (f));
2. A designated organization or corporation receiving donations shall perform the following obligations:
(a) In cases of a non-profit corporation under the Civil Act or a foreign non-profit corporation: Revenues shall be used for public interest, not for members’ personal interest and persons benefitting directly from its business shall be many and unspecified people (In cases of a foreign non-profit corporation, it is additionally required that the objective of such corporation shall be to provide cooperation and assistance to overseas Koreans defined in Article 2 of the Act on the Immigration and Legal Status of Overseas Koreans, conduct promotional activities for the Republic of Korea or promote international exchange and cooperation);
(b) In cases of a social cooperative: It shall engage in any of the business activities specified in Article 93 (1) 1 through 3 of the Framework Act on Cooperatives;
(c) In cases of a public institution or an institution established directly pursuant to any Act: It shall perform activities for public interest, such as social welfare, charity, culture, arts, education, science or scholarship;
3. The amount of donations annually collected and the details of the use of such donations shall be disclosed to the public on the websites of the relevant designated organization or corporation receiving donations and of the National Tax Service respectively within three months after the end of each business year. In such cases, the website of the National Tax Service shall disclose such amount and details to the public in accordance with the statement of the amount of donations collected and the details of the use of such donations in the form prescribed by the Ministry of the Strategy and Finance;
4. A designated organization or corporation receiving donations shall have no record confirmed by competent authorities that it has been involved in an election campaign prescribed in Article 58 (1) of the Public Official Election Act, for a particular political party or a particular person under the name of the organization or corporation or its representative;
5. A designated organization or corporation receiving donations shall spend at least 80/100 of its expenditure, excluding the expenditure in its profit-making business, directly for its proper purpose business;
6. A designated organization or corporation receiving donations shall use an exclusive bank account opened in accordance with Article 50-2 (1) of the Inheritance Tax and Gift Tax Act;
7. A designated organization or corporation receiving donations shall publish the documents specified in Article 50-3 (1) 1 through 4 of the Inheritance Tax and Gift Tax Act in the websites of the organization or corporation and of the National Tax Service: Provided, That the foregoing shall not apply to the public service corporations, etc. referred to in Article 43-3 (1) 1 of the Enforcement Decree of the Inheritance Tax and Gift Tax Act;
8. A designated organization or corporation receiving donations shall undergo audits conducted by an auditor specified in Article 3 of the Act on External Audit of Stock Companies, Etc. in accordance with the accounting standards applicable to public service corporations, etc. under Article 50-4 of the Inheritance Tax and Gift Tax Act: Provided, That the foregoing shall not apply to the public service corporations, etc. referred to in Article 43 (3) and (4) 2 of the Enforcement Decree of the Inheritance Tax and Gift Tax Act.
(6) A designated organization or corporation receiving donations referred to in any item of paragraph (1) 1 (excluding item (e)) shall report to the competent authorities on whether it has performed the obligations under paragraph (5) (hereafter in this Article referred to as "whether obligations have been performed"), as prescribed by Ordinance of the Ministry of Strategy and Finance. In such cases, if a designated organization or corporation receiving donations fails to report on whether obligations have been performed, the competent authorities shall request the organization or corporation to report thereon, as prescribed by Ordinance of the Ministry of Strategy and Finance. <Newly Inserted by Presidential Decree No. 22035, Feb. 18, 2010; Presidential Decree No. 22812, Mar. 31, 2011; Presidential Decree No. 25194, Feb. 21, 2014; Presidential Decree No. 28640, Feb. 13, 2018>
(7) The competent authorities shall review the details reported under paragraph (6) and notify the Commissioner of the National Tax Service of the results thereof (including the fact that the relevant organization or institution fails to report on whether obligations have been performed, even after receipt of a request made under the latter part of paragraph (6)), as prescribed by Ordinance of the Ministry of Strategy and Finance. <Newly Inserted by Presidential Decree No. 22035, Feb. 18, 2010; Presidential Decree No. 22812, Mar. 31, 2011; Presidential Decree No. 25194, Feb. 21, 2014; Presidential Decree No. 28640, Feb. 13, 2018>
(8) In any of the following cases, the Commissioner of the National Tax Service shall request the Minister of Strategy and Finance to revoke the designation of a corporation referred to in paragraph (1) 1 (f): <Newly Inserted by Presidential Decree No. 19891, Feb. 28, 2007; Presidential Decree No. 20619, Feb. 22, 2008; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 22035, Feb. 18, 2010; Presidential Decree No. 22812, Mar. 31, 2011; Presidential Decree No. 23589, Feb. 2, 2012; Presidential Decree No. 25194, Feb. 21, 2014; Presidential Decree No. 27828, Feb. 3, 2017; Presidential Decree No. 28640, Feb. 13, 2018>
1. Where a corporation has inheritance tax (including penalty tax thereon) or gift tax (including penalty tax thereon) collected additionally in an amount not smaller than the amount specified by Ordinance of the Ministry of Strategy and Finance under any provision of Article 48 (2), (3) and (8) through (11) of the Inheritance Tax and Gift Tax Act;
2. Where a designated organization or corporation receiving donations breaches public interest by engaging in any business other than its proper purpose business or by breaching any condition attached to the permission for incorporation, breaches the obligation under any subparagraph of paragraph (5), or fails to report on whether obligations have been performed, even upon receipt of a request made under the latter part of paragraph (6);
3. Where it has been disclosed that a designated organization or corporation receiving donations is listed as one of the unconscientious donation-receiving organizations under Article 85-5 of the Framework Act on National Taxes;
4. Where a sentence of imprisonment with prison labor or a fine, imposed upon a designated organization or corporation receiving donations or the representative or an agent, employee, or servant of a designated organization or corporation receiving donations for a violation of the Act on Collection and Use of Donations becomes final and conclusive under Article 16 of the aforesaid Act;
5. Where a designated organization or corporation receiving donations is dissolved.
(9) If the Commissioner of the National Tax Service becomes aware, after the end of the period of designation of a designated organization or corporation receiving donations under paragraph (1) 1 (f), that an event specified in any subparagraph of paragraph (8) occurred in relation to the designated organization or corporation receiving donations during the period of designation, he/she shall not re-designate the designated organization or corporation receiving donations or shall request the Minister of Strategy and Finance to revoke designation, if the designated organization or corporation receiving donations has been already re-designated. <Newly Inserted by Presidential Decree No. 22035, Feb. 18, 2010; Presidential Decree No. 25194, Feb. 21, 2014; Presidential Decree No. 27828, Feb. 3, 2017; Presidential Decree No. 28640, Feb. 13, 2018>
(10) Deleted. <by Presidential Decree No. 28640, Feb. 13, 2018>
(11) Before requesting the Minister of Strategy and Finance to revoke designation under paragraphs (8) through (9), the Commissioner of the National Tax Service shall notify the competent agency of his/her finding that the relevant designated organization or corporation receiving donations shall be revoked, along with the ground and legal authority for such finding, and the competent agency shall, immediately upon receipt of such notice, notify the relevant designated organization or corporation receiving donations of such finding, etc. <Newly Inserted by Presidential Decree No. 26981, Feb. 12, 2016; Presidential Decree No. 28640, Feb. 13, 2018>
(12) If a designated organization or corporation receiving donations has any objection to the notice given under paragraph (11), it may present its written opinion to the competent agency within one month, and the competent agency shall forward the opinion to the Commissioner of the National Tax Service within one month upon receipt of the opinion. <Newly Inserted by Presidential Decree No. 26981, Feb. 12, 2016; Presidential Decree No. 28640, Feb. 13, 2018>
(13) Upon receipt of a request under paragraphs (8) and (9), the Minister of Strategy and Finance may revoke the designation of the relevant designated organization or corporation receiving donations or may elect not to re-designate the designated organization or corporation receiving donations. <Newly Inserted by Presidential Decree No. 25194, Feb. 21, 2014; Presidential Decree No. 28640, Feb. 13, 2018>
(14) Matters necessary for the procedure for the designation of designated organizations, etc. receiving donations under paragraph (1) 1 (f), the methods for examination of requirements for designation, the documents to be submitted, the procedure for the revocation of designation or for the denial of re-designation, and other matters shall be prescribed by Ordinance of the Ministry of Strategy and Finance. <Newly Inserted by Presidential Decree No. 19891, Feb. 28, 2007; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 22577, Dec. 30, 2010; Presidential Decree No. 24357, Feb. 15, 2013; Presidential Decree No. 25194, Feb. 21, 2014; Presidential Decree No. 28640, Feb. 13, 2018>
 Article 36-2 (Requirements, etc. for Organizations Receiving Statutory Donations)
(1) Natural disasters referred to in Article 24 (2) 3 of the Act include disasters based on which a certain area is declared as a special disaster area under Article 60 of the Framework Act on the Management of Disasters and Safety.
(2) "Schools prescribed by Presidential Decree" in Article 24 (2) 4 (h) of the Act means the following: <Newly Inserted by Presidential Decree No. 23589, Feb. 2, 2012>
1. International graduate schools established in the Korea Development Institute under the Act on the Establishment, Operation and Fostering of Government-Funded Research Institutes, Etc.;
2. Graduate schools established in the Academy of Korean Studies under the Act on the Support of the Academy of Korean Studies;
(3) "Schools that meet requirements prescribed by Presidential Decree" in Article 24 (2) 4 (i) of the Act means the schools that meet all of the following requirements: <Amended by Presidential Decree No. 22812, Mar. 31, 2011; Presidential Decree No. 23589, Feb. 2, 2012; Presidential Decree No. 25194, Feb. 21, 2014>
1. A school shall have its own website on which the amount of donations collected and the outcomes of the use of such donations may be disclosed to the public;
2. If the designation of a school was revoked under paragraph (14), three years shall have passed since the date of revocation, while, if a school fails to obtain re-designation under the aforesaid paragraph, three years shall have passed since the period of designation ends.
(4) "Corporations that meet requirements prescribed by Presidential Decree" in Article 24 (2) 6 of the Act means the corporations that meet all of the following requirements: <Amended by Presidential Decree No. 22812, Mar. 31, 2011; Presidential Decree No. 23589, Feb. 2, 2012; Presidential Decree No. 25194, Feb. 21, 2014; Presidential Decree No. 26981, Feb. 12, 2016; Presidential Decree No. 28640, Feb. 13, 2018>
1. They have their own website on which the annual collection of donations and the outcomes of utilization thereof may be disclosed to the public;
2. They shall undergo an audit from an auditor under Article 3 of the Act on External Audit of Stock Companies;
3. They shall publish the documents specified in Article 50-3 (1) 1 through 4 of the Inheritance Tax and Gift Tax Act on their websites and the website of the National Tax Service;
4. They shall open and use exclusive accounts under Article 50-2 of the Inheritance Tax and Gift Tax Act;
5. The average amount disbursed for distributing donations for five business years [where the period from the establishment date to the end date of the business year immediately preceding the application date is less than five years, referring to the period (limited where the period is at least one year) from the establishment date of the relevant corporation to the end date of the month immediately preceding the month in which the application date falls; hereafter the same shall apply in subparagraph 6] immediately preceding the application date under paragraph (6) shall be at least 80/100 of the total amount disbursed, and the expenses incurred in collecting and distributing the donations and in managing and operating the corporation shall not exceed 10/100 of the donation income. In such cases, matters concerning the calculation of the total amount disbursed and the amount disbursed for distribution shall be prescribed by Ordinance of the Ministry of Strategy and Finance;
6. The average amount disbursed for distributing donations for five business years immediately preceding the application date per corporation (including an organization; hereafter the same shall apply in this subparagraph) shall not exceed 25/100 of the total amount disbursed for distributing, and no amount disbursed for distribution of donations shall exist with respect to a non-profit corporation referred to in Article 2-2 (1) 4, 5, or 8 of the Enforcement Decree of the Inheritance Tax and Gift Tax Act as a contributor provided for in Article 38 (10) of the same Enforcement Decree or an affiliated person of such investor under Article 2-2 (1) of the same Enforcement Decree;
7. If the designation was revoked under paragraph (14), three years shall have passed since the date of revocation, while, if a corporation fails to obtain re-designation under the aforesaid paragraph, three years shall have passed since the period of designation ends.
(5) Deleted. <by Presidential Decree No. 28640, Feb. 13, 2018>
(6) The competent authorities shall recommend schools or corporations referred to in paragraph (3) or (4) (hereinafter referred to as "schools, etc.") to the Minister of Strategy and Finance, upon receipt of an application from the relevant schools, etc., accompanied by the documents specified by Ordinance of the Ministry of Strategy and Finance, by no later than one month after the end of each quarter, and the Minister of Strategy and Finance shall designate such schools, etc. by no later than the end of each quarter. <Amended by Presidential Decree No. 22812, Mar. 31, 2011; Presidential Decree No. 23589, Feb. 2, 2012; Presidential Decree No. 25194, Feb. 21, 2014; Presidential Decree No. 28640, Feb. 13, 2018>
(7) Donations paid to the schools, etc., publicly notified by the Minister of Strategy and Finance designated under paragraph (6), shall be included in deductible expenses under Article 24 (2) of the Act as statutory donations for six years from January 1 of the year in which the public notification under paragraph (6) is made (hereafter referred to as "period of designation" in this Article). <Amended by Presidential Decree No. 22812, Mar. 31, 2011; Presidential Decree No. 23589, Feb. 2, 2012; Presidential Decree No. 28640, Feb. 13, 2018>
(8) Schools, etc. shall perform the following obligations during the period of designation: <Newly Inserted by Presidential Decree No. 22812, Mar. 31, 2011; Presidential Decree No. 23589, Feb. 2, 2012; Presidential Decree No. 25194, Feb. 21, 2014; Presidential Decree No. 28640, Feb. 13, 2018>
1. The annual amount of donations and the details of the use of such donations shall be disclosed to the public on the websites of relevant schools, etc. and of the National Tax Service within three months from the end of each business year in the form prescribed by Ordinance of the Ministry of Strategy and Finance;
2. Deleted; <by Presidential Decree No. 28640, Feb. 13, 2018>
3. They shall disburse at least 80/100 of the expenditures of the relevant business year directly for proper purpose business, excluding the expenditures for profit-making business.
(9) Schools, etc. shall report on whether they fulfill the requirements prescribed in paragraph (3) or (4) and whether they have performed the obligations prescribed in paragraph (8) (hereafter referred to as "whether the requirements, etc. are met" in this Article) to the competent authorities, as prescribed by Ordinance of the Ministry of Strategy and Finance. In such cases, if the relevant corporation or organization fails to report on compliance with the requirements, the competent authorities shall request such corporation or organization to report, as prescribed by Ordinance of the Ministry of Strategy and Finance. <Newly Inserted by Presidential Decree No. 22812, Mar. 31, 2011; Presidential Decree No. 23589, Feb. 2, 2012; Presidential Decree No. 28640, Feb. 13, 2018>
(10) The competent authorities shall inspect the details reported under paragraph (9) and notify the Commissioner of the National Tax Service of the results thereof (if the relevant corporation fails to report on compliance with the requirements, notwithstanding a request made under the latter part of paragraph (9), such fact shall be included), as prescribed by Ordinance of the Ministry of Strategy and Finance. <Newly Inserted by Presidential Decree No. 22812, Mar. 31, 2011; Presidential Decree No. 23589, Feb. 2, 2012; Presidential Decree No. 25194, Feb. 21, 2014>
(11) In any of the following cases, the Commissioner of the National Tax Service shall request the Minister of Strategy and Finance to revoke the designation of a school, etc., as prescribed by Ordinance of the Ministry of Strategy and Finance: <Newly Inserted by Presidential Decree No. 22812, Mar. 31, 2011; Presidential Decree No. 23589, Feb. 2, 2012; Presidential Decree No. 25194, Feb. 21, 2014; Presidential Decree No. 27828, Feb. 3, 2017; Presidential Decree No. 28640, Feb. 13, 2018>
1. Where inheritance tax (including penalty tax thereon) or gift tax (including penalty tax thereon) is additionally imposed on a school, etc. a under any provision of Article 48 (2), (3) and (8) through (11) of the Inheritance Tax and Gift Tax Act, which exceeds the amount specified by Ordinance of the Ministry of Strategy and Finance;
2. Where a school, etc. has violated public interest by engaging in any business, other than its proper purpose business, or by violating conditions for permission of its establishment, has violated the requirements prescribed in paragraphs (3) through (4), has breached the obligations prescribed in paragraph (8), or fails to report on whether the requirements, etc. are met, even after receipt of a request made under the latter part of paragraph (9);
3. Where it has been disclosed that the school, etc. is listed as an unconscientious donation receiving organization pursuant to Article 85-5 of the Framework Act on National Taxes;
4. Where the representative, agent, employee or other servant of a corporation has violated the Act on Collection and Use of Donations and is sentenced to imprisonment or a fine under Article 16 of the same Act;
5. Where the school, etc. is dissolved.
(12) If a school, etc. falls under paragraph (11) 2, 4, or 5, the competent authorities shall immediately notify the Commissioner of the National Tax Service of the name of the school, etc. and the details thereof. <Newly Inserted by Presidential Decree No. 25194, Feb. 21, 2014>
(13) If the Commissioner of the National Tax Service becomes aware, after the period of designation of a school, etc. ends, that an event specified in any subparagraph of paragraph (11) occurred in relation to the school, etc. during the period of designation, he/she shall not re-designate the school, etc. or shall request the Minister of Strategy and Finance to revoke the re-designation, as prescribed by Ordinance of the Ministry of Strategy and Finance, if the school, etc. has been already re-designated. <Newly Inserted by Presidential Decree No. 22812, Mar. 31, 2011; Presidential Decree No. 23589, Feb. 2, 2012; Presidential Decree No. 25194, Feb. 21, 2014; Presidential Decree No. 27828, Feb. 3, 2017>
(14) Upon receipt of a request under paragraph (11) or (13), the Minister of Strategy and Finance may revoke the designation of the school, etc., or may elect not to re-designate the school, etc. <Newly Inserted by Presidential Decree No. 25194, Feb. 21, 2014>
(15) Where the Minister of Strategy and Finance revokes the designation of a school, etc. under paragraph (14), he/she shall publish the name of the school, etc., relevant facts, the period during which the school, etc. is excluded from organizations receiving statutory donations (referring to the period required to elapse after the date of revocation of designation under paragraph (3) 2 or (4) 7) in the Official Gazette by December 31 of the year in which the designation is revoked (referring to January 31 of the following year, if the designation is revoked in December). <Newly Inserted by Presidential Decree No. 25194, Feb. 21, 2014; Presidential Decree No. 28640, Feb. 13, 2018>
[This Article Newly Inserted by Presidential Decree No. 22577, Dec. 30, 2010]
 Article 37 (Value, etc. of Donations)
(1) Where a corporation offers assets, other than money, as donations referred to in Article 24 of the Act, the value of the assets shall be the market price (the book value if the market price is lower than the book value) as at the time of the donation: Provided, That the amount of designated donations (excluding designated donations made to the related parties falling under any subparagraph of Article 87 (1)) referred to in Article 24(1) of the Act and statutory donations referred to in each subparagraph of Article 24 (2) of the Act shall be the book value. <Amended by Presidential Decree No. 19328, Feb. 9, 2006; Presidential Decree No. 22577, Dec. 30, 2010; Presidential Decree No. 22812, Mar. 31, 2011; Presidential Decree No. 23589, Feb. 2, 2012>
(2) Where a corporation defers the appropriation of donations referred to Article 24 of the Act as provisional payments, etc., they shall be deemed donations in the business year in which such provisional payments were made, and they shall not be deemed donations in the following business years.
(3) Where a corporation appropriates donations referred to in Article 24 of the Act as accounts payable, they shall not be deemed donations in calculating the amount of income for the relevant business year until they are actually paid.
 Article 38 (Scope, etc., of Inclusion of Donations in Deductible Expenses)
(1) The value of money and other valuables gratuitously contributed to the State or a local government under Article 24 (2) 1 of the Act shall include the value of assets contributed by a corporation to an individual or another corporation that contributes such assets without delay to the State or a local government and the value of money and other valuables contributed under Article 2 (2) of the Act on the Measures for the Admission to International Financial Institutions by the Bank of Korea under the Bank of Korea Act. <Amended by Presidential Decree No. 18706, Feb. 19, 2005>
(2) Contributions for national defense referred to in Article 24 (2) 2 of the Act shall include donations made directly to the Reserve Forces established under the Establishment of Reserve Forces Act or donations made through an institution or organization approved by the Minister of National Defense. <Amended by Presidential Decree No. 18706, Feb. 19, 2005; Presidential Decree No. 22687, Mar. 2, 2011; Presidential Decree No. 27619, Nov. 29, 2016>
(3) Where any corporation has made donations under Article 24 of the Act, the relevant donations shall be sequentially included in its deductible expenses up to the following amounts: <Amended by Presidential Decree No. 17826, Dec. 30, 2002; Presidential Decree No. 18706, Feb. 19, 2005; Presidential Decree No. 19328, Feb. 9, 2006; Presidential Decree No. 21302, Feb. 4, 2009; Presidential Decree No. 22577, Dec. 30, 2010>
1. Deleted; <by Presidential Decree No. 22577, Dec. 30, 2010>
2. In the case of donations referred to in each subparagraph of Article 24 (2) of the Act (hereafter in this paragraph referred to as "statutory donations"), the amount computed by the following formula:
(Amount of income for the relevant business year - Losses carried forward) × 50/100;
3. In the case of donations designated under Article 24 (1) of the Act, the amount computed by the following formula:
(Amount of income for relevant business year-Losses carried forward -Statutory donations) × 10/100
(4) In applying Article 24 (4) of the Act, the amount in excess of the ceilings on inclusion of designated donations in deductible expenses and the amount in excess of the ceilings on inclusion of statutory donations in deductible expenses provided for in paragraphs (1) and (2) of the same Article, shall be included in deductible expenses up to the amount of the shortfall only if the designated donations or statutory donations referred to in paragraphs (1) and (2) of the same Article fall short of the ceilings on inclusion in deductible expenses in the relevant taxable year to which such excess is carried forward. <Amended by Presidential Decree No. 19328, Feb. 9, 2006; Presidential Decree No. 22577, Dec. 30, 2010>
(5) When a corporation makes donations under Article 24 of the Act, it shall prepare the detailed statements on donations in the form stipulated by Ordinance of the Ministry of Strategy and Finance separately for donations designated under Article 24 (1) of the Act and donations under paragraph (2) of the same Article and submit them to the head of the tax office having jurisdiction over the place of tax payment, along with the report provided for in Article 60 of the Act. <Amended by Presidential Decree No. 17457, Dec. 31, 2001; Presidential Decree No. 18706, Feb. 19, 2005; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 22577, Dec. 30, 2010>
 Article 39 (Scope, etc., of Small and Medium Enterprises)
(1) "Small and medium enterprises prescribed by Presidential Decree" in Article 25 (1) 1 of the Act means enterprises defined in Article 2 of the Enforcement Decree of the Restriction of Special Taxation Act (hereinafter referred to as "small and medium enterprises"). <Amended by Presidential Decree No. 17033, Dec. 29, 2000; Presidential Decree No. 18706, Feb. 19, 2005; Presidential Decree No. 22951, Jun. 3, 2011>
(2) The number of months referred to in Article 25 (1) 1 of the Act shall be calculated based on the calendar months, and any number of days that falls short of one month shall be deemed one month.
(3) "Domestic corporation that meets the criteria prescribed by Presidential Decree" in Article 25 (1) and 27-2 (5) of the Act means a domestic corporation that meets all of the following criteria: <Newly Inserted by Presidential Decree No. 27828, Feb. 3, 2017>
1. The sum of stocks, etc., held by the controlling stockholder, etc., of the domestic corporation under Article 43 (7) as at the end of the relevant business year shall exceed 50/100 of the total number of outstanding stocks or the total amount of investment of the domestic corporation;
2. The domestic corporation shall engage mainly in real estate leasing business in the relevant business year or the sum of the following amounts shall be at least 70/100 of the sales computed according to the Korea Financial Accounting Standards (if the amounts specified in items (a) through (c) are not included, the amounts shall be included in the computation):
(a) The amount of income accruing from the leasing of real estate or of any right to real estate (including the amount to be added to gross income under Article 138 (1) of the Restriction of Special Taxation Act);
(b) The amount of interest income referred to in Article 16 (1) of the Income Tax Act;
(c) The amount of dividend income referred to in Article 17 (1) of the Income Tax Act;
3. The number of full-time employees for the relevant business year shall be less than five persons.
(4) Where a domestic corporation engages in at least two different businesses, the business that generates more business revenue shall be deemed its main business for the purpose of applying paragraph (3) 2. <Newly Inserted by Presidential Decree No. 27828, Feb. 3, 2017>
(5) In applying paragraph (3) 3, full-time employees shall be limited to Korean employees who have entered into an employment contract pursuant to the Labor Standards Act: Provided, That the following employees shall be excluded herefrom: <Newly Inserted by Presidential Decree No. 27828, Feb. 3, 2017>
1. The largest stockholder or largest investor of the corporation and employees who are relatives of such stockholder or investor, as defined in Article 1-2 (1) of the Enforcement Decree of the Framework Act on National Taxes;
2. Employees on whom it is not verified by the book for tax withholding for wage and salary income under Article 196 (1) of the Enforcement Decree of the Income Tax Act whether earned income tax was withheld;
3. Employees whose employment contract term is less than one year: Provided, That employees whose employment contract term exceeds one year as a result of consecutive renewal of his/her employment contract;
4. Part-time workers defined in Article 2 (1) 8 of the Labor Standards Act.
(6) Article 26-4 (3) of the Enforcement Decree of the Restriction of Special Taxation Act shall apply mutatis mutandis to the method of calculating the number of full-time employees for the purpose of applying paragraph (3) 3. <Newly Inserted by Presidential Decree No. 27828, Feb. 3, 2017>
 Article 40 (Standard, etc. for Calculating Entertainment Expenses as Amount of Income)
(1) "The amount of income prescribed by Presidential Decree" in the main sentence of Article 25 (1) 2 of the Act means the amount of sales {including the amount of sales from any business category suspended during the relevant business year and in the case of transactions of derivatives-combined securities provided in Article 4 (7) of the Financial Investment Services and Capital Markets Act and derivatives provided in Article 5 (1) of the same Act, it means the net profit calculated by summing up the income and losses from the relevant transactions (if such net profit is smaller than zero, it shall be zero); hereinafter referred to as "amount of sales"} calculated according to the corporate accounting standards: Provided, That in the case of any of the following corporations, the amount of sales means an amount computed by any of the following formulas: <Amended by Presidential Decree No. 17457, Dec. 31, 2001; Presidential Decree No. 18174, Dec. 30, 2003; Presidential Decree No. 18706, Feb. 19, 2005; Presidential Decree No. 19328, Feb. 9, 2006; Presidential Decree No. 21302, Feb. 4, 2009; Presidential Decree No. 22035, Feb. 18, 2010; Presidential Decree No. 22951, Jun. 3, 2011; Presidential Decree No. 23589, Feb. 2, 2012; Presidential Decree No. 24357, Feb. 15, 2013; Presidential Decree No. 25279, Mar. 24, 2014>
1. An investment dealer or investment broker as defined in the Financial Investment Services and Capital Markets Act: Sales + Amount equivalent to nine times the remuneration and fees related to the business specified in Article 6 (1) 2 of the Financial Investment Services and Capital Markets Act;
2. A collective investment business operator as defined in the Financial Investment Services and Capital Markets Act: Sales + Amount equivalent to nine times the remuneration and fees related to the management of collective investment assets specified in Article 9 (20) of the Financial Investment Services and Capital Markets Act;
3. The Korea Investment Corporation incorporated under the Korea Investment Corporation Act: Sales + Amount equivalent to six times the management fees specified in Article 34 (2) of the Korea Investment Corporation Act;
4. The Export-Import Bank of Korea established under the Export-Import Bank of Korea Act: Sales + Amount equivalent to six times the guarantee fees received;
5. A corporation specified in any subparagraph of Article 63 (1): Sales + Amount equivalent to six times guarantee fees received.
(2) The main sentence of Article 37 (1) shall apply mutatis mutandis to the calculation of the value of entertainment expenses.
 Article 41 (Use of Credit Cards, etc. for Entertainment Expenses)
(1) "Amount prescribed by Presidential Decree" referred to in the main sentence other than the subparagraphs of Article 25 (2) of the Act means an amount classified in the following: <Amended by Presidential Decree No. 19328, Feb. 9, 2006; Presidential Decree No. 19891, Feb. 28, 2007; Presidential Decree No. 21302, Feb. 4, 2009; Presidential Decree No. 22951, Jun. 3, 2011>
1. Celebration or condolence money: 200,000 won;
2. For cases other than that provided in subparagraph 1: The following amounts:
(a) By no later than December 31, 2007: 50,000 won;
(b) From January 1, 2008 to December 31, 2008: 30,000 won;
(c) On or after January 1, 2009: 10,000 won.
(2) "Expenditure of entertainment expenses in any foreign country prescribed by Presidential Decree or for farmers or fishermen" referred to in the proviso to Article 25 (2) of the Act means any of the following: <Newly Inserted by Presidential Decree No. 23589, Feb. 2, 2012>
1. Expenditure made in the relevant foreign country if it is impractical to obtain evidentiary documents provided in the subparagraphs of Article 25 (2) of the Act on the grounds of the lack of a means of payment, other than cash in the place where such entertainment expenses are expended (including any place similar to the place in neighboring areas where the relevant place is located);
2. Expenditure made in return for goods directly supplied from farmers or fishermen (referring to those engaged in the growing of crops of agriculture, farming of animals, mixed farming, forestry or fishing but excluding corporations) as payments made through financial companies, etc. as defined in subparagraph 1 of Article 2 of the Act on Real Name Financial Transactions and Confidentiality (limited to where the relevant corporation files a report on tax base, along with the statements of remittance on which the fact of remittance is entered, to the head of the tax office having jurisdiction over the place of tax payment at the time of filing a report on tax base under Article 60 of the Act).
(3) "Items prescribed by Presidential Decree" referred to in Article 25 (2) 1 (a) of the Act means a debit card issued under the Specialized Credit Finance Business Act, a credit card issued in any foreign country, a prepaid card or a cash receipt as provided in Article 126-2 (1) of the Restriction of Special Taxation Act. <Amended by Presidential Decree No. 18174, Dec. 30, 2003; Presidential Decree No. 18706, Feb. 19, 2005; Presidential Decree No. 22951, Jun. 3, 2011>
(4) In applying Article 25 (3) of the Act, "sales slips, etc. issued in the name of a credit card merchant, etc. other than the one that actually supply the relevant goods or services" means those stating the trade name and business location that are different from the trade name and business location of the credit card merchant, etc. that has supplied goods or services. <Newly Inserted by Presidential Decree No. 17033, Dec. 29, 2000>
(5) "Withholding receipt prescribed by Presidential Decree" referred to in Article 25 (2) 2 of the Act means a withholding receipt issued under Articles 144 and 145 of the Income Tax Act after having been supplied with services from a person who has not been registered as a business operator under Article 168 of the Income Tax Act. <Newly Inserted by Presidential Decree No. 21302, Feb. 4, 2009>
(6) and (7) Deleted. <by Presidential Decree No. 17457, Dec. 31, 2001>
(8) In applying paragraphs (1) through (4), credit cards, etc. referred to in Article 25 (2) 1 of the Act shall be the credit cards, etc. issued in the name of the relevant corporation. <Amended by Presidential Decree No. 16658, Dec. 31, 1999; Presidential Decree No. 17033, Dec. 29, 2000; Presidential Decree No. 17457, Dec. 31, 2001; Presidential Decree No. 18174, Dec. 30, 2003; Presidential Decree No. 19328, Feb. 9, 2006>
 Article 42 (Scope of Entertainment Expenses)
(1) Entertainment expenses paid by a corporation that should have been borne by any of its stockholders or investors (hereinafter referred to as "stockholders, etc.") or any person who holds any of the following positions (hereinafter referred to as "executives) shall not be deemed entertainment expenses: <Amended by Presidential Decree No. 20619, Feb. 22, 2008; Presidential Decree No. 28640, Feb. 13, 2018>
1. All members of the board of directors of a corporation, including Chairman, President, Vice-Presidents, Chief Director, Chief Executive Officer, Senior Managing Directors, and Managing Directors, and the liquidator of a corporation;
2. Executive partners or directors of a general partnership, a limited partnership or limited company;
3. Executive officers of a limited liability company;
4. Auditors;
5. Other persons who hold any position equivalent to any of those specified in subparagraphs 1 through 4.
(2) Where a corporation pays welfare facilities expenses of an association or organization comprised of its employees, and the association or organization is a corporation, such expenses shall be deemed entertainment expenses, and where the association or organization is not a corporation, such expenses shall be deemed a part of the account of the corporation.
(3) Deleted. <by Presidential Decree No. 20619, Feb. 22, 2008>
(4) and (5) Deleted. <by Presidential Decree No. 21302, Feb. 4, 2009>
 Article 42-2 Deleted. <by Presidential Decree No. 21302, Feb. 4, 2009>
 Article 43 (Non-Inclusion of Bonuses in Deductible Expenses)
(1) Bonuses paid by a corporation to its executives or employees to dispose of profits shall not be included in deductible expenses. In such cases, remuneration paid to members who invest through work and labor in unlimited partnerships or limited partnerships shall be deemed bonuses from the disposal of profits. <Amended by Presidential Decree No. 28640, Feb. 13, 2018>
(2) Where a corporation pays bonuses to its executives in excess of the amount to be paid under the salary payment standards determined by the articles of incorporation or by resolution at the general meeting of stockholders, the general meeting of employees, or the board of directors, such excess shall not be included in deductible expenses.
(3) Where a corporation pays remuneration to an executive or employee who is a controlling stockholder, etc. (including any related party; hereafter the same shall apply this paragraph) in excess of the amount paid to executives or employees in the same position, other than the controlling stockholder, etc. without any justifiable grounds, such excess shall not be included in deductible expenses. <Amended by Presidential Decree No. 20619, Feb. 22, 2008>
(4) The remuneration paid to a non-standing executive of a corporation shall be included in deductible expenses, except in cases falling under Article 52 of the Act.
(5) Dissolution bonuses or retirement bonuses paid to executives or employees of a corporation due to its dissolution shall be included in deductible expenses of the final business year.
(6) Deleted. <by Presidential Decree No. 21302, Feb. 4, 2009>
(7) "Controlling stockholder, etc." referred to in paragraph (3) means a stockholder, etc. (hereinafter referred to as "controlling stockholder, etc.") who, holding at least 1/100 of the total number of issued stocks or total investment amount of a corporation, have the most stocks or investment shares after summing up those held by the stockholder, etc. and any related party. <Newly Inserted by Presidential Decree No. 20619, Feb. 22, 2008>
(8) "Related party" referred to in paragraphs (3) and (7) means a person who has any of the following relationships with the relevant stockholder, etc.: <Newly Inserted by Presidential Decree No. 20619, Feb. 22, 2008; Presidential Decree No. 21302, Feb. 4, 2009; Presidential Decree No. 23589, Feb. 2, 2012>
1. A person with any of the following relationships if the relevant stockholder, etc. is an individual:
(a) A relative (refers to a person falling under Article 1-2 (1) of the Enforcement Decree of the Framework Act on National Taxes; hereinafter the same shall apply);
(b) A corporation in a relationship referred to in Article 87 (1) 1;
(c) A corporation in which the relevant stockholder, etc. and the persons falling under items (a) or (b) invest at least 30/100 of the total number of issued stocks or total investment amount;
(d) A non-profit corporation in which the relevant stockholder, etc. and his/her relatives occupy a majority of the directors or contribute at least 30/100 of contribution (limited to contributions for establishment) and one of them is the founder;
(e) A corporation in which a corporation falling under items (c) or (d) invest at least 30/100 of the total number of issued stocks or total investment amount;
2. A person in a relationship falling under such subparagraph (excluding subparagraph 3) of Article 87 (1) if the relevant stockholder, etc. is a corporation.
 Article 44 (Non-Inclusion of Severance Benefits in Deductible Expenses)
(1) Severance benefits (referring to benefits defined in subparagraph 5 of Article 2 of the Guarantee of Workers' Retirement Benefits Act; hereinafter the same shall apply) paid by a corporation to its executives or employees shall be included in deductible expenses within the extent of the amount actually paid when an executive or employee actually retires (hereafter referred to as "actual retirement" in this Article). <Amended by Presidential Decree No. 19328, Feb. 9, 2006>
(2) Actual retirement includes any of the following cases, in which a corporation actually pays severance benefits: <Amended by Presidential Decree No. 18706, Feb. 19, 2005; Presidential Decree No. 19010, Aug. 19, 2005; Presidential Decree No. 19328, Feb. 9, 2006; Presidential Decree No. 21302, Feb. 4, 2009; Presidential Decree No. 22035, Feb. 18, 2010>
1. Where an employee of a corporation becomes an executive of the corporation;
2. Where an employee or executive of a corporation retires due to the reorganization, merger, division, or transfer of the business of the corporation;
3. Where severance benefits are paid upon making interim settlement as prescribed in Article 8 (2) of the Act on the Guarantee of Workers' Retirement Benefits (limited to where severance benefits are newly calculated by counting the years of service from the time of interim settlement);
4. Deleted; <by Presidential Decree No. 26068, Feb. 3, 2015>
5. Where severance benefits are paid upon making interim settlement to executives for reasons prescribed by Ordinance of the Ministry of Strategy and Finance, such as long-term medical care as prescribed in the articles of incorporation or the regulations on payment of severance benefits delegated by the articles of incorporation benefits (limited to where severance benefits are newly calculated by counting the years of service from the time of interim settlement).
(3) Where a corporation pays severance benefit to an executive (excluding the controlling stockholder, etc., and persons related to the controlling stockholder. etc., as defined in Article 43 (8)) or employee, which is calculated by adding the period during which the executive or employee worked for the corporation and the period worked for a corporation with a special relationship provided for in Article 87, an amount equivalent to the relevant severance benefits shall be included in deductible expenses divided in proportion to the corporations, as prescribed by Ordinance of the Ministry of Strategy and Finance. In such cases, the corporation for which the relevant executive or employee worked most recently may submit the detailed statements of withholding and payment under the Income Tax Act concerning the relevant severance benefits all together. <Newly Inserted by Presidential Decree No. 21302, Feb. 4, 2009; Presidential Decree No. 23589, Feb. 2, 2012; Presidential Decree No. 24357, Feb. 15, 2013>
(4) The amount of severance benefits paid to an executive of a corporation in excess of any of the following amounts shall be excluded from deductible expenses: <Amended by Presidential Decree No. 17033, Dec. 29, 2000; Presidential Decree No. 18706, Feb. 19, 2005; Presidential Decree No. 19328, Feb. 9, 2006; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 21302, Feb. 4, 2009; Presidential Decree No. 22812, Mar. 31, 2011>
1. Where the amount to be paid as severance benefits (including retirement bonuses, etc.) is prescribed by the articles of incorporation, the amount prescribed by the articles of incorporation;
2. In cases, other than those referred to in subparagraph 1, the amount computed by multiplying the amount equivalent to 10/100 of the total amount of salaries paid to the relevant executive for one year retroactively from the date of retirement [referring to the amount referred to in Article 20 (1) 1 and 2 of the Income Tax Act (excluding the nontaxable income under Article 12 of the same Act), excluding the amount excluded from deductible expenses as prescribed in Article 43] by the number of years of continuous service as calculated by the method prescribed by Ordinance of the Ministry of Strategy and Finance. In such cases, where no severance benefits have been paid when the relevant executive became an executive from an employee, the period in which he/she has worked as an employee may be added to the number of years of continuous service.
(5) Paragraph (4) 1 shall include cases where the calculation standards for severance benefits for executives are stipulated by the articles of incorporation, and where the payment of severance benefits to executives are otherwise stipulated by the articles of incorporation, such severance benefits shall be calculated pursuant to the relevant provisions. <Amended by Presidential Decree No. 19328, Feb. 9, 2006; Presidential Decree No. 21302, Feb. 4, 2009>
(6) In determining whether a corporation is in the special relationship referred to in Article 43 (8) with a controlling stockholder, etc., under paragraph (3), an executive in the relationship referred to in Article 87 (1) 7 with the controlling stockholder, etc., shall not be deemed in the special relationship. <Newly Inserted by Presidential Decree No. 22035, Feb. 18, 2010>
 Article 44-2 (Non-Inclusion of Retirement Insurance Premiums, etc., in Deductible Expenses)
(1) Insurance premiums, installments, or charges (hereafter in this Article referred to as "insurance premium, etc.") paid or borne by a domestic corporation to pay severance benefits to its executives and employees, other than those included in deductible expenses under paragraphs (2) through (4), shall be excluded from deductible expenses. <Amended by Presidential Decree No. 19328, Feb. 9, 2006; Presidential Decree No. 22035, Feb. 18, 2010; Presidential Decree No. 26068, Feb. 3, 2015>
(2) The amount paid as charges by a domestic corporation for a pension prescribed by Ordinance of the Ministry of Strategy and Finance (hereafter in this Article referred to as "retirement pension, etc.") with the severance benefits to its executives and employees making the retirement of executives or employees as the condition for payment and with its executives or employees named as qualified recipients shall be included in deductible expenses for purposes of calculating the amount of income for the relevant business year. <Amended by Presidential Decree No. 19328, Feb. 9, 2006; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 22577, Dec. 30, 2010>
(3) Total amount of charges for the defined contribution retirement pension, etc., (referring to the defined contribution retirement pension provided for in Article 19 of the Act on the Guarantee of Workers' Retirement Benefits, the individual retirement pension system provided for in Article 24 of the same Act, and the defined contribution retirement pension among the retirement pensions provided for in the Korea Scientists and Engineers Mutual-Aid Association Act; hereinafter the same shall apply) among the amounts expended under paragraph (2) shall be included in deductible expenses: Provided, That Article 44 (4) shall apply to charges for executives, deeming that the sum total of the charges borne by a corporation until its executives retire to be severance benefits; where any amount in excess of the ceiling on inclusion in deductible expenses, the amount equivalent to the amount in excess of the ceiling on inclusion in deductible expenses among the charges for the business year in which the date of retirement falls, shall be excluded from deductible expenses; and where the amount in excess of the ceiling on inclusion in deductible expenses exceeds the charges for the business year in which the date of retirement falls, such excess amount shall be included in gross income for the business year in which the date of retirement falls. <Amended by Presidential Decree No. 22035, Feb. 18, 2010; Presidential Decree No. 22577, Dec. 30, 2010; Presidential Decree No. 23724, Apr. 13, 2012; Presidential Decree No. 26981, Feb. 12, 2016>
(4) The amount, other than the charges for the defined contribution retirement pension, etc., among the amounts expended under paragraph (2), shall be included in deductible expenses up to the amount computed by subtracting the amount referred to in subparagraph 2 from the larger of the amounts referred to in subparagraphs 1 and 1-2, and, if at least two charges exist, the charges for the retirement pension, etc., for which a contract is first concluded shall be included in deductible expenses: <Newly Inserted by Presidential Decree No. 22035, Feb. 18, 2010; Presidential Decree No. 22577, Dec. 30, 2010; Presidential Decree No. 23724, Apr. 13, 2012; Presidential Decree No. 25194, Feb. 21, 2014; Presidential Decree No. 26981, Feb. 12, 2016>
1. Charges for the pension equivalent to the estimated amount payable as severance benefits (excluding the amount excluded from deductible expenses under Article 44 and the amount included in deductible expenses under the main sentence of paragraph (3)), less retirement benefit appropriation funds accumulated as at the end of the relevant business year, if all executives or employees who hold offices as at the end of the relevant business year;
1-2. Charges for the pension equivalent to the aggregate of the following amounts (excluding the amount excluded from deductible expenses under Article 44 and the amount included in deductible expenses under the main sentence of paragraph (3)), less retirement benefit appropriation funds accumulated as at the end of the relevant business year:
(b) The aggregate of the estimated retirement benefits payable, if all persons who are not members of the defined contribution retirement pension referred to in subparagraph 8 of Article 2 of the Act on the Guarantee of Workers’ Retirement Benefits retire at once, and the estimated amount of retirement benefits payable for the duration that falls short of the duration of service, if all persons who are members of the defined contribution retirement pension but whose duration of membership falls short of the duration of service, retire at once, among executives or employees in service at the end of the relevant business year;
2. Charges paid by the last day of the immediately preceding business year.
(5) A corporation that has included charges in deductible expenses under paragraph (2) shall submit a report referred to in Article 60 of the Act to the head of the tax office having jurisdiction over the place of tax payment, along with an adjustment statement of retirement pension charges in the form stipulated by Ordinance of the Ministry of Strategy and Finance. <Amended by Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 22577, Dec. 30, 2010>
[This Article Newly Inserted by Presidential Decree No. 17033, Dec. 29, 2000]
 Article 45 (Non-Inclusion of Expenses for Fringe Benefits in Deductible Expenses)
(1) Expenses for fringe benefits paid by a corporation for its executives or employees, other than the following expenses, shall not be included in deductible expenses. In such cases, employees shall include temporary agency workers defined in Article 2 of the Act on the Protection, etc. of Temporary Agency Workers: <Amended by Presidential Decree No. 16703, Feb. 7, 2000; Presidential Decree No. 17457, Dec. 31, 2001; Presidential Decree No. 18706, Feb. 19, 2005; Presidential Decree No. 21302, Feb. 4, 2009; Presidential Decree No. 23356, Dec. 8, 2011; Presidential Decree No. 24357, Feb. 15, 2013; Presidential Decree No. 27828, Feb. 3, 2017>
1. Expenses for sporting activities of employees;
2. Expenses for cultural activities of employees;
2-2. Dining expenses for employees;
3. Operational expenses of employee stock ownership associations;
4. Deleted; <by Presidential Decree No. 17033, Dec. 29, 2000>
5. Insurance premiums and charges to be borne as an employer under the National Health Insurance Act, and the Act on Long-Term Care Insurance for Older Persons;
6. Operational expenses of workplace childcare centers established under the Infant Care Act;
7. Insurance premiums borne by an employer under the Employment Insurance Act;
8. Other condolence and congratulatory expenses paid to executives or employees and similar to those referred to in subparagraphs 1 through 7, to the extent socially acceptable.
(2) through (4) Deleted. <by Presidential Decree No. 17033, Dec. 29, 2000>
 Article 46 (Non-Inclusion of Travel Expenses in Deductible Expenses)
Travel expenses or education and training expenses reimbursed by a corporation to its controlling stockholders, etc. (including persons in a special relationship referred to in Article 43 (8)), other than executives or employees, shall not be included in deductible expenses for purposes of calculating the amount of income for the relevant business year. <Amended by Presidential Decree No. 20619, Feb. 22, 2008>
 Article 47 Deleted. <by Presidential Decree No. 19328, Feb. 9, 2006>
 Article 48 (Non-Inclusion of Joint Expenses in Deductible Expenses)
(1) Among deductible expenses incurred or paid when a corporation jointly operates or manages one and the same organization, business, etc. with any person other than itself, the amount exceeding the following allotments shall not be included in deductible expenses in calculating the amount of income of the relevant corporation: <Amended by Presidential Decree No. 17033, Dec. 29, 2000; Presidential Decree No. 19891, Feb. 28, 2007; Presidential Decree No. 20619, Feb. 22, 2008; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 22035, Feb. 18, 2010; Presidential Decree No. 26981, Feb. 12, 2016>
1. Where a specific business is jointly operated through investment, the ratio of the investment by the relevant corporation to the total investment;
2. The following standards for expenses expended by all corporations, etc. (hereafter in this paragraph referred to as "non-investing joint business operators") related to the organization, business, etc., in cases other than the cases falling subparagraph 1:
(a) Where non-investing joint business operators are in any of the relationships provided in the subparagraphs of Article 87 (1): The ratio of total sales (referring to the total asset value, if the total asset value is chosen) of the relevant corporation either to the total sales for the immediately preceding business year or for the relevant business year or to the total asset value (excluding book value of stocks of the other joint business holder, if either joint business operator holds shares of the other joint business operator; the same shall apply hereafter in this subparagraph), whichever is chosen by the corporation, (if neither the sales nor the total asset value has been chosen, the total sales shall be deemed chosen, and the amount shall apply for five consecutive business years from the business year in which the amount was chosen: Provided, That the standards prescribed by Ordinance of the Ministry of Strategy and Finance concerning the number of participants, purchase amount, etc., may apply to the deductible expenses specified by Ordinance of the Ministry of Strategy and Finance, including as joint event expenses and joint procurement expenses;
(b) In cases other than the cases falling under item (a): The ratio of allotment under the contract between non-investing joint business operators: Provided, That if no applicable ratio is stipulated, it means the ratio provided for in item (a);
3. Deleted. <by Presidential Decree No. 20619, Feb. 22, 2008>
(2) In applying paragraph (1), matters necessary for the calculation of sales amount and amount of allotments shall be prescribed by Ordinance of the Ministry of Strategy and Finance. <Amended by Presidential Decree No. 20720, Feb. 29, 2008>
 Article 49 (Scope, etc. of Non-Business Assets)
(1) "Assets prescribed by Presidential Decree" referred to in subparagraph 1 of Article 27 of the Act means any of the following assets: <Amended by Presidential Decree No. 16658, Dec. 31, 1999; Presidential Decree No. 17033, Dec. 29, 2000; Presidential Decree No. 18706, Feb. 19, 2005; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 22951, Jun. 3, 2011>
1. Any of the following real estate: Provided, That the real estate, the use of which is banned or restricted in accordance with the Acts and subordinate statutes, the real estate transferred by a special purpose company incorporated under the Asset-Backed Securitization Act according to its asset securitization plan registered under Article 3 of the same Act and other real estate with inevitable circumstances prescribed by Ordinance of the Ministry of Strategy and Finance shall be excluded herefrom:
(a) Real estate which is not directly used for the business of a corporation: Provided, That it shall exclude such real estate that is held until the period prescribed by Ordinance of the Ministry of Strategy and Finance (hereafter referred to as "grace period" in this Article) elapses;
(b) Real estate which is not directly used for the business of a corporation and is transferred during the grace period: Provided, That this shall exclude corporations which operate a real estate sales business prescribed by Ordinance of the Ministry of Strategy and Finance as their main business;
2. Any of the following moveable:
(a) Paintings and curios: Provided, That any paintings and any curios that are on permanent display in the space, such as offices and corridors, for the purpose of ornamenting and environmentally beautifying such space that is visible to many people shall be excluded;
(b) Cars, ships, and aircraft which are not directly used for business: Provided, That cars, ships and aircraft with inevitable circumstances prescribed by Ordinance of the Ministry of Strategy and Finance, such as ships acquired for the purpose of exercising mortgages and getting credits repaid for which three years have yet to elapse from the date of such acquisition, shall be excluded;
(c) Other assets similar to those referred to in items (a) and (b) which are not used directly for the business of a corporation.
(2) Matters necessary for determining whether an asset is the real estate falls under paragraph (1) 1 shall be prescribed by Ordinance of the Ministry of Strategy and Finance. <Amended by Presidential Decree No. 20720, Feb. 29, 2008>
(3) "Amount prescribed by Presidential Decree" referred to in subparagraph 1 of Article 27 of the Act means expenses incurred in acquiring and managing the assets provided in each subparagraph of paragraph (1) and their maintenance expenses, repair expenses and other related expenses. <Amended by Presidential Decree No. 22951, Jun. 3, 2011>
 Article 50 (Non-Business Expenditures)
(1) "Expenditures prescribed by Presidential Decree" referred to in subparagraph 2 of Article 27 of the Act means any of the following: <Amended by Presidential Decree No. 21302, Feb. 4, 2009; Presidential Decree No. 22577, Dec. 30, 2010>
1. Maintenance expenses, management expenses, and user fees and other related expenses of places, buildings, other things, etc. which the relevant corporation does not directly use but a third person (excluding executives, other than stockholders, etc., and executives and employees who are minority stockholders, etc.) mainly uses: Provided, That this shall not include expenses related to production facilities lent by a corporation to small and medium enterprises free of charge to transfer a business under Article 35 of the Act on the Promotion of Collaborative Cooperation between Large Enterprises and Small-Medium Enterprises to the relevant small and medium enterprises (limited to the operators of manufacturing business);
2. Maintenance expenses, management expenses, user fees and other related expenses for private residences used by stockholders, etc. (excluding minority stockholders, etc.), contributing executives of the relevant corporation or their relatives;
3. Expenses related to obtaining loans expended to acquire assets falling under any subparagraph of Article 49 (1);
4. The total amount of money, assets other than money, and other economic gains offered by the relevant corporation which fall under a bribe under the Criminal Act or the Act on Combating Bribery of Foreign Public Officials in International Business Transactions;
(2) "Minority stockholder, etc." referred to in paragraph (1) 1 and 2 means a stockholder, etc. (excluding the related parties of the controlling stockholders, etc. of the relevant corporation which are not the State and local governments; hereinafter referred to as "minority stockholder, etc.") who owns less than 1/100 of the total number of issued stocks or total investment amount. <Amended by Presidential Decree No. 23589, Feb. 2, 2012>
[This Article Wholly Amended by Presidential Decree No. 20619, Feb. 22, 2008]
 Article 50-2 (Special Cases concerning Exclusion of Expenses Incurred in Relation to Passenger Vehicles for Business Use from Deductible Expenses)
"Passenger vehicles specified by Presidential Decree" in Article 27-2 (1) of the Act means any of the following:
1. Passenger vehicles directly used to make commercial profits in the type of business specified in any subparagraph of Article 19 of the Enforcement Decree of the Value-Added Tax Act or in a facility leasing business defined in subparagraph 9 of Article 2 of the Specialized Credit Finance Business Act;
2. Passenger vehicles specified by Ordinance of the Ministry of Strategy and Finance, among passenger vehicles similar to those specified in subparagraph 1.
(2) "Expenses prescribed by Presidential Decree" in Article 27-2 (2) of the Act means expenses for acquiring and maintaining passenger vehicles for business use (hereafter in this Article referred to as "expenses incurred in relation to passenger vehicles for business use"), including depreciation costs, rental charges, fuel expenses, insurance premiums, repairing cost, motor vehicle tax, tolls, and finance lease liabilities.
(3) Notwithstanding Articles 26 (1) 2 and 28 (1) 2, the straight line method shall apply as the depreciation method for passenger vehicles for business use, and the amount computed by applying the service years of five years shall be included in deductible expenses as depreciation costs.
(4) "Expenses prescribed by Presidential Decree incurred for business use" in Article 27-2 (2) of the Act means the following amounts: <Amended by Presidential Decree No. 28640, Feb. 13, 2018>
1. Where a corporation purchases auto insurance policies covering only the cases where any of the following persons operates a vehicle (hereinafter referred to as "auto insurance policies only for business use") during the entire period of the relevant business year (referring to the period of lease during the relevant business year, in cases of a leased passenger vehicle): The amount computed by multiplying expenses incurred in relation to passenger vehicles for business use by the business use ratio:
(a) An executive or employee of the relevant corporation;
(b) A person who operates a vehicle for the relevant corporation's business under a contract;
(c) Any of the persons specified by Ordinance of the Ministry of Strategy and Finance as those necessary for the relevant corporation's business;
2. Where a corporation does not purchase any auto insurance policy: Not recognizable as deductible expenses at all.
(5) The business use ratio referred to in paragraph (4) 1 shall be defined as the ratio of the mileage of business use to the total mileage confirmed according to operation records, etc., prescribed by Ordinance of the Ministry of Strategy and Finance (hereafter in this Article referred to as "operation records, etc.").
(6) A domestic corporation that wishes to qualify for paragraph (4) 1 shall keep and maintain operation records, etc., for each passenger vehicle for business use and shall submit them immediately to the head of the tax office having jurisdiction over the place of tax payment, if requested.
(7) If a corporation does not keep and maintain operation records, etc., for the application of paragraph (4) 1, either of the following rates shall apply as the business use ratio of the relevant passenger vehicles for business use, notwithstanding paragraph (5): <Amended by Presidential Decree No. 28640, Feb. 13, 2018>
1. Where expenses incurred in relation to passenger vehicles for business use during the relevant business year do not exceed ten million won (referring to the amount computed by multiplying ten million won by the number of months of the relevant business year and then dividing it by 12, if the relevant business year is less than one year, or the amount computed by multiplying ten million won by the number of months in the period of owing or lease and then dividing it by the number of months in the relevant business year, if a vehicle is owned or leased for a certain period in the relevant business year; hereafter in this Article the same shall apply): 100/100;
2. Where expenses incurred in relation to passenger vehicles for business use during the relevant business year exceed ten million won: The rate computed by dividing ten million won by the expenses incurred in relation to passenger vehicles for business use.
(8) If a corporation has a special agreement on the lease of the leased passenger vehicles specified by Ordinance of the Ministry of Strategy and Finance, which restricts operators to either of the following persons, it shall be deemed to have purchased auto insurance policies only for business use for the purpose of applying paragraph (4) 1: <Newly Inserted by Presidential Decree No. 27828, Feb. 3, 2017>
1. Executives or employees of the corporation;
2. Persons who operate the vehicles under a contract for business of the corporation.
(9) Where a corporation purchases an auto insurance policy only for business use only for a certain period in the entire period of the relevant business year (referring to the period of lease during the relevant business year, in cases of a leased passenger vehicle), the expenses incurred for business use under Article 27-2 (2) of the Act shall be computed by the following formula, notwithstanding paragraph (4) 2: <Newly Inserted by Presidential Decree No. 27828, Feb. 3, 2017; Presidential Decree No. 28640, Feb. 13, 2018>
Expenses incurred in relation to passenger vehicles for business use × Business use ratio × (Number of days actually covered by auto insurance policies only for business use for the relevant business year ÷ Number of days that shall be mandatorily covered by auto insurance policies only for business use for the relevant business year)
(10) The excess of the ceiling on depreciation costs referred to in the main sentence of Article 27-2 (3) of the Act shall be computed by subtracting eight million won (referring to an amount computed by multiplying the number of months of the relevant business year and then dividing it by 12, if the relevant business year is less than one year, or the amount computed by multiplying eight million won by the number of months in the period of owing or lease and then dividing it by the number of months in the relevant business year, if a vehicle is owned or leased for a certain period in the relevant business year) from the amount computed by multiplying the amount in either subparagraph of Article 27-2 (3) of the Act by the business use ratio. <Amended by Presidential Decree No. 28640, Feb. 13, 2018>
(11) "Method prescribed by Presidential Decree" in Article 27-2 (3) of the Act means the method of carrying over an amount within the maximum amount computed by the following methods and including the amount in deductible expenses: <Amended by Presidential Decree No. 27828, Feb. 3, 2017>
1. Carried-over depreciation costs for each passenger vehicle for business use: If depreciation costs, among expenses incurred for business use of the relevant passenger vehicle for business use for business years following the relevant business year, is less than eight million won, the depreciation costs shall be recognized subsequently as deductible expenses within the maximum amount of the shortfall;
2. Carried-over rents equivalent to depreciation costs provided for in paragraph (12) for each passenger vehicle for business use: If the amount equivalent to depreciation costs, among expenses incurred for business use of the relevant passenger vehicle for business use for business years following the relevant business year, is less than eight million won, the amount shall be included in deductible expenses within the maximum amount of the shortfall: Provided, That the full amount of the remainder shall be included in deductible expenses in the business year in which ten years elapse from the date lease expires.
(12) "Amount specified by Presidential Decree as equivalent to depreciation costs" in Article 27-2 (3) 2 of the Act means an amount specified by Ordinance of the Ministry of Strategy and Finance as an amount exclusive of insurance premiums, motor vehicle tax, etc., among rents for a passenger vehicle for business use.
(13) "Carrying over the amount to the following term or by other methods prescribed by Presidential Decree" in Article 27-2 (4) of the Act means the method by which eight million won shall be included in deductible expenses equally for each business year following the relevant business years, but the full amount of the remainder shall be included in deductible expenses for the business year in which the remainder is less than eight million won or the business year in which ten years elapse from the date when the pertinent passenger vehicle for business use is disposed of.
(14) When a corporation that has included expenses incurred in relation to a passenger vehicle for business use or a loss on the disposal of such vehicle in deductible expenses files a return in accordance with Article 60 of the Act, it shall file the return with the head of the tax office having jurisdiction over the place of tax payment, accompanied by a statement of expenses incurred in relation to the passenger vehicle for business use.
(15) When paragraph 7, 10, 11, or 13 applies to a domestic corporation that meets all of the requirements provided for in Article 39 (3), "ten million won" shall be construed as "five million won," and "eight million won" as "four million won," respectively. <Newly Inserted by Presidential Decree No. 27828, Feb. 3, 2017>
(16) If the relevant business year is less than one year or if a vehicle has been owned or leased for a certain period in the relevant business year, the number of months shall be counted by calendar, but the number of days less than one month shall be deemed one month. <Newly Inserted by Presidential Decree No. 28640, Feb. 13, 2018>
(17) Except as otherwise expressly provided for in paragraphs (1) through (16), the scope of business use and other necessary matters shall be prescribed by Ordinance of the Ministry of Strategy and Finance. <Amended by Presidential Decree No. 27828, Feb. 3, 2017; Presidential Decree No. 28640, Feb. 13, 2018>
[This Article Newly Inserted by Presidential Decree No. 26981, Feb. 12, 2016]
 Article 51 (Scope of Interest, etc. on Debentures for which Creditor is Unknown)
(1) "Interest on debentures for which the creditor is unknown" referred to in Article 28 (1) 1 of the Act means interest on any of the following loans (including money and other valuables paid in borrowing money, irrespective of their names, such as brokerage commission and honorarium): Provided, That this shall not include the interest on loans if the whereabouts of the creditor becomes unknown after the creditor, whose residency was verified as at the date of the transaction by his/her resident registration card, receives repayment of the borrowed money:
1. Loans for which the name and address of the creditor cannot be verified;
2. Loans which cannot be recognized as the loans in cash by the creditor in view of his/her assets and abilities;
3. Loans for which the facts of the cash transaction or the details of the transaction with the creditor are unclear.
(2) "Interest on, a discount of, or gains from bonds and securities prescribed by Presidential Decree" referred to in Article 28 (1) 2 of the Act means, where the corporation which has issued bonds or securities directly pays the interest on, discount, or gains from such bonds or securities, the paid interest, discount, or gains, the payment of which are not objectively recognized. <Amended by residential Decree No. 22951, Jun. 3, 2011>
 Article 52 (Scope of Interest on Loans Appropriated for Construction Capital)
(1) "Interest on loans appropriated for construction capital prescribed by Presidential Decree" referred to in Article 28 (1) 3 of the Act means interest paid on loans used for purchasing, producing or constructing fixed assets for business (hereafter referred to as "construction, etc." in this Article), irrespective however named, (excluding loans, the use of which for the construction, etc. of fixed assets is unclear; hereafter referred to "special loan" in this Article) or other similar expenses (hereafter referred to "interest, etc. paid" in this Article). <Amended by Presidential Decree No. 22577, Dec. 30, 2010>
(2) Interest, etc. paid on a special loan shall be capital expenses included in the original capital until the date of the completion of the construction, etc.: Provided, That interest income accruing from the temporary deposit of the special loan shall be subtracted from the amount of capital expenses added to the original capital. <Amended by Presidential Decree No. 22577, Dec. 30, 2010>
(3) Where some of special loans are converted to operational capital, interest, etc. paid on the corresponding amount shall be deemed deductible expenses. <Amended by Presidential Decree No. 22577, Dec. 30, 2010>
(4) Where interest on special loans in arrears is added to the original capital, the added amount shall be deemed the capital expenditures of the relevant business year, and the interest paid on the added amount shall be deemed deductible expenses. <Amended by Presidential Decree No. 22577, Dec. 30, 2010>
(5) Interest on any special loan remaining after the completion of the relevant construction, etc. shall be deemed deductible expenses for each business year. In such cases, the date of the completion of construction, etc. shall be the date on which all objectives of the relevant construction, etc. are completed. <Amended by Presidential Decree No. 22577, Dec. 30, 2010>?
(6) "Date of completion" referred to in paragraphs (2) and the latter part of paragraph (5) means any of the following dates: <Amended by Presidential Decree No. 18706, Feb. 19, 2005>
1. Where land is purchased, the date the price is settled: Provided, That where the relevant land is used for business before the price is settled, it means the date on which the land was first used for business;
2. For buildings, the date of acquisition as prescribed in Article 162 of the Enforcement Decree of the Income Tax Act or the date on which it is first used for the purpose of its construction (hereafter referred to as "start date of use" in this paragraph), whichever comes earlier;
3. For other fixed assets used for business, the start date of use.
(7) "Amount prescribed by Presidential Decree" referred to in Article 28 (2) of the Act means the amount whichever is smaller between the amount computed by multiplying the construction, etc. of the fixed assets for each business during the relevant business year by the amount provided in subparagraph 2 and the rate provided in subparagraph 3, and the amount provided in subparagraph 1: <Newly Inserted by Presidential Decree No. 22577, Dec. 30, 2010>
1. The sum total of the interest, etc. paid on the general loan (referring to the amount excluding the special loan among the loans repaid or not repaid during the relevant business year; hereafter the same shall apply in this Article) actually incurred in the period required for the construction, etc. during the relevant business year;
2. The amount computed by the following formula:
Total amount expended for relevant construction, etc. during the relevant business yearTotal amount of special loans during the relevant business year
Number of days in the relevant business yearNumber of days in the relevant business year
3. The rate calculated by the following formula:
Sum total of interest, etc. paid, etc. on general loans÷Total amount of general loans during the relevant business year
Number of days in relevant business year
 Article 53 (Non-Inclusion of Interest Paid on Non-Business Assets, etc. in Deductible Expenses)
(1) "Provisional payments, etc. prescribed by Presidential Decree" referred to in Article 28 (1) 4 (b) of the Act mean the amount of loans for capital with no connection to the business of the relevant corporation, irrespective of however named, (for financial companies, etc. provided in any subparagraph of Article 61 (2), including the amount of loans for capital which cannot be recognized as the main profit-making business): Provided, That the amount prescribed by Ordinance of the Ministry of Strategy and Finance shall be excluded. <Amended by Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 22035, Feb. 18, 2010; Presidential Decree No. 22951, Jun. 3, 2011>
(2) "Amount calculated, as prescribed by Presidential Decree" referred to in Article 28 (1) 4 of the Act means the amount computed by the following formula: <Amended by Presidential Decree No. 22951, Jun. 3, 2011>

Interest paid ×
Sum total of asset value under paragraph (1) and Article 49 (1) (up to
the limit of the total loans)
Total loans
(3) The sum of the total loans and the asset value referred to in paragraph (2) shall be calculated based on the accumulated amount during the corresponding period. In such cases, the assets referred to in paragraph (1) shall, if there concurrently exist the provisional payments to and suspense receipts from the same person, be the amount offsetting them, and the assets referred to in Article 49 (1) shall be the acquisition value (it shall be the acquisition value of assets as prescribed in Article 72, and shall include the amount exceeding market prices referred to in paragraph (4) 3 of the same Article). <Amended by Presidential Decree No. 17033, Dec. 29, 2000; Presidential Decree No. 17826 Dec. 30, 2002; Presidential Decree No. 23589, Feb. 2, 2012>
(4) Loans provided in paragraph (2) shall not include any of the following amounts: <Amended by Presidential Decree No. 17033, Dec. 29, 2000; Presidential Decree No. 18706, Feb. 19, 2005; Presidential Decree No. 19815, Dec. 30, 2006; Presidential Decree No. 20619, Feb. 22, 2008; Presidential Decree No. 22035, Feb. 18, 2010>
1. The following amounts borrowed by a financial company, etc. under each subparagraph of Article 61 (2):
(a) Amounts borrowed from the Public Capital Management Fund established under the Public Capital Management Fund Act or from the Bank of Korea established under the Bank of Korea Act;
(b) Amounts borrowed from the State or local governments (including associations of local governments);
(c) Amounts borrowed from funds established under Acts and subordinate statutes;
(d) Foreign currency loans obtained under the Foreign Investment Promotion Act or the Foreign Exchange Transactions Act;
(e) Funds managed and operated after being received from many and unspecified customers on condition that a certificate of deposit shall be issued or compensation, such as the payment of regular interest through a bank account shall be made;
2. Amounts borrowed by a domestic corporation through business purchase financing loans under the regulations provided by the Governor of Bank of Korea.
 Article 54 Deleted. <by Presidential Decree No. 18706, Feb. 19, 2005>
 Article 55 (Order of Application of Non-Inclusion of Paid Interest in Deductible Expenses)
The following order shall apply where each subparagraph of Article 28 (1) of the Act applies simultaneously to the non-inclusion of paid interest in deductible expenses: <Amended by Presidential Decree No. 18706, Feb. 19, 2005; Presidential Decree No. 19328, Feb. 9, 2006>
1. Interest on debentures for which the creditor is unknown under Article 28 (1) 1 of the Act;
2. Interest on, a discount, or gains from bonds and securities for which the recipient is unknown under Article 28 (1) 2 of the Act;
3. Deleted; <by Presidential Decree No. 18706, Feb. 19, 2005>
4. Interest on loans appropriated for construction capital under Article 28 (1) 3 of the Act;
5. Deleted; <by Presidential Decree No. 19328, Feb. 9, 2006>
6. Interest paid as calculated under Article 53 (2).
Subsection 4 Inclusion of Reserve Funds and Appropriation Funds in Deductible Expenses
 Article 56 (Inclusion of Reserve Funds for Proper Purpose Business in Deductible Expenses)
(1) "Organizations prescribed by Presidential Decree" in the main sentence of Article 29 (1) of the Act means the following organizations: <Amended by Presidential Decree No. 17457, Dec. 31, 2001; Presidential Decree No. 22035, Feb. 18, 2010; Presidential Decree No. 22577, Dec. 30, 2010; Presidential Decree No. 27444, Aug. 11, 2016; Presidential Decree No. 27445, Aug. 11, 2016; Presidential Decree No. 28640, Feb. 13, 2018>
1. Organizations referred to in Article 36 (1) 1;
2. Deleted; <by Presidential Decree No. 17457, Dec. 31, 2001>
3. Any Fund established under the statutes;
4. An assembly of representatives of residents, an assembly of representatives of tenants or any similar management organization of a multi-family housing complex, as defined in Article 2 (1) 1 (a) of the Multi-Family Housing Management Act.
(2) Any of the following amounts of interest income shall be deemed the amount provided for in Article 29 (1) 1 of the Act: <Amended by Presidential Decree No. 19891, Feb. 28, 2007; Presidential Decree No. 20619, Feb. 22, 2008>
1. The amount of interest income generated when a non-profit domestic corporation engaging in finance and insurance business temporarily deposits funds to any corporation engaging in finance and insurance business listed on the Korea Standard Industrial Classification;
2. The amount of interest income generated when a person engaging in the business provided for in Article 2 (1) 5 (b) manages funds;
3. The amount of interest income generated when the Housing Finance Credit Guarantee Fund established under the Korea Housing Finance Corporation Act manages the guarantee fees received under Article 43-8 (1) and (2) of the said Act.
(3) "Income from profit-making business" in Article 29 (1) 4 of the Act means the amount of income generated from profit-making business in the relevant business year (referring to the amount of income before the inclusion of the reserve funds for proper purpose business and donations provided for in Article 24 (2) of the Act in deductible expenses) minus the amount referred to in Article 29 (1) 1 through 3 of the Act, losses referred to in subparagraph 1 of Article 13 of the Act, and donations referred to in under Article 24 (2) of the Act. <Amended by Presidential Decree No. 19328, Feb. 9, 2006; Presidential Decree No. 22577, Dec. 30, 2010>
(4) Deleted. <by Presidential Decree No. 18324, Mar. 22, 2004>
(5) "Proper purpose business" in Article 29 (1) of the Act means the business directly operated by the relevant non-profit domestic corporation for accomplishing its purpose of establishment stipulated by the statutes or the articles of incorporation, other than the profit-making business provided for in Article 2 (1).
(6) In applying Article 29 (1) through (4) of the Act, the following amounts shall be deemed expended or used for the proper purpose business: Provided, That, if a domestic non-profit corporation disposes of a fixed asset without directly using the asset for at least there years for the proper purpose business or health services prescribed by statutes or stipulated by its articles of incorporation (limited to domestic non-profit corporations providing health services (hereafter referred to as "medical corporation" in this Article) after acquiring the fixed asset, the amount specified in subparagraph 1 or 3 shall not be deemed an amount expended or used for its proper purpose business: <Amended by Presidential Decree No. 17033, Dec. 29, 2000; Presidential Decree No. 17457, Dec. 31, 2001; Presidential Decree No. 17826, Dec. 30, 2002; Presidential Decree No. 18174, Dec. 30, 2003; Presidential Decree No. 18706, Feb. 19, 2005; Presidential Decree No. 19328, Feb. 9, 2006; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 22577, Dec. 30, 2010; Presidential Decree No. 22812, Mar. 31, 2011; Presidential Decree No. 23589, Feb. 2, 2012; Presidential Decree No. 25194, Feb. 21, 2014; Presidential Decree No. 26922, Jan. 22, 2016; Presidential Decree No. 27828, Feb. 3, 2017; Presidential Decree No. 28640, Feb. 13, 2018>
1. The amount of expenses directly incurred in operating the proper purpose business of a non-profit domestic corporation, such as the acquisition expenses (including capital expenditures referred to in Article 31 (2)) of fixed assets and personnel expenses;
2. The amount of reserve funds for proper purpose business recognized as deductible expenses that are accumulated as funds or reserve funds under the statues by a non-profit domestic corporation, established under special Acts (including an organization deemed a corporation under Article 13 of the Framework Act on National Taxes from among the Funds established and operated in the relevant corporation), operating the health insurance business, pension fund management business, mutual aid business, and the business referred to in Article 2 (1) 8;
3. Any of the following amounts expended by a medical corporation:
(a) An amount expended to acquire fixed assets specified by Ordinance of the Ministry of Strategy and Finance, such as medical equipment;
(b) An amount expended for the purposes specified by Ordinance of the Ministry of Strategy and Finance, such as the development of overseas markets for medical services under subparagraph 1 of Article 2 of the Act on Support for Overseas Expansion of Healthcare System and Attraction of International Patients;
(c) An amount expended for research and development projects prescribed by Ordinance of the Ministry of Strategy and Finance;
4. The amount of loans that the National Agricultural Cooperative Federation established under the Agricultural Cooperatives Act provides to its members free of charge from the reserve funds for proper purpose business, appropriated under Article 61 (1) of the Act;
5. The amount contributed by the National Agricultural Cooperative Federation established under the Agricultural Cooperatives Act to the Mutual Finance Depositor Protection Fund created under the Act on the Structural Improvement of Agricultural Cooperatives;
6. The amount contributed by the National Federation of Fisheries Cooperatives established under the Fisheries Cooperatives Act to the Mutual Finance Depositor Protection Fund created under the Act on the Structural Improvement of Fisheries Cooperatives;
7. The amount contributed by the National Credit Union Federation of Korea established under the Credit Unions Act to the Credit Union Depositor Protection Fund created under the same Act;
8. The amount contributed by the Korean Federation of Community Credit Cooperatives established under the Community Credit Cooperatives Act to the Depositor Protection Reserves created under the same Act;
9. The amount contributed by the National Forestry Cooperatives Federation established under the Forestry Cooperatives Act to the Mutual Finance Depositor Protection Fund created under the same Act;
10. The amount expended by the Jeju Free International City Development Center established under Article 166 of the Special Act on the Establishment of Jeju Special Self-Governing Province and the Development of Free International City for the business affairs provided for in Article 170 (1) 1 and 2 (d) and (e) (including the acquisition and reservation of the relevant land) and Article 170 (1) 3.
(7) "Amount equivalent to the interest calculated, as prescribed by Presidential Decree" in Article 29 (5) of the Act means the amount computed by multiplying the amount referred to in subparagraph 1 by the rate referred to in subparagraph 2: <Amended by Presidential Decree No. 17826 Dec. 30, 2002; Presidential Decree No. 22577, Dec. 30, 2010>
1. The difference in the amount of corporate tax for the business year in which the balance of the relevant reserve funds for proper purpose business was included in deductible expenses, generated by including the balance in deductible expenses;
2. 3/10,000 per day for the period from the first day of the business year following the business year in which the balance was included in deductible expenses falls until the last day of the business year in which the balance was included in gross income falls.
(8) "Circumstances prescribed by Presidential Decree" in Article 29 (6) of the Act means circumstances in which the income accruing from the profit-making business of the relevant non-profit domestic corporation is subject to the application of the non-taxation, exemption, inclusion of reserve funds in deductible expenses, income deductions or tax reductions or exemptions (excluding tax credits) provided for in the Act or the Restriction of Special Taxation Act: Provided, That this shall not apply where a revised return is filed only for the application of the reserve funds for proper purpose business. <Newly Inserted by Presidential Decree No. 19328, Feb. 9, 2006; Presidential Decree No. 22577, Dec. 30, 2010>
(9) A non-profit domestic corporation that wishes to qualify for Article 29 (1) of the Act shall submit a detailed statement on the adjustment of reserve funds for proper purpose business 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 of tax payment, along with the report referred to in Article 60 of the Act. <Amended by Presidential Decree No. 20720, Feb. 29, 2008>
(10) A medical corporation that wishes to qualify for paragraph (6) 3 shall manage the amount equivalent to reserved funds for proper purpose business that was appropriated as deductible expenses in a separate medical development account prescribed by Ordinance of the Ministry of Strategy and Finance. <Newly Inserted by Presidential Decree No. 17033, Dec. 29, 2000; Presidential Decree No. 20720, Feb. 29, 2008>
(11) Where the sum total of wages and salaries referred to in each subparagraph of Article 20 (1) of the Income Tax Act paid to executives and employees of any of the following corporations for the relevant business year (hereinafter referred to as "total amount of wages" and, where the period of employment for the relevant business year is less than one year, it means the amount computed by multiplying the amount, which is divided by the total amount of wages by the number of months in the period of employment, by 12. In such cases, Article 39 (2) shall apply mutatis mutandis to the calculation of the number of months) exceeds 80 million won, such excess amount shall not be deemed personnel expenses referred to in paragraph 6 (1): Provided, That the same shall not apply where the relevant corporation obtains approval from the competent authorities with respect to the payment regulations on personnel expenses for the relevant executives and employees before it files a report on the tax base under Article 60 of the Act for the relevant business year: <Newly Inserted by Presidential Decree No. 23589, Feb. 2, 2012>
1. A non-profit domestic corporation which includes the income in deductible expenses as reserve funds for proper purpose business in excess of the amount computed by multiplying the amount of income generated by profit-making business under Article 29 (1) 4 of the Act by 50/100;
2. A non-profit domestic corporation which falls under Article 74 (1) 2 and 8 of the Restriction of Special Taxation Act and includes the income in deductible expenses as reserve funds for proper purpose business in excess of the amount computed by multiplying the amount of income generated by the profit-making business by 50/100.
(12) The competent authorities in receipt of a request to approve the payment regulations on personnel expenses under the proviso to paragraph (11) or (13) shall approve such regulations where it is deemed socially acceptable. <Newly Inserted by Presidential Decree No. 23589, Feb. 2, 2012>
(13) A person who has obtained approval of the payment regulations on personnel expenses under paragraph (12) shall re-obtain approval every three years from the date of the approval: Provided, That where the payment regulations on personnel expenses are revised within such period, he/she shall re-obtain approval until the filing deadline of tax bases specified under Article 60 of the Act for the business year in which such grounds arise. <Newly Inserted by Presidential Decree No. 23589, Feb. 2, 2012>
(14) A corporation which has obtained approval from the competent authorities under paragraph (12) shall submit the payment regulations on personnel expenses and the documents to verify the approval of the competent authorities to the head of the tax office having jurisdiction over the place of tax payment when filing a report under Article 60 of the Act. <Newly Inserted by Presidential Decree No. 23589, Feb. 2, 2012>
 Article 57 (Inclusion of Liability Reserve Funds, etc., in Deductible Expenses)
(1) Liability reserve funds referred to in Article 30 (1) of the Act shall be included in deductible expenses up to the sum of the following amounts in calculating the amount of income for the relevant business year: <Amended by Presidential Decree No. 16658, Dec. 31, 1999; Presidential Decree No. 18706, Feb. 19, 2005; Presidential Decree No. 19891, Feb. 28, 2007; Presidential Decree No. 20619, Feb. 22, 2008; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 21302, Feb. 4, 2009; Presidential Decree No. 22220, Jun. 28, 2010; Presidential Decree No. 22577, Dec. 30, 2010; Presidential Decree No. 23589, Feb. 2, 2012; Presidential Decree No. 24357, Feb. 15, 2013; Presidential Decree No.24441, Mar. 23, 2013; Presidential Decree No. 25751, Nov. 19, 2014; Presidential Decree No. 28211, Jul. 26, 2017>
1. The amount of money which would have to be refunded to policy-holders or beneficiaries under insurance terms and conditions approved by the Governor of the Financial Supervisory Service (for the mutual aid business under the Fisheries Cooperatives Act, the Minister of Oceans and Fisheries; for the trade insurance business under the Trade Insurance Act, the Minister of Trade, Industry and Energy; for the mutual aid business under the Community Credit Cooperatives Act, the Minister of the Interior and Safety; for the mutual aid business under the Framework Act on the Construction Industry, the Minister of Land, Infrastructure and Transport; and for the mutual aid business under the Small and Medium Enterprise Cooperatives Act, the Ministry of Small and Medium Enterprises (SMEs) and Startups) if all insurance contracts were cancelled as on the last day of the relevant business year (including surrender charges; hereafter in this Article referred to as "surrender charges"): Provided, That in cases of a corporation which uses the International Accounting Standards, it means the larger amount of surrender charges or the minimum reserves publicly announced by the Financial Services Commission after consultation with the Minister of Strategy and Finance;
2. Where an insured accident has occurred as on the last day of the relevant business year but the amount of insurance money payable is not determined, the amount of insurance money estimated (including the amount estimated to be used for damage assessment, subrogation of insurance and exercise of indemnity rights) in consideration of losses;
3. The amount (referring to the amount approved by the Minister of Oceans and Fisheries in cases of mutual aid business under the Fisheries Cooperatives Act after consultation with the Minister of Strategy and Finance; the amount approved by the Minister of the Interior and Safety after consultation with the Minister of Strategy and Finance in cases of mutual aid business under the Community Credit Cooperatives Act) accumulated in accordance with the standard for inclusion in deductible expenses determined by the Governor of the Financial Supervisory Service after consultation with the Minister of Strategy and Finance, which is a dividend reserve fund accumulated for distribution to the policy-holders.
(2) The amount referred to in paragraph (1) 1 and 2 out of the amounts included in deductible expenses under paragraph (1) shall be included in the gross income when calculating the amount of income for the following business year; and where the amount referred to in paragraph (1) 3 is distributed to the policy-holders, it shall be offset by the dividend in order of appropriation; however, where any balance is left after offset by the third anniversary of the last day of the business year in which it is included in deductible expenses, it shall be included in the gross income when calculating the amount of income for the business year in which the third anniversary falls. <Newly Inserted by Presidential Decree No. 21302, Feb. 4, 2009>
(3) "Amount calculated, as prescribed by Presidential Decree" in Article 30 (2) of the Act means 90/100 of the sum total of the accumulation standard amount by insurance type provided for in paragraph (7). <Newly Inserted by Presidential Decree No. 22577, Dec. 30, 2010>
(4) "Grounds prescribed by Presidential Decree, such as dissolution, occur before three years pass" in Article 30 (3) of the Act means any of the following: <Newly Inserted by Presidential Decree No. 21302, Feb. 4, 2009; Presidential Decree No. 22184, Jun. 8, 2010; Presidential Decree No. 22577, Dec. 30, 2010>
1. Dissolution: Provided, That this shall not apply where a corporation is dissolved following a merger or division and a surviving corporation, etc., engaging in insurance business succeeds to the balance;
2. Revocation of a license to engage in insurance business.
(5) The amount succeeded to by a surviving corporation, etc., under the proviso to paragraph (4) 1 shall be deemed included in deductible expenses by the surviving corporation, etc., in the business year in which the merged corporation, etc., included in deductible expenses. <Newly Inserted by Presidential Decree No. 21302, Feb. 4, 2009; Presidential Decree No. 22184, Jun. 8, 2010; Presidential Decree No. 22577, Dec. 30, 2010>
(6) "Amount equivalent to interest calculated, as prescribed by Presidential Decree" in Article 30 (4) of the Act means the amount computed by applying mutatis mutandis Article 56 (7). <Newly Inserted by Presidential Decree No. 21302, Feb. 4, 2009; Presidential Decree No. 22577, Dec. 30, 2010>
(7) Contingency reserve funds referred to in Article 30 (1) of the Act shall be included in deductible expenses up to the amount (hereafter referred to as "accumulation standard amount by insurance type" in this Article) calculated by multiplying the sum total of retention premiums for short-term non-life insurance in the relevant business year (for personal insurance, limited to mortality life or disease insurance with no surrender value or maturity repayment; hereafter in this Article the same shall apply) by the accumulation standard rates by insurance type determined by the Financial Services Commission. <Amended by Presidential Decree No. 17457, Dec. 31, 2001; Presidential Decree No. 19328, Feb. 9, 2006; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 22577, Dec. 30, 2010>
(8) The accumulated amount of contingency reserve funds included in deductible expenses under paragraph (7) shall be limited to 50/100 (40/100 in cases of automobile insurance; and 150/100 in cases of guarantee insurance) of the sum total of earned insurance premiums for short-term non-life insurance in the relevant business year. <Amended by Presidential Decree No. 19328, Feb. 9, 2006; Presidential Decree No. 21302, Feb. 4, 2009; Presidential Decree No. 22577, Dec. 30, 2010; Presidential Decree No. 27828, Feb. 3, 2017>
(9) Matters necessary for the disposition of contingency reserve funds recognized as deductible expenses under paragraphs (7) and (8) and Article 32 (2) of the Act and the calculation of earned insurance premiums shall be prescribed by Ordinance of the Ministry of Strategy and Finance. <Amended by Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 21302, Feb. 4, 2009; Presidential Decree No. 22577, Dec. 30, 2010>
(10) A domestic corporation that wishes to qualify for Article 30 (1) and (2) of the Act shall submit a detailed statement on liability reserve funds in the form stipulated by Ordinance of the Ministry of Strategy and Finance to the head of the tax office having jurisdiction over the place of tax payment, along with the report referred to in Article 60 of the Act. <Amended by Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 22577, Dec. 30, 2010>
 Article 58 Deleted. <by Presidential Decree No. 21302, Feb. 4, 2009>
 Article 59 Deleted. <by Presidential Decree No. 17033, Dec. 29, 2000>
 Article 60 (Inclusion of Retirement Benefit Appropriation Funds in Deductible Expenses)
(1) "Amount calculated, as prescribed by Presidential Decree" referred to in Article 33 (1) of the Act means the amount equivalent to 5/100 of the total salaries (refers to the total amount of salaries referred to in Article 44 (4) 2) paid to executives or employees eligible to receive severance benefits (excluding those for whom the defined contribution retirement pension, etc. have been established; hereafter the same shall apply in this Article) in the relevant business year. <Amended by Presidential Decree No. 19328, Feb. 9, 2006; Presidential Decree No. 21302, Feb. 4, 2009; Presidential Decree No. 22951, Jun. 3, 2011>
(2) The amount of accumulated retirement benefit appropriation funds included in deductible expenses under paragraph (1) shall be limited to the amount calculated by multiplying the estimated severance benefits payable if all executives or employees currently in service at the end of the pertinent business year retire at once or the aggregate of the amounts under Article 44-2 (4) 1-2, whichever is larger (excluding the amount not included in deductible expenses under Article 44), by any of the following rates: <Amended by Presidential Decree No. 19328, Feb. 9, 2006; Presidential Decree No. 22577, Dec. 30, 2010; Presidential Decree No. 23589, Feb. 2, 2012; Presidential Decree No. 23724, Apr. 13, 2012; Presidential Decree No. 25194, Feb. 21, 2014>
1. The business year that commences during the period from January 1, 2010 to December 31, 2010: 30/100;
2. The business year that commences during the period from January 1, 2011 to December 31, 2011: 25/100;
3. The business year that commences during the period from January 1, 2012 to December 31, 2012: 20/100;
4. The business year that commences during the period from January 1, 2013 to December 31, 2013: 15/100;
5. The business year that commences during the period from January 1, 2014 to December 31, 2014: 10/100;
6. The business year that commences during the period from January 1, 2015 to December 31, 2015: 5/100;
7. Business years that commences after January 1, 2016: 0/100.
(3) Where the amount less the retirement benefits paid to executives or employees during the business year following the business year during which retirement benefit appropriation funds are included in deductible expenses from the accumulated amount of retirement benefit appropriation funds included in deductible expenses within the limit set by each subparagraph of paragraph (2) exceeds the amount multiplied by the rate set by each subparagraph of paragraph (2) to the estimated amount referred to paragraph (2), such excess shall not be included in gross income. <Newly Inserted by Presidential Decree No. 22577, Dec. 30, 2010>
(4) The amount appropriated as retirement benefits conversion funds under the National Pension Act by a domestic corporation shall be added to the limit of the accumulated amount of retirement benefit appropriation funds included in deductible expenses, notwithstanding paragraph (2). <Amended by Presidential Decree No. 18706, Feb. 19, 2005>
(5) A domestic corporation which intends to be applicable under Article 33 (1) of the Act shall submit a detailed statement on the settlement of retirement benefit appropriation funds in the form stipulated by Ordinance of the Ministry of Strategy and Finance to the head of the tax office having jurisdiction over the place of tax payment, along with the report provided in Article 60 of the Act. <Amended by Presidential Decree No. 20720, Feb. 29, 2008>
 Article 61 (Inclusion of Allowances for Bad Debts in Deductible Expenses)
(1) “Credit sales accounts, loans, and other claims equivalent thereto” in Article 34 (1) of the Act are as follows: <Amended by Presidential Decree No. 26981, Feb. 12, 2016>
1. Credit sales accounts: The amount receivable upon selling commodities and goods, and the amount of business revenue receivable with respect to processing fees and upon provision of services;
2. Loans: The amount of loans provided to other persons under a consumer cash loan contract;
3. Other equivalent claims: Receivable claims on bills, outstanding accounts, and other claims with respect to which allowances for bad debts shall be created in accordance with Korean Financial Accounting Standards (excluding bonds equivalent to the excess of market price to which Article 88 (1) 1 shall apply).
(2) "Amount calculated, as prescribed by Presidential Decree" in Article 34 (1) of the Act means the amount equivalent to 1/100 of the sum of book values of all credit sales accounts, loans, and other equivalent claims provided for in paragraph (1) as on the last day of the relevant business year (hereafter in this Article referred to as "balance of receivable claims") or the amount computed by multiplying the balance of receivable claims by the rate of actual bad debts, whichever is greater: Provided, That, as for the financial companies, etc., specified in subparagraphs 1 through 4, 6 through 17, and 17-2, it means the amount that shall be accumulated in accordance with the accumulation standards of allowances for bad debts, as prescribed by the Financial Services Commission in consultation with the Minister of Strategy and Finance, the amount equivalent to 1/100 of the balance of receivable claims, or the amount computed by multiplying the balance of receivable claims by the rate of actual bad debts, whichever is greater: <Amended by Presidential Decree No. 16658, Dec. 31, 1999; Presidential Decree No. 17033, Dec. 29, 2000; Presidential Decree No. 17457, Dec. 31, 2001; Presidential Decree No. 17791, Dec. 5, 2002; Presidential Decree No. 17826 Dec. 30, 2002; Presidential Decree No. 18174, Dec. 30, 2003; Presidential Decree No. 18324, Mar. 22, 2004; Presidential Decree No. 18706, Feb. 19, 2005; Presidential Decree No. 19328, Feb. 9, 2006; Presidential Decree No. 19891, Feb. 28, 2007; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 21302, Feb. 4, 2009; Presidential Decree No. 22035, Feb. 18, 2010; Presidential Decree No. 22220, Jun. 28, 2010; Presidential Decree No. 22493, Nov. 15, 2010; Presidential Decree No. 22951, Jun. 3, 2011; Presidential Decree No. 23589, Feb. 2, 2012; Presidential Decree No. 24357, Feb. 15, 2013; Presidential Decree No. 25279, Mar. 24, 2014; Presidential Decree No. 26981, Feb. 12, 2016; Presidential Decree No. 27037, Mar. 11, 2016; Presidential Decree No. 27205, May 31, 2016; Presidential Decree No. 27322, Jul. 6, 2016; Presidential Decree No. 27828, Feb. 3, 2017>
1. Banks established upon approval granted under the Banking Act;
2. The Korea Development Bank established under the Korea Development Bank Act;
3. The Industrial Bank of Korea established under the Industrial Bank of Korea Act;
4. The Export-Import Bank of Korea established under the Export-Import Bank of Korea Act;
5. Deleted; <by Presidential Decree No. 25945, Dec. 30, 2014>
6. The National Agricultural Cooperative Federation (limited to the business activities provided for in Article 134 (1) 4 of the same Act) and the Nonghyup Bank established under the Agricultural Cooperatives Act;
7. The National Federation of Fisheries Cooperatives and the Suhyup Bank established under the Fisheries Cooperatives Act (limited to business activities provided for in Article 138 (1) 4 and 5 of the same Act);
8. Investment traders and investment brokers defined in the Financial Investment Services and Capital Markets Act;
9. Merchant banks established under the Financial Investment Services and Capital Markets Act;
10. The Korea Federation of Savings Banks (limited to deposits for reserve requirement) and the mutual savings banks established under the Mutual Savings Banks Act;
11. Insurance companies established under the Insurance Business Act;
12. Trust business operators defined in the Financial Investment Services and Capital Markets Act;
13. Specialized credit finance companies established under the Specialized Credit Finance Business Act;
14. The National Forestry Cooperatives Federation established under the Forestry Cooperatives Act (limited to the business provided for in Article 108 (1) 3, 4 and 6 of the same Act);
15. The Korea Housing Finance Corporation incorporated under the Korea Housing Finance Corporation Act;
16. Fund brokerage companies established under the Financial Investment Services and Capital Markets Act;
17. Financial holding companies established under the Financial Holding Companies Act;
17-2. The National Credit Union Federation of Korea under the Credit Unions Act (limited to the business activities provided for in Articles 78 (1) 5 and 6 and 78-2 (1) of the same Act);
18. The Credit Guarantee Fund established under the Credit Guarantee Fund Act;
19. The Korea Technology Finance Corporation established under the Korea Technology Finance Corporation Act;
20. The Credit Guarantee Fund for Farmers and Fishers established under the Act on the Credit Guarantee for Farmers and Fishers;
21. The Korea Housing Finance Credit Guarantee Fund established under the Korea Housing Finance Corporation Act;
22. The Korea Trade Insurance Corporation established under the Trade Insurance Act;
23. Credit guarantee foundations established under the Regional Credit Guarantee Foundation Act;
24. The Korean Federation of Community Credit Cooperatives established under the Community Credit Cooperatives Act;
25. Small and medium enterprise start-up investment companies established under the Support for Small and Medium Enterprise Establishment Act;
26. The Korea Deposit Insurance Corporation and a financial company authorized to perform liquidation under the Depositor Protection Act;
27. Special purpose companies established under the Asset-Backed Securitization Act;
28. Corporations registered as credit business operators under the Act on Registration of Credit Business, etc. and Protection of Finance Users;
29. The Korea Workers' Compensation and Welfare Service established under the Industrial Accident Compensation Insurance Act (limited to claims for indemnity accruing from the support business of workers' credit guarantee);
30. The Korea Asset Management Corporation (including the non-performing asset management fund) incorporated under the Act on the Efficient Disposal of Non-Performing Assets, etc. of Financial Institutions and the Establishment of Korea Asset Management Corporation;
31. The Agricultural Cooperative Asset Management Corporation incorporated under the Act on the Structural Improvement of Agricultural Cooperatives;
32. through 38. Deleted. <by Presidential Decree No. 21302, Feb. 4, 2009>
(3) The rate of actual bad debts referred to in paragraph (2) means the rate calculated by the following formula: <Amended by Presidential Decree No. 21302, Feb. 4, 2009>
Rate of actual bad debts=Bad debts for the relevant business year
under Article 19-2 (1) of the Act
Amount of receivable claims as on the end date
of the immediately preceding business year
(4) In calculating the ceilings on the amount of allowances for bad debts to be included in deductible expenses under Article 34 (1) of the Act, the funds for bad debts recognized in relation to the bad debts provided for in Article 19-2 (5) shall be excluded. <Newly Inserted by Presidential Decree No. 22035, Feb. 18, 2010>
(5) Deleted. <by Presidential Decree No. 21302, Feb. 4, 2009>
(6) Article 34 (6) of the Act shall apply where the receivable claims corresponding to allowances for bad debts are transferred simultaneously.
(7) A domestic corporation that wishes to qualify for Article 34 (1) of the Act shall submit a detailed statement on the settlement of allowances for bad debts and bad debts in the form stipulated by Ordinance of the Ministry of Strategy and Finance to the head of the tax office having jurisdiction over the place of tax payment, along with the report provided for in Article 60 of the Act. <Amended by Presidential Decree No. 20720, Feb. 29, 2008>
 Article 62 Deleted. <by Presidential Decree No. 21302, Feb. 4, 2009>
 Article 63 (Inclusion of Allowances to Redeem Claims for Indemnity in Deductible Expenses)
(1) "Corporation prescribed by Presidential Decree" in Article 35 (1) of the Act means any of the following: <Amended by Presidential Decree No. 17033, Dec. 29, 2000; Presidential Decree No. 17826 Dec. 30, 2002; Presidential Decree No. 18146, Nov. 29, 2003; Presidential Decree No. 18174, Dec. 30, 2003; Presidential Decree No. 18324, Mar. 22, 2004; Presidential Decree No. 18706, Feb. 19, 2005; Presidential Decree No. 18736, Mar. 8, 2005; Presidential Decree No. 20619, Feb. 22, 2008; Presidential Decree No. 21302, Feb. 4, 2009; Presidential Decree No. 22035, Feb. 18, 2010; Presidential Decree No. 22577, Dec. 30, 2010; Presidential Decree No. 22626, Jan. 17, 2011; Presidential Decree No. 23589, Feb. 2, 2012; Presidential Decree No. 26369, Jun. 30, 2015; Presidential Decree No. 26981, Feb. 12, 2016; Presidential Decree No. 27828, Feb. 3, 2017>
1. Corporations referred to in Article 61 (2) 18 through 23 and 29;
2. The Korea Housing and Urban Guarantee Corporation established under the Housing and Urban Fund Act;
3. The Industrial Infrastructure Credit Guarantee Fund established under the Act on Public-Private Partnerships in Infrastructure;
4. The Korean Federation of Credit Guarantee Foundations established under Article 35 of the Regional Credit Guarantee Foundation Act;
4-2. The Smile Microcredit Bank established under Article 3 of the Microfinance Support Act;
5. Engineering mutual aid cooperatives established under the Engineering Industry Promotion Act;
6. Software mutual aid associations established under the Software Industry Promotion Act;
7. Mutual aid associations established under the Act on Door-to-Door Sales, Etc.;
8. The Korea Housing Finance Corporation incorporated under the Korea Housing Finance Corporation Act;
9. Mutual aid cooperatives established under the Framework Act on the Construction Industry;
10. Electric Constructors' Financial Cooperatives established under the Electric Constructors' Financial Cooperative Act;
11. Capital goods mutual aid cooperatives established under the Industrial Development Act;
12. The Fire-Fighting Industry mutual aid cooperatives established under the Fire-Fighting Industry Promotion Act;
13. Information and communications financial cooperatives established under the Information and Communications Construction Business Act;
14. The Certified Architects’ Financial Cooperative established under the Certified Architects Act;
15. The mutual aid cooperative established under Article 74 of the Construction Technology Promotion Act;
16. The Korea Content Financial Cooperative established under Article 20-2 of the Content Industry Promotion Act.
(2) "Corporation prescribed by Presidential Decree" in Article 35 (2) of the Act means the corporation referred to in paragraph (1) 2. <Newly Inserted by Presidential Decree No. 22577, Dec. 30, 2010>
(3) "Amount calculated, as prescribed by Presidential Decree" in Article 35 (1) and (2) of the Act means the amount computed by multiplying the credit guarantee balance related to the credit guarantee business as on the last day of the relevant business year by 1/100 or by the incidence of claims for indemnity (referring to the rate of claims for indemnity accrued in the relevant business year among the credit guarantee balance related to the credit guarantee business as on the last day of the immediately preceding business year), whichever is smaller. <Amended by Presidential Decree No. 20619, Feb. 22, 2008; Presidential Decree No. 22577, Dec. 30, 2010; Presidential Decree No. 23589, Feb. 2, 2012>
(4) "Bad debts prescribed by Presidential Decree" in Article 35 (3) of the Act means bad debts incurred from any of the following claims for indemnity: <Amended by Presidential Decree No. 17033, Dec. 29, 2000; Presidential Decree No. 17826, Dec. 30, 2002; Presidential Decree No. 18706, Feb. 19, 2005; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 21302, Feb. 4, 2009; Presidential Decree No. 22577, Dec. 30, 2010; Presidential Decree No. 23589, Feb. 2, 2012; Presidential Decree No. 26369, Jun. 30, 2015>
1. Claims for indemnity falling under any subparagraph of Article 19-2 (1);
2. Claims for indemnity that a steering committee established under the Act concerning the incorporation of the relevant corporation (referring to the credit guarantee deliberation committee for farmers and fishers in cases of the Credit Guarantee Fund for Farmers and Fishers, the Korean Federation of Credit Guarantee Foundations established under Article 35 of the Regional Credit Guarantee Foundation Act in cases of a credit guarantee foundation, and the board of directors in cases of the Korea Housing and Urban Guarantee Corporation and the Korea Labor Welfare Corporation) recognizes as those that meet the standards, in consultation with the Minister of Strategy and Finance.
(5) A domestic corporation that wishes to qualify for Article 35 (1) of the Act shall submit a detailed statement on the settlement of allowances for redemption of claims for indemnity in the form stipulated by Ordinance of the Ministry of Strategy and Finance to the head of the tax office having jurisdiction over the place of tax payment, along with accompanied by the report provided for in Article 60 of the Act. <Amended by Presidential Decree No. 20720, Feb. 29, 2008>
 Article 64 (Inclusion of National Subsidies, etc., in Deductible Expenses)
(1) "Business assets prescribed by Presidential Decree" referred to in Article 36 (1) of the Act means fixed business assets and petroleum. <Amended by presidential Decree No. 22951, Jun. 3, 2011>
(2) The amount that may be included in deductible expenses under Article 36 (1) of the Act shall be limited to the amount of subsidies granted under the Subsidy Management Act, the Local Finance Act, or any Act specified in the subparagraphs of paragraph (6) (hereafter referred to as "national subsidies, etc." in this Article) and used to acquire or improve relevant business assets, among the value of each business asset. In such cases, if national subsidies, etc., are paid after acquiring or improving business assets, the amount equivalent to depreciation costs already included in deductible expenses for any business year before the business year in which such subsidies are paid shall be excluded from the amount that may be included otherwise in deductible expenses. <Amended by Presidential Decree No. 16658, Dec. 31, 1999; Presidential Decree No. 17457, Dec. 31, 2001; Presidential Decree No. 18706, Feb. 19, 2005; Presidential Decree No. 23589, Feb. 2, 2012; Presidential Decree No. 25194, Feb. 21, 2014>
(3) The amount included in deductible expenses under paragraph (2) shall be appropriated as lump sum depreciation reserve funds or as compressed account reserve funds in accordance with the following classifications for each type of the relevant business assets:
1. Depreciable assets: Lump sum depreciation reserve funds;
2. Assets other than those referred to in subparagraph 1: Compressed account reserve funds.
(4) Lump sum depreciation reserve funds and compressed accounts reserve funds appropriated as deductible expenses under paragraph (3) shall be included in gross income by the following methods:
1. The lump sum depreciation reserve funds shall offset the depreciation costs of the relevant business assets (limited to an amount equivalent to the relevant lump sum depreciation reserve funds among the acquisition value): Provided, That where the relevant assets are disposed of, the balance after offset shall be included in gross income for the business year in which such assets are disposed of;
2. The full amount of the compressed accounts reserve funds shall be included in gross income for the business year in which the relevant business assets are disposed of.
(5) In applying paragraph (4), the amount included in gross income when the relevant business assets are partially disposed of shall be computed by multiplying the value of the relevant business assets by the ratio of the proportion occupied by the lump sum depreciation reserve funds or the compressed accounts reserve funds.
(6) "Acts prescribed by Presidential Decree" referred to in Article 36 (1) of the Act means any of the following Acts: <Newly Inserted by Presidential Decree No. 17457, Dec. 31, 2001; Presidential Decree No. 17826, Dec. 30, 2002; Presidential Decree No. 18706, Feb. 19, 2005; Presidential Decree No. 18736, Mar. 8, 2005; Presidential Decree No. 19328, Feb. 9, 2006; Presidential Decree No. 22951, Jun. 3, 2011>
(7) "Grounds prescribed by Presidential Decree" referred to in the latter part of Article 36 (2) of the Act means any of the following: <Newly Inserted by Presidential Decree No. 20619, Feb. 22, 2008>
1. Where permission, authorization, etc., of construction is delayed;
2. Where the period for construction is extended because the construction site is not determined, etc.;
3. Where litigation on compensation for land, etc., is pending;
4. Where any grounds corresponding to those provided for in subparagraphs 1 through 3 have arisen.
(8) A domestic corporation which seeks the benefit of Article 36 (1) and (2) of the Act shall submit a detailed statement on settlement of the inclusion of an amount equivalent to National subsidies, etc., in deductible expenses (a plan to use National subsidies, etc.) in the form stipulated by Ordinance of the Ministry of Strategy and Finance, accompanied by the report provided for in Article 60 of the Act, to the head of the tax office having jurisdiction over the place of tax payment. <Amended by Presidential Decree No. 16658, Dec. 31, 1999; Presidential Decree No. 20720, Feb. 29, 2008>
 Article 65 (Inclusion of Construction Charges in Deductible Expenses)
(1) "Projects prescribed by Presidential Decree" referred to in Article 37 (1) 5 of the Act means any of the following projects: <Amended by Presidential Decree No. 17457, Dec. 31, 2001; Presidential Decree No. 18706, Feb. 19, 2005; Presidential Decree No. 21698, Aug, 21, 2009; Presidential Decree No. 22951, Jun. 3, 2011>
1. A project to build the information superhighway network under the Framework Act on National Informatization;
2. A project to install waterworks under the Water Supply and Waterworks Installation Act.
(2) The amount that may be included in deductible expenses under Article 37 (1) of the Act shall be limited to the amount equivalent to the value of each fixed asset (referring to the amount equivalent to construction charges, if a fixed asset has been acquired with construction charges). In such cases, if construction charges are paid after acquiring or improving fixed assets, the amount equivalent to depreciation costs already included in deductible expenses for any business year before the business year in which such construction charges are paid shall be excluded from the amount that may be included in deductible expenses. <Amended by Presidential Decree No. 25194, Feb. 21, 2014>
(3) Article 64 (3) through (5) and (7) shall apply mutatis mutandis to the inclusion of an amount equivalent to the value of fixed assets under paragraph (2) in deductible expenses and gross income. <Amended by Presidential Decree No. 20619, Feb. 22, 2008>
(4) Deleted. <by Presidential Decree No. 20619, Feb. 22, 2008>
(5) A domestic corporation which intends to be applicable under Article 37 (1) and (2) of the Act shall submit a detailed statement on the inclusion of an amount equivalent to construction charges in deductible expenses (a plan to use construction charges) in the form stipulated by Ordinance of the Ministry of Strategy and Finance, along with the report provided in Article 60 of the Act, to the head of the tax office having jurisdiction over the place of tax payment. <Amended by Presidential Decree No. 20720, Feb. 29, 2008>
 Article 66 (Inclusion of Insurance Marginal Profits in Deductible Expenses)
(1) The same type of fixed assets referred to in Article 38 (1) of the Act means fixed assets acquired to replace the destroyed fixed assets which are to be used for the same purpose as the destroyed assets.
(2) The amount included in deductible expenses under Article 38 (1) of the Act shall be the amount equivalent to the insurance marginal profits used to acquire or improve the relevant fixed assets by respective fixed assets. In such cases, where the value of the relevant fixed assets falls shorts of the insurance money paid, the amount of the insurance money, other than insurance marginal profits, is deemed first used.
(3) Article 64 (3) 1, (4) 1 and (5) shall apply mutatis mutandis to the inclusion of an amount equivalent to insurance marginal profits under paragraph (2) in deductible expenses and gross income.
(4) A domestic corporation which intends to be applicable under Article 38 (1) and (2) of the Act shall submit the detailed statement on the inclusion of an amount equivalent to insurance marginal profits in deductible expenses (plan to use insurance marginal profits) in the form stipulated by Ordinance of the Ministry of Strategy and Finance, along with the report provided in Article 60 of the Act, to the head of the tax office having jurisdiction over the place of tax payment. <Amended by Presidential Decree No. 20720, Feb. 29, 2008>
 Article 67 Deleted. <by Presidential Decree No. 17457, Dec. 31, 2001>
Subsection 5 Periods, etc. during which Gross Income and Deductible Expenses Accrue
 Article 68 (Business Year in which Gains, Losses, etc., from Sale of Assets Accrue)
(1) In applying Article 40 (1) and (2) of the Act, the business year in which gross income or deductible expenses accrue from the transfer, etc., of assets shall be the business year in which any of the following dates falls: <Amended by Presidential Decree No. 19891, Feb. 28, 2007; Presidential Decree No. 23589, Feb. 2, 2012; Presidential Decree No. 27828, Feb. 3, 2017>
1. Sale of commodities (excluding real estate), manufactured goods, or other products (hereafter in this Article referred to as "commodities"): The date on which such commodities, etc., are delivered;
2. Trial sale of commodities, etc.: The date on which the other party expresses its intention to purchase the commodities, etc.: Provided, That where the sale is finalized by a special contract which states that if the commodities, etc., are not returned or the intention to reject them is not expressed within a certain period, it shall be the expiration date of such period;
3. Transfer of assets, other than commodities, etc.: The date the price is settled [for the portion of exchange rate fluctuations in the amount of acquisition capital that is a foreign currency price (hereafter referred to as "foreign currency price" in this subparagraph), which is not converted into won currency, received in exchange for transferring foreign currency-denominated assets, such as foreign currency bonds, acquired and held by the Bank of Korea under the Bank of Korea Act, the date the foreign currency price is sold and converted into Korean won in such a manner as determined by the Bank of Korea]: Provided, That where the registration of the transfer of rights of possession, the delivery of the relevant assets, or the use of the relevant assets by the other party takes place before the date on which the price is settled, it shall be the registration date of the transfer (including the date of registration), the date of delivery, or the date on which the other party started to use the relevant assets, whichever is sooner;
4. Consignment sales and purchases of assets: The date on which the consignee buys or sells the consigned assets;
5. Sale and purchase of securities in the securities exchange, as defined in Article 8-2 (4) 1 of the Financial Investment Services and Capital Markets Act, by an ordinary transaction method in accordance with the Securities Market Business Regulation of the Exchange referred to in Article 393 (1) of the same Act: The date on which a sale and purchase agreement is entered into.
(2) In the settlement of accounts for the business year which includes the date of the delivery of assets sold or transferred on a long-term installment plan (for assets falling under paragraph (1) 3, the date specified in the proviso to the same subparagraph; hereafter in this Article the same shall apply), where the amount collected or to be collected in the relevant business year and the corresponding expenses are recognized as earnings and expenses respectively, the amount collected or to be collected pursuant to the long term installment plan in each business year and the corresponding expenses shall be included in the gross income and deductible expenses for each business year, notwithstanding paragraph (1) 1 and 3: Provided, That where a corporation that is a small and medium enterprise has sold or transferred the assets on a long term installment plan, the amount collected or to be collected pursuant to the long term installment plan in each business year and the corresponding expenses shall be included in the gross income and deductible expenses. <Amended by Presidential Decree No. 22577, Dec. 30, 2010>
(3) In applying paragraph (2), the amount collected or to be collected prior to the date of delivery shall be deemed collected on the date of delivery, and where the relevant corporation closes its business during the period of long term installment, the amount not included in gross income as on date of closure and the corresponding expenses shall be included in the gross income and deductible expenses, respectively, for the business year in which the date of closure falls. <Newly Inserted by Presidential Decree No. 22577, Dec. 30, 2010>
(4) "Long term installment plan" referred to in paragraph (2) means the sale or transfer of assets (for overseas transactions, including leases of assets under conditional contracts for the transfer of ownership), the sales proceeds or income of which is paid monthly, yearly, or by another periodic method by which payments are made in at least two installments, and the last payment is made one year or later from the day after the date of the delivery of the relevant assets.
(5) In applying paragraph (1), where a corporation sells at a discount, the amount of sales discount shall be subtracted from the amount of sales for the business year which includes the date of payment under the contract with the other party (where the date of payment is not prescribed, the date the payment is made).
(6) Where a corporation has evaluated the debentures generated upon the transfer or sale of assets under a long term installment plan referred to in paragraph (4) at the present value as determined by the corporate accounting standards and appropriates the realization balance, the amount equivalent to the realization balance entered or to be entered shall be included in the gross income for each business year during the collection period of the relevant debentures in accordance with the corporate accounting standards. <Amended by Presidential Decree No. 22577, Dec. 30, 2010>
(7) Matters necessary for the scope of the dates of delivery referred to in paragraph (1) 1 shall be prescribed by Ordinance of the Ministry of Strategy and Finance. <Amended by Presidential Decree No. 20720, Feb. 29, 2008>
 Article 69 (Business Year in which Gains and Losses from Provision of Services, etc. Accrue)
(1) In applying Article 40 (1) and (2) of the Act, in the case of gains and losses generated from construction, manufacturing or the provision of other services (including contracts and subscription sales; hereafter referred to as "construction, etc." in this Article), the gains and expenses, which are calculated based on the construction completion rate, as prescribed by Ordinance of the Ministry of Strategy and Finance (hereafter referred to as "progress rate of work" in this Article) shall be included in the gross income and deductible expenses for each business year from the business year which includes the commencement date of construction, etc. of the object to the business year in which the date of delivery (referring to the date on which services are completely provided, if services are involved; hereafter the same shall apply in this Article) of the object falls: Provided, That in any of the following cases, gains and losses may be included in the gross income and deductible expenses for each business year from the business year which includes the date of delivery of the object: <Amended by Presidential Decree No. 22577, Dec. 30, 2010; Presidential Decree No. 23589, Feb. 2, 2012; Presidential Decree No. 24357, Feb. 15, 2013>
1. In the case of construction, etc. with less than one year of the period of the construction contract conducted by a corporation which is a small and medium enterprise;
2. Where they are appropriated, according to the corporate accounting standards, as the gross income and deductible expenses for the business year in which the date of delivery of the object falls.
(2) In any of the following cases when applying paragraph (1), gains and losses shall be included in the gross income and deductible expenses for the business year in which the date of delivery of the object falls: <Amended by Presidential Decree No. 22577, Dec. 30, 2010; Presidential Decree No. 24357, Feb. 15, 2013>
1. Where it is deemed impracticable to calculate the progress rate of work in circumstances prescribed by Ordinance of the Ministry of Strategy and Finance;
2. In the case of subscription sales conducted by a corporation falling under any subparagraph of Article 51-2 (1) which applies the international accounting standards.
(3) In applying paragraph (1), if there is any difference between the gross income or deductible expenses based on the progress rate of work and the amount determined due to the termination of a construction contract, such difference shall be included in the gross income or deductible expenses for the business year which includes the date of termination of the construction contract. <Newly Inserted by Presidential Decree No. 23589, Feb. 2, 2012>
 Article 70 (Business Year in which Interest Income, etc. Accrues)
(1) In applying Article 40 (1) and (2) of the Act, the business year in which the interest, etc. reverts to gross income or deductible expenses shall be as listed in the following: <Amended by Presidential Decree No. 17457, Dec. 31, 2001; Presidential Decree No. 18706, Feb. 19, 2005; Presidential Decree No. 21302, Feb. 4, 2009; Presidential Decree No. 21972, Dec. 31, 2009>
1. Interest and discounts paid to a corporation: Business year in which the date of receipt of income provided in Article 45 of the Enforcement Decree of the Income Tax Act falls (for any corporation that runs the financial and insurance business listed in the Korean Standard Industrial Classification, the date of actually receiving the income, excluding any prepaid interest and discounts): Provided, That in the settlement of accounts, where the interest and discounts on a period which has already passed (excluding interest and discounts withheld as prescribed in Article 73 of the Act) are appropriated as profits for the relevant business year, it shall be included in gross income for the relevant business year;
2. Interest and discounts paid by a corporation: Business year in which the date of receipt of income provided in Article 45 of the Enforcement Decree of the Income Tax Act falls: Provided, That in the settlement of accounts, where the interest and discounts on a period which has already passed are appropriated as losses for the relevant business year, it shall be included in deductible expenses for the relevant business year.
(2) In applying Article 40 (1) and (2) of the Act, dividends paid to a corporation shall be included in gross income for the business year in which the date of receipt of income provided in Article 46 of the Enforcement Decree of the Income Tax Act falls: Provided, That as for dividends paid by a special purpose company as defined in the Asset-Backed Securitization Act, which has been established jointly by financial companies, etc. referred to in any subparagraph of Article 61 (2) in order to help debt delinquents recover credit, etc. and to jointly collect claims, such dividends shall be included in gross income for the business year in which the date such dividends were actually paid falls. <Amended by Presidential Decree No. 22035, Feb. 18, 2010>
(3) In applying Article 40 (1) and (2) of the Act, insurance premiums, installments, guarantee fees, or fees (hereafter referred to as "insurance premiums, etc." in this paragraph), excluding prepaid insurance premiums, etc. (including the prepaid accumulated insurance premiums appropriated as liabilities where a corporation falling under Article 63 (2) settles accounts), received by a corporation that runs the financial and insurance business listed in the Korean Standard Industrial Classification shall revert to the business year in which the date of actually receiving the insurance premiums falls: Provided, That in the settlement of accounts, where insurance premiums on a period which has already passed are appropriated as gains for the relevant business year (including where a corporation falling under Article 63 (2) appropriates the returned amount of prepaid accumulated insurance premiums as gains upon settling accounts), they shall be included in gross income for the relevant business year and where an investment dealer or investment broker prescribed in the Financial Investment Services and Capital Markets Act has traded securities defined in Article 4 of the same Act (hereafter referred to as "securities" in this Article) by a standardized dealing method, the business year to which the commission thereof reverts shall be the business year in which the date on which the transaction contract thereon is concluded falls. <Amended by Presidential Decree No. 17457, Dec. 31, 2001; Presidential Decree No. 18706, Feb. 19, 2005; Presidential Decree No. 21302, Feb. 4, 2009; Presidential Decree No. 22577, Dec. 30, 2010>
(4) Where interest, discounts and dividend income for a period that already passed among the gains relating to investment in securities, etc. have been appropriated as gains of the relevant business year when an investment company, etc. settles accounts, such gains shall be included in gross income for the relevant business year in which such appropriation is made, notwithstanding paragraphs (1) and (2). <Newly Inserted by Presidential Decree No. 17457, Dec. 31, 2001; Presidential Decree No. 18174, Dec. 30, 2003; Presidential Decree No. 18706, Feb. 19, 2005; Presidential Decree No. 21302, Feb. 4, 2009; Presidential Decree No. 21972, Dec. 31, 2009>
(5) Notwithstanding paragraphs (1) and (2), the business year to which the amount of income provided in the subparagraphs of Article 73 (1) of the Act that belongs to the trust property operated by the trust business operator registered under the Financial Investment Services and Capital Markets Act (excluding the investment trust property defined in the same Act; hereafter the same shall apply in Articles 111 and 113) reverts shall be the business year in which the date of withholding under Article 111 (6) falls. <Newly Inserted by Presidential Decree No. 21302, Feb. 4, 2009; Presidential Decree No. 21972, Dec. 31, 2009>
 Article 71 (Business Year in which other Gains and Losses, such as Rental Fees Accrue)
(1) In applying Article 40 (1) and (2) of the Act, the business year in which gains and losses generated from the rental of assets accrue shall be the business year which includes any of the following dates: Provided, That in settling accounts, where any amount equivalent to the rental fee for any period that has already passed and expenses corresponding thereto is appropriated as gains, and the payment period of such rental fee exceeds one year, an amount equivalent to the rental fee on the period that has already passed and other expenses shall be included in gross income or deductible expenses of the relevant business year: <Amended by Presidential Decree No. 17457, Dec. 31, 2001>
1. Where the date of payment of rental fees is prescribed by a contract, the payment date;
2. Where the date of payment of rental fees is not prescribed by a contract, the date on which payment is received.
(2) In applying Article 40 (1) and (2) of the Act, where a corporation operating a business, to which Article 162 of the Income Tax Act and Article 36 (4) of the Value-Added Tax Act applies, installs and uses a cash register, the business year to which the prices receivable for goods and services revert may be the business year in which such prices are actually received. <Amended by Presidential Decree No. 18706, Feb. 19, 2005; Presidential Decree No. 24638, Jun. 28, 2013>
(3) In applying Article 40 (1) and (2) of the Act, where any corporation issues bonds, an amount (hereafter referred to as "bond discount" in this paragraph) computed by deducting the total amount of the value of issued bonds (excluding the commission for issuing such bonds and expenses spent directly and inevitably to issue such bonds) from the total amount of bonds to be redeemed shall be included in deductible expenses according to the method of depreciating bond discounts under the corporate accounting standards. <Newly Inserted by Presidential Decree No. 17457, Dec. 31, 2001>
(4) In applying Article 40 (1) and (2) of the Act, where any corporation transfers the assets it owns by the method provided in Article 13 of the Asset-Backed Securitization Act and endorses and transfers the accounts receivable or note receivable, the business year in which the relevant gains or losses are included shall be determined according to the recognition method of gains and losses under the corporate accounting standards. <Newly Inserted by Presidential Decree No. 22577, Dec. 30, 2010; Presidential Decree No. 23589, Feb. 2, 2012>
(5) In applying Article 40 (1) and (2) of the Act, where any corporation appropriates any expenses as development costs provided in Article 24 (1) 2 (f) but cancels the development before the time the relevant product becomes available for sale or use arrives, such expenses shall be included in the deductible expenses for the business year in which the date all of the following requirements are satisfied falls: <Newly Inserted by Presidential Decree No. 23589, Feb. 2, 2012>
1. That it is impossible to discern the outcomes of improving the relevant material, device, product, process, system or service for commercial production or use from the relevant development;
2. That all relevant development costs shall be appropriated as deductible expenses.
(6) In applying Article 40 (1) and (2) of the Act, any gains or losses arising from trading of derivatives in which the object of the contract are not delivered but the difference due to a change in the value of the object is paid with money shall be included in gross income or deductible expenses for the business year in which the payment date determined in the relevant trading falls. <Newly Inserted by Presidential Decree No. 23589, Feb. 2, 2012>
(7) In applying Article 40 (1) and (2) of the Act, the business year to which gross income or deductible expenses reverts shall be prescribed by Ordinance of the Ministry of Strategy and Finance, except as otherwise expressly prescribed for in the Act (excluding Article 43), the Restriction of Special Taxation Act, and this Decree. <Amended by Presidential Decree No. 18706, Feb. 19, 2005; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 23589, Feb. 2, 2012>
 Article 72 (Acquisition Value, etc. of Assets)
(1) "Financial assets prescribed by Presidential Decree" referred to in Article 41 (1) 1 of the Act means financial assets and derivatives classified as short-term trading items (hereafter referred to as "short-term financial assets, etc." in this Article) by the corporate accounting standards. <Newly Inserted by Presidential Decree No. 22577, Dec. 30, 2010>
(2) The acquisition value of assets referred to in Article 41 (1) and (2) of the Act means the following amounts: <Amended by Presidential Decree No. 17457, Dec. 31, 2001; Presidential Decree No. 19328, Feb. 9, 2006; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 21302, Feb. 4, 2009; Presidential Decree No. 22035, Feb. 18, 2010; Presidential Decree No. 22184, Jun. 8, 2010; Presidential Decree No. 22577, Dec. 30, 2010; Presidential Decree No. 22812, Mar. 31, 2011; Presidential Decree No. 23589, Feb. 2, 2012; Presidential Decree No. 25194, Feb. 21, 2014; Presidential Decree No. 26068, Feb. 3, 2015; Presidential Decree No. 28640, Feb. 13, 2018>
1. Assets purchased from a third person: The sum of the purchase price, acquisition tax (including special tax for rural areas and local education tax), registration and license tax, and other incidental expenses [where a corporation acquires land, the building built on the land, other structures, etc., (hereafter referred to "building, etc." in this subparagraph) and it is unclear to classify the value of the land and the value of the building, etc., such value shall be in proportion to the market price referred to in Article 52 (2) of the Act];
2. Assets acquired by directly manufacturing, producing, or constructing the assets, or by other similar methods: The sum of raw materials costs, labor costs, shipping expenses, loading and unloading expenses, insurance premiums, fees, public charges (including acquisition tax and registration tax), installation costs, and other incidental expenses;
3. The following amounts in cases of assets acquired through a merger, division, or investment in kind:
(a) In cases of a qualified merger or qualified division: The book value provided for in Article 80-4 (1) or 82-4 (1);
(b) In other cases: The market value of the relevant assets;
3-2. The following amounts in cases of stocks, etc., acquired by a divided corporation due to a spin-off: The market value of net assets divided by the spin-off;
(a) and (b) Deleted; <by Presidential Decree No.25194, Fed. 21, 2014>
4. The following amounts in cases of stocks, etc., acquired by an investing corporation through investment in kind:
(a) In cases of an investment in kind with which an investing corporation (including persons who jointly invest with an investing corporation pursuant to Article 47-2 (1) 3 of the Act; hereinafter referred to as “investing corporation, etc.”) establishes an invested corporation and acquires only stocks, etc., in return for the new establishment: The market value of the net assets invested in kind;
(b) In other cases: The market value of the relevant stocks, etc.
4-2. Stocks, etc., acquired by debt-equity swap: The acquisition value of such stocks, etc., at the time of acquisition: Provided, That for the stocks, etc., acquired by debt-equity swap meeting the requirements prescribed in any subparagraph of Article 15 (4), it shall be the book value of the claims that have converted into investment (excluding any claim falling under any subparagraph of Article 19-2 (2) of the Act);
5. Stocks, etc., acquired through a merger or division (excluding a spin-off): The amount calculated by subtracting the sum total of money or other property value among the costs of a merger provided for in Article 16 (1) 5 of the Act or the costs of a division provided for in Article 16 (1) 6 from the amount computed by adding the amounts provided for in Article 16 (1) 5 or 6 of the Act, and subparagraph 9 of Article 11 to the former book value;
5-2. Short-term financial assets, etc.: The purchase value;
5-3. Assets donated to a public corporation, etc., provided for in Article 12 of the Enforcement Decree of the Inheritance Tax and Gift Tax Act: An asset falling under the designated donation (limited to assets, other than money referred to in Article 37 (1)) provided for in Article 24 (1) of the Act received from a person, other than any related party falling under any subparagraph of Article 87 (1) means the book value as at the time of donation [referring to the acquisition value computed under Article 89 of the Enforcement Decree of the Income Tax Act as at the acquisition of asset in cases of any asset not related to business revenue]: Provided, That for any contributed property excluded from the taxable value of the gift tax under the Inheritance Tax and Gift Tax Act, if the tax liability arise with respect to the contributed property excluded from the taxable value and an amount equivalent to the total amount of such inheritance tax or gift tax is imposed, the amount means the market price as at the time of contribution;
6. Emission permits gratuitously allocated by the Government under Article 12 of the Act on the Allocation and Trading of Greenhouse-Gas Emission Permits: Nil;
7. Assets acquired by other methods: The market price as at the time of acquisition.
(3) In applying paragraph (2), the following amounts shall be included in the acquisition value: <Amended by Presidential Decree No. 19328, Feb. 9, 2006; Presidential Decree No. 22577, Dec. 30, 2010; Presidential Decree No. 25194, Feb. 21, 2014>
1. The amount included in the gross income referred to in Article 15 (2) 1 of the Act;
2. The amount excluded from deductible expenses under Article 28 (1) 3 and (2) of the Act;
3. Where tangible fixed assets are acquired and national and public bonds are also purchased, the difference between the purchase value of the national and public bonds and the current value thereof is counted as the amount of the acquisition value of the relevant fixed assets by corporate accounting standards.
(4) In applying paragraph (2), the following amounts shall be excluded from the acquisition value: <Amended by Presidential Decree No. 17826, Dec. 30, 2002; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 22577, Dec. 30, 2010>
1. Where the present value of liabilities generated in acquiring assets through a long term installment plan provided for in Article 68 (4) is evaluated by corporate accounting standards and appropriated as the realization balance, such realization balance;
2. For annual income prescribed by Ordinance of the Ministry of Strategy and Finance, the acquisition value and the amount divided and appropriated as paid interest;
3. The amount in excess of the market price pursuant to Article 88 (1) 1 and 8 (b);
4. Deleted. <by Presidential Decree No. 17457, Dec. 31, 2001>
(5) Where any of the following cases occurs with respect to assets held by a corporation, the acquisition value thereof shall be as follows: <Amended by Presidential Decree No. 21302, Feb. 4, 2009; Presidential Decree No. 25194, Feb. 21, 2014>
1. The evaluated value, if evaluation is conducted under each subparagraph of Article 42 (1) and Article 42 (3) of the Act;
2. The sum of the acquisition value and such capital expenditures, if capital expenditures are made under Article 31 (2);
3. The amount computed by adding profits, if any profit referred to in subparagraph 9 of Article 11 accrues as a result of a merger or a division and merger (excluding cases of paragraph (2) 5).
(6) Articles 18-2 (1) 3, 18-3 (1) 3, 28, 73, 98, 120, and 120-2 of the Act shall not apply to the depreciation cost of the realization balance referred to in paragraph (4) 1 and the paid interest referred to in paragraph (4) 2. <Amended by Presidential Decree No. 18174, Dec. 30, 2003; Presidential Decree No. 22577, Dec. 30, 2010; Presidential Decree No. 25194, Feb. 21, 2014>
 Article 73 (Scope of Assets and Liabilities Subject to Evaluation)
"Inventory assets and other assets and liabilities prescribed by Presidential Decree" referred to in Article 42 (1) 2 of the Act means the following: <Amended by Presidential Decree No. 17457, Dec. 31, 2001; Presidential Decree No. 18174, Dec. 30, 2003; Presidential Decree No. 18706, Feb. 19, 2005; Presidential Decree No. 19328, Feb. 9, 2006; Presidential Decree No. 19891, Feb. 28, 2007; Presidential Decree No. 20619, Feb. 22, 2008; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 21302, Feb. 4, 2009; Presidential Decree No. 22035, Feb. 18, 2010; Presidential Decree No. 22577, Dec. 30, 2010; Presidential Decree No. 22812, Mar. 31, 2011; Presidential Decree No. 23589, Feb. 2, 2012>
1. Any of the following inventory assets:
(a) Manufactured goods and commodities (including real estate held by a realtor for the purpose of sale, and excluding securities);
(b) Semi-finished products, and goods in process;
(c) Raw materials;
(d) Stored products;
2. Any of the following securities, etc.:
(a) Stocks;
(b) Bonds;
(c) Collective investment property as defined in Article 9 (20) of the Financial Investment Services and Capital Markets Act;
(d) Assets belonging to the special account referred to in Article 108 (1) 3 of the Insurance Business Act;
3. Monetary assets and liabilities denominated in a foreign currency according to the corporate accounting standards (hereinafter referred to as "monetary assets and liabilities denominated in a foreign currency");
4. Currency forward, currency swap and exchange risk insurance prescribed by Ordinance of the Ministry of Strategy and Finance (hereafter referred to as "currency forward, etc." in this Article and Article 76) among the currency-related derivatives held by financial companies, etc. referred to in Article 61 (2) 1 through 7;
5. Currency forward, etc. held by corporations, other than financial companies, etc. referred to in Article 61 (2) 1 through 7, in order to avoid the exchange risk of monetary assets and liabilities denominated in a foreign currency.
 Article 74 (Evaluation of Inventory Assets)
(1) The evaluation of inventory assets referred to in subparagraph 1 of Article 73 shall be conducted in the method chosen and reported to the head of the tax office having jurisdiction over the place of tax payment by a corporation among any of the following methods (referring to the method under any item of subparagraph 1 in the case falling under subparagraph 1):
1. The cost method: The method of using the acquisition value calculated by any of the following methods as the evaluated value of the assets:
(a) The method of using the acquisition value of each inventory asset calculated on an individual basis as the evaluated value of the asset (hereinafter referred to as "individual method");
(b) The method of removing the inventory assets beginning with the first put into storage, and using the acquisition value calculated by deeming the assets acquired on the date nearest to the end date of the business year to be inventory assets as the evaluated value of the assets (hereinafter referred to as "first-in first-out method");
(c) The method of removing the inventory assets beginning with the assets most recently put into storage, and using the acquisition value calculated by deeming the assets acquired on the date furthest from the end date of the business year as inventory assets to be the evaluated value of the assets (hereinafter referred to as "last-in first-out method");
(d) The method of using the overall average acquisition value, calculated by adding the sum total of the acquisition value of assets as at the start date of the relevant business year to the sum total of the acquisition value of assets acquired during the relevant business year for each type of product and dividing by the total number of assets, as the evaluated value of the assets (hereinafter referred to as "gross average method");
(e) The method of using the average acquisition value calculated by the average unit price computed by dividing the total amount on the account books by the number of assets on the account books each time assets are acquired as the evaluated value of the assets (hereinafter referred to as "moving average method");
(f) The method of using the acquisition value calculated by deducting the estimated marginal earnings from sales from the estimated sales prices by the type of product on the end date of the relevant business year as the evaluated value of the assets (hereinafter referred to as "sales price reduction method");
2. The low-of-cost-or-market method: The method of using the amount computed in the cost method provided in subparagraph 1 or the value evaluated as the market price according to corporate accounting standards as the evaluated value, whichever is lower, for the inventory assets.
(2) In the evaluation of inventory assets under paragraph (1), a corporation may separate the relevant assets by type of assets under each item of subparagraph 1 of Article 73 and evaluate them each by a different method according to the types or places of business. In such cases, earnings and expenses shall be separated into types of business (according to small or medium categories under the Korean Standard Industrial Classification) or places of business and entered into the accounts, and a report on manufacturing costs and a comprehensive income statement (referring to a balance sheet if there is no comprehensive income statement; hereinafter the same shall apply) shall be made by type of business or place of business. <Amended by Presidential Decree No. 22577, Dec. 30, 2010>
(3) When a corporation intends to report on the evaluation method of inventory assets under paragraph (1), it shall submit a report (or a change report) on the evaluation method of inventory assets, etc. (including submitting such report through the national tax information and communications network) in the form stipulated by Ordinance of the Ministry of Strategy and Finance to the head of the tax office having jurisdiction over the place of tax payment by the following deadlines. In such cases, where the corporate reports the low-of-cost-or-market method, it shall also submit a report comparing the cost method and the market price: <Amended by Presidential Decree No. 18312, Mar. 17, 2004; Presidential Decree No. 20720, Feb. 29, 2008>
1. For a newly established corporation or non-profit domestic corporation which has commenced profit-making business: the filing deadline of reports on the corporate tax base for the business year which includes the date of the establishment of the relevant corporation or the commencement date of profit-making business;
2. For a corporation which has submitted a report under subparagraph 1 and intends to change the evaluation method: three months prior to the end date of the business year in which it intends to use the changed evaluation method.
(4) In any of the following circumstances, the head of the tax office having jurisdiction over the place of tax payment of a corporation shall evaluate inventory assets by the first-in first-out method (or by the individual method in cases of real estate owned for the purpose of sale): Provided, That in cases of subparagraph 2 or 3, where the amount evaluated by the reported appraisal method is greater than the amount appraised by the first-in first-out method (or by the individual method in cases of real estate owned for the purpose of sale), the reported appraisal method shall apply: <Amended by Presidential Decree No. 25194, Feb. 21, 2014>
1. Where the corporation fails to submit a report on the evaluation method of inventory assets by the deadline specified under paragraph (3) 1;
2. Where the corporation conducts evaluation by a method, other than the reported evaluation method;
3. Where the corporation changes the evaluation method of inventory assets without submitting a report to change the evaluation method by the deadline specified under paragraph (3) 2.
(5) Where a corporation reports on the evaluation method of inventory assets after the deadline specified in each subparagraph of paragraph (3) expires, paragraph (4) shall apply mutatis mutandis to the business year which includes the date of the report, and the evaluation method reported by the corporation shall apply from the following business year.
(6) If a corporation intends to apply an evaluation method different from the evaluation method prescribed by paragraph (4) for inventory assets, which has been applied to the corporation because it failed to file a report on the evaluation method, such corporation shall file a report on the change by no later than three months before the end of the business year for which it intends to apply the different evaluation method. <Newly Inserted by Presidential Decree No. 24357, Feb. 15, 2013>
(7) A corporation which evaluates inventory assets under paragraph (1) shall submit a detailed statement on the settlement of the evaluation of inventory assets in the form stipulated by Ordinance of the Ministry of Strategy and Finance, along with the report provided in Article 60 of the Act, to the head of the tax office having jurisdiction over the place of tax payment. <Amended by Presidential Decree No. 20720, Feb. 29, 2008>
 Article 75 (Evaluation of Securities, etc.)
(1) Securities prescribed in subparagraph 2 (a) and (b) of Article 73 shall be evaluated according to the method reported by the relevant corporation to the head of the tax office having jurisdiction over the place of tax payment among the following methods: <Amended by Presidential Decree No 17457, Dec. 31, 2001; Presidential Decree No. 18174, Dec. 30, 2003; Presidential Decree No. 18706, Feb. 19, 2005; Presidential Decree No. 21302, Feb. 4, 2009; Presidential Decree No. 22184, Jun. 8, 2010; Presidential Decree No. 22812, Mar. 31, 2011>
1. The individual method (limited to bonds);
2. The gross average method;
3. The moving average method;
4. Deleted. <by Presidential Decree No. 21302, Feb. 4, 2009>
(2) Article 74 (3) through (6) shall apply mutatis mutandis to the evaluation of securities. In such cases, "first in first out method" referred to in Article 74 (4) shall be construed as "gross average method", and "detailed statement on the settlement of the evaluation of inventory assets" referred to in paragraph (6) of the same Article shall be construed as "detailed statement on the settlement of the evaluation of securities". <Amended by Presidential Decree No. 22812, Mar. 31, 2011>
(3) The property referred to in subparagraph 2 (c) of Article 73 held by an investment company, etc. shall be evaluated by the fair market value method: Provided, That the non-marketable assets referred to in Article 242 (2) of the Enforcement Decree of the Financial Investment Services and Capital Markets Act held by any closed-end fund provided in Article 230 of the same Act shall be evaluated by a method reported by the relevant close-end fund to the head of the tax office having jurisdiction over the place of tax payment, along with the report provided in Article 60 of the Act among the methods falling under any subparagraph of paragraph (1) or the fair market value method, and such method shall continuously apply thereafter. <Newly Inserted by Presidential Decree No. 21302, Feb. 4, 2009; Presidential Decree No. 22812, Mar. 31, 2011>
(4) Assets referred to in subparagraph 2 (d) of Article 73 held by an insurance company incorporated under the Insurance Business Act shall be evaluated by a method reported by the relevant insurance company, along with the report provided in Article 60 of the Act, to the head of the tax office having jurisdiction over the place of tax payment among the methods falling under any subparagraph of paragraph (1) or the fair market value method, and such method shall continuously apply thereafter. <Newly Inserted by Presidential Decree No. 21302, Feb. 4, 2009>
 Article 76 (Evaluation of Foreign Assets and Liabilities)
(1) Monetary assets and liabilities denominated in a foreign currency, currency forwards, etc. held by financial companies, etc. referred to in Article 61 (2) 1 through 7 shall be evaluated in the following methods: <Amended by Presidential Decree No. 22577, Dec. 30, 2010; Presidential Decree No. 23589, Feb. 2, 2012>
1. Monetary assets and liabilities denominated in a foreign currency: Method of evaluation by the basic rate of exchange or arbitrated rate of exchange (hereinafter referred to as "basic rate of exchange, etc.") prescribed by Ordinance of the Ministry of Strategy and Finance as at the date the relevant business year ends;
2. Currency forwards, etc.: Method of evaluation by the method reported to the head of the competent tax office among any of the following methods: Provided, That the method provided in item (a) shall apply in the business year before the method provided in item (b) is first reported and applied:
(a) The method of evaluating the assets and liabilities denominated in a foreign currency stated in the contract in accordance with the basic rate of exchange, etc. as at the date of contract;
(b) The method of evaluating the assets and liabilities denominated in a foreign currency stated in the contract in accordance with the basic rate of exchange, etc. as at the end of the relevant business year.
(2) Monetary assets and liabilities denominated in a foreign currency held by a corporation, other than financial companies, etc. referred to in Article 61 (2) 1 through 7 and currency forwards, etc. held to avoid the exchange risk arising from monetary assets and liabilities denominated in a foreign currency under subparagraph 5 of Article 73 (hereinafter referred to as "currency forwards, etc. to avoid exchange risk") shall be evaluated by the method reported to the head of the competent tax office among any of the following methods: Provided, That the method provided in subparagraph 1 shall apply in the business year before the method provided in subparagraph 2 is first reported and applied: <Amended by Presidential Decree No. 22577, Dec. 30, 2010; Presidential Decree No. 23589, Feb. 2, 2012>
1. The method of evaluating the assets and liabilities denominated in a foreign currency stated in the contract of the monetary assets and liabilities denominated in a foreign currency, currency forwards, etc. to avoid exchange risk in accordance with the basic rate of exchange, etc. as at the acquisition date or the effective date (referring to the date of contract in the case of the currency forwards, etc.);
2. The method of evaluating the assets and liabilities denominated in a foreign currency stated in the contract of the monetary assets and liabilities denominated in a foreign currency, currency forwards, etc. to avoid exchange risk in accordance with the basic rate of exchange, etc. as at the end of the relevant business year.
(3) The evaluation method reported under paragraphs (1) 2 and (2) by a corporation shall apply continuously in the subsequent business years: Provided, That a different evaluation method may be reported to apply the changed method after five business years, including the business year in which the evaluation method reported under paragraph (2) is applied. <Newly Inserted by Presidential Decree No. 20619, Feb. 22, 2008; Presidential Decree No. 22577, Dec. 30, 2010; Presidential Decree No. 25194, Feb. 21, 2014>
(4) Marginal profits or losses in the evaluated won currency amount and the Won currency account amount arising from the evaluation of the monetary assets and liabilities denominated in any foreign currency, currency forwards, etc., and currency forwards, etc. to avoid exchange risk referred to in paragraphs (1) and (2) shall be included in the gross income or deductible expenses for the relevant business year. In such cases, the Won currency account amount at the time of contract of currency forwards, etc., currency forwards, etc. to avoid exchange risk means the amount computed by multiplying the amount of assets and liabilities denominated in a foreign currency stated in the contract by the basic rate of exchange, etc. as at the date of contract. <Amended by Presidential Decree No. 17457, Dec. 31, 2001; Presidential Decree No. 19328, Feb. 9, 2006; Presidential Decree No. 19891, Feb. 28, 2007; Presidential Decree No. 20619, Feb. 22, 2008; Presidential Decree No. 22035, Feb. 18, 2010; Presidential Decree No. 22577, Dec. 30, 2010; Presidential Decree No. 23589, Feb. 2, 2012>
(5) Marginal profits or losses in the Won currency amount and the Won currency account amount of foreign currency claims and liabilities to be repaid to or repaid by a domestic corporation shall be included in the gross income or deductible expenses during the relevant business year: Provided, That the portion of exchange fluctuations in the amount to be repaid or repay in any foreign currency (hereafter referred to as "foreign currency amount" in this paragraph) among the foreign currency claims and liabilities of the Bank of Korea under the Bank of Korea Act shall be included in the gross income or deductible expenses for the business year in which the foreign currency amount is sold and converted into Korean won in such a manner as determined by the Bank of Korea. <Amended by Presidential Decree No. 19891, Feb. 28, 2007>
(6) A corporation that intends to apply the evaluation method provided in paragraph (1) 2 (b) or (2) 2 or to change the evaluation method under the proviso to paragraph (3) shall submit a report on the evaluation method of monetary assets, etc. denominated in a foreign currency in the form stipulated by Ordinance of the Ministry of Strategy and Finance, along with the report provided in Article 60 of the Act for the business year to which it intends to first apply the evaluation method provided in paragraph (1) 2 (b) or (2) 2 or for the business year to which it intends to apply the evaluation method changed under the proviso to paragraph (3). <Newly Inserted by Presidential Decree No. 22577, Dec. 30, 2010; Presidential Decree No. 25194, Feb. 21, 2014>
(7) A corporation which evaluates the monetary assets and liabilities denominated in a foreign currency, currency forwards, etc, and currency forwards, etc. to avoid exchange risk under paragraphs (1) and (2) shall submit a detailed statement on settlement on marginal profits and losses on the evaluation of assets, etc. denominated in a foreign currency in the form stipulated by Ordinance of the Ministry of Strategy and Finance, along with the report provided in Article 60 of the Act, to the head of the tax office having jurisdiction over the place of tax payment. <Amended by Presidential Decree No. 17457, Dec. 31, 2001; Presidential Decree No. 19328, Feb. 9, 2006; Presidential Decree No. 19891, Feb. 28, 2007; Presidential Decree No. 20619, Feb. 22, 2008; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 22577, Dec. 30, 2010; Presidential Decree No. 23589, Feb. 2, 2012>
 Article 77 Deleted. <by Presidential Decree No. 17457, Dec. 31, 2001>
 Article 78 (Marginal Losses from Evaluation of Inventory Assets, etc.)
(1) "Grounds prescribed by Presidential Decree, such as a natural disaster and a fire" referred to in Article 42 (3) 2 of the Act means any of the following: <Amended by Presidential Decree No. 22951, Jun. 3, 2011>
1. Natural disasters, accidents, or fires;
2. Expropriation, etc. under Acts and subordinate statutes;
3. Mines abandoned due to non-fulfillment of estimated mining outputs (including where fixed assets used for mining, including land, cannot be used for their proper purposes).
(2) "Stocks, etc. prescribed by Presidential Decree" referred to in Article 42 (3) 3 of the Act means any of the following stocks, etc.: <Amended by Presidential Decree No. 18706, Feb. 19, 2005; Presidential Decree No. 19328, Feb. 9, 2006; Presidential Decree No. 20619, Feb. 22, 2008; Presidential Decree No. 21302, Feb. 4, 2009; Presidential Decree No. 22951, Jun. 3, 2011>
1. Stocks issued by listed stock corporations;
2. Stocks issued by business founders or new technology business entities from among the stocks, etc. that are held by small and medium enterprise start-up investment companies provided in the Support for Small and Medium Enterprise Establishment Act or the new technology venture capitalist provided in the Specialized Credit Finance Business Act;
3. Stocks, etc. issued by a corporation, among the corporations, other than those referred to in subparagraph 1, which is not in any relationship listed in any subparagraph of Article 87 (1).
(3) "Method prescribed by Presidential Decree" referred to in the main sentence other than the subparagraphs of Article 42 (3) of the Act means the method of reducing the book value of assets provided in each subparagraph of the same paragraph by the value evaluated under each of the following subparagraphs in the business year during which the grounds for reducing such book value arise and appropriating the reduced amount as deductible expenses for the relevant business year: <Amended by Presidential Decree No. 17457, Dec. 31, 2001; Presidential Decree No. 19328, Feb. 9, 2006; Presidential Decree No. 22951, Jun. 3, 2011>
1. For inventory assets provided in Article 42 (3) 1 of the Act, the value evaluated as the market price which could be obtained through the disposal of the relevant inventory assets as at the end date of the business year;
2. For fixed assets provided in Article 42 (3) 2 of the Act, the value evaluated as the market price as at the end date of the business year;
3. For stocks, etc. provided in Article 42 (3) 3 of the Act, the value evaluated as the market price as at the end date of the business year (where the value evaluated as the market price of the total amount of stocks held by each corporation that issues stocks, etc. is 1,000 won or less, it shall be 1,000 won);
4. For stocks, etc. provided in Article 42 (3) 4 of the Act, the value evaluated as the market price as at the end date of the business year (if the value evaluated as the market price is 1,000 won or less, it shall be 1,000 won).
(4) In determining whether having a special relationship with a corporation as prescribed in paragraph (2) 3, a corporation that holds not more than 5/100 of the total number of issued stocks or total investment amount of the corporation issuing the stocks, etc. and its purchase price is less than one billion won shall be deemed as a minority stockholder, etc., for the purpose of determining whether the corporation is a related party, notwithstanding Article 50 (2). <Newly Inserted by Presidential Decree No. 22035, Feb. 18, 2010; Presidential Decree No. 23589, Feb. 2, 2012>
 Article 78-2 (Non-Inclusion in Gross Income of Evaluation Marginal Profits of Inventory Assets of Domestic Corporation that Applies International Accounting Standards)
(1) "Last-in first-out method prescribed by Presidential Decree" referred to in Article 42-2 (1) of the Act means the last-in first-out method as prescribed in Article 74 (1) 1 (c).
(2) "Other evaluation methods of inventory assets prescribed by Presidential Decree" referred to in Article 42-2 (1) of the Act means the evaluation methods of inventory assets, excluding the last-in first-out method, among the evaluation methods of inventory assets provided in each subparagraph of Article 74 (1).
(3) Where a domestic corporation includes the marginal profits from evaluation of inventory assets in the gross income under the latter part of Article 42-2 (1) of the Act, the amount computed by the following formula shall be included in the gross income for the relevant business year. In such cases, the number of months shall be calculated according to the calendar months and the number of days that falls short of one month shall be deemed one month. Where the month in which the commencement date of the business year falls is included in the calculation, the month which includes the fifth anniversary of the commencement date of the business year shall be excluded from the calculation:
Evaluation marginal profits of inventory assets x Number of months in the relevant business year ÷ 60 months
(4) A domestic corporation that intends to be applicable under Article 42-2 (1) of the Act shall submit an application for non-inclusion in the gross income of evaluation marginal profits of inventory assets in the form stipulated by Ordinance of the Ministry of Strategy and Finance when filing a report on the tax base under Article 60 of the Act for the business year in which it first applies the international accounting standards to the head of the tax office having jurisdiction over the place of tax payment.
[This Article Newly Inserted by Presidential Decree No. 23589, Feb. 2, 2012]
 Article 79 (Scope of Corporate Accounting Standards and Practices)
Corporate accounting standards or practices referred to in Article 43 of the Act shall be any of the following accounting standards (including practices generally deemed fair and appropriate which are not contrary to the relevant accounting standards): <Amended by Presidential Decree No. 18706, Feb. 19, 2005; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 21302, Feb. 4, 2009; Presidential Decree No. 22577, Dec. 30, 2010; Presidential Decree No. 28640, Feb. 13, 2018>
1. International accounting standards;
1-2. Accounting standards enacted by Korea Accounting Institute under Article 13 (1) 2 and (4) of the Act on External Audit of Stock Companies;
2. Accounting standards by type of business enacted by the Securities and Futures Committee;
3. Accounting regulations of public enterprises and quasi-governmental agencies enacted under the Act on the Management of Public Institutions;
4. Accounting standards established pursuant to subparagraph 3 of Article 15 of the Enforcement Decree of the Commercial Act;
5. Accounting standards enacted under other Acts and subordinate statutes and approved by the Minister of Strategy and Finance.
Subsection 6 Special Cases concerning Mergers, Divisions, etc.
 Article 80 (Calculation of Capital Gains or Losses from Transfer upon Merger)
(1) The transfer value referred to in Article 44 (1) 1 of the Act shall be any of the following amounts: <Amended by Presidential Decree No. 22577, Dec. 30, 2010; Presidential Decree No. 23589, Feb. 2, 2012; Presidential Decree No. 27828, Feb. 3, 2017>
1. In cases of a qualified merger: The net book value of the assets as on the registration date of the merger by the merged corporation referred to in Article 44 (1) 2 of the Act;
2. In cases other than those falling under subparagraph 1: An aggregate of the following amounts:
(a) Sum total of the value of the stocks, etc. (hereinafter referred to as "stocks, etc., granted due to a merger") of a surviving corporation, etc., or the parent company of the surviving corporation, etc. (referring to a domestic corporation that owns the total number of issued stocks or total investment amount of the surviving corporation, etc., as on the registration date of the merger: hereinafter the same shall apply), money or other property value received by the stockholders, etc., of the merged corporation due to the merger: Provided, That where the surviving corporation, etc., acquired stocks, etc. (for a new merger or a merger of at least three corporations, including the stocks, etc., of another merged corporation, etc., acquired by the merged corporation; hereinafter referred to as "stocks, etc., combined due to a merger") of the merged corporation prior to the registration date of the merger, although the stocks, etc., granted due to a merger are not granted with respect to the stocks, etc., combined due to a merger, the stocks, etc., granted due to a merger shall be deemed granted by the equity ratio for the purposes of calculating the value of the stocks, etc., granted due to a merger;
(b) Sum total of the corporate tax of the merged corporation paid by the surviving corporation, the national tax imposed on the corporate tax (including the amount of tax reduction or exemption) and the local corporate tax imposed under Article 88 (2) of the Local Tax Act.
(2) Where any corporate tax is refunded under the Framework Act on National Taxes in calculating the net book value of assets of the merged corporation referred to in Article 44 (1) 2 of the Act, the amount equivalent to such refunded amount shall be added to the net book value of assets as on the registration date of the merger of the merged corporation.
(3) Any merged corporation, etc., that wishes to qualify for paragraph (1) 1 shall file an application for special cases for taxation upon merger in the form prescribed by Ordinance of the Ministry of Strategy and Finance, along with a surviving corporation, etc., in filing a report on tax base under Article 60 of the Act, with the head of the tax office having jurisdiction over the place of tax payment. In such cases, the surviving corporation, etc. shall also submit the detailed statement on the asset adjustment account referred to in Article 80-4 (11) to the head of the tax office having jurisdiction over the place of tax payment of the merged corporation. <Amended by Presidential Decree No. 22577, Dec. 30, 2010; Presidential Decree No. 28640, Feb. 13, 2018>
[This Article Wholly Amended by Presidential Decree No. 22184, Jun. 8, 2010]
 Article 80-2 (Requirements, etc. for Qualified Merger)
(1) "In inevitable circumstances prescribed by Presidential Decree" in the proviso to Article 44 (2) of the Act means the following circumstances: <Amended by Presidential Decree No. 22577, Dec. 30, 2010; Presidential Decree No. 22812, Mar. 31, 2011; Presidential Decree No. 23589, Feb. 2, 2012; Presidential Decree No. 25194, Feb. 21, 2014; Presidential Decree No. 25640, Sep. 26, 2014; Presidential Decree No. 27828, Feb. 3, 2017; Presidential Decree No. 28640, Feb. 13, 2018>
1. Where inevitable circumstances are deemed to exist with respect to Article 44 (2) 2 of the Act: In any of the following cases:
(a) Where the stockholders, etc., provided for in paragraph (5) (hereafter in this Article referred to as "relevant stockholders, etc.") dispose of not more than 1/2 of the stocks, etc., granted due to a merger. In such cases, where the relevant stockholders, etc., dispose of stocks, etc., granted due to a merger among them, they shall not be deemed to have disposed of stocks, etc.; and where the relevant stockholders, etc., who hold the stocks, etc., granted due to a merger along with the stocks, etc., acquired by any means other than the merger, they shall be deemed to first dispose of the stocks, etc., acquired by any means other than the merger;
(b) Where the stocks, etc., are disposed of due to the death or bankruptcy of the relevant stockholders, etc.;
(c) Where the relevant stockholders, etc., dispose of stocks, etc., due to a qualified merger, qualified division, qualified spin-off, or qualified investment in kind (referring to an investment in kind, which meets all requirements provided for in Article 47-2 (1) of the Act and the amount equivalent to capital gains on a transfer is included in deductible expenses; hereinafter the same shall apply);
(d) Where the relevant stockholders, etc. invested stocks, etc. in kind or exchanged or transferred stocks, etc. pursuant to Article 38, 38-2 or 121-30 of the Restriction of Special Taxation Act and then dispose of the stocks, etc. with the tax deferred;
(e) Where the relevant stockholders, etc., dispose of stocks, etc., upon obtaining approval from the court pursuant to the rehabilitation procedure under the Debtor Rehabilitation and Bankruptcy Act;
(f) Where the relevant stockholders, etc., dispose of stocks, etc., under an agreement to implement a business normalization plan under Article 34 (6) 1 of the Enforcement Decree of the Restriction of Special Taxation Act or a special agreement to implement a workout program under Article 34 (6) 2;
(g) Where the relevant stockholders, etc., dispose of stocks, etc., to perform the obligations under the statutes;
2. Where inevitable circumstances are deemed to exist with respect to Article 44 (2) 3 of the Act: In any of the following cases:
(a) Where the surviving corporation disposes of the succeeded assets due to its bankruptcy;
(b) Where the surviving corporation discontinues its business due to a qualified merger, qualified division, qualified spin-off or investment in kind;
(c) Where the surviving corporation disposes of assets to which the corporation succeeded under an agreement for implementing a workout program under Article 34 (6) 1 of the Enforcement Decree of the Restriction of Special Taxation Act or a special agreement for implementing a workout program under Article 34 (6) 2 of said Enforcement Decree;
(d) Where the surviving corporation, etc., disposes of the succeeded assets upon obtaining approval from the court according to the rehabilitation procedure under the Debtor Rehabilitation and Bankruptcy Act.
3. Where inevitable circumstances are deemed to exist with respect to Article 44 (2) 4 of the Act: In any of the following cases:
(a) Where the surviving corporation is implementing a rehabilitation plan under Article 193 of the Debtor Rehabilitation and Bankruptcy Act;
(b) Where the surviving corporation fails to maintain the ratio of employees following bankruptcy;
(c) Where the surviving corporation fails to maintain the ratio of employees due to a qualified merger, division, spin-off, or investment in kind;
(d) Where the number of Korean nationals employed by the merged corporation as of one month before the registration date of the merger under an employment contract made under the Labor Standards Act is less than five.
(2) "Corporation prescribed by Presidential Decree" in the proviso to Article 44 (2) 1 of the Act means a corporation that meets all requirements referred to in the items of Article 6 (4) 14 of the Enforcement Decree of the Financial Investment Services and Capital Markets Act as a special purpose acquisition company prescribed in Article 6 (4) 14 of the same Enforcement Decree. <Newly Inserted by Presidential Decree No. 22577, Dec. 30, 2010>
(3) The total costs of the merger received by the stockholders, etc., of the merged corporation referred to in Article 44 (2) 2 of the Act shall be the amount computed under Article 80 (1) 2 (a), and where a surviving corporation acquired stocks, etc., combined due to a merger within two years prior to the registration date of the merger for the purpose of determining whether the value of the stocks, etc., of the total costs of the merger exceeds the rate referred to in Article 44 (2) 2 of the Act, any of the following amounts shall be deemed granted with money. In such cases, for the new merger or merger of at least three corporations, where the merged corporation acquired the stocks, etc., of another merged corporation, etc., the amount computed by applying any of the followings shall be added to the total costs of the merger by deeming the merged corporation that acquired the stocks, etc. of another merged corporation, etc., to be the surviving corporation, etc.: <Amended by Presidential Decree No. 23589, Feb. 2, 2012>
1. Where the surviving corporation, etc., is not the controlling stockholder, etc., of the merged corporation referred to in Article 43 (7) as on the registration date of the merger: Where the stocks, etc., combined due to the merger acquired by the surviving corporation, etc., within two years prior to the registration date of the merger exceed 20/100 of the total number of issued stocks or the total investment amount of the merged corporation, the value of the stocks, etc., granted due to the merger with respect to the stocks, etc., combined due to the merger (where the stocks, etc., granted due to a merger are deemed granted under the proviso to Article 80 (1) 2 (a), including such stocks, etc.);
2. Where the surviving corporation, etc., is the controlling stockholder, etc., of the merged corporation referred to in Article 43 (7) as on the registration date of the merger: The value of the stocks, etc., granted due to the merger with respect to the stocks, etc., combined due to the merger (in cases where the stocks, etc., granted due to a merger are deemed granted under the proviso to Article 80 (1) 2 (a), including such stocks, etc.) acquired within two years prior to the registration date of the merger.
(4) In allocating stocks received due to a merger to the stockholders, etc., of the merged corporation under Article 44 (2) 2 of the Act, the stocks, etc., in excess of the value calculated by the following formula shall be allocated to the relevant stockholders, etc.: <Amended by Presidential Decree No. 22577, Dec. 30, 2010; Presidential Decree No. 23589, Feb. 2, 2012>
Sum total of the value of the stocks, etc., granted due to a merger under Article 80 (1) 2 (a) received by the stockholders, etc., of the merged corporation × the equity ratio of each relevant stockholder, etc. in the merged corporation
(5) "Stockholders, etc., of the merged corporation prescribed by Presidential Decree" in Article 44 (2) 2 of the Act means stockholders, etc., other than the following persons, among the controlling stockholders, etc., of the merged corporation, etc. referred to in Article 43 (3): <Amended by Presidential Decree No. 25194, Feb. 21, 2014>
1. Relatives by blood or marriage in the fourth or any closer degree, among relatives referred to in Article 43 (8) 1 (a);
2. Persons whose equity ratio in the merged corporation is less than 1/100 or the value of the equity share appraised at the market price is less than one billion won as on the registration date of the merger;
3. Persons who are the controlling stockholders, etc., of the merged corporation that merges with any special purpose acquisition company meeting all requirements provided for in the items of Article 6 (4) 14 of the Enforcement Decree of the Financial Investment Services and Capital Markets Act.
(6) "Employees specified by Presidential Decree" in Article 44 (2) 4 of the Act means Korean nationals employed under an employment contract entered into under the Labor Standards Act: Provided, That the following employees shall be excluded herefrom: <Newly Inserted by Presidential Decree No. 28640, Feb. 13, 2018>
1. Executives specified in any subparagraph of Article 42 (1);
2. Employees who will retire from office at the retirement age under Article 19 of the Act on Prohibition of Age Discrimination in Employment and Elderly Employment Promotion before the end of the business year in which the merger is registered;
3. Employees who died before the end of the business year in which the merger is registered or employees who retired due to any of the causes specified by Ordinance of the Ministry of Strategy and Finance, such as illness or injury;
4. Workers employed on a daily basis, as referred to in Article 14 (3) 2 of the Income Tax Act;
5. Employees whose employment contract term is less than six months: Provided, That employees whose employment contract term is not less than one year as of one month before the registration date of the merger due to consecutive renewals of the employment contract shall be excluded herefrom;
6. Employees who retired due to any fault for which employees are liable, as specified by Ordinance of the Ministry of Strategy and Finance, such as employees sentenced to imprisonment without labor or any heavier punishment.
(7) Where a surviving corporation disposes of at least 1/2 of the value of fixed assets succeeded to from a merged corporation on or before the last day of the business year in which the registration date of the merger falls or fails to use them for its business, it shall be deemed not to fall under Article 44 (2) 3 of the Act: Provided, That where the surviving corporation, etc., retires the treasury stocks upon succeeding to the stocks of the surviving corporation, etc., held by the merged corporation, whether the surviving corporation continues the business shall be determined based on the fixed assets succeeded to from the merged corporation, other than the relevant stocks of the surviving corporation; and where the succeeded fixed assets are only the stocks of the surviving corporation, the surviving corporation, etc., shall be deemed to continue the business.
[This Article Newly Inserted by Presidential Decree No. 22184, Jun. 8, 2010]
 Article 80-3 (Disposition of Difference between Transfer Value and Net Market Price of Assets upon Disqualified Merger)
(1) Where the transfer value is less than the net market price of assets as prescribed in Article 44-2 (2) of the Act and a surviving corporation includes the difference between them (hereinafter referred to as "marginal profits from merger") in gross income, it shall include the amount computed by the following formula from the business year in which the registration date of the merger falls to the business year in which the fifth anniversary of the registration date of the merger falls. In such cases, the number of months shall be calculated based on the calendar months; however, the number of days that falls short of one month shall be deemed one month. Where the month which includes the registration date of the merger is calculated as one month, the month which includes the fifth anniversary of the registration date of the merger shall be excluded from the calculation:
Marginal profits from merger
×
Number of months in the relevant business year
60 months
(2) "Circumstances prescribed by Presidential Decree" referred to in Article 44-2 (3) of the Act means the circumstances in which the surviving corporation, etc. deemed that the company name, transaction relationships and other trade secrets of the merged corporation have business value and paid the consideration therefor.
(3) Where the transfer value exceeds the net market price of assets under Article 44-2 (3) of the Act, paragraph (1) shall apply mutatis mutandis to the inclusion of the difference thereof (hereinafter referred to as "marginal losses from merger") in deductible expenses, method of inclusion and other matters.
[This Article Newly Inserted by Presidential Decree No. 22184, Jun. 8, 2010]
 Article 80-4 (Follow-Up Management Based on Special Provisions concerning Taxation upon Qualified Merger)
(1) Where a surviving corporation acquires assets of the merged corporation transferred at the book value under Article 44-3 (1) of the Act, it shall recognize the market price as on the registration date of the merger as the value of the transferred assets and liabilities. The surviving corporation shall include the difference between the market price and the book value of the merged corporation in gross income, and shall include the same amount in deductible expenses in the asset adjustment account, if the amount computed by subtracting the book value (where tax settlement matters referred to in subparagraph 1 of Article 85 exist, such value shall be calculated by adding the amount not included in gross income and by subtracting the amount not included in deductible expenses, among the tax settlement matters) of the merged corporation from the market price is greater than zero. The surviving corporation shall include the difference between the market price and the book value in deductible expenses, and shall include the same amount in gross income in the asset adjustment account, if the difference is smaller than zero. In such cases, where the recognized asset adjustment account shall be handled as follows: <Amended by Presidential Decree No. 27828, Feb. 3, 2017>
1. An asset adjustment account set for depreciable assets: Where the difference is included in deductible expenses in the asset adjustment account, it shall be offset against the depreciation cost of the relevant assets (limited to the portion equivalent to those in the relevant asset adjustment account), while it shall be added to depreciation costs, if it is included in gross income in the asset adjustment account. In such cases, the amount left over after set-off or addition, where relevant assets are disposed of, shall be fully included in gross income or deductible expenses for the business year in which such assets are disposed of;
2. An asset adjustment account set for assets, other than those provided for in subparagraph 1: It shall be all included in the gross income or deductible expenses for the business year in which the relevant assets are disposed of: Provided, That where the treasury stocks are retired, it shall be extinguished without being included in the gross income or deductible expenses.
(2) Where a surviving corporation, etc., acquires assets of the merged corporation transferred at the book value as prescribed in paragraph (1), it is eligible for the tax reduction, exemption, or tax credits upon succeeding to the tax reduction or exemption or tax credits under Article 59 of the Act which applied to the merged corporation before the merger. In such cases, where provisions governing the requirements, etc., for the tax reduction or exemption or tax credits in the Act or other Acts, the same shall apply only where the surviving corporation, etc., meets all the requirements, etc. <Newly Inserted by Presidential Decree No. 22577, Dec. 30, 2010>
(3) "Period prescribed by Presidential Decree" in the main sentence of Article 44-3 (3) of the Act means two years (or three years in cases under Article 44-3 (3) 3 of the Act) beginning on the first day of the business year following the business year in which the registration date of the merger falls. <Amended by Presidential Decree No. 23589, Feb. 2, 2012; Presidential Decree No. 28640, Feb. 13, 2018>
(4) Where a surviving corporation, etc., falls under any subparagraph of Article 44-3 (3) of the Act, the sum total of the balance in the asset adjustment account recognized under paragraph (1) (limited to cases where the sum total is greater than zero; and where it is smaller than zero, it shall be deemed nil) and the amount deducted among the deficits succeeded to from the merged corporation under Article 44-3 (2) of the Act shall be included in the gross income. In such cases, the asset adjustment account recognized under paragraph (1) shall be deemed extinguished. <Amended by Presidential Decree No. 22577, Dec. 30, 2010>
(5) Where the sum total of the balance in the asset adjustment account is included in the gross income under paragraph (4), the amount equivalent to capital gains or losses from sale upon merger shall be disposed of by the following methods: <Amended by Presidential Decree No. 22577, Dec. 30, 2010>
1. Where the transfer value paid by a surviving corporation, etc., to a merged corporation upon the merger is less than the net market price of assets of the merged corporation as on the registration date of the merger: The amount equivalent to the capital gains from sale upon the merger shall be included in the deductible losses for the business year which includes the date on which any ground referred to in any subparagraph of Article 44-3 (3) of the Act arises, and the amount equivalent thereto shall be included in the gross income in installment by the fifth anniversary of the registration date of the merger in accordance with the following classifications:
(a) The business year in which any grounds referred to in any subparagraph of Article 44-3 (3) of the Act arise: The amount computed by multiplying the capital gains from sale upon the merger by the ratio calculated by dividing the number of months in the relevant business year from the registration date of the merger to the last day of the relevant business year by 60 months shall be included in the gross income (the number of months shall be calculated based on the calendar months, and the number of days that falls short of one month shall be deemed one month);
(b) The business year which includes the fifth anniversary of the registration date of the merger from the business year since the business year referred to in item (a): The amount computed by multiplying the capital gains from sale upon the merger by the ratio calculated by dividing the number of months for the relevant business year by 60 months (where the number of the month that includes the registration date of the merger falls short of one month, the month that includes the fifth anniversary of the registration date of the merger shall be deemed nil) shall be included in the gross income;
2. Where the transfer value paid by a surviving corporation, etc. to a merged corporation upon merger exceeds the net market price of assets of the merged corporation as on the registration date of the merger: The amount equivalent to the capital losses from sale upon a merger shall be included in the gross income for the business year which includes the date on which any grounds referred to in any subparagraph of Article 44-3 (3) of the Act arise, and the relevant amount shall, limited to the cases falling under Article 80-3 (2), be included in the deductible expenses in installment until the fifth anniversary of the registration date of the merger by the following classifications:
(a) The business year in which any grounds referred to in any subparagraph of Article 44-3 (3) of the Act arise: The amount computed by multiplying the capital losses from sale upon the merger by the ratio calculated by dividing the number of months in the relevant business year from the registration date of the merger to the last day of the relevant business year by 60 months shall be included in the deductible expenses (the number of months shall be calculated based on the calendar months, and the number of days that falls short of one month shall be deemed one month);
(b) The business year which includes the fifth anniversary of the registration date of the merger from the business year since the business year referred to in item (a): The amount computed by multiplying the capital losses from sale upon the merger by the ratio calculated by dividing the number of months in the relevant business year by 60 months (where the number of the month that includes the registration date of the merger is less than one month, the month that includes the fifth anniversary of the registration date of the merger shall be deemed nil) shall be included in the deductible expenses.
(6) Where a surviving corporation falls under any subparagraph of Article 44-3 (3) of the Act, it shall add the amount not included in the gross income and subtract the amount not included in the deductible expenses among the tax settlement matters succeeded under subparagraph 1 of Article 85 for the purposes of calculating the amount of income and the tax base of the surviving corporation and add the amount equivalent to tax reduction or exemption or tax credits granted upon succession from a merged corporation to the corporate tax of the business year in which the relevant grounds arise and pay such amount, and it shall not apply from the business year in which the relevant grounds arise. <Newly Inserted by Presidential Decree No. 22577, Dec. 30, 2010; Presidential Decree No. 23589, Feb. 2, 2012>
(7) "Where inevitable circumstances prescribed by Presidential Decree exist" in the proviso to Article 44-3 (3) of the Act means the following cases: <Amended by Presidential Decree No. 22577, Dec. 30, 2010; Presidential Decree No. 28640, Feb. 13, 2018>
1. Where inevitable circumstances are deemed to exist with respect to Article 44-3 (3) 1 of the Act: Where the surviving corporation, etc., falls under any item of Article 80-2 (1) 2;
2. Where inevitable circumstances are deemed to exist with respect to Article 44-3 (3) 2 of the Act: Where the stockholders, etc., provided for in paragraph (9) fall under any item of Article 80-2 (1)1;
3. Where inevitable circumstances are deemed to exist with respect to Article 44-3 (3) 3 of the Act: Where the surviving corporation falls under any provision of Article 80-2 (1) 3 (a) through (c).
(8) Where a surviving corporation, etc., disposes of at least 1/2 of the value of fixed assets succeeded to from a merged corporation during the period referred to in paragraph (3) or fails to use them for the succeeded business, it shall be deemed to discontinue the business succeeded to from the merged corporation: Provided, That where the surviving corporation, etc., retires the treasury stocks upon succeeding to the stocks of the surviving corporation, etc., held by the merged corporation, whether the surviving corporation continues the business shall be determined based on the fixed assets succeeded to from the merged corporation, other than the relevant stocks of the surviving corporation, etc., and where the succeeded fixed assets are only the stocks of the surviving corporation, etc., the surviving corporation, etc., shall be deemed to continue the business. <Amended by Presidential Decree No. 22577, Dec. 30, 2010>
(9) "Stockholders, etc., of a merged corporation prescribed by Presidential Decree" in Article 44-3 (3) 2 of the Act mean the stockholders, etc., referred to in Article 80-2 (5). <Amended by Presidential Decree No. 22577, Dec. 30, 2010>
(10) "Employees specified by Presidential Decree" in Article 44-3 (3) 3 of the Act means Korean nationals employed under an employment contract entered into under the Labor Standards Act. <Newly Inserted by Presidential Decree No. 28640, Feb. 13, 2018>
(11) Any surviving corporation, etc., that recognizes the asset adjustment account under paragraph (1) shall submit a detailed statement on asset adjustment 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 of tax payment, accompanied by the report provided for in Article 60 of the Act.
[This Article Newly Inserted by Presidential Decree No. 22184, Jun. 8, 2010]
 Article 81 (Succession of Losses, etc. Carried Forward upon Merger)
(1) "Rate of value of asset prescribed by Presidential Decree" referred to in Article 45 (1) of the Act means the rate of value of fixed business asset of a surviving corporation and a merged corporation as at the registration date of the merger. In such cases, the value of fixed business asset of the merged corporation, which is succeeded to by the surviving corporation shall be determined by the value as at the registration date of the merger of the fixed asset, limited the fixed asset that is continuously held (including where the fixed asset is replaced after disposal) and used by the end of each business year in which succeeded losses are deducted. <Amended by Presidential Decree No. 21302, Feb. 4, 2009>
(2) Losses succeeded to and deducted by a surviving corporation when the surviving corporation calculates the tax base of each business year under Article 45 (2) of the Act shall be the losses referred to in subparagraph 1 of Article 13 of the Act (referring to the amount computed by deeming the registration date of the merger to be the start date of a business year) of the merged corporation as at the registration date of the merger, and the amount of such losses (hereafter referred to as "limit of succeeded losses" in this Article) shall be calculated each year by deeming that one year has passed sequentially from the business year following the business year in which the registration date of the merger falls. <Amended by Presidential Decree No. 21302, Feb. 4, 2009>
(3) A surviving corporation, etc. may obtain a tax reduction or exemption or tax credit succeeded by a merged corporation under Article 44-3 (2) of the Act as follows: <Newly Inserted by Presidential Decree No. 22577, Dec. 30, 2010>
1. For reductions or exemptions provided for in Article 59 (1) 1 of the Act (limited to reductions or exemptions for a fixed term): The surviving corporation shall apply such reductions or exemptions on income generated by the business succeeded for each business year which ends within the residual reduction period as at the time of the merger;
2. For tax credits provided for in Article 59 (1) 3 of the Act (including foreign tax credits) which are the un-deducted amounts carried forward: The surviving corporation apply tax credits for each business year which ends within the remaining period for credits carried forward pursuant to the following items:
(a) Un-deducted amounts of foreign tax credits carried forward: The deduction shall be made up to the amount computed by multiplying the foreign source income accruing from the succeeded business divided by the tax base for the relevant business year by the amount of tax for the relevant business year;
(b) Un-deducted amounts carried forward under Article 144 of the Restriction of Special Taxation Act because the amount falls short of the minimum corporate tax provided for in Article 132 of the same Act and it is not deducted (hereafter referred to as "minimum corporate tax" in this Article): The deduction shall be made up to the minimum corporate tax calculated by applying Article 132 of the Restriction of Special Taxation Act with respect to the succeeded business category. In such cases, the amount to be deducted shall not exceed the minimum corporate tax of the surviving corporation, etc.;
(c) Un-deducted amounts carried forward under Article 144 of the Restriction of Special Taxation Act because there is no tax payable other than tax referred to in the items (a) and (b) and the amount is not deducted: The deduction shall be made up to the amount of corporate tax computed with respect to the succeeded business category.
(4) Articles 80-2 (7) and 80-4 (8) shall apply mutatis mutandis to determination as to the continuation or closure of business and application thereof with respect to the deduction of losses, inclusion in gross income and addition of corporate tax of a surviving corporation which has succeeded to the business of a merged corporation. <Amended by Presidential Decree No. 22184, Jun. 8, 2010; Presidential Decree No. 22577, Dec. 30, 2010; Presidential Decree No. 28640, Feb. 13, 2018>
(5) and (6) Deleted. <by Presidential Decree No. 21302, Feb. 4, 2009>
 Article 82 (Calculation of Capital Gains or Losses from Transfer upon Division)
(1) The transfer value referred to in Article 46 (1) 1 of the Act means any of the following amounts: <Amended by Presidential Decree No. 22577, Dec. 30, 2010; Presidential Decree No. 23589, Feb. 2, 2012; Presidential Decree No. 27828, Feb. 3, 2017>
1. In cases of a qualified division: The net book value of assets as on the registration date of the division of a divided corporation, etc. (hereinafter referred to as "divided corporation, etc.") referred to in Article 46 (1) 2 of the Act;
2. In cases other than those provided for in subparagraph 1: Sum total of the following amounts:
(a) Sum total of the value of the stocks (including stocks of the domestic corporation that holds the total number of outstanding stocks or the total amount of investment of the counterpart corporation as on the registration date of the division in cases of a division and merger; hereinafter the same shall apply) of a corporation established through division, etc. (hereinafter referred to as "corporation established through division, etc.") and money or the value of other property, paid to stockholders of the divided corporation upon division by the corporation established through division, etc., as prescribed in the former part of Article 46 (1) of the Act: Provided, That in cases of a division and merger, where the counterpart corporation to the division and merger acquired the stocks [for the new division and merger or the division and merger of at least three corporations, including the stocks of another divided corporation acquired by the divided corporation prior to the registration date of the division (limited to the stocks succeeded to by the counterpart corporation to the division and merger due to the division and merger), the stocks of the disappearing counterpart corporation to the division and merger acquired by the counterpart corporation to the division and merger prior to the registration date of the division or the stocks acquired by the disappearing counterpart corporation to the division and merger prior to the registration date of the division and the stocks of another disappearing counterpart corporation to the division and merger: hereinafter referred to as "stocks combined due to division and merger"] of the divided corporation prior to the registration date of the division, although the stocks of the corporation established through division, etc. (hereinafter referred to the "stocks granted due to division and merger") are not granted with respect to such stocks, the stocks granted due to division and merger shall be deemed granted by the equity ratio for the purposes of calculating the value of the stocks of the counterpart corporation to the division and merger;
(b) Sum total of the corporate tax of the divided corporation paid by the corporation established through division, etc., the national tax imposed on the corporate tax (including the amount of tax reduction or exemption) and the local corporate tax imposed under Article 88 (2) of the Local Tax Act.
(2) Where any corporate tax is refunded under the Framework Act on National Taxes in calculating the net book value of assets of a divided corporation, etc., under Article 46 (1) 2 of the Act, the amount equivalent to such refunded amount shall be added to the net book value of assets as on the registration date of the division of the divided corporation, etc.
(3) Any divided corporation, etc., that wishes to qualify for paragraph (1) 1 shall file an application for special cases for taxation upon division in the form prescribed by Ordinance of the Ministry of Strategy and Finance, together with any corporation established through division, etc., in filing a report on tax base under Article 60 of the Act, with the head of the tax office having jurisdiction over the place of tax payment. In such cases, the corporation established through division, etc., shall also submit the detailed statement on the asset adjustment account referred to in Article 82-4 (10) to the head of the tax office having jurisdiction over the place of tax payment of the corporation established through division, etc. <Amended by Presidential Decree No. 22577, Dec. 30, 2010; Presidential Decree No. 28640, Feb. 13, 2018>
[This Article Wholly Amended by Presidential Decree No. 22184, Jun. 8, 2010]
 Article 82-2 (Requirements, etc. for Qualified Divisions)
(1) "Inevitable circumstances prescribed by Presidential Decree" in the proviso to Article 46 (2) of the Act means the following circumstances: <Amended by Presidential Decree No. 26981, Feb. 12, 2016; Presidential Decree No. 28640, Feb. 13, 2018>
1. Where inevitable circumstances are deemed to exist with respect to Article 46 (2) 2 of the Act: Where a stockholder referred to in paragraph (8) falls under any item of Article 80-2 (1) 1;
2. Where inevitable circumstances are deemed to exist with respect to Article 46 (2) 3 of the Act: Where a corporation established through division, etc., falls under any item of Article 80-2 (1) 2;
3. Where inevitable circumstances are deemed to exist with respect to Article 46 (2) 4 of the Act: Where a corporation established through division, etc. falls under any item of Article 80-2 (1) 3 or where the number of employees under Article 82-4 (9) who work for the divided division as of one month before the registration date of division is less than five.
(2) If any of the following applies to a divided business division (referring to the division acquired from a divided corporation by succession; hereafter the same shall apply in this Article and subparagraph 1 of Article 85), such division shall not be deemed a division separated as a business division capable of operating its business as an independent business division: <Newly Inserted by Presidential Decree No. 25194, Feb. 21, 2014>
1. A business division mainly engaging in real estate rental business prescribed by Ordinance of the Ministry of Strategy and Finance;
2. A business division whose assets, as referred to in Article 94 (1) 1 and 2 of the Income Tax Act, are at least 80/100 of the value of fixed assets for business use acquired by the divided business division by succession (excluding the value of the fixed assets for business use prescribed by Ordinance of the Ministry of Strategy and Finance);
3. A business division composed only of stocks, etc., and assets and liabilities related to the stocks, etc.
(3) Notwithstanding paragraph (2) 3, if any of the following applies to a divided business division, such division shall be deemed a division separated as a business division capable of operating its business as an independent business division: <Newly Inserted by Presidential Decree No. 25194, Feb. 21, 2014>
1. A business division composed only of all stocks, etc., that the divided corporation holds for the purpose of control on the day immediately preceding the registration date of the division (referring to stocks, etc., prescribed by Ordinance of the Ministry of Strategy and Finance as stocks, etc., held for the purpose of control; hereafter in this Article the same shall apply) and assets and liabilities related to such stocks, etc.;
2. A business division that establishes a holding company defined in the Monopoly Regulation and Fair Trade Act and the Financial Holding Companies Act: Provided, That the foregoing shall be limited to cases where a divided business division acquires stocks, etc., held as a controlling stockholder and assets and liabilities related to such stocks, etc.;
3. Cases prescribed by Ordinance of the Ministry of Strategy and Finance, and similar to the cases of subparagraph 2.
(4) "Those prescribed by Presidential Decree, such as assets and liabilities that are indivisible, including the assets jointly used and the liabilities, the debtor of which cannot be changed" in the proviso to Article 46 (2) 1 (b) of the Act means the following assets and liabilities: <Amended by Presidential Decree No. 23589, Feb. 2, 2012; Presidential Decree No. 25194, Feb. 21, 2014>
1.  Assets:
(a) Substation facilities, waste water treatment facilities, electricity facilities, water supply facilities, or steam facilities;
(b) Offices, warehouses, restaurants, training centers, company houses, and in-house training facilities;
(c) Joint production facilities, business supporting facilities and land attached thereto and assets which cannot be divided physically;
(d) Assets prescribed by Ordinance of the Ministry of Strategy and Finance, and similar to those under items (a) through (c);
2. Liabilities:
(a) Notes payable;
(b) Borrowings with respect to which the change of the name of the borrower is limited on the conditions for borrowing;
(c) Borrowings with respect to which the conditions for borrowing of the borrower under the agreement are adversely changed due to a division;
(d) Joint loans that are not directly used in the divided business division;
(e) Liabilities prescribed by Ordinance of the Ministry of Strategy and Finance, and similar to those under items (a) through (d);
3. Assets and liabilities that the divided division shall acquire, which shall not exceed 20/100 of the total assets and total liabilities evaluated by the market value as at the time of the division. In such cases, the value of assets and liabilities that the divided division shall acquire by succession shall be calculated, as prescribed by Ordinance of the Ministry of Strategy and Finance, but stocks, assets referred to in subparagraph 1, and liabilities referred to in subparagraph 2 shall be excluded therefrom.
(5) Where a divided business division acquires stocks, etc., by succession, the assets and liabilities of the divided business division shall not be deemed those comprehensively acquired by succession under Article 46 (2) 1 (b) of the Act: Provided, That the same shall not apply where stocks, etc., are acquired by succession under any subparagraph of paragraph (3) or cases prescribed by Ordinance of the Ministry of Strategy and Finance as similar to such cases. <Newly Inserted by Presidential Decree No. 25194, Feb. 21, 2014>
(6) The total costs of a division referred to in Article 46 (2) 2 of the Act shall be the amount provided for in Article 82 (1) 2 (a), and where the counterpart corporation to a division and merger acquired the stocks combined due to the division and merger of the divided corporation within two years prior to the registration date of the division for the purposes of determining whether the value of the stocks, etc., among the total costs of the division as prescribed in Article 46 (2) 2 of the Act exceeds the rate referred to in Article 44 (2) 2 of the Act in cases of the division and merger, any of the following amounts shall be deemed granted with money. In such cases, for the new division and merger, or division and merger of at least three corporations, where the divided corporation acquired the stocks of another divided corporation, the divided corporation that acquired the stocks of another divided corporation shall be deemed a counterpart corporation to the division and merger for the following purposes. Where the disappearing counterpart corporation to the division and merger acquired the stocks of the divided corporation, such disappearing counterpart corporation to the division and merger shall be deemed a counterpart corporation to the division and merger and the amount computed by applying each subparagraph shall be deemed granted with money: <Amended by Presidential Decree No. 23589, Feb. 2, 2012>
1. Where the counterpart corporation to the division and merger is not the controlling stockholder, etc., of the divided corporation referred to in Article 43 (7) as on the registration date of the division: Where the stocks combined due to the division and merger acquired by the counterpart corporation to the division and merger within two years prior to the registration date of the division exceed 20/100 of the total number of issued stocks of the divided corporation, etc., the value of the stocks, etc., granted due to the division and merger granted with respect to the stocks, etc., combined due to the division and merger (if the stocks, etc., granted due to the division and merger are deemed granted under the proviso to Article 82 (1) 2 (a), it shall include such stocks, etc.);
2. Where the counterpart corporation to the division and merger is the controlling stockholder, etc., of the divided corporation referred to in Article 43 (7) as on the registration date of the division: The value of the stocks, etc., granted due to the division and merger granted with respect to the stocks, etc., combined due to the division and merger (if the stocks, etc., granted due to the division and merger are deemed granted under the proviso to Article 82 (1) 2 (a), it shall include such stocks, etc.) acquired within two years prior to the registration date of the division.
(7) In allocating stocks received due to a division and merger to the stockholders of the divided corporation, etc., under Article 46 (2) 2 of the Act, the stocks in excess of the value calculated by the following formula shall be allocated respectively to the stockholders referred to in paragraph (8): <Amended by Presidential Decree No. 22577, Dec. 30, 2010; Presidential Decree No. 23589, Feb. 2, 2012; Presidential Decree No. 26981, Feb. 12, 2016>
Sum total of the value of the stocks, etc., of the corporation established through division, etc., as prescribed in Article 82 (1) 2 (a) received by the stockholders, etc., of the divided corporation, etc. x the equity ratio of each stockholder referred to in paragraph (8) with respect to the divided corporation, etc.
(8) "Stockholders of the divided corporation, etc., prescribed by Presidential Decree" in Article 46 (2) 2 of the Act mean stockholders, other than the following persons, among controlling stockholders, etc., of the divided corporation, etc., as prescribed in Article 43 (3): <Amended by Presidential Decree No. 25194, Feb. 21, 2014>
1. Relatives by blood or marriage in the fourth or any closer degree, among relatives referred to in Article 43 (8) 1 (a);
2. Persons whose equity ratio in the divided corporation, etc., is less than 1/100 and the value of such equity appraised at the market price is less than one billion won as on the registration date of the division.
(9) Article 80-2 (7) shall apply mutatis mutandis to determination as to whether a corporation established through division, etc., continues the business acquired by succession from the divided corporation, etc. under Article 46 (2) 3 of the Act. <Amended by Presidential Decree No. 22577, Dec. 30, 2010; Presidential Decree No. 28640, Feb. 13, 2018>
(10) Article 80-2 (6) shall apply mutatis mutandis to the scope of employees specified by Presidential Decree pursuant to Article 46 (2) 4 of the Act, but any of the following employees may be excluded from the scope. In such cases, "registration date of merger" shall be construed as "registration date of division": <Newly Inserted by Presidential Decree No. 28640, Feb. 13, 2018>
1. Employees working for both the business division surviving the division and the divided business division;
2. Employees who are not deemed to work for the divided business division but who perform any of the duties specified by Ordinance of the Ministry of Strategy and Finance.
[This Article Newly Inserted by Presidential Decree No. 22184, Jun. 8, 2010]
 Article 82-3 (Disposition of Difference between Transfer Value and Net Market Price of Assets upon Disqualified Division)
(1) Where the transfer value is less than the net market price of assets, as prescribed in Article 46-2 (2) of the Act, Article 80-3 (1) shall apply mutatis mutandis to the inclusion of the difference (hereinafter referred to as "marginal profits from division") in gross income, method of inclusion and other matters.
(2) "Circumstances prescribed by Presidential Decree" referred to in Article 46-2 (3) of the Act means the case where the corporation established through division, etc. deemed that the company name, transaction relationships and other trade secrets of the divided corporation, etc. have business value and paid the consideration therefor.
(3) Where the transfer value exceeds the net market price of assets as prescribed in Article 46-2 (3) of the Act, Article 80-3 (3) shall apply mutatis mutandis to the inclusion of the difference (hereinafter referred to as "marginal losses from division") in deductible expenses, method of inclusion and other matters.
[This Article Newly Inserted by Presidential Decree No. 22184, Jun. 8, 2010]
 Article 82-4 (Follow-Up Management Based on Special Provisions concerning Taxation upon Qualified Division)
(1) Where a corporation established through division has assets transferred from the divided corporation at book value in accordance with Article 46-3 (1) of the Act, it shall recognize the market price as on the registration date of the division as the value of the assets and liabilities so transferred but shall include the difference between the market price and the book value in gross income and include the same amount in deductible expenses in the asset adjustment account, if the amount computed by subtracting the book value (where tax settlement matters provided for in subparagraph 1 of Article 85 exist, such value shall be calculated by adding the amount not included in gross income and by subtracting the amount not included in deductible expenses, among the tax settlement matters) of the divided corporation from the market price is greater than zero, while it shall include the difference between the market price and the book value in deductible expenses and shall include the same amount in gross income in the asset adjustment account, if the difference is smaller than zero. In such cases, Article 80-4 (1) shall apply mutatis mutandis to the handling of the asset adjustment account. <Amended by Presidential Decree No. 25194, Feb. 21, 2014; Presidential Decree No. 27828, Feb. 3, 2017>
(2) Where a corporation established through division, etc., has assets transferred from the divided corporation, etc., at book value under paragraph (1), it may obtain tax reductions or exemptions or tax credits upon succeeding to tax reductions or exemptions or tax credits provided for in Article 59 of the Act which applied to the merged corporation before the merger. In such cases, where there are provisions governing the requirements, etc., for tax reductions or exemptions or tax credits in the Act or other Acts, the same shall apply only where the corporation established through division, etc., meets such requirements, etc., and the corporation established through division, etc., may obtain tax reductions or exemptions or tax credits only applicable to the succeeded business by the following classifications: <Newly Inserted by Presidential Decree No. 22577, Dec. 30, 2010>
1. Where tax reductions, exemptions, or tax credits carried forward are related to a specific business or asset: To be deducted by the corporation established through division, etc., that has succeeded to the specific business or asset;
2. In cases of tax reductions, exemptions, or tax credits carried forward, other than those falling under subparagraph 1: To be applied respectively by corporations, etc., established through the division by dividing proportionally at the rate of value of fixed business assets succeeded by such corporations, etc., established through the division from among the value of fixed business assets of the divided corporation, etc.
(3) "Period prescribed by Presidential Decree" in the main sentence of Article 46-3 (3) of the Act means two years (or three years in cases under Article 46-3 (3) 3 of the Act) beginning on the first day of the business year following the business year in which the registration date of a division falls. <Amended by Presidential Decree No. 23589, Feb. 2, 2012; Presidential Decree No. 28640, Feb. 13, 2018>
(4) Where a corporation, etc., established through a division falls under any subparagraph of Article 46-3 (3) of the Act, Article 80-4 (4) and (5) shall apply mutatis mutandis to the inclusion of losses, etc., in gross income and the inclusion of the amount equivalent to capital gains from the transfer or capital losses from the transfer in deductible expenses or gross income and other matters. <Amended by Presidential Decree No. 22577, Dec. 30, 2010>
(5) Where a corporation, etc., established through a division falls under any subparagraph of Article 46-3 (3) of the Act, it shall add the amount not included in gross income and subtract the amount not included in deductible expenses among the tax settlement matters succeeded under subparagraph 1 of Article 85 for the purposes of calculating the amount of income and the tax base of the corporation, etc., established through the division and add the amount equivalent to the amount of tax reductions or exemptions or tax credits upon succession from a merged corporation to the corporate tax of the business year during which the relevant grounds arise and pay such amount, and it shall not apply from the business year during which the relevant grounds arise. <Newly Inserted by Presidential Decree No. 22577, Dec. 30, 2010; Presidential Decree No. 23589, Feb. 2, 2012>
(6) "Inevitable circumstances prescribed by Presidential Decree" in the proviso to Article 46-3 (3) of the Act means the following circumstances: <Amended by Presidential Decree No. 22577, Dec. 30, 2010; Presidential Decree No. 28640, Feb. 13, 2018>
1. Where inevitable circumstances are deemed to exist with respect to Article 46-3 (3) 1 of the Act: Where a corporation, etc., established through a division falls under any item of Article 80-2 (1) 2;
2. Where inevitable circumstances are deemed to exist with respect to Article 46-3 (3) 2 of the Act: Where stockholders referred to in paragraph (8) falls under any item of Article 80-2 (1) 1;
3. Where inevitable circumstances are deemed to exist with respect to Article 46-3 (3) 3 of the Act: Where a corporation, etc. established through a division falls under any provision of Article 80-2 (1) 3 (a) through (c).
(7) Article 80-4 (8) shall apply mutatis mutandis to determination as to whether a corporation, etc., established through a division continues the business succeeded to from a divided corporation, etc., under Article 46-3 (3) 1 of the Act. <Amended by Presidential Decree No. 22577, Dec. 30, 2010>
(8) "Stockholders of a divided corporation, etc., prescribed by Presidential Decree" in Article 46-3 (3) 2 of the Act means the stockholders provided for in Article 82-2 (8). <Amended by Presidential Decree No. 25194, Feb. 21, 2014>
(9) "Employees specified by Presidential Decree" in the main sentence of Article 46-3 (3) 3 of the Act means Korean nationals employed under an employment contract entered into under the Labor Standards Act: Provided, That the employees who fall under any subparagraph of Article 82-2 (10), among employees working for the divided business division, may be excluded herefrom. <Newly Inserted by Presidential Decree No. 28640, Feb. 13, 2018>
(10) A corporation, etc., established through a division which has made appropriation in the asset adjustment account under paragraph (1) shall file a detailed statement on the asset adjustment account in the form prescribed by Ordinance of the Ministry of Strategy and Finance with the head of the tax office having jurisdiction over the place of tax payment, accompanied by the report provided for in Article 60 of the Act.
[This Article Newly Inserted by Presidential Decree No. 22184, Jun. 8, 2010]
 Article 83 (Succession of Losses, etc. Carried Forward upon Division)
(1) "Rate of value of assets prescribed by Presidential Decree" referred to in Article 46-4 (1) of the Act means the rate of the value of the fixed business assets of a divided corporation (limited to the business succeeded) and of a counterpart corporation to a division and merger (including a disappearing corporation; hereafter the same shall apply in this Article) as at the registration date of the division and merger. In such cases, the value of the fixed business assets of the divided corporation, etc. succeeded by the corporation, etc. established through the division shall be limited to the fixed assets held or used continuously (including acquisition of replacing fixed assets after disposition) as at the end date of each business year during which the succeeded losses are deducted and shall be based on the value of such fixed business assets as at the registration date of the division and merger.
(2) Losses succeeded to and deducted by a corporation, etc. established through a division when it calculates the tax base of each business year under Article 46-4 (2) of the Act shall be the losses that belong to the business succeeded to by the corporation, etc. established through the division among the amount of losses referred to in subparagraph 1 of Article 13 of the Act (referring to the amount computed by deeming the registration date of the division to be the start date of the business year) of the divided corporation, etc. as at the registration date of the division, and the amount of such losses shall be calculated each year by deeming that one year has passed sequentially from the business year following the business year in which the registration date of the division falls.
(3) Losses that belong to the business succeeded as prescribed in paragraph (2) shall be the amount computed by proportionally dividing the losses of the divided corporation, etc. by the rate of the fixed business assets succeeded to by corporations, etc. established through the division among the value of the fixed business assets of the divided corporation, etc. as at the registration date of the division.
(4) Article 81 (3) shall apply mutatis mutandis where any corporation, etc. established through a division applies tax reductions or exemptions or tax credits succeeded from a divided corporation, etc. under Article 46-3 (2) of the Act. <Newly Inserted by Presidential Decree No. 22577, Dec. 30, 2010>
(5) Articles 80-2 (7) and 80-4 (8) shall apply mutatis mutandis to determination as to whether a corporation, etc. established through a division continues the business succeeded to from a divided corporation, etc. and the application thereof for the purposes of deduction of losses, inclusion in gross income and addition of corporate tax. <Amended by Presidential Decree No. 22577, Dec. 30, 2010; Presidential Decree No. 28640, Feb. 13, 2018>
[This Article Wholly Amended by Presidential Decree No. 22184, Jun. 8, 2010]
 Article 83-2 (Special Cases concerning Calculation of Income Amount for Divided Corporations Surviving Division)
(1) The transfer value referred to in Article 46-5 (1) 1 of the Act shall be any of the following amounts: <Amended by Presidential Decree No. 22577, Dec. 30, 2010; Presidential Decree No. 23589, Feb. 2, 2012; Presidential Decree No. 27828, Feb. 3, 2017>
1. In cases of a qualified division: The net book value of assets as on the registration date of the division of the business category divided by a divided corporation, etc., under Article 46-5 (1) 2 of the Act;
2. In cases other than those falling under subparagraph 1: Sum total of the following amounts:
(a) Sum total of the value of the stocks of a corporation established through division, etc., money or other property value paid by the corporation established through division, etc., to the stockholders of the divided corporation due to the division: Provided, That, in cases of a division and merger, where a counterpart corporation to the division and merger acquired the stocks combined due to the division and merger, although the stocks granted due to division and merger are not granted with respect to such stocks, the stocks granted due to the division and merger shall be deemed granted by the equity ratio for the purposes of calculating the value of the stocks of the counterpart corporation to the division and merger;
(b) Sum total of the corporate tax of the divided corporation paid by the corporation established through the division, etc., the national tax imposed on the corporate tax (including the amount of tax reduction or exemption) and the local corporate tax imposed under of Article 88 (2) of the Local Tax Act.
(2) Where any corporate tax is refunded under the Framework Act on National Taxes in calculating the net book value of assets of a divided corporation, etc., under Article 46-5 (1) 2 of the Act, the amount equivalent to such refunded amount shall be added to the net book value of assets as on the registration date of the division of the divided corporation, etc.
(3) Any divided corporation, etc., that wishes to qualify for paragraph (1) 1 shall file an application for special cases for taxation upon division in the form prescribed by Ordinance of the Ministry of Strategy and Finance, together with any corporation established through division, etc., in filing a report on tax base under Article 60 of the Act, with the head of the tax office having jurisdiction over the place of tax payment. In such cases, the corporation established through division, etc., shall also submit the detailed statement on the asset adjustment account referred to in Article 82-4 (10) to the head of the tax office having jurisdiction over the place of tax payment of the corporation established through division, etc. <Amended by Presidential Decree No. 22577, Dec. 30, 2010; Presidential Decree No. 28640, Feb. 13, 2018>
[This Article Wholly Amended by Presidential Decree No. 22184, Jun. 8, 2010]
 Article 84 (Inclusion of Amount Equivalent to Capital Gains from Transfer of Assets upon Spin-off in Deductible Expenses)
(1) Of the value of stocks, etc., acquired from a corporation established through a division (hereafter in this Article referred to as "stocks, etc. of a corporation established through a division"), the amount that a divided corporation may include in deductible expenses under Article 47 (1) of the Act shall be the amount equivalent to capital gains from the transfer of assets generated by the spin-off. <Amended by Presidential Decree No. 23589, Feb. 2, 2012; Presidential Decree No. 24357, Feb. 15, 2013>
(2) The amount included in deductible expenses under paragraph (1) shall be recognized as accelerated depreciation allowances of stocks, etc., of a corporation established through division. <Amended by Presidential Decree No. 23589, Feb. 2, 2012; Presidential Decree No. 24357, Feb. 15, 2013>
(3) "Amount prescribed by Presidential Decree" in the main sentence of Article 47 (2) of the Act means the amount computed by multiplying the accelerated depreciation allowances of stocks, etc., of a corporation established through division as on the last day (referring to the registration date of the division for the business year in which the registration date of the division falls; hereafter in this Article the same shall apply) of the immediately preceding business year by the rate calculated by subtracting the rate calculated by multiplying the rates provided for in subparagraphs 1 and 2 from the rate calculated by adding the rates provided for in subparagraphs 1 and 2: <Amended by Presidential Decree No. 23589, Feb. 2, 2012; Presidential Decree No. 24357, Feb. 15, 2013>
1. The ratio of the book value of stocks, etc., of a corporation established through division disposed of pursuant to Article 47 (2) 1 of the Act in the relevant business year to the book value of stocks, etc., of the corporation established through division, acquired pursuant to Article 47 (1) of the Act and held by a divided corporation as on the last day of the immediately preceding business year;
2. The ratio of capital gains from the transfer of the succeeded assets disposed of in the relevant business year to capital gains from the transfer of the assets provided for in paragraph (4) succeeded to from a divided corporation pursuant to Article 47 (1) of the Act (hereafter in this Article referred to as "succeeded assets") and held by a corporation established through division as on the last day of the immediately preceding business year.
(4) "Assets prescribed by Presidential Decree" in Article 47 (2) 2 of the Act means depreciable assets (including assets provided for in Article 24 (3) 1), land, stocks, etc. <Amended by Presidential Decree No. 23589, Feb. 2, 2012>
(5) "Where a corporation established through division becomes subject to a qualified merger or qualified division or where such corporation is in other extenuating circumstances specified by Presidential Decree" in the proviso to Article 47 (2) of the Act means where a divided corporation or a corporation established through division disposes of stocks or closes the business to which it has succeeded, for the first time, through a qualified merger, a qualified division, a qualified spin-off, a qualified investment in kind, an all-inclusive exchange, etc. of stocks on which taxation has been deferred under Article 38 of the Restriction of Special Taxation Act, or an in-kind investment of stocks on which taxation has been deferred under Article 38-2 of the same Act (hereafter in this Article and Article 84-2 referred to as "qualified restructuring"). <Amended by Presidential Decree No. 27828, Feb. 3, 2017; Presidential Decree No. 28640, Feb. 13, 2018>
(6) Where a divided corporation becomes subject to the proviso to Article 47 (2) of the Act on the ground specified in paragraph (5), the accelerated depreciation allowances of the stocks, etc., of the corporation established through division, held by the divided corporation, shall be set aside as follows: <Amended by Presidential Decree No. 27828, Feb. 3, 2017>
1. The amount computed by multiplying the balance of the accelerated depreciation allowances of the stocks, etc., of the corporation established through division by the ratio specified in paragraph (3) 2 (transferred assets disposed of for purposes of computing the rate mean those that constitute transferred assets disposed of to the corporation (hereafter in this Article referred to as "corporation succeeding to assets") that succeeds to assets of the corporation established through division from the corporation established through division through qualified restructuring) shall be set aside as accelerated depreciation allowances of the stocks, etc. of the corporation succeeding to assets (hereafter in this Article referred to as "stocks, etc., of the corporation succeeding to assets"), which the divided corporation or the corporation established through division newly acquires: Provided, That, if the corporation succeeding to assets is the divided corporation, the amount computed by apportioning the balance of accelerated depreciation allowances of the stocks, etc., of the corporation established through division in proportion to capital gains accruing from assets at the time of the initial spin-off, among assets transferred to the divided corporation, shall be set aside as temporary depreciation allowances, if the assets are depreciated assets, or as accelerated depreciation allowances of such assets, if such assets are not depreciated assets;
2. The amount computed by multiplying the balance of accelerated depreciation allowances of the stocks, etc., of the corporation established through division by the ratio specified in paragraph (3) 1 (stocks disposed of for purposes of computing the rate mean those that constitute stocks, etc., of the corporation established through division, which have been disposed of to the corporation (hereafter in this Article referred to as "corporation succeeding to stocks") that succeeds stocks, etc. of the corporation established through division from the divided corporation through qualified restructuring) shall be set aside as accelerated depreciation allowances of the stocks, etc., of the corporation established through division, to which the corporation succeeding to stocks has succeeded.
(7) Where either of the following events occurs in relation to a divided corporation that has newly set aside accelerated depreciation allowances pursuant to paragraph (6), the corporation established through division, or the corporation succeeding to stocks, the corporation shall include the amount computed by applying paragraph (3) mutatis mutandis in gross income when computing the amount of income for the business year in which such event occurs: Provided, That, in cases of the proviso to paragraph (6) 1, the amount computed by the methods prescribed in Article 64 (4) shall be included in gross income: <Newly Inserted by Presidential Decree No. 24357, Feb. 15, 2013; Presidential Decree No. 26981, Feb. 12, 2016; Presidential Decree No. 27828, Feb. 3, 2017>
1. Where a divided corporation or the corporation established through division disposes of the stocks, etc. of the corporation succeeding to assets, which it newly acquired upon qualified restructuring, or where the corporation succeeding to stocks disposes of the stocks, etc., of the corporation established through division, to which it succeed upon qualified restructuring;
2. Where the corporation succeeding to assets disposes of assets provided for in paragraph (4), among assets to which it succeeded from the corporation established through division, or where the corporation established through division disposes of transferred assets.
(8) If either of the following events occurs in relation to a divided corporation that has set aside accelerated depreciation allowances pursuant to paragraph (6), a corporation established through division, or a corporation succeeding to assets during the period set forth in paragraph (10), such corporation shall include the balance of the accelerated depreciation allowances fully in gross income when computing the amount of income for the business year in which such event occurs: <Newly Inserted by Presidential Decree No. 24357, Feb. 15, 2013; Presidential Decree No. 25194, Feb. 21, 2014; Presidential Decree No. 26981, Feb. 12, 2016; Presidential Decree No. 27828, Feb. 3, 2017>
1. Where the corporation succeeding to assets closes the business to which it succeeded from the corporation established through division upon qualified restructuring, or where the corporation established through division closes the business to which it succeeded from the divided corporation;
2. Where the ratio of the stocks, etc., of the corporation succeeding to assets, which are held by the divided corporation or the corporation established through division, to the total number of outstanding stocks or the total amount of investment of the corporation succeeding to assets (hereafter in this Article referred to as "ratio of shares of the corporation succeeding to assets") is less than 50/100 of the ratio of shares of the corporation succeeding to assets on the acquisition date of stocks, etc., of the corporation succeeding to assets, or where the ratio of the stocks, etc., of the corporation established through division, which are held by the corporation succeeding to assets, to the total number of outstanding stocks or the total amount of investment of the corporation established through division (hereafter in this Article referred to as "ratio of shares of the corporation established through division") is less than 50/100 of the ratio of shares of the corporation established through division on the acquisition date of stocks, etc., of the corporation established through division.
(9) "Extenuating circumstances prescribed by Presidential Decree" in the proviso to Article 47 (1) of the Act and the proviso to Article 47 (3) of the Act means the following circumstances: <Amended by Presidential Decree No. 22577, Dec. 30, 2010; Presidential Decree No. 23589, Feb. 2, 2012; Presidential Decree No. 28640, Feb. 13, 2018>
1. Where such circumstances are related to Article 46 (2) 2 or 47 (3) 2 of the Act: Where a divided corporation falls under any item of Article 80-2 (1) 1;
2. Where such circumstances are related to Article 46 (2) 3 or 47 (3) 1 of the Act: Where a corporation established through division, etc., falls under any item of Article 80-2 (1) 2;
3. Where such circumstances are related to Article 46 (2) 4 or 47 (3) 3 of the Act: In either of the following cases:
(a) Where such circumstances are related to Article 46 (2) 4 of the Act: Where a corporation established through division, etc. falls under any provision of Article 80-2 (1) 3 (a) through (c) or where the number of employees under Article 82-4 (9) who work for the divided division as of one month before the registration date of division is less than five;
(b) Where such circumstances are related to Article 47 (3) 3 of the Act: Where a corporation established through division, etc. falls under any provision of Article 80-2 (1) 3 (a) through (c).
(10) "Period prescribed by Presidential Decree" in the main sentence of Article 47 (3) of the Act means two years (or three years in cases under Article 47 (3) 3 of the Act) beginning on the first day of the business year following the business year in which the registration date of the division falls. <Amended by Presidential Decree No. 23589, Feb. 2, 2012; Presidential Decree No. 27828, Feb. 3, 2017; Presidential Decree No. 28640, Feb. 13, 2018>
(11) "Employees specified by Presidential Decree" in Article 47 (3) 3 of the Act means Korean nationals employed under an employment contract entered into under the Labor Standards Act: Provided, That the employees who fall under any subparagraph of Article 82-2 (10), among employees working for the divided business division, may be excluded herefrom. <Newly Inserted by Presidential Decree No. 28640, Feb. 13, 2018>
(12) Where a divided corporation recognized accelerated depreciation allowances in accordance with paragraph (1) or (2), the corporation established through division may succeed to the tax reductions, exemptions or credits under Article 59 of the Act, which the divided corporation was entitled before the division, to be entitled to such tax reductions, exemptions or credits. In such cases, if the Act or any other Act provides for requirements, etc. for such tax reductions, exemptions or credits, such provisions shall apply only where a corporation established through division meets such requirements, etc. and a corporation established through division may be entitled only to the tax reductions, exemptions or credits applicable to the business to which the corporation succeeds as follows: <Newly Inserted by Presidential Decree No. 28640, Feb. 13, 2018>
1. Where carried-over tax reductions, exemptions or credits are related to a specific business or asset: The corporation established through division who succeeded to the specific business or asset shall be entitled to deductions;
2. Where carried-over tax reductions, exemptions or credits are not related to any specific business or asset referred to in subparagraph 1: The corporation established through division shall be entitled to deductions in proportion to the ratio of the value of the fixed assets for business year to which the corporation established through division succeeded to the value of fixed assets of the divided corporation for business use.
(13) Article 81 (3) shall apply mutatis mutandis where a corporation established through division applies to the tax reductions, exemptions or credits transferred from the divided corporation under Article 47 (4) of the Act. <Newly Inserted by Presidential Decree No. 28640, Feb. 13, 2018>
(14) Articles 80-2 (7) and 80-4 (8) shall apply mutatis mutandis to determination as to whether a corporation established through division or a corporation succeeding to assets continues or closes the transferred business and the application thereof. <Amended by Presidential Decree No. 22577, Dec. 30, 2010; Presidential Decree No. 24357, Feb. 15, 2013; Presidential Decree No. 27828, Feb. 3, 2017; Presidential Decree No. 28640, Feb. 13, 2018>
(15) A domestic corporation which wishes to qualify for Article 47 (1) of the Act shall file an application for special taxation on spin-off in the form prescribed by Ordinance of the Ministry of Strategy and Finance and the detailed statement on capital gains on a transfer of assets with the head of the tax office having jurisdiction over the place of tax payment at the time of filing a return pursuant to Article 60 of the Act, jointly with the corporation established through division or the corporation succeeding to assets. <Amended by Presidential Decree No. 23589, Feb. 2, 2012; Presidential Decree No. 26981, Feb. 12, 2016; Presidential Decree No. 27828, Feb. 3, 2017>
[This Article Wholly Amended by Presidential Decree No. 22184, Jun. 8, 2010]
 Article 84-2 (Inclusion of Amount Equivalent to Capital Gains from Transfer of Assets upon Investment in Kind in Deductible Expenses)
(1) Of the value of stocks, etc., acquired from an invested corporation (hereafter in this Article referred to as "stocks, etc., of an invested corporation"), the amount that an investing corporation shall include in deductible expenses under Article 47-2 (1) of the Act shall be the amount equivalent to capital gains from the transfer of assets accruing from the investment in kind. <Amended by Presidential Decree No. 23589, Feb. 2, 2012; Presidential Decree No. 24357, Feb. 15, 2013>
(2) The amount included in deductible expenses under paragraph (1) shall be recognized as accelerated depreciation allowances of the stocks, etc., of the invested corporation. <Amended by Presidential Decree No. 23589, Feb. 2, 2012; Presidential Decree No. 24357, Feb. 15, 2013>
(3) "Amount prescribed by Presidential Decree" in the main sentence of Article 47-2 (2) of the Act means the amount computed by multiplying accelerated depreciation allowances of the stocks, etc., of an invested corporation as on the last day (referring to the date of the investment in kind for the business year in which the date of the investment in kind falls; hereafter in this Article the same shall apply) of the immediately preceding business year, by the rate calculated by subtracting the rate calculated by multiplying the ratios provided for in subparagraphs 1 and 2 from the rate calculated by adding the rates provided for in subparagraphs 1 and 2: <Amended by Presidential Decree No. 23589, Feb. 2, 2012; Presidential Decree No. 24357, Feb. 15, 2013>
1. The ratio of the book value of stocks, etc., of an invested corporation disposed of pursuant to Article 47-2 (2) 1 of the Act in the relevant business year to the book value of stocks, etc., of the invested corporation acquired pursuant to Article 47-2 (1) of the Act and held by an investing corporation as on the last day of the immediately preceding business year;
2. The ratio of capital gains from the transfer of the succeeded assets disposed of in the relevant business year to the capital gains (referring to the amount computed by subtracting the book value of the succeeded assets held by an investing corporation, etc., on the date preceding the date of the investment in kind from the market price of the succeeded assets as on the date of the investment in kind) from the transfer of the assets provided for in paragraph (4) succeeded to from the investing corporation, etc., pursuant to Article 47-2 (1) of the Act (hereafter in this Article referred as "succeeded assets") and held by an invested corporation as on the last day of the immediately preceding business year.
(4) "Assets prescribed by Presidential Decree" in Article 47-2 (2) 2 of the Act means depreciable assets (including the assets provided for in Article 24 (3) 1), land, stocks, etc. <Amended by Presidential Decree No. 23589, Feb. 2, 2012>
(5) "Where an invested corporation becomes subject to a qualified merger or qualified division, or where such corporation is in other extenuating circumstances prescribed by Presidential Decree" in the proviso to Article 47-2 (2) of the Act means where a investing corporation or an invested corporation disposes of stocks or closes a transferred business, for the first time upon qualified restructuring. <Amended by Presidential Decree No. 27828, Feb. 3, 2017>
(6) Where an investing corporation becomes subject to the proviso to Article 47-2 (2) of the Act pursuant to paragraph (5), the accelerated depreciation allowances of the stocks, etc., of the invested corporation, held by the investing corporation, shall be set aside as follows: <Amended by Presidential Decree No. 27828, Feb. 3, 2017>
1. The amount of accelerated depreciation allowances of the stocks, etc., of the corporation succeeding to assets, which the investing corporation or the invested corporation shall newly acquire (hereafter in this Article referred to as "stocks, etc., of the corporation succeeding to assets") shall be computed by multiplying the balance of the accelerated depreciation allowances of the stocks, etc., of the invested corporation by the ratio specified in paragraph (3) 2 (the transferred assets disposed of for purposes of calculating the ratio means those that constitute transferred assets disposed of to the corporation that succeeds to assets of the invested corporation from the invested corporation (hereafter in this Article referred to as "corporation succeeding to assets")): Provided, That, if the corporation succeeding to assets is the investing corporation, the amount computed by apportioning the balance of accelerated depreciation allowances of the stocks, etc., of the invested corporation in proportion to capital gains accruing from assets at the time of the initial investment in kind, among assets transferred to the investing corporation, shall be set aside as the temporary depreciation allowances, if the assets are depreciated assets, or as compressed accounts reserve funds of such assets, if such assets are not depreciated assets;
2. The amount computed by multiplying the balance of accelerated depreciation allowances of the stocks, etc., of the invested corporation by the ratio specified in paragraph (3) 1 (stocks disposed of for purposes of computing the rate mean those that constitute stocks, etc., of the corporation established through division, which have been disposed of to the corporation (hereafter in this Article referred to as "corporation succeeding to stocks") that succeeds stocks, etc., of the invested corporation from the investing corporation through qualified restructuring) shall be set aside as accelerated depreciation allowances of the stocks, etc., of the invested corporation, to which the corporation succeeding to stocks has succeeded.
(7) Where either of the following events occurs in relation to an investing corporation, an invested corporation, or a corporation succeeding to stocks, which has newly set aside as accelerated depreciation allowances pursuant to paragraph (6), the amount computed by applying paragraph (3) mutatis mutandis shall be included in gross income at the time of computing the amount of income for the business year in which such event occurs: Provided, That, in cases of the proviso to paragraph (6) 1, such amount shall be included in gross income by the methods prescribed in Article 64 (4): <Newly Inserted by Presidential Decree No. 24357, Feb. 15, 2013; Presidential Decree No. 26068, Feb. 3, 2015; Presidential Decree No. 27828, Feb. 3, 2017>
1. Where the investing corporation or the invested corporation disposes of stocks, etc., of the corporation succeeding to assets, newly acquired upon qualified restructuring, where the corporation succeeding to assets disposes of the stocks, etc., of the invested corporation, to which it has succeeded upon qualified restructuring;
2. Where the corporation succeeding to assets disposes of assets provided for in paragraph (4), to which it has succeeded from the invested corporation upon qualified restructuring, or where the invested corporation disposes of transferred assets.
(8) Where either of the following events occurs in relation to an investing corporation that has newly set aside as accelerated depreciation allowances pursuant to paragraph (6), an invested corporation, or a corporation succeeding to assets during the period set forth in paragraph (12), the accelerated depreciation allowances shall be fully included in gross income in computing the amount of income for the business year in which such event occurs: <Newly Inserted by Presidential Decree No. 24357, Feb. 15, 2013; Presidential Decree No. 26068, Feb. 3, 2015; Presidential Decree No. 26981, Feb. 12, 2016; Presidential Decree No. 27828, Feb. 3, 2017>
1. Where the corporation succeeding to assets closes the business to which it succeeded from the invested corporation upon qualified restructuring, or where the invested corporation closes the business to which it succeeded from the investing corporation;
2. Where the ratio of the stocks, etc., of the corporation succeeding to assets, which are held by the investing corporation or the invested corporation, to the total number of outstanding stocks or the total amount of investment of the corporation succeeding to assets (hereafter in this Article referred to as "ratio of shares of the corporation succeeding to assets") is less than 50/100 of the ratio of shares of the corporation succeeding to assets on the acquisition date of stocks, etc., of the corporation succeeding to assets, or where the ratio of the stocks, etc., of the invested corporation, which are held by the corporation succeeding to assets, to the total number of outstanding stocks or the total amount of investment of the invested corporation (hereafter in this Article referred to as "ratio of shares of the invested corporation") is less than 50/100 of the ratio of shares of the invested corporation on the acquisition date of stocks, etc. of the invested corporation.
(9) and (10) Deleted. <by Presidential Decree No. 27828, Feb. 3, 2017>
(11) "Extenuating circumstances prescribed by Presidential Decree" in the provisos to Article 47-2 (1) and (3) of the Act means the following cases: <Amended by Presidential Decree No. 22812, Mar. 31, 2011; Presidential Decree No. 23589, Feb. 2, 2012>
1. Where such circumstances are related to Article 47-2 (1) 4 or (3) 2 of the Act: Where an investing corporation falls under any item of Article 80-2 (1) 1;
2. Where such circumstances are related to Article 47-2 (1) 2 or (3) 1 of the Act: Where an invested corporation falls under any item of Article 80-2 (1) 2.
(12) "Period prescribed by Presidential Decree" in the main sentence of Article 47-2 (3) of the Act means two years beginning on the first day of the business year following the business year in which investment in kind is made. <Amended by Presidential Decree No. 23589, Feb. 2, 2012; Presidential Decree No. 27828, Feb. 3, 2017>
(13) Articles 80-2 (7) and 80-4 (8) shall apply mutatis mutandis to determination as to whether an invested corporation or a corporation succeeding to assets continues or closes the business to which it succeeded and the application thereof. <Amended by Presidential Decree No. 22577, Dec. 30, 2010; Presidential Decree No. 24357, Feb. 15, 2013; Presidential Decree No. 27828, Feb. 3, 2017; Presidential Decree No. 28640, Feb. 13, 2018>
(14) and (15) Deleted. <by Presidential Decree No. 28640, Feb. 13, 2018>
(16) A domestic corporation that wishes to qualify for Article 47-2 (1) of the Act shall file an application for special taxation on investment in kind in the form prescribed by Ordinance of the Ministry of Strategy and Finance and the detailed statement on the capital gains on the transfer of assets, with the head of the tax office having jurisdiction over the place of tax payment, jointly with the invested corporation or the corporation succeeding to assets, at the time of filing a return under Article 60 of the Act. <Amended by Presidential Decree No. 23589, Feb. 2, 2012; Presidential Decree No. 27828, Feb. 3, 2017>
[This Article Wholly Amended by Presidential Decree No. 22184, Jun. 8, 2010]
 Article 85 (Succession of Assets and Liabilities upon Merger or Division)
In the case of a merger or division of a domestic corporation, the amount included or not included in gross income or deductible expenses (hereafter referred to as "tax settlement matters" in this Article) in the calculation of the amount of income and the tax base of a merged corporation, etc. for each business year under the latter part of Article 44-2 (1), Article 44-3 (2), the latter part of Article 46-2 (1), or Article 46-3 (2) of the Act or according to a spin-off shall be transferred by succession as follows, unless otherwise expressly provided in the Act or any other Act: <Amended by Presidential Decree No. 22577, Dec. 30, 2010; Presidential Decree No. 23589, Feb. 2, 2012; Presidential Decree No. 25194, Feb. 21, 2014>
1. In the case of a qualified merger or qualified division: All of the tax settlement matters (in the cases of a division, limited to the tax settlement matters of the divided business category) shall be succeeded to a surviving corporation, etc.;
2. In cases other than those falling under subparagraph 1: Where retirement benefit appropriation funds or appropriation for bad debts are succeeded to a surviving corporation, etc. under Articles 33 (3), (4) and 34 (6) of the Act, all of the tax settlement matters related thereto shall be succeeded to the surviving corporation, etc. and other tax settlement matters shall not be succeeded to the surviving corporation, etc.
[This Article Wholly Amended by Presidential Decree No. 22184, Jun. 8, 2010]
 Article 85-2 (Liability to Pay Tax on Transfer Marginal Profits or Losses upon Merger or Division)
Where a corporation disappears due to a merger or division, the surviving corporation, etc., etc. shall be liable to pay the corporate tax (including the corporate tax on profits or losses from transfer upon a merger or division) on the income for each business year which the merged corporation, etc. has not paid.
[This Article Newly Inserted by Presidential Decree No. 22184, Jun. 8, 2010]
 Article 86 (Inclusion of Amount Equivalent to Transfer Marginal Profits of Assets due to Exchange in Deductible Expenses)
(1) "Business prescribed by Presidential Decree" referred to in Article 50 (1) of the Act means business, other than the business provided in Article 29 (3) of the Enforcement Decree of the Restriction of Special Taxation Act and Article 60-2 (1) 1 through 3 of the Enforcement Decree of the same Act. <Amended by Presidential Decree No. 17457, Dec. 31, 2001; Presidential Decree No. 18324, Mar. 22, 2004; Presidential Decree No. 18706, Feb. 19, 2005; Presidential Decree No. 20619, Feb. 22, 2008; Presidential Decree No. 22577, Dec. 30, 2010>
(2) "Assets prescribed by Presidential Decree" referred to in Article 50 (1) of the Act means land, buildings, assets provided in Article 4 (2) of the Enforcement Decree of the Restriction of Special Taxation Act, and other assets prescribed by Ordinance of the Ministry of Strategy and Finance. <Amended by Presidential Decree No. 17338, Aug. 14, 2001; Presidential Decree No. 18706, Feb. 19, 2005; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 22035, Feb. 18, 2010; Presidential Decree No. 22951, Jun. 3, 2011>
(3) "Exchange among several corporations prescribed by Presidential Decree" referred to in Article 50 (1) of the Act means an exchange of assets among at least three corporations under one exchange contract. <Amended by Presidential Decree No. 22951, Jun. 3, 2011>
(4) The amount equivalent to the transfer marginal profits included in deductible expenses under Article 50 (1) of the Act shall be an amount computed by subtracting the amount provided in subparagraph 2 (if the amount is in excess of the amount computed by subtracting the book value from the market price of the fixed business assets, such excess amount shall be excluded) from the amount provided in subparagraph 1: <Amended by Presidential Decree No. 17457, Dec. 31, 2001>
1. The value of assets acquired through exchange;
2. If some payments are made in cash, such amount and the book value of fixed business assets.
(5) Article 64 (3) through (5) shall apply mutatis mutandis to the inclusion of an amount equivalent to transfer marginal profits included in deductible expenses under paragraph (4) in the calculation of deductible expenses or gross income.
(6) A domestic corporation that intends to be applicable under Article 50 (1) of the Act shall submit a detailed statement on assets exchanges in the form stipulated by Ordinance of the Ministry of Strategy and Finance, along with the report provided in Article 60 of the Act, to the head of the tax office having jurisdiction over the place of tax payment. <Amended by Presidential Decree No. 20720, Feb. 29, 2008>
Subsection 6-2 Income Tax Deduction
 Article 86-2 (Income Deductions for Special Purpose Companies, etc.)
(1) "Distributable profits prescribed by Presidential Decree" in Article 51-2 (1) of the Act means the amount calculated by subtracting corporate tax expenses on the financial statements prepared in accordance with the Korean Financial Accounting Standards, adding carried-over retained earnings to the profit for the year or deducting carried-over losses from the net income, and then deducting earned surplus reserves accumulated under Article 458 of the Commercial Act. In such cases, the following amounts shall be excluded therefrom: <Amended by Presidential Decree No. 26981, Feb. 12, 2016>
1. Dividends provided for in subparagraph 8 of Article 18 of the Act;
2. Gains or losses on the valuation of assets under subparagraph 2 (a) through (c) of Article 73, among the profit for the year, carried-over retained earnings, and carried-over losses: Provided, That gains or losses on the valuation of assets of an investment company, etc., under subparagraph 2 (c) of Article 73, as evaluated by the market value method under Article 75 (3), shall be included in distributable income.
(2) "Corporation prescribed by Presidential Decree" in Article 51-2 (1) 6 of the Act means a corporation incorporated upon meeting the requirements for investment companies referred to in Article 4 (1) 3 (c) of the Enforcement Decree of the Special Act on Private Rental Housing to engage in rental business. <Newly Inserted by Presidential Decree No. 19328, Feb. 9, 2006; Presidential Decree No. 20849, Jun. 20, 2008; Presidential Decree No. 22577, Dec. 30, 2010; Presidential Decree No. 26763, Dec. 28, 2015>
(3) Where an investment company similar to those referred to in Article 51-2 (1) 1 through 8 of the Act operates a housing construction project jointly with a housing construction project operator pursuant to the Housing Act, uses its assets for the housing construction project, and distributes the profits therefrom to its stockholders, the investment company is deemed to have met the requirements provided for in Article 51-2 (1) 9 (a) of the Act. <Newly Inserted by Presidential Decree No. 19891, Feb. 28, 2007; Presidential Decree No. 20619, Feb. 22, 2008; Presidential Decree No. 22577, Dec. 30, 2010>
(4) "Requirements prescribed by Presidential Decree" in Article 51-2 (1) 9 (e) of the Act means the following requirements: <Newly Inserted by Presidential Decree No. 18324, Mar. 22, 2004; Presidential Decree No. 18945, Jul. 15, 2005; Presidential Decree No. 19328, Feb. 9, 2006; Presidential Decree No. 21302, Feb. 4, 2009; Presidential Decree No. 22035, Feb. 18, 2010; Presidential Decree No. 22577, Dec. 30, 2010>
1. At least one incorporator shall be either of the following:
(a) A financial company, etc., referred to in any of Article 61 (2) 1 through 13, and 24;
(b) The National Pension Service established under the National Pension Act (limited to an investment company that implements public-private partnership projects in the manner referred to in subparagraph 2 of Article 4 of the Act on Public-Private Partnerships in Infrastructure);
2. Incorporators falling under subparagraph 1 (a) or (b) shall make equity investment in at least 5/100 of the capital (if there are multiple numbers of incorporators falling under subparagraph 1 (a) or (b), their investments shall be added up).
(5) "Requirements prescribed by Presidential Decree" in Article 51-2 (1) 9 (h) of the Act means the following requirements: <Newly Inserted by Presidential Decree No. 18324, Mar. 22, 2004; Presidential Decree No. 18706, Feb. 19, 2005; Presidential Decree No. 18945, Jul. 15, 2005; Presidential Decree No. 19891, Feb. 28, 2007; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 21302, Feb. 4, 2009; Presidential Decree No. 22035, Feb. 18, 2010; Presidential Decree No. 22577, Dec. 30, 2010; Presidential Decree No. 26981, Feb. 12, 2016>
1. The capital shall be at least five billion won: Provided, That in cases of an investment company that implements public-private partnership projects in the manner referred to in subparagraph 2 of Article 4 of the Act on Public-Private Partnerships in Infrastructure, it shall be at least one billion won;
2. Management, operation, and disposition of assets shall be entrusted to any of the following entities (hereafter in this Article referred to as "asset management company"): Provided, That business affairs related to trust contracts referred to in Article 4 (1) 1 of the Act on Sale of Building Units in cases of the proviso to subparagraph 6 may be entrusted to a trustee company of fund management referred to in subparagraph 3:
(a) A corporation that makes an equity investment in the relevant company;
(b) A corporation incorporated independently or jointly by a person or persons who make an equity investment in the relevant company;
3. Fund management affairs shall be entrusted to a financial company, etc., that operates trust business under the Financial Investment Services and Capital Markets Act (hereafter in this Article referred to as "trustee company of fund management");
4. Shareholders shall meet the requirements provided for in each subparagraph of paragraph (4). In such cases, "incorporator" shall be construed as "stockholder";
5. A nominal company incorporation report stating the following matters, accompanied by documents prescribed by Ordinance of the Ministry of Strategy and Finance, shall be submitted to the head of the tax office having jurisdiction over the place of tax payment within two months from the registration date of the incorporation of corporation:
(a) Proper purpose business prescribed in the articles of incorporation;
(b) Names and resident registration numbers of directors and auditors;
(c) The name of an asset management company;
(d) The name of a trustee company of fund management;
6. An asset management company and a trustee company of fund management shall not be the same entity: Provided, That the foregoing shall not apply where the relevant company has a trust contract and an agency contract has signed with a trustee company of fund management (it shall not be a controlling stockholder of the relevant company or in any similar status, and its investment ratio shall be less than 10/100) in accordance with Article 4 (1) 1 of the Act on Sale of Building Units.
(6) Where a director, auditor, or stockholder of a corporation referred to in Article 51-2 (1) 9 of the Act fail to meet the requirements provided for in Article 51-2 (1) 9 (f) and (g) of the Act, and paragraph (5) 4 of this Decree after such corporation files a report under paragraph (5) 5, and where the corporation supplements the relevant requirement within one month from the date on which the grounds of failing to meet such requirements arise, such corporation shall be deemed to continue to meet the relevant requirements. <Newly Inserted by Presidential Decree No. 18324, Mar. 22, 2004; Presidential Decree No. 19891, Feb. 28, 2007; Presidential Decree No. 20619, Feb. 22, 2008; Presidential Decree No. 22577, Dec. 30, 2010>
(7) Where any matter referred to in any item of paragraph (5) 5 are changed after a corporation referred to in Article 51-2 (1) 9 of the Act files a report under paragraph (5) 5, the corporation shall file a nominal company change report stating the relevant changed matters, accompanied by documents prescribed by Ordinance of the Ministry of Strategy and Finance, to the head of the tax office having jurisdiction over the place of tax payment within two weeks from the date on which such change occurs. <Newly Inserted by Presidential Decree No. 18324, Mar. 22, 2004; Presidential Decree No. 19891, Feb. 28, 2007; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 22577, Dec. 30, 2010>
(8) Where an amount equivalent to the dividends deducted under Article 51-2 (1) of the Act exceeds the income of the relevant business year, such excess amount shall be deemed nil.
(9) Any corporation that wishes to qualify for Article 51-2 (1) of the Act shall file an application for income deduction in the form stipulated by Ordinance of the Ministry of Strategy and Finance with the head of the tax office having jurisdiction over the place of tax payment, along with the report on the tax base provided for in Article 60 of the Act: Provided, That any corporation that wishes to qualify for Article 51-2 (1) of the same Act shall submit the written confirmation of the application of special case of taxation on partnership enterprise and the partnership taxation in the form stipulated by Ordinance of the Ministry of Strategy and Finance which is submitted by the partnership enterprise that receives dividends by the filing deadline specified under Article 100-23 (1) of the Restriction of Special Taxation Act. <Amended by Presidential Decree No. 22035, Feb. 18, 2010>
(10) "Corporation meeting the standards prescribed by Presidential Decree" referred to in Article 51-2 (2) 2 of the Act means a corporation that meets all of the following requirements: <Newly Inserted by Presidential Decree No. 19328, Feb. 9, 2006; Presidential Decree No. 22035, Feb. 18, 2010>
1. The corporation shall be incorporated by means of private offering of shares;
2. Not more than two individuals or one individual and his/her relatives (hereafter in this subparagraph referred to as "individuals, etc.") shall own at least 95/100 of the total number of issued stocks or the total amount of investment: Provided, That this shall not apply where the individuals, etc., do not have the right to claim the distribution of dividends and residual assets.
[This Article Newly Inserted by Presidential Decree No. 16658, Dec. 31, 1999]
Subsection 7 Special Cases concerning Calculation of Amounts of Income
 Article 87 (Scope of Related Party)
(1) "Related party prescribed by Presidential Decree" referred to in Article 52 (1) of the Act means a person with any of the following relationships (hereinafter referred to as "related party") with a corporation. In such cases, the principal shall be deemed the related party of the related party under the latter part other than the items of subparagraph 20 of Article 20 of the Framework Act on National Taxes: <Amended by Presidential Decree No. 17457, Dec. 31, 2001; Presidential Decree No. 17826, Dec. 30, 2002; Presidential Decree No. 18706, Feb. 19, 2005; Presidential Decree No. 22951, Jun. 3, 2011; Presidential Decree No. 23589, Feb. 2, 2012>
1. Persons (including persons to be treated as directors under Article 401-2 (1) of the Commercial Act) recognized to be exercising actual influence over the management of the relevant corporation, such as exercising the right to appoint or dismiss executives or determining the course of business, and their relatives;
2. Stockholders (excluding minority stockholders, etc.; hereafter the same shall apply in this Sub-section) and their relatives;
3. Executives and employees of a corporation, or employees of a stockholder (referring to the executives, in the case of a profit-making corporation, and the director and the founder, in the case of a non-profit corporation) or persons, other than employees, whose livelihood depends on the cash and other assets of the corporation or stockholder, and their relatives who depend upon them for their livelihood;
4. Where the relevant corporation exercises controlling influence over a corporation's management directly or through a person in the relationship referred to in subparagraphs 1 through 3, such relevant corporation;
5. Where the relevant corporation exercises controlling influence over a corporation's management directly or through a person in the relationship referred to in subparagraphs 1 through 4, such relevant corporation;
6. A corporation or individual which invests at least 30/100 in a corporation which invests at least 30/100 in the relevant corporation;
7. Where the relevant corporation belongs to an enterprise group defined in the Monopoly Regulation and Fair Trade Act, other affiliates and executives of such affiliates in the enterprise group;
8. Deleted. <by Presidential Decree No. 23589, Feb. 2, 2012>
(2) Whether a corporation is exercising controlling influence as prescribed in paragraph (1) 4 and 5 shall be determined pursuant to Article 1-2 (4) of the Enforcement Decree of the Framework Act on National Taxes. <Newly Inserted by Presidential Decree No. 23589, Feb. 2, 2012>
(3) and (4) Deleted. <by Presidential Decree No. 20619, Feb. 22, 2008>
 Article 88 (Types, etc. of Wrongful Calculations)
(1) "Where the head of the tax office having jurisdiction over the place of tax payment or the commissioner of the competent regional tax office deems that the tax burden of a domestic corporation has been unjustly reduced" in Article 52 (1) of the Act means any of the following cases: <Amended by Presidential Decree No. 18706, Feb. 19, 2005; Presidential Decree No. 19328, Feb. 9, 2006; Presidential Decree No. 19891, Feb. 28, 2007; Presidential Decree No. 20619, Feb. 22, 2008; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 21302, Feb. 4, 2009; Presidential Decree No. 22035, Feb. 18, 2010; Presidential Decree No. 22184, Jun. 8, 2010; Presidential Decree No. 22951, Jun. 3, 2011; Presidential Decree No. 23589, Feb. 2, 2012; Presidential Decree No. 26981, Feb. 12, 2016; Presidential Decree No. 28640, Feb. 13, 2018>
1. Where assets are purchased or received as investments in kind at a price higher than the market price or the assets are over-depreciated;
2. Where unprofitable assets are purchased or received as investments in kind or expenses are borne for such assets;
3. Where assets are transferred or invested in kind gratuitously or at a price lower than the market price: Provided, That excluded herefrom shall be the cases where stocks are transferred upon the exercise or grant of stock options, etc. under the main sentence of subparagraph 19-2 of Article 19;
3-2. For a merger (including a division and merger) or division of corporations which are affiliated persons, where capital gains or losses from a transfer upon the merger or division are reduced because the merger or division is made at an unfair ratio: Provided, That excluded herefrom shall be a merger (including a division and merger) or division referred to in Article 165-4 of the Financial Investment Services and Capital Markets Act;
4. Where doubtful or inferior assets are refunded or non-performing loans are transferred;
5. Where contributions are made in place of another party;
6. Where money, other assets or services are lent or provided gratuitously or at an interest rate, tariff, or rent lower than the market price: Provided, That this shall not apply to any of the following cases:
(a) Where money is paid to the exercise or grant of stock options, etc. referred to in the main sentence of subparagraph 19-2 of Article 19;
(b) Where company houses (including rental company houses prescribed by Ordinance of the Ministry of Strategy and Finance) are provided to executives (including executives who are minority stockholders, etc.) and employees, other than stockholders, contributors, etc.;
7. Where money, other assets or services are borrowed or received at an interest rate, tariff, or rental rate higher than the market price;
7-2. Where profits are distributed in such a manner as not exercising the derivative-based rights prescribed by Ordinance of the Ministry of Strategy and Finance or as adjusting the period of exercise;
8. Where profits are distributed by a corporation which is a stockholder to another stockholder, etc., who is a related party of the corporation through any of the following capital transactions:
(a) Where stocks are evaluated higher or lower than their market price and a merger is made at an unfair ratio in the merger (including a division and merger) between corporations that are affiliated persons: Provided, That this shall not apply to any merger (including a division and merger) prescribed in Article 165-4 of the Financial Investment Services and Capital Markets Act;
(b) Where the right to allot and assume control of new stocks (including convertible bonds, warrant bonds, exchangeable bonds, etc.; hereafter in this item the same shall apply) in transactions that increases the capital (including the amount of investments) of a corporation is partially or fully waived (excluding where the waived stocks are allotted by means of public offering provided for in Article 9 (7) of the Financial Investment Services and Capital Markets Act) or bought at a price higher than the market price of the new stocks;
(c) Where stocks held by some stockholders are retired in the reduction of capital of a corporation at a rate which is not proportional to the stocks held by the relevant stockholders;
8-2. Cases other than those provided for in subparagraph 8, where it is deemed that a corporation has distributed its profits through any transaction that increases or decreases its capital (including the amount of investments), such as the increase or reduction of capital, a merger (including a division and merger), a division, the conversion or exchange of stocks through convertible bonds, etc., into or for stocks or the acceptance of stocks with convertible bonds, etc., pursuant to Article 40 (1) of the Inheritance Tax and Gift Tax Act: Provided, That excluded herefrom shall be where stocks are issued upon the exercise of stock options, among the stock options, etc., provided for in the main sentence of subparagraph 19-2 of Article 19;
9. Other cases in which it is deemed that activities, calculations, or other distributions of the profit of a corporation equivalent to those provided for in subparagraphs 1 through 7, 7-2, 8 and 8-2 have occurred.
(2) Paragraph (1) shall apply to transactions between the relevant corporation and any affiliated person (including transactions made through a person, other than an affiliated persony) as at the time of the activities: Provided, That the determination as to whether a corporation is an affiliated person for the purposes of paragraph (1) 8 (a) shall be made based on the period beginning on the first day of the business year immediately preceding the business year which includes the registration date of the merger (in cases of a merger between corporations with different starting dates, it shall be the earlier date) and ending on the registration date of the merger. <Amended by Presidential Decree No. 17457, Dec. 31, 2001; Presidential Decree No. 23589, Feb. 2, 2012>
(3) Paragraph (1) 1, 3, 6, 7 and 9 (limited to any activity or calculation similar to those provided for in paragraph (1) 1, 3, 6 and 7) shall only apply where the difference between the market price and the transaction price is at least three hundred million won or at least an amount equivalent to 5/100 of the market price. <Newly Inserted by Presidential Decree No. 19891, Feb. 28, 2007>
(4) Paragraph (3) shall not apply where stocks issued by a listed corporation are traded on the Korea Exchange established under the Financial Investment Services and Capital Markets Act (hereinafter referred to as "Korea Exchange"). <Newly Inserted by Presidential Decree No. 19891, Feb. 28, 2007; Presidential Decree No. 21302, Feb. 4, 2009>
 Article 89 (Scope, etc. of Market Price)
(1) In applying Article 52 (2) of the Act, where there is a price at which the relevant corporation has continuously made transactions with many and unspecified persons, other than an affiliated person, or a price at which transactions have been made ordinarily between third parties who are not affiliated persons in a situation similar to the relevant transaction, such price (where stocks issued by a listed corporation have been traded on the Korea Exchange, the closing price of such stocks on the day of trading on the Korea Exchange shall be the market price thereof) shall be used. <Amended by Presidential Decree No. 19891, Feb. 28, 2007; Presidential Decree No. 21302, Feb. 4, 2009; Presidential Decree No. 23589, Feb. 2, 2012>
(2) If the market value is unclear when applying Article 52 (2) of the Act, the amount shall be computed by sequentially applying the following subparagraphs: <Amended by Presidential Decree No. 17826, Dec. 30, 2002; Presidential Decree No. 18174, Dec. 30, 2003; Presidential Decree No. 18706, Feb. 19, 2005; Presidential Decree No. 22577, Dec. 30, 2010; Presidential Decree No. 24357, Feb. 15, 2013; Presidential Decree No. 25194, Feb. 21, 2014; Presidential Decree No. 26981, Feb. 12, 2016; Presidential Decree No. 27472, Aug. 31, 2016; Presidential Decree No. 27828, Feb. 3, 2017; Presidential Decree No. 28640, Feb. 13, 2018>
1. The value appraised by an appraisal firm under the Act on Appraisal and Certified Appraisers (the average appraised value, if the value is appraised by at least two appraisal firms), if such value is available: Provided, That stocks, etc. shall be excluded herefrom, and the appraisal by an appraiser under the Act on Appraisal and Certified Appraisers shall be limited to cases where the appraised value does not exceed 500 million won;
2. The value appraised by applying mutatis mutandis Articles 38, 39, 39-2, 39-3, and 61 through 66 of the Inheritance Tax and Gift Tax Act and Article 101 of the Restriction of Special Taxation Act. In such cases, the appraised value of stocks (limited to stocks issued by a listed corporation) held by the corporation that issued the relevant unlisted stocks in appraising the unlisted stocks pursuant to Article 63 (1) 1 (b) of the Inheritance Tax and Gift Tax Act and Article 54 of the Enforcement Decree of the same Act shall be the closing price at the Korea Exchange on the base date for the appraisal, and "immediately preceding six months (three months for stocks, etc., upon which gift tax is imposed)" shall be construed as "immediately preceding six months" in applying mutatis mutandis Article 63 (2) 1 and 2 of the Inheritance Tax and Gift Tax Act and Article 57 (1) and (2) of the Enforcement Decree of the same Act.
(3) In lending or borrowing money referred to in Article 88 (1) 6 and 7, the lessee’s incremental borrowing rate of interest (hereinafter referred to as "lessee’s incremental borrowing rate of interest") prescribed by Ordinance of the Ministry of Strategy and Finance shall be the rate prevailing in the market, notwithstanding paragraphs (1) and (2): Provided, That in any of the following cases, the interest rate prevailing in the market on overdraft (hereinafter referred to as "interest rate on overdraft") prescribed by Ordinance of the Ministry of Strategy and Finance according to the classification in each subparagraph shall apply: <Amended by Presidential Decree No. 22577, Dec. 30, 2010; Presidential Decree No. 23589, Feb. 2, 2012; Presidential Decree No. 25194, Feb. 21, 2014>
1. Where it is impracticable to apply the lessee’s incremental borrowing rate of interest and there exists a ground prescribed by Ordinance of Ministry of Strategy and Finance: The interest rate prevailing in the market on overdraft shall apply only to relevant loans or borrowings;
1-2. Where there are loans, the maturity period of which exceeds five years, and other cases prescribed by Ordinance of Ministry of Strategy and Finance: The interest rate prevailing in the market on overdraft shall apply only to relevant loans or borrowings;
2. Where the relevant corporation chooses the interest rate prevailing in the market on overdraft, as prescribed by Ordinance of the Ministry of Strategy and Finance, upon filing a report under Article 60 of the Act: The interest rate prevailing in the market on overdraft shall apply to the business year for which interest rate prevailing in the market on overdraft is chosen and two consecutive business years thereafter.
(4) Where paragraphs (1) and (2) cannot apply to the provision of assets (excluding money) or services referred to in Article 88 (1) 6 and 7, the amount computed as follows shall be deemed their market price: <Amended by Presidential Decree No. 17033, Dec. 29, 2000; Presidential Decree No. 17457, Dec. 31, 2001; Presidential Decree No. 23589, Feb. 2, 2012>
1. Where tangible or intangible assets are provided or received, the amounts calculated by multiplying the term deposit interest rate by the amount equivalent to 50/100 of the market value of the relevant assets less the amount of rental key money or deposits received in connection with such assets;
2. Where construction or other services are provided or received, the sum of the amount required to provide the relevant services (including direct and indirect expenses; hereafter in this subparagraph referred to as "costs") and costs multiplied by the rate of profit (referring to the rate divided by the balance of sales calculated according to Korean Financial Accounting Standards less the costs, divided by the costs) during the relevant business year from transactions providing similar services to persons other than affiliated persons.
(5) If a corporation has conducted any of the wrongful calculations provided for in Article 88, the difference, etc., of the market price prescribed in paragraphs (1) through (4) shall be included in gross income for purposes of calculating the amount of the income of that corporation for each business year under Article 52 (1) of the Act: Provided, That this shall not apply to any cash loan prescribed by Ordinance of the Ministry of Strategy and Finance. <Amended by Presidential Decree No. 20720, Feb. 29, 2008>
(6) Articles 38, 39, 39-2, 39-3, 40 and 42-2 of the Inheritance Tax and Gift Tax Act and Articles 28 (3) through (7), 29 (2), 29-2 (1) and (2), 29-3 (1), 30 (5), and 32-2 of the Enforcement Decree of the same Act shall apply mutatis mutandis to the calculation of the amounts to be included in gross income under paragraph (5) if profits are distributed to an affiliated person under Article 88 (1) 8 and 8-2. In such cases, "large stockholder" and "affiliated person" shall be construed as "affiliated person" provided for in this Decree, and "profits" and "profits prescribed by Presidential Decree" as "profits distributed to an affiliated person", respectively. <Amended by Presidential Decree No. 16658, Dec. 31, 1999; Presidential Decree No. 17826, Dec. 30, 2002; Presidential Decree No. 18706, Feb. 19, 2005; Presidential Decree No. 19328, Feb. 9, 2006; Presidential Decree No. 19891, Feb. 28, 2007; Presidential Decree No. 20619, Feb. 22, 2008; Presidential Decree No. 22951, Jun. 3, 2011; Presidential Decree No. 23589, Feb. 2, 2012; Presidential Decree No. 26981, Feb. 12, 2016>
 Article 90 (Submission of Detailed Statements on Transactions between Affiliated Persons)
(1) Corporations that conduct transactions with affiliated persons in each business year shall submit a detailed statement on transactions between affiliated persons in the form stipulated by Ordinance of the Ministry of Strategy and Finance under Article 52 (3) of the Act, along with the report provided in Article 60 of the Act, to the head of the tax office having jurisdiction over the place of tax payment: Provided, That the particulars of international trades submitted to the head of the tax office having jurisdiction over the place of tax payment as prescribed in Article 11 of the Adjustment of International Taxes Act may be omitted. <Amended by Presidential Decree No. 18706, Feb. 19, 2005; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 21302, Feb. 4, 2009; Presidential Decree No. 23589, Feb. 2, 2012>
(2) Where it is deemed necessary to verify the particulars of the detailed statements submitted under paragraph (1), the head of the tax office having jurisdiction over the place of tax payment or the commissioner of the competent regional tax office may request the relevant corporation to submit the calculation of the market price applied to the transaction, the grounds for calculation, and other necessary data.
 Article 91 (Special Cases concerning Calculation of Amount of Income from Transactions with Foreign Corporations, etc.)
Article 17 of the Enforcement Decree of the Adjustment of International Taxes Act shall apply mutatis mutandis to filing an application for the adjustment of an amount of income under Article 53 of the Act, the procedures therefor, and other matters. <Amended by Presidential Decree No. 18706, Feb. 19, 2005>
 Article 91-2 (Application for and Change of Calculation Method of Tax Bases for Corporations Adopting Functional Currencies)
(1) A corporation that intends to apply the calculation method of tax bases provided in Article 53-2 (1) 2 or 3 of the Act shall submit a report on the calculation method of tax bases in the form stipulated by Ordinance of the Ministry of Strategy and Finance to the head of the tax office having jurisdiction over the place of tax payment, along with the report provided in Article 60 of the Act for the business year during which it intends to first apply the calculation method of tax base provided in Article 53-2 (1) 2 or 3 of the Act.
(2) "Circumstances prescribed by Presidential Decree" referred to in Article 53-2 (2) of the Act means any of the following cases:
1. Where the reported functional currency is changed;
2. Where corporations using a different calculation method of tax bases provided in each subparagraph of Article 53-2 (1) of the Act merge (including a division and merger) (hereafter referred to as "calculation method of tax bases" in this Article and Article 91-3);
3. Where a corporation assumes charge of the business of another corporation using a different calculation method of tax bases;
4. Where the calculation method of tax bases of a domestic corporation to which the consolidated tax return system first applies is different from the calculation method of tax base of the relevant consolidated group (limited to change to the calculation method of tax base of the relevant consolidated group).
(3) Where a corporation which applies the calculation method of tax bases provided in Article 53-2 (1) 2 or 3 of the Act intends to change the calculation method of tax bases as it falls under any subparagraph of paragraph (2), it shall submit an application for changing the calculation method of tax bases in the form stipulated by Ordinance of Ministry of Strategy and Finance to the head of the tax office having jurisdiction over the place of tax payment, by the end date of the business year during which it intends to apply the changed calculation method of tax bases.
(4) Upon receipt of an application submitted under paragraph (3), the head of the tax office having jurisdiction over the place of tax payment shall determine whether to grant approval and notify the relevant corporation of the determination within one month from the end date of the business year.
(5) Where a corporation changes the calculation method of tax bases without obtaining approval under paragraph (4), the tax base shall be calculated in accordance with the calculation method of tax bases before the change.
[This Article Newly Inserted by Presidential Decree No. 22577, Dec. 30, 2010]
 Article 91-3 (Detailed Regulations on Calculation Method of Tax Bases for Corporations Adopting Functional Currencies)
(1) For the purpose of applying the calculation method of tax bases provided in Article 53-2 (1) 1 of the Act, with respect to the items included in deductible expenses in calculating the amount of income in each business year only when they are appropriated as deductible expenses, the amount to be appropriated as deductible expenses shall be calculated based on the amount on the financial statements to be otherwise prepared when no currency, other than Korean won, is adopted as the functional currency (hereafter referred to as "won-denominated financial statements" in this Article and Article 91-5).
(2) For the purpose of applying the calculation method of tax bases provided in Article 53-2 (1) 2 of the Act, gross income and deductible expenses referred to in the Act and this Decree and losses referred to in subparagraph 1 of Article 13 of the Act, non-taxable income referred to in subparagraph 2 of the same Article, and the amount of income deductions referred to in subparagraph 3 of the same Article shall be denominated in the functional currency and the tax base shall be calculated and the calculated tax base shall be converted into Korean won.
(3) A corporation which applies the calculation method of tax bases provided in Article 53-2 (1) 2 of the Act shall apply the rate of exchange reported to the head of the tax office having jurisdiction over the place of tax payment, along with the report provided in Article 91-2 (1) or (3), among the basic rate of exchange, etc. as at the end date of the business year or the average rate of exchange provided in paragraph (5) in any of the following cases:
1. Where the tax base denominated in the functional currency is converted into Korean won;
2. Where the limit of entertainment expenses referred to in each subparagraph of Article 25 (1) of the Act is converted into the functional currency;
3. Where the tax credits are calculated by applying Articles 57 and 57-2 of the Act, Articles 5, 10, 11, 24 through 26, 94 and 104-5 of the Restriction of Special Taxation Act and such amount is converted into Korean won.
(4) The foreign currency referred to in subparagraphs 3 and 5 of Article 73, and Article 76 (1) and (2) in applying the calculation method of tax bases provided in Article 53-2 (1) 2 or 3 shall be in a currency, other than the functional currency.
(5) The exchange rate referred to in Article 53-2 (1) 3 and (3) 2 of the Act shall be the basic rate of exchange, etc. on the relevant day and the average exchange rate of the business year shall be the average exchange rate (hereafter referred to as "average exchange rate" in this Article and Article 91-5) of the relevant business year prescribed by Ordinance of the Ministry of Strategy and Finance.
(6) "Items prescribed by Presidential Decree" referred to in Article 53-2 (1) 3 of the Act means the depreciation costs, retirement benefit appropriation funds, appropriation for bad debts, appropriation for redemption of claims for indemnity, the amount of equivalent to the realization balance referred to in Article 68 (6), profits and losses from provision of construction, etc. referred to in the main sentence of Article 69 (1), interest and discounts referred to in the proviso to Article 70 (1) 1 and 2, the amount equivalent to insurance premiums, etc. referred to in the proviso to Article 70 (3), interest, discounts and dividend income referred to in Article 70 (4), the amount equivalent to the rental fee and expenses corresponding thereto referred to in the proviso to the part other than the subparagraphs of Article 71 (1), bond discount referred to in Article 71 (3), and other similar items prescribed by Ordinance of the Ministry of Strategy and Finance.
(7) For the purpose of applying the calculation method of tax bases provided in Article 53-2 (1) 3 of the Act, with respect to the depreciation costs, retirement insurance premiums (referring to the charges of the defined contribution retirement pension, etc. referred to in Article 44-2 (4)), allowances for severance benefits, allowances for bad debts, allowances to redeem claims for indemnity, and other similar items prescribed by Ordinance of the Ministry of Strategy and Finance, the amount included in deductible expenses shall be determined by indicating the amount appropriated as deductible expenses and the ceilings on inclusion in deductible expenses in the functional currency, respectively.
(8) The amount included in gross income under Article 53-2 (3) of the Act shall be included in deductible expenses upon appropriating it as lump-sum depreciation reserve funds or compressed accounts reserve funds by applying mutatis mutandis Article 64 (3) and the amount included in deductible expenses shall be included in gross income by applying mutatis mutandis Article 64 (4) and (5).
[This Article Newly Inserted by Presidential Decree No. 22577, Dec. 30, 2010]
 Article 91-4 (Application for and Change of Calculation Method of Tax Bases for Overseas Place of Business)
(1) "Circumstances prescribed by Presidential Decree" referred to in Article 53-3 (2) of the Act means any of the following cases:
1. Where corporations using a different calculation method of tax bases provided in each subparagraph of Article 53-3 (1) of the Act merge (including a division and merger) (hereafter referred to as "calculation method of tax bases" in this Article and Article 91-5);
2. Where a corporation assumes charge of the business of another corporation using a different calculation method of tax base.
(2) Article 91-2 (1) shall apply mutatis mutandis to an application for the calculation method of tax bases provided in Article 53-3 (1) 2 or 3 of the Act and Article 91-2 (3) through (5) shall apply mutatis mutandis to the change of the calculation method of tax bases of a corporation which applies the calculation method of tax bases provided in Article 53-3 (1) 2 or 3 of the Act.
[This Article Newly Inserted by Presidential Decree No. 22577, Dec. 30, 2010]
 Article 91-5 (Detailed Regulations on Calculation Method of Tax Bases for Overseas Place of Business)
(1) For the purpose of applying the calculation method of tax bases provided in Article 53-3 (1) 1 of the Act, with respect to the items included in deductible expenses in calculating the amount of income in each business year only when they are appropriated as deductible expenses, the amount to be appropriated as deductible expenses shall be calculated based on the amount on the won-denominated financial statements.
(2) For the purpose of applying the calculation method of tax bases provided in Article 53-3 (1) 2 of the Act, the gross income and deductible expenses of the overseas place of business established under the Act and other Acts shall be denominated in the functional currency of the overseas place of business and the tax base shall be calculated and the calculated tax base shall be converted into Korean won. The tax base of the relevant corporation shall be calculated by applying mutatis mutandis Article 13 of the Act to the sum total of the tax base of the overseas place of business converted into Korean won and the tax base of its headquarters.
(3) For the purpose of applying the calculation method of tax bases provided in Article 53-3 (1) 2 of the Act, the tax base of the overseas place of business denominated in the functional currency shall be converted into Korean won by applying the exchange rate reported to the head of the tax office having jurisdiction over the place of payment, along with the report provided in Article 91-4 (2), among the basic rate of exchange, etc. or average exchange rate as at the end date of the business year. <Amended by Presidential Decree No. 22812, Mar. 31, 2011>
(4) For the purpose of applying the calculation method of tax bases provided in Article 53-3 (1) 2 of the Act, the donations, entertainment expenses, reserve funds for proper purpose business, liability reserve funds, contingency reserve funds, retirement benefits, retirement insurance premiums (referring to the charges of the defined contribution retirement pension, etc. under Article 44-2 (4)), retirement benefit appropriation funds, appropriation for bad debts, appropriation for redemption of claims for indemnity, and other deductible expense items with the ceilings on inclusion in deductible expenses under the Act and this Decree shall not be included in deductible expenses. <Amended by Presidential Decree No. 22812, Mar. 31, 2011>
(5) The amount not included in deductible expenses under paragraph (4) shall be converted into Korean won by applying the exchange rate referred to in paragraph (3) and the converted amount shall be added to the corresponding item of the headquarters. Then it shall be included in deductible expenses up to the ceilings on inclusion in deductible expenses of the relevant corporation (including the headquarters and the overseas place of business; hereafter the same shall apply in this Article) for the purpose of calculating the amount of income. In such cases, for the purpose of calculating the ceiling on inclusion in deductible expenses of the relevant corporation, the financial statements of the overseas place of business shall be converted into Korean won by applying the exchange rate referred to in paragraph (3).
(6) For the purpose of applying the calculation method of tax bases provided in Article 53-3 (1) 2 and 3 of the Act, the foreign currency referred to in subparagraphs 3 and 5 of Article 73 and Article 76 (1) and (2) shall be a currency other than the functional currency of the overseas place of business.
(7) "Exchange rate as at the end date of the business year" referred to in Article 53-3 (1) 3 of the Act means the basic rate of exchange, etc. as at the end date of the business year and "exchange rate prescribed by Presidential Decree" means the following exchange rates:
1. In case of items falling under Article 91-3 (6): The average exchange rate;
2. In case other than those falling under subparagraph 1: The exchange rate reported to the head of the tax office having jurisdiction over the place of payment, along with the report provided in Article 91-4 (2) among the basic rate of exchange, etc. or average exchange rate as at the last of the trading day of the relevant item.
[This Article Newly Inserted by Presidential Decree No. 22577, Dec. 30, 2010]
SECTION 2 Calculation of Amount of Tax
 Article 92 (Calculation of Number of Months)
Article 39 (2) shall apply mutatis mutandis to the calculation of the number of months under the latter part of Article 55 (2) of the Act.
 Article 92-2 (Special Provisions concerning Taxation on Capital Gains on Transfer of Land, etc.)
(1) Deleted. <by Presidential Decree No. 21526, Jun. 8, 2009>
(2) "Residential house prescribed by Presidential Decree" in the main sentence of Article 55-2 (1) 2 of the Act means any residential house located in the Republic of Korea, except the following: <Newly Inserted by Presidential Decree No. 18174, Dec. 30, 2003; Presidential Decree No. 18706, Feb. 19, 2005; Presidential Decree No. 19225, Dec. 31, 2005; Presidential Decree No. 19328, Feb. 9, 2006; Presidential Decree No. 20619, Feb. 22, 2008; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 20930, Jul. 24, 2008; Presidential Decree No. 21063, Oct. 7, 2008; Presidential Decree No. 21431, Apr. 21, 2009; Presidential Decree No. 21748, Sep. 29, 2009; Presidential Decree No. 21935, Dec. 31, 2009; Presidential Decree No. 22184, Jun. 8, 2010; Presidential Decree No. 22390, Sep. 20, 2010; Presidential Decree No. 22812, Mar. 31, 2011; Presidential Decree No. 22951, Jun. 3, 2011; Presidential Decree No. 23220, Oct. 14, 2011; Presidential Decree No. 25194, Feb. 21, 2014; Presidential Decree No. 26369, Jun. 30, 2015; Presidential Decree No. 26763, Dec. 28, 2015; Presidential Decree No. 27444, Aug. 11, 2016; Presidential Decree No. 28640, Feb. 13, 2018>
1. Any house that meets all of the following requirements and has been rented by the relevant corporation as buy-to-rent private housing defined in subparagraph 3 of Article 2 of the Special Act on Private Rental Housing, or buy-to-rent public housing defined in subparagraph 1-3 of Article 2 of the Special Act on Public Housing: Provided, That the housing of rental business entities, as defined in subparagraph 7 of Article 2 of the Special Act on Private Rental Housing shall be limited to the housing for which the registration of a rental business entity under Article 5 of said Act and the registration of a business operator under Article 111 of the Act have been completed (hereafter referred to as "registration of a business operator, etc." in this Article):
(a) Deleted; <by Presidential Decree No. 24357, Feb. 15, 2013>
(b) That it shall have been rented for at least five years;
(c) That the total amount of the standard market prices (referring to the standard market prices defined in Article 99 of the Income Tax Act; hereafter the same shall apply in this paragraph) of the relevant house and the land appurtenant thereto as on the date rental began after being registered for private rental housing under Article 5 of the Special Act on Private Rental Housing or built or buy-to-rent public housing defined in subparagraph 1 (a) of Article 2 of the Special Act on Public Housing, shall not exceed 600 million won [300 million won if the house in an area outside the Seoul Metropolitan Area defined in subparagraph 1 of Article 2 of the Seoul Metropolitan Area Readjustment Planning Act (hereinafter referred to as "Seoul Metropolitan Area")];
1-2. The houses that meet all the following requirements, where at least two houses are rented by the relevant corporation as buy-to-rent private housing defined in subparagraph 2 of Article 2 of the Special Act on Private Rental Housing, or are rented as built-to-rent public housing defined in subparagraph 1-2 of Article 2 of the Special Act on Public Housing: Provided, That the housing of rental business entities defined in subparagraph 7 of Article 2 of the Special Act on Private Rental Housing shall be limited to the housing for which the registration of a business operator, etc. was completed on or before March 31, 2018:
(a) That the site area shall not exceed 298 square meters, and the total floor area (including the portion that is deemed housing under the main sentence of Article 154 (3) of the Enforcement Decree of the Income Tax Act and the area of the basement exclusively used for residential purposes, and referring to the exclusive area in cases of collective housing) shall not exceed 149 square meters;
(b) That it shall have been rented for at least five years;
(c) That the total amount of the standard market prices of the relevant house and the land appurtenant thereto as on the date that rental begins after being registered for private rental housing under Article 5 of the Special Act on Private Rental Housing or built or buy-to-rent public housing defined in subparagraph 1 (a) of Article 2 of the Special Act on Public Housing, shall not exceed 600 million won;
1-3. The houses that meet all of the following requirements, where at least five houses are acquired during the period from January 1, 2008 to December 31, 2008 and rented by a real estate investment company defined in subparagraph 1 of Article 2 of the Real Estate Investment Company Act or a real estate indirect investment fund defined in subparagraph 3 of Article 27 of the Indirect Investment Asset Management Business Act, as buy-to-rent private housing defined in subparagraph 3 of Article 2 of the Special Act on Private Rental Housing, or buy-to-rent public housing defined in subparagraph 1-3 of Article 2 of the Special Act on Public Housing:
(a) That the site area shall not exceed 298 square meters, and the total floor area (including the portion that is deemed housing under the main sentence of Article 154 (3) of the Enforcement Decree of the Income Tax Act and the area of the basement exclusively used for residential purposes, and referring to the exclusive area in cases of collective housing) shall not exceed 149 square meters;
(b) That it shall have been rented for at least ten years;
(c) That it shall be located outside the Seoul Metropolitan Area;
1-4. The houses that meet all of the following requirements for buy-to-rent private housing defined in subparagraph 3 of Article 2 of the Special Act on Private Rental Housing, or for buy-to-rent public housing defined in subparagraph 1-3 of Article 2 of the Special Act on Public Housing [limited to unsold housing units (referring to housing units supplied by a project operator referred to in Article 54 of the Housing Act in accordance with the same Article on a first-come first-served basis, because the project operator fails to sign sale contracts for the housing units by June 10, 2008 in a housing complex for which the deadline for concluding contracts with buyers according to the public notice of inviting buyers has elapsed; hereafter in this subparagraph the same shall apply), for which sale contracts are signed with down payments made during the period from June 11, 2008 to June 30, 2009]. In such cases, the corporation that sells such housing units shall submit a copy of the certificate of unsold housing units, which is issued by the head of the relevant Si/Gun/Gu, accompanied by the copies of sale contracts for purchasing the housing units, to the head of the tax office having jurisdiction over the place of tax payment, at the time of filing the return on the tax base for the business year in which such houses are sold:
(a) That the site area shall not exceed 298 square meters and the total floor area (including the portion that is deemed housing under the main sentence of Article 154 (3) of the Enforcement Decree of the Income Tax Act and the area of the basement exclusively used for residential purposes, and referring to the exclusive area in cases of collective housing) shall not exceed 149 square meters;
(b) That it shall have been rented for at least five years;
(c) That it shall be located outside the Seoul Metropolitan area;
(d) That the number of buy-to-rent housing units meeting all requirements provided for in item (a) thorough (c) (hereafter in this Article referred to as "unsold housing unit") shall be at least five in the same Si (including the Seoul Special Metropolitan City and any Metropolitan City)/Gun (if the number of buy-to-rent housing units referred to in subparagraph 1 is at least five or the number of buy-to-rent housing units referred to in subparagraph 1-3 is at least five, the total number of buy-to-rent housing units and the unsold housing units referred to in subparagraph 1 or 1-3 shall be at least five);
1-5. An unsold housing unit (referring to housing supplied by a project operator referred to in Article 54 of the Housing Act under the same Article on a first-come first-served basis after the deadline for signing a contract has elapsed, followed by the publication of recruitment of occupants; hereafter in this paragraph the same shall apply) directly acquired by February 11, 2010 (including conclusion of a sale and purchase contract and making a down payment by February 11, 2011) by a corporate restructuring real estate investment company defined in subparagraph 1 (c) of Article 2 of the Real Estate Investment Company Act, or a real estate fund provided for in subparagraph 2 of Article 229 of the Financial Investment Services and Capital Markets Act (hereafter in this paragraph referred to as "corporate restructuring real estate investment company, etc."), which meets all of the following requirements:
(a) That all real estate acquired by the corporate restructuring real estate investment company, etc., shall be unsold housing units located outside the Seoul Special Metropolitan City (excluding the designated area under Article 104-2 of the Income Tax Act; hereafter the same shall apply in this Article) and the ratio of the housing units located outside the Seoul Metropolitan Area shall be at least 60/100;
(b) That the period of existence of the corporate restructuring real estate investment company, etc., shall not exceed five years;
1-6. An unsold housing unit acquired by a person who has signed a purchase agreement at the time a corporate restructuring real estate investment company, etc., acquired the unsold housing unit under subparagraph 1-5, 1-8 or 1-10 under the purchase agreement (in cases falling under subparagraph 1-8, limited to unsold housing units locate outside the Seoul Metropolitan Area), and three years have not passed since the acquisition date of the unsold housing unit at issue;
1-7. An unsold housing unit directly acquired by February 11, 2010 (including cases of concluding a sale and purchase contract and making the down payment by February 11, 2010) by a trust business operator (hereafter in this subparagraph referred to as "trust business operator") as provided for in the Financial Investment Services and Capital Markets Act as trust property under a trust contract, which meets all of the following requirements:
(a) That money financed by a housing constructor (hereafter in this Article referred to as "constructor") by issuing bonds shall be trusted to a trust business operator and the bonds issued by the relevant constructor shall be securitized under the Asset-Backed Securitization Act upon obtaining the credit guarantee of the Korea Housing Finance Corporation incorporated under the Korea Housing Finance Corporation Act;
(b) That the real estate acquired by the trust business operator as trust property shall be unsold housing units located outside the Seoul Special Metropolitan City (limited to housing units constructed under the guarantee for sale by the Korea Housing and Urban Guarantee Corporation established under the Housing and Urban Fund Act) and the ratio of the number of housing units (where many constructors trust money to the trust business operator, such housing units mean all unsold housing units acquired by the trust business operator as trust property) located outside the Seoul Metropolitan Area shall be at least 60/100;
(c) That the period of management (where the trust contract is extended, including such period extended) of the trust property shall not exceed five years;
1-8. An unsold housing unit directly acquired (including conclusion of a sale and purchase contract and making a down payment by April 30, 2011) by a corporate restructuring real estate investment company, etc., by April 30, 2011, which are located outside the Seoul Metropolitan Area and meets all of the following requirements:
(a) That all real estate acquired by the corporate restructuring real estate investment company, etc., shall be unsold housing units as of February 11, 2010 located outside the Seoul Special Metropolitan City and the ratio of the housing units located outside the Seoul Metropolitan Area shall be at least 50/100;
(b) That the period of existence of the corporate restructuring real estate investment company, etc., shall not exceed five years;
1-9. An unsold housing unit directly acquired (including conclusion of a sale and purchase contract and making a down payment by April 30, 2011) by a trust business operator (hereafter in this subparagraph referred to as "trust business operator") as provided for in the Financial Investment Services and Capital Markets Act as trust property under a trust contract which meets all of the following requirements, by April 30, 2011:
(a) That money financed by a constructor by issuing bonds shall be trusted to a trust business operator and the bonds issued by the relevant constructor shall be securitized under the Asset-Backed Securitization Act upon obtaining the credit guarantee of the Korea Housing Finance Corporation incorporated under the Korea Housing Finance Corporation Act;
(b) That all real estate acquired by the trust business operator as trust property shall be unsold housing units as of February 11, 2010 located outside the Seoul Special Metropolitan City (limited to housing units constructed under the guarantee for sale by the Korea Housing and Urban Guarantee Corporation established pursuant to the Housing and Urban Fund Act) and the ratio of the housing units (where many constructors trust money to the trust business operator, such housing units shall be all unsold housing units acquired by the trust business operator as trust property) located outside the Seoul Metropolitan Area shall exceed 50/100;
(c) That the period of management (where the trust contract is extended, including such extended period) of the trust property shall not exceed five years;
1-10. An unsold housing unit directly acquired (including conclusion of a sale and purchase contract and making a down payment by December 31, 2014) by a corporate restructuring real estate investment company, etc., which meets all of the following requirements, by December 31, 2014:
(a) That all real estate acquired by the corporate restructuring real estate investment company, etc., shall be unsold housing units;
(b) That the period of existence of the corporate restructuring real estate investment company, etc., shall not exceed five years;
1-11. An unsold housing unit (limited to housing units constructed under the credit guarantee of the Korea Housing and Urban Guarantee Corporation established under the Housing and Urban Fund Act) directly acquired by December 31, 2012 (including conclusion of a sale and purchase contract and making down payment by December 31, 2012) by a trust business operator (hereafter in this subparagraph referred to as "trust business operator") as provided for in the Financial Investment Services and Capital Markets Act as trust property under a trust contract, which meets all the following requirements:
(a) That money financed by a constructor by issuing bonds shall be trusted to a trust business operator and the bonds issued by the relevant constructor shall be securitized under the Asset-Backed Securitization Act upon obtaining the credit guarantee by the Korea Housing Finance Corporation incorporated under the Korea Housing Finance Corporation Act;
(b) That the period of management (where the trust contract is extended, including such extended period) of the trust property shall not exceed five years;
1-12. A commercial rental housing unit defined in subparagraph 4 of Article 2 of the Special Act on Private Rental Housing, or a quasi-public rental housing unit defined in subparagraph 5 of Article 2 of said Act, (hereafter referred to as "commercial or quasi-public rental housing unit" in this Article), which meets all of the following requirements, among buy-to-rent private housing units defined in subparagraph 3 of Article 2 of said Act:
(a) That the housing unit has been rented for at least eight years;
(b) That the sum of the reference market value of the house and the land appurtenant thereto as at the date on which the house was registered as a private rental housing unit and began to be leased under Article 5 of the Special Act on Private Rental Housing shall not exceed 600 million won (or 300 million won in cases of an area outside of the Seoul Metropolitan area);
1-13. At least two commercial or quasi-public rental housing units that meet all the following requirements, among privately constructed rental housing units defined in subparagraph 2 of Article 2 of the Special Act on Private Rental Housing:
(a) That the area of its building site shall not exceed 298 square meters and that the floor area of the house (including the area of the part deemed a residential house under the Enforcement Decree of the Income Tax Act and the area of the basement used exclusively for dwelling; and referring to the exclusive area in cases of multi-family housing) shall not exceed 149 square meters;
(b) That the housing unit has been rented for at least eight years;
(c) That the sum of the reference market value of the house and the land appurtenant thereto as at the date on which the house was registered as a private rental housing unit and began to be leased under Article 5 of the Special Act on Private Rental Housing shall not exceed 600 million won;
2. A company house provided to an executive (including an executive who is a minority stockholder, etc.) who is neither a stockholder, etc. nor a contributor, or an employee, and a house owned by a corporation and gratuitously provided, the provision period of which as company house or gratuitous provision period of which is at least ten years;
3. A house acquired upon exercising a mortgage or in place of disbursement of liabilities, for which three years have yet to lapse from the date of acquisition;
4. A houses held on inevitable grounds, which are determined by Ordinance of the Ministry of Strategy and Finance.
(3) "Circumstances prescribed by Presidential Decree" in Article 55-2 (4) 2 of the Act means circumstances provided for in Article 153 (1) of the Enforcement Decree of the Income Tax Act. In such cases, "cultivation while residing in the location of farmland" in the proviso to subparagraph 3 of the same paragraph shall be construed as "cultivation." <Amended by Presidential Decree No. 18706, Feb. 19, 2005; Presidential Decree No. 19225, Dec. 31, 2005; Presidential Decree No. 22951, Jun. 3, 2011>
(4) "Income accruing on the grounds prescribed by Presidential Decree" in Article 55-2 (4) 3 of the Act means any of the following incomes: <Amended by Presidential Decree No. 18706, Feb. 19, 2005; Presidential Decree No. 19225, Dec. 31, 2005; Presidential Decree No. 19328, Feb. 9, 2006; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 21744, Sep. 21, 2009; Presidential Decree No. 22184, Jun. 8, 2010; Presidential Decree No. 22951, Jun. 3, 2011; Presidential Decree No. 23589, Feb. 2, 2012; Presidential Decree No. 26068, Feb. 3, 2015; Presidential Decree No. 26763, Dec. 28, 2015; Presidential Decree No. 26981, Feb. 12, 2016>
1. Income accruing from change of the land category or lot number following the disposition of replotting land or from the appropriation of a land secured by the authorities for the development outlay referred to in the Urban Development Act and other Acts. In such cases, the disposition of replotting land and an area of land secured by the authorities for the development outlay shall be as provided for in Article 152 of the Enforcement Decree of the Income Tax Act;
1-2. Income accruing from the exchange provided for in Article 152 (3) of the Enforcement Decree of the Income Tax Act;
2. Income accruing from a qualified division, qualified merger, qualified spin-off, qualified investment in kind, the alteration of organization or exchange (limited to any alteration of organization or any exchange meeting the requirements provided for in Article 50 of the Act);
3. Income accruing from the transfer of housing construction sites among land created by a development project performed under the Korea Land and Housing Corporation Act by the Korea Land and Housing Corporation established under the same Act;
4. Income that accrues to a corporation that builds new housing units for sale (including where built-to-rent private housing units defined in subparagraph 2 of Article 2 of the Special Act on Private Rental Housing or built-to-rent public housing units defined in subparagraph 1-2 of Article 2 of the Special Act on Public Housing are provided to tenants referred to in the same Act or are sold to another rental business operator) from the sale of such housing units and the land appurtenant thereto with the area specified in either of the following items, whichever is greater:
(a) The total floor area of the housing units (excluding the basement area, the parking lot area on the ground, and the area of joint facilities for residents provided for in subparagraph 3 of Article 2 of the Regulations on Standards, etc. for Housing Construction);
(b) Five times the area on which the building is built (ten times if the building is located in any area outside an urban area provided for in Article 6 of the National Land Planning and Utilization Act);
5. Income accruing from a transfer of land to a commercial rental business operator defined in subparagraph 8 of Article 2 of the Special Act on Private Rental Housing;
6. Income accruing on any grounds prescribed by Ordinance of the Ministry of Strategy and Finance, including a transfer for public purposes.
(5) "Land, etc., prescribed by Presidential Decree" in the proviso to Article 55-2 (5) of the Act means any of the following: <Amended by Presidential Decree No. 19225, Dec. 31, 2005; Presidential Decree No. 22951, Jun. 3, 2011>
1. Land, etc., the registration of acquisition of which is impracticable at the time of its transfer under the provisions of any Act or a court ruling;
2. Farmland provided for in Article 55-2 (4) 2 of the Act.
(6) Article 68 shall apply mutatis mutandis to the business year to which capital gains on the transfer of land, etc., revert under Article 55-2 (1) of the Act, the timing for transfer or acquisition thereof: Provided, That Article 68 (1) 3 shall apply to the transfer of land, etc., on a long-term installment plan under Article 68 (3), notwithstanding Article 68 (2). <Amended by Presidential Decree No. 18174, Dec. 30, 2003>
(7) In applying Article 55-2 (1) 1 of the Act, if land, etc., is transferred through subscription sale, such land, etc., shall be deemed transferred on the date of contract for such subscription sale. <Amended by Presidential Decree No. 18174, Dec. 30, 2003>
(8) With respect to capital gains on the transfer of land, etc., deemed transferred on the date of contract under paragraph (7), profits and expenses respectively generated during the period for which the land, etc., are included in the designated area provided for in Article 55-2 (1) 1 (a) and (b) shall be calculated as gross income and deductible expenses of the relevant business year among profits and expenses calculated based on the progress rate of work provided for in Article 69 (2): Provided, That where it is deemed impracticable to calculate the progress rate of work provided for in Article 69 (2) in circumstances determined by Ordinance of the Ministry of Strategy and Finance, the amount that accrues and is incurred during the period for which the land, etc., are included in the designated area provided for in Article 55-2 (1) 1 (a) and (b) of the Act shall be calculated as gross income and deductible expenses, respectively, of the relevant business year among the amount computed by equally distributing the contract amount and the estimated total construction cost during the period from the date of commencement to the date of transfer of the object of contract. <Amended by Presidential Decree No. 18174, Dec. 30, 2003; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 21526, Jun. 8, 2009>
(9) Where a corporation transfers at least two parcels of land, etc., to which Article 55-2 of the Act applies in each business year, capital gains on the transfer of such land, etc., shall be the sum of the amounts calculated as prescribed in Article 55-2 (6) of the Act by asset transferred in the relevant business year. In such cases, where there is land, etc., the book value of which at the time of transfer exceeds the amount of transfer among the transferred assets, capital gains on the transfer of land, etc., shall be calculated by deducting the excess amount (hereafter in this paragraph referred to as "capital losses from transfer") sequentially from capital gains from the transfer of the following assets: <Amended by Presidential Decree No. 21302, Feb. 4, 2009>
1. Capital gains from the transfer of assets, to which the same tax rate as that of assets with capital losses from transfer applies;
2. Capital gains from the transfer of assets to which the tax rate different from that of assets with capital losses from transfer applies.
[This Article Newly Inserted by Presidential Decree No. 17457, Dec. 31, 2001]
 Article 92-3 (Standards for Period of Idle Land)
"Period specified by Presidential Decree" in Article 55-2 (2) of the Act means any of the following periods: <Amended by Presidential Decree No. 21302, Feb. 4, 2009; Presidential Decree No. 22951, Jun. 3, 2011; Presidential Decree No. 26068, Feb. 3, 2015>
1. Both of the periods, if the period of holding the relevant land is at least five years:
(a) The period exceeding two years among the five years immediately preceding the date of transfer;
(b) The period exceeding one year among three years immediately preceding the date of transfer of the relevant land;
(c) The period exceeding the period equivalent to 40/100 of the period of holding the relevant land. In such cases, the period shall be calculated in the number of days.
2. Both of the following periods, if the period of holding the relevant land is between three to five years:
(a) The period exceeding the period computed by subtracting three years from the period of holding the relevant land;
(b) The period exceeding one year among three years immediately preceding the date of transfer of the relevant land;
(c) The period exceeding the period equivalent to 40/100 of the period of holding the relevant land. In such cases, the period shall be calculated in the number of days;
3. Both of the following periods, if the period of holding the relevant land is less than three years: Provided, That item (a) shall not apply, if the period of holding is less than two years:
(a) The period exceeding the period computed by subtracting two years from the period of holding the relevant land;
(b) The period exceeding the period equivalent to 40/100 of the period of holding the relevant land. In such cases, the period shall be calculated in the number of days.
[This Article Newly Inserted by Presidential Decree No. 19225, Dec. 31, 2005]
 Article 92-4 (Determination of Land Categories)
In applying Article 55-2 (2) of the Act, whether land is farmland, forest land, a ranch area or other land shall be determined based on its current state, except as otherwise expressly provided in this Decree: Provided, That if the current state is unclear, the determination shall be made based on the current entries in the public register.
[This Article Newly Inserted by Presidential Decree No. 19225, Dec. 31, 2005]
 Article 92-5 (Scope, etc., of Farmland)
(1) "Farmland" referred to in Article 55-2 (2) 1 of the Act means a dry field, a paddy field, and an orchard that is actually used as the land for cultivation, regardless of its land category in the Cadastral Record. In such cases, the pieces of land, including a farm hut, barnyard, pumping station, pond, marsh, farm road, or waterway, which are directly used for the management of the farmland, shall be included.
(2) In applying Article 55-2 (2) 1 (a) of the Act, the main business shall be determined according to the following standards:
1. Where a corporation runs at least two different kinds of business, the main business shall be the business that accrues larger revenue among such businesses;
2. Notwithstanding subparagraph 1, if a corporation uses agricultural products produced from the farmland that it is directly uses for farming as raw materials to manufacture and produce goods and keeps separate accounting for the agriculture and the manufacturing business, etc., the main business of that corporation shall be deemed agriculture. In such cases, if the ratio of agricultural products used as raw materials to manufacture and produce goods (hereafter referred to as "use ratio" in this paragraph) among the agricultural products produced by the corporation does not exceed 50/100, such corporation shall be deemed to run agriculture as it main business to the extent of the farmland area, which is up to two times the area equivalent to the use ratio of the relevant farmland area.
(3) "Farmland prescribed by Presidential Decree" in the proviso to Article 55-2 (2) 1 (a) of the Act means any of the following farmlands: <Amended by Presidential Decree No. 20619, Feb. 22, 2008; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 22951, Jun. 3, 2011; Presidential Decree No. 26068, Feb. 3, 2015>
2. Farmland owned by any corporation that has obtained farmland conversion permission or has filed a report on farmland conversion under Article 6 (2) 7 of the Farmland Act or farmland used for the relevant conversion purpose after completing the farmland conversion consultation under Article 6 (2) 8 of the same Act;
3. Farmland acquired under Article 6 (2) 10 (d) through (f) of the Farmland Act and used for the relevant business purposes;
4. Farmland owned by a clan (limited to farmland acquired on or before December 31, 2005);
5. Farmland used directly by any non-profit business operator referred to in Article 22 of the Enforcement Decree of the Local Tax Act for memorial services, religion, charity, academic purpose, arts and crafts, or any other public service;
6. Farmland prescribed by Ordinance of the Ministry of Strategy and Finance that is permitted to be owned under the Farmland Act and other Acts.
(4) "Area designated by Presidential Decree" referred to in the main sentence of Article 55-2 (2) 1 (b) of the Act means a green belt area and a development restriction area classified under the National Land Planning and Utilization Act. <Amended by residential Decree No. 22951, Jun. 3, 2011>
(5) "Period set by Presidential Decree" in the proviso to Article 55-2 (2) 1 (b) of the Act means three years. <Amended by residential Decree No. 22951, Jun. 3, 2011; Presidential Decree No. 26068, Feb. 3, 2015>
[This Article Newly Inserted by Presidential Decree No. 19225, Dec. 31, 2005]
 Article 92-6 (Scope, etc., of Forest Land)
(1) "Forest land prescribed by Presidential Decree" referred to in Article 55-2 (2) 2 (a) of the Act means any of the following forest lands: <Amended by Presidential Decree No. 19891, Feb. 28, 2007; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 20763, Apr. 3, 2008; Presidential Decree No. 21025, Sep. 22, 2008; Presidential Decree No. 21528, Jun. 9, 2009; Presidential Decree No. 22073, Mar. 9, 2010; Presidential Decree No. 22951, Jun. 3, 2011>
1. A seed-gathering forest and an experimental forest created under the Creation and Management of Forest Resources Act and a forest protection zone classified under the Forest Protection Act;
2. A temple forest or forest owned by a village;
3. Forest land in a park nature preservation area or a park natural environmental area classified under the Natural Parks Act;
4. Forest land in an urban park created under Act on Urban Parks, Green Areas, Etc.;
5. Forest land in a cultural property protection area classified under the Cultural Heritage Protection Act;
6. A courtyard owned by any traditional temple preserved under the Korea Traditional Temples Preservation and Support Act;
7. Forest land in a development restriction area classified under the Act on Special Measures for Designation and Management of Development Restriction Zones;
8. Forest land in a military base or a military installations protection zone provided for in the Protection of Military Bases and Installations Act;
9. Forest land in a clearance area provided for in the Road Act;
10. A forest land in a railroad protection area provided for in the Railroad Safety Act;
11. Forest land in a flood management area provided for in the River Act;
12. Forest land in a water source protection area provided in for the Water Supply and Waterworks Installation Act;
13. Other forest land, prescribed by Ordinance of the Ministry of Strategy and Finance, which is necessary for public interests and for protecting and fostering forests.
(2) In applying Article 55-2 (2) 2 (b) of the Act, if a corporation runs at least two different kinds of business, the corporation's main business shall be the business with the larger value of assets among its total value of assets as at the end date of the business year.
(3) "Forest land prescribed by Presidential Decree" referred to in Article 55-2 (2) 2 (b) of the Act means any of the following forest lands in any mountain area provided for in the Mountainous Districts Management Act: Provided, That any forest in an urban area (excluding any green conservation area classified under Article 30 of the Enforcement Decree of the National Land Planning and Utilization Act; hereafter the same shall apply in this paragraph) defined by the National Land Planning and Utilization Act for which three years have passed from the date it is included in the urban area shall be excluded: <Amended by Presidential Decree No. 19891, Feb. 28, 2007; Presidential Decree No. 22951, Jun. 3, 2011; Presidential Decree No. 26068, Feb. 3, 2015>
1. Forest land for which the afforestation work is being conducted upon authorization for the afforestation plan granted under the Creation and Management of Forest Resources Act;
2. Forest land in a special afforestation project zone provided for in the Creation and Management of Forest Resources Act.
(4) "Forest land prescribed by Presidential Decree" referred to in Article 55-2 (2) 2 (c) of the Act means any of the following forest lands: <Amended by Presidential Decree No. 19891, Feb. 28, 2007; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 22951, Jun. 3, 2011; Presidential Decree No. 26068, Feb. 3, 2015; Presidential Decree No. 26416, Jul. 20, 2015>
1. Forest land used to produce tree seeds and saplings for forests by any seed and sapling business operator registered under the Creation and Management of Forest Resources Act;
2. Forest land used for a project to create, manage, and operate any natural recreation forest pursuant to the Forestry Culture and Recreation Act;
3. Forest land used for a project to create, manage, and operate an arboretum pursuant to the Act on the Creation and Furtherance of Arboretums and Gardens;
4. Forest land directly used by any forest association or forest fraternity for its proper purpose business;
5. Forest land directly used by any non-profit business operator referred to in Article 22 of the Enforcement Decree of the Local Tax Act for memorial services, religion, charity, academic purpose, arts and crafts, or any other public services;
6. Forest land owned by a clan (limited to forest land acquired on or before December 31, 2005);
7. Forest land prescribed by Ordinance of the Ministry of Strategy and Finance and directly related to a corporation's business, in consideration of its owner, location, utilization, holding period, area, etc.
[This Article Newly Inserted by Presidential Decree No. 19225, Dec. 31, 2005]
 Article 92-7 (Scope, etc., of Ranch Areas)
(1) "Ranch area" referred to in Article 55-2 (2) 3 of the Act means a barn, the land on which appurtenant facilities are installed, grassland and grazing fields, all of which are used for livestock purposes.
(2) "Ranch area prescribed by Presidential Decree" referred to in the proviso to Article 55-2 (2) 3 of the Act means any of the following ranch areas: <Amended by Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 22951, Jun. 3, 2011>
1. A ranch area owned by a clan (limited to a ranch area acquired on or before December 31, 2005);
2. A ranch area used by a school provided for in the Elementary and Secondary Education Act and the Higher Education Act, an agency in charge of overall control over the livestock improvement or livestock improvement agency to conduct experiments, research, and practical training pursuant to the Livestock Industry Act;
3. A ranch area directly used by any non-profit business operator referred to in the main sentence of subparagraph 1 of Article 186 of the Local Tax Act for memorial services, religion, charity, academic purpose, arts and crafts, and public services;
4. A ranch area prescribed by Ordinance of the Ministry of Strategy and Finance and directly related to a corporation's business, in consideration of its owner, location, utilization, holding period, area, etc.
(3) In applying Article 55-2 (2) 3 (a) of the Act, the main business shall be determined based on the following:
1. Where a corporation runes at least two different kinds of business, the main business shall be the business with larger revenue: Provided, That any agricultural cooperative and the National Agricultural Cooperative Federation established under the Agricultural Cooperatives Act shall be deemed a corporation, the main business of which is the livestock business;
2. Notwithstanding the main sentence of subparagraph 1, where a corporation uses livestock products produced in the ranch area directly used for running its livestock business as raw materials to process them and keeps separate accounting of the livestock business and the processing business, the corporation's main business shall be deemed the livestock business. In such cases, if the ratio of livestock products used as raw materials to process them among the livestock products produced by the relevant corporation (hereafter referred to as "use ratio" in this paragraph) is less than 50/100, such corporation shall be deemed to run the livestock business as its main business to the extent of the relevant ranch area, which is up to two times the area equivalent to the use ratio among the area of the relevant ranch area.
(4) "Standard size of the livestock area prescribed by Presidential Decree" referred to in Article 55-2 (2) 3 (a) of the Act means the land size calculated by applying the standard size by domestic animal and the number of domestic animals prescribed in attached Table 1. <Amended by Presidential Decree No. 22035, Feb. 18, 2010; Presidential Decree No. 22951, Jun. 3, 2011>
(5) "Area prescribed by Presidential Decree" referred to in Article 55-2 (2) 3 (a) of the Act means a green area or development restriction zone classified under the National Land Planning and Utilization Act. <Newly Inserted by Presidential Decree No. 20619, Feb. 22, 2008; Presidential Decree No. 22951, Jun. 3, 2011>
(6) "Period set by Presidential Decree" referred to in Article 55-2 (2) 3 (a) of the Act means three years. <Amended by residential Decree No. 22951, Jun. 3, 2011; Presidential Decree No. 26068, Feb. 3, 2015>
[This Article Newly Inserted by Presidential Decree No. 19225, Dec. 31, 2005]
 Article 92-8 (Scope of Other Land Used for Business)
(1) "Land prescribed by Presidential Decree" in Article 55-2 (2) 4 (c) of the Act means any of the following lands: <Amended by Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 21881, Dec. 14, 2009; Presidential Decree No. 22395, Sep. 20, 2010; Presidential Decree No. 22951, Jun. 3, 2011; Presidential Decree No. 26302, Jun. 1, 2015; Presidential Decree No. 27245, Jun. 21, 2016>
1. Any of the following lands used for sports facilities, including sports stadiums or fields:
(a) Land used for sports facilities exclusive for athletes:
(i) Land used for sports facilities exclusive for athletes, which continues to be furnished by any corporation that has a company sports team pursuant to the National Sports Promotion Act and is not wider than the standard area prescribed by Ordinance of the Ministry of Strategy and Finance: Provided, That the same shall not apply where the company sports team fails to meet the requirements for athletes and coaches, which are prescribed by Ordinance of the Ministry of Strategy and Finance;
(ii) Land on which sports facilities are installed and used directly by any corporation that runs the business of athletic sports and is not wider than the standard area prescribed by Ordinance of the Ministry of Strategy and Finance;
(b) Land used for sports facilities for employees: Land not wider than the standard area for sports facilities installed for employees, which is prescribed by Ordinance of the Ministry of Strategy and Finance among the lands used to install sports facilities for the welfare of employees: Provided, That the same shall not apply where the sports facilities fails to meet the standards for sports facilities for employees, which are prescribed by Ordinance of the Ministry of Strategy and Finance;
(c) Land used directly by any corporation that runs the business of sports facilities provided for in the Installation and Utilization of Sports Facilities Act after installing the sports facilities and equipment that meet the standards therefor pursuant to the same Act;
(d) Land used directly by any corporation that runs the business of operating the sports stadiums;
2. Any of the following lands used for parking lots:
(a) An annexed parking lot (excluding any parking lot annexed to housing; hereafter in this item the same shall apply) provided for in the Parking Lot Act, which is within the standard area for parking lots pursuant to the same Act: Provided, That the land used for an annexed parking lot in the land used for the recreational establishment business provided for in subparagraph 6 shall be subject to subparagraph 6;
(b) Land used for a parking lot for business motor vehicles (excluding any passenger motor vehicles, motorcycle, or bus used for transporting employees) that are indispensably owned by any corporation, other than business operators provided for in Article 101 (3) 1 of the Enforcement Decree of the Local Tax Act: Provided, That such land shall be limited to the land within the area computed by multiplying 1.5 by the area (hereinafter referred to as "minimum standard area for the parking lot") aggregating the area calculated by multiplying the number of business cars by each car type by the minimum standard area for the parking lot per car by car type to be secured under the Passenger Transport Service Act or the Trucking Transport Business Act;
(c) Land used for the parking lot business: Land owned by any corporation that mainly operates parking lots, and used as an off-road parking lot provided for in the Parking Lot Act and the ratio of the amount of annual revenue to the value of the land exceeds the ratio set by Ordinance of the Ministry of Strategy and Finance;
3. Land created through any public-private partnership project performed by a project operator designated under the Act on Public-Private Partnerships in Infrastructure and other land created by the project operator pursuant to other Acts, both of which are prescribed by Ordinance of the Ministry of Strategy and Finance: Provided, That any land for which two years have passed from the date its creation is completed shall be excluded;
4. Land used for juvenile training facilities established under the Juvenile Activity Promotion Act, which meets facility and equipment standards provided for in the same Act: Provided, That excluded herefrom is any land which exceeds the standard area set by Ordinance of the Ministry of Strategy and Finance;
5. Land owned for conducting reservists training for employees, etc., which meets all of the following requirements:
(a) The land category shall not be a housing site or factory site;
(b) The land shall not be located in any residential area, commercial area, or industrial area in an urban area designated under National Land Planning and Utilization Act;
(c) The land shall meet the facility standards set by Ordinance of the Ministry of Strategy and Finance and be within the standard area set by Ordinance of the Ministry of Strategy and Finance;
(d) The land shall be owned by a person entrusted with the reservists training from the head of mandatory corps;
6. Land used for recreation establishment business prescribed by Ordinance of the Ministry of Strategy and Finance, such as the specialized recreation business and the integrated recreation business registered under the Tourism Promotion Act and be within the standard area set by Ordinance of the Ministry of Strategy and Finance;
7. Land used for a storage yard, etc.: A storage yard, open-area storage yard, or piling-up yard (including any land attached to a building built as a warehouse without obtaining a building permit or filing a required report pursuant to the Building Act) that are separately set up to keep and manage goods and the land area does not exceed 120/100 of the maximum area used to keep and manage goods in the relevant business year;
8. Land used to extract aggregate: Any land used by a corporation to extract aggregate under terms of an aggregate extraction permit issued by the head of a Si/Gun/Gu (limited to the head of an autonomous Gu) pursuant to the Aggregate Extraction Act;
9. Land used by a corporation that runs wastes treatment business upon obtaining permission therefor pursuant to the Wastes Control Act;
10. Land that is a mineral water spring (referring to the land used to run the business of bottling refreshing beverages and the hot spring business, etc., which is an outlet from which hot water or mineral water spout from underground and a site for maintaining it) and the ratio of annual revenue to the value of the land exceeds the ratio set by Ordinance of the Ministry of Strategy and Finance;
11. Any of the following lands, which is used for a fish farm, lake, or pond (referring to a dam, reservoir, small pond, naturally formed lake or marsh used to operate an inland fish farming business or fishing pond business and the site necessary to maintain such facility), as defined in the Act on the Establishment, Management, etc. of Spatial Data:
(a) Land used for a business of cultivation in inland seawater with permission under the Fisheries Act or a business producing seeds for fisheries with permission under the Fisheries Seed Industry Promotion Act;
(b) Land used by anyone who obtains a license or permission from the head of a Si/Gun/Gu (referring to the head of an autonomous Gu, and in cases of Han River of the Seoul Special Metropolitan City, referring to the head of the agency in charge of managing Han River; hereafter in this item the same shall apply) or file a report with the head of a Si/Gun/Gu pursuant to the Inland Water Fisheries Act, for his/her licensed fishing business, permitted fishing business, or reported fishing business;
(c) Land, other than the lands referred to in items (a) and (b), whose ratio of annual revenue to the value of the land exceeds the ratio set by Ordinance of the Ministry of Strategy and Finance;
12. Land used to engage in the business of producing blocks, stone products, and earthen pipes, the land used to run facilities business for selling flowering plants, the land used to engage in the business of planting landscape trees, the land used by any private institute that teaches how to repair automobiles and heavy vehicles and to drive heavy vehicles or teaches farming courses, and other land similar to the former, whose ratio of annual revenue to the value of the land exceeds the ratio set by Ordinance of the Ministry of Strategy and Finance;
13. Other land similar to the lands referred to in subparagraphs 1 through 12, which is prescribed by Ordinance of the Ministry of Strategy and Finance, as being directly related to the business of a corporation, in consideration of its current utilization and its observance, etc., of relevant statutes.
(2) In applying paragraph (1) 2 (c), 10, 11 (c) and 12, "ratio of annual revenue to the value of the land" (hereafter in this paragraph referred to as "ratio of the revenue amount") shall be calculated by the business year, whichever is higher between the following ratios. In such cases, if the revenue accruing from the relevant land can be divided by the plot of land, the ratio of the revenue shall be calculated by the plot of land:
1. The ratio computed by dividing annual revenue in the relevant business year by the value of land in the relevant business year;
2. (Annual revenue in the relevant business year + Annual revenue in the immediately preceding business year) ÷ (the value of land in the relevant business year + the value of land in the immediately preceding business year).
(3) "Annual revenue" in paragraph (2) means the amount calculated by any of the following formulae: <Amended by Presidential Decree No. 24638, Jun. 28, 2013>
1. The amount of annual revenue accruing from the business related to the relevant land, building, facility, etc., for one business year, and if key money or security deposit is received after a lease or rental contract is concluded on such land, building, facility, etc., an amount calculated by applying mutatis mutandis the formula provided for in Article 65 (1) of the Enforcement Decree of the Value-Added Tax Act shall be added;
2. Where the revenue amount for one business year is commonly related to the relevant land, building, facility, etc. (hereafter in this subparagraph referred to as "relevant land, etc.") and other land, building, facility, etc. (hereafter in this subparagraph referred to as "other land, etc."), making it impracticable to tell from which such revenue accrues, the revenue amount for one business year related to the relevant land, etc., shall be calculated by the following formula:
The revenue amount for one business year related to the relevant land, etc. = the revenue amount in the one business year commonly related to the relevant land, etc., and other land, etc. × (the value of the relevant land in the relevant business year ÷ the total amount of the value of the relevant land in the relevant business year and the value of other land);
3. Where the period during which the business is run on the relevant land during one business year does not exceed one year due to the commencement of a new business, the closure of business, the transfer of land, a prohibition on use of land imposed pursuant to statutes or on other inevitable grounds, the revenue amount during such period shall be calculated as the revenue amount in one business year after converting the revenue amount accruing during the relevant period to that of one year.
(4) "Value of land in the relevant business year" in paragraphs (2) and (3) means the standard market price as on the last day of the relevant business year (referring to the date of transfer, where such land is transferred during the relevant business year).
(5) In applying Article 55-2 (2) of the Act, where several lots of contiguous land is used for one purpose and the total area of the land exceeds the standard area, based on which whether such land is idle land (hereafter in this paragraph referred to as "standard area"), all or part of such land shall be deemed a portion in excess of the standard area in the following order:
1. Where no building or facility exists on the land:
(a) The land that is acquired later;
(b) Where the land is acquired at the same time, the land chosen by the relevant corporation;
2. Where any building or facility exists on the land:
(a) The land that is acquired later, among the lands except the floor area of the building or the horizontal projection area of the facility;
(b) Where the land is acquired at the same time, the land chosen by the relevant corporation.
(6) In applying Article 55-2 (2) of the Act, where at least one building (including facilities, etc.; hereafter in this paragraph the same shall apply) stands on the land and the building that is divided into the portion (including the portion of a building used for a specific business among multiple buildings; hereafter in this paragraph referred to as "portion for the specific use"), which is used for the specific business of a corporation and the portion that is not used for the specific business thereof, the area, etc., of the appurtenant land, etc., for the portion for the specific use among the floor area of the building and the area of the appurtenant land (hereafter in this paragraph referred to as "area of the appurtenant land, etc.") shall be calculated by the following formulae:
1. Where one building is used for multiple purposes:
The area of the appurtenant land, etc., for the portion for the specific use = the area of the appurtenant land, etc., to the building × the total floor area of the portion for the specific use ÷ the floor area of the building;
2. Where multiple buildings with different uses stand within the same boundary:
The area of the appurtenant land for the portion for the specific use = the area of the entire land appurtenant to the multiple buildings × the floor area for the portion for the specific use ÷ the entire floor area of the multiple buildings.
(7) In applying Article 55-2 (2) of the Act, the types of business shall be classified according to the Korean Standard Industrial Classification published by the Commissioner of Statistics Korea pursuant to Article 17 of the Statistics Act, except as otherwise expressly provided for in this Decree.
[This Article Newly Inserted by Presidential Decree No. 19225, Dec. 31, 2005]
 Article 92-9 (Scope of Land Attached to Housing)
"Multiple rate set by Presidential Decree by area" referred to in Article 55-2 (2) 5 of the Act means the following multiple rates: <Amended by Presidential Decree No. 22951, Jun. 3, 2011>
1. Five times for the land in an urban area;
2. Ten times for the land outside an urban area.
[This Article Newly Inserted by Presidential Decree No. 19225, Dec. 31, 2005]
 Article 92-10 (Scope of Resort Villas and Applicable Standards)
"Residential house (including the land appurtenant thereto) at a rural village in an Eup/Myeon specified in Article 3 (3) or (4) of the Local Autonomy Act, if such residential house meets the scope and standards prescribed by Presidential Decree" in the proviso to Article 55-2 (1) 2 of the Act means a residential house and the land appurtenant thereto that meets all of the following criteria: <Amended by residential Decree No. 22951, Jun. 3, 2011; Presidential Decree No. 26068, Feb. 3, 2015>
1. The total floor area of the building shall not exceed 150 square meters and the area of the land appurtenant to the building shall not exceed 660 square meters;
2. The value of the building and the appurtenant land shall not exceed the standard market price of 200 million won;
3. The building shall be in any area, other than the areas referred to in the items of Article 99-4 (1) 1 of the Restriction of Special Taxation Act.
[This Article Newly Inserted by Presidential Decree No. 19225, Dec. 31, 2005]
 Article 92-11 (Criteria, etc. for Determining Land that is Not Deemed Idle Lands on Grounds of Inevitability)
(1) Pursuant to Article 55-2 (3) of the Act, any of the following land shall be deemed not to fall under any subparagraph of Article 55-2 (2) of the Act during the period specified in the corresponding subparagraph for the purposes of determining whether the land is the idle land (hereafter referred to as "idle land" in this Article) as provided in Article 55-2 (2) of the Act: <Amended by Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 21302, Feb. 4, 2009>
1. The land, the use of which is prohibited or restricted pursuant to Acts and subordinate statutes after it is acquired: The period during which its use is prohibited or restricted;
2. The land in any cultural heritage protection area designated under the Cultural Heritage Protection Act after it is acquired: The period during which the land is designated as the protection area;
3. Land that falls under the grounds of inevitability prescribed by Ordinance of the Ministry of Strategy and Finance, in consideration of the public interest, legal restriction due to corporate restructuring or inevitable reasons, current state of land, grounds for acquiring the land, current state of utilization of the land, etc: The period prescribed by Ordinance of the Ministry of Strategy and Finance.
(2) Pursuant to Article 55-2 (3) of the Act, any of the following land shall be deemed transferred on the date specified in the corresponding subparagraph for the purposes of determining whether it is the idle land by applying Article 92-3: <Amended by Presidential Decree No. 20720, Feb. 29, 2008>
1. Land transferred by means of auction under the Civil Execution Act: The first auction date;
2. Land transferred by means of public auction under the National Tax Collection Act: The public auction date;
3. Land that requires a certain period for its transfer and falls under the grounds of inevitability prescribed by Ordinance of the Ministry of Strategy and Finance: The date prescribed by Ordinance of the Ministry of Strategy and Finance.
(3) Pursuant to Article 55-2 (3) of the Act, none of the following land shall be deemed the idle land: <Amended by Presidential Decree No. 19328, Feb. 9, 2006; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 21063, Oct. 7, 2008; Presidential Decree No. 21302, Feb. 4, 2009; Presidential Decree No. 25194, Feb. 21, 2014>
1. Land to be transferred within three years from the date of acquisition due to a merger or division of a corporation;
2. Land purchased by means of consultation or expropriated under the Act on Acquisition of and Compensation for Land, etc. for Public Works and other Acts, and of which business authorization is published on or before December 31, 2006, or the acquisition date of which is two years before the project authorization is publicly notified;
3. Farmland owned by a clan (limited to the farmland acquired on or before December 31, 2005) as farmland falling under Article 55-2 (2) 1 (b) of the Act;
4. Land donated (including contribution) to an educational foundation under the Private School Act;
5. Land that falls under the grounds of inevitability prescribed by Ordinance of the Ministry of Strategy and Finance, in consideration of the public interest, legal restriction due to corporate restructuring or inevitable reasons, current state of land, grounds for acquiring the land, current state of utilization of the land, etc.
[This Article Newly Inserted by Presidential Decree No. 19225, Dec. 31, 2005]
 Article 93 (Corporate Tax on Unappropriated Earnings of Enterprises)
(1) "Equity capital prescribed by Presidential Decree" in Article 56 (1) 1 of the Act means the total assets on the financial statement less the total liabilities.
(2) "Small or medium enterprises prescribed by Presidential Decree" in Article 56 (1) 1 of the Act means the enterprises defined in Article 2 of the Enforcement Decree of the Restriction of Special Taxation Act.
(3) A domestic corporation that intends to file a tax return pursuant to Article 56 (2) of the Act shall submit a return on the corporate tax on unappropriated earnings 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 of tax payment at the time filing its tax base return under Article 60 or 76-17 of the Act.
(4) "Income prescribed by Presidential Decree" in the main sentence of Article 56 (2) 1 of the Act shall be determined by adding the aggregate referred to in subparagraph 1 to the income for each business year and then subtracting the aggregate referred to in subparagraph 2 from the former amount (if the amount is negative, it shall be deemed nil): <Amended by Presidential Decree No. 27828, Feb. 3, 2017>
1. The aggregate of the following amounts:
(a) Interest on the refund referred to in subparagraph 4 of Article 18 of the Act;
(b) The amount of dividend income excluded from gross income under Article 18 (3) of the Act;
(c) The amount carried over under Article 24 (4) of the Act and included in deductible expenses for the relevant business year;
(d) The amount of depreciation cost for the assets subject to Article 56 (2) 1 (a) of the Act for the relevant business year, included in deductible expenses for the relevant business year;
2. The aggregate of the following amounts:
(a) The amount of corporate tax for the relevant business year (including the amount of foreign corporate tax paid directly by a domestic corporation but excluded from deductible expenses under Article 57 of the Act and the amount of foreign corporate tax under Article 15 (2) 2 of the Act) and the amount of special tax for rural villages and the amount of local corporate income tax for the amount of exempted corporate tax;
(b) The earned surplus reserve that shall be compulsorily set aside for the relevant business year under Article 458 of the Commercial Act;
(c) The amount specified by Ordinance of the Ministry of Strategy and Finance for the reserves that shall be compulsorily set aside under statutes;
(d) The loss deducted for the relevant business year under subparagraph 1 of Article 13 of the Act (referring to the amount calculated under Articles 45 and 46-4 of the Act, in cases of a merged corporation, etc.);
(e) The amount of bonuses and severance benefits appropriated by disposing of the retained earnings for the relevant business year but excluded from deductible expenses;
(f) The amount referred to in Article 16 (1) 5 of the Act (limited to the portion received as stocks, etc., out of the costs of a merger), which is included in gross income for the relevant business year (referring to the amount prior to the non-inclusion in gross income under Article 18-3 of the Act);
(g) The amount referred to in Article 16 (1) 6 of the Act (limited to the portion received as stocks, etc., out of the costs of a merger), which is included in gross income for the relevant business year (referring to the amount prior to the non-inclusion in gross income under Article 18-3 of the Act);
(h) The amount exceeding the ceiling of donations on the inclusion in deductible expenses under Article 24 (1) and (2) of the Act and not included in deductible expenses;
(i) The amount of gains (or losses) on a transfer under Article 44 (1) of the Act, which is included in gross income for the relevant business year:
(j) The amount of gains (or losses) on a transfer under Article 46 (1) of the Act, which is included in gross income for the relevant business year:
(k) The amount of the reserve accumulated for research and development of human resources pursuant to Article 9 (1) of the Restriction of Special Taxation Act, which is included in gross income for the relevant business year pursuant to Article 9 (2) 1 of the same Act.
(5) "Rate prescribed by Presidential Decree" in the main sentence of Article 56 (2) 1 of the Act means 80/100, and "rate prescribed by Presidential Decree" in Article 56 (2) 2 of the Act means 30/100.
(6) "Assets prescribed by Presidential Decree, such as machinery" in Article 56 (2) 1 (a) of the Act means the assets specified in subparagraphs 1 and 2 as assets for business use, newly acquired to use them in a domestic place of business, (excluding secondhand goods and lease assets, other than finance lease assets provided for in Article 3 of the Enforcement Decree of the Restriction of Special Taxation Act, and limited to the assets specified by Ordinance of the Ministry of Strategy and Finance in cases of a domestic corporation eligible for special cases concerning the computation of tax base of corporate tax on shipping enterprises under Article 104-10 of the Restriction of Special Taxation Act) and the assets specified in subparagraph 3: Provided, That the capital expenditure under Article 31 (2) for the assets referred to in subparagraph 1 (including assets acquired before the relevant business year) shall be included therein, but the assets immediately depreciated in the relevant business year under Article 31 (4) and (6) shall be excluded: <Amended by Presidential Decree No. 27828, Feb. 3, 2017>
1. The following tangible fixed assets for business use:
(a) Machinery, devices, tools, instruments, fixtures, vehicles, transports, ships, aircraft, and other similar tangible fixed assets for business use;
(b) Buildings specified by Ordinance of the Ministry of Strategy and Finance, newly constructed or extended for business use;
(c) The land directly used for the construction or extension of the buildings for business use referred to in item (b) and the land that meets the criteria prescribed by Ordinance of the Ministry of Strategy and Finance, deemed to be used for the construction or extension of a building for business use in light of the main business, the investment plan, etc.;
2. Intangible fixed assets referred to in Article 24 (1) 2 (a) through (d) and (f): Provided, That excluded herefrom shall be goodwill (including goodwill reported by a merged corporation, etc., upon a merger or division);
3. Stocks, etc., acquired by investing in a venture business defined in Article 2 (1) of the Act on Special Measures for the Promotion of Venture Businesses, by either of the following methods:
(a) Payment for capital at the time of incorporating the relevant business;
(b) Payment for the price of stocks newly issued for capital increase, where the relevant business issues new stocks for consideration in order to increase its capital after its incorporation.
(7) Where the investments referred to in Article 56 (2) 1 (a) of the Act are made over at least two business years, the aggregate of the investments shall be calculated based on the amounts actually disbursed in each business year during the business years over which such investments are made.
(8) "Full-time employees prescribed by Presidential Decree" in Article 56 (2) 1 (b) (i) and (ii) means full-time employees provided for in Article 26-4 (2) of the Enforcement Decree of the Restriction of Special Taxation Act. <Amended by Presidential Decree No. 27828, Feb. 3, 2017>
(9) The increased amount of wages referred to in Article 56 (2) 1 (b) of the Act means the increased amount, compared with the amount for the immediately preceding business year, in the aggregate of earned income under Article 20 (1) 1 and 2 of the Income Tax Act (including the book value of treasury stocks contributed to the employee ownership stock association under subparagraph 16 of Article 19 or the amount of money or goods calculated by the formula prescribed by Ordinance of the Ministry of Strategy and Finance, but limited to the amount included by the relevant corporation in deductible expenses). <Amended by Presidential Decree No. 26981, Feb. 12, 2016; Presidential Decree No. 27828, Feb. 3, 2017>
(10) Article 26-4 (3) of the Enforcement Decree of the Restriction of Special Taxation Act shall apply mutatis mutandis to the calculation of the number of full-time employees referred to in paragraph (8). <Newly Inserted by Presidential Decree No. 27828, Feb. 3, 2017>
(11) "Full-time youth employees prescribed by Presidential Decree" in Article 56 (2) 1 (b) (ii) of the Act means full-time youth employees provided for in Article 27-4 (2) of the Enforcement Decree of the Restriction of Special Taxation Act. <Newly Inserted by Presidential Decree No. 27828, Feb. 3, 2017>
(12) Article 27-4 (5) 1 (b) of the Enforcement Decree of the Restriction of Special Taxation Act shall apply mutatis mutandis to the calculation of the number of full-time youth employees referred to in paragraph (11). <Newly Inserted by Presidential Decree No. 27828, Feb. 3, 2017>
(13) "Sum of dividends prescribed by Presidential Decree" in Article 56 (2) 1 (c) of the Act means the sum of the following amounts: <Amended by Presidential Decree No. 27828, Feb. 3, 2017>
1. The dividends distributed from the retained earnings for the relevant business year (excluding the dividends distributed by reducing the capital reserves or earned surplus funds under Article 461-2 of the Commercial Act, and limited to dividends in cash);
2. Interim or quarterly dividends distributed during the relevant business year (excluding dividends distributed by reducing the capital reserves or earned surplus funds under Article 461-2 of the Commercial Act, and limited to dividends in cash);
3. The amount of treasury stocks acquired by a listed stock corporation during the relevant business year, as prescribed by Ordinance of the Ministry of Strategy and Finance and retired within one month.
(14) "Amount prescribed by Presidential Decree, such as the amount expended for collaborative cooperation defined in subparagraph 3 of Article 2 of the Act on the Promotion of Collaborative Cooperation between Large Enterprises and Small-Medium Enterprises" in Article 56 (2) 1 (d) of the Act means any of the following contributions made during the relevant business year: <Amended by Presidential Decree No. 26981, Feb. 12, 2016>
1. A contribution made in the case of any subparagraph of Article 8-3 (1) of the Restriction of Special Taxation Act pursuant to the same paragraph;
2. A contribution made to an intra-company labor welfare fund of a small or medium requiring cooperation prescribed in Article 8-3 (1) 1 of the Restriction of Special Taxation Act;
3. A contribution made to a joint labor welfare fund under Article 86-2 of the Framework Act on Labor Welfare.
(15) "Period prescribed by Presidential Decree" in Article 56 (3) of the Act means either of the following periods: <Amended by Presidential Decree No. 27828, Feb. 3, 2017>
1. Where a domestic corporation files a return by the method provided for in Article 56 (2) 1 of the Act: The business year in which three years elapse;
2. Where a domestic corporation files a return by the method provided for in Article 56 (2) 2 of the Act: The business year in which one year elapses.
(16) Where a corporation that shall continuously apply the method chosen under Article 56 (3) of the Act merges with another corporation or acquires the business of another corporation, or in circumstances specified by Ordinance of the Ministry of Strategy and Finance, it may change the method chosen.
(17) Where a domestic corporation has not chosen any of the methods provided for in Article 56 (2) of the Act, the domestic corporation shall be deemed chosen a method by which the smaller amount of unappropriated earnings or the greater over-appropriated amount is computed for the business year that falls under any subparagraph of Article 56 (1) of the Act for the first time in filing the relevant tax return.
(18) Even where a domestic corporation that sets aside the reserve for appropriation in the next term during the relevant business year and deducts the reserve from unappropriated earnings pursuant to Article 56 (5) of the Act ceases to fall under any subparagraph of Article 56 (1) of the Act in the next business year due to the reduction of equity capital or any other cause, it shall pay corporate tax on unappropriated earnings in accordance with Article 56 (1) and (6) of the Act.
(19) “Where a domestic corporation referred to in paragraph (1) has disposed of an asset referred to in paragraph (2) 1 (a), or in circumstances prescribed by Presidential Decree" in Article 56 (8) of the Act means the following cases: <Amended by Presidential Decree No. 27828, Feb. 3, 2017>
1. Where the relevant asset is transferred or lent before two years have elapsed from the completion date of investment in the asset under paragraph (6) 1 (a) or the purchase date of the asset (limited to purchased assets) under paragraph (6) 2 or the acquisition date of the asset under paragraph (6) 3: Provided, That the foregoing shall not apply where the asset falls under any of the following items:
(b) Where an asset referred to in paragraph (6) 1 (a) is transferred or lent, gratuitously to the commissioned enterprise defined in subparagraph 6 of Article 2 of the Act on the Promotion of Collaborative Cooperation between Large Enterprises and Small-Medium Enterprises (excluding the related parties provided for in Article 87);
(c) Other cases specified by Ordinance of the Ministry of Strategy and Finance in consideration of the type of business and other characteristics;
2. Cases specified by Ordinance of the Ministry of Strategy and Finance, such as where the relevant asset ceases to be classified as a building for business use under paragraph (6) 1 (b) or fails to meet the requirements under paragraph (6) 1 (c).
(20) Pursuant to Article 56 (8) of the Act, a domestic corporation shall pay the amount calculated by multiplying the amount of tax not paid due to the deduction of the invested amount by the period specified in subparagraph 1 and the rate specified in subparagraph 2, as the amount equivalent to interest, when it files a tax base return for the business year in which the date specified by Ordinance of the Ministry of Strategy and Finance falls (hereafter in this paragraph referred to as "the payment date of the amount equivalent to interest"), where the cause or event referred to in any subparagraph of paragraph (19) occurs: <Amended by Presidential Decree No. 27828, Feb. 3, 2017>
1. The period between the day immediately after the filing date of the tax base return on corporate tax for the business year in which the invested amount was deducted and the payment date of the amount equivalent to interest;
2. The rate of 3/10000 per day.
(21) The aggregate of earned income referred to in paragraph (9) shall be calculated as follows:
1. Where a surviving corporation, a corporation newly established by a division, an invested corporation, or a transferred corporation (hereafter in this paragraph referred to as "surviving corporation, etc.") accepts continuous employment of the employees engaged in former business divisions as a consequence of a merger, division, investment in kind, or acquisition of business, such employees shall be deemed employed by the surviving corporation, etc., before such event;
2. Where a new corporation is established, the aggregate of earned income for the immediately preceding business year shall be deemed nil: Provided, That the foregoing shall not apply to cases subject to subparagraph 1.
(22) Where the merged corporation or divided corporation disappears as a consequence of a merger or division, the surviving corporation or the corporation newly established by the division may succeed to the unappropriated earnings or the over-appropriated amount under Article 56 of the Act, as prescribed by Ordinance of the Ministry of Strategy and Finance.
(23) In computing an over-appropriated amount to be subtracted from the reserve for appropriation in the next term by applying Article 56 (6) of the Act, Article 56 (2) 1 of the Act shall also apply to the business year in which December 31, 2017 is included and subsequent business years thereafter. <Newly Inserted by Presidential Decree No. 28640, Feb. 13, 2018>
(24) Methods for computing the aggregate of investments, the increased amount of wages, unappropriated earnings upon a merger or division, and other necessary matters, shall be prescribed by Ordinance of the Ministry of Strategy and Finance.
[This Article Newly Inserted by Presidential Decree No. 26068, Feb. 3, 2015]
 Article 94 (Deduction of Foreign Tax Credits)
(1) "Amount of foreign corporate tax prescribed by Presidential Decree" in Article 57 (1) of the Act means the following amounts of tax (excluding additional tax and surcharges) imposed by a foreign government (including a local government; hereinafter the same shall apply): Provided, That this shall not apply to the amount imposed by a foreign government on amounts not returned to a foreign-related party and reserved to a domestic corporation among the amounts of the domestic corporation reduced as prescribed in Article 10 (1) of the Adjustment of International Taxes Act: <Amended by Presidential Decree No. 18706, Feb. 19, 2005; Presidential Decree No. 21302, Feb. 4, 2009; Presidential Decree No. 22951, Jun. 3, 2011; Presidential Decree No. 23589, Feb. 2, 2012>
1. The amount of excess profit tax and other taxes imposed with other income, etc., of the corporation as the tax base;
2. The amount of value-added tax imposed with the income, etc., of the corporation as the tax base;
3. The amount of tax imposed with the amount of earnings, other than income, as the tax base and other corresponding taxes falling under the same tax items as the tax imposed with the income, etc., of the corporation as the tax base.
(2) "Ratio specified by Presidential Decree" in Article 57 (1) 1 of the Act means the ratio computed by the following formula: <Amended by Presidential Decree No. 22951, Feb. 29, 2008; Presidential Decree No. 22951, Jun. 3, 2011>
Foreign source income - The amount prescribed by Ordinance of the Ministry of Strategy and Finance among the foreign source income
Tax base for the relevant business year
(3) The amount of tax paid in a foreign country under Article 57 (1) of the Act shall be deducted from the calculated amount of tax or included in expenses incurred in the business year in which the relevant foreign source income is included in the tax base. In such cases, a domestic corporation that wishes to qualify for Article 57 (1) of the Act shall submit a tax statement on foreign tax credits in the form stipulated by Ordinance of the Ministry of Strategy and Finance to the head of the tax office having jurisdiction over the place of tax payment, along with the report provided for in Article 60 of the Act. <Amended by Presidential Decree No. 21302, Feb. 4, 2009>
(4) Where a domestic corporation is unable to submit a tax statement on foreign tax credits, along with a report under Article 60 of the Act, due to the foreign government's delay in determining and notifying the foreign source income or due to discrepancy in taxable periods, it may submit the tax statement on foreign tax credits, accompanied with supporting documents, within three months after receiving the notice from the foreign government on the determination of corporate tax on the foreign source income. <Amended by Presidential Decree No. 26068, Feb. 3, 2015; Presidential Decree No. 27828, Feb. 3, 2017>
(5) Paragraph (4) shall apply mutatis mutandis where the amount of tax paid in a foreign country is revised due to the correction of determination made by the foreign government on the amount of corporate tax on the foreign source income. In suc