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ENFORCEMENT DECREE OF THE RESTRICTION OF SPECIAL TAXATION ACT

Wholly Amended by Presidential Decree No. 15976, Dec. 31, 1998

Amended by Presidential Decree No. 16184, Mar. 12, 1999

Presidential Decree No. 16366, May 24, 1999

Presidential Decree No. 16448, jun. 30, 1999

Presidential Decree No. 16431, jun. 30, 1999

Presidential Decree No. 16508, Aug. 6, 1999

Presidential Decree No. 16574, Oct. 11, 1999

Presidential Decree No. 16584, Oct. 30, 1999

Presidential Decree No. 16669, Dec. 31, 1999

Presidential Decree No. 16693, Jan. 10, 2000

Presidential Decree No. 16762, Mar. 28, 2000

Presidential Decree No. 16891, Jul. 1, 2000

Presidential Decree No. 16984, Oct. 21, 2000

Presidential Decree No. 17034, Dec. 29, 2000

Presidential Decree No. 17115, Jan. 29, 2001

Presidential Decree No. 17158, Mar. 27, 2001

Presidential Decree No. 17227, May 24, 2001

Presidential Decree No. 17236, jun. 12, 2001

Presidential Decree No. 17296, Jul. 7, 2001

Presidential Decree No. 17305, Jul. 16, 2001

Presidential Decree No. 17303, Jul. 16, 2001

Presidential Decree No. 17336, Aug. 14, 2001

Presidential Decree No. 17367, Sep. 29, 2001

Presidential Decree No. 17458, Dec. 31, 2001

Presidential Decree No. 17538, Mar. 2, 2002

Presidential Decree No. 17583, Apr. 20, 2002

Presidential Decree No. 17633, jun. 25, 2002

Presidential Decree No. 17791, Dec. 5, 2002

Presidential Decree No. 17829, Dec. 30, 2002

Presidential Decree No. 18044, jun. 30, 2003

Presidential Decree No. 18030, jun. 30, 2003

Presidential Decree No. 18146, Nov. 29, 2003

Presidential Decree No. 18207, Dec. 30, 2003

Presidential Decree No. 18176, Dec. 30, 2003

Presidential Decree No. 18312, Mar. 17, 2004

Presidential Decree No. 18373, Apr. 24, 2004

Presidential Decree No. 18408, jun. 5, 2004

Presidential Decree No. 18428, jun. 11, 2004

Presidential Decree No. 18437, jun. 22, 2004

Presidential Decree No. 18457, jun. 29, 2004

Presidential Decree No. 18557, Oct. 5, 2004

Presidential Decree No. 18594, Dec. 3, 2004

Presidential Decree No. 18669, Jan. 5, 2005

Presidential Decree No. 18704, Feb. 19, 2005

Presidential Decree No. 18736, Mar. 8, 2005

Presidential Decree No. 18740, Mar. 18, 2005

Presidential Decree No. 18796, Apr. 22, 2005

Presidential Decree No. 18919, jun. 30, 2005

Presidential Decree No. 19023, Aug. 31, 2005

Presidential Decree No. 19213, Dec. 30, 2005

Presidential Decree No. 19256, Dec. 31, 2005

Presidential Decree No. 19321, Feb. 8, 2006

Presidential Decree No. 19329, Feb. 9, 2006

Presidential Decree No. 19422, Mar. 29, 2006

Presidential Decree No. 20620, Feb. 22, 2008

Presidential Decree No. 20720, Feb. 29, 2008

Presidential Decree No. 20743, Mar. 10, 2008

Presidential Decree No. 20774, Apr. 30, 2008

Presidential Decree No. 20854, jun. 20, 2008

Presidential Decree No. 21064, Oct. 7, 2008

Presidential Decree No. 21196, Dec. 31, 2008

Presidential Decree No. 21214, Dec. 31, 2008

Presidential Decree No. 21252, Jan. 6, 2009

Presidential Decree No. 21263, Jan. 14, 2009

Presidential Decree No. 21307, Feb. 4, 2009

Presidential Decree No. 21429, Apr. 21, 2009

Presidential Decree No. 21445, Apr. 21, 2009

Presidential Decree No. 21461, Apr. 30, 2009

Presidential Decree No. 21480, May 6, 2009

Presidential Decree No. 21545, jun. 19, 2009

Presidential Decree No. 21634, Jul. 22, 2009

Presidential Decree No. 21656, Jul. 30, 2009

Presidential Decree No. 21676, Aug. 6, 2009

Presidential Decree No. 21692, Aug. 18, 2009

Presidential Decree No. 21719, Sep. 9, 2009

Presidential Decree No. 21734, Sep. 21, 2009

Presidential Decree No. 21744, Sep. 21, 2009

Presidential Decree No. 21747, Sep. 29, 2009

Presidential Decree No. 21765, Oct. 1, 2009

Presidential Decree No. 21774, Oct. 8, 2009

Presidential Decree No. 21807, Nov. 2, 2009

Presidential Decree No. 21835, Nov. 20, 2009

Presidential Decree No. 21847, Nov. 26, 2009

Presidential Decree No. 21882, Dec. 14, 2009

Presidential Decree No. 21904, Dec. 24, 2009

Presidential Decree No. 21914, Dec. 30, 2009

Presidential Decree No. 21984, Jan. 7, 2010

Presidential Decree No. 22003, Jan. 27, 2010

Presidential Decree No. 22037, Feb. 18, 2010

Presidential Decree No. 22085, Mar. 26, 2010

Presidential Decree No. 22151, May 4, 2010

Presidential Decree No. 22181, jun. 8, 2010

Presidential Decree No. 22224, jun. 28, 2010

Presidential Decree No. 22235, jun. 29, 2010

Presidential Decree No. 22254, Jul. 6, 2010

Presidential Decree No. 22356, Aug. 25, 2010

Presidential Decree No. 22394, Sep. 20, 2010

Presidential Decree No. 22395, Sep. 20, 2010

Presidential Decree No. 22421, Oct. 1, 2010

Presidential Decree No. 22424, Oct. 1, 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. 22583, Dec. 30, 2010

Presidential Decree No. 22605, Dec. 31, 2010

Presidential Decree No. 22626, Jan. 17, 2011

Presidential Decree No. 22637, Jan. 24, 2011

Presidential Decree No. 22953, jun. 3, 2011

Presidential Decree No. 22967, jun. 8, 2011

Presidential Decree No. 22977, jun. 24, 2011

Presidential Decree No. 23039, Jul. 25, 2011

Presidential Decree No. 23113, Aug. 30, 2011

Presidential Decree No. 23142, Sep. 16, 2011

Presidential Decree No. 23313, Nov. 23, 2011

Presidential Decree No. 23356, Dec. 8, 2011

Presidential Decree No. 23535, Jan. 25, 2012

Presidential Decree No. 23590, Feb. 2, 2012

Presidential Decree No. 23718, Apr. 10, 2012

Presidential Decree No. 24017, Aug. 3, 2012

Presidential Decree No. 24077, Aug. 31, 2012

Presidential Decree No. 24141, Oct. 15, 2012

Presidential Decree No. 24271, Dec. 28, 2012

Presidential Decree No. 24368, Feb. 15, 2013

Presidential Decree No. 24441, Mar. 23, 2013

Presidential Decree No. 24534, May 10, 2013

Presidential Decree No. 24638, jun. 28, 2013

Presidential Decree No. 24697, Aug. 27, 2013

Presidential Decree No. 24698, Sep. 2, 2013

Presidential Decree No. 24887, Nov. 29, 2013

Presidential Decree No. 24890, Dec. 4, 2013

Presidential Decree No. 25079, Jan. 14, 2014

Presidential Decree No. 25211, Feb. 21, 2014

Presidential Decree No. 25279, Mar. 24, 2014

Presidential Decree No. 25317, Apr. 22, 2014

Presidential Decree No. 25339, Apr. 29, 2014

Presidential Decree No. 25590, Sep. 11, 2014

Presidential Decree No. 25677, Nov. 4, 2014

Presidential Decree No. 25945, Dec. 30, 2014

Presidential Decree No. 26070, Feb. 3, 2015

Presidential Decree No. 26205, Apr. 20, 2015

Presidential Decree No. 26316, jun. 15, 2015

Presidential Decree No. 26369, jun. 30, 2015

Presidential Decree No. 26600, Oct. 23, 2015

Presidential Decree No. 26659, Nov. 20, 2015

Presidential Decree No. 26748, Dec. 22, 2015

Presidential Decree No. 26754, Dec. 22, 2015

Presidential Decree No. 26762, Dec. 28, 2015

Presidential Decree No. 26763, Dec. 28, 2015

Presidential Decree No. 26922, Jan. 22, 2016

Presidential Decree No. 26959, Feb. 5, 2016

Presidential Decree No. 27127, May 10, 2016

Presidential Decree No. 27205, May 31, 2016

Presidential Decree No. 27230, jun. 21, 2016

Presidential Decree No. 27241, jun. 21, 2016

Presidential Decree No. 27245, jun. 21, 2016

Presidential Decree No. 27444, Aug. 11, 2016

Presidential Decree No. 27445, Aug. 11, 2016

Presidential Decree No. 27464, Aug. 29, 2016

Presidential Decree No. 27511, Sep. 22, 2016

Presidential Decree No. 27524, Sep. 29, 2016

Presidential Decree No. 27617, Nov. 29, 2016

Presidential Decree No. 27620, Nov. 29, 2016

Presidential Decree No. 27621, Nov. 29, 2016

Presidential Decree No. 27649, Dec. 1, 2016

Presidential Decree No. 27767, Jan. 6, 2017

Presidential Decree No. 27771, Jan. 10, 2017

Presidential Decree No. 27848, Feb. 7, 2017

Presidential Decree No. 27972, Mar. 29, 2017

Presidential Decree No. 27978, Apr. 7, 2017

Presidential Decree No. 28009, May 8, 2017

Presidential Decree No. 28152, jun. 27, 2017

Presidential Decree No. 28211, Jul. 26, 2017

Presidential Decree No. 28575, Jan. 9, 2018

Presidential Decree No. 28583, Jan. 16, 2018

Presidential Decree No. 28627, Feb. 9, 2018

Presidential Decree No. 28636, Feb. 13, 2018

Presidential Decree No. 28686, Feb. 27, 2018

Presidential Decree No. 29045, Jul. 16, 2018

Presidential Decree No. 29116, Aug. 28, 2018

Presidential Decree No. 29163, Sep. 18, 2018

Presidential Decree No. 29241, Oct. 23, 2018

Presidential Decree No. 29617, Mar. 12, 2019

Presidential Decree No. 29677, Apr. 2, 2019

CHAPTER I GENERAL PROVISIONS
 Article 1 (Purpose)
The purpose of this Decree is to prescribe matters delegated by the Restriction of Special Taxation Act and those necessary for the enforcement thereof. <Amended by Presidential Decree No. 18704, Feb. 19, 2005>
CHAPTER II DIRECT NATIONAL TAX
SECTION 1 Special Taxation for Small or Medium Enterprises
 Article 2 (Scope of Small or Medium Enterprises)
(1) "Small or medium enterprise prescribed by Presidential Decree" in Article 5 (1), with the exception of its subparagraphs, of the Restriction of Special Taxation Act (hereinafter referred to as the "Act"), means an enterprise that meets each of the following requirements (hereinafter referred to as "small or medium enterprise"): Provided, That no enterprise with the total assets of at least 500 billion, shall be deemed a small or medium enterprise: <Amended by Presidential Decree No. 16693, Jan. 10, 2000; Presidential Decree No. 17034, Dec. 29, 2000; Presidential Decree No. 17458, Dec. 31, 2001; Presidential Decree No. 17829, Dec. 30, 2002; Presidential Decree No. 18408, Jun. 5, 2004; Presidential Decree No. 18557, Oct. 5, 2004; Presidential Decree No. 18704, Feb. 19, 2005; Presidential Decree No. 19329, Feb. 9, 2006; Presidential Decree No. 20244, Sep. 6, 2007; Presidential Decree No. 20290, Sep. 27, 2007; Presidential Decree No. 20428, Nov. 30, 2007; Presidential Decree No. 20620, Feb. 22, 2008; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 21307, Feb. 4, 2009; Presidential Decree No. 22037, Feb. 18, 2010; Presidential Decree No. 22583, Dec. 30, 2010; Presidential Decree No. 23590, Feb. 2, 2012; Presidential Decree No. 24368, Feb. 15, 2013; Presidential Decree No. 25211, Feb. 21, 2014; Presidential Decree No. 26070, Feb. 3, 2015; Presidential Decree No. 26959, Feb. 5, 2016; Presidential Decree No. 27848, Feb. 7, 2017>
1. Its turnover shall not exceed the standard amount specified in attached Table 1 to the Enforcement Decree of the Framework Act on Small and Medium Enterprises for each type of business (“average turnover, etc.” shall be construed as “turnover”; hereafter in this Article, referred to as “criteria for small or medium enterprises”);
2. Deleted; <by Presidential Decree No. 17034, Dec. 29, 2000>
3. Its substantial independence shall meet the requirements prescribed in Article 3 (1) 2 of the Enforcement Decree of the Framework Act on Small and Medium Enterprises. When calculating the indirect holding ratio of stocks, etc. under Article 3 (1) 2 (b) of the Enforcement Decree of the Framework Act on Small and Medium Enterprises, stocks, etc. indirectly held through a collective investment scheme defined under the Financial Investment Services and Capital Markets Act shall be excluded; and “enterprise whose average turnover, etc. does not meet the standard amount specified in attached Table 1” shall be construed as “enterprise that does not meet the criteria for small or medium enterprises under Article 2 (1) 1 of the Enforcement Decree of the Restriction of Special Taxation Act” for the purposes of Article 3 (1) 2 (c) of the Enforcement Decree of the Framework Act on Small and Medium Enterprises;
4. It shall not engage mainly in any of the consumer service businesses provided for in Article 29 (3).
(2) For the purposes of paragraph (1), if a small or medium enterprise falls under the proviso, with the exception of its subparagraphs, of paragraph (1), due to expansion of its size, etc. or ceases to be a small or medium enterprise because it fails to meet either of the requirements prescribed in paragraph (1) 1 or 3 (limited to cases to which Article 3 (1) 2 (c) of the Enforcement Decree of the Framework Act on Small and Medium Enterprises applies), such enterprise shall be deemed a small or medium enterprise only for the taxable year in which the relevant ground first arises and the three subsequent taxable years thereafter; and after the aforesaid period (hereafter in this Article, referred to as “grace period”), whether such enterprise falls under a small or medium enterprise shall be determined each taxable year pursuant to paragraph (1): Provided, That no grace period shall apply to an enterprise that ceases to be a small or medium enterprise due to any of the following grounds; and no grace period shall apply to any enterprise in the grace period, beginning from the taxable year in which the relevant ground arises (or the date of merger, if the enterprise in the grace period referred to in subparagraph 2, merges with a small or medium enterprise): <Amended by Presidential Decree No. 17034, Dec. 29, 2000; Presidential Decree No. 18704, Feb. 19, 2005; Presidential Decree No. 19329, Feb. 9, 2006; Presidential Decree No. 22583, Dec. 30, 2010; Presidential Decree No. 26070, Feb. 3, 2015; Presidential Decree No. 27848, Feb. 7, 2017>
1. Where the small or medium enterprise merges with an enterprise that is not a small or medium enterprise defined under the Framework Act on Small and Medium Enterprises;
2. Where the small or medium enterprise merges with an enterprise in the grace period;
3. Where the small or medium enterprise fails to meet the requirement prescribed in paragraph (1) 3 (excluding Article 3 (1) 2 (c) of the Enforcement Decree of the Framework Act on Small and Medium Enterprises);
4. Where the small or medium enterprise exceeds the criteria for small or medium enterprises as at the end of the taxable year within two years from the end of the taxable year in which it is incorporated.
(3) For the purposes of paragraph (1), where a small or medium enterprise engages in at least two different businesses, the business generating more revenue shall be deemed its principal business. <Amended by Presidential Decree No. 17034, Dec. 29, 2000>
(4) Matters necessary for calculating the turnover, total assets, and indirect holding ratio of outstanding stocks referred to in the proviso, with the exception of its subparagraphs, of paragraph (1) 1, and the latter part of paragraph (1) 3, and for determining whether an enterprise is a related company defined in Article 3 (1) 2 (c) of the Enforcement Decree of the Framework Act on Small and Medium Enterprises, shall be prescribed by Ordinance of the Ministry of Economy and Finance. <Amended by Presidential Decree No. 17034, Dec. 29, 2000; Presidential Decree No. 17829, Dec. 30, 2002; Presidential Decree No. 20620, Feb. 22, 2008; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 25211, Feb. 21, 2014; Presidential Decree No. 26070, Feb. 3, 2015>
(5) For the purposes of paragraph (1), where an enterprise becomes qualified as a small or medium enterprise due to an amendment of Article 3 (1) 2, attached Table 1, or attached Table 2 to the Enforcement Decree of the Framework Act on Small and Medium Enterprises, the enterprise shall be deemed a small or medium enterprise from the taxable year in which the relevant ground arises; and where the enterprise cease to be a small or medium enterprise, it shall be deemed a small or medium enterprise only for the taxable year in which the relevant ground arises and the three subsequent taxable years thereafter. <Amended by Presidential Decree No. 16693, Jan. 10, 2000; Presidential Decree No. 17034, Dec. 29, 2000; Presidential Decree No. 18704, Feb. 19, 2005; Presidential Decree No. 19329, Feb. 9, 2006; Presidential Decree No. 20620, Feb. 22, 2008; Presidential Decree No. 22037, Feb. 18, 2010; Presidential Decree No. 23590, Feb. 2, 2012>
 Article 3 (Leases Excluded from Tax Credit for Investment)
"Lease prescribed by Presidential Decree" in Article 5 (1), with the exception of its subparagraphs; the former part, with the exception of the subparagraphs, of Article 8-3 (3); Article 25 (1); the former part of Article 25-4 (1); Articles 25-5 (1) with the exception of its subparagraphs; and 25-7 (1), and the main sentence, with the exception of the subparagraphs, of Article 26 (1) means leasing an asset to a national, excluding finance leases prescribed by Ordinance of the Ministry of Economy and Finance. <Amended by Presidential Decree No. 27848, Feb. 7, 2017; Presidential Decree No. 29527, Feb. 12, 2019>
[This Article Newly Inserted by Presidential Decree No. 22583, Dec. 30, 2010]
 Article 4 (Tax Credits for Investments by Small or Medium Enterprises)
(1) "Middle-standing enterprise prescribed by Presidential Decree" in Article 5 (1), with the exception of its subparagraphs, of the Act means an enterprise that meets all of the following requirements: <Newly Inserted by Presidential Decree No. 28636, Feb. 13, 2018; Presidential Decree No. 29527, Feb. 12, 2019>
1. It shall not be a small or medium enterprise;
2. It shall not mainly engage in any of the following types of business. In such cases, if it engages in at least two different businesses, the business generating more revenue shall be deemed its principal business:
(a) Any of the consumer service businesses provided for in Article 29 (3);
4. The amount of its average turnover during the immediately preceding three taxable years (the turnover shall be calculated by the method specified in Article 2 (4); and the turnover for a taxable year, which is less than one year in length, shall be converted into the turnover for one year), shall be less than 300 billion won.
(2) "Business assets prescribed by Presidential Decree" in Article 5 (1) 1 of the Act means tangible assets prescribed by Ordinance of the Ministry of Economy and Finance, of such tangible assets mainly used for the relevant business, such as manufacturing (hereafter in this Article, referred to as “business assets”). <Newly Inserted by Presidential Decree No. 20620, Feb. 22, 2008; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 26070, Feb. 3, 2015>
(3) The amount invested under Article 5 (5) and (6) of the Act shall be the greater of the amount of subparagraph 1 or 2 minus the amount of subparagraph 3: <Amended by Presidential Decree No. 18704, Feb. 19, 2005; Presidential Decree No. 24368, Feb. 15. 2013; Presidential Decree No. 26070, Feb. 3, 2015; Presidential Decree No. 28636, Feb. 13, 2018; Presidential Decree No. 29527, Feb. 12, 2019>
1. The amount calculated by multiplying the total amount invested, by the progress rate of work referred to in Article 69 (1) of the Enforcement Decree of the Corporate Tax Act;
2. The amount actually spent by the relevant taxable year;
3. The aggregate of the amount invested for which tax credits for investment were granted before the relevant taxable year, and the amount calculated by applying mutatis mutandis subparagraph 1 to the investment made before the tax credit for investments was applied.
(4) For the purposes of Article 5 of the Act, business assets acquired to be used both for any of the consumer service businesses provided for in Article 29 (3) and for any other business, the point-of-sale information management system defined under the Distribution Industry Development Act, and facilities used for the information protection system defined in subparagraph 6 of Article 3 of the Framework Act on National Informatization, shall be deemed assets for the business that mainly uses the assets, if the depreciation period for such assets and facilities is at least two years. <Amended by Presidential Decree No. 26070, Feb. 3, 2015; Presidential Decree No. 27848, Feb. 7, 2017>
(5) For the purposes of Article 5 (2) of the Act, Article 23 (10) through (13) shall apply mutatis mutandis to the number of full-time employees and the methods for calculating it. <Newly Inserted by Presidential Decree No. 28636, Feb. 13, 2018>
(6) “Middle-standing enterprise prescribed by Presidential Decree” in Article 5 (3) of the Act means an enterprise that meets each of the following requirements: <Newly Inserted by Presidential Decree No. 26070, Feb. 3, 2015; Presidential Decree No. 27848, Feb. 7, 2017; Presidential Decree No. 28636, Feb. 13, 2018>
1. It shall meet the requirements prescribed in paragraph (1) 1 through 3;
2. The amount of its average turnover for the immediately preceding three taxable years (the turnover shall be calculated by the method specified in Article 2 (4); and the turnover for a taxable year, which is less than one year in length, shall be converted into the turnover for one year), shall be less than 150 billion won.
(7) "Region prescribed by Presidential Decree" in Article 5 (4) 1 of the Act means a region designated and publicly notified by the Minister of Employment and Labor pursuant to Article 29 of the Enforcement Decree of the Framework Act on Employment Policy. <Newly Inserted by Presidential Decree No. 29527, Feb. 12, 2019>
(8) A person who wishes to be granted a tax credit for investments under Article 5 of the Act shall file an application for tax credits for investments in the form prescribed by Ordinance of the Ministry of Economy and Finance, with the head of the tax office having jurisdiction over the place of tax payment, along with his/her tax return for the taxable year in which the investments are completed (referring to each taxable year in which the relevant investment is made, where the person wishes to be granted a tax credit under Article 5 (5) of the Act). <Amended by Presidential Decree No. 20620, Feb. 22, 2008; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 26070, Feb. 3, 2015; Presidential Decree No. 28636, Feb. 13, 2018; Presidential Decree No. 29527, Feb. 12, 2019>
 Article 4-2 (Special Taxation for Supporting Projects of Informatization for Small or Medium Enterprises)
(1) "Small or medium enterprisers prescribed by Presidential Decree" in Article 5-2 of the Act means small or medium enterprisers defined under the Framework Act on Small and Medium Enterprises. <Amended by Presidential Decree No. 18704, Feb. 19, 2005; Presidential Decree No. 22037, Feb. 18, 2010>
(2) "Facilities prescribed by Presidential Decree" in subparagraph 3 of Article 5-2 of the Act means any of the following equipment, such as software which computerizes management and distribution control by using computer or various control apparatuses (limited to those with the depreciation period of at least two years): <Amended by Presidential Decree No. 17829, Dec. 30, 2002; Presidential Decree No. 20620, Feb. 22, 2008; Presidential Decree No. 20720, Feb. 29, 2008>
1. Deleted; <by Presidential Decree No. 21064, Oct. 7, 2008>
2. Systems for making production facilities electronic and for informatizing production processes;
3. Information co-owning systems among enterprises for mutual ex- change, joint design, joint purchase, etc. of product-manufacturing information, inventory information, etc.;
4. Software to make an integrated support of at least two of unit affairs, such as personnel affairs, wages, accounting, cost control, inventory, financial affairs, sales, commercial pursuits, materials procurement, and logistics;
5. Other equipment prescribed by Ordinance of the Ministry of Economy and Finance, to be used for informatization of enterprises.
(3) Any national who intends to include contributions, etc. paid in deductible expenses under Article 5-2 of the Act shall submit, to the head of the tax office having jurisdiction over the place of tax payment, a specification for inclusion of contributions, etc. for supporting informatization projects in deductible expenses stipulated by Ordinance of the Ministry of Economy and Finance, along with his/her tax return for income tax or corporate tax. <Amended by Presidential Decree No. 20720, Feb. 29, 2008>
[This Article Newly Inserted by Presidential Decree No. 17458, Dec. 31, 2001]
 Article 4-3 Deleted. <by Presidential Decree No. 20620, Feb. 22, 2008>
 Article 5 (Tax Reductions or Exemptions for Small or Medium Start-Up Enterprises)
(1) "Youth start-up small or medium enterprise prescribed by Presidential Decree" in the proviso to Article 6 (1) 1 (a) of the Act means an enterprise, the representative [in cases of a place of joint business referred to in Article 43 (1) of the Income Tax Act, referring to the business operator whose profit-and-loss distribution ratio under paragraph (2) of the same Article is the largest (where there are at least two business operators whose profit-and-loss distribution ratio is the largest, referring to them all; hereafter in this Article, the same shall apply)] of which meets the requirements classified as follows (hereafter in this Article, referred to as "youth start-up small or medium enterprise"): <Newly Inserted by Presidential Decree No. 27848, Feb. 7, 2017; Presidential Decree No. 29116, Aug. 28, 2018; Presidential Decree No. 29527, Feb. 12, 2019>
1. Where a new enterprise is incorporated in the form of a sole proprietorship: A person between the ages of 15 and 34 at the time of incorporation: Provided, That, where the age of a person who has performed the military service specified in any item of Article 27 (1) 1, does not exceed 34, after subtracting the period of such military service (which shall not exceed six years) from his age at the time of incorporation, such person shall be deemed a youth;
2. Where a new enterprise is incorporated in the form of a corporation: A person who meets each of the following requirements:
(a) The person shall meet the requirement prescribed in subparagraph 1;
(b) The person shall be the controlling stockholder, etc. prescribed in Article 43 (7) of the Enforcement Decree of the Corporate Tax Act and shall be either the largest stockholder or the largest investor of the corporation.
(2) For the purposes of Article 6 (1) 1 (a) of the Act, if the representative of a youth start-up small or medium enterprise who has commenced his/her business in an area outside the over-concentration control region of the Seoul Metropolitan area fails to meet the requirement prescribed in paragraph (1) 2 (b) or becomes a business operator whose profit-and-loss distribution ratio is no more the largest as a sole proprietor, during the period of tax reduction or exemption, the tax reduction or exemption provided for in Article 6 (1) 1 (a) of the Act shall not apply, but the reduction or exemption provided for in Article 6 (1) 1 (b) of the Act shall apply to the youth start-up small or medium enterprise for the remaining period of tax reduction or exemption from the taxable year in which the relevant ground arises. <Newly Inserted by Presidential Decree No. 27848, Feb. 7, 2017; Presidential Decree No. 29116, Aug. 28, 2018; Presidential Decree No. 29527, Feb. 12, 2019>
(3) For the purposes of Article 6 (1) 1 (b) of the Act, if the representative of a youth start-up small or medium enterprise who has commenced his/her business in the over-concentration control region of the Seoul Metropolitan area fails to meet the requirements prescribed in paragraph (1) 2 (b) or becomes a business operator whose profit-and-loss distribution ratio is no longer the largest as a sole proprietor, during the period of tax reduction or exemption, the tax reduction or exemption provided for in Article 6 (1) of the Act shall not apply for the remaining period of tax reduction or exemption from the taxable year in which the relevant ground arises. <Newly Inserted by Presidential Decree No. 29116, Aug. 28, 2018; Presidential Decree No. 29527, Feb. 12, 2019>
(4) "Enterprise prescribed by Presidential Decree" in Article 6 (2) of the Act means any of the following enterprises: <Amended by Presidential Decree No. 16584, Oct. 30, 1999; Presidential Decree No. 17034, Dec. 29, 2000; Presidential Decree No. 18176, Dec. 30, 2003; Presidential Decree No. 18704, Feb. 19, 2005; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 21307, Feb. 4, 2009; Presidential Decree No. 22037, Feb. 18, 2010; Presidential Decree No. 23590, Feb. 2, 2012>
1. A small or medium enterprise which satisfies the requirements provided for in Article 2-2 of the Act on Special Measures for the Promotion of Venture Businesses (excluding small or medium enterprises that satisfy the requirements provided for in paragraph (1) 2 (b) of the same Article);
2. A small or medium enterprise whose expenses referred to in attached Table 6 for research and development and human resources development (hereafter in this Article, referred to as "research and development expenses"), are at least 5/100 of its turnover in the relevant taxable year.
(5) Paragraph (4) 2 shall apply only where a small or medium enterprise keeps maintaining its research and development expenses within the ratio prescribed in the same subparagraph from the taxable year in which whether it is qualified as a venture business pursuant to Article 25 of the Act on Special Measures for the Promotion of Venture Businesses, is verified. <Amended by Presidential Decree No. 16584, Oct. 30, 1999; Presidential Decree No. 18704, Feb. 19, 2005>
(6) "Businesses prescribed by Presidential Decree" in Article 6 (3) 2 of the Act means the businesses prescribed by Ordinance of the Ministry of Economy and Finance, which do not directly manufacture products, but outsourcing manufacturing products. <Newly Inserted by Presidential Decree No. 27848, Feb. 7, 2017>
(7) "Engineering business prescribed by Presidential Decree" in Article 6 (3) 17 of the Act means a business which provides engineering services (hereinafter referred to as "engineering business") pursuant to the Engineering Industry Promotion Act (including engineering services provided by professional engineers subject to the Professional Engineers Act; hereinafter the same shall apply). <Amended by Presidential Decree No. 16584, Oct. 30, 1999; Presidential Decree No. 18704, Feb. 19, 2005; Presidential Decree No. 21307, Feb. 4, 2009; Presidential Decree No. 22626. Jan. 17, 2011>
(8) "Logistics industry prescribed by Presidential Decree" in Article 6 (3) 18 of the Act means a cargo transportation business, cargo handling business, safekeeping and warehousing business, cargo terminal operating business, cargo transportation intermediation, agency, and related business, cargo packing, cargo tallying, and cargo weights and measures service, among transportation businesses; and towing business under the Act on the Arrival and Departure of Ships, pilotage services under the Pilotage Act, and pallet leasing business among the industrial machinery and equipment leasing business (hereinafter referred to as "logistics industry"). <Amended by Presidential Decree No. 21307, Feb. 4, 2009; Presidential Decree No. 25211, Feb. 21, 2014; Presidential Decree No. 28636, Feb. 13, 2018>
(9) "Tourist facilities business prescribed by Presidential Decree" in Article 6 (3) 20 of the Act means specialized resort business, general resort complex business, auto campground business, tourist excursion ship business, and tourist theater business, prescribed in Article 2 of the Enforcement Decree of the Tourism Promotion Act. <Amended by Presidential Decree No. 21307, Feb. 4, 2009; Presidential Decree No. 25677, Nov. 4, 2014>
(10) "New energy technology small or medium enterprise prescribed by Presidential Decree" in Article 6 (4) of the Act means a small or medium enterprise manufacturing any of the following products (hereafter in this Article, referred to as "high efficiency products, etc."): <Newly Inserted by Presidential Decree No. 22037, Feb. 18, 2010>
1. Grade 1 energy efficiency products referred to in Article 15 of the Energy Use Rationalization Act, and products certified as high efficiency energy equipment and materials pursuant to Article 22 of the same Act;
(11) “Enterprise ... that engages in any of the new-growth service businesses prescribed by Presidential Decree" in Article 6 (5) of the Act means a small or medium enterprise that mainly engages in any of the following businesses (hereafter in this Article, referred to as "type of new-growth service business"). In such cases, if it engages in at least two different businesses, the business generating more revenue shall be deemed its principal business: <Newly Inserted by Presidential Decree No. 28636, Feb. 13, 2018>
1. Computer programming, system integration and management services, software development and supply business, information service activities (excluding news agency activities), or telecommunications business;
2. Creative- and arts-related services (excluding individual artists), business producing motion pictures, videos, and broadcasting programs, audio publishing and original master recording business, or broadcasting business;
3. Engineering business, specialized design services, security system service activities, or advertising preparation business among advertising businesses;
4. Business publishing books, magazines, and other printed matters, research and development business, business operating a private institute teaching vocational skills under the Act on the Establishment and Operation of Private Teaching Institutes and Extracurricular Lessons, or business operating a vocational skill development training establishment under the Act on the Development of Vocational Skills of Workers (limited to where the main business is vocational skill development training);
5. Logistic industry under paragraph (8);
6. Tourist accommodation business, international conference business, or amusement facility business under the Tourism Promotion Act, or tourist facilities business under paragraph (9);
7. Other new-growth service businesses prescribed by Ordinance of the Ministry of Economy and Finance.
(12) For the purposes of Article 6 (5) of the Act, if the principal business is changed to a type of business other than a new-growth service business during the period of tax reduction or exemption, the reduction or exemption under the same paragraph shall not apply, but the reduction or exemption under paragraph (1), (2) or (4) of the same Article shall apply for the remaining period of tax reduction or exemption from the taxable year in which the date relevant ground has occurred falls. <Newly Inserted by Presidential Decree No. 28636, Feb. 13, 2018; Presidential Decree No. 29116, Aug. 28, 2018>
(13) "Number of full-time employees prescribed by Presidential Decree by type of business" in the main sentence, with the exception of its subparagraphs, of Article 6 (7) of the Act means the number of such employees classified as follows: <Newly Inserted by Presidential Decree No. 28636, Feb. 13, 2018; Presidential Decree No. 29116, Aug. 28, 2018>
1. In cases of mining business, manufacturing business, construction business or logistics industry: Ten persons;
2. In cases of other types of business: Five persons.
(14) The income accrued from the relevant business under Article 6 (8) of the Act shall be calculated by the following formula: <Newly Inserted by Presidential Decree No. 22037, Feb. 18, 2010; Presidential Decree No. 28636, Feb. 13, 2018; Presidential Decree No. 29116, Aug. 28, 2018>
Income accrued from the manufacturing industry in the relevant taxable year × (Sales of high efficiency products, etc. in the relevant taxable year ÷ total sales accrued from the manufacturing industry in the relevant taxable year)
(15) For purposes of paragraph (14), the accounts of the sales of high efficiency products, etc. shall be kept separately from the accounts of the sales of other products in the field of the manufacturing industry. <Newly Inserted by Presidential Decree No. 22037, Feb. 18, 2010; Presidential Decree No. 28636, Feb. 13, 2018>
(16) Articles 23 (10) through (13) shall apply mutatis mutandis to the scope of full-time employees and methods for calculating the number of full-time employees under Article 6 (9) of the Act. <Newly Inserted by Presidential Decree No. 28636, Feb. 13, 2018; Presidential Decree No. 29116, Aug. 28, 2018; Presidential Decree No. 29527, Feb. 12, 2019>
(17) For the purpose of calculating the number of full-time employees under Article 6 (9) of the Act, in cases of a national who has been converted into a corporation or has conducted succession, etc. to a business, the number classified as follows shall be deemed the number of full-time employees in the immediately preceding taxable year or the relevant taxable year: <Newly Inserted by Presidential Decree No. 28636, Feb. 13, 2018; Presidential Decree No. 29116, Aug. 28, 2018>
1. Number of full-time employees in the immediately preceding taxable year in cases falling under Article 6 (10) 2 of the Act: Number of full-time employees in the immediately preceding taxable year for the business before it is converted into a corporation;
2. Number of full-time employees in the immediately preceding taxable year or relevant taxable year in either of the following cases: In cases of an enterprise that has transferred the business, the number calculated by subtracting the number of full-time employees transferred by succession from the number of full-time employees in the immediately preceding taxable year; and in cases of an enterprise that has acquired the business, the number calculated by adding the number of full-time employees acquired by succession to the number of full-time employees of an enterprise succeeded in the immediately preceding taxable year; and the number of full-time employees in the relevant taxable year shall be the number of full-time employees calculated by deeming the full-time employees have been transferred or acquired by succession on the date the relevant taxable year commences:
(a) Where such enterprise takes over full-time employees engaging in the previous business division by a merger, a split-off, an investment in kind, a transfer of business, or any similar event in the relevant taxable year;
(b) Where such enterprise takes over full-time employees from a related party referred to in Article 11 (1).
(18) "Business assets prescribed by Presidential Decree, including land, buildings, and machinery" in Article 6 (10) 1 (a) of the Act means land and depreciable assets prescribed in Article 24 of the Enforcement Decree of the Corporate Tax Act. <Newly Inserted by Presidential Decree No. 18704, Feb. 19, 2005; Presidential Decree No. 22037, Feb. 18, 2010; Presidential Decree No. 28636, Feb. 13, 2018; Presidential Decree No. 29116, Aug. 28, 2018>
(19) "Ratio prescribed by Presidential Decree" in Article 6 (10) 1 (a) of the Act means 30/100. <Newly Inserted by Presidential Decree No. 18704, Feb. 19, 2005; Presidential Decree No. 22037, Feb. 18, 2010; Presidential Decree No. 28636, Feb. 13, 2018; Presidential Decree No. 29116, Aug. 28, 2018>
(20) "Which meets the requirements prescribed by Presidential Decree" in Article 6 (10) 1 (b) of the Act means the cases where all of the following requirements are met: <Newly Inserted by Presidential Decree No. 28636, Feb. 13, 2018; Presidential Decree No. 29116, Aug. 28, 2018>
1. A contract on the separation of business shall be concluded between the enterprise and the executive officers and employees of the relevant enterprise that commences the business;
2. An executive officer or employee who commences the business shall be, as the representative of the enterprise newly incorporated, the largest stockholder or the largest investor of the corporation, falling under the controlling stockholder, etc. prescribed in Article 43 (7) of the Enforcement Decree of the Corporate Tax Act (referring to the representative in cases of a sole proprietor).
(21) For the purposes of Article 6 (10) 1 (b) of the Act, if a person who commences a business fails to meet the requirements prescribed in paragraph (20) 2, tax reduction or exemption shall not apply from the taxable year in which the relevant ground arises. <Newly Inserted by Presidential Decree No. 28636, Feb. 13, 2018; Presidential Decree No. 29116, Aug. 28, 2018>
(22) For the purposes of Article 6 (10) of the Act, the same types of business shall be classified into the groups according to the standard classification formulated and publicly notified by the Commissioner of the Korea National Statistical Office under Article 22 of the Statistics Act (hereinafter referred to as “Korean Standard Industrial Classification”). <Newly Inserted by Presidential Decree No. 21307, Feb. 4, 2009; Presidential Decree No. 22037, Feb. 18, 2010; Presidential Decree No. 26070, Feb. 3, 2015; Presidential Decree No. 28636, Feb. 13, 2018; Presidential Decree No. 29116, Aug. 28, 2018>
(23) "Any of the events prescribed by Presidential Decree" in Article 6 (11) of the Act means any of the events specified in subparagraphs of Article 2 (2). <Newly Inserted by Presidential Decree No. 27848, Feb. 7, 2017; Presidential Decree No. 28636, Feb. 13, 2018; Presidential Decree No. 29116, Aug. 28, 2018>
(24) For the purposes of Article 6 (1), (5), (6) and (7) of the Act, if any of the following grounds arises to a small or medium start-up enterprise that has commenced its business in an area outside of the over-concentration control region of the Seoul Metropolitan area after commencing its business, the relevant small or medium start-up enterprise shall be deemed a small or medium start-up enterprise that has commenced its business in the over-concentration control region of the Seoul Metropolitan area for the remaining period of tax reduction or exemption from the taxable year in which the relevant ground arises: <Newly Inserted by Presidential Decree No. 29116, Aug. 28, 2018>
1. Where the small or medium start-up enterprise has relocated its place of business to the over-concentration control region of the Seoul Metropolitan area;
2. Where the small or medium start-up enterprise establishes (including merger, division, investment in kind or acquisition of business) a branch office or place of business in the over-concentration control region of the Seoul Metropolitan area.
(25) A person who wishes to be granted a reduction or exemption of income tax or corporate tax pursuant to Article 6 (1), (2), and (4) through (7) of the Act shall file an application for tax reduction or exemption in the form prescribed by Ordinance of the Ministry of Economy and Finance, with the head of the tax office having jurisdiction over the place of tax payment, along with his/her tax return. <Amended by Presidential Decree No. 16584, Oct. 30, 1999; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 21307, Feb. 4, 2009; Presidential Decree No. 22037, Feb. 18, 2010; Presidential Decree No. 22953, Jun. 3, 2011; Presidential Decree No. 28636, Feb. 13, 2018; Presidential Decree No. 29116, Aug. 28, 2018>
 Article 6 (Special Tax Reductions or Exemptions for Small or Medium Enterprises)
(1) "Outsourced manufacturing business by OEM method prescribed by Presidential Decree" in Article 7 (1) 1 (v) of the Act means the business manufacturing and supplying goods by re-outsourcing the outsourced manufacture of goods from the consignor according to the OEM method. <Amended by Presidential Decree No. 21307, Feb. 4, 2009>
(2) "Motor vehicle maintenance factory prescribed by Presidential Decree" in Article 7 (1) 1 (z) of the Act means a motor vehicle maintenance shop referred to in Article 54 (1). <Amended by Presidential Decree No. 21307, Feb. 4, 2009>
(3) and (4) Deleted. <by Presidential Decree No. 21307, Feb. 4, 2009>
(5) "Small enterprise prescribed by Presidential Decree" in Article 7 (1) 2 (a) of the Act means a small or medium enterprise whose turnover does not exceed the amount of turnover calculated by applying mutatis mutandis attached Table 3 to the Enforcement Decree of the Framework Act on Small and Medium Enterprises to each type of business. In such cases, “average turnover, etc.” shall be construed as “turnover.” <Amended by Presidential Decree No. 26959, Feb. 5, 2016>
(6) "Knowledge-based business prescribed by Presidential Decree" in Article 7 (1) 2 (e) of the Act means any of the following businesses: <Newly Inserted by Presidential Decree No. 17458, Dec. 31, 2001; Presidential Decree No. 17829, Dec. 30, 2002; Presidential Decree No. 18704, Feb. 19, 2005; Presidential Decree No. 19329, Feb. 9, 2006; Presidential Decree No. 20620, Feb. 22, 2008; Presidential Decree No. 22037, Feb. 18, 2010; Presidential Decree No. 25211, Feb. 21, 2014; Presidential Decree No. 26959, Feb. 5, 2016; Presidential Decree No. 28636, Feb. 13, 2018>
1. Engineering business;
2. Telecommunications business;
3. Research and development business;
4. Computer programming, system integration, and management services;
5. Business producing motion picture, video, and broadcasting programs;
6. Specialized design services;
7. Audio publishing and original master recording business;
8. Advertising preparation business among advertising business;
9. Software development and supply business;
10. Broadcasting business;
11. Information service activities;
12. Business publishing books, magazines, and other printed materials;
13. Creative and arts-related services (excluding individual artists);
14. Security system service activities.
(7) Article 23 (10) through (13) shall apply mutatis mutandis to the scope of full-time employees and methods for calculating the number of full-time employees under Article 7 (5) of the Act. <Newly Inserted by Presidential Decree No. 28636, Feb. 13, 2018>
(8) Any person who wishes to be granted a reduction or exemption of income tax or corporate tax under Article 7 of the Act shall file an application for tax reduction or exemption in the form prescribed by Ordinance of the Ministry of Economy and Finance, with the head of the tax office having jurisdiction over the place of tax payment, along with his/her tax return. <Amended by Presidential Decree No. 19329, Feb. 9, 2006; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 21307, Feb. 4, 2009>
 Article 6-2 (Tax Credit for Improving Corporate Bill System)
(1) Any purchasing enterprise that intends to be granted a tax credit pursuant to Article 7-2 (1) 5 of the Act shall submit the relevant financial institution with materials concerning its order including the date and amount of each order, the selling enterprise, and the delivery deadline, as well as materials concerning the confirmation of the sale claims, including the amount of delivered goods, the date the tax invoice is prepared, the payment deadline, etc.
(2) The relevant financial institution in receipt of materials submitted by a purchasing enterprise pursuant to paragraph (1) shall furnish the purchasing enterprise with materials necessary for the tax credit, including the loan date and the loan amount, etc. of the selling enterprise by order case.
(3) Any national who intends to be granted an income tax or corporate tax credit pursuant to Article 7-2 of the Act shall submit an application for the tax credit and a statement of the amount of tax deductible, in the form prescribed by Ordinance of the Ministry of Economy and Finance, to the head of the tax office having jurisdiction over the place of tax payment, along with his/her tax return. <Amended by Presidential Decree No. 20720, Feb. 29, 2008>
[This Article Wholly Amended by Presidential Decree No. 19329, Feb. 9, 2006]
 Article 6-3 Deleted. <by Presidential Decree No. 18176, Dec. 30, 2003>
 Article 6-4 (Tax Credits on Payments through Mutually-Beneficial Settlement System)
(1) "Middle-standing enterprise prescribed by Presidential Decree" in the main sentence, with the exception of its subparagraphs, of Article 7-4 (1) of the Act means a middle-standing enterprise provided for in Article 4 (1). <Newly Inserted by Presidential Decree No. 28636, Feb. 13, 2018>
(2) "Mutually-beneficial settlement system prescribed by Presidential Decree" in the main sentence, with the exception of its subparagraphs, of Article 7-4 (1) of the Act means the settlement method that meets each of the following requirements:
1. The purchasing enterprise shall pay the purchase price by issuing new accounts-receivable bonds to the selling enterprise by offering accounts-receivable bonds that the purchasing enterprise, as a seller, has received in lieu of the sales price from another purchasing enterprise as security for such bonds;
2. Selling enterprises in multiple lower tiers of the industry shall pay sales prices by issuing accounts-receivable bonds at the same interest rate as the interest rate of the accounts-receivable bonds issued by purchasing enterprises;
3. The due date for payment of accounts-receivable bonds shall be within 60 days from the issue date of the tax invoice, etc. referred to in Article 7-2 (1) 2 of the Act (hereafter in this Article, referred to as "tax invoice, etc.");
4. An agreement shall be made with the relevant financial institution that the financial institution shall not exercise its right of recourse against the selling enterprise.
(3) "Price paid in cash or cash equivalents prescribed by Presidential Decree" in Article 7-4 (1) 1 of the Act means the amount settled by bill of exchange, etc. referred to in Article 7-2 (1) of the Act (the amount settled by bill of exchanges or a written request for the collection of proceeds from sale referred to in Article 7-2 (1) 1 of the Act shall be limited to those for which the payment due date is within 60 days from the issue date of the tax invoice, etc., and for which the relevant financial institution has agreed not to exercise its right of recourse against the selling enterprise).
(4) A national who wishes to be granted an income tax or corporate tax credit under Article 7-4 of the Act shall file an application for tax credit and a statement of the amount of tax deductible, in the form prescribed by Ordinance of the Ministry of Economy and Finance, with the head of the tax office having jurisdiction over the place of tax payment, along with his/her tax return.
[This Article Newly Inserted by Presidential Decree No. 26959, Feb. 5, 2016]
 Article 7 (Special Cases of Inclusion in Deductible Expenses for Facilities for Supporting Small or Medium Enterprises)
(1) "Facility prescribed by Presidential Decree, including an automation facility, which has been used for his/her own business" in Article 8 (1), with the exception of its subparagraphs, of the Act means any of the following facilities used for the relevant business for at least one year: <Amended by Presidential Decree No. 21064, Oct. 7, 2008; Presidential Decree No. 25211, Feb. 21, 2014; Presidential Decree No. 26070, Feb. 3, 2015>
1. Business assets referred to in Article 4 (2);
2. Facilities or assets referred to in Article 10 (2) through (4);
3. Facilities or equipment referred to in Article 21 (2) or (3);
4. Facilities referred to in the subparagraphs (excluding subparagraph 8) of Article 22 (1).
(2) Article 8 (1) and (2) of the Act shall not apply to any small or medium enterprises that have any of the following special relationship with a national:
1. Special relationships provided for in Article 98 (1) of the Enforcement Decree of the Income Tax Act;
(3) A small or medium enterprise that intends to include the equivalent to the value of a donated facility in deductible expenses pursuant to Article 8 (2) of the Act shall submit a statement of adjustment of the deductible expenses for facilities for supporting small or medium enterprises in the form prescribed by Ordinance of the Ministry of Economy and Finance, along with its tax return of income tax or corporate tax, to the head of the tax office having jurisdiction over the place of tax payment. <Newly Inserted by Presidential Decree No. 20620, Feb. 22, 2008; Presidential Decree No. 20720, Feb. 29, 2008>
[This Article Newly Inserted by Presidential Decree No. 19888, Feb. 28, 2007]
 Article 7-2 (Scope of Small or Medium Enterprises Requiring Cooperation)
(1) "Related parties prescribed by Presidential Decree" in the proviso, with the exception of the subparagraphs, of Article 8-3 (1) of the Act and paragraph (2) of the same Article means the related parties provided for in Article 2 (5) of the Enforcement Decree of the Corporate Tax Act, respectively. <Newly Inserted by Presidential Decree No. 25211, Feb. 21, 2014; Presidential Decree No. 27848, Feb. 7, 2017; Presidential Decree No. 29527, Feb. 12, 2019>
(2) "Small or medium enterprise prescribed by Presidential Decree, such as a commissioned enterprise defined in subparagraph 6 of Article 2 of the Act on the Promotion of Mutually Beneficial Cooperation between Large Enterprises and Small and Medium Enterprises" in Article 8-3 (1) 1 of the Act means any of the following small or medium enterprises: <Amended by Presidential Decree No. 26959, Feb. 5, 2016; Presidential Decree No. 27230, Jun. 21, 2016; Presidential Decree No. 27848, Feb. 7, 2017>
2. A small or medium enterprise under a contractual relationship to directly or indirectly supply goods to the commissioned enterprise referred to in subparagraph 1;
3. A start-up company to which support is rendered jointly with the specialized agency designated under Article 16-4 (3) of the Framework Act on Science and Technology;
4. Other small or medium enterprises deemed in need of cooperation by a domestic corporation referred to in Article 8-3 (1) of the Act.
(3) Deleted. <by Presidential Decree No. 27848, Feb. 7, 2017>
(4) A domestic corporation that wishes to be eligible under Article 8-3 (1) of the Act shall submit an application for tax credits in the form prescribed by Ordinance of the Ministry of Economy and Finance, to the head of the tax office having jurisdiction over the place of tax payment, along with its tax return.
(5) The Credit Guarantee Fund and the Korea Technology Finance Corporation referred to in Article 8-3 (1) 1 of the Act and the Cooperation Foundation referred to in Article 8-3 (1) 2 of the Act shall submit a statement of disbursement of contributions in the form prescribed by Ordinance of the Ministry of Economy and Finance, to the head of the tax office having jurisdiction over the place of tax payment, when it files its tax return for the relevant business year. <Newly Inserted by Presidential Decree No. 23590, Feb. 2, 2012; Presidential Decree No. 27205, May 31, 2016>
(6) "Tangible fixed assets prescribed by Presidential Decree" in Article 8-3 (2) of the Act means assets prescribed by Ordinance of the Ministry of Economy and Finance for research and testing for research and development. <Newly Inserted by Presidential Decree No. 27848, Feb. 7, 2017>
(7) Where a domestic corporation gratuitously leases a tangible fixed asset pursuant to Article 8-3 (2) of the Act, the domestic corporation shall gratuitously lease the assets specified in paragraph (6) to a start-up business it supports jointly with the specialized agency referred to in paragraph (2) 3 or a business incubator designated under the Support for Small and Medium Enterprise Establishment Act (hereafter in this Article, referred to as "business incubator, etc.") continuously for at least five years. <Newly Inserted by Presidential Decree No. 27848, Feb. 7, 2017>
(8) A domestic corporation that wishes to be eligible under Article 8-3 (2) of the Act shall submit an application for tax credits in the form prescribed by Ordinance of the Ministry of Economy and Finance and the certificate referred to in paragraph (9), to the head of the tax office having jurisdiction over the place of tax payment, along with its tax return. <Newly Inserted by Presidential Decree No. 27848, Feb. 7, 2017>
(9) A business incubator, etc. that jointly supports a start-up business to whom an asset has been gratuitously leased under Article 8-3 (2) of the Act shall issue a certificate of gratuitous lease (hereafter in this Article, referred to as "certificate") to the relevant domestic corporation in the form prescribed by Ordinance of the Ministry of Economy and Finance, immediately upon commencing the gratuitous lease of the asset. <Newly Inserted by Presidential Decree No. 27848, Feb. 7, 2017>
(10) A business incubator, etc. shall ascertain whether the gratuitous lease continues after the date of issuance of the certificate, and shall give notice to the head of the tax office having jurisdiction over the place of tax payment immediately upon finding that the gratuitous lease does not continue during the period specified in paragraph (7). <Newly Inserted by Presidential Decree No. 27848, Feb. 7, 2017>
(11) "Facility prescribed by Presidential Decree" in the former part of Article 8-3 (3) of the Act means any inspection counter or research facility installed by an outsourcing enterprise at an outsourced enterprise under the Act on the Promotion of Mutually Beneficial Cooperation between Large Enterprises and Small and Medium Enterprises; <Newly Inserted by Presidential Decree No. 29527, Feb. 12, 2019>
(12) A person who wishes to be eligible under Article 8-3 (3) of the Act shall file an application for tax credits, in the form prescribed by Ordinance of the Ministry of Economy and Finance, with the head of the tax office having jurisdiction over the place of tax payment, along with his/her tax return, in the taxable year in which the investment is completed (referring to each taxable year in which the relevant investment is made, if the person wishes to be eligible under Article 25 (3) of the Act). <Newly Inserted by Presidential Decree No. 29527, Feb. 12, 2019>
[This Article Newly Inserted by Presidential Decree No. 22583, Dec. 30, 2010]
 Article 7-3 Deleted. <by Presidential Decree No. 17829, Dec. 30, 2002>
SECTION 2 Special Taxation for Research and Human Resources Development
 Article 8 (Scope of Reserves for Research and Human Resources Development)
(1) "Expenses prescribed by Presidential Decree" in Article 9 (2) 1 of the Act means expenses listed in attached Table 6, which are for research and development, and human resources development: Provided, That the following expenses shall be excluded therefrom: <Amended by Presidential Decree No. 23590, Feb. 2, 2012; Presidential Decree No. 24368, Feb. 15, 2013; Presidential Decree No. 29527, Feb. 12, 2019>
1. The amount disbursed as research and development expenses from the contribution, etc. for research and development received under Article 10-2 of the Act;
2. The amount disbursed as research and development expenses or human resources development expenses from the assets, including contributions received from the State, local governments, public institutions under the Act on the Management of Public Institutions, and local public enterprises under the Local Public Enterprises Act for the purposes of research and development, human resources development, etc.
(2) The research and development under paragraph (1) does not include the following: <Amended by Presidential Decree No. 23590, Feb. 2, 2012; Presidential Decree No. 29527, Feb. 12, 2019>
1. General management and support;
2. Market research, sales promotion, and usual quality inspections;
3. Repetitive information gathering;
4. Inspecting and analyzing the efficiency of management or business;
5. Legal and administrative affairs, such as applications for, protection, etc. of patent rights;
6. Examination and exploration to check the reserves of minerals, etc. and the location, etc. thereof;
7. Research conducted on commission;
8. Manufacturing of contents, software, etc. already planned.
(3) "Additional amount equivalent to interest calculated as prescribed by Presidential Decree" in Article 9 (4) of the Act means the amount calculated by multiplying the amount in subparagraph 1 by the period of subparagraph 2 and the rate of subparagraph 3: <Amended by Presidential Decree No. 23590, Feb. 2, 2012; Presidential Decree No. 29527, Feb. 12, 2019>
1. An amount calculated by subtracting the amount computed by including the reserves for research and human resources development in deductible expenses, from the amount of income tax or corporate tax calculated by excluding such reserves from deductible expenses for the taxable year in which such reserves were included in deductible expenses;
2. A period from the commencement date of the taxable year following the taxable year in which it was included in deductible expenses, until the end of the taxable year in which it is included in gross income;
3. 25/100,000 per day.
(4) A national who seeks the benefit under Article 9 (1) of the Act shall submit a detailed statement of reserves for research and human resources development prescribed by Ordinance of the Ministry of Economy and Finance, along with his/her tax return. <Amended by Presidential Decree No. 23590, Feb. 2, 2012>
[This Article Newly Inserted by Presidential Decree No. 21307, Feb. 4, 2009]
 Article 9 (Tax Credits for Research and Human Resources Development Expenses)
(1) "Research and development incurred in the new growth engine industries prescribed by Presidential Decree or the research and development expenses incurred in acquiring source technologies" in Article 10 (1) 1, with the exception of its items, of the Act means the following expenses (hereafter in this Article, referred to as "research and development expenses incurred for new growth engines and source technologies"): Provided, That the expenses referred to in Article 8 (1) shall be excluded herefrom: <Amended by Presidential Decree No. 23590, Feb. 2, 2012; Presidential Decree No. 24368, Feb. 15, 2013; Presidential Decree No. 27848, Feb. 7, 2017; Presidential Decree No. 29527, Feb. 12, 2019>
1. In cases of in-house research and development: The following expenses:
(a) Personnel expenses for researchers engaging in research and development of technologies for new growth engines and source technologies specified in attached Table 7 (hereafter in this Article, referred to as "research and development of new growth engines and source technologies") at any of the research institutes or specialized departments prescribed by Ordinance of the Ministry of Economy and Finance and for persons who directly support research and development of such researchers: Provided, That personnel expenses for persons prescribed by Ordinance of the Ministry of Economy and Finance, shall be excluded herefrom;
(b) Expenses incurred in purchasing samples, parts, raw materials, and reagents used for research and development of new growth engines and source technologies, and expenses incurred in lending and purchasing software (limited to the software used for the purpose of manufacturing cultural products defined in subparagraph 2 of Article 2 of the Framework Act on the Promotion of Cultural Industries), character types, sound sources, and images;
2. In cases of outsourced or joint research and development: Expenses incurred in outsourcing (including re-outsourcing) research and development of new growth engines and source technologies to any of the institutions prescribed by Ordinance of the Ministry of Economy and Finance (excluding expenses incurred in outsourcing the development of systems related to the operation, management and support of the business of an enterprise, such as enterprise resource management facilities and point of sale information management system facilities) and expenses incurred in conducting joint research and development with any of such institutions.
(2) "Middle-standing enterprise prescribed by Presidential Decree" in Article 10 (1) 1 (a) (ii) of the Act means any enterprise that meets each of the following requirements: <Newly Inserted by Presidential Decree No. 24368, Feb. 15, 2013; Presidential Decree No. 24887, Nov. 29, 2013; Presidential Decree No. 26070, Feb. 3, 2015; Presidential Decree No. 27848, Feb. 7, 2017; Presidential Decree No. 28636, Feb. 13, 2018; Presidential Decree No. 29527, Feb. 12, 2019>
1. It shall not be a small or medium enterprise;
2. It shall not engage mainly in the any of the following types of business. In such cases, if it engages in at least two different businesses, the business from which it earns the greater business income, shall be deemed its principal business:
(a) Any of the consumer service businesses provided for in Article 29 (3);
4. The amount of its average turnover for the immediately preceding three taxable years (the turnover shall be calculated by the method specified in Article 2 (4); and the turnover for a taxable year, which is less than one year in length, shall be converted into the turnover for one year), shall be less than 500 billion won.
(3) "Multiplying factor prescribed by Presidential Decree" in the main sentence of Article 10 (1) 1 (b) of the Act means three times. <Amended by Presidential Decree No. 27848, Feb. 7, 2017; Presidential Decree No. 28636, Feb. 13, 2018>
(4) "Where a small or medium enterprise first ceases to be a small or medium enterprise, as prescribed by Presidential Decree" in Article 10 (1) 3 (b) of the Act means where the taxable year during which the ground making the small or medium enterprise cease to be a small or medium enterprise, arises, and the three subsequent taxable years, lapse pursuant to the main sentence of Article 2 (2), with the exception of its subparagraphs, and Article 2 (5). <Newly Inserted by Presidential Decree No. 22583, Dec. 30, 2010>
(5) The annual average of general research and human resources development expenses incurred for the four preceding years as prescribed in Article 10 (2) of the Act shall be calculated by the following formula: <Amended by Presidential Decree No. 23590, Feb. 2, 2012>
(Aggregate of general research and human resources development expenses incurred for the four years retrospectively from the date the relevant taxable year commences ÷ Number of taxable years in which the general research and human resources development expenses incurred for the four years retrospectively from the date the relevant taxable year commences (four, if such number exceeds four)) × (Number of months in the relevant taxable year ÷ 12)
(6) When calculating the aggregate of general research and human resources development expenses incurred for the four years retrospectively from the date the relevant taxable year commences in the formula described in paragraph (5), the general research and human resources development expenses incurred by a merged corporation, a divided corporation, a business transferor, or an investor in kind (hereafter in this paragraph, referred to as “merged corporation, etc.”) before a merger, a split-off, a merger by division, a transfer of business, or an investment in kind in the manner prescribed by Ordinance of the Ministry of Economy and Finance (hereafter in this paragraph, referred to as "merger, etc."), shall be deemed to have incurred by the merging corporation, the corporation newly incorporated in the course of the split-off, the counterpart corporation to the merger by division, the business transferee, or the corporation that receives the investment in kind in the manner prescribed by Ordinance of the Ministry of Economy and Finance (hereafter in this paragraph, referred to as "merging corporation, etc."): Provided, That, if it is impracticable to separate the general research and human resources development expenses incurred by the merged corporation, etc. in connection with the transferred business before the merger, etc., where the business operated by the merged corporation, etc. is partially transferred, the amount calculated by multiplying the general research and human resources development expenses incurred by the merged corporation, etc. by the greater of the ratio of the turnover of the transferred business for each business year to the total turnover, and the ratio of the value of assets of the transferred business as at the end of each business year to the total assets, shall be deemed the general research and human resources development expenses incurred by the merged corporation, etc. <Amended by Presidential Decree No. 22583, Dec. 30, 2010; Presidential Decree No. 24368, Feb. 15, 2013; Presidential Decree No. 26070, Feb. 3, 2015>
(7) For the purposes of the formula described in paragraph (5), the number of months shall be calculated on the basis of calendar months, and if the number of days in the month during which a taxable year commences, is less than one full month, it shall be deemed one month, while the month during which a taxable year ends shall be disregarded in counting the number of months, if the number of days in that month is less than one full month. <Amended by Presidential Decree No. 22583, Dec. 30, 2010; Presidential Decree No. 24368, Feb. 15, 2013>
(8) A national who wishes to be eligible under Article 10 (1) 1 of the Act shall keep separate accounting for research and development expenses incurred for new growth engines and source technologies and for general research and human resource development expenses. If the research and development expenses incurred for new growth engines and source technologies overlap with the general research and human resource development expenses, the relevant expenses shall be calculated by dividing proportionally into research and development expenses incurred for new growth engines and source technologies and general research and human resource development expenses, as prescribed by Ordinance of the Ministry of Economy and Finance. <Amended by Presidential Decree No. 27848, Feb. 7, 2017; Presidential Decree No. 29527, Feb. 12, 2019>
(9) A national who wishes to be eligible under Article 10 (1) of the Act shall prepare and submit evidentiary documents, including a research and development plan, a research and development report and research notes, as prescribed by Ordinance of the Ministry of Economy and Finance.
(10) A national who wishes to be eligible under Article 10 (1) of the Act shall submit an application for tax credits, a statement of research and human resources development expenses, and evidentiary documents in the forms prescribed by Ordinance of the Ministry of Economy and Finance, to the head of the tax office having jurisdiction over the place of tax payment, at the time he/she files a tax return. <Amended by Presidential Decree No. 29527, Feb. 12, 2019>
(11) A deliberative committee on new growth engines and source technologies may be established under the joint jurisdiction of the Minister of Economy and Finance and the Ministrer of Trade, Industry and Energy to deliberate on whether the technologies for which the research and development expenses for new growth engines and source technologies and general research and human resource development expenses are disbursed by nationals fall under attached Table 7 and on the matters provided for in Article 22-9 (1). <Amended by Presidential Decree No. 27848, Feb. 7, 2017; Presidential Decree No. 29527, Feb. 12, 2019>
(12) The composition and operation of the deliberative committee on new growth engines and source technologies referred to in paragraph (11), and other necessary matters, shall be prescribed by Joint Ordinance of the Ministry of Economy and Finance and the Ministry of Trade, Industry and Energy. <Amended by Presidential Decree No. 22583, Dec. 30, 2010; Presidential Decree No. 27848, Feb. 7, 2017; Presidential Decree No. 29527, Feb. 12, 2019>
(13) A national who wishes to be eligible under Article 10 (1) of the Act may request the Commissioner of the National Tax Service to examine in advance whether the expenses he/she has disbursed qualify as research and human resources development expenses, before he/she files a tax return under paragraph (10). In such cases, examination methods and matters necessary for requesting procedures, etc. shall be determined by the Commissioner of the National Tax Service. <Newly Inserted by Presidential Decree No. 29527, Feb. 12, 2019>
[This Article Wholly Amended by Presidential Decree No. 22037, Feb. 18, 2010]
 Article 9-2 (Special Taxation for Contributions Related to Research and Development)
(1) "Other Acts prescribed by Presidential Decree" in Article 10-2 (1) of the Act means any of the following Acts: <Amended by Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 21692, Aug. 18, 2009; Presidential Decree No. 22037, Feb. 18, 2010>
4. Other statutes that provide for the payment of contributions, etc. for the purpose of research, development, etc., as specified by Ordinance of the Ministry of Economy and Finance.
(2) "Where a national keeps separate accounts of research and development contribution, etc. in a manner prescribed by Presidential Decree" in Article 10-2 (1) of the Act means keeping separate accounts by applying mutatis mutandis Article 113 of the Corporate Tax Act. <Amended by Presidential Decree No. 22037, Feb. 18, 2010>
(3) "Including an amount equivalent to the disbursed amount in the gross income in a manner prescribed by Presidential Decree" in Article 10-2 (2) 2 of the Act means the following methods: <Amended by Presidential Decree No. 22037, Feb. 18, 2010>
1. Depreciable assets under Article 24 of the Enforcement Decree of the Corporate Tax Act or Article 62 (2) and (3) of the Enforcement Decree of the Income Tax Act: Method of including the amount equivalent to the depreciation cost, which shall be included in deductible expenses in accordance with Article 25 of the Enforcement Decree of the Corporate Tax Act or Article 62 (1) and (4) of the Enforcement Decree of the Income Tax Act, in gross income, when calculating the income amount for the pertinent taxable year: Provided, That where the relevant asset is disposed of, the balance left over after including the amount in the gross income which was not included in the gross income in accordance with Article 10-2 (1) of the Act shall be entirely included in the gross income for the taxable year during which it was disposed of;
2. Assets other than those prescribed in subparagraph 1: Method of including the full amount, which has not been included in gross income in accordance with Article 10-2 (1) of the Act, in gross income, when calculating the income amount for the taxable year during which the relevant asset was disposed of.
(4) A national who wants to be eligible for the application of Article 10-2 (1) and (2) of the Act shall submit, along with the tax return, a statement of non-inclusion of contributions, etc. in gross income prescribed by Ordinance of the Ministry of Economy and Finance, to the head of the tax office having jurisdiction over the place of tax payment. <Amended by Presidential Decree No. 20720, Feb. 29, 2008>
[This Article Newly Inserted by Presidential Decree No. 19888, Feb. 28, 2007]
 Article 10 Deleted. <by Presidential Decree No. 29527, Feb. 12, 2019>
 Article 11 (Scope of Technical Knowhow)
(1) "Related parties prescribed by Presidential Decree" in Article 12 (1), the former part of Article 12 (2), and Article 12 (3) of the Act means the related parties provided for in Article 2 (5) of the Enforcement Decree of the Corporate Tax Act and Article 98 (1) of the Enforcement Decree of the Income Tax Act. In such cases, "1/100" in Article 50 (2) of the Enforcement Decree of the Corporate Tax Act shall be construed as "30/100" for determining a minority stockholder, etc. referred to in Article 2 (5) 2 of the Enforcement Decree of the Corporate Tax Act. <Newly Inserted by Presidential Decree No. 18176, Dec. 30, 2003; Presidential Decree No. 18704, Feb. 19, 2005; Presidential Decree No. 19329, Feb. 9. 2006; Presidential Decree No. 20620, Feb. 22, 2008; Presidential Decree No. 22037, Feb. 18, 2010; Presidential Decree No. 23590, Feb. 2, 2012; Presidential Decree No. 25211, Feb. 21, 2014; Presidential Decree No. 26070, Feb. 3, 2015; Presidential Decree No. 29527, Feb. 12, 2019>
(2) “Middle-standing enterprise prescribed by Presidential Decree” in Article 12 (1) of the Act means any middle-standing enterprise provided for in Article 4 (1). <Newly Inserted by Presidential Decree No. 26070, Feb. 3, 2015; Presidential Decree No. 29527, Feb. 12, 2019>
(3) "Patent, utility model right, technical knowhow, or technology obtained as a result of its own research and development, as prescribed by Presidential Decree" in Article 12 (1) of the Act means any of the following: <Amended by Presidential Decree No. 27848, Feb. 7, 2017>
1. A patent or utility model right first created and registered as a result of the relevant enterprise's own research and development in the Republic of Korea pursuant to the Patent Act or the Utility Model Act;
2. Technical knowhow (excluding industrial property rights and technical knowhow related to overseas construction engineering activities under the Overseas Construction Promotion Act or engineering activities under the Engineering Industry Promotion Act) that is developed as a result of the relevant enterprise's own research and development in the field of science and technology in the Republic of Korea and meets the requirements prescribed by Ordinance of the Ministry of Economy and Finance for the amount of revenue, etc.;
3. Technology defined in subparagraph 1 of Article 2 of the Technology Transfer and Commercialization Promotion Act, that is developed as a result of the relevant enterprise's own research and development in the Republic of Korea and meets the requirements prescribed by Ordinance of the Ministry of Economy and Finance for the amount of revenue, etc.
(4) "Patent, etc. prescribed by Presidential Decree" in the former part of Article 12 (2) of the Act, with the exception of its subparagraphs, means any of the things specified in the subparagraphs of paragraph (3). <Amended by Presidential Decree No. 27848, Feb. 7, 2017>
(5) “Patent, etc. prescribed by Presidential Decree, obtained as a result of its own research and development” in Article 12 (3) of the Act means the patent or utility model right provided for in paragraph (3) 1 and the technical knowhow provided for in paragraph (3) 2. <Newly Inserted by Presidential Decree No. 26070, Feb. 3, 2015; Presidential Decree No. 27848, Feb. 7, 2017>
(6) A person who wishes to be eligible under Article 12 (1) through (3) of the Act shall file an application for tax reduction or exemption or an application for tax credits, in the form prescribed by Ordinance of the Ministry of Economy and Finance, with the head of the tax office having jurisdiction over the place of tax payment, along with his/her tax return. <Amended by Presidential Decree No. 17034, Dec. 29, 2000; Presidential Decree No. 17829, Dec. 30, 2002; Presidential Decree No. 19329, Feb. 9, 2006; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 23590, Feb. 2, 2012; Presidential Decree No. 25211, Feb. 21, 2014; Presidential Decree No. 26070, Feb. 3, 2015>
 Article 11-2 (Reduction or Exemption of Corporate Tax for High-Tech Enterprises that Occupy Special Research and Development Zones)
(1) “Business prescribed by Presidential Decree, such as the biotech industry or the information and communications industry” in Article 12-2 (1) of the Act means any business engaged in the following industries: <Amended by Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 21692, Aug. 18, 2009; Presidential Decree No. 22037, Feb. 18, 2010; Presidential Decree No. 23590, Feb. 2, 2012; Presidential Decree No. 24441, Mar. 23, 2013; Presidential Decree No. 27245, Jun. 21, 2016>
1. Industries related to biotechnology defined in Article 2 of the Biotechnology Support Act (including growing crop seeds and nursery products; and hatching and seeding aquatic animals and seaweeds);
2. The information and communications industry defined in subparagraph 2 of Article 2 of the Information and Communications Technology Industry Promotion Act;
3. Industries that provide information and communications services defined in Article 2 (1) 2 of the Act on Promotion of Information and Communications Network Utilization and Information Protection;
4. Industries related to advanced technology and products publicly notified by the Minister of Trade, Industry and Energy pursuant to Article 5 (1) of the Industrial Development Act.
(2) "Cumulative investments prescribed by Presidential Decree" in Article 12-2 (3) 1 of the Act means the sum of investments in the business assets prescribed by Ordinance of the Ministry of Economy and Finance by the relevant taxable year in which a reduction or exemption of corporate tax or income tax is granted pursuant to Article 12-2 (2) of the Act. <Newly Inserted by Presidential Decree No. 22583, Dec. 30, 2010>
(3) “Service businesses prescribed by Presidential Decree" in Article 12-2 (3) 2 of the Act means the service businesses referred to in Article 23 (4). <Newly Inserted by Presidential Decree No. 27848, Feb. 7, 2017>
(4) The amount of income tax or corporate tax payable under Article 12-2 (5) of the Act shall be calculated by the following formula (where the amount is a negative, it shall be deemed nil; if the number of full-time employees has decreased for two consecutive taxable years after the end of the taxable year in which tax reductions or exemptions are granted, such amount payable in the second taxable year means an amount less the amount paid in the first taxable year); and such amount shall be paid as income tax or corporate tax, when filing the tax return of the taxable year in which the number of full-time employees has decreased: <Newly Inserted by Presidential Decree No. 22583, Dec. 30, 2010; Presidential Decree No. 27848, Feb. 7, 2017; Presidential Decree No. 29527, Feb. 12, 2019>
The aggregate of amounts of tax reduced or exempted under Article 12-2 (3) 2 of the Act within two taxable years immediately preceding the taxable year in which the number of full-time employees of the relevant enterprise has decreased - [the number of full-time employees at the place of business eligible for reduction or exemption for the taxable year in which the number of full-time employees has decreased × 15 million won (or 20 million won in cases of a full-time youth employee and a service business referred to in Article 12-2 (3) 2 of the Act)]
(5) For the purposes of Article 12-2 (3) and (5) of the Act, the scopes of full-time employees and full-time youth employees shall be classified as follows: <Amended by Presidential Decree No. 29527, Feb. 12, 2019>
1. Scope of full-time employees: Full-time employees under Article 23 (10) (hereafter in this Article, referred to as "full-time employees");
2. Scope of full-time youth employees: Persons falling under Article 26-7 (3) 1 (hereafter in this Article, referred to as "full-time youth employees").
(6) For the purposes of Article 12-2 (3) and (5) of the Act, the number of full-time employees and the number of full-time youth employees shall be calculated by the following applicable formulas (a fraction of less than 1/100 shall be deemed nil): <Newly Inserted by Presidential Decree No. 29527, Feb. 12, 2019>
1. The number of full-time employees:
Aggregate of the number of full-time employees as at the end of each month in the relevant taxable year ÷ Number of months in the relevant taxable year
2. The number of full-time youth employees:
Aggregate of the number of full-time youth employees as at the end of each month in the relevant taxable year ÷ Number of months in the relevant taxable year
(7) The latter part of Article 23 (11), with the exception of its subparagraphs, and Article 23 (11) 2 shall apply mutatis mutandis to the calculation of the number of full-time employees and the number of full-time youth employees under paragraph (6). <Newly Inserted by Presidential Decree No. 29527, Feb. 12, 2019>
(8) A person who wishes to be granted a reduction or exemption of corporate tax or income tax under Article 12-2 (7) of the Act shall file an application for tax reduction or exemption in the form prescribed by Ordinance of the Ministry of Economy and Finance, with the head of the tax office having jurisdiction over the place of tax payment, along with his/her tax return. <Amended by Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 22583, Dec. 30, 2010>
[This Article Newly Inserted by Presidential Decree No. 19888, Feb. 28, 2007]
 Article 11-3 (Tax Credits for Technological Innovation-Oriented Mergers)
(1) "Technological innovation-oriented small or medium enterprise prescribed by Presidential Decree" in Article 12-3 (1) of the Act, with the exception of its subparagraphs, means any of the following small or medium enterprises: <Amended by Presidential Decree No. 26959, Feb. 5, 2016>
1. An enterprise confirmed as a venture business under Article 25 of the Act on Special Measures for the Promotion of Venture Businesses by no later than the date the merger is registered;
2. An enterprise selected as a technological innovation-oriented small or medium enterprise under Article 15 of the Act on the Promotion of Technology Innovation of Small and Medium Enterprises and Article 13 of the Enforcement Decree of the same Act by no later than the date the merger is registered;
3. A small or medium business that has spent at least 5/100 of its turnover as research and human resources development expenses referred to in Article 9 (2) 1 of the Act in the business year immediately preceding the business year in which the merger is registered;
4. A small or medium business that obtains any of the following certifications, etc. by no later than the date the merger is registered:
(b) Certification of a new technology in health and medical service under Article 8 (1) of the Health and Medical Service Technology Promotion Act;
(d) Certification of an innovative pharmaceutical company under Article 7 (2) of the Special Act on Fostering and Support of Pharmaceutical Industry;
(f) Other certifications, etc. prescribed by Ordinance of the Ministry of Economy and Finance, similar to those listed in items (a) through (e).
(2) "Related party prescribed by Presidential Decree" in Article 12-3 (1) of the Act, with the exception of its subparagraphs, means any related party defined in Article 2 (5) of the Enforcement Decree of the Corporate Tax Act. <Amended by Presidential Decree No. 29527, Feb. 12, 2019>
(3) "Technical value prescribed by Presidential Decree" in Article 12-3 (1) of the Act, with the exception of its subparagraphs, means either of the following amounts chosen by the merging corporation: <Amended by Presidential Decree No. 27848, Feb. 7, 2017; Presidential Decree No. 29527, Feb. 12, 2019>
1. The total amount of patent rights, utility model rights, and technical knowhow or technology prescribed by Ordinance of the Ministry of Economy and Finance (hereafter in this Article and Article 11-4, referred to as "patents, etc.") held by the merged corporation within three months before and after the date the merger is registered, which is appraised by any of the agencies specified under Article 2-3 (7) of the Enforcement Decree of the Act on Special Measures for the Promotion of Venture Businesses. In such cases, the total amount shall not exceed an amount calculated by subtracting the net asset value of the merged corporation as at the date the merger is registered, from the transfer value paid by the merging corporation to the merged corporation (if such amount calculated is a negative number, it shall be deemed zero);
2. An amount calculated by subtracting 130/100 of the net asset value of the merged corporation as at the date the merger is registered, from the transfer value paid by the merging corporation to the merged corporation.
(4) The transfer value referred to in Article 12-3 (1) of the Act, with the exception of its subparagraphs, shall be an amount calculated under Article 80 (1) 2 of the Enforcement Decree of the Corporate Tax Act.
(5) The net asset value of the merged corporation referred to in Article 12-3 (1) 2 of the Act and paragraph (3) of this Decree shall be an amount calculated by subtracting total liabilities from total assets (excluding the value of patents, etc.) of the merged corporation as at the date the merger is registered. <Amended by Presidential Decree No. 27848, Feb. 7, 2017>
(6) The total price for the merger referred to in Article 12-3 (1) 3 of the Act shall be an amount calculated under Article 80 (1) 2 (a) of the Enforcement Decree of the Corporate Tax Act.
(7) Where stocks, etc. granted due to a merger under the main sentence of Article 80 (1) 2 (a) of the Enforcement Decree of the Corporate Tax Act exist for the purposes of calculating the ratio of the value of stocks or equity shares to the total price for the merger referred to in Article 12-3 (1) 3 of the Act, the proviso to Article 80 (1) 2 (a) of the Enforcement Decree of the Corporate Tax Act shall apply mutatis mutandis to such calculation.
(8) "Stockholders or investors of the merged corporation prescribed by Presidential Decree" in Article 12-3 (1) 3 of the Act and “stockholders, etc. of the merged corporation prescribed by Presidential Decree” in Article 12-3 (2) 1 of the Act mean controlling stockholders, etc. of the merged corporation referred to in Article 43 (3) and (7) of the Enforcement Decree of the Corporate Tax Act, except: <Amended by Presidential Decree No. 28636, Feb. 13, 2018>
1. Fourth or higher degree relatives by blood or marriage among relatives prescribed in Article 43 (8) 1 (a) of the Enforcement Decree of the Corporate Tax Act;
2. Persons whose equity ratio in the merged corporation is less than 1/100, and the value of the equity share appraised at the market price is less than one billion won as of the date the merger is registered.
(9) Article 43 (3) and (7) of the Enforcement Decree of the Corporate Tax Act shall apply mutatis mutandis to the scope of controlling stockholders, etc. of the merging corporation referred to in Article 12-3 (1) 3 and (2) 1 of the Act.
(10) Article 80-2 (6) of the Enforcement Decree of the Corporate Tax Act shall apply mutatis mutandis to determination as to whether the merging corporation continues or closes the business succeeded from the merged corporation under Article 12-3 (1) 4 and (2) 2 of the Act.
(11) "Period prescribed by Presidential Decree" in Article 12-3 (2) of the Act, with the exception of its subparagraphs, means two years from the commencement date of the business year following the business year in which the merger is registered.
(12) "Equivalent to the interest calculated by the formula prescribed by Presidential Decree" in Article 12-3 (2) of the Act, with the exception of its subparagraphs, means an amount calculated by multiplying the amount of the tax credit under Article 12-3 (1) of the Act by the period of subparagraph 1 and the rate of subparagraph 2: <Amended by Presidential Decree No. 29527, Feb. 12, 2019>
1. The period from the day following the end of the business year in which a tax credit is granted, until the end of the business year in which a ground for payment arises;
2. 25/100,000 per day.
(13) "In extenuating circumstances prescribed by Presidential Decree" in Article 12-3 (3) of the Act means where the merging corporation becomes bankrupt or disposes of the assets acquired by succession, with permission from the court in accordance with the rehabilitation procedures under the Debtor Rehabilitation and Bankruptcy Act.
(14) A domestic corporation that wishes to be granted a tax credit under Article 12-3 (1) of the Act shall file an application for tax credits and calculation of tax credits in the form prescribed by Ordinance of the Ministry of Economy and Finance, with the head of the tax office having jurisdiction over the place of tax payment, along with its tax return.
[This Article Newly Inserted by Presidential Decree No. 25211, Feb. 21, 2014]
 Article 11-4 (Tax Credits for Acquisition of Technological Innovation-Oriented Stocks)
(1) The date of first acquisition referred to in Article 12-4 (1) 1 of the Act (hereafter in this Article, referred to as "date of acquisition"), shall apply where the acquiring corporation has not held any stocks or equity shares (hereafter in this Article, referred to as "stocks, etc.") of the acquired corporation during the period of two years immediately preceding the date the stocks, etc. are acquired: Provided, That the period during which the acquiring corporation becomes a minority stockholder, etc. provided for in Article 50 (2) of the Enforcement Decree of the Corporate Tax Act shall not be deemed the period of holding stocks, etc.
(2) "Technological innovation-oriented small or medium enterprise prescribed by Presidential Decree" in Article 12-4 (1) of the Act, with the exception of its subparagraphs, means any of the following small or medium enterprises: <Amended by Presidential Decree No. 26959, Feb. 5, 2016>
1. An enterprise confirmed as a venture business under Article 25 of the Act on Special Measures for the Promotion of Venture Businesses by no later than the date of acquisition;
2. An enterprise selected as a technological innovation-oriented small or medium enterprise under Article 15 of the Act on the Promotion of Technology Innovation of Small and Medium Enterprises and Article 13 of the Enforcement Decree of the same Act by no later than the date of acquisition;
3. A small or medium business that has spent at least 5/100 of its turnover as research and human resources development expenses referred to in Article 9 (2) 1 of the Act in the business year immediately preceding the business year in which the date of acquisition falls;
4. A small or medium business that obtains any of the following certifications, etc. by no later than the date of acquisition:
(b) Certification of a new technology in health and medical service under Article 8 (1) of the Health and Medical Service Technology Promotion Act;
(d) Certification of an innovative pharmaceutical company under Article 7 (2) of the Special Act on Fostering and Support of Pharmaceutical Industry;
(f) Other certifications, etc. prescribed by Ordinance of the Ministry of Economy and Finance, similar to those listed in items (a) through (e).
(3) "Related party prescribed by Presidential Decree" in Article 12-4 (1) of the Act, with the exception of its subparagraphs, means any related party defined in Article 2 (5) of the Enforcement Decree of the Corporate Tax Act. <Amended by Presidential Decree No. 29527, Feb. 12, 2019>
(4) "Technical value prescribed by Presidential Decree" in Article 12-4 (1) of the Act, with the exception of its subparagraphs, means either of the following amounts chosen by the acquiring corporation: <Amended by Presidential Decree No. 27848, Feb. 7, 2017>
1. An amount calculated by multiplying the equity ratio as at the date of acquisition by the total amount of patent rights, etc. held by the acquired corporation within three months before and after the date of acquisition, which is appraised by any of the agencies prescribed under Article 2-3 (5) of the Enforcement Decree of the Act on Special Measures for the Promotion of Venture Businesses. In such cases, the total amount shall not exceed an amount calculated by subtracting an amount calculated by multiplying the equity ratio by the net asset value of the acquired corporation as at the date of acquisition from the purchase price paid by the acquiring corporation to the acquired corporation (if such amount calculated is a negative number, it shall be deemed zero);
2. An amount calculated by subtracting an amount calculated by multiplying the amount of item (a) by the ratio of item (b) from the purchase price paid by the acquiring corporation to the acquired corporation:
(a) Equivalent to 130/100 of the net asset value of the acquired corporation as at the date of acquisition;
(b) Equity ratio as at the date of acquisition.
(5) The net asset value of the acquired corporation referred to in Article 12-4 (1) 3 of the Act and paragraph (4) 1 of this Article shall be an amount calculated by subtracting total liabilities from total assets (excluding the value of patents, etc.) of the acquired corporation as at the date of acquisition. <Amended by Presidential Decree No. 27848, Feb. 7, 2017>
(6) "Stockholders or investors of the acquired corporation prescribed by Presidential Decree" in Article 12-4 (1) 4 of the Act and "stockholders, etc. investors of the acquired corporation prescribed by Presidential Decree" in Article 12-4 (2) 1 of the Act respectively means controlling stockholders, etc. of the acquired corporation referred to in Article 43 (3) and (7) of the Enforcement Decree of the Corporate Tax Act, except: <Amended by Presidential Decree No. 28636, Feb. 13, 2018>
1. Fourth or higher degree relatives by blood or marriage among relatives prescribed in Article 43 (8) 1 (a) of the Enforcement Decree of the Corporate Tax Act;
2. Persons whose equity ratio in the acquired corporation is less than 1/100, and the value of equity share appraised at the market value is less than one billion won as of the acquisition date.
(7) Article 43 (3) and (7) of the Enforcement Decree of the Corporate Tax Act shall apply mutatis mutandis to the scope of controlling stockholders, etc. of the acquiring corporation or the acquired corporation referred to in Article 12-4 (1) 4 and (2) 1 of the Act.
(8) Article 80-2 (6) of the Enforcement Decree of the Corporate Tax Act shall apply mutatis mutandis to determination as to whether the acquired corporation continues or closes the business it has been engaged in under Article 12-4 (1) 5 and (2) 2 of the Act.
(9) "Period prescribed by Presidential Decree" in Article 12-4 (2) of the Act, with the exception of its subparagraphs, means two years from the commencement date of the business year following the business year in which the date of acquisition falls: Provided, That in cases falling under Article 12-4 (2) 3, the period shall be four years from the commencement date of the business year following the business year in which the date of acquisition falls.
(10) "Equivalent to the interest calculated by the formula prescribed by Presidential Decree" in Article 12-4 (2) of the Act, with the exception of its subparagraphs, means an amount calculated by multiplying the amount of the tax credit under Article 12-4 (1) of the Act by the period of subparagraph 1 and the rate of subparagraph 2: <Amended by Presidential Decree No. 29527, Feb. 12, 2019>
1. The period from the day following the end of the business year in which a tax credit is granted, until the end of the business year in which a ground for payment arises;
2. 25/100,000 per day.
(11) "In extenuating circumstances prescribed by Presidential Decree" in Article 12-4 (3) of the Act means where the acquired corporation becomes bankrupt or disposes of the held assets, with permission from the court in accordance with the rehabilitation procedures under the Debtor Rehabilitation and Bankruptcy Act.
(12) A domestic corporation that wishes to be granted a tax credit under Article 12-4 (1) of the Act shall file an application for tax credits and calculation of tax credits in the form prescribed by Ordinance of the Ministry of Economy and Finance, with the head of the tax office having jurisdiction over the place of tax payment, along with its tax return.
[This Article Newly Inserted by Presidential Decree No. 25211, Feb. 21, 2014]
 Article 12 (Calculation of Gains from Transfer of Stocks and Dividend Income)
(1) Gains from transfer of stocks or equity shares (hereafter referred to as "stocks, etc." in this Article), exempt from corporate tax under Article 13 (1) of the Act shall be computed by the following methods: <Amended by Presidential Decree No. 17829, Dec. 30, 2002; Presidential Decree No. 18704, Feb. 19, 2005; Presidential Decree No. 21307, Feb. 4, 2009>
1. Where some of the retained stocks, etc. are transferred by a small and medium business start-up investment company or a new technology venture capitalist (hereafter referred to as "small or medium business start-up investment company, etc." in this Article) that concurrently holds stocks, etc. acquired by the methods described in the subparagraphs of Article 13 (1) of the Act and stocks, etc. acquired by other methods, stocks, etc. first acquired shall be deemed to have been first transferred;
2. The acquisition value of stocks, etc. acquired by a small or medium business start-up investment company, etc. shall be computed by the method reported by the relevant enterprise to the head of a tax office having jurisdiction over the place of tax payment among the methods prescribed under Article 74 (1) 1 (d) or (e) of the Enforcement Decree of the Corporate Tax Act;
3. Gains from the transfer of stocks, etc., exempt from corporate tax, shall be computed by the following formula based on the type classifiable at each transfer:
Total gains from transfer × (Number of stocks, etc. exempt from corporate tax ÷ Total number of stocks, etc. transferred)
(2) "Corporation prescribed by Presidential Decree" in Article 13 (1) 4 of the Act means a corporation that manages and operates the fund established under statutes, or operates the mutual-aid business under statutes, which is prescribed by Ordinance of the Ministry of Economy and Finance. <Amended by Presidential Decree No. 21307, Feb. 4, 2009>
(3) The dividend income, exempt from corporate tax under Article 13 (4) of the Act shall be computed by the following formula based on the type classifiable: <Newly Inserted by Presidential Decree No. 21307, Feb. 4, 2009; Presidential Decree No. 25211, Feb. 21, 2014>
Dividend income × (Number of stocks, etc. exempt from corporate tax ÷ Total number of stocks, etc. held)
[This Article Newly Inserted by Presidential Decree No. 17034, Dec. 29, 2000]
 Article 12-2 (Special Taxation for Investment by Domestic Corporations in Venture Businesses)
(1) "Domestic corporation prescribed by Presidential Decree" in the main sentence of Article 13-2 (1) of the Act, with the exception of its subparagraphs, means any domestic corporation, except:
1. A small or medium business start-up investment company referred to in Article 13 (1) 1 of the Act;
2. A new technology venture capitalist referred to in Article 13 (1) 2 of the Act;
3. A limited-liability company investing in venture businesses referred to in Article 13 (1) 3 of the Act, with the exception of its items;
4. A fund management corporation, etc. referred to in Article 13 (1) 4 of the Act.
(2) "Related party prescribed by Presidential Decree" in the proviso to Article 13-2 (1) of the Act, with the exception of its subparagraphs, means any related party defined in Article 2 (5) of the Enforcement Decree of the Corporate Tax Act. <Amended by Presidential Decree No. 29527, Feb. 12, 2019>
(3) An additional amount equivalent to interest referred to in Article 13-2 (3) of the Act means an amount calculated by multiplying the amount of tax credit by the period of subparagraph 1 and the rate of subparagraph 2:
1. The period from the date following the filing date of the tax return for the tax-deducted business year, until the filing date of the tax return for the business year in which the ground specified in Article 13-2 (3) of the Act arises;
2. 25/100,000 per day.
(4) The scope of controlling stockholder, etc. referred to in Article 13-2 (3) of the Act shall be as provided for in Article 43 (7) of the Enforcement Decree of the Corporate Tax Act.
(5) A domestic corporation that wishes to be eligible under Article 13-2 (1) of the Act shall file an application for tax credits in the form prescribed by Ordinance of the Ministry of Economy and Finance, with the head of the tax office having jurisdiction over the place of tax payment, along with its tax return.
[This Article Newly Inserted by Presidential Decree No. 27848, Feb. 7, 2017]
 Article 13 (Special Taxation on Investment in Business Starters)
(1) "Stocks or equity shares prescribed by Presidential Decree" in Article 14 (1) 4 of the Act means stocks or equity shares acquired by making an investment that meets the requirements of subparagraphs 1 and 2, and three years have passed since the date of such investment: <Amended by Presidential Decree No. 17458, Dec. 31, 2001; Presidential Decree No. 18704, Feb. 19, 2005; Presidential Decree No. 22037, Feb. 18, 2010; Presidential Decree No. 23590, Feb. 2, 2012; Presidential Decree No. 26959, Feb. 5, 2016; Presidential Decree No. 29527, Feb. 12, 2019>
1. Such investment shall be made in a venture business for which five years have not passed since its establishment (referring to a venture business defined under Article 2 (1) of the Act on Special Measures for the Promotion of Venture Businesses; hereafter in this Article the same shall apply) or a business converted into a venture business not more than three years ago: Provided, That an investment shall be deemed to have been made in a venture business for which five years have not passed since its establishment, if an additional investment is made within three years from the date of initial investment in the venture business within five years after its establishment, and the sum of the initial investment and the additional investment does not exceed one billion won;
2. Such investment shall be made in any of the following venture businesses: Provided, That Article 2 (5) 2 of the Enforcement Decree of the Corporate Tax Act shall not apply where the proviso to subparagraph 1 is applicable:
(a) A venture business with no special relationship defined under Article 98 (1) of the Enforcement Decree of the Income Tax Act or Article 2 (5) of the Enforcement Decree of the Corporate Tax Act (hereafter referred to as "special relationship" in this paragraph);
(b) An investment made by an association established under Article 13 of the Act on Special Measures for the Promotion of Venture Businesses in a venture business that has no special relationship with any of its members.
(2) Deleted. <by Presidential Decree No. 21307, Feb. 4, 2009>
 Article 13-2 (Exemption from Secondary Tax Liability of Investors of Venture Businesses)
(1) "Small enterprise prescribed by Presidential Decree" in Article 15 (1) 2 of the Act means a small or medium enterprise whose turnover does not exceed the amount of turnover calculated by applying mutatis mutandis attached Table 3 to the Enforcement Decree of the Framework Act on Small and Medium Enterprises to each type of business. In such cases, “average turnover, etc.” shall be construed as “turnover.”
(2) "Delinquency date prescribed by the Presidential Decree" in Article 15 (2) of the Act, with the exception of its subparagraphs, means the date falling under any subparagraph of Article 12-4 (1) of the Enforcement Decree of the Framework Act on National Taxes.
(3) An investor who wishes to be eligible for the application of Article 15 (1) of the Act shall file an application for exemption from the secondary tax liability in the form prescribed by Ordinance of the Ministry of Economy and Finance with the head of the competent tax office within 90 days from the date the notice of payment issued to the secondary taxpayer is received under Article 12 of the National Tax Collection Act.
(4) The head of a tax office shall notify the relevant investor whether he/she is eligible for exemption within one month from the date the application for exemption from the second tax liability is received under paragraph (3).
(5) Where it is decided not to apply Article 15 (1) of the Act due to any reason specified in paragraph (2) or (3) of the same Article after notifying the decision on exemption pursuant to paragraph (4), the head of the competent tax office shall notify the relevant investor thereof.
[This Article Newly Inserted by Presidential Decree No. 28636, Feb. 13, 2018]
 Article 14 (Income Deduction for Contributions to Small or Medium Start-Up Investment Funds)
(1) "Venture business investment trust prescribed by Presidential Decree" in Article 16 (1) 2 of the Act means any trust that meets all the following requirements (hereafter in this Article, referred to as "venture business investment trust"): <Amended by Presidential Decree No. 18176, Dec. 30, 2003; Presidential Decree No. 18704, Feb. 19, 2005; Presidential Decree No. 21307, Feb. 4, 2009; Presidential Decree No. 22037, Feb. 18, 2010; Presidential Decree No. 23590, Feb. 2, 2012; Presidential Decree No. 28636, Feb. 13, 2018; Presidential Decree No. 29527, Feb. 12, 2019>
1. It shall be an investment trust established under the Financial Investment Services and Capital Markets Act (excluding special accounts of insurance companies under Article 251 of the same Act; hereinafter referred to as "investment trust") and the contract period shall be at least three years;
2. It shall be transacted by a bankbook;
3. The aggregate of the following rates to the total amount of assets shall be at least 50/100 within six months (or within nine months where the investment trust does not fall under a privately placed fund defined Article 9 (19) of the Financial Investment Services and Capital Markets Act). In such cases, the ratio of assessed value of the property invested under item (a) (i) to the total amount of property of the investment trust shall be at least 15/100:
(a) The ratio of the aggregate of the assessed value of the property invested in venture businesses as follows:
(ii) Investments made by the method of acquiring, through purchase, the stocks or contributed shares owned by other persons;
(b) The ratio of the aggregate of the assessed value of property invested under item (a) (i) and (ii) by an enterprise which was a venture business but seven years have not passed since it ceased to be a venture business or middle-standing enterprises under Article (4) 1;
4. The ratio calculated by dividing, every six months from the date of fulfilling the requirements of subparagraph 3, the ratio calculated by aggregating the ratios referred to in the former part and the latter part of subparagraph 3, with the exception of its items, every day for six months (where the assessed value of investment trust property is smaller than the invested principal, and if the ratio under the same latter part is less than 15/100, it shall be deemed 15/100), by the total number of days of the same period, shall be at least 50/100 and 15/100, respectively: Provided, That this shall not apply to six months before the termination of the investment trust.
(2) Where an investment is made in beneficiary certificates of a venture business investment trust, the amount of investment (referring to the aggregate amount of all venture business investment trusts invested by the relevant resident) eligible for income deduction shall be 30 million won per resident. <Newly Inserted by Presidential Decree No. 28636, Feb. 13, 2018>
(3) "Where the resident invests the amount ... in a venture business or an equivalent small or medium enterprise prescribed by Presidential Decree for which three years have not passed since its incorporation (hereafter in this Article and Article 16-4, referred to as "venture business, etc.”), as prescribed by Presidential Decree” in Article 16 (1) 3 of the Act means where a fund established under Article 13 of the Act on Special Measures for the Promotion of Venture Businesses (hereafter in this Article, referred to as "private investment fund"), invests contributions made by residents in any of the following businesses (hereafter in this Article and Article 14-5, referred to as "venture business, etc.") pursuant to the same Act by the end of the taxable year immediately following the taxable year in which the contributions are made: <Amended by Presidential Decree No. 25211, Feb. 21, 2014; Presidential Decree No. 26959, Feb. 5, 2016; Presidential Decree No. 27848, Feb. 7, 2017; Presidential Decree No. 28636, Feb. 13, 2018; Presidential Decree No. 29527, Feb. 12, 2019>
1. A venture business;
2. A small or medium business for which three years have not passed since its incorporation and of which technology is highly appreciated under Article 2-2 (1) 2 (c) (iii) of the Act on Special Measures for the Promotion of Venture Businesses;
3. A small or medium business for which three years have not passed since its incorporation and which spent at least 30 million won (or at least 20 million won in cases of a business engaged in any of the business activities specified in attached Table 1 to the Enforcement Decree of the Basic Research Promotion and Technology Development Support Act) on the expenses specified in Article 8 during the taxable year immediately preceding the taxable year in which a private investment fund made an investment in the business (or in which an industrial property right is invested in the case of Article 16-5 of the Act): Provided, That, if the duration of the immediately preceding taxable year does not exceed six months, an eligible business shall be a small or medium business that spent at least 15 million won on the expenses specified in Article 8 (or at least 10 million won in cases of a business engaged in any of the business activities specified in attached Table 1 to the Enforcement Decree of the Basic Research Promotion and Technology Development Support Act);
4. An enterprise whose technology grade (referring to the grade granted after comprehensive assessment of the technology, marketability, business possibility, etc. related to the technology of the enterprise or corporation under Article 2 (1) 5 (m) of the Enforcement Decree of the Credit Information Use and Protection Act) assessed by a credit bureau that provides technological credit information referred to in the same item after obtaining permission from the Financial Services Commission pursuant to Article 4 (1) 1 of the Credit Information Use and Protection Act, falls within the top 50/100 of the technology rating system, as a small or medium enterprise which has commenced its business within three years.
(4) Where an investment is made in a venture business, etc. pursuant to paragraph (3), the investment eligible for income deduction shall be calculated by the following formula: <Amended by Presidential Decree No. 25211, Feb. 21, 2014; Presidential Decree No. 28636, Feb. 13, 2018>
{Amount contributed by a resident to a private investment fund × (Amount invested in a venture business, etc. by the private investment fund ÷ the total amount of the investment by the private investment fund)}
(5) "Where the resident invests in equity securities of an enterprise prescribed by Presidential Decree as a small or medium enterprise for which seven years have not passed since its incorporation" in Article 16 (1) 6 of the Act means cases where the resident invests in equity securities of any enterprise prescribed in paragraph (3) 2 through 4. In such cases, "small or medium enterprise for which three years have not passed since its incorporation" shall be construed as "small or medium enterprise for which seven years have not passed since its incorporation." <Newly Inserted by Presidential Decree No. 28636, Feb. 13, 2018; Presidential Decree No. 29527, Feb. 12, 2019 >
(6) A resident who wishes to be granted an income deduction under Article 16 of the Act shall file an application for income deductions in the form prescribed by Ordinance of the Ministry of Economy and Finance, with the withholding agent, the tax association, or the head of the tax office having jurisdiction over the place of tax payment, along with a certificate of a contribution or an investment in the form prescribed by Ordinance of the Ministry of Economy and Finance, issued by the manager of the small or medium business start-up investment fund under the Support for Small and Medium Enterprise Establishment Act (hereinafter referred to as "small or medium business start-up investment fund"); the manager of the Korea Venture Fund established under the Act on Special Measures for the Promotion of Venture Businesses (hereinafter referred to as the "Korea Venture Fund"); the manager of a new technology venture capital fund established under the Specialized Credit Finance Business Act (hereinafter referred to as "new technology venture capital fund"); the collective investment entity of a venture business investment trust under the Financial Investment Services and Capital Markets Act; or financial companies that handle such investment trust. the executive partner of a private equity fund specialized in business start-ups and venture businesses under the same Act; a person to whom the Minister of SMEs and Startups has delegated his/her authority under Article 27 of the Act on Special Measures for the Promotion of Venture Businesses; or a manager of a specialized investment fund for components and materials established under the Act on Special Measures for the Promotion of Specialized Enterprises, etc. for Materials and Components (hereinafter referred to as "specialized investment fund for materials and components") (hereafter in this Article, referred to as "investment fund manager, etc."), by the date classified as follows: <Amended by Presidential Decree No. 17458, Dec. 31, 2001; Presidential Decree No. 18176, Dec. 30, 2003; Presidential Decree No. 18704, Feb. 19, 2005; Presidential Decree No. 19329, Feb. 9, 2006; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 21307, Feb. 4, 2009; Presidential Decree No. 21480, May 6, 2009; Presidential Decree No. 25079, Jan. 14, 2014; Presidential Decree No. 26205, Apr. 20, 2015; Presidential Decree No. 27848, Feb. 7, 2017; Presidential Decree No. 28211, Jul. 26, 2017; Presidential Decree No. 28636, Feb. 13, 2018>
1. For a resident subject to Article 73 of the Income Tax Act: The date he/she receives wages or business income for one month of the year following the relevant year (or the date he/she receives wages or business income for the month in which the date of resignation or business closure falls, if he/she resigns or closes his/her business);
2. For any resident other than subparagraph 1: The filing deadline of the final return on global income tax base.
(7) Where any of the grounds for additional collection under Article 16 (2) of the Act arises, the investment fund manager, etc. shall submit a notice of changes in equity shares, etc. in the form prescribed by Ordinance of the Ministry of Economy and Finance, to the withholding agent, the tax association, the Commissioner of the National Tax Service, or the head of the tax office having jurisdiction over the place of tax payment, with which the relevant resident has filed an application for income deductions pursuant to paragraph (6): Provided, That, where any of the following grounds arises, the investment fund manager, etc. shall submit a notice of changes in equity shares, etc. to the head of the tax office having jurisdiction over the place of tax payment: <Amended by Presidential Decree No. 18704, Feb. 19, 2005; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 22037, Feb. 18, 2010; Presidential Decree No. 28636, Feb. 13, 2018>
1. Suspension or closure of business by the withholding agent;
2. Dissolution of the tax association;
3. Resignation of an employee;
4. Suspension or closure of business of a person with only business income referred to in Article 73 (1) 4 of the Income Tax Act.
(8) Upon receipt of a notice of changes in equity shares, etc. under paragraph (7), the withholding agent, the tax association, or the head of a tax office having jurisdiction over the place of tax payment shall additionally collect without delay the equivalent to the deducted tax amount imposed on the income of the relevant resident under Article 16 (1) of the Act (limited to the portion related to a transfer or recovery of the equity shares or investment shares or a transfer or repurchase of the beneficiary certificates). <Amended by Presidential Decree No. 28636, Feb. 13, 2018>
(9) "Ground prescribed by Presidential Decree" in the proviso to Article 16 (2) of the Act, with the exception of its subparagraphs, means any of the following grounds: <Amended by Presidential Decree No. 16693, Jan. 10, 2000; Presidential Decree No. 17458, Dec. 31, 2001; Presidential Decree No. 18176, Dec. 30, 2003; Presidential Decree No. 18704, Feb. 19, 2005; Presidential Decree No. 19329, Feb. 9, 2006; Presidential Decree No. 21307, Feb. 4, 2009; Presidential Decree No. 21480, May 6, 2009; Presidential Decree No. 22037, Feb. 18, 2010; Presidential Decree No. 26205, Apr. 20, 2015>
1. Emigration of all members of a household to a foreign country under the Emigration Act;
2. Occurrence of a serious loss to property due to a natural disaster;
3. Dissolution of the small or medium business start-up investment fund, the Korea Venture Fund, a new technology venture capital fund, a specialized investment fund for materials and components, or a collective investment entity under the Financial Investment Services and Capital Markets Act.
(10) Notwithstanding paragraphs (7) and (8), if reasons for additional collection of a tax referred to in Article 16 (2) 2 of the Act arise to a resident who has been granted an income deduction pursuant to paragraph (1) (hereafter in this paragraph, referred to as "investor"), the financial institution that deals with the relevant venture business investment trust shall additionally collect an amount calculated by multiplying the amount of transfer or recovery of the beneficiary certificates of the venture business investment trust by 35/1,000, subject to a ceiling of three million won per year, and shall pay it to the head of the tax office having jurisdiction over withholding taxes by the tenth day of the month following the month in which the date such event has occurred falls, and notify the details thereof to the investor in writing: Provided, That if it is verified that there is a difference between the amount of tax reduced or exempted due to the relevant income deduction and the amount of tax additionally collected, such as the case where the investor proves that the amount of tax reduced or exempted due to the relevant income deduction is less than the amount of tax to be additionally collected, the equivalent to the amount of tax actually reduced or exempted shall be additionally collected. <Newly Inserted by Presidential Decree No. 29527, Feb. 12, 2019>
(11) A person who falls under any subparagraph of Article 16 (2) of the Act because grounds referred to in the proviso to the same paragraph, with the exception of its subparagraphs, has occurred to him/her, shall submit a report on the ground for special termination in the form prescribed by Ordinance of the Ministry of Economy and Finance to the head of the tax office having jurisdiction over the domicile of the relevant resident, the relevant withholding agent or the financial institution that deals with the venture business investment trust. <Newly Inserted by Presidential Decree No. 29527, Feb. 12, 2019>
 Article 14-2 (Application for Special Case for Non-Taxation on Gains from Exercising Stock Options of Venture Businesses)
For the purpose of Article 16-2 (1) of the Act, a withholding agent shall submit a detailed statement for application of special case for non-taxation, in the form prescribed by Ordinance of the Ministry of Economy and Finance, to the head of the tax office having jurisdiction over withholding taxes by not later than the end of February of the year following the year in which the date the stock option of the venture business is exercised falls: Provided, That this shall not apply where a statement on the subjects of application of special cases under Article 14-3 or a statement of a person eligible for special taxation under Article 14-4 is submitted to the head of the tax office having jurisdiction over withholding taxes in order to be eligible for special treatment in the payment of gains from exercising stock options of the venture business under Article 16-3 of the Act or special taxation for gains from exercising stock options of the venture business under Article 16-4 of the Act.
[This Article Newly Inserted by Presidential Decree No. 29527, Feb. 12, 2019]
 Article 14-3 (Special Cases on Payment of Gains from Exercising Stock Options of Venture Businesses)
(1) "Amount prescribed by Presidential Decree" in Article 16-3 (1) 2 of the Act means an amount calculated by the following formula. In such cases, in calculating the amount of global income and the amount of income from exercising a stock option for the relevant taxable period, the amount non-taxable under Article 16-2 of the Act shall be excluded therefrom: <Amended by Presidential Decree No. 28636, Feb. 13, 2018>
Final tax amount on the global income of the relevant taxable year - The tax amount computed by excluding the amount of income from exercising stock options of venture businesses from the global income of the relevant taxable period.
(2) An executive officer or employee of a venture business who intends to pay income tax under Article 16-3 (1) of the Act (hereafter referred to as "executive officers, etc. of a venture business" in this Article) shall submit an application for special cases in the form prescribed by Ordinance of the Ministry of Economy and Finance (hereafter referred to as "application for special cases" in this Article) to the withholding agent by no later than the fifth day of the month following the month in which the date he/she has exercised his/her stock option falls. <Amended by Presidential Decree No. 28636, Feb. 13, 2018>
(3) An withholding agent, in receipt of an application for special cases under paragraph (2), shall submit a statement on the subjects of application of special cases in the form prescribed by Ordinance of the Ministry of Economy and Finance by no later than the tenth day of the month following the month in which the date he/she has exercised his/her stock option falls.
(4) Executive officers, etc. of a venture business who has submitted an application for special cases under paragraph (2) shall submit a copy of the application for special cases to the head of a tax office having jurisdiction over the place of tax payment when filing his/her final tax return of the global income under Article 70 of the Income Tax Act for the taxable period in which the date he/she has exercised his/her stock option falls.
(5) Notwithstanding the provisions of paragraphs (2) through (4), executive officers, etc. of a venture business who fail to have submitted an application for special cases within the period prescribed in paragraph (2), but intends to pay income tax under Article 16-3 (1) of the Act shall submit an application for special cases when filing his/her final tax return of the global income under Article 70 of the Income Tax Act for the taxable period in which the date he/she has exercised his/her stock option falls. <Amended by Presidential Decree No. 28636, Feb. 13, 2018>
[This Article Newly Inserted by Presidential Decree No. 25211, Feb. 21, 2014]
 Article 14-4 (Special Taxation for Gains from Exercising Stock Options of Venture Businesses)
(1) “Person prescribed by Presidential Decree” in Article 16-4 (1) of the Act, with the exception of its subparagraphs, means an executive officer or employee granted a stock option under Article 16-3 (1) of the Act on Special Measures for the Promotion of Venture Businesses (excluding the following persons as at the date a resolution is passed at the stockholders’ general meeting under Article 16-3 (1) of the Act on Special Measures for the Promotion of Venture Businesses; hereafter in this Article, referred to as “executive officer or employee of a venture business”): <Amended by Presidential Decree No. 28636, Feb. 13, 2018>
1. A person who holds more than 10/100 of the total number of outstanding stocks of the relevant corporation, if he/she exercises all of his/her stock options;
2. A stockholder of the relevant corporation, who is identified as a controlling stockholder, etc., as provided for in Article 43 (7) of the Enforcement Decree of the Corporate Tax Act;
3. A stockholder who holds more than 10/100 of the total number of outstanding stocks of the relevant corporation;
4. A person who is a relative of the stockholder referred to in subparagraph 3 or who has control over the management of such stockholder, as provided for in Article 1-2 (1) or (3) 1 of the Enforcement Decree of the Framework Act on National Taxes.
(2) An executive officer or employee of a venture business who wishes to be eligible under Article 16-4 (1) of the Act shall open an account prescribed by Ordinance of the Ministry of Economy and Finance (hereafter in this Article, referred to as “account only for stock options”) with a financial investment business entity defined in Article 8 (1) of the Financial Investment Services and Capital Markets Act (hereafter in this Article, referred to as “financial investment business entity”), and shall file an application for special taxation in the form prescribed by Ordinance of the Ministry of Economy and Finance (hereafter in this Article, referred to as “application for special taxation”) with the venture business by the date immediately preceding the date he/she intends to exercise a stock option, along with a written confirmation of opening an account only for stock options in the form prescribed by Ordinance of the Ministry of Economy and Finance. <Amended by Presidential Decree No. 28636, Feb. 13, 2018>
(3) Upon receipt of an application for special taxation under paragraph (2), a venture business shall deposit the stocks issued by the exercise of a stock option in the account only for stock options, and shall submit a statement of deposit of stocks by the exercise of a stock option in the form prescribed by Ordinance of the Ministry of Economy and Finance (hereafter in this Article, referred to as “statement of delivery of stocks by the exercise of a stock option”) and a statement of a person eligible for special taxation in the form prescribed by Ordinance of the Ministry of Economy and Finance (hereafter in this Article, referred to as “statement of a person eligible for special taxation”), to the head of the tax office having jurisdiction over withholding taxes, by no later than the tenth day of the month immediately following the month in which the person exercises the stock option.
(4) A financial investment business entity shall submit a report on transactions through the accounts only for stock options in the form prescribed by Ordinance of the Ministry of Economy and Finance (hereafter in this Article, referred to as “report on transactions through the accounts only for stock options”), to the head of the tax office having jurisdiction over its head office or principal place of business, by no later than the end of the month immediately following the end of each quarter.
(5) “Requirements prescribed by Presidential Decree” in Article 16-4 (1) 1 of the Act means the following requirements: <Amended by Presidential Decree No. 27649, Dec. 1, 2016; Presidential Decree No. 28636, Feb. 13, 2018>
1. A venture business shall make an agreement with its executive officers or employees after passing a resolution on the quantity of stock options, purchase price, eligible persons, duration, etc. at the stockholders’ general meeting before it grants stock options;
2. Stock options granted under subparagraph 1 shall be non-transferable;
3. Stock options shall be exercised after a person serves in or works for the relevant corporation for at least two years from the day a resolution is passed at the stockholders’ general meeting under Article 16-3 (1) of the Act on Special Measures for the Promotion of Venture Businesses, except in extenuating circumstances prescribed by Ordinance of the Ministry of Economy and Finance, such as death or reaching the statutory retirement age;
(6) When an executive officer or employee of a venture business files a tax return on capital gains tax under Article 105 or 110 of the Income Tax Act to pay capital gains tax under Article 16-4 (2) of the Act, the executive officer or employee shall submit a written confirmation issued by the venture business on the application for special taxation filed under paragraph (2), in the form prescribed by Ordinance of the Ministry of Economy and Finance, to the head of the tax office having jurisdiction over the place of tax payment. <Amended by Presidential Decree No. 28636, Feb. 13, 2018>
(7) “Amount prescribed by Presidential Decree” in Article 16-4 (4) of the Act means the difference between the agreed purchase price and the market price of stocks at the agreed time to purchase the stocks. <Amended by Presidential Decree No. 28636, Feb. 13, 2018>
(8) “Extenuating circumstances prescribed by Presidential Decree, such as where the venture business becomes bankrupt” in Article 16-4 (5) 1 of the Act means any of the following: <Amended by Presidential Decree No. 27848, Feb. 7, 2017; Presidential Decree No. 28636, Feb. 13, 2018>
1. Where the venture business that granted stock options becomes bankrupt;
2. Where stocks are disposed of with permission from the court in accordance with the rehabilitation procedures under the Debtor Rehabilitation and Bankruptcy Act;
3. Where stocks of the relevant corporation are disposed of due to a merger, division, etc., and new stocks of the merging corporation or the corporation newly established as a consequence of the division are delivered in return.
(9) “Data prescribed by Presidential Decree” in Article 16-4 (6) of the Act means a statement of delivery of stocks by the exercise of a stock option, a statement of a person eligible for special taxation, and a report on transactions through the account only for stock options. <Amended by Presidential Decree No. 28636, Feb. 13, 2018>
[This Article Newly Inserted by Presidential Decree No. 26070, Feb. 3, 2015]
 Article 14-5 (Special Taxation for Gains from Investment of Industrial Property Rights in Kind)
(1) “Patent, utility model right, design right, or trademark prescribed by Presidential Decree" in Article 16-5 (1) of the Act means the following: <Amended by Presidential Decree No. 28636, Feb. 13, 2018>
1. A patent registered under the Patent Act;
2. A utility model right registered under the Utility Model Act;
3. A design right registered under the Design Protection Act;
4. A trademark registered under the Trademark Act.
(2) "Related party prescribed by Presidential Decree" in Article 16-5 (1) of the Act means the following: <Amended by Presidential Decree No. 28636, Feb. 13, 2018>
1. A person who will hold more than 30/100 of the total number of outstanding stocks of the relevant corporation (including stockholders who already hold more than 30/100 of the total number of outstanding stocks of the relevant corporation before making an investment in kind), if the person receives stocks in return for an industrial property right invested in kind under Article 16-5 (1) of the Act (hereafter in this Article, referred to as "industrial property right");
2. A stockholder of the relevant corporation, who is identified as a controlling stockholder, etc., as provided for in Article 43 (7) of the Enforcement Decree of the Corporate Tax Act;
3. A person who is a relative of, or has an economic relationship with, or has control over the management of, a stockholder who holds more than 30/100 of the total number of outstanding stocks of the relevant corporation, as provided for in Article 1-2 (1), (2), or (3) 1 of the Enforcement Decree of the Framework Act on National Taxes.
(3) A person who wishes to be eligible under Article 16-5 (1) of the Act shall open an account prescribed by Ordinance of the Ministry of Economy and Finance (hereafter in this Article, referred to as "account only for stocks for the investment of an industrial property right") with a financial investment business entity defined in Article 8 (1) of the Financial Investment Services and Capital Markets Act (hereafter in this Article, referred to as "financial investment business entity"), and shall file an application for special taxation (hereafter in this Article, referred to as "application for special taxation"), in the form prescribed by Ordinance of the Ministry of Economy and Finance, with the relevant venture business, etc. by the date immediately preceding the date the person receives stocks in return for the investment, along with a written confirmation of opening of an account only for stocks for the investment of an industrial property right in the form prescribed by Ordinance of the Ministry of Economy and Finance, which is issued by the financial investment business entity. <Amended by Presidential Decree No. 27848, Feb. 7, 2017; Presidential Decree No. 28636, Feb. 13, 2018>
(4) Upon receipt of an application for special taxation under paragraph (3), a venture business, etc. shall issue a certificate of the application for special taxation (hereafter in this Article, referred to as "certificate of the application for special taxation"), to the person who wishes to be eligible under Article 16-5 (1) of the Act, in the form prescribed by Ordinance of the Ministry of Economy and Finance. <Amended by Presidential Decree No. 27848, Feb. 7, 2017; Presidential Decree No. 28636, Feb. 13, 2018>
(5) Upon receipt of an application for special taxation under paragraph (3), a venture business, etc. shall deposit the stocks issued in return for the investment of an industrial property right in the account only for stocks for the investment of an industrial property right, and shall submit a statement of the delivery of stocks for the investment of an industrial property right (hereafter in this Article, referred to as "statement of the delivery of stocks for the investment of an industrial property right") and a statement of a person eligible for special taxation (hereafter in this Article, referred to as "statement of a person eligible for special taxation"), in the forms prescribed by Ordinance of the Ministry of Economy and Finance, to the head of the tax office having jurisdiction over withholding taxes by the tenth day of the month immediately following the month in which the stocks are delivered in return for the investment of the industrial property right. <Amended by Presidential Decree No. 27848, Feb. 7, 2017>
(6) A financial investment business entity shall submit a report on transactions through accounts only for stocks for the investment of an industrial property right prescribed by Ordinance of the Ministry of Economy and Finance (hereafter in this Article, referred to as "report on transactions through accounts only for stocks for the investment of an industrial property right"), to the head of the tax office having jurisdiction over its head office or principal place of business, by no later than the end of the month immediately following the end of each quarter.
(7) A person who intends to pay capital gains tax under Article 16-5 (2) of the Act shall file a certificate of an application for special taxation with the head of the tax office having jurisdiction over the place of tax payment, when filing the tax return on capital gains tax under Article 105 or 110 of the Income Tax Act. <Amended by Presidential Decree No. 28636, Feb. 13, 2018>
(8) The acquisition value of an industrial property right under Article 16-5 (3) of the Act shall be calculated by the method for calculating the acquisition value of an asset prescribed in Article 89 of the Enforcement Decree of the Income Tax Act. <Amended by Presidential Decree No. 28636, Feb. 13, 2018>
(9) "Data prescribed by Presidential Decree" in Article 16-5 (4) of the Act means a statement of the delivery of stocks for the investment of an industrial property right, a statement of a person eligible for special taxation, and a report on transactions through accounts only for stocks for the investment of an industrial property right. <Amended by Presidential Decree No. 28636, Feb. 13, 2018>
[This Article Newly Inserted by Presidential Decree No. 26959, Feb. 5, 2016]
 Article 15 Deleted. <by Presidential Decree No. 20620, Feb, 22. 2008>
 Article 16 (Scope of Foreign Engineers)
(1) "Foreign engineer prescribed by Presidential Decree" in Article 18 (1) of the Act means a non-Korean national who falls under any of the following subparagraphs: <Amended by Presidential Decree No. 16693, Jan. 10, 2000; Presidential Decree No. 18408, Jun. 5, 2004; Presidential Decree No. 18594, Dec. 3, 2004; Presidential Decree No. 18704, Feb. 19, 2005; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 22037, Feb. 18, 2010; Presidential Decree No. 24368, Feb. 15, 2013; Presidential Decree No. 26070, Feb. 3, 2015>
1. A person who provides technology in the Republic of Korea under an engineering technology license agreement prescribed by Ordinance of the Ministry of Economy and Finance;
2. A researcher working in the research and development facility of a foreign-capital invested company that meets the requirements prescribed by Ordinance of the Ministry of Economy and Finance, including requirement of having an independent research facility;
2-2. through 4. Deleted. <by Presidential Decree No. 26070, Feb. 3, 2015>
(2) Deleted. <by Presidential Decree No. 26070, Feb. 3, 2015>
(3) A person who intends to obtain an income tax reduction under Article 18 (1) of the Act shall file an application for tax reduction in the form prescribed by Ordinance of the Ministry of Economy and Finance, with the head of the tax office having jurisdiction over withholding taxes via the relevant withholding agent, by no later than the tenth day of the month immediately following the month in which the person provided service. <Amended by Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 22037, Feb. 18, 2010; Presidential Decree No. 26070, Feb. 3, 2015>
 Article 16-2 (Special Taxation for Foreign Workers)
(1) "Foreign investment enterprises prescribed by Presidential Decree" in the main sentence of Article 18-2 (2) of the Act means enterprises granted a reduction of, or exemption from, corporate tax, income tax, acquisition tax, and property tax under Article 121-2 of the Act, or enterprises that meet the requirements for tax reduction or exemption under Article 116-2 (3) through (10) as at the end of the relevant taxable year. <Newly Inserted by Presidential Decree No. 25211, Feb. 21, 2014; Presidential Decree No. 26070, Feb. 3, 2015>
(2) "Related person prescribed by Presidential Decree" in the main sentence of Article 18-2 (2) of the Act means an enterprise that has relative relations or management control relationship defined under Article 1-2 (1) or (3) of the Enforcement Decree of the Framework Act on National Taxes, with the enterprise to which a foreign worker provides service as of the end of the relevant taxable year: Provided, That the requirement of Article 1-2 (4) 1 (b) of the same Act shall not apply in determining of the management control relationship with the relevant enterprise. <Newly Inserted by Presidential Decree No. 25211, Feb. 21, 2014; Presidential Decree No. 26070, Feb. 3, 2015>
(3) “Regional headquarters prescribed by Presidential Decree” in the proviso to Article 18-2 (2) of the Act means a local headquarters defined under Article 20-2 (4) 1 of the Enforcement Decree of the Foreign Investment Promotion Act. <Newly Inserted by Presidential Decree No. 26070, Feb. 3, 2015>
(4) A foreign worker (only applicable to foreign workers who do not have the nationality of the Republic of Korea as of the end of the relevant taxable year) who intends to obtain a tax deduction under Article 18-2 (2) of the Act shall submit a wage and salary income earner's return on income deductions and tax credits under Article 198 (1) of the Enforcement Decree of the Income Tax Act, and an application for single tax rate for foreign workers in the form stipulated by Ordinance of the Ministry of Economy and Finance to the withholding agent, taxpayers' union, or the head of a tax office having jurisdiction over the place of tax payment, when making a year-end settlement of earned income tax amount or filing a final return of global income tax base. <Amended by Presidential Decree No. 18704, Feb. 19, 2005; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 22037, Feb. 18, 2010; Presidential Decree No. 25211, Feb. 21, 2014; Presidential Decree No. 26070, Feb. 3, 2015>
(5) A foreign worker (only applicable to foreign workers who do not have the nationality of the Republic of Korea as at the date of filing an application for withholding) who intends to be accorded tax treatment under Article 18-2 (4) of the Act shall submit an application for withholding applying single tax rate in the form stipulated by Ordinance of the Ministry of Economy and Finance to the head of a tax office having jurisdiction over withholding by the tenth of the month following the month in which the foreign worker provided service. <Newly Inserted by Presidential Decree No. 22583, Dec. 30, 2010; Presidential Decree No. 26070, Feb. 3, 2015>
(6) Where a foreign worker who has submitted an application for withholding applying single tax rate under paragraph (5) submits an application for renouncement of withholding applying single tax rate in the form stipulated by Ordinance of the Ministry of Economy and Finance to the head of a tax office having jurisdiction over withholding through the withholding agent, Article 18-2 (4) of the Act shall not apply, starting from the taxable period following the taxable period in which the date of submission of such application falls. <Newly Inserted by Presidential Decree No. 23590, Feb. 2, 2012; Presidential Decree No. 25211, Feb. 21, 2014; Presidential Decree No. 26070, Feb. 3, 2015>
[This Article Wholly Amended by Presidential Decree No. 18176, Dec. 30, 2003]
 Article 17 (Tax Credits for Management Performance Bonuses of Achievement-Sharing Small and Medium Enterprises)
(1) "Full-time employees prescribed by Presidential Decree" in the main sentence of Article 19 (1) of the Act means employees with Korean nationality who have signed an employment contract under the Labor Standards Act: Provided, That any of the following persons shall be excluded herefrom:
1. An employee whose period of employment contract is less than one year: Provided, That an employee, whose total period of employment contracts is at least one year due to the consecutive renewal of an employment contract shall be deemed a full-time employee;
2. A part-time employee defined in Article 2 (1) 9 of the Labor Standards Act: Provided, That an employee whose contractual work hours per month are at least 60 hours shall be deemed a full-time employee;
3. An executive officer falling under any subparagraph of Article 40 (1) of the Enforcement Decree of the Corporate Tax Act;
4. The largest stockholder or the largest investor of the relevant enterprise (referring to the representative, if the relevant enterprise is a sole proprietor), and his/her spouse;
5. A lineal ascendant or descendent (including his/her spouse) of a person falling under subparagraph 4, or a blood relative referred to in Article 1-2 (1) of the Enforcement Decree of the Framework Act on National Taxes;
6. A person in whose case neither the fact that his/her gross wage and salary income tax has been withheld nor the fact that any of the following amounts has been paid is verified by a book for tax withholding for gross wage and salary income under Article 196 of the Enforcement Decree of the Income Tax Act:
(a) An employer contribution or employee contribution defined in Article 3 (1) 11 or 12 of the National Pension Act;
(b) An insurance contribution of the employee insured under Article 69 of the National Health Insurance Act;
7. An employer whose gross wage and salary income in the relevant taxable period exceeds 70 million won.
(2) "Management performance bonus prescribed by Presidential Decree" in the main sentence of Article 19 (1) of the Act means the performance bonus that meets all of the following requirements:
2. It shall be a performance bonus paid by an enterprise in which an operating profit (referring to the operating profit for the taxable year in which the payment of performance bonus under subparagraph 1 was agreed calculated according to the Business Accounting Standards) has occurred.
(3) For the purposes of Article 19 (1) of the Act, the number of full-time employees shall be calculated by the following formula (a fraction of less than 1/100 shall be deemed nil):
Aggregate of the number of full-time employees as at the end of each month in the relevant taxable year ÷ Number of months in the relevant taxable year.
(4) The latter part of Article 23 (11), with the exception of its subparagraphs, and subparagraph 2 of the same paragraph shall apply mutatis mutandis to the calculation of the number of full-time employees under paragraph (3).
(5) A person who wishes to be granted tax credits under Article 19 (1) of the Act shall file an application for tax credits and a statement of calculation of tax credits, in the forms prescribed by Ordinance of the Ministry of Economy and Finance, with the head of the tax office having jurisdiction over the place of tax payment, along with his/her tax return.
(6) “Person prescribed by Presidential Decree, such as the largest stockholder of the relevant enterprise” in Article 19 (2) 2 of the Act means any of the following persons:
1. The largest stockholder or the largest investor of the relevant enterprise (referring to the representative if the relevant enterprise is a sole proprietor), and his/her spouse;
2. A lineal ascendant or descendent (including his/her spouse) of a person falling under subparagraph 1, or a blood relative referred to in Article 1-2 (1) of the Enforcement Decree of the Framework Act on National Taxes.
(7) The tax amount reduced under Article 19 (2) of the Act shall be calculated by the following formula:
Amount of global income tax calculated under Article 137 (1) 2 of the Income Tax Act (hereafter in this Article, referred to as "amount of tax calculated") × (Amount of earned income under Article 20 (2) of the Income Tax Act ÷ Amount of global income under Article 14 (2) of the Income Tax Act) × (Management performance bonus under Article 19 (1) of the Act ÷ Total wages of the relevant employee) × Reduction rate under Article 19 (2) of the Act.
(8) Notwithstanding paragraph (7), where a person who wishes to be granted a tax reduction or exemption under Article 19 (2) of the Act is granted a reduction or exemption under Article 30 (1) of the Act, the tax amount reduced or exempted under Article 19 (2) of the Act shall be calculated by the following formula:
[(Amount of tax calculated x Amount of earned income under Article 20 (2) of the Income Tax Act ÷ Amount of global income under Article 14 (2) of the Income Tax Act) - (Tax amount reduced under Article 30 (1) of the Act] x (Management performance bonus under Article 19 (1) of the Act ÷ Total amount of wages of the relevant employee) x Reduction rate under Article 19 (2) of the Act.
(9) A person who wishes to be granted a tax reduction or exemption under Article 19 (2) of the Act shall file an application for tax reduction or exemption, in the form prescribed by Ordinance of the Ministry of Economy and Finance, with the relevant withholding agent by not later than the end of the month immediately following the month in which he/she receives a management performance bonus.
(10) A withholding agent in receipt of an application for tax reduction or exemption under paragraph (9) shall submit a statement of subjects eligible for tax reduction or exemption prescribed by Ordinance of the Ministry of Economy and Finance to the head of the tax office having jurisdiction over the withholding tax by not later than the end of the month immediately following the month in which the application is received.
[This Article Newly Inserted by Presidential Decree No. 29527, Feb. 12, 2019]
SECTION 3 Special Taxation on International Capital Transactions
 Article 18 (Exemption of Corporate Tax on Interest Income from International Financial Transactions)
(1) Deleted. <by Presidential Decree No. 20620, Feb, 22. 2008>
(2) "Finance companies, etc. prescribed by Presidential Decree" in Article 21 (1) 3 of the Act means the following finance companies, etc.: <Amended by Presidential Decree No. 18704, Feb. 19, 2005; Presidential Decree No. 21307, Feb. 4, 2009; Presidential Decree No. 22037, Feb. 18, 2010; Presidential Decree No. 22493, Nov. 15, 2010; Presidential Decree No. 23590, Feb. 2, 2012; Presidential Decree No. 27848, Feb. 7, 2017>
1. A bank authorized to engage in banking business under the Banking Act;
2. The Korea Development Bank incorporated under the Korea Development Bank Act;
3. The Export-Import Bank of Korea incorporated under the Export-Import Bank of Korea Act;
4. The Industrial Bank of Korea incorporated under the Industrial Bank of Korea Act;
5. Deleted; <by Presidential Decree No. 16693, Jan. 10, 2000>
6. The NongHyup Bank incorporated under the Agricultural Cooperatives Act;
7. The SuHyup Bank incorporated under the Fisheries Cooperatives Act;
8. Deleted; <by Presidential Decree No. 25945, Dec. 30, 2014>
9. A merchant bank incorporated under the Financial Investment Services and Capital Markets Act.
(3) Deleted. <by Presidential Decree No. 17829, Dec. 30, 2002>
(4) "Securities prescribed by Presidential Decree" in Article 21 (3) of the Act means the following: <Amended by Presidential Decree No. 16693, Jan. 10, 2000; Presidential Decree No. 20620, Feb. 22, 2008; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 22037, Feb. 18, 2010; Presidential Decree No. 24368, Feb. 15, 2013>
1. Securities denominated in a foreign currency or those prescribed by Ordinance of the Ministry of Economy and Finance which are payable in a foreign country among those issued outside the Republic of Korea: Provided, That excluded herefrom shall be where deposit certificates issued on the basis of stocks, investment certificates, or other securities (hereafter in this paragraph, referred to as "taxable stocks, etc.") are transferred, and where the owner of taxable stocks, etc. before the deposit certificates are issued keeps holding the relevant deposit certificates after the deposit certificates are issued until the deposit certificates are transferred;
2. Stocks or equity shares of domestic corporations listed or registered at a foreign securities market prescribed by Ordinance of the Ministry of Economy and Finance, that are transferred at the foreign securities market: Provided, That taxable stocks, etc. that have not been acquired in the foreign securities market and are first transferred in such foreign securities market, shall be excluded. The same shall not apply where taxable stocks, etc. offered and sold to meet the requirements for distribution of shares under the listing regulations of a foreign securities market, are acquired and transferred.
 Article 18-2 (Non-Taxation of Interest Income Tax on Foreign Currency Time Deposits of Non-Residents)
(1) "Foreign currency time deposit prescribed by Presidential Decree" in Article 21-2 (1) of the Act means a foreign currency time deposit dealt in by a foreign exchange business handling institution referred to in Article 21 (1) 2 of the Act, contractual terms and conditions of which have been deliberated upon by the Governor of the Financial Supervisory Service.
(2) Where a person holding an account of the deposit terminates the savings contract or withdraws all or part of the savings during the contract period under Article 21-2 (2) of the Act, the income tax or corporate tax shall be additionally collected pursuant to the following subparagraphs: Provided, That where the deposit is maintained for at least one year without withdrawal of savings, no income tax or corporate tax shall be imposed on the interest accrued for such one year period:
1. Where the saving contract is terminated: Income tax or corporate tax which has not been imposed on the interest accrued;
2. Where the savings are withdrawn: Income tax or corporate tax which has not been imposed on the interest generated from the savings from the contract date to the withdrawal date.
(3) A non-resident, etc. who seeks the benefit under Article 21-2 (1) shall submit a document verifying that he/she is a non-resident, etc. to the relevant foreign exchange business handling institution, as prescribed by the Commissioner of the National Tax Service.
(4) Where a non-resident, etc. makes a change in or renews his/her savings contract causing the relevant deposit to fall under a foreign currency time deposit to which Article 21-2 (1) applies, the account of such deposit shall be deemed newly opened on the date of such change or renewal.
[This Article Newly Inserted by Presidential Decree No. 24368, Feb. 15, 2013]
 Article 19 (Scope of Overseas Resources Development Projects)
"Overseas resources development projects prescribed by Presidential Decree" in Article 22 of the Act means projects of developing following resources in the foreign countries (including projects of processing resources pursuant to the terms and conditions of introduction of foreign capital of foreign countries possessing resources): <Amended by Presidential Decree No. 22037, Feb. 18, 2010>
1. Agricultural products;
2. Livestock products;
3. Fishery products;
4. Forest products;
5. Minerals.
 Article 20 Deleted. <by Presidential Decree No. 21307, Feb. 4, 2009>
SECTION 4 Special Taxation for Investment Promotion
 Article 21 Deleted. <by Presidential Decree No. 29527, Feb. 12, 2019>
 Article 22 (Scope of Facilities for Research and Experimenting and Facilities for Vocational Training)
(1) "Research and experimenting facilities and vocational training facilities, prescribed by Presidential Decree" in Article 25 (1) 1 of the Act means the following facilities:
1. Research and experimenting facilities for research and development, prescribed by Ordinance of the Ministry of Economy and Finance;
2. Vocational training facilities for human resources development, prescribed by Ordinance of the Ministry of Economy and Finance.
[This Article Wholly Amended by Presidential Decree No. 29527, Feb. 12, 2019]
 Article 22-2 (Scope of Energy-Saving Facilities)
(1) "Energy-saving facilities prescribed by Presidential Decree" in Article 25 (1) 2 of the Act means any of the following facilities:
1. Energy-saving type facilities, etc. under the Energy Use Rationalization Act, which are prescribed by Ordinance of the Ministry of Economy and Finance (including facilities established by an enterprise specialized in energy-saving under the same Act on condition that it acquires the ownership after paying the price in installments);
2. Wastewater reclamation and reusing systems under the Act on Promotion and Support of Water Reuse and the water-saving equipment and apparatus under the Water Supply and Waterworks Installation Act;
3. Facilities to manufacture the parts, intermediate goods, or finished goods of a facility to manufacture new energy and renewable energy under Article 2 of the Act on the Promotion of the Development, Use and Diffusion of New and Renewable Energy, which are prescribed by Ordinance of the Ministry of Economy and Finance.
[This Article Wholly Amended by Presidential Decree No. 29527, Feb. 12, 2019]
 Article 22-3 (Scope of Facilities for Environmental Conservation)
(1) "Facilities for environmental conservation prescribed by Presidential Decree" in Article 25 (1) 3 of the Act means any of the following facilities prescribed by Ordinance of the Ministry of Economy and Finance:
1. Air pollution prevention facilities and fuel supply facilities for non-pollution or low-pollution motor vehicles under the Clean Air Conservation Act;
2. Noise or vibration prevention facilities and sound-proof or vibration-proof facilities under the Noise and Vibration Control Act;
3. Treatment facilities under the Act on the Management and Use of Livestock Excreta;
4. Sewage treatment facilities under the Enforcement Decree of the Sewerage Act;
5. Water pollution prevention facilities under the Water Environment Conservation Act;
6. Waste treatment facilities and waste quantity reduction facilities under the Wastes Control Act;
7. Construction waste treatment facilities under the Construction Waste Recycling Promotion Act;
9. Ships, equipment, and materials for sea pollution prevention business under the Marine Environment Management Act;
10. Desulfurization facilities, among oil refining facilities under the Petroleum and Alternative Fuel Business Act; prescribed by Ordinance of the Ministry of Economy and Finance;
11. Soil pollution prevention facilities under Article 12 (3) of the Soil Environment Conservation Act (limited to those meeting the recommended installation, maintenance, and management standards under Article 7-2 (2) of the Enforcement Decree of the same Act);
12. Cleaning manufacturing facilities;
13. Facilities for reducing greenhouse gas emissions.
[This Article Wholly Amended by Presidential Decree No. 29527, Feb. 12, 2019]
 Article 22-4 (Scope of Facilities for Promoting Employees' Welfare)
(1) "Facilities prescribed by Presidential Decree for promoting the convenience of persons with disabilities, elderly persons, pregnant women, etc." in Article 25 (1) 4 (c) of the Act means any of the following facilities prescribed by Ordinance of the Ministry of Economy and Finance:
1. Convenience facilities for persons with disabilities, elderly persons, pregnant women, etc.;
2. Facilities for employing persons with disabilities.
(2) "Facilities prescribed by Presidential Decree for the rest, health training, etc. of employees" in Article 25 (1) 4 (d) of the Act means any of the following facilities prescribed by Ordinance of the Ministry of Economy and Finance:
1. Resting places;
2. Health training centers;
3. Shower or bathing facilities.
[This Article Newly Inserted by Presidential Decree No. 29527, Feb. 12, 2019]
 Article 22-5 (Scope of Safety Facilities)
(1) "Facilities prescribed by Presidential Decree" in Article 25 (1) 5 (a) of the Act means fire-fighting facilities other than those installed in accordance with the reinforced standards pursuant to the proviso to Article 11 (1) of the Act on Fire Prevention and Installation, Maintenance, and Safety Control of Fire-Fighting Systems, with the exception of its subparagraphs.
(2) “Fire-fighting related commodities prescribed by Presidential Decree” in Article 25 (1) 5 (a) of the Act means the fire engines prescribed by Ordinance of the Ministry of Economy and Finance, excluding chemical fire engines that shall be kept available by a person responsible for a place of business for which a fire brigade shall be organized under Article 19 of the Act on the Safety Control of Hazardous Substances.
(3) "Industrial disaster prevention facilities prescribed by Presidential Decree" in Article 25 (1) 5 (b) of the Act means facilities prescribed by Ordinance of the Ministry of Economy and Finance among any of the following facilities:
1. Industrial accident prevention facilities installed under the Occupational Safety and Health Act;
2. Facilities for keeping safety of gas supply facilities under the Urban Gas Business Act;
3. Facilities for keeping safety of facilities handling toxic chemicals under the Chemicals Control Act.
(4) "Mining safety facilities prescribed by Presidential Decree" in Article 25 (1) 5 (c) of the Act means mining safety facilities prescribed by Ordinance of the Ministry of Economy and Finance.
(5) “Facilities for preventing hazardous elements, prescribed by Presidential Decree” in Article 25 (1) 5 (e) of the Act means inspection equipment, etc. prescribed by Ordinance of the Ministry of Economy and Finance to prevent harmful materials from being mixed with livestock products or food or from polluting them throughout the entire processes of raw material management, treatment, processing, and distribution of the livestock products or food.
(6) “Equipment for preventing illegal transfer of technology, prescribed by Presidential Decree” in Article 25 (1) 5 (f) of the Act means equipment prescribed by Ordinance of the Ministry of Economy and Finance to prevent illegal transfer of technology, such as information protection system and equipment.
(7) “Facilities for developing overseas resources, prescribed by Presidential Decree” in Article 25 (1) 5 (g) of the Act means drilling and mining equipment, etc. prescribed by Ordinance of the Ministry of Economy and Finance, which are used by an overseas resources development business operator under the Overseas Resources Development Business Act to explore overseas mineral resources.
(8) “Facilities for reinforcing earthquake-resistant structures, prescribed by Presidential Decree” in Article 25 (1) 5 (h) of the Act means facilities prescribed by Ordinance of the Ministry of Economy and Finance to reinforce earthquake resistance of any of the following buildings (limited to the buildings defined in Article 2 (1) 2 of the Building Act; hereafter in this paragraph, the same shall apply) to meet the standards prescribed by Ordinance of the Ministry of Economy and Finance:
1. A building not subject to an examination of its structural safety under Article 48 (2) of the Building Act;
2. A building not subject to an examination of its structural safety under the statutes or regulations in effect as at the time it is constructed.
[This Article Newly Inserted by Presidential Decree No. 29527, Feb. 12, 2019]
 Article 22-6 (Scope of Facilities for Improving Productivity)
(1) “Facilities for improving and automating process, prescribed by Presidential Decree” in Article 25 (1) 6 (a) of the Act means facilities prescribed by Ordinance of the Ministry of Economy and Finance in which investment is made to improve process or to automate and informatize facilities.
(2) “High-technology facilities prescribed by Presidential Decree” in Article 25 (1) 6 (b) of the Act means facilities manufactured using or applying high-technology, which are prescribed by Ordinance of the Ministry of Economy and Finance.
[This Article Newly Inserted by Presidential Decree No. 29527, Feb. 12, 2019]
 Article 22-7 (Methods for Calculating Tax Credits for Investment in Specific Facilities)
(1) Article 4 (3) shall apply mutatis mutandis to the calculation of investment amount under Article 25 (4) of the Act.
(2) Where the national housing under Article 25 (1) 4 (a) of the Act and any other house are acquired all together or where a dormitory referred to in item (b) of the same subparagraph and any other building are acquired all together, the amount of tax credit under paragraph (5) of the same Article shall be calculated by the following formula:
Acquisition cost of the relevant housing, etc. x Reduction rate under Article 25 (2) of the Act x (Total floor area of the leased national houses or dormitories for employees who are non-homeowners ÷ Total floor area of housing, etc.)
(3) A person who wishes to be granted a tax credit for investments under Article 25 (1) of the Act shall file an application for tax credits in the form prescribed by Ordinance of the Ministry of Economy and Finance, with the head of the tax office having jurisdiction over the place of tax payment, along with his/her tax return for the taxable year (referring to each taxable year in which the relevant investment is made, where the person wishes to be granted a tax credit under Article 25 (3) of the Act; hereafter in Article 22-8 (3), the same shall apply) in which the completion date of the investments (referring to the acquisition date, if any facility referred to in Article 25 (1) 4 of the Act is acquired) falls.
(4) An additional amount equivalent to interest referred to in Article 25 (7) of the Act shall be calculated by multiplying the amount of tax credit by the period of subparagraph 1 and the rate of subparagraph 2:
1. The period from the day following the filing date of the tax return for the tax-deducted taxable year, until the filing date of the tax return for the taxable year in which the ground specified in Article 25 (7) of the Act arises;
2. 25/100,000 per day.
[This Article Newly Inserted by Presidential Decree No. 29527, Feb. 12, 2019]
 Article 22-8 (Scope of Facilities to Improve Quality Control of Medical Supplies)
(1) "Facilities to improve the quality control of medical supplies prescribed by Presidential Decree" in the former part of Article 25-4 (1) of the Act means the facilities prescribed by Ordinance of the Ministry of Economy and Finance to manufacture or supply medical supplies of outstanding quality. <Amended by Presidential Decree No. 20720, Feb. 29, 2008>
(2) "Middle-standing enterprise prescribed by Presidential Decree" in the former part of Article 25-4 (1) of the Act means a middle-standing enterprise provided for in Article 4 (1). <Newly Inserted by Presidential Decree No. 25211, Feb. 21, 2014; Presidential Decree No. 29527, Feb. 12, 2019>
(3) A person who wishes to be granted a tax credit under Article 25-4 (1) of the Act shall submit an application for tax credit stipulated by Ordinance of the Ministry of Economy and Finance, along with a tax return in the taxable year in which he/she completes investment, to the head of a tax office having jurisdiction over the place of tax payment. <Amended by Presidential Decree No. 20720, Feb. 29, 2008>
[This Article Newly Inserted by Presidential Decree No. 20620, Feb. 22, 2008]
 Article 22-9 (Tax Credit for Investment in Facilities for Commercializing New Growth Technologies)
(1) "Facilities for commercializing new growth technologies prescribed by Presidential Decree" in Article 25-5 (1) of the Act, with the exception of its subparagraphs, means business assets provided for in Article 4 (2), which are recognized by the Minister of Trade, Industry and Energy after deliberation by the deliberative committee on new growth engines and source technologies established under Article 9 (10), among facilities for commercializing eligible technologies in the field of new growth engines and source technology listed in attached Table 7, as prescribed by Ordinance of the Ministry of Economy and Finance. <Amended by Presidential Decree No. 29527, Feb. 12, 2019>
(2) "Middle-standing enterprise prescribed by Presidential Decree" in Article 25-5 (1) of the Act, with the exception of its subparagraphs, means a middle-standing enterprise provided for in Article 4 (1). <Amended by Presidential Decree No. 29527, Feb. 12, 2019>
(3) The amount invested under Article 25-5 (1) of the Act shall be the amount of subparagraph 1 minus the amount of subparagraph 2:
1. The greater of the amount calculated by multiplying the total amount invested, by the progress rate of work referred to in Article 69 (1) of the Enforcement Decree of the Corporate Tax Act, and the amount actually spent by the relevant taxable year;
2. The aggregate of the following amounts:
(a) The amount invested, subject to Article 25-5 of the Act before the relevant taxable year;
(b) The amount calculated by applying mutatis mutandis subparagraph 1 to the portion invested before the relevant taxable year, except the amount of item (a).
(4) "Research and development expenses for new growth engines and source technologies, etc. shall meet the requirements prescribed by Presidential Decree" in Article 25-5 (1) 1 of the Act means that either of the following requirements shall be met: <Amended by Presidential Decree No. 29527, Feb. 12, 2019>
1. The ratio of research and development expenses incurred for new growth engines and source technologies to the total expenses for research and human resources development during the taxable year (referring to the relevant taxable year, if the investment is commenced in the taxable year in which the enterprise is incorporated) immediately preceding the taxable year in which the relevant investment began, shall be at least 10/100;
2. The relevant enterprise shall hold a patent first created and registered as a result of its own research and development of the eligible technology in any field of new growth engines and source technologies, as prescribed by Ordinance of the Ministry of Economy and Finance.
(5) The amount of income tax or corporate tax payable under Article 25-5 (2) 1 of the Act shall be calculated as follows (the amounts of subparagraphs 1 and 2 (referring to the aggregate of items (a) and (b)) shall not exceed the aggregate of tax credits granted under Articles 25-5 and 144 (4) of the Act within the two taxable year immediately preceding the taxable year in which the number of full-time employees decreased)); and such amount shall be paid as income tax or corporate tax, at the time of filing the tax return for the taxable year in which the number of full-time employees decreased:
1. Where the number of full-time employees decreased only in one taxable year: The decreased number of full-time employees between the relevant taxable year and the tax-credit granted taxable year under Article 25-5 (1) or 144 (4) of the Act (referring to the second taxable year, if tax credits were granted for two consecutive taxable years) × Ten million won;
2. Where the number of full-time employees decreased for two consecutive taxable years:
(a) The first taxable year in which the number of full-time employees decreased: The amount calculated under subparagraph 1;
(b) The second taxable year in which the number of full-time employees decreased: The decreased number of full-time employees between the relevant taxable year and the immediately preceding taxable year × Ten million won.
(6) For the purposes of Article 25-5 (1) and (2) of the Act, Article 23 (10) through (13) shall apply mutatis mutandis to the scope of full-time employees and the method for calculating the number of full-time employees.
(7) The additional amount equivalent to interest, which shall be added in cases falling under Article 25-5 (2) 2 of the Act shall be calculated by multiplying the amount of tax credit by the period of subparagraph 1 and the rate of subparagraph 2: <Amended by Presidential Decree No. 29527, Feb. 12, 2019>
1. The period from the day following the date for filing the tax return for the tax-credit granted taxable year, until the date for filing the tax return for the taxable year in which a ground specified in Article 25-5 (2) 2 of the Act arises;
2. 25/100,000 per day.
(8) For the purposes of paragraphs (1), (3), and (4), the commencement date of an investment provided for in Article 23 (14) shall be deemed the commencement date of an investment.
(9) A person who wishes to be granted a tax credit under Article 25-5 (1) of the Act shall file an application for tax credits in the form prescribed by Ordinance of the Ministry of Economy and Finance, with the head of the tax office having jurisdiction over the place of tax payment, along with his/her tax return.
[This Article Newly Inserted by Presidential Decree No. 27848, Feb. 7, 2017]
 Article 22-10 (Tax Credit for Production Costs of Video Content)
(1) "National prescribed by Presidential Decree" in Article 25-6 (1) of the Act, with the exception of its subparagraphs, means a producer of cinematographic works defined in subparagraph 14 of Article 2 of the Copyright Act, who meets the requirements prescribed by Ordinance of the Ministry of Economy and Finance.
(2) "Broadcast programs or motion pictures prescribed by Presidential Decree" in Article 25-6 (1) of the Act, with the exception of its subparagraphs, means any of the following (hereafter in this Article, referred to as "video content"):
1. A drama, etc. prescribed by Ordinance of the Ministry of Economy and Finance (hereafter in this Article, referred to as "drama, etc."), which has been broadcast through the television channel of a broadcasting business operator defined in subparagraph 3 of Article 2 of the Broadcasting Act, among broadcast programs defined in subparagraph 17 of Article 2 of the same Act;
2. A motion picture defined in subparagraph 1 of Article 2 of the Promotion of the Motion Pictures and Video Products Act, screened repeatedly for a certain period at a movie theater (hereafter in this Article, referred to as "motion picture"), as prescribed by Ordinance of the Ministry of Economy and Finance.
(3) "Cost prescribed by Presidential Decree" in Article 25-6 (1) of the Act, with the exception of its subparagraphs, means the cost prescribed by Ordinance of the Ministry of Economy and Finance (hereafter in this Article, referred to as "production costs of video content"), including the labor cost for persons participating in the production of the video content: Provided, That the following costs and expenses shall be excluded herefrom:
1. The amount of assets received as contributions, etc. from the State, a local government, a public institution under the Act on the Management of Public Institutions, or a local public enterprise under the Local Public Enterprises Act, and used as the production costs of video content;
2. The expenses prescribed by Ordinance of the Ministry of Economy and Finance, including the production costs spent abroad.
(4) "Middle-standing enterprise prescribed by Presidential Decree" in Article 25-6 (1) of the Act, with the exception of its subparagraphs, means a middle-standing enterprise provided for in Article 4 (1). <Amended by Presidential Decree No. 29527, Feb. 12, 2019>
(5) If a drama, etc. is broadcast in series over several taxable years, tax credits may be granted to the production costs calculated as prescribed by Ordinance of the Ministry of Economy and Finance.
(6) A person who wishes to be granted a tax credit under Article 25-6 (1) of the Act shall file an application for tax credits in the form prescribed by Ordinance of the Ministry of Economy and Finance, with the head of the tax office having jurisdiction over the place of tax payment, along with his/her tax return for the taxable year classified as follows:
1. In cases of a drama, etc.: The taxable year in which it is first broadcast through the television channel: Provided, That it means each taxable year in which the drama, etc. is broadcast in cases falling under paragraph (5);
2. In cases of a motion picture: The taxable year in which it premieres in a movie theater.
[This Article Newly Inserted by Presidential Decree No. 27848, Feb. 7, 2017]
 Article 22-11 (Tax Credits for Investment in Facilities for Constructing Hyper-Connected Networks)
(1) "Facilities for the fifth generation mobile telecommunication base stations prescribed by Presidential Decree" in Article 25-7 (1) of the Act means exchange facilities, transmission facilities, and power supply facilities among the telecommunication equipment and facilities referred to in Article 8 of the Regulations on Accounting and Reporting of Telecommunications Business (hereafter in this Article, referred to as "base station facilities"), which are equipment and facilities necessary to operate the fifth generation mobile telecommunication base stations (including exchange facilities linked therewith) to which the technologies specified in subparagraph 6 (a) (i) and (ii) of attached Table 7 are applied.
(2) The amount of investment referred to in Article 27-5 (1) of the Act means the purchase price (including public charges and taxes) of base station facilities in the relevant taxable year.
(3) In applying the ratio calculated by the formula prescribed in Article 25-7 (1) of the Act, if the number of full-time employees in the relevant taxable year is smaller than the number of full-time employees in the immediately preceding taxable year, the number calculated by subtracting the number of full-time employees in the immediately preceding taxable year from the number of full-time employees in the relevant taxable year shall be deemed nil.
(4) The fraction of less than 1/10,000 of the ratio calculated by the formula prescribed in Article 25-7 (1) of the Act shall be deemed nil.
(5) Article 23 (10) through (13) shall apply mutatis mutandis to the scope of full-time employees and the method for calculating the number of full-time employees under Article 25-7 (1) of the Act.
(6) The additional amount equivalent to interest under Article 25-7 (2) of the Act shall be calculated by multiplying the amount of tax credit by the period of subparagraph 1 and the rate of subparagraph 2:
1. The period from the day following the date for filing the tax return for the tax-credit granted taxable year, until the date for filing the tax return for the taxable year in which a ground specified in Article 25-7 (2) of the Act arises;
2. 25/100,000 per day.
(7) A person who wishes to be eligible under Article 25-7 (1) of the Act shall file an application for tax credits in the form prescribed by Ordinance of the Ministry of Economy and Finance with the head of the tax office having jurisdiction over the place of tax payment, along with his/her tax return for the relevant taxable year.
[This Article Newly Inserted by Presidential Decree No. 29527, Feb. 12, 2019]
 Article 23 (Tax Credits for Employment-Creating Investment)
(1) "Investment prescribed by Presidential Decree" in the main sentence of Article 26 (1) of the Act, with the exception of its subparagraphs, means an investment made by a national who engages in any business activities other than the consumer service businesses specified in Article 29 (3), to acquire a new facility that is one of the business assets prescribed by Ordinance of the Ministry of Economy and Finance (hereafter in this Article, referred to as "business asset") and to use it for the relevant business. <Amended by Presidential Decree No. 27848, Feb. 7, 2017>
(2) The amount invested under Article 26 (1) of the Act shall be the amount of subparagraph 1 minus the amount of subparagraph 2: <Amended by Presidential Decree No. 23590, Feb. 2, 2012>
1. The greater of the amount calculated by multiplying the total amount invested, by the progress rate of work referred to in Article 69 (1) of the Enforcement Decree of the Corporate Tax Act, and the amount actually spent by the relevant taxable year;
2. The aggregate of the following amounts:
(a) The amount invested, subject to Article 26 (1) 1 of the Act before the relevant taxable year;
(b) The amount calculated by applying mutatis mutandis subparagraph 1 to the portion invested before the relevant taxable year, except the amount of item (a).
(3) “Middle-standing enterprise prescribed by Presidential Decree” in Article 26 (1) 1 of the Act, with the exception of its items, means a middle-standing enterprise provided for in Article 4 (1). <Newly Inserted by Presidential Decree No. 26070, Feb. 3, 2015; Presidential Decree No. 29527, Feb. 12, 2019>
(4) "Service businesses prescribed by Presidential Decree" in the main sentence of Article 26 (1) 2 of the Act, with the exception of its items, means any business (hereafter in this Article, referred to as "service businesses"), except the following: <Newly Inserted by Presidential Decree No. 26070, Feb. 3, 2015; Presidential Decree No. 27127, May 10, 2016; Presidential Decree No. 27848, Feb. 7, 2017>
1. Agriculture, forestry, and fisheries;
2. Mining;
3. Manufacturing;
4. Electricity, gas, steam, and water supply;
5. Construction;
6. Consumer service businesses provided for in Article 29 (3).
(5) "Schools prescribed by Presidential Decree" in Article 26 (1) 2 (a) of the Act means the following schools (hereinafter referred to as "high schools, etc. aligned to industry demand"): <Amended by Presidential Decree No. 23590, Feb. 2, 2012; Presidential Decree No. 25211, Feb. 21, 2014; Presidential Decree No. 26070, Feb. 3, 2015>
3. Various kinds of schools defined in subparagraph 5 of Article 2 of the Elementary and Secondary Education Act (limited to schools that provide curricula for vocational education, among alternative schools defined in Article 60-3 of the same Act, and schools that provide curricula for vocational education under entrustment to students enrolled in general high schools defined in subparagraph 1 of Article 76-2 of the Enforcement Decree of the same Act).
(6) For the purposes of Article 26 (1) 2 of the Act, where a national engaging in at least two different businesses, acquires a business asset that may be used for both a service business and any other business, the business asset shall be deemed a business asset for the business for which the asset is mainly used. <Newly Inserted by Presidential Decree No. 26070, Feb. 3, 2015; Presidential Decree No. 27848, Feb. 7, 2017>
(7) The number of graduates from high schools, etc. aligned to industry demand mentioned in Article 26 (1) 2 (a) of the Act shall be determined with the number of full-time employees who have signed an employment contract before the lapse of two years since they graduated from high schools, etc. aligned to industry demand (the maximum number of such workers shall be calculated by subtracting the number of full-time employees in the immediately preceding taxable year from that number of full-time employees in the relevant taxable year). <Amended by Presidential Decree No. 23590, Feb. 2, 2012; Presidential Decree No. 26070, Feb. 3, 2015>
(8) The number of youth employees, employees with disabilities, and employees aged at least 60, as referred to in Article 26 (1) 2 (b) of the Act shall be calculated as follows: <Amended by Presidential Decree No. 25211, Feb. 21, 2014; Presidential Decree No. 26070, Feb. 3, 2015>
1. Number of youth employees: The number of full-time employees (the maximum number of such employees shall be calculated by subtracting the number of full-time employees in the immediately preceding taxable year and the number of graduates from high schools, etc. aligned to industry demand under paragraph (7), from the number of full-time employees in the relevant taxable period) between the ages of 15 and 29 on the date an employment contract is entered into: Provided, That, if a person has performed the military service specified in any item of Article 27 (1) 1, and his age calculated by subtracting the period of such military service (which shall not exceed six years) from his age as on the date an employment contract is entered into, does not exceed 29 years, the person shall be deemed a youth;
2. Number of employees with disabilities: The aggregate of the number of full-time employees with disabilities subject to the Act on Welfare of Persons with Disabilities, and the number of full-time employees who are wounded persons under the Act on the Honorable Treatment of and Support for Persons of Distinguished Service to the State (the maximum number of such employees shall be calculated by subtracting the number of full-time employees in the immediately preceding taxable year, the number of graduates from high schools, etc. aligned to industry demand under paragraph (7), and the number of youth employees referred to in subparagraph 1, from the number of full-time employees in the relevant taxable period);
3. Number of employees aged at least 60: The number of full-time employees who are aged at least 60 on the date an employment contract is entered into (the maximum number of such employees shall be calculated by subtracting the number of full-time employees in the immediately preceding taxable year, the number of graduates from high schools, etc. aligned to industry demand under paragraph (7), the number of youth employees referred to in subparagraph 1, and the number of employees with disabilities referred to in subparagraph 2, from the number of full-time employees in the relevant taxable period).
(9) The amount of income tax or corporate tax payable under Article 26 (6) of the Act shall be calculated as follows (the amounts of subparagraphs 1 and 2 (referring to the aggregate of items (a) and (b)) shall not exceed the aggregate of tax credits granted under Articles 26 (1) 2 and 144 (3) of the Act within the immediately preceding two taxable years to the taxable year in which the number of full-time employees decreased); and such amount shall be paid as income tax or corporate tax, at the time of filing the tax return for the taxable year in which the number of full-time employees decreased: <Newly Inserted by Presidential Decree No. 22583, Dec. 30, 2010; Presidential Decree No. 23590, Feb. 2, 2012; Presidential Decree No. 26070, Feb. 3, 2015>
1. Where the number of full-time employees decreased only in one taxable year: The number of full-time employees decreased compared to that in the tax-credit granted taxable year under Article 26 (1) 2 or 144 (3) of the Act (referring to the second taxable year, if tax credits were granted for two consecutive taxable years) × Ten million won;
2. Where the number of full-time employees decreased for two consecutive taxable years:
(a) The first taxable year in which the number of full-time employees decreased: An amount calculated under subparagraph 1;
(b) The second taxable year in which the number of full-time employees decreased: The decreased number of full-time employees between the immediately preceding taxable year and the relevant taxable year × Ten million won.
(10) For the purposes of paragraphs (7) through (9), full-time employees shall be nationals who have enter into an employment contract under the Labor Standards Act: Provided, That the following persons shall be excluded herefrom: <Newly Inserted by Presidential Decree No. 23590, Feb. 2, 2012; Presidential Decree No. 24077, Aug 31, 2012; Presidential Decree No. 26070, Feb. 3, 2015; Presidential Decree No. 28636, Feb. 13, 2018; Presidential Decree No. 29527, Feb. 12, 2019>
1. Any worker whose employment contract is for less than one year: Provided, That workers whose employment contract exceeds one year in total as a consequence of consecutive renewal of the employment contrAct shall be deemed full-time employees;
2. Part-time workers defined in Article 2 (1) 9 of the Labor Standards Act: Provided, That workers who work at least 60 hours for one month, shall be deemed full-time employees;
3. Executive officers specified under subparagraphs of Article 40 (1) of the Enforcement Decree of the Corporate Tax Act;
4. The largest stockholder or largest investor (referring to the representative in cases of a sole proprietor) of the relevant enterprise and his/her spouse;
5. Lineal ascendants and descendants (including their spouses) of the persons referred to in subparagraph 4, and relatives defined in Article 1-2 (1) of the Enforcement Decree of the Framework Act on National Taxes, of such persons;
6. Persons regarding whom it is not confirmed whether income tax on earned income has ever been withheld by earned income withholding register under Article 196 of the Enforcement Decree of the Income Tax Act, and whether they have ever paid either of the following:
(a) Charges and contributions under Article 3 (1) 11 and 12 of the National Pension Act;
(b) Premiums of employer-provided policy-holders under Article 69 of the National Health Insurance Act.
(11) For the purposes of paragraphs (7) and (8), the number of full-time employees shall be calculated by the formula provided for in subparagraph 1. In such cases, one worker provided for in the proviso to paragraph (10) 2 shall be calculated as 0.5 person; where all of the requirements for support provided for in the items of subparagraph 2 are met, one worker shall be calculated as 0.75 person: <Amended by Presidential Decree No. 25211, Feb. 21, 2014; Presidential Decree No. 26070, Feb. 3, 2015; Presidential Decree No. 26959, Feb. 5, 2016>
1. Formula:
Number of full-time employees = Sum of the number of full-time employees as at the end of each month in the relevant taxable year ÷ the number of months in the relevant taxable year
2. Requirements for support:
(a) The number of full-time employees in the relevant taxable year (excluding the workers provided for in the proviso to paragraph (10) 2) shall not be decreased as compared with that in the immediately preceding taxable year (excluding the workers provided for in the proviso to paragraph (10) 2);
(b) They shall have entered into an indefinite employment contract;
(c) They shall not be given discriminatory treatment defined in subparagraph 3 of Article 2 of the Act on the Protection of Fixed-Term and Part-Time Workers, in their hourly wages (including wages defined in Article 2 (1) 5 of the Labor Standards Act, regularly paid bonuses, such as regular bonuses and holiday bonuses, and performance-based incentives) and other matters concerning the terms and conditions of employment, welfare, etc.;
(d) The hourly wage shall be at least 130/100 (or 120/100, in cases of a small or medium enterprise) of the minimum wage prescribed under Article 5 of the Minimum Wage Act.
(12) The fraction of less than 1/100 of the number of full-time employees calculated under paragraph (11) shall be deemed nil. <Newly Inserted by Presidential Decree No. 23590, Feb. 2, 2012; Presidential Decree No. 26070, Feb. 3, 2015>
(13) For the purposes of paragraphs (7) and (8), if a national starts a business, etc. in the relevant taxable year, the number according to the following classification shall be deemed the number of full-time employees in the immediately preceding taxable year or relevant taxable year: <Newly Inserted by Presidential Decree No. 23590, Feb. 2, 2012; Presidential Decree No. 24368, Feb. 15, 2013; Presidential Decree No. 25211, Feb. 21, 2014; Presidential Decree No. 26070, Feb. 3, 2015; Presidential Decree No. 28636, Feb. 13, 2018; Presidential Decree No. 29527, Feb. 12, 2019>
1. Number of full-time employees in the immediately preceding taxable year where the national starts a business (excluding cases falling under Article 6 (10) 1 through 3 of the Act): 0;
2. Number of full-time employees in the immediately preceding taxable year in any case falling under Article 6 (10) 1 (excluding succession to a previous business through a merger, split-off, investment in kind, or acquisition of business) through 3 of the Act: Number of full-time employees in the immediately preceding taxable year of the previous business, business before conversion into a corporation, or business before closure of business;
3. Number of full-time employees in the immediately preceding taxable year or relevant taxable year in either of the following cases: In cases of an enterprise that has transferred the business, the number calculated by deducting the number of full-time employees transferred by succession from the number of full-time employees in the immediately preceding taxable year; and in cases of an enterprise that has acquired the business, the number calculated by adding the number of full-time employees by succession to the number of full-time employees of an enterprise succeeded in the immediately preceding taxable year; and the number of full-time employees in the relevant taxable year shall be the number of full-time employees calculated by deeming the full-time employees have been transferred or acquired by succession on the date the relevant taxable year commences:
(a) Where such enterprise takes over full-time employees engaging in the previous business division by a merger, a split-off, an investment in kind, a transfer of business, or any similar event in the relevant taxable year;
(b) Where such enterprise takes over full-time employees from any related party referred to in Article 11 (1).
(14) For the purposes of paragraphs (1) and (2), the commencement date of an investment shall be any of the following applicable dates: <Amended by Presidential Decree No. 21064, Oct. 7, 2008; Presidential Decree No. 21545, Jun. 19, 2009; Presidential Decree No. 22037, Feb. 18, 2010; Presidential Decree No. 22583, Dec. 30, 2010; Presidential Decree No. 23590, Feb. 2, 2012>
1. The date a person placing an order sends the first order sheet when placing orders under a domestic or international manufacturing contract;
2. The date a down payment or a part of prices is paid (the date facilities are actually taken over, if such facilities have been taken over before a down payment or a part of prices is paid) where the purchases are made not by the order referred to in subparagraph 1, but under a sales and purchase agreement;
3. The date an import license is obtained where a license is to be obtained to import the relevant facilities, notwithstanding subparagraphs 1 and 2;
4. The date construction or manufacturing is actually started where he/she directly engages in construction or manufacturing. In such cases, those for the validity of business and preliminary preparation thereof shall not imply the time such construction or manufacturing is started;
5. The date construction is actually started where construction is entrusted to any third person. In such cases, those for the validity of business and preliminary preparation thereof shall not imply the time when such construction is started.
(15) Any person who wishes to be granted a tax credit under Article 26 (1) of the Act shall file an application for tax credits and a statement of calculation of tax credits in the forms prescribed by Ordinance of the Ministry of Economy and Finance, with the head of a tax office having jurisdiction over the place of tax payment, along with his/her tax return. <Amended by Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 23590, Feb. 2, 2012>
(16) Any person who wishes to be granted a tax credit under Article 26 (2) of the Act shall submit an application for tax credits in the form prescribed by Ordinance of the Ministry of Economy and Finance, to the head of a tax office having jurisdiction over the place of tax payment, when making an interim tax prepayment. <Newly Inserted by Presidential Decree No. 17336, Aug. 14, 2001; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 22583, Dec. 30, 2010; Presidential Decree No. 23590, Feb. 2, 2012; Presidential Decree No. 27848, Feb. 7, 2017>
(17) Any person who wishes to file a return of an interim tax prepayment under Article 26 (3) of the Act shall submit an application for tax credits and a return of the interim tax pre-payment in the forms prescribed by Ordinance of the Ministry of Economy and Finance, to the head of a tax office having jurisdiction over the place of tax payment. <Newly Inserted by Presidential Decree No. 17336, Aug. 14, 2001; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 22583, Dec. 30, 2010; Presidential Decree No. 23590, Feb. 2, 2012; Presidential Decree No. 27848, Feb. 7, 2017>
(18) Paragraphs (2) through (17) shall also apply mutatis mutandis to investments made under paragraph (1) in the Gaeseong industrial district defined in subparagraph 1 of Article 2 of the Act on the Support of Gaeseong Industrial District. <Newly Inserted by Presidential Decree No. 20743, Mar. 10, 2008; Presidential Decree No. 21545, Jan. 19, 2009; Presidential Decree No. 26070, Feb. 3, 2015>
 Articles 24 through 24-3 Deleted. <by Presidential Decree No. 17034, Dec. 29, 2000>
 Article 25 (Special Taxation for Including Depreciation Cost of Service Businesses in Deductible Expenses)
(1) “Service businesses prescribed by Presidential Decree” in Article 28 (1) of the Act, with the exception of its subparagraphs, means the service businesses specified in Article 23 (4).
(2) “Fixed assets prescribed by Presidential Decree” in Article 28 (1) of the Act, with the exception of its subparagraphs, means the assets specified in Article 28 (6) of the Enforcement Decree of the Corporate Tax Act and the subparagraphs of Article 63 (5) of the Enforcement Decree of the Income Tax Act (hereafter in this Article, referred to as "assets invested in plant and equipment").
(3) “Amount calculated by the formula prescribed by Presidential Decree” in Article 28 (1) of the Act, with the exception of its subparagraphs, means an amount (hereafter in this Article, referred to as “allowable limit for depreciation”) calculated by the method described in Article 26 (1) of the Enforcement Decree of the Corporate Tax Act or Article 64 (1) of the Enforcement Decree of the Income Tax Act (hereafter in this Article, referred to as “depreciation method”) based on the reported service life under paragraph (4), notwithstanding the main sentence of Article 28 (1) 2 of the Enforcement Decree of the Corporate Tax Act and Article 63 (1) 2 of the Enforcement Decree of the Income Tax Act. In such cases, the depreciation method shall be based on the method reported by the relevant national in accordance with Article 26 (3) of the Enforcement Decree of the Corporate Tax Act or Article 64 (2) of the Enforcement Decree of the Income Tax Act; and Article 26 (2) and (4) through (9) of the Enforcement Decree of the Corporate Tax Act and the latter part of Article 62 (1), Articles 64 (3) and (4), 66, and 71 of the Enforcement Decree of the Income Tax Act shall apply mutatis mutandis to the methods for applying the deprecation methods and calculating a specific allowable limit for depreciation.
(4) The service life applicable to calculating the allowable limit for depreciation shall be the number of useful years (hereafter in this Article, referred to as “reported service life”) that the relevant national chooses within the range (a fraction of less than one year shall be deemed nil) determined by adding or subtracting 40/100 of the number of the standard service life specified in Article 26-3 (2) 1 of the Enforcement Decree of the Corporate Tax Act or Article 63 (1) 2 of the Enforcement Decree of the Income Tax Act (hereafter in this Article, referred to as “standard service life”) to or from the standard service life and reports to the head of the tax office having jurisdiction over the place of tax payment. If the business year of a corporation is less than one year in such cases, Article 28 (2) of the Enforcement Decree of the Corporate Tax Act shall apply mutatis mutandis to the calculation of the service life.
(5) A national shall continue to apply the reported service life which has been applied to each type of asset invested in plant and equipment and each type of business under paragraph (4), to subsequent taxable years.
(6) Article 23 (2) of the Corporate Tax Act shall not apply to the assets invested in plant and equipment eligible under Article 28 (1) of the Act; and Article 29-2 (2) 1 of the Enforcement Decree of the Corporate Tax Act shall apply only where the merging corporation, the corporation newly established as a consequence of a split-off, or the other corporation subject to a merger by division, engages in any of the businesses referred to in paragraph (1), and uses such assets for the relevant business, if the corporation acquires such assets through a qualified merger or a qualified split-off. <Amended by Presidential Decree No. 28636, Feb. 13, 2018>
(7) Where a national changes the depreciation method pursuant to Article 27 of the Enforcement Decree of the Corporate Tax Act or Article 65 of the Enforcement Decree of the Income Tax Act, the national shall calculate the allowable limit for depreciation for assets invested in plant and equipment by applying the changed depreciation method. In such cases, Article 27 (5) and (6) of the Enforcement Decree of the Corporate Tax Act and Articles 64 (5) and 65 (5) of the Enforcement Decree of the Income Tax Act shall apply mutatis mutandis to the method for calculating the allowable limit for depreciation.
(9) A person who intends to be accorded special taxation under Article 28 (1) of the Act shall separate assets invested in plant and equipment from other assets; prepare and keep statements of adjustment of depreciation cost in the form prescribed by Ordinance of the Ministry of Economy and Finance; submit a sum table of statements of adjustment of depreciation cost and statements of adjustment of depreciation cost in the forms prescribed by Ordinance of the Ministry of Economy and Finance, to the head of the tax office having jurisdiction over the place of tax payment, along with a tax return; and file an application for special taxation for service life in the form prescribed by Ordinance of the Ministry of Economy and Finance, with the head of the tax office having jurisdiction over the place of tax payment, by the deadline for filing a tax return for the taxable year in which the person acquires such assets invested in plant and equipment (including filing through the national tax information communications network under subparagraph 19 of Article 2 of the Framework Act on National Taxes (hereinafter referred to as the “Home Tax Service Network”)).
(10) Except as provided in paragraphs (1) through (9), matters necessary for calculating the depreciation cost of assets invested in plant and equipment, shall be prescribed by Ordinance of the Ministry of Economy and Finance.
[This Article Newly Inserted by Presidential Decree No. 26070, Feb. 3, 2015]
 Article 25-2 (Special Taxation for Including Depreciation Cost of Assets Invested in Plant and Equipment of Small or Medium and Middle-Standing Enterprises in Deductible Expenses)
(1) "Middle-standing enterprise prescribed by Presidential Decree" in Article 28-2 (1) of the Act means a middle-standing enterprise provided for in Article 4 (1) (hereafter in this Article, referred to as "middle-standing enterprise"). <Amended by Presidential Decree No. 29527, Feb. 12, 2019>
(2) "Fixed assets prescribed by Presidential Decree" in Article 28-2 (1) of the Act means the assets specified under Article 28 (6) of the Enforcement Decree of the Corporate Tax Act or Article 63 (5) of the Enforcement Decree of the Income Tax Act (hereafter in this Article, referred to as "assets invested in plant and equipment").
(3) "Amount calculated, as prescribed by Presidential Decree" in Article 28-2 (1) of the Act means an amount (hereafter in this Article, referred to as “allowable limit for depreciation”) calculated by the method prescribed in Article 26 (1) of the Enforcement Decree of the Corporate Tax Act or Article 64 (1) of the Enforcement Decree of the Income Tax Act (hereafter in this Article, referred to as "depreciation method") by applying the reported service life under paragraph (4), notwithstanding the main sentence of Article 28 (1) 2 of the Enforcement Decree of the Corporate Tax Act or Article 63 (1) 2 of the Enforcement Decree of the Income Tax Act. In such cases, Article 26 (2) through (9) of the Enforcement Decree of the Corporate Tax Act and the latter part of Article 62 (1), Articles 64 (2) through (4), 66, and 71 of the Enforcement Decree of the Income Tax Act shall apply mutatis mutandis to the methods for applying the depreciation method and calculating a specific allowable limit for depreciation.
(4) The service life applicable to calculating the allowable limit for depreciation shall be the service life that a small or medium enterprise or a middle-standing enterprise chooses within a range (a period of less than one year shall be deemed nil) determined by adding or subtracting 50/100 of the standard service life to/from the standard service life under Article 26-3 (2) 1 of the Enforcement Decree of the Corporate Tax Act or Article 63 (1) 2 of the Enforcement Decree of the Income Tax Act (hereafter in this Article, referred to as "standard service life") and reports to the head of the tax office having jurisdiction over the place of tax payment. If the business year of a corporation is less than one year in such cases, the service life shall be calculated by applying mutatis mutandis Article 28 (2) of the Enforcement Decree of the Corporate Tax Act.
(5) The service life that a small or medium enterprise or a middle-standing enterprise applies to assets invested in plant and equipment for each asset and for each type of business in accordance with paragraph (4), shall be continuously applied to subsequent taxable years.
(6) Article 23 (2) of the Corporate Tax Act shall not apply to assets invested in plant and equipment subject to Article 28-2 (1) of the Act; and Article 29-2 (2) 1 of the Enforcement Decree of the Corporate Tax Act shall apply to such assets invested in plant and equipment, if they are acquired through a qualified merger or a qualified division. <Amended by Presidential Decree No. 28636, Feb. 13, 2018>
(7) Where a small or medium enterprise or a middle-standing enterprise changes the depreciation method in accordance with Article 27 of the Enforcement Decree of the Corporate Tax Act or Article 65 of the Enforcement Decree of the Income Tax Act, it shall calculate the allowable limit for depreciation for assets invested in plant and equipment by the changed depreciation method. In such cases, Article 27 (5) and (6) of the Enforcement Decree of the Corporate Tax Act and Articles 64 (5) and 65 (5) of the Enforcement Decree of the Income Tax Act shall apply mutatis mutandis to the methods for calculating the allowable limit for depreciation.
(9) A person who wishes to be eligible under Article 28-2 (1) of the Act shall prepare and keep a statement of adjustment of depreciation costs separately for assets invested in plant and equipment from other assets in the form prescribed by Ordinance of the Ministry of Economy and Finance; file (including filing through the Home Tax Service Network; hereafter in this paragraph, the same shall apply) an aggregate table of statements of adjustment of depreciation costs in the form prescribed by Ordinance of the Ministry of Economy and Finance and statements of adjustment of depreciation costs in the form prescribed by Ordinance of the Ministry of Economy and Finance, with the head of the tax office having jurisdiction over the place of tax payment, along with his/her tax return; and file an application for special taxation on the service life in the form prescribed by Ordinance of the Ministry of Economy and Finance, with the head of the tax office having jurisdiction over the place of tax payment, by the deadline for filing the tax return for the taxable year in which the person acquires the relevant assets invested in plant and equipment.
(10) Except as provided in paragraphs (1) through (9), matters necessary for calculating the depreciation costs of assets invested in plant and equipment, shall be prescribed by Ordinance of the Ministry of Economy and Finance.
[This Article Newly Inserted by Presidential Decree No. 27848, Feb. 7, 2017]
 Article 25-3 (Special Taxation for Including Depreciation Cost of Assets Invested in Plant and Equipment)
(1) "Middle-standing enterprise prescribed by Presidential Decree" in Article 28-3 (1) 1 of the Act means a middle-standing enterprise provided for in Article 4 (1).
(2) "Fixed business assets" in Article 28-3 (1) 1 of the Act means any of the following assets:
1. Motor vehicles and transportation equipment: Provided, That they shall be limited to those used for transportation business or lease business for the purpose of lease;
2. Ships and aircraft: Provided, That they shall be limited to those used for transport business or for lease business for the purpose of lease;
3. Tools, instruments and furnishings;
4. Machinery and equipment.
(3) "Investment assets for innovative growth prescribed by Presidential Decree in Article 28-3 (1) 2 of the Act means any of the following facilities:
1. A facility that commercializes the target technologies for each sector of new growth engine and source technology specified in attached Table 7, as prescribed by Ordinance of the Ministry of Economy and Finance, among business assets under Article 4 (2);
2. A facility that falls under any subparagraph of Article 22.
(4) Notwithstanding the main sentence of Article 28 (1) 2 of the Enforcement Decree of the Corporate Tax Act or Article 63 (1) 2 of the Income Tax Act, the amount calculated as prescribed in Article 28-3 (1) of the Act, with the exception of its subparagraphs, shall be the amount calculated by the method prescribed in Article 26 (1) of the Enforcement Decree of the Corporate Tax Act or Article 64 (1) of the Enforcement Decree of the Income Tax Act (hereafter in this Article, referred to as “depreciation method”) based on the reported service life under paragraph (5) (hereafter in this Article, referred to as "allowable limit for depreciation"). In such cases, Article 26 (2) through (9) of the Enforcement Decree of the Corporate Tax Act and the latter part of Article 62 (1), and Articles 64 (2) through (4), 66, and 71 of the Enforcement Decree of the Income Tax Act shall apply mutatis mutandis to the methods for applying depreciation and the detailed methods for calculating the allowable limit for depreciation.
(5) The service life applicable to calculating the allowable limit for depreciation shall be the number of useful years (hereafter in this Article, referred to as “reported service life”) that the relevant national chooses within the range (a fraction of less than one year shall be deemed nil) determined by adding or subtracting 50/100 of the number of the standard service life specified in Article 26-3 (2) 1 of the Enforcement Decree of the Corporate Tax Act or Article 63 (1) 2 of the Enforcement Decree of the Income Tax Act (hereafter in this Article, referred to as “standard service life”) to or from the standard service life and reports to the head of the tax office having jurisdiction over the place of tax payment. If the period of business of a corporation is less than one year, Article 28 (2) of the Enforcement Decree of the Corporate Tax Act shall apply mutatis mutandis to the calculation of the service life.
(6) A national shall continue to apply the reported service life which has been applied to each type of asset invested in plant and equipment and each type of business under paragraph (5), to subsequent taxable years.
(7) Article 23 (2) of the Corporate Tax Act shall not apply to the assets invested in plant and equipment subject to Article 28-3 (1) of the Act; and Article 29-2 (2) 1 of the Enforcement Decree of the Corporate Tax Act shall apply to such assets invested in plant and equipment, if they are acquired through a qualified merger or a qualified division.
(8) Where a national changes the depreciation method pursuant to Article 27 of the Enforcement Decree of the Corporate Tax Act or Article 65 of the Enforcement Decree of the Income Tax Act, the national shall calculate the allowable limit for depreciation for assets invested in plant and equipment by applying the changed depreciation method. In such cases, Article 27 (5) and (6) of the Enforcement Decree of the Corporate Tax Act and Articles 64 (5) and 65 (5) of the Enforcement Decree of the Income Tax Act shall apply mutatis mutandis to the method for calculating the allowable limit for depreciation.
(10) A person who wishes to be applied Article 28-3 (1) of the Act shall separate assets invested in plant and equipment from other assets; prepare and keep statements of adjustment of depreciation cost in the form prescribed by Ordinance of the Ministry of Economy and Finance; submit a sum table of statements of adjustment of depreciation cost and statements of adjustment of depreciation cost in the forms prescribed by Ordinance of the Ministry of Economy and Finance, to the head of the tax office having jurisdiction over the place of tax payment (including filing through the national tax information communications network under subparagraph 19 of Article 2 of the Framework Act on National Taxes; hereafter in this paragraph, the same shall apply), along with a tax return; and file an application for special taxation for service life in the form prescribed by Ordinance of the Ministry of Economy and Finance, with the head of the tax office having jurisdiction over the place of tax payment, by the deadline for filing a tax return for the taxable year in which the person acquires such assets invested in plant and equipment.
(11) Except as provided in paragraphs (1) through (10), matters necessary for calculating the depreciation cost of assets invested in plant and equipment, shall be prescribed by Ordinance of the Ministry of Economy and Finance.
[This Article Newly Inserted by Presidential Decree No. 29527, Feb. 12, 2019]
 Article 26 (Scope of Social Infrastructure Bonds)
(1) "Social infrastructure bonds prescribed by Presidential Decree" in Article 29 of the Act means the infrastructure bonds under Article 58 (1) of the Act on Private Participation in Infrastructure. <Amended by Presidential Decree No. 16693, Jan. 10, 2000; Presidential Decree No. 18704, Feb. 19, 2005; Presidential Decree No. 18736, Mar. 8, 2005; Presidential Decree No. 22037, Feb. 18, 2010>
(2) Deleted. <by Presidential Decree No. 22037, Feb. 18, 2010>
SECTION 4-2 Special Taxation for Employment Support
 Article 26-2 (Tax Credits for Enterprises Having Reinstated Graduates of High Schools Aligned to Industry Demand, after Performing their Military Service)
(1) "Middle-standing enterprise prescribed by Presidential Decree" in Article 29-2 (1) of the Act means a middle-standing enterprise provided for in Article 4 (1). <Newly Inserted by Presidential Decree No. 28636, Feb. 13, 2018; Presidential Decree No. 29527, Feb. 12, 2019>
(2) "Person prescribed by Presidential Decree" in Article 29-2 (1) of the Act means a person who has signed an employment contract before the lapse of two years since the person graduated from a high school, etc. aligned to industry demand; "military service prescribed by Presidential Decree" means any military service specified under Article 27 (1) 1; and "labor cost prescribed by Presidential Decree" means expenses paid as consideration for service provided, excluding the following labor costs: <Amended by Presidential Decree No. 25211, Feb. 21, 2014; Presidential Decree No. 29527, Feb. 12, 2019>
1. The amount of retirement income under Article 22 of the Income Tax Act;
2. The allowances for severance benefits under Article 29 of the Income Tax Act and Article 33 of the Corporate Tax Act;.
3. The amount of charge paid to a retirement pension account under subparagraph 2 of Article 40-2 of the Enforcement Decree of the Income Tax Act and the amount of charge paid to a retirement pension, etc. under Article 44-2 (2) of the Enforcement Decree of the Corporate Tax Act.
(3) A person who wishes to be granted a tax credit under Article 29-2 (1) of the Act shall submit an application for the tax credit in the form prescribed by Ordinance of the Ministry of Economy and Finance, to the head of a tax office having jurisdiction over the place of tax payment, along with his/her tax return.
[This Article Newly Inserted by Presidential Decree No. 24368, Feb. 15, 2013]
 Article 26-3 (Tax Credits for Enterprises Re-Employing Career-Interrupted Women)
(1) "Labor cost prescribed by Presidential Decree" in Article 29-3 (1) of the Act, with the exception of its subparagraphs, and the main sentence of paragraph (2) of the same Article, with the exception of its subparagraphs, means the expenses paid as consideration for service provided, excluding the following labor costs: <Amended by Presidential Decree No. 29527, Feb. 12, 2019>
1. The amount of retirement income under Article 22 of the Income Tax Act;
2. The allowances for severance benefits under Article 29 of the Income Tax Act and Article 33 of the Corporate Tax Act;.
3. The amount of charge paid to a retirement pension account under subparagraph 2 of Article 40-2 of the Enforcement Decree of the Income Tax Act and the amount of charge paid to a retirement pension, etc. under Article 44-2 (2) of the Enforcement Decree of the Corporate Tax Act.
(2) Where it is verified that an enterprise withheld income tax on the earned income of a career-interrupted woman pursuant to Article 29-3 (1) 1 and (2) 1 of the Act shall be limited to where it is verified that the income tax on the earned income of the career-interrupted woman was withheld by the book for tax withholding for wage and salary income defined under Article 196 (1) of the Enforcement Decree of the Income Tax Act. <Amended by Presidential Decree No. 28636, Feb. 13, 2018; Presidential Decree No. 29527, Feb. 12, 2019>
(3) “Pregnancy, childbirth, or child-care, as prescribed by Presidential Decree” in Article 29-3 (1) 2 of the Act means any of the following cases: <Amended by Presidential Decree No. 26959, Feb. 5, 2016>
1. Where a woman becomes pregnant or has an infertility surgery prescribed by Ordinance of the Ministry of Economy and Finance, within two years from the date of her resignation (limited to where the fact the woman has had the infertility surgery is confirmed by a medical report or certificate issued by a medical institution);
2. Where a woman is pregnant as at the time of her resignation (limited to where her pregnancy is confirmed by a medical report or certificate issued by a medical institution);
3. Where a woman has a lineal descendent aged 8 years or less or enrolled in the second grade of elementary school as at the time of her resignation.
(4) “Related person of the largest stockholder or the largest investor, as prescribed by Presidential Decree” in Article 29-3 (1) 4 and (2) 3 of the Act means a person who has a relationship of relatives defined under Article 1-2 (1) of the Enforcement Decree of the Framework Act on National Taxes. <Amended by Presidential Decree No. 29527, Feb. 12, 2019>
(5) A person who intends to obtain a tax credit under Article 29-3 of the Act shall file an application for tax credit in the form prescribed by Ordinance of the Ministry of Economy and Finance, with the head of the tax office having jurisdiction over the place of tax payment.
(6) The amount equivalent to interest under Article 29-3 (3) of the Act shall be calculated by multiplying the amount of tax credit under paragraph (2) of the same Article by the period of subparagraph 1 and the rate of subparagraph 2: <Newly Inserted by Presidential Decree No. 29527, Feb. 12, 2019>
1. The period from the day following the end of the taxable year for which tax credit is given until the end of the taxable year in which the grounds for payment arise;
2. 25/100,000 per day.
(7) For the purposes of Article 29-3 (2) of the Act, Article 23 (10) through (13) shall apply mutatis mutandis to full-time employees and method for calculating the number of full-time employees. <Newly Inserted by Presidential Decree No. 29527, Feb. 12, 2019>
[This Article Newly Inserted by Presidential Decree No. 26070, Feb. 3, 2015]
 Article 26-4 (Tax Credits for Enterprises Increasing Earned Income)
(1) “Middle-standing enterprise prescribed by Presidential Decree” in Article 29-4 (1) and (3) of the Act means, with the exception of their subparagraphs, a middle-standing enterprise provided for in Article 4 (1). <Amended by Presidential Decree No. 26959, Feb. 5, 2016; Presidential Decree No. 29527, Feb. 12, 2019>
(2) “Full-time employees prescribed by Presidential Decree” in Article 29-4 (1) 1 of the Act means workers who have signed an employment contract pursuant to the Labor Standards Act (excluding the following persons; hereafter in this Article, referred to as “full-time employees”): <Amended by Presidential Decree No. 28636, Feb. 13, 2018; Presidential Decree No. 29527, Feb. 12, 2019>
1. Executive officers specified under subparagraphs of Article 40 (1) of the Enforcement Decree of the Corporate Tax Act;
2. Workers whose earned income referred to in Article 20 (1) 1 and 2 of the Income Tax Act amounts to at least 70 million won;
3. The largest stockholder or the largest investor (referring to the representative in cases of a sole proprietor) of the relevant enterprise, as prescribed by Ordinance of the Ministry of Economy and Finance, and a worker who is a relative of such stockholder or investor, as defined in Article 1-2 (1) of the Enforcement Decree of the Framework Act on National Taxes;
4. Workers in whose cases it is not confirmed, by the book for tax withholding for wage and salary income defined under Article 196 of the Enforcement Decree of the Income Tax Act, that income tax on earned income has been withheld;
5. Workers whose employment contract is for less than one year (excluding workers whose employment contract exceeds one year in total as a consequence of consecutive renewal of the employment contract);
6. Part-time workers defined in Article 2 (1) 8 of the Labor Standards Act.
(3) For the purposes of Article 29-4 (1) through (6) of the Act, the number of full-time employees shall be calculated by the following formula. In such cases, a fraction of less than 1/100 shall be deemed nil: <Amended by Presidential Decree No. 26959, Feb. 5, 2016; Presidential Decree No. 27848, Feb. 7, 2017>
Aggregate of the number of full-time employees as at the end of each month in the relevant taxable year ÷ Number of months in the relevant taxable year
(4) For the purposes of Article 29-4 (1) through (6) of the Act, “wages” means the aggregate of the incomes referred to in Article 20 (1) 1 and 2 of the Income Tax Act. <Amended by Presidential Decree No. 26959, Feb. 5, 2016; Presidential Decree No. 27848, Feb. 7, 2017>
(5) For the purposes of Article 29-4 (1), (2), (5), and (6) of the Act, the average wages shall be calculated by the following formula. In such cases, a fraction of less than 1,000 won shall be deemed nil: <Amended by Presidential Decree No. 27848, Feb. 7, 2017>
Total wages of full-time employees in the relevant taxable year ÷ Number of full-time employees in the relevant taxable year calculated under paragraph (3)
(6) For the purposes of Article 29-4 (1), (2), and (5) of the Act, the increase rate of average wages shall be calculated by the following formula, but a fraction of less than 1/10,000 shall be deemed nil: <Amended by Presidential Decree No. 27848, Feb. 7, 2017>
(Average wages in the relevant taxable year ? Average wages in the immediately preceding taxable year) ÷ Average wages in the immediately preceding taxable year
(7) For the purposes of Article 29-4 (1) and (2) of the Act, the mean increase rate of average wages for the immediately preceding three taxable years (hereafter in this Article, referred to as “mean increase rate of average wages for the immediately preceding three years”), shall be calculated by the following formula, but a fraction of less than 1/10,000 shall be deemed nil. If the increase rate of average wages for the immediately preceding two taxable years or for the immediately preceding three taxable years is negative, the rate shall be deemed zero for the purposes of calculation:
(Increase rate of average wages in the immediately preceding taxable year + Increase rate of average wages in the immediately preceding two taxable years + Increase rate of average wages in the immediately preceding three taxable years) ÷ 3
(8) Notwithstanding paragraphs (5) through (7), if the increase rate of average wages for the immediately preceding taxable year is negative or less than 30/100 of the mean increase rate of average wages for the immediately preceding three years (only where the average is positive), the average wages, the increase rate of average wages, the mean increase rate of average wages for the immediately preceding three years, and an increase of wages in excess of the average wages for the immediately preceding three years under Article 29-4 (2) of the Act shall be calculated by the formula prescribed by Ordinance of the Ministry of Economy and Finance, respectively.
(9) If there is a full-time employee whose working period in the relevant taxable year is less than one year for the purposes of calculating the amount of earned income referred to in paragraph (2) 2 or the average wages referred to in paragraph (5), the amount calculated by dividing the amount of his/her earned income or wages by the number of months for which he/she has worked in the relevant taxable year, and then multiplying the amount by 12, shall be deemed the amount of earned income or wages of the full-time employee.
(10) If a worker resigns or falls under any subparagraph of paragraph (2) during the five-year period before the end of the taxable year for which his/her employer wishes to be granted a tax credit under Article 29-4 (1) and (5) of the Act, the worker must be disregarded for the purposes of calculating the number of full-time employees under paragraph (3) and the average wages under paragraph (5); and if a worker was employed during the five-year period before the end of the taxable year for which his/her employer wishes to be granted a tax credit, the worker must be disregarded for the purposes of calculating the increase rate of average wages for the taxable year in which the worker was newly employed, as referred to in paragraph (6). <Amended by Presidential Decree No. 26959, Feb. 5, 2016; Presidential Decree No. 27848, Feb. 7, 2017>
(11) Where full-time employees who have worked in a previous business division, are transferred to the merging corporation, the corporation newly established as a consequence of a merger, the invested corporation, etc. (hereafter in this Article, referred to as “merging corporation, etc.”) due to a merger, a split-off, an investment in kind, a transfer of business, or any similar event, the full-time employees shall be deemed to have worked for the merging corporation, etc.
(12) Article 29-4 (1) and (5) of the Act shall not apply where impracticable to calculate the mean increase rate of average wages for the immediately preceding three years under paragraph (7) or (8) due to such event as a startup or suspension of business. <Amended by Presidential Decree No. 26959, Feb. 5, 2016; Presidential Decree No. 27848, Feb. 7, 2017>
(13) “Employees whose status has been changed to regular employees and who meet the requirements prescribed by Presidential Decree” in Article 29-4 (3) of the Act, with the exception of its subparagraphs, means workers who have entered into an employment contract under the Labor Standards Act and meet all the following requirements (hereafter in this Article, referred to as “employees changed to regular employees”): <Newly Inserted by Presidential Decree No. 26959, Feb. 5, 2016>
1. The employees have continuously provided service from the commencement date of the immediately preceding taxable year to the end of the relevant taxable year; and it is confirmed, by the book for tax withholding for wage and salary income defined under Article 196 of the Enforcement Decree of the Income Tax Act, that income tax on their earned income for each month has been withheld;
2. The status of irregular employees (referring to fixed-term workers and part-time workers defined under the Act on the Protection of Fixed-Term and Part-Time Workers; hereafter in this subparagraph, the same shall apply) has been changed to regular employees during the relevant taxable year;
3. The employees shall not fall under paragraph (2) 1 through 3 during the relevant taxable year.
(14) For the purposes of Article 29-4 (3) of the Act, the aggregate of increased wages of employees changed to regular employees shall be calculated by subtracting the total wages of employees changed to regular employees in the immediately preceding taxable year from the total wages of such workers in the relevant taxable year. In such cases, if the immediately preceding taxable year or the relevant taxable year is less than one year in length, such aggregate shall be calculated by dividing the aggregate of wages by the number of months in the taxable year (if the number of days less than a month shall be deemed one month) and then multiplying the amount by 12. <Newly Inserted by Presidential Decree No. 26959, Feb. 5, 2016>
(15) The amount of tax payable under Article 29-4 (4) of the Act shall be the aggregate of the following amounts: <Newly Inserted by Presidential Decree No. 26959, Feb. 5, 2016; Presidential Decree No. 29527, Feb. 12, 2019>
1. The amount of tax calculated by the following formula:
Tax credits granted under Article 29-4 (3) of the Act × (Number of employees who have terminated employment relationship, among employees changed to regular employees during the taxable year for which the tax credits are granted ÷ Number of employees changed to regular employees during the taxable year for which the tax credits are granted)
2. The amount of tax calculated by multiplying the amount of tax calculated under subparagraph 1 by the period of item (a) and the ratio of item (b):
(a) The period from the day following the end of the tax-credit granted taxable year, until the end of the taxable year in which a ground for payment of tax arises;
(b) 25/100,000 per day.
(16) "Rate prescribed by Presidential Decree, based upon the increase rate of wages of all small or medium enterprises" in Article 29-4 (5) 1 and (6) of the Act means the rate prescribed by Ordinance of the Ministry of Economy and Finance, based upon the increase rate of average wages of all small or medium enterprises for the immediately preceding three years, respectively. <Newly Inserted by Presidential Decree No. 27848, Feb. 7, 2017>
(17) A person who wishes to be granted a tax credit under Article 29-4 (1), (3), or (5) of the Act shall file an application for tax credits in the form prescribed by Ordinance of the Ministry of Economy and Finance, with the head of the tax office having jurisdiction over the place of tax payment, along with his/her tax return. <Amended by Presidential Decree No. 26959, Feb. 5, 2016; Presidential Decree No. 27848, Feb. 7, 2017>
[This Article Newly Inserted by Presidential Decree No. 26070, Feb. 3, 2015]
 Article 26-5 (Tax Credits for Enterprises Increasing Jobs for Youths)
(1) "Types of business prescribed by Presidential Decree, such as consumer service business" in Article 29-5 (1) of the Act means any consumer service business provided for in Article 29 (3).
(2) "Regular employees prescribed by Presidential Decree" in Article 29-5 (1) of the Act means national employees hired under an employment contract entered into under the Labor Standards Act (hereafter in this Article, referred to as "all regular employees"), except the following:
1. Fixed-term workers and part-time workers defined under the Act on the Protection of Fixed-Term and Part-Time Workers;
2. Temporary agency workers defined under the Act on the Protection of Temporary Agency Workers;
3. Workers specified in Article 23 (10) 3 through 6;
4. Youth defined in subparagraph 1 of Article 2 of the Youth Protection Act, who work in any business establishment specified under subparagraph 5 of Article 2 of the same Act.
(3) "Regular youth employees prescribed by Presidential Decree" in Article 29-5 (1) of the Act means regular employees provided for in paragraph (2), between the ages of 15 and 29 (hereafter in this Article, referred to as "regular youth employees"): Provided, That, if the age of an employee who has performed any military service specified under Article 27 (1) 1, does not exceed 29 years, when the period of such military service (which shall not exceed six years) is subtracted from his current age, the employee shall be deemed a regular youth employee.
(4) "Full-time employees prescribed by Presidential Decree" in Article 29-5 (1) of the Act means full-time employees defined in Article 23 (10) (hereafter in this Article referred to as "full-time employees").
(5) "Middle-standing enterprise prescribed by Presidential Decree" in Article 29-5 (1) of the Act means a middle-standing enterprise provided for in Article 4 (1) (hereafter in this Article, referred to as "middle-standing enterprise"). <Amended by Presidential Decree No. 29527, Feb. 12, 2019>
(6) The amount of income tax or corporate tax payable under Article 29-5 (2) of the Act shall be the amount of subparagraph 1 (which shall not exceed the aggregate of tax credits granted under Article 29-5 (1) of the Act for up to two years immediately preceding the relevant taxable year) minus the amount of subparagraph 2 (if the amount calculated is a negative figure, it shall be deemed zero), and shall be paid as income tax or corporate tax, at the time of filing the tax return for the relevant taxable year: <Amended by Presidential Decree No. 28009, May 8, 2017>
1. The amount calculated by multiplying the greatest number, of the decreased number of regular youth employees, the decreased number of all regular employees, and the decreased number of full-time employees between the taxable year for which a tax credit was granted under Article 29-5 (1) of the Act (it shall be the most recent taxable year for which a tax credit was granted, if the person was granted tax credits for at least two consecutive taxable years; hereafter in this Article, referred to as "tax credit-granted taxable year"), and the relevant taxable year by three million won (or ten million won in cases of a small or medium enterprise; or seven million won in cases of a middle-standing enterprise in the tax credit-granted taxable year);
2. The amount calculated by multiplying the greatest number, of the decreased number of regular youth employees, the decreased number of all regular employees, and the decreased number of full-time employees between the tax credit-granted taxable year and the immediately preceding taxable year by three million won (or ten million won in cases of a small or medium enterprise; or seven million won in cases of a middle-standing enterprise in the tax credit-granted taxable year) (the amount calculated shall be deemed zero, if the tax credit-granted taxable year is the immediately preceding taxable year).
(7) For the purposes of paragraph (6), a person aged 29 years or under at the end of the tax credit-granted taxable year (including persons specified in the proviso to paragraph (3)), shall be deemed a person aged 29 years or under, even for the following taxable year.
(8) For the purposes of Article 29-5 (1) and (2) of the Act, the number of regular youth employees, the number of all regular employees, or the number of full-time employees, shall be calculated by the following applicable formulas (a fraction of less than 1/100 shall be deemed nil):
1. The number of regular youth employees:
Aggregate of the number of regular youth employees as at the end of each month in the relevant taxable year ÷ Number of months in the relevant taxable year
2. The number of all regular employees:
Aggregate of the number of all regular employees as at the end of each month in the relevant taxable year ÷ Number of months in the relevant taxable year
3. The number of full-time employees:
Aggregate of the number of full-time employees as at the end of each month in the relevant taxable year ÷ Number of months in the relevant taxable year
(9) The latter part of Article 23 (11), with the exception of its subparagraphs, and Article 23 (11) 2 shall apply mutatis mutandis to calculating the number of full-time employees under paragraph (8) 3.
(10) For the purposes of paragraph (8), Article 23 (13) shall apply mutatis mutandis to any national who commences a business during the relevant taxable year. In such cases, "the number of full-time employees" shall be construed as "the number of regular youth employees, the number of all regular employees, or the number of full-time employees," and "full-time employees" as "regular youth employees, all regular employees, or full-time employees," respectively.
(11) A person who wishes to be granted a tax credit under Article 29-5 (1) of the Act shall file an application for tax credits and a statement of calculation of tax credits, in the forms prescribed by Ordinance of the Ministry of Economy and Finance, with the head of the tax office having jurisdiction over the place of tax payment, along with his/her tax return.
[This Article Newly Inserted by Presidential Decree No. 26959, Feb. 5, 2016]
 Article 26-6 (Income Tax Reductions or Exemptions on Payments Received from Performance Compensation Fund for Core Personnel of Small and Medium Enterprises)
(1) "Middle-standing enterprise prescribed by Presidential Decree" in Article 29-6 (1) of the Act means a middle-standing enterprise provided for in Article 4 (1). <Newly Inserted by Presidential Decree No. 28636, Feb. 13, 2018; Presidential Decree No. 29527, Feb. 12, 2019>
(2) "Persons prescribed by Presidential Decree" in Article 29-6 (1) of the Act means the following persons:
1. The largest stockholder or the largest investor (referring to the representative, in cases of a sole proprietor) of the relevant enterprise and his/her spouse;
2. Lineal ascendants and descendants (including their spouses) of any of the persons specified in subparagraph 1 or persons who have a relationship of relatives specified in Article 1-2 (1) of the Enforcement Decree of the Framework Act on National Taxes with any of the persons specified in subparagraph 1.
(3) The tax amount reduced under Article 29-6 (1) of the Act shall be calculated by the following formula. In such cases, the reduction rate shall be 50/100 in cases of employees of a small or medium enterprise, and 30/100 in cases of employees of a middle-standing enterprise: <Amended by Presidential Decree No. 28636, Feb. 13, 2018>
Amount of global income tax calculated under Article 137 (1) 2 of the Income Tax Act × (Amount of earned income under Article 20 (2) of the Income Tax Act ÷ Amount of global income under Article 14 (2) of the Income Tax Act) × (Contributions made under Article 29-6 (1) of the Act ÷ Total wages of the relevant employee) × Reduction rate.
(4) An employee who intends to apply for a tax reduction under Article 29-6 (1) of the Act shall file an application for tax reduction, in the form prescribed by Ordinance of the Ministry of Economy and Finance, with the relevant withholding agent by no later than the end of the month immediately following the month in which he/she receives a mutual aid payment under Article 29-6 (1) of the Act.
(5) If an employee is granted a tax reduction under Article 29-6 (1) of the Act, the relevant withholding agent shall submit a statement of the person eligible for tax reduction, in the form prescribed by Ordinance of the Ministry of Economy and Finance, to the head of the tax office having jurisdiction over the place of tax payment by no later than the tenth day of the month immediately following the month in which the application for tax reduction was filed.
[This Article Newly Inserted by Presidential Decree No. 26959, Feb. 5, 2016]
 Article 26-7 (Tax Credits for Enterprises Increasing Jobs)
(1) “Types of business prescribed by Presidential Decree, such as a consumer service businesses" in Article 29-7 (1) of the Act, with the exception of its subparagraphs, means the types of business under Article 29 (3).
(2) "Full-time employees prescribed by Presidential Decree" in Article 29-7 (1) of the Act, with the exception of its subparagraphs, means the full-time employees under Article 23 (10) (hereafter in this Article, referred to as "full-time employees").
(3) "Full-time employees prescribed by Presidential Decree, such as regular youth employees and employees with disabilities" in Article 29-7 (1) 1 of the Act means any of the following persons among full-time employees (hereafter in this Article, referred to as "regular youth employees, etc."): <Amended by Presidential Decree No. 29527, Feb. 12, 2019>
1. Persons aged between 15 and 29 years, excluding any of the following persons: Provided, That if the relevant employees have completed military service that falls under any item of Article 27 (1) 1, the employees each of whose age calculated by deducting the period of military service from the present age does not exceed 29 shall be included therein:
(a) Fixed-term employees and part-time employees defined in the Act on the Protection of Fixed-Term and Part-Time Employees;
(b) Temporary agency workers defined in the Act on the Protection of Temporary Agency Workers;
(c) Youth defined in subparagraph 1 of Article 2 of the Youth Protection Act, who work in any business establishment specified in items of subparagraph 5 of Article 2 of the same Act;
2. Persons with disabilities eligible under the Act on Welfare of Persons with Disabilities, wounded persons under the Act on the Honorable Treatment of and Support for Persons of Distinguished Service to the State, persons wounded during their participation in the May 18 Democratization Movement under subparagraph 2 of Article 4 of the Act on the Honorable Treatment of Persons of Distinguished Service to the May 18 Democratization Movement, and persons having received disability ratings as patients suffering from potential aftereffects of defoliants defined in subparagraph 3 of Article 2 of the Act on Assistance to Patients Suffering from Actual or Potential Aftereffects of Defoliants and Establishment of Related Organizations.
(4) “Middle-standing enterprise prescribed by Presidential Decree” in Article 29-7 (1) of the Act, with the exception of its subparagraphs, means a middle-standing enterprise provided for in Article 4 (1). <Amended by Presidential Decree No. 29527, Feb. 12, 2019>
(5) The amount of income tax or corporate tax payable under Article 29-7 (2) of the Act shall be the amount of subparagraph 1 (which shall not exceed the aggregate of tax credits granted under Article 29-7 (1) of the Act for up to two years immediately preceding the relevant taxable year) minus the amount of subparagraph 2 (if the amount calculated is a negative figure, it shall be deemed zero), and shall be paid as income tax or corporate tax, at the time of filing the tax return for the relevant taxable year: <Amended by Presidential Decree No. 29527, Feb. 12, 2019>
1. The amount calculated by multiplying the decreased number of full-time employees and full-time youth employees, etc., between the taxable year for which a tax credit was granted under Article 29-7 (1) of the Act (it shall be the most recent taxable year for which a tax credit was granted, if the person was granted tax credits for at least two consecutive taxable years; hereafter in this Article, referred to as "tax credit-granted taxable year") and the relevant taxable year by the amount classified in subparagraphs of Article 29-7 (1) of the Act;
2. The amount calculated by multiplying the decreased number of full-time employees and full-time youth employees, etc., between the tax credit-granted taxable year and the immediately preceding taxable year by the amount classified in subparagraphs of Article 29-7 (1) of the Act; (the amount calculated shall be deemed zero, if the tax credit-granted taxable year is the immediately preceding taxable year).
(6) For the purposes of paragraph (5), a person aged 29 years or under as at the end of the tax credit-granted taxable year (including persons falling under the proviso of paragraph (3) 1 with the exception of its items), shall be deemed a person aged 29 years or under, even for the following taxable year.
(7) For the purposes of Article 29-7 (1) and (2) of the Act, the number of full-time employees and the number of full-time youth employees, etc., shall be calculated according to the formula classified as follows (a fraction of less than 1/100 shall be deemed nil): <Amended by Presidential Decree No. 28636, Feb. 13, 2018: <Amended by Presidential Decree No. 29527, Feb. 12, 2019>
1. The number of full-time employees:
Aggregate of the number of full-time employees as at the end of each month in the relevant taxable year ÷ Number of months in the relevant taxable year
2. The number of full-time youth employees, etc.:
Aggregate of the number of full-time youth employees, etc as at the end of each month in the relevant taxable year ÷ Number of months in the relevant taxable year
(8) The latter part of Article 23 (11), with the exception of its subparagraphs, and Article 23 (11) 2 shall apply mutatis mutandis to calculating the number of full-time employees under paragraph (7).
(9) For the purposes of paragraph (7), Article 23 (13) shall apply mutatis mutandis to a national who commences a business, etc. in the relevant taxable year.
(10) A person who wishes to be granted a tax credit under Article 29-7 (1) of the Act shall file an application for tax credits and a statement of calculation of tax credits, in the forms prescribed by Ordinance of the Ministry of Economy and Finance, with the head of the tax office having jurisdiction over the place of tax payment, along with his/her tax return. <Amended by Presidential Decree No. 29527, Feb. 12, 2019>
[This Article Newly Inserted by Presidential Decree No. 28636, Feb. 13, 2018]
 Article 27 (Income Tax Reduction or Exemption for Employees of Small or Medium Enterprises)
(1) "Youth prescribed by Presidential Decree, a person aged at least 60 years, a person with a disability, or a career-interrupted woman" in the former part of Article 30 (1) of the Act means the following: <Amended by Presidential Decree No. 25211, Feb. 21, 2014; Presidential Decree No. 26659, Nov. 20, 2015; Presidential Decree No. 27617, Nov. 29, 2016; Presidential Decree No. 27848, Feb. 7, 2017; Presidential Decree No. 29116, Aug. 28, 2018; Presidential Decree No. 29527, Feb. 12, 2019>
1. Youths: Persons between the ages of 15 and 34 as on the date an employment contract is entered into: Provided, That, where a person has performed any military service described below, and his/her age calculated by subtracting the period of such military service (which shall not exceed six years) from the age as on the date an employment contract is entered into, does not exceed 34 years, the person shall be deemed a youth:
(a) Active duty servicemen enlisted under Article 16 or 20 of the Military Service Act (including full-time reservists, auxiliary policemen, and auxiliary fire-fighting personnel who served under Articles 21 and 25 of the same Act);
(b) Pubic duty personnel prescribed under Articles 26 (1) of the Military Service Act;
(c) Officers, warrant officers, and noncommissioned officers in active service referred to in subparagraph 1 of Article 2 of the Military Personnel Management Act;
2. Persons aged at least 60: Persons aged at least 60 as on the date their employment contracts are entered into;
3. Persons with disabilities: Any of the following persons:
(a) Persons with disabilities eligible under the Act on Welfare of Persons with Disabilities;
(b) Wounded persons under the Act on the Honorable Treatment of and Support for Persons of Distinguished Service to the State;
(c) Persons wounded during their participation in the May 18 Democratization Movement under subparagraph 2 of Article 4 of the Act on the Honorable Treatment of Persons of Distinguished Service to the May 18 Democratization Movement;
(d) Persons having received disability ratings as patients suffering from potential aftereffects of defoliants under the Act on Assistance to Patients Suffering from Actual or Potential Aftereffects of Defoliants and Establishment of Related Organizations;
4. Career-interrupted women: Career-interrupted women provided for in Article 29-3 (1) of the Act.
(2) The following persons shall be disregarded for the purposes of paragraph (1): <Newly Inserted by Presidential Decree No. 23590, Feb. 2, 2012; Presidential Decree No. 24077, Aug 31, 2012; Presidential Decree No. 26070, Feb. 3, 2015; Presidential Decree No. 26959, Feb. 5, 2016; Presidential Decree No. 28636, Feb. 13, 2018; Presidential Decree No. 29527, Feb. 12, 2019>
1. Executive officers who fall under subparagraphs of Article 40 (1) of the Enforcement Decree of the Corporate Tax Act;
2. The largest stockholder or the largest investor (referring to the representative in cases of a sole proprietor) of the relevant enterprise and his/her spouse;
3. Lineal ascendants and descendants (including their spouses) of the persons referred to in subparagraph 2, and relatives defined in Article 1-2 (1) of the Enforcement Decree of the Framework Act on National Taxes, of such persons;
4. Daily employed workers defined in Article 14 (3) 2 of the Income Tax Act;
5. Persons regarding whom it is not confirmed whether they have ever paid either of the following: Provided, That excluded herefrom are the persons who are not eligible to be insured under the National Pension Scheme under the proviso to Article 6 of the National Pension Act and the persons who are not eligible for the coverage of the National Health Insurance under the proviso to Article 5 (1) of the National Health Insurance Act:
(a) Charges and contributions under Article 3 (1) 11 and 12 of the National Pension Act;
(b) Premiums of employer-provided policy-holders under Article 69 of the National Health Insurance Act.
(3) "Enterprise prescribed by Presidential Decree" in the former part of Article 30 (1) of the Act means any enterprise mainly engaging in agriculture; forestry; fishery; mining; manufacturing; electricity, gas, steam, and water supply; sewage, waste treatment, material recovery, and remediation activities; construction; wholesale and retail trade; transportation, accommodation and food service activities (excluding drinking places and non-alcoholic beverages places); publishing, video, broadcasting, and information and communications (excluding video exhibition rooms); real estate activities and renting and leasing; research and development; advertising; market research and public opinion polling; architectural, engineering, and other scientific technical services; other professional, scientific, and technical services; business facilities management and business support services; technical and trade schools; social work activities; and maintenance and repair services: Provided, That excluded herefrom are the State, local governments (including association of local governments), public institutions under the Act on the Management of Public Institutions, and local public enterprises under the Local Public Enterprises Act. <Newly Inserted by Presidential Decree No. 23590, Feb. 2, 2012; Presidential Decree No. 26070, Feb. 3, 2015>
(4) “Military service prescribed by Presidential Decree” in the former part of Article 30 (1) of the Act means any military service prescribed under paragraph (1) 1. <Newly Inserted by Presidential Decree No. 26070, Feb. 3, 2015>
(5) A worker who intends to apply for a reduction of income tax under Article 30 (2) of the Act shall file an application for tax reduction, in the form prescribed by Ordinance of the Ministry of Economy and Finance, with the withholding agent, along with a document, etc. evidencing the period of military service, by no later than the end of the month immediately following the month in which the date of employment falls. In such cases, the withholding agent may withhold income tax on earned income for each month by applying the reduction or exemption rate specified in Article 30 (1) of the Act, notwithstanding Article 134 (1) of the Income Tax Act. <Amended by Presidential Decree No. 23590, Feb. 2, 2012; Presidential Decree No. 26959, Feb. 5, 2016>
(6) A withholding agent shall also submit a statement of the persons eligible for tax reduction, in the form prescribed by Ordinance of the Ministry of Economy and Finance, when submitting a list of employees who have applied for tax reduction under Article 30 (3) of the Act to the head of the tax office having jurisdiction over the withholding. <Amended by Presidential Decree No. 23590, Feb. 2, 2012>
(7) A withholding agent shall submit a statement of retirees ineligible for tax reduction in the form prescribed by Ordinance of the Ministry of Economy and Finance, when notifying the head of the tax office having jurisdiction over the withholding of the fact that an employee has resigned under the proviso to Article 30 (5) of the Act. <Amended by Presidential Decree No. 23590, Feb. 2, 2012>
(8) If a person has earned income paid by a small or medium enterprise under Article 30 (1) of the Act (hereafter in this Article, referred to as "tax-exempted or reduced income") and other global income, the amount of tax to be exempted or reduced for the relevant taxable period shall be calculated by the following formula, subject to a ceiling of 1,500,000 won for each taxable year: <Amended by Presidential Decree No. 26959, Feb. 5, 2016>
Amount of global income tax calculated under Article 137 (1) 2 of the Income Tax Act (hereafter in this Article, referred to as "amount of tax calculated") × (Amount of earned income referred to in Article 20 (2) of the Income Tax Act ÷ Amount of global income referred to in Article 14 (2) of the Income Tax Act) × (Total wages received from a small or medium enterprise under Article 30 (1) of the Act ÷ Total wages of the relevant worker) × the reduction or exemption rate specified in Article 30 (1) of the Act
(9) For the purpose of granting a tax credit on earned income under Article 59 (1) of the Income Tax Act, if a person has tax-exempted or reduced income and other earned income (including where a person has no earned income in addition to tax-exempted or reduced income), the amount calculated by the following formula shall be determined as the amount of a tax credit on earned income: <Amended by Presidential Decree No. 26959, Feb. 5, 2016>
Amount of a tax credit on earned income calculated under Article 59 (1) of the Income Tax Act × (1 ­ Amount of tax reduced or exempted ÷ Amount of tax calculated)
[This Article Wholly Amended by Presidential Decree No. 22085, Mar. 26, 2010]
 Article 27-2 (Tax Credits for Change of Status to Regular Employees)
(1) "Middle-standing enterprise prescribed by Presidential Decree" in Article 30-2 (1) of the Act means a middle-standing enterprise provided for in Article 4 (1). <Newly Inserted by Presidential Decree No. 28009, May 8, 2017; Presidential Decree No. 29527, Feb. 12, 2019>
(2) “Equivalent to interest calculated as prescribed by Presidential Decree" in Article 30-2 (2) of the Act means the amount calculated by multiplying the amount of the tax credit under Article 30-2 (1) of the Act by the period of subparagraph 1 and the rate of subparagraph 2: <Amended by Presidential Decree No. 29527, Feb. 12, 2019>
1. The period from the day following the end of the taxable year for which tax credit is given until the end of the taxable year in which the grounds for payment arise;
2. 25/100,000 per day.
[This Article Newly Inserted by Presidential Decree No. 21064, Oct. 7, 2008]
 Article 27-3 (Special Taxation for Small or Medium Enterprises Maintaining Employment)
(1) The hourly rate of a full-time employee in the immediately preceding taxable year or the relevant taxable year referred to in Article 30-3 (1) 1 and (2) 2 of the Act (excluding full-time employees who enter into an employment contract in the relevant taxable year; hereafter in this paragraph and paragraph (5), the same shall apply), shall be calculated by dividing the total wages referred to in subparagraph 1 by the total working hours referred to in subparagraph 2: <Amended by Presidential Decree No. 25211, Feb. 21, 2014; Presidential Decree No. 27848, Feb. 7, 2017; Presidential Decree No. 29527, Feb. 12, 2019>
1. Total wages: The aggregate of ordinary wages and the amount of fixed payments, such as regular bonuses, paid to full-time employees in the immediately preceding taxable year or the relevant taxable year;
2. Total working hours: Total working hours stipulated in the employment contracts of full-time employees in the immediately preceding taxable year or the relevant taxable year (or total actual working hours in cases of a part-time worker defined in Article 2 (1) 9 of the Labor Standards Act, who works for at least 60 hours for one month).
(2) "Rate prescribed by Presidential Decree" in Article 30-3 (1) 2 of the Act means 0/100.
(3) A small or medium enterprise which intends to be accorded special taxation for maintaining employment pursuant to Article 30-3 of the Act shall file an application for tax credits in the form prescribed by Ordinance of the Ministry of Economy and Finance, accompanied by the documents verifying an agreement between the business operator and the employees' representative, with the head of the tax office having jurisdiction over the place of tax payment, along with its tax return for income tax or corporate tax. <Amended by Presidential Decree No. 21545, Jun. 19, 2009; Presidential Decree No. 25211, Feb. 21, 2014; Presidential Decree No. 29527, Feb. 12, 2019>
(4) For the purposes of Article 30-3 (1) through (3) of the Act, the full-time employees mean workers who enter into an employment contract under the Labor Standards Act: Provided, That the following persons shall be excluded herefrom: <Newly Inserted by Presidential Decree No. 23590, Feb. 2, 2012; Presidential Decree No. 24077, Aug 31, 2012; Presidential Decree No. 25211, Feb. 21, 2014; Presidential Decree No. 28636, Feb. 13, 2018; Presidential Decree No. 29527, Feb. 12, 2019>
1. Any worker whose employment contract is for less than one year: Provided, That for the purposes of Article 30-3 (3) of the Act, a worker whose employment contract exceeds one year in total as a consequence of consecutive renewal of the employment contrAct shall be deemed a full-time employee;
2. Executive officers who fall under subparagraphs of Article 40 (1) of the Enforcement Decree of the Corporate Tax Act;
3. The largest stockholder or the largest investor (referring to the representative in cases of a sole proprietor) of the relevant enterprise and his/her spouse;
4. Lineal ascendants and descendants of the persons referred to in subparagraph 3 and their spouses;
5. Persons regarding whom it is not confirmed whether income tax on earned income has ever been withheld by earned income withholding register under Article 196 of the Enforcement Decree of the Income Tax Act, and whether they have ever paid either of the following:
(a) Charges and contributions under Article 3 (1) 11 and 12 of the National Pension Act;
(b) Premiums of employer-provided policy-holders under Article 69 of the National Health Insurance Act;
6. Part-time workers defined in Article 2 (1) 9 of the Labor Standards Act, who work for less than 60 hours for one month.
(5) For the purposes of Article 30-3 (1) 3 and (2) of the Act, the total annual wages per full-time employee of the immediately preceding or relevant taxable year, shall be calculated by dividing the total wages prescribed in subparagraph 1 by the number of full-time employees calculated by the formula prescribed in subparagraph 2: <Newly Inserted by Presidential Decree No. 23590, Feb. 2, 2012>
1. Total wages: The aggregate of ordinary wages and the amount of fixed payments, such as regular bonuses, paid to full-time employees in the immediately preceding or relevant taxable year;
2. Number of full-time employees:
Aggregate of the full-time employees as at the end of each month in the immediately preceding or relevant taxable year ÷ Number of months in the immediately preceding or relevant taxable year
(6) Where the number of full-time employees has reduced because the labor relationship is terminated due to a death, mandatory retirement, or other similar reasons in the immediately preceding or relevant taxable year, the reduced number of employees shall be disregarded for the purposes of calculating the number of full-time employees and the total annual wages per full-time employee under paragraph (5), deeming that they did not work from the immediately preceding taxable year. <Newly Inserted by Presidential Decree No. 23590, Feb. 2, 2012>
(7) Where full-time employees who have worked in the previous business division are succeeded due to a merger, general acquisition of a business, or any similar event in the immediately preceding or relevant taxable year, the number of persons succeeded shall be included in the number of full-time employees and the total annual wages per full-time employee under paragraph (5), deeming that they have worked for the succeeding enterprise from the immediately preceding taxable year. <Newly Inserted by Presidential Decree No. 23590, Feb. 2, 2012>
(8) Where the number of full-time employees has reduced due to a split-off, general transfer of a business, or any similar event in the immediately preceding or relevant taxable year, the reduced number of employees shall be disregarded for the purposes of calculating the number of full-time employees and the total annual wages per full-time employee under paragraph (5), deeming that they did not work for an enterprise, etc. which is split-off or generally transferred, from the immediately preceding taxable year. <Newly Inserted by Presidential Decree No. 23590, Feb. 2, 2012>
(9) The total working hours of all full-time employees for the relevant taxable year referred to in Article 30-3 (2) 2 of the Act shall be deemed the total working hours for the relevant taxable year provided for in paragraph (1) 2. <Newly Inserted by Presidential Decree No. 27848, Feb. 7, 2017>
(10) The total annual wages referred to in Article 30-3 (3) of the Act means the aggregate of ordinary wages and the amount of fixed payments, such as regular bonuses. In such cases, the total annual wages of a full-time employee whose labor relationship is established or terminated during the immediately preceding or relevant taxable year, shall be calculated by the following applicable formula: <Newly Inserted by Presidential Decree No. 23590, Feb. 2, 2012>
1. The total annual wages of a full-time employee whose labor relationship was established in the immediately preceding taxable year in the relevant taxable year, shall be calculated by the following formula:
Aggregate of ordinary wages and the amount of fixed payments in the relevant taxable year × (Total number of working days in the immediately preceding taxable year ÷ Total number of working days in the relevant taxable year)
2. The total annual wages of a full-time employee whose labor relationship is terminated in the relevant taxable year in the immediately preceding taxable year, shall be calculated by the following formula:
Aggregate of ordinary wages and the amount of fixed payments in the immediately preceding taxable year × (Total number of working days in the relevant taxable year ÷ Total number of working days in the immediately preceding taxable year)
3. The total annual wages of a full-time employee whose labor relationship is succeeded due to a merger, split-off, etc. of an enterprise during the immediately preceding or relevant taxable year, in the immediately preceding or relevant taxable year, shall be the aggregate of wages paid by the previous employer, notwithstanding subparagraphs 1 and 2.
(11) "Middle-standing enterprise prescribed by Presidential Decree" in Article 30-3 (5) of the Act means a middle-standing enterprise provided for in Article 4 (1). <Newly Inserted by Presidential Decree No. 29527, Feb. 12, 2019>
[This Article Newly Inserted by Presidential Decree No. 21429, Apr. 21, 2009]
 Article 27-4 (Scope of Full-Time Employees for Granting Tax Credits on Social Insurance Premiums for Small or Medium Enterprises)
(1) The full-time employees referred to in Article 30-4 (1) of the Act shall be the Korean workers who enter into an employment contract under the Labor Standards Act: Provided, That the following persons shall be excluded herefrom: <Amended by Presidential Decree No. 28636, Feb. 13, 2018; Presidential Decree No. 29527, Feb. 12, 2019>
1. Any worker whose employment contract is for less than one year: Provided, That a worker whose employment contract exceeds one year in total as a consequence of consecutive renewal of the employment contrAct shall be deemed a full-time employee;
2. Part-time workers defined in Article 2 (1) 9 of the Labor Standards Act: Provided, That workers who work for at least 60 hours for one month, shall be deemed full-time employees;
3. Executive officers who fall under any subparagraph of Article 40 (1) of the Enforcement Decree of the Corporate Tax Act;
4. The largest stockholder or the largest investor (referring to the representative in cases of a sole proprietor) of the relevant enterprise and his/her spouse;
5. Lineal ascendants and descendants (including their spouses) of the persons referred to in subparagraph 4, and relatives defined in Article 1-2 (1) of the Enforcement Decree of the Framework Act on National Taxes, of such persons;
6. Persons regarding whom it is not confirmed whether income tax on earned income has ever been withheld by earned income withholding register under Article 196 of the Enforcement Decree of the Income Tax Act;
7. Workers regarding whom it is not confirmed whether the charges or premiums payable by their employers for the social insurance under Article 30-4 (4) of the Act have ever been paid.
(2) “Youths and career-interrupted women hired as full-time employees” in Article 30-4 (1) 1 of the Act (hereafter in this Article, referred to as "youths, etc."), means the following persons; and “full-time employees, excluding youths, etc.” in Article 30-4 (1) 2 of the Act means full-time employees who are not full-time youth employees, etc.: <Amended by Presidential Decree No. 27848, Feb. 7, 2017>
1. Full-time youth employees: Full-time employees between the ages of 15 and 29 (if a person has performed any military service specified under Article 27 (1) 1, and his age calculated by subtracting the period of such military service (which shall not exceed six years) from his age as on the date an employment contract is entered into, does not exceed 29 years, the person shall be deemed a youth);
2. Career-interrupted women hired as full-time employees: Full-time employees who are career-interrupted women provided for in Article 29-3 (1) of the Act.
(3) "Number of employees prescribed by Presidential Decree" in Article 30-4 (1) 1 of the Act means the increased number of full-time youth employees, etc. between the relevant taxable year and the immediately preceding taxable year (if the number is a negative, it shall be deemed zero): Provided, That its ceiling shall be the increased number of full-time employees in the relevant taxable year compared to the immediately preceding taxable year. <Amended by Presidential Decree No. 27848, Feb. 7, 2017>
(4) "Number of increased full-time employees prescribed by Presidential Decree" in Article 30-4 (1) 2 of the Act means the increased number of full-time employees between the relevant taxable year and the immediately preceding taxable year (if the number is a negative, it shall be deemed zero) minus the number referred to in paragraph (3).
(5) "Small or medium enterprise engaging in any of the new-growth service businesses prescribed by Presidential Decree" in Article 30-4 (1) 2 of the Act means a small or medium enterprise engaging mainly in any of the following business activities. If an enterprise engages in at least two different businesses, the business from which it earns the greater business income, shall be deemed its main business: <Newly Inserted by Presidential Decree No. 27848, Feb. 7, 2017>
1. Computer programming, system integration and management services; software development and supply; information service activities; or telecommunications;
2. Creative and arts-related services (excluding individual artists); business activities producing motion pictures, video, and broadcast programs; business activities of audio publishing and original master recording; or broadcasting;
3. Engineering business; specialized designing services; security system service activities; or business making advertisements, among advertising businesses;
4. Business publishing books, magazines, and other printed matters; research and development business; business operating a private institute teaching vocational skills under the Act on the Establishment and Operation of Private Teaching Institutes and Extracurricular Lessons; or business operating a vocational skill development training establishment under the Act on the Development of Vocational Skills of Workers (limited to where the main business is vocational skill development training);
5. Tourist accommodation business, international conference business, or amusement facility business under the Tourism Promotion Act; or tourist facilities business referred to in Article 6 (3) 20 of the Act;
6. The logistics industry referred to in Article 5 (8);
7. Other new-growth service businesses specified by Ordinance of the Ministry of Economy and Finance.
(6) The number of full-time employees and the number of full-time youth employees, etc. referred to in paragraphs (3), (4) and (11) shall be calculated by the formula classified under subparagraph 1: Provided, That one worker referred to in the proviso to paragraph (1) 2, shall be calculated as 0.5 person; where all of the requirements for support prescribed under subparagraph 2 are met, one worker shall be calculated as 0.75 person; and the fraction of less than 1/100 shall be deemed nil: <Amended by Presidential Decree No. 25211, Feb. 21, 2014; Presidential Decree No. 26959, Feb. 5, 2016; Presidential Decree No. 27848, Feb. 7, 2017; Presidential Decree No. 28636, Feb. 13, 2018>
1. Formula for calculating the number of full-time employees and full-time youth employees, etc.:
(a) Number of full-time employees:
Aggregate of the number of full-time employees as at the end of each month during the relevant period ÷ Number of months during the relevant period
(b) Number of full-time youth employees, etc.:
Aggregate of the number of full-time youth employees, etc. as at the end of each month during the relevant period ÷ Number of months during the relevant period
2. Requirements for support:
(a) The number of full-time employees in the relevant taxable year (excluding the workers referred to in the proviso to paragraph (1) 2), shall not be smaller than that in the immediately preceding taxable year (excluding the workers referred to in the proviso to paragraph (1) 2);
(b) They shall have entered into an indefinite employment contract;
(c) They shall not be given discriminatory treatment defined in subparagraph 3 of Article 2 of the Act on the Protection of Fixed-Term and Part-Time Workers, in their hourly wages (including wages defined in Article 2 (1) 5 of the Labor Standards Act, regularly paid bonuses, such as regular bonuses and holiday bonuses, and performance-based incentives) and other matters concerning the terms and conditions of employment, welfare, etc., compared with the full-time employees;
(d) The hourly wage shall be at least 120/100 of the minimum wage prescribed under Article 5 of the Minimum Wage Act.
(7) When calculating the increased number of full-time youth employees, etc. or full-time employees referred to in paragraphs (3) and (4), the number classified as follows shall be deemed the number of full-time youth employees, etc. or the number of full-time employees in the immediately preceding or relevant taxable year, if an enterprise starts its business, etc. in the relevant taxable year: <Amended by Presidential Decree No. 24368, Feb. 15, 2013; Presidential Decree No. 25211, Feb. 21, 2014; Presidential Decree No. 27848, Feb. 7, 2017; Presidential Decree No. 28636, Feb. 13, 2018; Presidential Decree No. 29527, Feb. 12, 2019>
1. Number of full-time employees in the immediately preceding taxable year where an enterprise starts its business (excluding cases falling under Article 6 (10) 1 through 3 of the Act): 0;
2. Number of full-time employees in the immediately preceding taxable year in cases falling under any of Article 6 (10) 1 (excluding succession to the previous business through a merger, a split-off, an investment in kind or acquisition of business) through 3 of the Act: Number of full-time youth employees, etc. or number of full-time employees in the immediately preceding taxable year of the previous business, business before conversion into a corporation, or business before closure of business;
3. Number of full-time employees in the immediately preceding or relevant taxable year in either of the following cases: In cases of an enterprise that has transferred the business, the number calculated by deducting the number of full-time youth employees, etc. or the number of full-time employees transferred by succession from the number of full-time youth employees, etc. or the number of full-time employees in the immediately preceding taxable year; and in cases of an enterprise that has acquired the business, the aggregate of the number of full-time youth employees, etc. or the number of full-time employees by succession and the number of full-time youth employees, etc. or the number of full-time employees of an enterprise succeeded in the immediately preceding taxable year; and the number of full-time employees in the relevant taxable year shall be the number of full-time youth employees, etc. or the number of full-time employees calculated by deeming the full-time employees have been transferred or acquired by succession on the date the relevant taxable year commences:
(a) Where such enterprise takes over full-time youth employees, etc. or full-time employees engaging in the previous business division due to a merger, a split-off, an investment in kind, a transfer of business, or any similar event in the relevant taxable year;
(b) Where such enterprise takes over full-time youth employees, etc. or full-time employees from a related party provided for in Article 11 (1).
(8) "Amount prescribed by Presidential Decree" in Article 30-4 (1) 1 of the Act means the amount calculated by the following formula: <Amended by Presidential Decree No. 27848, Feb. 7, 2017>
(Total wages referred to in Article 20 (1) of the Income Tax Act, which are paid to full-time youth employees, etc. in the relevant taxable year ÷ Number of full-time youth employees, etc. in the relevant taxable year) × Social insurance premium rate
(9) "Amount prescribed by Presidential Decree" in Article 30-4 (1) 2 of the Act means the amount calculated by the following formula: <Amended by Presidential Decree No. 27848, Feb. 7, 2017>
(Total wages referred to in Article 20 (1) of the Income Tax Act, which are paid to full-time employees, excluding youths, etc. in the relevant taxable year ÷ (Number of full-time employees in the relevant taxable year - Number of full-time youth employees, etc. in the relevant taxable year) × Social insurance premium rate
(10) For purposes of paragraphs (8) and (9), the social insurance premium rate shall be the aggregate of the following applicable as of the end of the relevant taxable year: <Amended by Presidential Decree No. 24077, Aug 31, 2012; Presidential Decree No. 27848, Feb. 7, 2017>
1. 1/2 of the insurance premium rate prescribed under Article 44 (1) of the Enforcement Decree of the National Health Insurance Act;
2. Number calculated by multiplying the number calculated under subparagraph 1 by the long-term care insurance premium rate prescribed under Article 4 of the Act on Long-Term Care Insurance for Older Persons;
3. The insurance premium rate prescribed under Article 88 of the National Pension Act;
4. The aggregate of the numbers calculated under each subparagraph of Article 13 (4) of the Act on the Collection of Insurance Premiums for Employment Insurance and Industrial Accident Compensation Insurance;
5. The industrial accident compensation insurance rate prescribed under Article 14 (3) of the Act on the Collection of Insurance Premiums for Employment Insurance and Industrial Accident Compensation Insurance.
(11) "Enterprise prescribed by Presidential Decree among small and medium enterprises" in Article 30-4 (3) of the Act means a small or medium enterprise meeting all of the following requirements: <Newly Inserted by Presidential Decree No. 28636, Feb. 13, 2018>
1. Number of its full-time employees in the relevant taxable year shall be less than 10 persons;
2. The tax base of its income tax or corporate tax for the relevant taxable year shall not exceed 500 million won. In such cases, the tax base of income tax shall be limited to that of business income tax, and its calculation method shall be prescribed by Ordinance of the Ministry of Economy and Finance.
(12) "Employees prescribed by Presidential Decree" in Article 30-4 (3) of the Act means employees whose hourly wage is between 100/100 and 120/100 of the minimum wage amount under Article 5 of the Minimum Wage Act among nationals who have entered into an employment contract under the Labor Standards Act. <Newly Inserted by Presidential Decree No. 28636, Feb. 13, 2018>
(13) "Subsidies from the State, etc. prescribed by Presidential Decree" in Article 30-4 (3) of the Act means the aggregate amount of the subsidies paid or to be paid by the State and public institutions under Article 4 of the Act on the Management of Public Institutions for the amount equivalent to the premiums of a social insurance which falls under any subparagraph of Article 30-4 (4) of the Act and is to be borne by the employer, and the amount of reductions or exemptions. <Newly Inserted by Presidential Decree No. 28636, Feb. 13, 2018>
(14) "Amount prescribed by Presidential Decree" in Article 30-4 (3) of the Act means the amount equivalent to the social insurance premiums to be borne by the employer less the amount referred to in paragraph (13). <Newly Inserted by Presidential Decree No. 28636, Feb. 13, 2018>
[This Article Wholly Amended by Presidential Decree No. 23590, Feb. 2, 2012]
 Article 27-5 (Special Taxation for Gift Tax on Start-Up Funds)
(1) “Property prescribed by Presidential Decree, such as land and buildings” in the former part of Article 30-5 (1) of the Act means any property specified in Article 94 (1) of the Income Tax Act. <Amended by Presidential Decree No. 20620, Feb. 22, 2008; Presidential Decree No. 22037, Feb. 18, 2010; Presidential Decree No. 25211, Feb. 21, 2014>
(2) “Business start-up fund prescribed by Presidential Decree” in the former part of Article 30-5 (1) of the Act means either of the following funds used directly for starting a business specified in Article 30-5 (2) of the Act: <Newly Inserted by Presidential Decree No. 26959, Feb. 5, 2016; Presidential Decree No. 29116, Aug. 28, 2018>
1. Funds for acquiring business assets prescribed in Article 5 (18) (hereafter in this Article, referred to as "business assets");
2. Payments made for security deposits and rents for the place of business (including security money for lease on a deposit basis; hereinafter the same shall apply).
(3) “Commence his/her business” or “business startup” in the former part and the latter part of Article 30-5 (2) of the Act, with the exception of its subparagraphs, means registration of a business with the head of the tax office having jurisdiction over the place of tax payment under Article 168 (1) of the Income Tax Act, Article 111 (1) of the Corporate Tax Act, or Article 8 (1) or (5) of the Value-Added Tax Act; and "situations prescribed by Presidential Decree" in the latter part of Article 30-5 (2) of the Act, with the exception of its subparagraphs, means where a person acquires a business asset or pays a security deposit or a rent for an extended place of business. <Amended by Presidential Decree No. 24638, Jun. 28, 2013; Presidential Decree No. 26959, Feb. 5, 2016>
(4) "Date prescribed by Presidential Decree" in the former part of Article 30-5 (5) of the Act means: <Amended by Presidential Decree No. 22037, Feb. 18, 2010>
1. The end of the month following the month in which the date of start-up falls;
2. The deadline for filing the tax return each taxable year by the four subsequent taxable years (where the start-up funds are fully used, the taxable year in which the date such start-up funds are used falls) from the taxable year in which the date of start-up falls.
(5) "Cases prescribed by Presidential Decree" in Article 30-5 (2) 4 of the Act means where start-up funds are used for operating the business in which a person has engaged before receiving donated start-up funds or for replacing plant and equipment for such business. <Amended by Presidential Decree No. 22037, Feb. 18, 2010>
(6) The following information shall be stated in a statement on the spending of start-up funds submitted under the former part of Article 30-5 (5) of the Act: <Amended by Presidential Decree No. 26959, Feb. 5, 2016>
1. Details of the donated start-up funds;
2. Details of the use of the donated start-up funds and materials evidencing such details;
3. Materials evidencing details of employment, if the donated start-up funds exceed three billion won.
(7) The equivalent to the interest, which is added to gift tax levied under the latter part of Article 30-5 (6) of the Act shall be calculated by multiplying the amount of subparagraph 1 by the period of subparagraph 2 and the rate of subparagraph 3: <Amended by Presidential Decree No. 29527, Feb. 12, 2019>
1. The amount of gift tax determined pursuant to the former part of Article 30-5 (6) of the Act, with the exception of its subparagraphs;
2. The period from the day following a deadline for filing the tax return of gift tax on the first-donated start-up funds until the date the grounds for additional collection arise;
3. 25/100,000 per day.
(8) "Cases prescribed by Presidential Decree" in Article 30-5 (6) 6 of the Act means any of the following: <Amended by Presidential Decree No. 22037, Feb. 18, 2010; Presidential Decree No. 23590, Feb. 2, 2012>
1. Where a donee dies: Provided, That the same shall not apply to the following cases:
(a) Where a donee dies after receiving donated start-up funds, but before commencing his/her business pursuant to Article 30-5 (2) of the Act; and the heir of the donee commences the business pursuant to Article 30-5 (2) through (6) of the same Act after succeeding to the donee's status;
(b) Where a donee dies after receiving donated start-up funds and commencing his/her business pursuant to Article 30-5 (2) of the Act, but before using the start-up funds for the start-up objectives provided for in Article 30-5 (4) of the Act; and the heir of the donee commences the business pursuant to Article 30-5 (4) through (6) of the same Act after succeeding to the donee's status;
(c) Where a donee dies after receiving donated start-up funds and completing the commencement of his/her business pursuant to Article 30-5 (4) of the Act; and the heir of the donee commences the business pursuant to Article 30-5 (6) of the same Act after succeeding to the donee's status;
2. Where a donee discontinues or suspends his/her business (including actual suspension of the business): Provided, That the same shall not apply where the donee discontinues or suspends his/her business on either of the following grounds:
(a) Where the donee discontinues his/her business on the grounds that his/her debt exceeds his/her asset;
(b) Where the donee suspends or discontinues his/her business (limited to either one of suspension or discontinuation of the business) for the period not exceeding two years (where he/she discontinues his/her business, referring to two years by the time he/she resumes his/her business after discontinuing his/her business) only once on the grounds of his/her business need or his/her business conversion after first commencing his/her business.
(9) "Amount prescribed by Presidential Decree" in Article 30-5 (6) 6 of the Act means start-up funds (including the portion of the value increased on the grounds of the start-up). <Amended by Presidential Decree No. 22037, Feb. 18, 2010; Presidential Decree No. 23590, Feb. 2, 2012>
(10) For the purposes of Article 30-5 (6) 7 of the Act, "employees" means full-time employees prescribed in Article 27-3 (4). In such cases, the number of workers shall be calculated by dividing the aggregate of the number of employees as at the end of each month in the relevant taxable year by the number of months in the relevant taxable year. <Newly Inserted by Presidential Decree No. 26959, Feb. 5, 2016>
(11) Anyone who intends to be accorded special taxation on gift tax on start-up funds pursuant to Article 30-5 (11) of the Act shall file a tax return on gift tax, an application for special taxation for start-up funds in the form prescribed by Ordinance of the Ministry of Economy and Finance, and a statement on the spending of start-up funds, with the head of a tax office having jurisdiction over the place of tax payment. <Amended by Presidential Decree No. 20720, Feb. 29, 2008>
[This Article Newly Inserted by Presidential Decree No. 19329, Feb. 9, 2006]
 Article 27-6 (Special Taxation for Gift Tax on Succession to Family Business)
(1) "Where a resident succeeds to a family business, as prescribed by Presidential Decree" in Article 30-6 (1) of the Act means where a person to whom stocks or equity shares of a family business (hereafter in this Article, referred to as “stocks, etc.”) are conveyed as a gift (hereafter in this Article and Articles 28 and 29, referred to as “donee”) or his/her spouse, engages in the family business until the deadline for filing a tax return on gift tax under Article 68 of the Inheritance Tax and Gift Tax Act, and takes office as representative director within five years from the date of conveyance as a gift. <Amended by Presidential Decree No. 26070, Feb. 3, 2015>
(2) “Where a person fails to succeed to the family business” in Article 30-6 (2) of the Act means where the donee fails to succeed to the family business as provided for in paragraph (1).
(3) "Just grounds prescribed by Presidential Decree" in the former part of Article 30-6 (2) of the Act, with the exception of its subparagraphs, means any of the following circumstances: <Amended by Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 21064, Oct. 7, 2008>
1. Where a donee has died and the heir of the donee engages in the family business after succeeding to the initial status of the donee by the filing deadline for filing a tax return under Article 67 of the Inheritance and Gift Tax Act;
2. Where a donee donates the stocks, etc. conveyed as a gift, to the State or a local government;
3. Where other extenuating circumstances prescribed by Ordinance of the Ministry of Economy and Finance arise.
(4) The equivalent to the interest, which is added to gift tax levied under the latter part of Article 30-6 (2) of the Act, with the exception of its subparagraphs, shall be calculated by multiplying the amount of subparagraph 1 by the period of subparagraph 2 and the rate of subparagraph 3: <Amended by Presidential Decree No. 29527, Feb. 12, 2019>
1. The amount of gift tax determined pursuant to the former part of Article 30-6 (2) of the Act, with the exception of its subparagraphs,;
2. The period from the day following a deadline for filing the tax return of gift tax on the first-donated stocks, etc., until the date the grounds for additional collection arise;
3. 25/100,000 per day.
(5) Circumstances provided for in Article 30-6 (2) 1 of the Act shall include the following: <Amended by Presidential Decree No. 25211, Feb. 21, 2014; Presidential Decree No. 26070, Feb. 3, 2015; Presidential Decree No. 26959, Feb. 5, 2016>
1. Where the donee (including the spouse of the donee referred to in paragraph (1)) fails to take office as representative director within five years from the date of conveyance of stocks, etc. as a gift, or fails to keep the position of representative director for seven years;
2. Where the main type of family business referred to in Article 30-6 (1) of the Act (hereafter in this Article, referred to as "family business") is changed to a different type of business (excluding where the type of business is changed to another type of business within the same Group of the Korean Standard Industrial Classification, and the turnover of the type of business in which the person engages as at the date of conveyance as a gift (referring to a type of business in a Class of the Korean Standard Industrial Classification) is at least 30/100 of the total turnover as at the end of the business year);
3. Where the donee suspends (or has no business performance) the family business for at least one year, or closes the family business.
(6) Circumstances provided for in Article 30-6 (2) 2 of the Act shall include the following: <Amended by Presidential Decree No. 23590, Feb. 2, 2012; Presidential Decree No. 26070, Feb. 3, 2015; Presidential Decree No. 26959, Feb. 5, 2016; Presidential Decree No. 28636, Feb. 13, 2018>
1. Where the donee disposes of the stocks, etc. conveyed as a gift: Provided, That the following cases shall be excluded herefrom:
(a) Where the donee becomes the largest stockholder, etc. defined under Article 15 (3) of the Enforcement Decree of the Inheritance Tax and Gift Tax Act (hereafter in this Article, referred to as "largest stockholder, etc.") as a consequence of restructuring, such as a merger or split-off;
(b) Where the donee reduces his/her shares in order to meet the requirements for listing specified in the Listing Regulations pursuant to Article 390 (1) of the Financial Investment Services and Capital Markets Act;
2. Where the donee's holding ratio decreases due to forfeiture of his/her rights, etc. in the course of increasing the paid-in capital of the corporation that issued the stocks, etc. conveyed as a gift: Provided, That any of the following cases shall be excluded herefrom:
(a) Where the relevant corporation increases its paid-in capital by issuing new stocks in order to increase its investment in plant and equipment or to expand its business, and the donee is forfeited his/her rights in order to allocate new stocks to any person, other than the related persons (referring to the persons defined under Article 2-2 (1) of the Enforcement Decree of the Inheritance Tax and Gift Tax Act; hereafter in this Article, the same shall apply) to the donee, but the donee falls under the largest stockholder, etc.;
(b) Where the donee's holding ratio decreases due to a debt-for-equity swap of the relevant corporation, but the donee becomes the largest stockholder, etc.
3. Where the donee ceases to be the largest stockholder, etc. because his/her holding ratio decreases due to the disposal of stocks or forfeiture, etc. in the course of increasing the paid-in capital by any related person to the donee.
(7) A taxpayer may be granted special taxation for gift tax under Article 30-6 (1) of the Act on the aggregate of the taxable value of the stocks, etc. eligible for special taxation of gift tax and the gains from donation, subject to a ceiling of ten billion won, with regard to gains from donation under Article 41-3 or 41-5 of the Inheritance Tax and Gift Tax Act (hereafter in this paragraph, referred to as "gains from donation"), which accrue from the donation of stocks after the taxpayer receives stocks, etc. eligible for special taxation of gift tax under Article 30-6 (1) of the Act. In such cases, gains from donation granted special taxation shall be added to the taxable value of inheritance tax under Articles 30-5 (7) and (8) and 30-6 (3) of the Act, notwithstanding Article 13 (3) of the Inheritance Tax and Gift Tax Act. <Amended by Presidential Decree No. 26959, Feb. 5, 2016>
(8) Where an inheritance commences after stocks, etc. eligible for special taxation of gift tax under Article 30-6 (1) of the Act were conveyed as a gift; and each of the following requirements are satisfied as at the commencement date of inheritance, relevant provisions shall apply by deeming such case inheritance of a family business under Article 18 (2) 1 of the Inheritance Tax and Gift Tax Act: <Amended by Presidential Decree No. 26959, Feb. 5, 2016>
2. Deleted; <by Presidential Decree No. 22953, Jun. 3, 2011>
3. The donee engages in the family business or holds office as representative director where he/she has not disposed of the stocks, etc. conveyed as a gift or his/her holding ratio has not decreased.
(9) "Equivalent to the property of family business prescribed by Presidential Decree" in the main sentence of Article 30-6 (1) of the Act means an amount calculated by applying mutatis mutandis Article 15 (5) 2 of the Enforcement Decree of the Inheritance Tax and Gift Tax Act. In such cases, "stocks, etc. of a corporation that falls under family business among the inherited property" shall be construed as "stocks, etc. conveyed as a gift." <Newly Inserted by Presidential Decree No. 25211, Feb. 21, 2014>
(10) When reporting gift tax and the amount equivalent to interest pursuant to Article 30-6 (6) of the Act, a report on the grounds for additional collection of gift tax on succession to the family business eligible for special taxation and statement of voluntary payment in the forms prescribed by Ordinance of the Ministry of Economy and Finance shall be submitted to the head of the tax office having jurisdiction over the place of tax payment. <Newly Inserted by Presidential Decree No. 28636, Feb. 13, 2018>
[This Article Newly Inserted by Presidential Decree No. 20620, Feb. 22, 2008]
SECTION 5 Special Taxation for Corporate Restructuring
 Article 28 (Capital Gains Tax Carried Forward Following Consolidation between Small or Medium Enterprises)
(1) "Consolidation between small or medium enterprises engaging in the types of business prescribed by Presidential Decree" in Article 31 (1) of the Act means that a small or medium entrepreneur (referring to small or medium entrepreneurs subject to the Framework Act on Small and Medium Enterprises; hereafter in this Article, the same shall apply) engaging in a business, other than consumer service businesses defined under Article 29 (3) (limited to where the turnover of each consumer service business for the business year immediately preceding the business year in which the date of transfer of real estate falls, is the largest, if a small or medium entrepreneur concurrently engages in any of the consumer service businesses and other business), fully succeeds to the main assets at each business establishment relating to the business of the relevant enterprise, maintains the business identity, and meets the following requirements. In such cases, succession to a business of an individual investor by a corporation for which one year has not passed since its incorporation (limited to majority stockholders prescribed under Article 39 (2) of the Framework Act on National Taxes), shall not be deemed consolidation: <Amended by Presidential Decree No. 17458, Dec. 31, 2001; Presidential Decree No. 17829, Dec. 30, 2002; Presidential Decree No. 18176, Dec. 30, 2003; Presidential Decree No. 18704, Feb. 19, 2005; Presidential Decree No. 19329, Feb. 9, 2006; Presidential Decree No. 22037, Feb. 18, 2010; Presidential Decree No. 24368, Feb. 15, 2013>
1. The small or medium entrepreneur of the business establishment to be extinguished upon consolidation, shall be a shareholder or an investor of the corporation which has survived, or newly incorporated in the course of such consolidation (hereafter in this Article, referred to as "consolidated corporation");
2. The value of stocks or shares acquired by the small or medium entrepreneur of the business establishment to be extinguished upon consolidation, shall be more than or equal to the net asset value of the business establishment to be extinguished upon such consolidation (referring to the total value of assets appraised at the market price as on the date of consolidation minus total liabilities, including the reserves; hereinafter the same shall apply).
(2) "Fixed business assets prescribed by Presidential Decree" in Article 31 (1) of the Act means tangible and intangible assets (excluding the assets determined to be real estate unrelated to the business of corporations as stipulated by Ordinance of the Ministry of Economy and Finance, which have been acquired as of January 1, 1981) used directly for the relevant business. <Amended by Presidential Decree No. 17458, Dec. 31, 2001; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 22037, Feb. 18, 2010>
(3) Any person who intends to have the capital gains tax carried-forward under Article 31 (1) of the Act shall submit an application for tax carried-forward in the form prescribed by Ordinance of the Ministry of Economy and Finance, to the head of the tax office having jurisdiction over the place of tax payment, along with the consolidated corporation, at the time of filing his/her tax return for the taxable year in which the date of consolidation falls (including the preliminary return). <Amended by Presidential Decree No. 16693, Jan. 10, 2000; Presidential Decree No. 17458, Dec. 31, 2001; Presidential Decree No. 20720, Feb. 29, 2008>
(4) A person eligible for tax reduction or exemption for the remaining period of tax reduction or exemption under Article 31 (4) of the Act is entitled to such tax reduction or exemption for each taxable year or payment term that ends within the remaining period of tax reduction or exemption at the time of consolidation, with respect to the income generated from the business the person succeeded to from a small or medium start-up enterprise or a small or medium start-up venture enterprise to be extinguished upon consolidation, or an enterprise in an agro-industrial complex or an area for special support for local small or medium enterprises designated under Article 62-23 (1) of the Small and Medium Enterprises Promotion Act (hereinafter referred to as “area for special support for local small or medium enterprises”) or the business assets the person succeeded to from such enterprise. <Amended by Presidential Decree No. 16693, Jan. 10, 2000; Presidential Decree No. 26070, Feb. 3, 2015; Presidential Decree No. 27524, Sep. 29, 2016>
(5) A consolidated corporation that seeks the tax benefit provided for in Article 31 (4) of the Act shall file an application for tax reduction or exemption by applying mutatis mutandis Article 5 (25) or 61 (7). <Amended by Presidential Decree No. 24368, Feb. 15, 2013; Presidential Decree No. 29116, Aug. 28, 2018; Presidential Decree No. 29527, Feb. 12, 2019>
(6) A person eligible for tax reduction or exemption for the remaining period of tax reduction or exemption under Article 31 (5) of the Act is entitled to such tax reduction or exemption for each taxable year that ends within the remaining period of tax reduction or exemption at the time of consolidation, with respect to the income generated from the business the person succeeded to from a small or medium entrepreneur to be extinguished upon consolidation. <Amended by Presidential Decree No. 17458, Dec. 31, 2001; Presidential Decree No. 17829, Dec. 30, 2002>
(7) Article 60 (5) or 65 shall apply mutatis mutandis to an application for tax reduction or exemption filed by a consolidated corporation that seeks the tax benefit provided for in Article 31 (5) of the Act. <Amended by Presidential Decree No. 17458, Dec. 31, 2001; Presidential Decree No. 22037, Feb. 18, 2010; Presidential Decree No. 24368, Feb. 15, 2013>
(8) A person who has succeeded to an unused tax credit pursuant to Article 31 (6) of the Act may obtain a tax credit by carrying forward the equivalent to the unused tax credit on the assets succeeded to from a small or medium entrepreneur to be extinguished upon consolidation to each taxable year that ends within the remaining period of carry-forward deduction for that small or medium entrepreneur. <Amended by Presidential Decree No. 17829, Dec. 30, 2002>
(9) Where a consolidated corporation disposes of at least 1/2 of the fixed business assets referred to in paragraph (2) it has succeeded to from a small or medium entrepreneur whose business establishment extinguishes upon consolidation, or fails to use the fixed business assets for its business, the consolidated corporation shall be deemed to discontinue its business under Article 31 (7) 1: Provided, That this shall not apply to any of the following cases: <Newly Inserted by Presidential Decree No. 24368, Feb. 15, 2013>
1. Where the consolidated corporation disposes of the assets succeeded, due to its bankruptcy;
2. Where the consolidated corporation disposes of its assets by means of a merger under Article 44 (2) of the Corporate Tax Act, split-off under Article 46 (2) of the same Act, spin-off under Article 47 (1) of the same Act, or an investment in kind under Article 47-2 (1) of the same Act;
3. Deleted; <by Presidential Decree No. 28636, Feb. 13, 2018>
4. Where the consolidated corporation disposes of the assets succeeded, in accordance with the rehabilitation procedures under the Debtor Rehabilitation and Bankruptcy Act upon obtaining permission from the court.
(10) A disposal under Article 31 (7) 2 of the Act includes a transfer of stocks or equity shares for or without consideration and capital reduction for or without consideration (excluding where stocks or equity shares are retired equally in proportion to the ratio of stocks or equity shares held by each stockholder or investor): Provided, That this shall not apply in the following cases: <Newly Inserted by Presidential Decree No. 24368, Feb. 15, 2013; Presidential Decree No. 25211, Feb. 21, 2014; Presidential Decree No. 26070, Feb. 3, 2015>
1. Where the stocks or equity shares are disposed of upon the death or bankruptcy of a national eligible under Article 31 (1) of the Act (hereafter in this Article, referred to as "relevant national");
2. Where the relevant national disposes of the stocks or equity shares by means of a merger or split-off under Article 44 (2) or 46 (2) of the Corporate Tax Act;
3. Where the relevant domestic corporation disposes of the stocks or equity shares under the benefit of special taxation by means of comprehensive exchange and transfer of stocks under Article 38 of the Act or investment in kind with stocks under Article 38-2 of the Act;
4. Where the relevant national disposes of the stocks or equity shares in accordance with the rehabilitation procedures under the Debtor Rehabilitation and Bankruptcy Act upon obtaining permission from the court;
5. Where the relevant national disposes of the stocks or equity shares to perform his/her legal obligation;
6. Where the relevant national conveys stocks or equity shares of the relevant family business as a gift to any third person in order to transfer the family business, and the donee is granted special taxation for gift tax under Article 30-6 of the Act.
(11) For the purposes of paragraph (10) 6, Article 31 (7) of the Act shall apply to the donee, deeming that the donee is the relevant national, but the five-year period shall include the period during which the donor has held the stocks or equity shares of the consolidating corporation it acquired upon consolidation. <Newly Inserted by Presidential Decree No. 26070, Feb. 3, 2015>
 Article 29 (Capital Gains Tax Carried Forward following Conversion into Corporation)
(1) Deleted. <by Presidential Decree No. 17829, Dec. 30, 2002>
(2) "By the means of business transfer or acquisition prescribed by Presidential Decree" in Article 32 (1) of the Act means the comprehensive transfer of all business-related rights and duties to the relevant corporation within three months from the date of its incorporation by a person who has operated the relevant business after incorporating such corporation by becoming one of the incorporators and investing at least the amount calculated under paragraph (5). <Amended by Presidential Decree No. 19329, Feb. 9, 2006; Presidential Decree No. 21545, Jun. 19, 2009; Presidential Decree No. 22583, Dec. 30, 2010>
(3) "Consumer service business prescribed by Presidential Decree" in Article 32 (1) of the Act means any of the following businesses (hereinafter referred to as "consumer service business"): <Newly Inserted by Presidential Decree No. 22037, Feb. 18, 2010>
1. Hotel business and inn business (excluding tourist accommodation business under the Tourism Promotion Act);
2. Bar business (applicable only to general entertainment bar business, dancing entertainment bar business, and karaoke bar business under Article 21 of the Enforcement Decree of the Food Sanitation Act, but excluding foreigner-only entertainment restaurant business and tourist entertainment restaurant business under the Tourism Promotion Act);
3. Other businesses for the purpose of amusement, entertainment, etc., which are prescribed by Ordinance of the Ministry of Economy and Finance.
(4) A person who intends to have capital gains tax carried-forward under Article 32 (1) of the Act shall submit, to the head of a tax office having jurisdiction over the place of tax payment, an application for carried-forward taxation in the form prescribed by Ordinance of the Ministry of Economy and Finance, along with a newly-incorporated corporation, when filing his/her tax return (including preliminary returns) for the taxable year in which the date of an investment in kind or the date of business transfer and acquisition falls. <Amended by Presidential Decree No. 16693, Jan. 10, 2000; Presidential Decree No. 17458, Dec. 31, 2001; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 22037, Feb. 18, 2010>
(5) "Amount prescribed by Presidential Decree" in Article 32 (2) of the Act means the amount calculated by applying mutatis mutandis Article 28 (1) 2, which is the net asset value of a business place converted into a corporation by making an investment in kind with fixed business assets, or transferring and acquiring a business. <Amended by Presidential Decree No. 17829, Dec. 30, 2002; Presidential Decree No. 22037, Feb. 18, 2010>
(6) Where a corporation incorporated under Article 32 (1) of the Act (hereafter in this Article, referred to as "converted corporation"), disposes of at least 1/2 of the fixed business assets acquired through investment in kind or business transfer or acquisition pursuant to Article 32 (1) of the Act, or fails to use the fixed business assets for its business, the corporation shall be deemed to discontinue its business under Article 32 (5) 1 of the Act: Provided, That this shall not apply to any of the following cases: <Amended by Presidential Decree No. 24368, Feb. 15, 2013>
1. Where the converted corporation disposes of the assets succeeded due to its bankruptcy;
2. Where the converted corporation disposes of its assets by means of a merger under Article 44 (2) of the Corporate Tax Act, split-off under Article 46 (2) of the same Act, spin-off under Article 47 (1) of the same Act, or an investment in kind under Article 47-2 (1) of the same Act;
3. Deleted; <by Presidential Decree No. 28636, Feb. 13, 2018>
4. Where the converted corporation disposes of the assets succeeded, in accordance with the rehabilitation procedures under the Debtor Rehabilitation and Bankruptcy Act upon obtaining permission from the court.
(7) A disposal under Article 32 (5) 2 of the Act includes a transfer of stocks or equity shares for or without consideration and capital reduction for or without consideration (excluding where stocks or equity shares are retired equally in proportion to the ratio of stocks or equity shares held by each stockholder or investor): Provided, That this shall not apply in the following cases: <Newly Inserted by Presidential Decree No. 24368, Feb. 15, 2013; Presidential Decree No. 25211, Feb. 21, 2014; Presidential Decree No. 26070, Feb. 3, 2015; Presidential Decree No. 28636, Feb. 13, 2018>
1. Where the stocks or equity shares are disposed of, upon the death or bankruptcy of a national eligible under Article 32 (1) of the Act (hereafter in this Article, referred to as "relevant resident");
2. Where the relevant resident disposes of the stocks or equity shares by means of a merger or split-off under Article 44 (2) or 46 (2) of the Corporate Tax Act;
3. Where the relevant resident disposes of the stocks or equity shares under the benefit of special taxation by means of comprehensive exchange and transfer of stocks under Article 38 of the Act or investment in kind with stocks under Article 38-2 of the Act;
4. Where the relevant resident disposes of the stocks or equity shares in accordance with the rehabilitation procedures under the Debtor Rehabilitation and Bankruptcy Act upon obtaining permission from the court;
5. Where the relevant resident disposes of the stocks or equity shares to perform his/her legal obligation;
6. Where the relevant resident conveys stocks or equity shares of the relevant family business as a gift to any third person in order to transfer the family business, and the donee is granted special taxation for gift tax under Article 30-6 of the Act.
(8) For the purposes of paragraph (7) 6, Article 32 (5) of the Act shall apply to the donee by deeming that the donee is the relevant national, but the five-year period shall include the period during which the donor has held the stocks or equity shares of the consolidating corporation it acquired upon consolidation. <Newly Inserted by Presidential Decree No. 26070, Feb. 3, 2015>
 Article 30 (Special Taxation for Enterprises Undergoing Trade Adjustment Assistance whose Business is Converted)
(1) Deleted. <by Presidential Decree No. 21307, Feb. 4, 2009>
(2) "Fixed business assets" in the former part of Article 33 (1) of the Act means tangible fixed assets and intangible fixed assets used directly for the relevant business.
(3) Business conversion eligible for Article 33 (1) of the Act means that a person transfers fixed assets for the pre-conversion business at each place of business and starts the converted business by acquiring replacement fixed business assets to be used directly for the converted business within one year from the date of such transfer.
(4) "Amount calculated, as prescribed by Presidential Decree" in the former part of Article 33 (1) of the Act means the amount calculated by multiplying the amount of subparagraph 1 by the ratio of subparagraph 2: <Amended by Presidential Decree No. 21307, Feb. 4, 2009; Presidential Decree No. 29527, Feb. 12, 2019>
1. The transfer value of the fixed assets for the pre-conversion business minus the aggregate of the book value of the fixed assets and carried-forward losses referred to in Article 13 (1) 1 of the Corporate Tax Act as of the end of the immediately preceding business year;
2. The ratio of the acquisition value of the fixed assets for the converted business to the transfer value of the fixed assets for the pre-conversion business.
(5) The amount of tax reduction or exemption under Article 33 (2) 1 of the Act shall be calculated by the following formula: <Amended by Presidential Decree No. 23590, Feb. 2, 2012>
Amount of the capital gains tax calculated under subparagraph 1 of Article 93 of the Income Tax Act, payable upon the transfer of the building for the pre-conversion business and the land appurtenant thereto × Ratio of the acquisition value of the machinery and equipment of the converted business to the transfer value of the pre-conversion business × 50/100
(6) The amount eligible for tax deferral under Article 33 (2) 2 of the Act shall be calculated by the following formula: <Amended by Presidential Decree No. 23590, Feb. 2, 2012>
Capital gains provided for in Article 95 (1) of the Income Tax Act × (Acquisition value of the building for the converted business and the land appurtenant thereto ÷ Transfer value of the pre-conversion business)
(7) For the purposes of paragraphs (4) through (6), where none of the fixed assets for the converted business, the machinery, equipment, and building for the converted business, and land appurtenant thereto, is acquired by the end of the business year in which the fixed assets for the pre-conversion business are transferred, the acquisition value shall be the estimated value in a statement of (planned) business conversion.
(8) "Amount calculated, as prescribed by Presidential Decree" in the former part of Article 33 (3) of the Act, with the exception of its subparagraphs, means the following amounts: <Amended by Presidential Decree No. 22037, Feb. 18, 2010; Presidential Decree No. 27848, Feb. 7, 2017; Presidential Decree No. 28636, Feb. 13, 2018>
1. Where capital gains are not included in the gross income pursuant to paragraph (4), the total amount not included in the gross income;
2. Where the capital gains tax is reduced or exempted pursuant to paragraph (5), the total amount of tax reduced or exempted;
3. Where the tax is deferred under paragraph (6), the total equivalent to the tax-deferred amount (referring to the amount of tax calculated by multiplying the tax rate specified in Article 104 of the Income Tax Act by the tax-deferred amount; hereafter in this paragraph and paragraphs (9) and (14), referred to as "amount of tax deferred");
4. Where the estimated value is not included in the gross income under paragraph (7), the tax is reduced, exempted, or deferred, the amount granted in excess of the amount calculated on the basis of the actual value pursuant to paragraphs (4) through (6).
(9) "Equivalent to the interest calculated, as prescribed by Presidential Decree" in the latter part of Article 33 (3) of the Act shall be the amount calculated as follows: <Amended by Presidential Decree No. 21307, Feb. 4, 2009; Presidential Decree No. 22037, Feb. 18, 2010; Presidential Decree No. 28636, Feb. 13, 2018; Presidential Decree No. 29527, Feb. 12, 2019>
1. Where the amount referred to in paragraph (8) 1 and 4 is included in the gross income: The amount calculated by multiplying the difference in corporate tax incurred by excluding the amount referred to in paragraph (8) 1 or 4 from the gross income for the business year in which capital gains are not included in gross income, by the period of item (a) and the rate of item (b):
(a) The period from the day following the end of the business year in which capital gains are not included in the gross income, until the end of the business year in which the amount referred to in paragraph (8) 1 or 4 is included in the gross income;
(b) 25/100,000 per day;
2. Where the tax referred to in paragraph (8) 2 through 4 is paid: The amount calculated by multiplying the amount of tax reduced, exempted, or deferred that has to be paid pursuant to paragraph (8) 2 through 4, by the period of item (a) and the rate of item (b):
(a) The period from the day following the deadline for payment of capital gains tax on fixed assets for the pre-conversion business until the date the amount of tax is paid under subparagraphs of Article 33 (3) of the Act;
(b) 25/100,000 per day.
(10) For the purpose of Article 33 of the Act, the business shall be classified into the Sub-Class according to the Korean Standard Industrial Classification. <Newly Inserted by Presidential Decree No. 19888, Feb. 28, 2007>
(11) Any domestic corporation that wishes to be eligible for Article 33 (1) of the Act shall submit a statement of capital gains and adjustment for inclusion in gross income in installments, and a statement of (planned) business conversion, in the forms prescribed by Ordinance of the Ministry of Economy and Finance, along with its tax return for the business year in which the fixed assets for the pre-conversion business are transferred. <Amended by Presidential Decree No. 20720, Feb. 29, 2008>
(12) Any resident who wishes to be granted a reduction, exemption, or deferral of capital gains tax pursuant to Article 33 (2) of the Act shall submit an application for tax reduction, exemption, or deferral, and a statement of (planned) business conversion, in the forms prescribed by Ordinance of the Ministry of Economy and Finance, along with his/her tax return (including the preliminary return) for the taxable year in which the fixed assets for the pre-conversion business are transferred. <Amended by Presidential Decree No. 20720, Feb. 29, 2008>
(13) When a person starts the converted business after the application of paragraph (7), the person shall submit a report on the completion of the business conversion in the form prescribed by Ordinance of the Ministry of Economy and Finance, to the head of the tax office having jurisdiction over the place of tax payment, along with his/her tax return for the taxable year in which he/she starts the converted business. <Amended by Presidential Decree No. 20720, Feb. 29, 2008>
(14) "Amount of tax deferred, calculated as prescribed by Presidential Decree" in Article 33 (4) of the Act, with the exception of its subparagraphs, means the total amount of tax deferred under paragraph (8) 3. <Newly Inserted by Presidential Decree No. 27848, Feb. 7, 2017>
[This Article Newly Inserted by Presidential Decree No. 19329, Feb. 9, 2006]
 Article 30-2 (Tax Reduction or Exemption for Small or Medium Enterprises Engaging in Converted Business)
(1) Deleted. <by Presidential Decree No. 21307, Feb. 4, 2009>
(2) "Date of business conversion prescribed by Presidential Decree" in Article 33-2 (1) of the Act, with the exception of its subparagraphs, means either of the following applicable dates: <Amended by Presidential Decree No. 21307, Feb. 4, 2009>
1. In cases falling under Article 33-2 (1) 1 of the Act: The commencement date of the converted business under Article 33-2 (1) of the Act (hereafter in this Article, referred to as "converted business");
2. In cases falling under Article 33-2 (1) 2 of the Act: The end of the taxable year in which the business is converted, as prescribed in paragraph (3).
(3) Conversion of business under Article 33-2 (1) 2 of the Act means where the gross sales of a pre-conversion business defined under Article 33-2 (1) of the Act (hereafter in this Article, referred to as "pre-conversion business") is reduced to not more than 50/100 of the gross sales for the taxable year immediately preceding the taxable year in which the converted business is added (hereafter in this paragraph, referred to as "base gross sales") within the five years from the commencement date of the taxable year immediately following the taxable year in which the converted business is added, and the sales of the converted business increase by at least 50/100 of the base gross sales within the relevant period. <Amended by Presidential Decree No. 26959, Feb. 5, 2016; Presidential Decree No. 27848, Feb. 7, 2017>
(4) "Taxable year prescribed by Presidential Decree" in Article 33-2 (2) of the Act means any taxable year in which the sales of a pre-conversion business exceed 50/100 of the base gross sales, or the sales of the newly-added converted business do not exceed 50/100 of the base gross sales. <Amended by Presidential Decree No. 22037, Feb. 18, 2010; Presidential Decree No. 26959, Feb. 5, 2016>
(5) For the purposes of Article 33-2 of the Act, the business shall be classified into the Sub-Class according to the Korean Standard Industrial Classification.
(6) "Equivalent to the interest calculated as prescribed by Presidential Decree" in Article 33-2 (4) of the Act means the equivalent to the amount of tax payable under Article 33-2 (3) of the Act multiplied by the period of subparagraph 1 and the rate of subparagraph 2: <Newly Inserted by Presidential Decree No. 21545, Jun. 19, 2009; Presidential Decree No. 29527, Feb. 12, 2019>
1. The period from the day following the end of the taxable year in which tax reduction or exemption is granted, until the end of the taxable year in which the grounds prescribed in Article 33-2 (3) of the Act arise;
2. 25/100,000 per day.
(7) Any national who wishes to be granted a reduction or exemption of income tax or corporate tax pursuant to Article 33-2 (1) of the Act shall file an application for tax reduction or exemption in the form prescribed by Ordinance of the Ministry of Economy and Finance, with the head of the tax office having jurisdiction over the place of tax payment, along with his/her tax return for the taxable year in which the date of business conversion falls. <Amended by Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 21545, Jun. 19, 2009>
[This Article Newly Inserted by Presidential Decree No. 19888, Feb. 28, 2007]
 Article 31 Deleted. <by Presidential Decree No. 20620, Feb, 22. 2008>
 Articles 32 and 33 Deleted. <by Presidential Decree No. 17458, Dec. 31, 2001>
 Article 34 (Special Taxation for Assets Sold by Domestic Corporations to Pay Financial Debts)
(1) "Date prescribed by Presidential Decree" in Article 34 (1) of the Act means the date a domestic corporation receives an installment (the down payment is deemed to be included in the first installment). <Amended by Presidential Decree No. 27127, May 10, 2016>
(2) For the purposes of Article 34 (1) and (2) of the Act, Article 162 of the Enforcement Decree of the Income Tax Act shall apply mutatis mutandis to the date an asset is transferred (hereafter in this Article, referred to as "date an asset is transferred"): Provided, That dates prescribed in paragraph (1) shall apply to the transfer of an asset under long-term installment terms.
(3) "Unavoidable causes prescribed by Presidential Decree" in Article 34 (1) of the Act means where it is impracticable to repay a debt due to a situation in which the financial creditor defined in subparagraph 2 of Article 2 of the Corporate Restructuring Promotion Act (hereafter in this Article, referred to as "financial creditor") is unable to receive the repayment of the debt. <Amended by Presidential Decree No. 27127, May 10, 2016; Presidential Decree No. 28636, Feb. 13, 2018>
(4) "Deadline prescribed by Presidential Decree" in Article 34 (1) of the Act means the deadline specified in the following: <Amended by Presidential Decree No. 27127, May 10, 2016>
1. Where the causes provided for in paragraph (3) arise and the date such causes terminate comes later than the date specified in subparagraph 2, the date following the date such causes terminate;
2. In any case other than subparagraph 1, the date three months lapse from the date assets are transferred.
(5) For the purposes of Article 34 (1) and (2) of the Act, the scope of debts shall be limited to those specified in the financial restructuring plan provided for in paragraph (6), which shall contain the details of the debts and a repayment plan through the transfer of assets, and shall include the following (hereafter in this Article, referred to as "debts to financial creditors"): <Amended by Presidential Decree No. 27127, May 10, 2016; Presidential Decree No. 28636, Feb. 13, 2018>
1. Business-related loans from any financial creditor;
2. Interest on the loans referred to in subparagraph 1;
3. Corporate bonds issued by the relevant domestic corporation to raise funds, which are purchased or guaranteed by the financial creditor;
4. Commercial paper issued by the relevant domestic corporation to raise funds, which is purchased by the financial creditor.
(6) "Financial restructuring plan prescribed by Presidential Decree" in Article 34 (1) of the Act means any of the following documents, which specify the total amount and details of debts to financial creditors, a repayment plan, details of assets to be transferred, and a transfer plan (hereafter in this Article, referred to as "financial restructuring plan"): <Amended by Presidential Decree No. 27127, May 10, 2016; Presidential Decree No. 27848, Feb. 7, 2017; Presidential Decree No. 28636, Feb. 13, 2018>
1. An agreement made between the principal creditor bank defined in subparagraph 5 of Article 2 of the Corporate Restructuring Promotion Act, or a council of financial creditors provided for in Article 22 of the same Act (hereafter in this Article, referred to as "council of financial creditors or such") and an enterprise to implement the workout program pursuant to Article 14 of the same Act;
2. A special agreement made between a committee (hereafter in this Article, referred to as "creditor banks’ autonomous committee") organized among banks having bonds of an enterprise subject to financial restructuring, to assess credit risks and to discuss a restructuring plan, etc. of the enterprise subject to financial restructuring and the enterprise subject to financial restructuring in accordance with the basis to organize such, and an agreement stipulating the joint management procedure of the banks having bonds of the enterprise subject to financial restructuring to implement the workout program;
3. Timely corrective measures, which the Financial Services Commission recommends, requests, or orders to the relevant financial institution under Article 10 of the Act on the Structural Improvement of the Financial Industry, or the Financial Services Commission orders the relevant financial institution to submit the implementation plan such timely corrective measures;
4. A rehabilitation plan formulated under Article 193 of the Debtor Rehabilitation and Bankruptcy Act, for which a decision on authorization is declared by the court under Article 245 of the same Act;
5. An agreement made between the Korea Asset Management Corporation under the Act on the Efficient Disposal of Non-Performing Assets of Financial Companies and the Establishment of Korea Asset Management Corporation (hereafter in this Article, referred to as the "Korea Asset Management Corporation") and a small or medium enterprise that falls under either of the following to improve its financial structure:
(a) An enterprise showing signs of insolvency defined in subparagraph 3 of Article 2 of the Act on the Efficient Disposal of Non-Performing Assets of Financial Companies and the Establishment of Korea Asset Management Corporation;
(b) A restructuring company provided for in Article 26 (1) 7 of the Act on the Efficient Disposal of Non-Performing Assets of Financial Companies and the Establishment of Korea Asset Management Corporation.
(7) "Persons prescribed by Presidential Decree" in Article 34 (1) of the Act means the following entities (hereafter in this Article and Articles 36, 37, and 43, referred to as "person authorized to approve the financial restructuring plan"): <Amended by Presidential Decree No. 27127, May 10, 2016; Presidential Decree No. 27848, Feb. 7, 2017>
1. In cases falling under paragraph (6) 1: A council of financial creditors or such;
2. In cases falling under paragraph (6) 2: A creditor banks’ autonomous committee;
3. In cases falling under paragraph (6) 3: The Financial Services Commission;
4. In case falling under paragraph (6) 4: The competent court;
5. In case falling under paragraph (6) 5: The Korea Asset Management Corporation.
(8) “Equivalent to the paid debts prescribed by Presidential Decree (limited to the amount that exceeds the deficit prescribed by Presidential Decree” in Article 34 (1) of the Act means the amount calculated by the following formula (hereafter in this Article, referred to as "equivalent to capital gains"): <Amended by Presidential Decree No. 27127, May 10, 2016>
[Capital gains referred to in Article 34 (1) of the Act ? Carried-forward losses referred to in subparagraph 1 of Article 13 of the Corporate Tax Act (hereafter in this Article referred to as "carried-forward losses") as at the end of the business year immediately preceding the business year in which assets are transferred. If the domestic corporation covers carried-forward losses first with the value of assets it has acquired without consideration or with the reduced amount of debts due to debt relief or acquittance in such cases, the covered amount shall be subtracted from the carried-forward losses] × [the amount of debts paid to financial institutions (hereafter in this Article, referred to as "amount of debts paid") out of the transfer value of assets transferred pursuant to Article 34 (1) of the Act (hereafter in this Article, referred to as "transfer value") ÷ the transfer value]
(9) For the purposes of paragraph (8), if debts to financial creditors have not been paid until the end of the business year in which the date assets are transferred, the amount of debts paid shall be determined with the amount of debts payable on the statement of debts paid (payable) in the form prescribed by Ordinance of the Ministry of Economy and Finance. <Amended by Presidential Decree No. 27127, May 10, 2016; Presidential Decree No. 28636, Feb. 13, 2018>
(10) Where an amount not included in gross income is included in gross income in accordance with the former part of Article 34 (2) of the Act, with the exception of its subparagraphs, the amount calculated by the following formula shall be included in gross income: <Amended by Presidential Decree No. 27127, May 10, 2016>
1. In cases falling under Article 34 (2) 1 of the Act: The amount calculated by the following formula:
Equivalent to capital gains × [Amount of debts payable on the statement of debts paid (or payable) - Amount of debts paid out of the transfer value] ÷ Amount of debts payable on the statement of debts repaid (or payable)
2. In cases falling under Article 34 (2) 2 of the Act: The amount calculated by the following formula:
Equivalent to capital gains × Debt ratio less standard debt ratio to standard debt ratio (if the ratio exceeds one, it shall be deemed one)
3. In cases falling under Article 34 (2) 3 of the Act:
The full amount not included in gross income out of the equivalent to capital gains.
(11) "Equivalent to the interest calculated by the formula prescribed by Presidential Decree" in the latter part of Article 34 (2) of the Act, with the exception of its subparagraphs, and the proviso to Article 34 (2) 3 of the Act means the difference in corporate tax incurred by excluding the amount calculated under any subparagraph of paragraph (10) from gross income for the business year in which assets are transferred, multiplied by the period of subparagraph 1 and the rate of subparagraph 2: <Amended by Presidential Decree No. 27127, May 10, 2016; Presidential Decree No. 29527, Feb. 12, 2019>
1. The period from the day following the end of the business year in which the assets are transferred, until the end of the business year in which the amount calculated under any subparagraph of paragraph (10) is included in gross income;
2. 25,100,000 per day.
(12) For the purposes of paragraphs (10) (excluding paragraph (10) 3; hereafter in this paragraph, the same shall apply) and (11), if an amount not included partially or fully in gross income in accordance with Article 34 (1) of the Act is included later in gross income (hereafter in this Article, referred to as "amount already included in gross income") before including the amount calculated under paragraph (10) in gross income, the amount already included in gross income in the order of inclusion in gross income shall be deemed the amount included in gross income under paragraph (10); and the equivalent to interest referred to in paragraph (11) shall be calculated, based on the period until the business year in which the amount already included in gross income is included in gross income. <Amended by Presidential Decree No. 27127, May 10, 2016>
(13) For the purposes of Article 34 (2) 2 of the Act, if the date assets are transferred and the date debts are repaid to financial creditors (hereafter in this Article, referred to as "date debts are repaid"), fall in different business years, the three-year period shall be counted from the date debts are repaid. <Amended by Presidential Decree No. 27127, May 10, 2016; Presidential Decree No. 28636, Feb. 13, 2018>
(14) For the purposes of Article 34 (2) 2 of the Act, the three-year period shall be counted, deeming that the period from the date assets are transferred (referring to the date debts are repaid, in cases falling under paragraph (13)), until the end of the relevant business, is one year. <Amended by Presidential Decree No. 27127, May 10, 2016>
(15) For the purposes of Article 34 (2) 2 of the Act, the debt ratio shall be calculated by dividing the liabilities prescribed by Ordinance of the Ministry of Economy and Finance (hereafter in this Article, referred to as "liabilities") as at the end of each business year, by the stockholder's equity on the balance sheet (its amount shall be calculated, as prescribed by Ordinance of the Ministry of Economy and Finance, and it refers to the paid-in capital calculated, as prescribed by Ordinance of the Ministry of Economy and Finance, if the stockholder's equity is less than the paid-in capital; hereafter in this Article, referred to as "stockholder's equity"). Foreign-currency denominated assets and liabilities in such cases shall be valued, as prescribed by Ordinance of the Ministry of Economy and Finance. <Amended by Presidential Decree No. 27127, May 10, 2016>
(16) For the purposes of Article 34 (2) 2 of the Act, the standard debt ratio shall be the ratio of subparagraph 1 minus the ratio of subparagraph 2. In such cases, the latter part of paragraph (15) shall apply to foreign-currency denominated assets and liabilities: <Amended by Presidential Decree No. 27127, May 10, 2016>
1. The ratio calculated by dividing liabilities as at the end of the business year (hereafter in this Article, referred to as "record date for calculation of the standard debt ratio") immediately preceding the business year in which a financial restructuring plan is first approved, by the stockholders' equity as at the record date for calculation of the standard debt ratio. If liabilities and stockholder's equity are valued and confirmed by the person authorized to approve the financial restructuring plan to formulate a financial restructuring plan as of a specific day during the period from the record date for calculation of the standard debt ratio to the date before the date the financial restructuring plan is first approved, such liabilities and stockholder's equity may be used for calculation in such cases;
2. The ratio calculated by dividing the amount of debts paid, by the stockholder’s equity referred to in subparagraph 1.
(17) "Unavoidable cause prescribed by Presidential Decree, such as bankruptcy" in the proviso to Article 34 (2) 3 of the Act means the following cases:
1. Where bankruptcy is declared;
2. Where a business is discontinued due to a natural disaster or any other similar event.
(18) The person authorized to approve the financial restructuring plan shall submit the financial restructuring plan and a report on performance of the financial restructuring plan, in the forms prescribed by Ordinance of the Ministry of Economy and Finance, to the head of the tax office having jurisdiction over the place of tax payment of a domestic corporation whose financial restructuring plan is approved (hereafter in this Article, referred to as "domestic corporation with an approved financial restructuring plan") by the following relevant deadline: Provided, That, where the domestic corporation with an approved financial restructuring plan submits its financial restructuring plan or a report on performance of its financial restructuring plan, which have been confirmed by the person authorized to approve the financial restructuring plan, to the head of the tax office having jurisdiction over the place of tax payment, such plan and report shall be deemed submitted by the person authorized to approve the financial restructuring plan: <Amended by Presidential Decree No. 27127, May 10, 2016>
1. The financial restructuring plan: By the end of the business year in which the domestic corporation’s financial restructuring plan is approved;
2. The report on performance of the financial restructuring plan: By the deadline for filing the tax return for the following relevant business year:
(a) The business year in which assets are transferred;
(b) The business year in which debts are repaid (limited to where the date assets are transferred and the date debts are repaid, fall in different business years);
(c) Three business years following the business year in which debts are repaid.
(19) A domestic corporation that wishes to be eligible under Article 34 (1) of the Act shall submit a statement of capital gains and adjustment for inclusion in gross income in installments, and a statement of debts paid (payable), in the forms prescribed by Ordinance of the Ministry of Economy and Finance, to the head of the tax office having jurisdiction over the place of tax payment, along with its tax return for the business year in which assets are transferred. It shall submit a statement of debts paid (or payable) additionally, along with its tax return for the business year in which debts are repaid, if the date assets are transferred and the date debts are repaid, fall in different business years. <Amended by Presidential Decree No. 27127, May 10, 2016>
[This Article Newly Inserted by Presidential Decree No. 21545, Jun. 19, 2009]
 Article 35 Deleted. <by Presidential Decree No. 28636, Feb. 13, 2018>
 Article 35-2 (Special Taxation for Corporations following All-Inclusive Share Swap or Transfer)
(1) Where a corporation (limited to domestic corporations and foreign corporations referred to in Article 91 (1) of the Corporate Tax Act; hereafter in this Article, the same shall apply) that is a stockholder of a domestic corporation (hereafter in this Article, referred to as "wholly-owned subsidiary"), conducts an all-inclusive share swap or transfer (hereafter in this Article, referred to as "all-inclusive share swap, etc.") with or to another domestic corporation (hereafter in this Article, referred to as "complete parent company") as prescribed in Article 38 (1) of the Act, and is granted tax deferral, the corporation may include the equivalent to the amount of subparagraph 1 minus the amount of subparagraph 2 in deductible expenses, when calculating the income amount for the business year in which the date of the all-inclusive share swap, etc. falls. In such cases, the amount included in deductible expenses shall be recognized as the advanced depreciation provision of stocks of the complete parent company or of the complete parent company of that complete parent company, acquired through the all-inclusive share swap, etc.: <Amended by Presidential Decree No. 22583, Dec. 30, 2010; Presidential Decree No. 27848, Feb. 7, 2017>
1. The amount calculated by subtracting the acquisition price of stocks of the wholly-owned subsidiary transferred through the all-inclusive share swap, etc. from the aggregate of the price of stocks of the complete parent company (referring to stocks of the complete parent company of the complete parent company, if the value of stocks of the complete parent company of the complete parent company is at least 80/100 of the aggregate of the price for the swap or transfer received under Article 38 (1) 2 of the Act; hereafter in this Article, referred to as "stocks of the complete parent company, etc."), acquired through the all-inclusive share swap, etc., money, and value of other property (hereafter in this Article, referred to as "price for the swap or transfer");
2. The smaller of an amount calculated under subparagraph 1, and the aggregate of money, other than stocks of the complete parent company, etc., received as the price for the swap or transfer, and value of other property.
(2) The advanced depreciation provision recognized under paragraph (1) shall be adjusted by the following formula and be included in the gross income in the business year in which the relevant corporation disposes of the stocks of the complete parent company, etc. However, where such stocks are retired as treasury stocks, the advanced depreciation provision adjusted as aforementioned shall not be included in the gross income, but be deemed to become extinct. In such cases, if stocks of the complete parent company, etc. have been acquired through any means other than an all-inclusive share swap, etc., stocks acquired through the all-inclusive share swap, etc. shall be deemed transferred first: <Amended by Presidential Decree No. 27848, Feb. 7, 2017>
Advanced depreciation provision × (Number of stocks disposed of ÷ Number of stocks acquired through the all-inclusive share swap, etc.)
(3) Where a resident, non-resident, or foreign corporation not falling under Article 91 (1) of the Corporate Tax Act (hereafter in this Article, referred to as "resident, etc."), being a stockholder of a wholly-owned subsidiary, conducts an all-inclusive share swap, etc. with a complete parent company as prescribed in Article 38 (1) of the Act, and is granted tax deferral, capital gains tax shall be imposed, deeming that the smaller of the amounts calculated under subparagraphs 1 and 2, is capital gains: <Amended by Presidential Decree No. 22583, Dec. 30, 2010; Presidential Decree No. 27848, Feb. 7, 2017>
1. An amount calculated by subtracting the acquisition value of stocks of the wholly-owned subsidiary that have been transferred by the all-inclusive share swap, etc., from the price for the swap or transfer;
2. The aggregate of money, other than stocks of the complete parent company, etc., received as the price for the swap or transfer, and value of other property.
(4) When a resident, etc. transfers all or some of the stocks of a complete parent company, etc., acquired under paragraph (3), capital gains tax shall be imposed, deeming the amount calculated by the following formula to be the acquisition value. In such cases, where stocks of the complete parent company, etc. have been acquired through any means other than an all-inclusive share swap, etc., stocks acquired through the all-inclusive share swap, etc. shall be deemed transferred first: <Amended by Presidential Decree No. 27848, Feb. 7, 2017>
(Acquisition value of stocks of the wholly-owned subsidiary + Capital gains calculated under paragraph (3) - An amount calculated under paragraph (3) 2) × (Number of stocks disposed of ÷ Number of stocks acquired through the all-inclusive share swap, etc.)
(5) Where a complete parent company has acquired stocks of a wholly-owned subsidiary within two years prior to the date of all-inclusive swap or transfer of stocks of a complete parent company for the purposes of determining whether the value of stocks amounts to at least 80/100 of the total price for the swap or transfer as prescribed in Article 38 (1) 2 of the Act, the following amounts shall be deemed given in cash and be added to the total price for the swap or transfer:
1. Where the complete parent company is not a controlling stockholder under Article 43 (7) of the Enforcement Decree of the Corporate Tax Act of the wholly-owned subsidiary as at the date of all-inclusive share swap or transfer: Where the stocks of such wholly-owned subsidiary acquired by the complete parent company within two years prior to the date of all-inclusive share swap or transfer, exceed 20/100 of the total number of outstanding stocks of the wholly-owned company: The acquisition value of such stocks in excess;
2. Where the complete parent company is the controlling stockholder under Article 43 (7) of the Enforcement Decree of the Corporate Tax Act of the wholly-owned subsidiary as at the date of all-inclusive share swap or transfer: The acquisition price of stocks acquired within two years prior to the date of all-inclusive share swap or transfer.
(6) "Stockholders of the wholly-owned subsidiary prescribed by Presidential Decree" in Article 38 (1) 2 and (2) 2 of the Act means the controlling stockholders under Article 43 (3) of the Enforcement Decree of the Corporate Tax Act of the wholly-owned subsidiary, except: <Amended by Presidential Decree No. 25211, Feb. 21, 2014>
1. Fourth or higher degree relatives by blood or marriage among relatives prescribed in Article 43 (8) 1 (a) of the Enforcement Decree of the Corporate Tax Act;
2. Persons whose equity ratio in the wholly-owned subsidiary is less than 1/100, and the value of the equity share at the appraised market price is less than one billion won as of the date of all-inclusive share swap or transfer.
(7) When the stocks of a complete parent company, etc. received as the price for the swap or transfer, are distributed to the stockholders of a wholly-owned subsidiary, stocks of the complete parent company, etc. in at least the amount calculated by the following formula, shall be distributed to the stockholders referred to in paragraph (6): <Amended by Presidential Decree No. 27848, Feb. 7, 2017>
Aggregate of stocks of the complete parent company, etc., paid by the complete parent company as the price for the swap or transfer × Share-holding ratio of the relevant stockholder in the wholly-owned subsidiary
(8) Where a wholly-owned subsidiary disposes of at least 1/2 of the value of fixed assets held as at the date of all-inclusive share swap or transfer, or does not use it for its business when determining whether the wholly-owned subsidiary continues or closes the business under Article 38 (1) 3 and (2) 1 of the Act, it shall be deemed to have closed its business.
(9) and (10) Deleted. <by Presidential Decree No. 28636, Feb. 13, 2018>
(11) "Period prescribed by Presidential Decree" in Article 38 (2) of the Act, with the exception of its subparagraphs, means two years from the commencement date of the business year following the business year in which the date of an all-inclusive share swap or transfer falls. <Amended by Presidential Decree No. 23590, Feb. 2, 2012>
(12) Where either of the circumstances provided for in any subparagraph of Article 38 (2) of the Act arises with respect to a wholly-owned subsidiary, a stockholder thereof shall pay the capital gains tax or corporate tax deferred, according to the following distinction: <Amended by Presidential Decree No. 28636, Feb. 13, 2018>
1. Where the stockholder of the wholly-owned subsidiary is a resident: The amount of tax transferred under Article 38 (1) of the Act (excluding the portion already paid out of the amount of tax transferred and the amount of tax paid pursuant to paragraph (3) of this Article) shall be paid within two months from the end of a half-year term in which the date the relevant circumstance arises falls. In such cases, if stocks of the complete parent company, etc. are transferred, the acquisition value of such stocks shall be the market price of the stocks of the complete parent company, etc. as at the date of the comprehensive exchange and transfer of the stocks;
2. Where the stockholder of the wholly-owned subsidiary is a corporation: When calculating the amount of income for the business year in which the date the relevant circumstance arises falls, the balance left over after including the amount included in the deductable expenses as the advanced depreciation provision under paragraph (1) in the gross income under paragraph (2), shall be included in the gross income.
(13) "Where extenuating circumstances prescribed by Presidential Decree arise" in Article 38 (3) of the Act means either of the following circumstances: <Amended by Presidential Decree No. 23590, Feb. 2, 2012>
1. Where extenuating circumstances are deemed to have arisen for the purposes of Article 38 (1) 2 and (2) 2 of the Act: Where a complete parent company and stockholders referred to in paragraph (6) fall under any of the items of Article 80-2 (1) 1 of the Enforcement Decree of the Corporate Tax Act;
2. Where extenuating circumstances are deemed to have arisen for the purposes of Article 38 (1) 3 and (2) 1 of the Act: Where a wholly-owned subsidiary falls under any of the items of Article 80-2 (1) 2 of the Enforcement Decree of the Corporate Tax Act.
(14) A stockholder of a wholly-owned subsidiary who intends to be eligible under Article 38 (1) of the Act shall file an application for special taxation for all-inclusive share swap, etc., in the form prescribed by Ordinance of the Ministry of Economy and Finance, with the head of the tax office having jurisdiction over the place of tax payment, jointly with the complete parent company, when filing his/her tax return for the taxable year in which the date of all-inclusive share swap or transfer falls. <Amended by Presidential Decree No. 26959, Feb. 5, 2016>
(15) Deleted. <by Presidential Decree No. 28636, Feb. 13, 2018>
[This Article Newly Inserted by Presidential Decree No. 22181, Jun. 8, 2010]
 Article 35-3 (Special Taxation for Corporations concerning Incorporation of Holding Companies)
(1) Where a corporation (limited to domestic corporations and foreign corporations referred to in Article 91 (1) of the Corporate Tax Act; hereafter in this Article, the same shall apply), being a stockholder of a domestic corporation, invests in kind with stocks held by it in a holding company or converted holding company, or exchanges such stocks with the stocks of the holding company or converted holding company pursuant to Article 38-2 (1) or (2) of the Act, and is granted tax deferral, the corporation shall include the amount (where the amount exceeds the amount calculated by subtracting the book value from the market price of the relevant stocks held, the excess shall be excluded; hereafter in this Article, referred to as "stock transfer gains") calculated by subtracting the book value of the relevant stocks held as at the date immediately preceding the date such investment in kind or exchange was made (hereafter in this Article and in Article 35-4, referred to as "investment in kind, etc.") from the price of stocks (referring to the appraised market price under Article 52 (2) of the Corporate Tax Act) of the holding company or converted holding company acquired by investment in kind, etc. as at the date investment in kind, etc. was made in the deductible expenses in calculating the amount of income for such business year. In such cases, said amount shall be recognized as the advanced depreciation provision for such stocks. <Amended by Presidential Decree No. 18704, Feb. 19, 2005; Presidential Decree No. 19329, Feb. 9, 2006; Presidential Decree No. 21307, Feb. 4, 2009; Presidential Decree No. 22037, Feb. 18, 2010; Presidential Decree No. 22181, Jun. 8, 2010; Presidential Decree No. 22583, Dec. 30, 2010>
(2) The advanced depreciation provision recognized under paragraph (1) shall be included in gross income in the business year in which the stocks of the relevant holding company or converted holding company are disposed of (where stocks are acquired by any means, other than investment in kind, etc., the stocks acquired by investment in kind, etc. are deemed disposed of first), but where some of such stocks are disposed of, the amount calculated by the following formula shall be included in gross income: <Amended by Presidential Decree No. 29527, Feb. 12, 2019>
Advanced depreciation provision × (Number of disposed stocks out of stocks of a holding company or a converted holding company, which are acquired by investment in kind or treasury stock swap ÷ Number of stocks of a holding company or a converted holding company, which are acquired by investment in kind or treasury stock swap)
(3) Notwithstanding paragraph (2), where stocks of the relevant holding company or converted holding company are transferred by qualified division that meets the requirements prescribed in Article 82-2 (3) 2 of the Enforcement Decree of the Corporate Tax Act (excluding split-offs and mergers by division; hereafter in this paragraph, referred to as "qualified division"), the advanced depreciation provision reflected in the relevant stocks shall not be included in gross income, while the corporation newly established as a consequence of the qualified division shall succeed to the advanced depreciation provision reflected in the stocks as the advanced depreciation provision for the stocks of the holding company or converted holding company, which it acquires by the qualified division, and shall include such advanced depreciation provision calculated by the formula prescribed in paragraph (2) in its gross income. <Newly Inserted by Presidential Decree No. 26959, Feb. 5, 2016>
(4) "Stockholders prescribed by Presidential Decree" in Article 38-2 (1) 1 and (3) 4 of the Act means stockholders, etc. falling under Article 80-2 (5) of the Enforcement Decree of the Corporate Tax Act, among stockholders of a corporation that has issued stocks subject to investment in kind, etc. <Newly Inserted by Presidential Decree No. 22583, Dec. 30, 2010; Presidential Decree No. 24368, Feb. 15, 2013>
(5) Articles 80-2 (7) and 80-4 (8) of the Enforcement Decree of the Corporate Tax Act shall apply mutatis mutandis to determination as to whether a subsidiary continues or closes its business under Article 38-2 (1) 2 of the Act (including cases applied mutatis mutandis in Article 38-2 (2) of the Act) and Article 38-2 (3) 3 of the Act. <Newly Inserted by Presidential Decree No. 22583, Dec. 30, 2010; Presidential Decree No. 29527, Feb. 12, 2019>
(6) Where a holding company or converted holding company acquires the stocks of its subsidiary at the book value pursuant to the former part of Article 38-2 (3) of the Act, with the exception of its subparagraphs, it shall recognize the value of the subsidiary's stocks acquired through investment in kind, etc. as the market price as at the date such investment in kind, etc. is made, but reflect an amount calculated by subtracting the total book value of the subsidiary's stocks from the market price in the asset adjustment account. In such cases, the recognized asset adjustment account shall include the amount calculated by the following formula in the gross income or deductible expenses in the business year in which the relevant stocks are disposed of; and where such stocks are retired as treasury stocks, it shall be excluded from the gross income or deductible expenses, but be deemed to become extinct: <Newly Inserted by Presidential Decree No. 22583, Dec. 30, 2010; Presidential Decree No. 29527, Feb. 12, 2019>
Asset adjustment account × (Number of stocks disposed of ÷ Number of stocks acquired through the investment in kind with stocks for the incorporation, etc. of a holding company).
(7) "Period prescribed by Presidential Decree" in the former part of Article 38-2 (3) of the Act, with the exception of its subparagraphs, means two years from the commencement date of the business year following the business year in which investment in kind, etc. is made. <Newly Inserted by Presidential Decree No. 22583, Dec. 30, 2010; Presidential Decree No. 23590, Feb. 2, 2012>
(8) Where any of the causes provided for in the subparagraphs of Article 38-2 (3) of the Act arises after a corporation has included the equivalent to the stock transfer gains in the deductible expenses as prescribed in paragraph (1), any balance in the asset adjustment account under paragraph (6) (limited to where the balance is greater than zero; if the balance is less than zero, it shall be deemed nil) shall be included in the deductible expenses pursuant to the former part of Article 38-2 (3) of the Act with the exception of its subparagraphs. In such cases, the asset adjustment account recognized under paragraph (5) shall be deemed extinguished. <Amended by Presidential Decree No. 22583, Dec. 30, 2010; Presidential Decree No. 26959, Feb. 5, 2016>
(9) Public notice of a treasury stock swap under Article 38-2 (2) 3 of the Act shall be made by publishing the following matters at least once on a nationally-circulated newspaper among the general dailies or the special dailies in the economy field permitted under the Act on the Promotion of Newspapers: <Amended by Presidential Decree No. 18704, Feb. 19, 2005; Presidential Decree No. 22003, Jan. 27, 2010>
1. The date of the treasury stock swap and the scope of stocks to be swapped;
2. The deadline for, and place of, presenting the stock certificates;
3. The quantity, ratio, and method of the swap;
4. The content that all shareholders are allowed to participate in the swap of treasury stocks, and other matters necessary for the stock swap.
(10) The equivalent to interest payable in addition to corporate tax under the latter part of Article 38-2 (3) of the Act, with the exception of its subparagraphs, shall be calculated by multiplying the amount of subparagraph 1 by the rate of subparagraph 2: <Amended by Presidential Decree No. 22583, Dec. 30, 2010; Presidential Decree No. 26959, Feb. 5, 2016; Presidential Decree No. 29527, Feb. 12, 2019>
1. The difference in the amount of corporate tax incurred due to a failure to include the balance in the asset adjustment account to be included in the gross income under paragraph (8) in the gross income of the business year in which the date of investment in kind, etc. falls for the event prescribed in Article 38-2 (3) 2 of the Act;
2. 25/100,000 per day for the period from the commencement date of the business year following the business year in which the date of investment in kind, etc. falls, until the end of the business year in which the balance in the asset adjustment account is added to gross income.
(11) "Cases prescribed by Presidential Decree" in the proviso to Article 38-2 (3) 1 of the Act means where a holding company or converted holding company satisfies, as of the end of each business year, the criteria for holding companies under the statutes or regulations in effect as at the time it was incorporated or converted into a holding company (referring to the criteria in effect closest to the date of revising criteria, where the holding company's criteria have been revised at least two occasions during the period from after incorporation or conversion to the date of revising criteria), among the period (hereafter in this paragraph, referred to as "grace period") of the business year in which the date of revising the criteria for holding company (hereafter in this paragraph, referred to as "date of revising criteria") due to the amendments of statutes or regulations (referring to the business year of the relevant holding company that ceases to be a holding company due to a revision of holding company's criteria; hereafter in this paragraph, the same shall apply), and of the business year that ends within four years from the commencement date of the following business year, which remains in the relevant grace period. <Newly Inserted by Presidential Decree No. 17829, Dec. 30, 2002; Presidential Decree No. 22037, Feb. 18, 2010>
(12) Paragraphs (1) and (2) shall apply mutatis mutandis to the deferral of corporate tax under Article 38-2 (4) of the Act. In such cases, the amount to be recognized as the advanced depreciation provision shall be the aggregate of the amount of tax deferred under paragraph (1), and the transfer gains accrued by swapping the stocks of the intermediary holding company granted tax deferral with the stocks of the financial holding company that controls the relevant intermediary holding company; and the relevant advanced depreciation provision shall be included in the gross income in the business year in which the stocks of the financial holding company acquired through swap with the stocks of the intermediary holding company are disposed of. <Amended by Presidential Decree No. 21307, Feb. 4, 2009; Presidential Decree No. 29527, Feb. 12, 2019>
(13) "Where unavoidable causes prescribed by Presidential Decree arise" in Article 38-2 (5) of the Act means any of the following cases: <Newly Inserted by Presidential Decree No. 22583, Dec. 30, 2010; Presidential Decree No. 26959, Feb. 5, 2016>
1. Where an unavoidable cause is deemed to arise for the purposes of Article 38-2 (1) 1 of the Act (including cases applied mutatis mutandis in Article 38-2 (2) of the Act) and Article 38-2 (3) 4 of the Act: Where a holding company, converted holding company, and stockholders, etc. referred to in paragraph (4), fall under any item of Article 80-2 (1) 1 of the Enforcement Decree of the Corporate Tax Act;
2. Where an unavoidable cause is deemed to arise for the purposes of Article 38-2 (1) 2 of the Act (including cases applied mutatis mutandis in Article 38-2 (2) of the Act) and Article 38-2 (3) 3 of the Act: Where a holding company and a subsidiary of a converted holding company, falls under any items of Article 80-2 (1) 2 of the Enforcement Decree of the Corporate Tax Act.
(14) Where a corporation, being a stockholder of a domestic corporation, (hereafter in this paragraph and Article 35-4 (5), referred to as "subsidiary corporation"), has included stock transfer gains through investment in kind, etc. in deductible expenses as prescribed in paragraph (1), a holding company or converted holding company shall deem the stocks of the subsidiary corporation acquired through investment in kind, etc. to have been acquired at the book value of the corporation, being a stockholder of such subsidiary corporation: <Newly Inserted by Presidential Decree No. 22181, Jun. 8, 2010; Presidential Decree No. 22583, Dec. 30, 2010>
1. and 2. Deleted. <by Presidential Decree No. 22583, Dec. 30, 2010>
(15) A corporation that intends to be eligible under Article 38-2 (1), (2), and (4) of the Act shall submit an application for special taxation for investment in kind, etc. in the form prescribed by Ordinance of the Ministry of Economy and Finance, to the head of the tax office having jurisdiction over the place of tax payment, together with the holding company or converted holding company, when filing its tax return for the business year in which such investment in kind, etc. is made. <Newly Inserted by Presidential Decree No. 21307, Feb. 4, 2009; Presidential Decree No. 22181, Jun. 8, 2010>
(16) A holding company or converted holding company that has acquired stocks of the subsidiary corporation at the book value as prescribed in paragraph (14), shall submit a statement of calculation of the book value of stocks of the subsidiary corporation prescribed by Ordinance of the Ministry of Economy and Finance, to the head of the tax office having jurisdiction over the place of tax payment, when filing its tax return for the business year in which investment in kind, etc. is made. <Newly Inserted by Presidential Decree No. 22181, Jun. 8, 2010; Presidential Decree No. 22583, Dec. 30, 2010; Presidential Decree No. 26959, Feb. 5, 2016>
[This Article Wholly Amended by Presidential Decree No. 17034, Dec. 29, 2000]
 Article 35-4 (Special Taxation for Residents concerning Incorporation of Holding Companies)
(1) Where a resident, non-resident, or foreign corporation not falling under Article 91 (1) of the Corporate Tax Act (hereafter in this Article, referred to as "resident, etc."), being a stockholder of a domestic corporation, invests in kind with the stocks in possession in a holding company or converted holding company, or exchanges such stocks with the stocks thereof as prescribed in Article 38-2 (1) or (2) of the Act, and is granted tax deferral, no capital gains tax shall be imposed on income accruing from the investment in kind, etc. of such stocks in possession (hereafter in this Article, referred to as "amount of tax deferred on stocks"), but with respect to the transfer of stocks of the said holding company or the converted holding company (where there exist any stocks acquired by a method other than the method of investment in kind, etc., the stocks acquired by investment in kind, etc. shall be deemed first transferred), the capital gains tax shall be imposed, considering the amount obtained by subtracting the amount of tax deferred on stocks from the acquisition value of stocks of a holding company or a converted holding company, as acquisition value. <Amended by Presidential Decree No. 21307, Feb. 4, 2009; Presidential Decree No. 22037, Feb. 18, 2010; Presidential Decree No. 22181, Jun. 8, 2010; Presidential Decree No. 22583, Dec. 30, 2010>
(2) and (3) Deleted. <by Presidential Decree No. 22583, Dec. 30, 2010>
(4) Paragraph (1) shall apply mutatis mutandis to the taxation deferment of capital gains tax under Article 38-2 (4) of the Act. In such cases, the amount for which taxation shall be deferred, shall be the aggregate of the amount of tax deferred under paragraph (1), and the transfer gains accruing from exchanging the stocks of an intermediary holding company granted deferred taxation, with the stocks of a financial holding company that controls the intermediary holding company concerned; and capital gains tax shall be imposed when the stocks of the financial holding company acquired by exchange with the stocks of such intermediary company, are transferred. <Amended by Presidential Decree No. 21307, Feb. 4, 2009>
(5) Where capital gains tax on the amount of tax deferred on stocks accruing from investment in kind, etc. made by residents, etc., being the stockholders of a subsidiary corporation, has not been imposed as prescribed in paragraph (1), the holding company or converted holding company shall make the stocks of a subsidiary corporation acquired by investment in kind, etc. as having acquired at the acquisition value of residents, etc., being the stockholders of a subsidiary corporation: <Newly Inserted by Presidential Decree No. 22181, Jun. 8, 2010; Presidential Decree No. 22583, Dec. 30, 2010>
1 and 2. Deleted. <by Presidential Decree No. 22583, Dec. 30, 2010>
(6) When residents, etc. intending to have Article 38-2 (1), (2), and (4) of the Act applied, file a tax return for the taxable year in which the relevant investment in kind, etc. is made, they shall submit an application for special taxation for investment in kind, etc. prescribed by Ordinance of the Ministry of Economy and Finance together with the holding company or converted holding company. <Newly Inserted by Presidential Decree No. 21307, Feb. 4, 2009; Presidential Decree No. 22181, Jun. 8, 2010>
(7) When the holding company or converted holding company that has acquired stocks of subsidiary corporation at book value as prescribed in paragraph (5), files a tax return for the business year in which such investment in kind, etc. is made, it shall submit a statement of book value of stocks of subsidiary corporation prescribed by Ordinance of the Ministry of Economy and Finance, to the head of tax office having jurisdiction over the place of tax payment. <Newly Inserted by Presidential Decree No. 22181, Jun. 8, 2010>
[This Article Newly Inserted by Presidential Decree No. 17034, Dec. 29, 2000]
 Article 35-5 (Special Taxation for Investment in Kind with Stocks of Foreign Subsidiary Company by Domestic Corporation)
(1) "Amount calculated by the formula prescribed by Presidential Decree" in Article 38-3 (2) of the Act means the amount calculated according to the following arithmetic formula. In such cases, where stocks acquired by a method other than the stocks, etc. acquired by investment in kind exist, the stocks, etc. acquired by investment in kind shall be deemed first transferred: <Amended by Presidential Decree No. 22037, Feb. 18, 2010>
{Amount not included in gross income until the end of the immediately preceding business year, among the equivalent to the transfer margin of the foreign subsidiary’s stocks, etc. accruing from an investment in kind × (Number of stocks, etc. transferred in the relevant business year, among the foreign corporation’s stocks, etc. acquired by investment in kind / Number of stocks, etc. it holds as at the end of the immediately preceding business year, among the foreign corporation’s stocks, etc. acquired by investment in kind)}
(2) Any domestic corporation which intends to be granted special taxation under Article 38-3 (1) of the Act shall submit, to the head of the tax office having jurisdiction over the place of tax payment, a specification of transfer margin of the investment in kind of stocks, etc. and a specification for inclusion in the deductible expenses, in the forms stipulated by Ordinance of the Ministry of Economy and Finance, along with its tax return for the business year in which the relevant investment in kind is made. <Amended by Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 21429, Apr. 21, 2009>
[This Article Newly Inserted by Presidential Decree No. 17458, Dec. 31, 2001]
 Article 36 (Special Taxation for Assumption or Payment of Debts)
(1) The assumption or payment of debts under Article 39 (1) of the Act (hereafter in this Article, referred to as “assumption or payment of debts”), with the exception of its subparagraphs, shall be limited to debts assumed or paid in lump sum solely by a stockholder or jointly by stockholders, etc. referred to paragraph (1) of the same Article, with the exception of its subparagraphs, (hereafter in this Article, referred to as "stockholders, etc.") under a single agreement.
(2) For the purposes of Article 39 (1) through (5) of the Act, the scope of debts shall be limited to those specified in the financial restructuring plan referred to in paragraph (4), which shall contain details of the debts and the plan for assumption or payment of debts by stockholders, etc. and shall include the amounts referred to in the subparagraphs of Article 34 (5) (hereafter in this Article, referred to as "debts to financial creditors"). <Amended by Presidential Decree No. 28636, Feb. 13, 2018>
(3) "Amount prescribed by Presidential Decree" in Article 39 (1) of the Act, with the exception of its subparagraphs, means the amount of debts assumed or paid by the relevant stockholders, etc. (hereafter in this Article, referred to as "amount of debts assumed and paid"), out of debts that the corporation subject to transfer, etc. provided for in Article 39 (2) of the Act (hereafter in this Article, referred to as "corporation subject to transfer, etc."), owes to financial creditors. <Amended by Presidential Decree No. 27848, Feb. 7, 2017; Presidential Decree No. 28636, Feb. 13, 2018>
(4) "Financial restructuring plan prescribed by Presidential Decree" in Article 39 (1) 1 of the Act means any of the documents provided for in Article 34 (6) 1 through 4, which state the total amount and details of debts to financial creditors, a plan for assumption and payment of debts by stockholders, etc., and a plan for transfer or liquidation of the corporation (hereafter in this Article, referred to as "financial restructuring plan"). <Amended by Presidential Decree No. 27848, Feb. 7, 2017; Presidential Decree No. 28636, Feb. 13, 2018>
(5) "Person prescribed by Presidential Decree" in Article 39 (1) 1 of the Act means any person specified in Article 34 (7) 1 through 4. <Amended by Presidential Decree No. 27848, Feb. 7, 2017>
(6) "Controlling stockholder or investor of the domestic corporation and related persons to such controlling stockholder or investor" in Article 39 (1) 1 of the Act means a controlling stockholder, etc. and a related party provided for in Article 43 (7) and (8) of the Enforcement Decree of the Corporate Tax Act (hereafter in this Article, referred to as "controlling stockholder, etc.").
(7) "Related party prescribed by Presidential Decree" in Article 39 (1) 1 of the Act means any person who has the relationship specified in any subparagraph of Article 2 (5) of the Enforcement Decree of the Corporate Tax Act with the relevant domestic corporation or controlling stockholder, etc. <Amended by Presidential Decree No. 29527, Feb. 12, 2019>
(8) "Amount that exceeds the deficit prescribed by Presidential Decree" in the main sentence of Article 39 (2) of the Act means the amount (hereafter in this Article, referred to as "amount of debts reduced") calculated by subtracting losses provided for in Article 16 (1) of the Enforcement Decree of the Corporate Tax Act (hereafter in this Article, referred to as "carried-forward losses") from the amount of debts assumed and paid. If the corporation subject to transfer, etc. covers carried-forward losses first with the value of assets it has acquired without consideration under subparagraph 6 of Article 18 of the Corporate Tax Act or with the amount of debts reduced (excluding the amount of debts assumed and paid) due to debt relief or acquittance in such cases, the covered amount shall be subtracted from the carried-forward losses. <Amended by Presidential Decree No. 27848, Feb. 7, 2017; Presidential Decree No. 29527, Feb. 12, 2019>
(9) An amount that the corporation subject to transfer, etc. must include in its gross income under the former part of Article 39 (3) of the Act, with the exception of its subparagraphs, shall be calculated as follows:
1. In cases falling under Article 39 (3) 1 of the Act: The amount calculated by the following formula:
Amount of debts reduced × Debt ratio less standard debt ratio to standard debt ratio (if the ratio exceeds one, it shall be deemed one);
2. In cases falling under Article 39 (3) 2 of the Act:
The full amount not included in gross income out of the amount of debts reduced;
3. In cases falling under Article 39 (3) 3 of the Act:
The full amount of debts reduced.
(10) The amount of corporate tax reduction granted to stockholders, etc. that must be paid in addition to corporate tax under the latter part of Article 39 (3) of the Act, with the exception of its subparagraphs, shall be calculated as follows:
1. In cases falling under Article 39 (3) 1 of the Act: The amount calculated by the following formula:
Difference in corporate tax, incurred by including the amount of debts assumed and paid in deductible expenses for the business year in which such amount of debts assumed and paid is included in deductible expenses × Debt ratio less standard debt ratio to standard debt ratio (if the ratio exceeds one, it shall be deemed one);
2. In cases falling under the main sentence of Article 39 (3) 2 and Article 39 (3) 3 of the Act:
Difference in corporate tax, incurred by including the amount of debts assumed and paid in deductible expenses for the business year in which such amount of debts assumed and paid is included in deductible expenses
(11) "Additional amount equivalent to interest calculated by the formula prescribed by Presidential Decree" in the latter part of Article 39 (3) of the Act, with the exception of its subparagraphs, and the proviso to Article 39 (3) 2 of the Act means the aggregate of the following amounts: <Amended by Presidential Decree No. 29527, Feb. 12, 2019>
1. The amount calculated by multiplying the difference in corporate tax, incurred by excluding the amount that must be included in gross income under paragraph (9) for the business year in which debts are assumed and paid from gross income, by the period of item (a) and the rate of item (b):
(a) The period from the day following the end of the business year in which debts are assumed and paid, until the end of the business year in which the amount that must be included in the gross income under paragraph (9) is included in the gross income;
(b) 25/100,000 per day;
2. The amount of tax that must be paid under paragraph (10) multiplied by the period of item (a) and the rate of item (b):
(a) The period from the day following the end of the business year in which debts are assumed and paid, until the end of the business year in which the amount that must be paid under paragraph (10) is paid;
(b) 25/100,000 per day.
(12) For the purposes of Article 39 (3) 1 of the Act, the three-year period shall be calculated, deeming that the period from the date of assumption and payment of debts, until the end of the relevant business year, is one year.
(13) Article 34 (15) and (16) shall apply mutatis mutandis to the calculation of the debt ratio and the standard debt ratio referred to in Article 39 (3) 1 of the Act. In such cases, “amount of debts paid" shall be construed as “total amount of debts assumed and paid."
(14) "Unavoidable cause prescribed by Presidential Decree, such as bankruptcy" in the proviso to Article 39 (3) 2 of the Act means any of the events specified under Article 34 (17).
(15) In cases of a transfer and acquisition of a corporation under Article 39 (4) of the Act, if the relevant stock transfer agreement contains provisions concerning due diligence on assets, the shortfall in assets of the corporation subject to transfer, etc. shall be limited to the shortfall as at the date of stock transfer, as corrected and reflected in accounts after having confirmed by the accounting firm designated by the Securities and Futures Commission established pursuant to Article 19 of the Act on the Establishment of Financial Services Commission upon request by the corporation subject to transfer, etc.
(16) "Related persons prescribed by Presidential Decree" in the proviso to Article 39 (5) of the Act means persons who have the relationship specified in any subparagraph of Article 19 (2) of the Enforcement Decree of the Inheritance Tax and Gift Tax Act with the stockholder, etc. who has assumed and paid debts.
(17) The person authorized to approve the financial restructuring plan shall submit details of the financial restructuring plan to the head of the tax office having jurisdiction over the place of tax payment for the corporation subject to transfer, etc., in the form prescribed by Ordinance of the Ministry of Economy and Finance, by the end of the business year in which such plan for the corporation subject to transfer, etc. is approved (hereafter in this Article, referred to as "business year"); and shall submit a report on performance of the financial restructuring plan to the head of the tax office having jurisdiction over the place of tax payment for the corporation subject to transfer, etc. in the form prescribed by Ordinance of the Ministry of Economy and Finance, by the deadline for filing the tax return for any of the following business years. In such cases, where the corporation subject to transfer, etc. submits its financial restructuring plan or a report on performance of it financial restructuring plan, which has been confirmed by the person authorized to approve the financial restructuring plan, to the head of the tax office having jurisdiction over the place of tax payment, such plan or report shall be deemed submitted by the person authorized to approve the financial restructuring plan:
1. The business year in which debts are assumed and paid;
2. The business year in which stocks, etc. are transferred or the liquidation of the corporation is completed under Article 39 (1) 1 or 2 of the Act;
3. Three years following the business year in which stocks, etc. are transferred under Article 39 (1) 1 of the Act.
(18) A stockholder, etc. who wishes to be eligible under Article 39 (1) of the Act shall submit a plan for transfer/acquisition/liquidation of a corporation, a statement of debts assumed and paid, and an application for tax reduction or exemption, in the forms prescribed by Ordinance of the Ministry of Economy and Finance, to the head of the tax office having jurisdiction over the place of tax payment, along with his/her tax return for the business year in which the stockholder, etc. assumes and pays debts.
(19) A corporation that wishes to be eligible under Article 39 (2) of the Act shall submit a plan for transfer/acquisition/liquidation of a corporation, a statement of debts assumed and paid, and a statement of adjustment for inclusion in gross income in installments, in the forms prescribed by Ordinance of the Ministry of Economy and Finance, to the head of the tax office having jurisdiction over the place of tax payment, along with its tax return for the business year in which its debts are assumed and paid.
[This Article Wholly Amended by Presidential Decree No. 26959, Feb. 5, 2016]
 Article 37 (Special Taxation on Corporate Tax following Transfer of Assets by Stockholders)
(1) The donation of an asset under Article 40 (1) of the Act shall be limited to an asset donated solely or jointly by stockholders or investors referred to in Article 40 (1) of the Act, with the exception of its subparagraphs, (hereafter in this Article, referred to as "stockholder, etc.") at once under a single agreement.
(2) "Amount exceeding the deficit prescribed by Presidential Decree" in Article 40 (1) of the Act, with the exception of its subparagraphs, means the amount calculated by applying mutatis mutandis Article 36 (8) (hereafter in this Article, referred to as "gains from donated assets"). In such cases, "amount of debts assumed or paid" shall be construed as "assets value donated under Article 40 (1) of the Act."
(3) "Financial restructuring plan prescribed by Presidential Decree" in Article 40 (1) 1 of the Act means any of the documents provided for in Article 34 (6) 1 through 4, which contain a plan for the transfer or donation of assets by stockholders, etc., total amount and details debts to financial creditors referred to in paragraph (10), and a plan for repayment of debts (hereafter in this Article, referred to as "financial restructuring plan"). <Amended by Presidential Decree No. 27848, Feb. 7, 2017; Presidential Decree No. 28636, Feb. 13, 2018>
(4) "Person prescribed by Presidential Decree" in Article 40 (1) 1 of the Act means any of the persons referred to in Article 34 (7) 1 through 4. <Amended by Presidential Decree No. 27848, Feb. 7, 2017>
(5) "Deadline prescribed by Presidential Decree" in Article 40 (1) 2 of the Act means the deadline provided for in Article 34 (4).
(6) "Date prescribed by Presidential Decree" in Article 40 (1) 2 of the Act means the date a corporation receives an installment (the down payment shall be deemed included in the first installment).
(7) For the purposes of Article 40 (1) and (2) of the Act, Article 162 of the Enforcement Decree of the Income Tax Act shall apply mutatis mutandis to the time when an asset is transferred: Provided, That the date provided for in paragraph (6) shall apply to the transfer of assets under long-term installment terms.
(8) "Financial creditor prescribed by Presidential Decree" in Article 40 (1) 2 of the Act means any financial creditor defined in subparagraph 2 of Article 2 of the Corporate Restructuring Promotion Act. <Amended by Presidential Decree No. 28636, Feb. 13, 2018>
(9) "Inevitable causes prescribed by Presidential Decree" in Article 40 (1) 2 of the Act means the causes provided for in Article 34 (3).
(10) The debts paid under Article 40 (1) 2 of the Act shall be limited to those specified in the financial restructuring plan that contains the details of the debts and a repayment plan through donation of assets by stockholders, etc. and mean the amount specified under Article 34 (5) (hereafter in this Article, referred to as "debts to financial creditors"). <Amended by Presidential Decree No. 28636, Feb. 13, 2018>
(11) "Amount prescribed by Presidential Decree" in Article 40 (2) of the Act means the book value of assets donated by stockholders, etc. (hereafter in this Article, referred to as "amount of donated assets"). <Amended by Presidential Decree No. 27848, Feb. 7, 2017>
(12) "Equivalent to the donated amount prescribed by Presidential Decree" in Article 40 (3) of the Act, with the exception of its subparagraphs, means the amount calculated by the following formula (hereafter in this Article, referred to as "equivalent to capital gains"): <Amended by Presidential Decree No. 27848, Feb. 7, 2017>
Capital gains on transfer of an asset under Article 40 (3) of the Act × {Amount donated to a corporation whose financial restructuring plan is approved (hereafter in this Article, referred to as "corporation with an approved financial restructuring plan"), out of the transfer value of the asset ÷ (Transfer value of the asset - Amount of special rural development tax paid by the relevant corporation under the Act on Special Rural Development Tax for the capital gains on transfer of the asset under Article 40 (3) of the Act)}
(13) An amount that shall be included in gross income under the former part of Article 40 (4) of the Act, with the exception of its subparagraphs, shall be calculated as follows:
1. In cases falling under Article 40 (4) 1 of the Act: The amount calculated by the following formula:
Gains from the donated asset × [Value of the asset donated under Article 40 (1) of the Act (referring to the transfer value in cases of any asset other than money; hereafter in this Article, referred to as "value of the transferred asset") - Amount used to repay debts, out of the value of the transferred asset] ÷ Value of the transferred asset
2. In cases falling under Article 40 (4) 2 of the Act: The amount calculated by the following formula:
Gains from donated asset × the debt ratio less the standard debt ratio to the standard debt ratio (if the ratio exceeds one, it shall be deemed one)
3. In cases falling under Article 40 (4) 3 of the Act:
The full amount not included in gross income, out of gains from the donated asset
(14) The amount of tax that shall be collected in addition to corporate tax to be paid by a corporation with an approved financial restructuring plan under Article 40 (4) of the Act, out of the tax reduction or exemption granted to a stockholder, etc. under Article 40 (2) of the Act shall be as follows:
1. In cases falling under Article 40 (4) 1 of the Act: Difference in corporate tax incurred by including the amount calculated by the following formula in deductible expenses for the business year in which the stockholder, etc. has included the amount of donated assets in deductible expenses:
Amount of the donated asset × (Value of the transferred asset - Amount used to repay debts, out of the value of the transferred asset) ÷ Value of the transferred asset
2. In cases falling under Article 40 (4) 2 of the Act: The amount calculated by the following formula:
Difference in corporate tax incurred by including the amount of the donated asset in deductible expenses for the business year in which the amount of the donated asset is included in deductible expenses × Debt ratio less standard debt ratio to standard debt ratio (if the ratio exceeds one, it shall be deemed one)
3. In cases falling under the main sentence of Article 40 (4) 3 of the Act:
Difference in corporate tax incurred by including the amount of the donated asset in deductible expenses for the business year in which the amount of the donated asset is included in deductible expenses
(15) The amount of tax that shall be collected in addition to the corporate tax to be paid by a corporation with an approved financial restructuring plan under Article 40 (4) of the Act, out of the tax reduction or exemption granted to a stockholder, etc. under Article 40 (3) of the Act shall be as follows:
1. Where the stockholder, etc. is a resident: The amount calculated by the following formulas:
(a) In cases falling under Article 40 (4) 1 of the Act: Difference in capital gains tax incurred by including the amount calculated by the following formula for the taxable year, for which capital gains tax on the equivalent to capital gains was not paid, in the calculation of the equivalent to capital gains:
Equivalent to capital gains × (Value of the transferred asset - Amount used to repay debts out of the value of the transferred asset) ÷ the value of the transferred asset
(b) In cases falling under Article 40 (4) 2 of the Act: The amount calculated by the following formula:
Unpaid capital gains tax on the equivalent to capital gains × Debt ratio less standard debt ratio to standard debt ratio (if the ratio exceeds one, it shall be deemed one)
(c) In cases falling under the main sentence of Article 40 (4) 3 of the Act:
The full amount of unpaid capital gains tax on the equivalent to capital gains
2. Where the stockholder, etc. is a domestic corporation: The amount calculated by the following formulas:
(a) In cases falling under Article 40 (4) 1 of the Act: Difference in corporate tax incurred by excluding the amount calculated by the following formula from gross income for the business year in which the equivalent to capital gains was not included in gross income:
Equivalent to capital gains × (Value of the transferred asset - Amount used to repay debts out of the value of the transferred asset) ÷ Value of the transferred asset
(b) In cases falling under Article 40 (4) 2 of the Act: The amount calculated by the following formula:
Difference in corporate tax incurred by excluding the equivalent to capital gains from gross income for the business year in which the equivalent to capital gains was not included in gross income × Debt ratio less standard debt ratio to standard debt ratio (if the ratio exceeds one, it shall be deemed one)
(c) In cases falling under the main sentence of Article 40 (4) 3 of the Act:
Difference in corporate income tax incurred by excluding the equivalent to capital gains from gross income for the business year in which the equivalent to capital gains was not included in gross income
(16) For the purpose of Article 40 (4) 2 of the Act, the three-year period shall be counted, deeming that the period from the date debts are repaid (hereafter in this Article, referred to as "date debts are repaid"), until the end of the relevant business, is one year, if debts are repaid during the business year.
(17) Article 34 (15) and (16) shall apply mutatis mutandis to calculating the debt ratio and the standard debt ratio referred to in Article 40 (4) 2 of the Act. In such cases, "amount of debts paid" shall be construed as "amount used to repay debts out of the value of the transferred asset."
(18) "Unavoidable cause prescribed by Presidential Decree" in the proviso to Article 40 (4) 3 of the Act means any of the events specified under Article 34 (17).
(19) "Equivalent to the interest calculated by the formula prescribed by Presidential Decree" in the main sentence of Article 40 (5) of the Act means the aggregate of the following: <Amended by Presidential Decree No. 29527, Feb. 12, 2019>
1. The amount calculated by multiplying the difference in corporate tax incurred by excluding the amount calculated under paragraph (13) from gross income for the business year in which a corporation receives an asset donated under Article 40 (1) of the Act (hereafter in this Article, referred to as "date the asset is donated") by the period of item (a) and the rate of item (b):
(a) The period from the day following the end of the business year in which the asset is donated, until the end of the business year in which the amount calculated under paragraph (13) is included in gross income;
(b) 25/100,000 per day;
2. The amount of tax calculated under paragraph (14) or (15), multiplied by the period of item (a) and the rate of item (b):
(a) The period from the day following the end of the business year in which the amount of tax calculated under paragraph (14) or (15) is not paid, until the end of the business year in which the amount of tax calculated under paragraph (14) or (15) is paid;
(b) 25/100,000 per day.
(20) For the purposes of paragraphs (13) (excluding paragraph (13) 3; hereafter in this paragraph, the same shall apply) and (19) 1, if an amount not included partially or fully in gross income in accordance with Article 40 (1) of the Act is included later in gross income (hereafter in this Article, referred to as "amount already included in gross income") before including the amount calculated under paragraph (13) in gross income, the amount already included in gross income in the order of inclusion in gross income shall be deemed the amount included in gross income under paragraph (13). The additional amount equivalent to interest referred to in paragraph (19) 1 shall be calculated based on the period until the business year in which the amount already included in gross income is included in gross income.
(21) Article 36 (16) shall apply mutatis mutandis to the scope of "related persons" in the proviso to Article 40 (6) of the Act.
(22) Article 34 (18) shall apply mutatis mutandis to how to submit a financial restructuring plan and a report on performance of the financial restructuring plan under Article 40 (7) of the Act. In such cases, "date an asset is transferred" shall be construed as "date an asset is donated."
(23) A corporation who wishes to be eligible under Article 40 (1) of the Act shall submit a statement of donated assets, debts repaid (or payable), and adjustment for inclusion in gross income in installments, in the form prescribed by Ordinance of the Ministry of Economy and Finance, to the head of a tax office having jurisdiction over the place of tax payment, along with its tax return for the business year in which an asset is donated. Where the date an asset is donated and the date debts are repaid, fall in different business years, it shall submit a statement of debts paid (or payable) additionally along with its tax return for the business year in which debts are repaid.
(24) A stockholder, etc. who wishes to be eligible under Article 40 (2) of the Act shall submit an asset donation agreement, a statement of debts paid (or payable), and an application for tax reduction or exemption, in the forms prescribed by Ordinance of the Ministry of Economy and Finance, to the head of the tax office having jurisdiction over the place of tax payment, along with his/her tax return for the business year in which the relevant asset is donated.
(25) A stockholder, etc. who wishes to be eligible under Article 40 (3) of the Act shall submit an asset sale/purchase agreement, a donation agreement, a statement of debts paid (or payable), and an application for tax reduction or exemption, in the forms prescribed by Ordinance of the Ministry of Economy and Finance, to the head of a tax office having jurisdiction over the place of tax payment, along with his/her tax return for the business year in which the relevant asset is transferred under the same paragraph.
[This Article Wholly Amended by Presidential Decree No. 21545, Jun. 19, 2009]
 Articles 38 and 38-2 Deleted. <by Presidential Decree No. 20620, Feb. 22, 2008>
 Article 39 Deleted. <by Presidential Decree No. 17458, Dec. 31, 2001>
 Article 40 (Reduction or Exemption of Capital Gains Tax on Acquisitor of Real Estate Subject to Restructuring)
(1) Capital gains accruing for five years from the date of acquisition of real estate subject to restructuring in Article 43 (1) of the Act means the amount calculated by the following formula as capital gains under Article 95 (1) of the Income Tax Act or capital gains under Article 55-2 (1) of the Corporate Tax Act (hereafter in this paragraph, referred to as “capital gains”). In such cases, the assessed value for the immediately preceding period shall apply, if a person acquires or transfers the real estate or the fifth anniversary from the date of acquisition arrives, before a new assessed value is publicly notified:
Capital gains × ((assessed value on the fifth anniversary from the date of acquisition ? assessed value as at the time of acquisition) ÷ (assessed value as at the time of transfer ? assessed value as at the time of acquisition))
(2) A person who intends to apply for the reduction or exemption of capital gains tax under Article 43 (2) of the Act shall file an application for tax reduction or exemption, in the form prescribed by Ordinance of the Ministry of Economy and Finance, with the head of the tax office having jurisdiction over the place of tax payment, along with the tax return for the taxable year in which the relevant real estate subject to restructuring is transferred.
(3) Upon receipt of an application for tax reduction or exemption under paragraph (2), the head of the tax office having jurisdiction over the place of tax payment shall verify the relevant real estate subject to restructuring with the statement of (planned) payment of debts under Article 37 (25) and the application for tax reduction or exemption.
[This Article Wholly Amended by Presidential Decree No. 26070, Feb. 3, 2015]
 Article 40-2 Deleted. <by Presidential Decree No. 21307, Feb. 4, 2009>
 Article 41 (Special Taxation on Gains from Debt Relief of Corporations Implementing Financial Restructuring Plans)
(1) "Amount that exceeds the deficit prescribed by Presidential Decree" in the Article 44 (1) of the Act, with the exception of its subparagraphs, means the amount calculated by applying mutatis mutandis of Article 36 (8). In such cases, "amount of debts assumed and paid" shall be construed as "equivalent to the debts relieved by financial creditors under Article 44 (1) of the Act, with the exception of its subparagraphs": <Amended by Presidential Decree No. 19888, Feb. 28, 2007; Presidential Decree No. 21545, Jun. 19, 2009; Presidential Decree No. 28636, Feb. 13, 2018>
1 and 2. Deleted. <by Presidential Decree No. 21545, Jun. 19, 2009>
(2) "Where the domestic corporation is relieved from its debts under an agreement between the financial creditors retaining receivables, as prescribed by Presidential Decree" in Article 44 (1) 3 of the Act means where the domestic corporation is relived from its debts under a special agreement to implement a workout program referred to in Article 34 (6) 2. <Newly Inserted by Presidential Decree No. 21545, Jun. 19, 2009; Presidential Decree No. 27127, May 10, 2016; Presidential Decree No. 28636, Feb. 13, 2018>
(3) "Cases prescribed by Presidential Decree" in Article 44 (1) 4 of the Act means where a domestic corporation is relieved from its debts according to the timely corrective measures referred to in Article 34 (6) 3. <Newly Inserted by Presidential Decree No. 21545, Jun. 19, 2009>
(4) A corporation that wishes to be eligible under Article 44 (1), (2), and (4) of the Act shall file a statement of debt relief prepared for each corporation in the form prescribed by Ordinance of the Ministry of Economy and Finance, with the head of the tax office having jurisdiction over the place of tax payment, along with its tax return for the business year in which the date of relief of debts falls. <Amended by Presidential Decree No. 16693, Jan. 10, 2000; Presidential Decree No. 17829, Dec. 30, 2002; Presidential Decree No. 18176, Dec. 30, 2003; Presidential Decree No. 19329, Feb. 9, 2006; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 21545, Jun. 19, 2009; Presidential Decree No. 27848, Feb. 7, 2017>
 Article 42 (Special Taxation for Reduction of Capital)
(1) "Financial restructuring plan prescribed by Presidential Decree" in Article 45 (1) of the Act means cases falling under any subparagraph of Article 34 (6), which stipulates a donation plan of stock or investment shares (hereafter in this Article, referred to as "stocks, etc.") of stockholders or investors (hereafter in this Article, referred to as "stockholders, etc.") and a retirement plan of donated stocks, etc.
(2) "Person prescribed by Presidential Decree" in Article 45 (1) of the Act means persons falling under any subparagraph of Article 34 (7).
(3) "Amount exceeding the deficit prescribed by Presidential Decree" in Article 45 (1) of the Act means the amount calculated by applying mutatis mutandis Article 36 (8). In such cases, "amount subject to takeover and payment of liabilities" shall be construed as "value of stocks, etc. donated under Article 45 (1) of the Act."
(4) Article 36 (16) shall apply mutatis mutandis to the scope of "related persons" referred to in the proviso to Article 45 (3) of the Act.
(5) Any corporation which seeks the benefit under Article 45 (1) of the Act shall submit, to the head of a tax office having jurisdiction over the place of tax payment, a statement of assets received, its financial restructuring plan, and an application for tax reduction or exemption, in the forms prescribed by Ordinance of the Ministry of Economy and Finance, along with its tax return of a business year in which stocks, etc. are donated under the same paragraph.
(6) Any stockholder, etc. who seeks the benefit under Article 45 (2) of the Act shall submit, to the head of a tax office having jurisdiction over the place of tax payment, a donation deed, his/her financial restructuring plan, and an application for tax reduction or exemption, in the forms prescribed by Ordinance of the Ministry of Economy and Finance, along with his/her tax return of a business year in which stocks, etc. are donated under Article 45 (1) of the Act.
[This Article Newly Inserted by Presidential Decree No. 21545, Jun. 19, 2009]
 Article 42-2 (Special Taxation for Split-off following Privatization of Public Enterprises)
(1) "Split-off prescribed by Presidential Decree" in Article 45-2 of the Act means any split-off described below:
1. Deleted; <by Presidential Decree No. 25945, Dec. 30, 2014>
2. Other split-offs of public institutions for restructuring, such as privatization, which are prescribed by Ordinance of the Ministry of Economy and Finance.
(2) "Requirements prescribed by Presidential Decree" in Article 45-2 of the Act means the following requirements:
1. Split-off shall be eligible under Article 46 (1) 2 and 3 of the Corporate Tax Act;
2. A domestic corporation that have engaged in a business for at least five years as of the date of registration of a split-off is being split-off, meeting the requirements provided for in Article 82 (3) 3 and 4 of the Enforcement Decree of the Corporate Tax Act.
[This Article Newly Inserted by Presidential Decree No. 22037, Feb. 18, 2010]
 Article 43 (Special Taxation for Exchange of Stocks between Enterprises)
(1) Article 36 (6) shall apply mutatis mutandis to the scope of "controlling stockholder or investor of a domestic corporation or a related person to such stockholder or investor" in Article 46 (1) of the Act, with the exception of its subparagraphs, (hereafter in this Article, referred to as "controlling stockholder, etc.").
(2) "Financial restructuring plan prescribed by Presidential Decree" in Article 46 (1) of the Act, with the exception of its subparagraphs, means any of the documents provided for in Article 34 (6) 1 through 4, which stipulates a plan for transfer/acquisition of stocks or equity shares (hereafter in this Article, referred to as "stocks, etc.") held by a controlling stockholder, etc. <Amended by Presidential Decree No. 27848, Feb. 7, 2017>
(3) "Person prescribed by Presidential Decree" in Article 46 (1) of the Act, with the exception of its subparagraphs, means any of the entities provided for in Article 34 (7) 1 through 4. <Amended by Presidential Decree No. 27848, Feb. 7, 2017>
(4) "Related party prescribed by Presidential Decree" in Article 46 (1) of the Act, with the exception of its subparagraphs, means any person who has any of the relationships prescribed under Article 2 (5) of the Enforcement Decree of the Corporate Tax Act with a corporation subject to exchange defined in the same paragraph (hereafter in this Article, referred to as "exchanged corporation"). <Amended by Presidential Decree No. 29527, Feb. 12, 2019>
(5) In the transfer and acquisition of stocks, etc. under Article 46 (1) of the Act, stocks, etc. of a transferred corporation for exchange defined in the same paragraph, with the exception of its subparagraphs, (hereafter in this Article, referred to as "transferred corporation for exchange"), shall be distributed in proportion to the holding ratio of stocks, etc. of the relevant corporation among the controlling stockholder, etc. that transfers stocks, etc. of the transferred corporation for exchange.
(6) Pursuant to Article 46 (1) of the Act, a controlling stockholder, etc. may be allowed to defer capital gains tax or corporate tax as follows:
1. If the controlling stockholder, etc is a corporation, it may be allowed to defer capital gains tax or corporate tax as follows:
(a) Capital gains accruing from transfer of stocks, etc. under Article 46 (1) of the Act shall be the market price at the time of transfer of the stocks, etc. (referring to the market price provided for in Article 52 (2) of the Corporate Tax Act) minus the book value as of the date preceding the date of transfer day (the capital gains shall not exceed the value of acquired stocks, etc. of the transferred corporation for exchange; hereafter in this Article, referred to as "tax-deferred amount"); and such capital gains shall be recognized as the advance depreciation allowance for the acquired stocks, etc. of the transferred corporation for exchange;
(b) The advance depreciation provision recognized under item (a) shall be included in gross income for the business year in which the acquired stocks, etc. of the transferred corporation for exchange are transferred, inherited, or donated (if stocks, etc. have been acquired in any manner other than the acquisition as provided for in Article 46 (1) of the Act, the stocks, etc. acquired under the same paragraph shall be deemed first transferred, inherited, or donated; hereafter in this Article, referred to as "disposal"). Where stocks, etc. are disposed of partially, the amount calculated by the following formula shall be included in gross income:
The advance depreciation provision recognized under item (a) × (Number of disposed stocks, etc. out of the acquired stocks, etc. of the transferred corporation for exchange ÷ Number of the acquired stocks, etc. of the transferred corporation for exchange)
2. If the controlling stockholder, etc. is a resident, it may pay capital gains tax, treating the acquisition value of stocks, etc. of the transferred corporation for exchange minus the tax-deferred amount as the acquisition value, when it disposes of stocks, etc. of the transferred corporation for exchange, which it has acquired without paying capital gains tax at the time of transferring stocks, etc. under Article 46 (1) of the Act.
(7) The shortfall in assets referred to in Article 46 (2) of the Act shall be limited to the shortfall as at the date of transfer/acquisition of stocks, etc., as corrected and reflected in accounts after having confirmed by the accounting firm designated by the Securities and Futures Commission established pursuant to Article 19 of the Act on the Establishment of Financial Services Commission upon request by the relevant corporation, where the agreement on the stock exchange between the exchanged corporation and the transferred corporation for exchange contains provisions concerning due diligence on assets.
(8) "Equivalent to the interest calculated by the formula prescribed by Presidential Decree" in the latter part of Article 46 (3) of the Act, with the exception of its subparagraphs, shall be calculated as follows: <Amended by Presidential Decree No. 29527, Feb. 12, 2019>
1. If the controlling stockholder, etc. is a resident: The amount of capital gains tax not paid at the time of transferring stocks, etc. under Article 46 (1) of the Act, multiplied by the period of item (a) and the rate of item (b):
(a) The period from the day following the end of the taxable year in which capital gains tax on the tax-deferred amount is not paid at the time of transferring stocks, etc. under Article 46 (1) of the Act, until the end of the taxable year in which capital gains tax on the tax-deferred amount is paid due to any of the grounds specified under Article 46 (3) of the Act;
(b) 25/100,000 per day;
2. If the controlling stockholder, etc. is a domestic corporation: The amount calculated by multiplying the difference in corporate tax incurred by excluding the tax-deferred amount from gross income for the business year in which the tax-deferred amount was not included in gross income, by the period of item (a) and the rate of item (b):
(a) The period from the day following the end of the business year in which the tax-deferred amount was not included in gross income, until the end of the business year in which the tax-deferred amount is included in gross income due to any of the grounds specified under Article 46 (3) of the Act;
(b) 25/100,000 per day.
(9) The types of business referred to in Article 46 (3) 1 of the Act shall be classified into the Group according to the Korean Standard Industrial Classification.
(10) The amount eligible for tax deferral under Article 46 (4) of the Act shall be the tax-deferred amount at the time of an investment in kind or a spin-off, which shall not exceed the equivalent to the value of acquired stocks, etc. of the transferred corporation for exchange under Article 46 (1) of the Act; and such amount shall be recognized as the advanced depreciation provision for the stocks, etc. of the transferred corporation for exchange and shall be included in gross income by applying mutatis mutandis paragraph (6) 1 (b).
(11) The person authorized to approve the financial restructuring plan shall submit the details of the financial restructuring plan of an exchanged corporation in the form prescribed by Ordinance Ministry of Economy and Finance, to the head of a tax office having jurisdiction over the place of tax payment for the exchanged corporation by the end of the business year (hereafter in this subparagraph, referred to as "business year") in which the exchanged corporation’s financial restructuring plan is approved, and submit a report on performance of the financial restructuring plan in the form prescribed by Ordinance of the Ministry of Economy and Finance, to the head of a tax office having jurisdiction over the place of tax payment for the exchanged corporation by the deadline for filing the tax return for the following business years. In such cases, where the exchanged corporation submits its financial restructuring plan or a report on performance of its financial restructuring plan, which has been confirmed by the person authorized to approve the financial restructuring plan, to the head of a tax office having jurisdiction over the place of tax payment, such plan or report shall be deemed submitted by the person authorized to approve the financial restructuring plan:
1. The business year in which stocks, etc. are transferred or acquired under Article 46 (1) of the Act;
2. Three business years following the business year in which stocks, etc. are transferred or acquired under Article 46 (1) of the Act.
(12) A stockholder, etc. who wishes to be eligible under Article 46 (1), (2), and (4) of the Act shall file an agreement on the exchange of enterprises and a statement of transfer/acquisition of stocks, etc. and an application for tax deferral in the forms prescribed by Ordinance of the Ministry of Economy and Finance, with the head of a tax office having jurisdiction over the place of tax payment, along with his/her tax return for the taxable year in which stocks, etc. are transferred or acquired under the same paragraph.
[This Article Newly Inserted by Presidential Decree No. 21545, Jun. 19, 2009]
 Article 43-2 (Special Taxation for Stock Exchange by Venture Business)
(1) "Strategic partnership program” in Article 46-2 (1) 1 of the Act means a plan under which a venture business intends to establish a cooperative relationship with a third cooperation (hereafter in this Article, referred to as "affiliated corporation") through stock exchange or stock investment in kind (hereafter in this Article, referred to as "stock exchange, etc.") between the stockholders of the affiliated corporation and the venture business by a contract between such venture business and affiliated corporation in order to improve its productivity improvement and to strengthen its competitiveness, etc.
(2) The contract referred to in paragraph (1) shall satisfy the following requirements that:
1. The venture business and its affiliated corporation shall be the parties to a contract;
2. The details of the business for partnership shall be feasible and specific;
3. Methods for allotting the profits and losses generated from the partnership business shall be determined;
4. The contract shall contain matters pertaining to cooperation, such as technology, information, facilities, human resources, and capital.
(3) "Stockholder who holds at least 10/100 of the total number of stocks issued by a corporation" in Article 46-2 (1) of the Act, with the exception of its subparagraphs, means a stockholder who holds at least 10/100 of the total number of voting stocks issued by the relevant corporation.
(4) "Related person prescribed by Presidential Decree" in Article 46-2 (1) 2 of the Act means the related party prescribed under Article 1-2 (1) and (2) of the Enforcement Decree of the Framework Act on National Taxes; and "special relationship prescribed by Presidential Decree" means the relationship prescribed under Article 1-2 (1) and (2) of the Enforcement Decree of the Framework Act on National Taxes. <Amended by Presidential Decree No. 18704, Feb. 19, 2005; Presidential Decree No. 22037, Feb. 18, 2010; Presidential Decree No. 23590, Feb. 2, 2012>
(5) "Largest stockholder prescribed by Presidential Decree" in Article 46-2 (1) 2 of the Act means a stockholder who holds the largest number of stocks in total with any person stipulated in paragraph (4). <Amended by Presidential Decree No. 22037, Feb. 18, 2010>
(6) No capital gains tax shall be imposed on the incomes accruing from the stock exchanges, etc. conducted by a stockholder of the affiliated corporation with a venture business under Article 46-2 (1) of the Act (hereafter in this Article, referred to as "tax-deferred amount on stocks"), but when any stocks of the venture business acquired by the stock exchanges, etc. have been transferred (where any stocks have been acquired by any means, other than the stock exchanges, etc., such stocks acquired by the stock exchanges, etc. shall be deemed first transferred), the capital gains tax shall be imposed by deeming that the amount calculated by deducting the tax-deferred amount calculated under paragraph (7), is the acquisition value.
(7) The tax-deferred amount to be deducted from the acquisition value under paragraph (6), shall be calculated by multiplying the tax-deferred amount on stocks by the ratio of the transferred stocks among the stocks acquired by the stockholders of an affiliated corporation through stock exchanges, etc. with the venture business with the stocks held by them.
(8) When any cause for violating Article 46-2 (1) 3 of the Act occurs after a stockholder of an affiliated corporation has been allowed to defer capital gains tax under Article 46-2 (1) of the Act (a stockholder of an affiliated corporation or a venture business transfers the stocks acquired by stock exchanges, etc. within one year from such acquisition), the stockholder shall pay an amount calculated by multiplying the tax-deferred amount for stocks by the ratio of the stocks remaining as at the date of occurrence of the relevant cause out of the stocks acquired through stock exchange, etc. and by the tax rate under Article 104 (1) of the Income Tax Act valid as at the time of such stock exchange, etc., when filing his/her tax return for the taxable year in which the relevant cause occurs. <Amended by Presidential Decree No. 18704, Feb. 19, 2005>
(9) Any person who intends to apply for deferral of capital gains tax under Article 46-2 (3) of the Act shall submit his/her tax return, and an application for deferred taxation on the transfer gains from the transfer of stocks, such as the exchange of stocks of a venture business, in the form prescribed by Ordinance of the Ministry of Economy and Finance, accompanied by his/her strategic partnership program, a contract for stock exchange, and a document prescribed by Ordinance of the Ministry of Economy and Finance which verifies his/her eligibility for taxation support, to the head of a tax office having jurisdiction over the place of tax payment within two months from the end of the quarter of the month in which stocks are exchanged or investment in kind is made. <Amended by Presidential Decree No. 20720, Feb. 29, 2008>
[This Article Newly Inserted by Presidential Decree No. 18176, Dec. 30, 2003]
 Article 43-3 (Special Taxation for Stock Exchange between Logistics Enterprises)
(1) Article 43-2 (1) through (8) shall apply mutatis mutandis to the special case of taxation for the stock exchange, etc. executed between logistics enterprises for their strategic partnership under Article 46-3 of the Act. In this case, "Article 46-2 of the Act" shall be deemed "Article 46-3 of the Act," the "venture enterprise" shall be deemed the "logistics corporation that is a partnership counterpart" and the "partnership corporation" shall be deemed the "partnership logistics corporation," respectively.
(2) The scope of the logistics business provided for in Article 46-3 (2) of the Act shall be the logistics business provided for in Article 5 (8).
(3) Anyone who intends to file an application for deferring the taxation of the capital gains tax pursuant to Article 46-3 (3) of the Act shall report the tax base and file an application for deferring the taxation of the transfer gains accruing from the stock exchange between logistics enterprises, which is prescribed by Ordinance of the Ministry of Economy and Finance, accompanied by a strategic partnership plan and a stock exchange contract, with the head of tax office having jurisdiction over the place of tax payment within two months from the last date of the quarter that belongs to the date on which the stock exchange, etc. are executed. <Amended by Presidential Decree No. 20720, Feb. 29, 2008>
[This Article Newly Inserted by Presidential Decree No. 18704, Feb. 19, 2005]
 Article 43-4 (Special Taxation of Corporate Tax on Margins Accruing from Transfer of Self-Logistics Facilities)
(1) "Self-logistics facilities prescribed by Presidential Decree" in the former part of Article 46-4 (1) of the Act means facilities for logistics defined in subparagraph 5 of Article 2 of the Goods Distribution Promotion Act, which are owned and used by a corporation for its own purpose. <Amended by Presidential Decree No. 22037, Feb. 18, 2010>
(2) "Amount calculated pursuant to Presidential Decree" in the former part of Article 46-4 (1) of the Act means the amount calculated by the following arithmetic formula: <Amended by Presidential Decree No. 23590, Feb. 2, 2012>
(Transfer price of relevant self-logistics facilities - Book value of relevant self-logistics facilities ? Aggregate of carried-forward losses prescribed in subparagraph 1 of Article 13 of the Corporate Tax Act as at the end of the immediately preceding business year)
(3) "Amount calculated pursuant to Presidential Decree" in the former part of Article 46-4 (2) of the Act, with the exception of its subparagraphs, means the full amount not included in gross income in accordance with Article 46-4 (1) of the Act. <Amended by Presidential Decree No. 22037, Feb. 18, 2010>
(4) "Period fixed by Presidential Decree" in Article 46-4 (2) 1 and 2 of the Act means the period of three subsequent business years after the business year immediately following the business year in which the date of transfer falls. <Amended by Presidential Decree No. 22037, Feb. 18, 2010>
(5) "Interest rate prescribed by Presidential Decree" in Article 46-4 (2) 2 (b) of the Act means the interest rate prescribed by Ordinance of the Ministry of Economy and Finance, based upon the time deposit interest rates to which financial institutions apply. <Amended by Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 22037, Feb. 18, 2010>
(6) Where Article 46-4 (1) and (2) of the Act is applied, the logistics expense shall be the aggregate of the expenses set forth in subparagraphs 1 and 2: <Amended by Presidential Decree No. 20720, Feb. 29, 2008>
1. Logistics expense incurred from logistics activities conducted from the stage of transportation of goods from a supplier and safekeeping and management of the goods in a warehouse to the stage immediately before production process or putting them to a factory;
2. Logistics expense incurred from logistics activities from the stage of commencing the movement of goods after the sales are finalized to the stage of delivering them to a consumer, being returned from a consumer, or being reused or scrapped, as prescribed further by Ordinance of the Ministry of Economy and Finance.
(7) A domestic corporation that wishes to be eligible under Article 46-4 (1) of the Act shall submit a statement on gains from transfer and a statement on adjustment for inclusion of gross income in installments prescribed by Ordinance of the Ministry of Economy and Finance, to the head of the tax office having jurisdiction over the place of tax payment, along with the tax return for the business year during which the self-logistics facilities are transferred. <Amended by Presidential Decree No. 20720, Feb. 29, 2008>
[This Article Newly Inserted by Presidential Decree No. 19888, Feb. 28, 2007]
 Article 43-5 (Special Taxation on Division of Logistics Business)
(1) "Corporation specialized in logistics prescribed by Presidential Decree" in the main sentence of Article 46-5 of the Act, with the exception of its subparagraphs, means any of the following corporations: <Amended by Presidential Decree No. 22037, Feb. 18, 2010>
1. A corporation whose assets used for the distribution business under Article 5 (8) out of the corporation's assets value have a greater value (referring to the assets value on the balance sheet as of the end of the business year immediately preceding the business year on which the registration date of the division falls; hereafter the same shall apply in this subparagraph);
2. A corporation whose sales generated from the logistics business under Article 5 (8) out of the corporation's sales amount have a greater amount (referring to the sales on the income statement for the business year immediately preceding the business year on which the registration date of the division falls; hereafter the same shall apply in this subparagraph).
(2) "Assets prescribed by Presidential Decree" in the main sentence of Article 46-5 of the Act, with the exception of its subparagraphs, means tangible assets provided for in Article 24 (1) 1 of the Enforcement Decree of the Corporate Tax Act. <Amended by Presidential Decree No. 22037, Feb. 18, 2010; Presidential Decree No. 29527, Feb. 12, 2019>
(3) "One conducted as prescribed by Presidential Decree" in subparagraph 1 of Article 46-5 of the Act means a split-off that satisfies all requirements under subparagraphs of Article 82 (3) of the Enforcement Decree of the Corporate Tax Act. <Amended by Presidential Decree No. 22037, Feb. 18, 2010>
[This Article Newly Inserted by Presidential Decree No. 19888, Feb. 28, 2007]
 Article 43-6 (Special Taxation for Succession to Deficits Carried Forward Following Merger of Logistics Corporations)
"Amount determined by Presidential Decree" in the main sentence of Article 46-6 of the Act, with the exception of its subparagraphs, means the deficit succeeded in accordance with Article 81 (1) of the Enforcement Decree of the Corporate Tax Act. <Amended by Presidential Decree No. 22037, Feb. 18, 2010>
[This Article Newly Inserted by Presidential Decree No. 19888, Feb. 28, 2007]
 Article 43-7 (Special Taxation for Swap of Unlisted Stocks for Strategic Partnership)
(1) "Small or medium enterprises which invest at least five percent of their sales prescribed by Presidential Decree in research and development of human resources" in Article 46-7 (1) of the Act, with the exception of its subparagraphs, means small or medium enterprises which invest at least five percent of their sales in research and development of human resources referred to in Article 9 (2) 1 of the Act in the business year immediately preceding the business year in which the date of a stock swap or an investment in kind falls.
(2) “Stockholder who holds at least 10/100 of the total number of stocks issued” in Article 46-7 (1) of the Act, with the exception of its subparagraphs, means a stockholder who holds at least 10/100 of the total number of voting stocks issued by the relevant corporation.
(3) “Strategic partnership program” in Article 46-7 (1) 1 of the Act means a plan under which a venture business (including small or medium enterprises prescribed in paragraph (1); hereafter in this Article, referred to as "venture business, etc.") intends to establish a cooperative relationship with a corporation which is a stock company (hereafter in this Article, referred to as "affiliated corporation") through a contract entered into by no later than December 31, 2018, to improve its productivity and strengthen its competitiveness. <Amended by Presidential Decree No. 27649, Dec. 1, 2016>
(4) The contract referred to in paragraph (3) shall meet the following requirements that:
1. A venture business, etc. and an affiliated corporation shall be parties to such contract;
2. The details of the business for partnership shall be feasible and specific;
3. The method for distributing profits and losses generated from the partnership business shall be determined;
4. The contract shall include provisions concerning cooperation in technology, information, facilities, human resources, capital, etc.
(5) "Related person prescribed by Presidential Decree" in Article 46-7 (1) 2 of the Act means a person in any the relationships prescribed under Article 1-2 (1) or (2) of the Enforcement Decree of the Framework Act on National Taxes (hereafter in this Article, referred to as "related person"); and "special relationship prescribed by Presidential Decree" means any relationship prescribed under Article 1-2 (1) or (2) of the Enforcement Decree of the Framework Act on National Taxes.
(6) "Largest stockholder prescribed by Presidential Decree" in Article 46-7 (1) 2 of the Act means a stockholder who holds the largest number of stocks in total with his/her related persons, out of the total number of voting stocks of a corporation.
(7) No capital gains tax shall be imposed on gains (hereafter in this Article, referred to as "tax-deferred amount on stocks") accrued to a stockholder of a venture business, etc. through a stock swap with an affiliated corporation or a stockholder of the affiliated corporation or through an investment in kind under Article 46-7 (1) of the Act (hereafter in this Article, referred to as "stock swap, etc."); however, when the stockholder transfers any stocks of the affiliated corporation acquired through the stock swap, etc. (where he/she has acquired any stocks by any means other than the stock swap, etc., the stocks acquired through such stock swap, etc. shall be deemed first transferred), capital gains tax shall be imposed, deeming that the amount calculated by the following formula is the acquisition value thereof:
Acquisition value of transferred stocks among stocks acquired through the stock swap, etc. - (Tax-deferred amount on stocks × Number of transferred stocks ÷ Number of stocks acquired through the stock swap, etc.)
(8) When any cause for violating Article 46-7 (1) 3 of the Act occurs after a stockholder of a venture business, etc. has been allowed to defer capital gains tax under Article 46-7 (1) of the Act, the stockholder shall pay an amount calculated by multiplying the tax-deferred amount on stocks by the ratio of remaining stocks as at the date of occurrence of the relevant cause to the stocks acquired through a stock swap, etc. and by the tax rate prescribed under Article 104 (1) of the Income Tax Act valid as at the time of the stock swap, etc., when filing his/her tax return for the taxable year in which the relevant cause occurs.
(9) Any person who intends to apply for deferral of capital gains tax under Article 46-7 (3) of the Act shall file his/her tax return and an application for tax deferral on capital gains from the stock swap, etc. of an unlisted corporation, in the form prescribed by Ordinance of the Ministry of Economy and Finance, with the head of a tax office having jurisdiction over the place of tax payment, along with his/her strategic partnership program, a stock swap agreement, and a document prescribed by Ordinance of the Ministry of Economy and Finance which verifies his/her eligibility for tax support, within two months from the end of the quarter in which the date of the stock swap, etc. falls.
[This Article Newly Inserted by Presidential Decree No. 25211, Feb. 21, 2014]
 Article 43-8 (Special Taxation for Re-Investment in Venture Businesses after Sale of Stocks)
(1) "Stockholder prescribed by Presidential Decree" in the main sentence of Article 46-8 (1) of the Act, with the exception of its subparagraphs, means a founder or an incorporator of a venture business or an enterprise in which case seven years have not passed since it ceased to be a venture business (hereafter in this Article, referred to as "enterprise for sale"), which is a stockholder of an enterprise for sale (hereafter in this Article, referred to as "stockholder of an enterprise for sale"). <Amended by Presidential Decree No. 27848, Feb. 7, 2017>
(2) "Percentage prescribed by Presidential Decree" in the main sentence of Article 46-8 (1) of the Act, with the exception of its subparagraphs, means 30/100 of the stocks held by a stockholder of an enterprise for sale. <Amended by Presidential Decree No. 27848, Feb. 7, 2017>
(3) "Related party prescribed by Presidential Decree" in the main sentence of Article 46-8 (1) of the Act, with the exception of its subparagraphs, and Article 46-8 (1) 2 of the Act means a person in a relationship prescribed under Article 1-2 (1) or (2) of the Enforcement Decree of the Framework Act on National Taxes (hereafter in this Article, referred to as "related party"); and "special relationship prescribed by Presidential Decree" in Article 46-8 (1) 2 of the Act means a relationship prescribed under Article 1-2 (1) or (2) of the Enforcement Decree of the Framework Act on National Taxes.
(4) "Largest stockholder prescribed by Presidential Decree" in Article 46-8 (1) 2 of the Act means a stockholder who holds the largest number of stocks in total with his/her related parties, out of the total number of voting stocks of a corporation. <Amended by Presidential Decree No. 27848, Feb. 7, 2017>
(5) "Period prescribed by Presidential Decree" in Article 46-8 (1) 1 of the Act, with the exception of its items, means one year from the deadline for filing a preliminary return on capital gains accruing from the sale of stocks of an enterprise for sale, as specified under Article 105 of the Income Tax Act. <Amended by Presidential Decree No. 27848, Feb. 7, 2017; Presidential Decree No. 29527, Feb. 12, 2019>
(6) "Venture business investment trust prescribed by Presidential Decree" in Article 46-8 (1) 1 (b) of the Act means a venture business investment trust under Article 14 (1). <Amended by Presidential Decree No. 28636, Feb. 13, 2018>
(7) Re-investment referred to in Article 46-8 (1) 1 (c) of the Act means an investment made by a fund established under Article 13 of the Act on Special Measures for the Promotion of Venture Businesses (hereafter in this Article, referred to as "private investment fund") with an amount of money contributed by residents, in a venture business, etc. by the end of the taxable year following the taxable year in which the date of such contribution falls; and "small or medium enterprise prescribed by Presidential Decree for which three years have not passed since its incorporation" in Article 46-8 (1) 1 (c) of the Act means a small or medium enterprise for which three years have not passed since its incorporation, the technology of which is highly appreciated as prescribed in Article 2-2 (1) 2 (c) (iii) of the Act on Special Measures for the Promotion of Venture Businesses.
(8) No capital gains tax shall be imposed on gains accruing from the transfer of stocks of an enterprise for sale under Article 46-8 (1) of the Act (hereafter in this Article, referred to as "tax-deferred amount on stocks"); however, when any stocks or equity shares (hereafter in this Article, referred to as "stocks etc.") acquired by a re-investment, are transferred (where any stocks have been acquired by any means other than the re-investment, the stocks, etc. acquired by such re-investment shall be deemed first transferred), capital gains tax shall be imposed, deeming that the amount calculated by the following formula is the acquisition value thereof:
Acquisition value of transferred stocks, etc. among stocks, etc. acquired by the re-investment - (Tax-deferred amount on stocks × Number of transferred stocks ÷ Number of stocks, etc. acquired by the re-investment)
(9) When any cause for violating Article 46-8 (1) 1 of the Act occurs after a stockholder of an enterprise for sale has been allowed to defer capital gains tax under Article 46-8 (1) of the Act, the stockholder shall be deemed to have filed his/her preliminary return, but have not paid the capital gains tax.
(10) A stockholder of an enterprise for sale shall pay capital gains tax on gains from the sale of stocks of the enterprise for sale and a penalty tax under Article 47-4 (1) of the Framework Act on National Taxes, along with his/her tax return, immediately after a cause for violating Article 46-8 (1) 1 of the Act occurs.
(11) When any cause for violating Article 46-8 (1) 3 of the Act occurs after a stockholder of an enterprise for sale has been allowed to defer capital gains tax under Article 46-8 (1) of the Act, the stockholder shall pay an amount calculated by multiplying the tax-deferred amount on stocks by the ratio of remaining stocks as at the date of occurrence of the relevant cause to the stocks acquired by the re-investment and by the tax rate prescribed under Article 104 (1) of the Income Tax Act valid as at the time of transfer of the stocks to sell the enterprise, when filing his/her tax return for the taxable year in which the relevant cause occurs.
(12) Any person who intends to apply for deferral of capital gains tax under Article 46-8 (2) of the Act shall file his/her tax return on capital gains under Article 105 of the Income Tax Act and an application for tax deferral on gains from the transfer of stocks through a re-investment, in the form prescribed by Ordinance of the Ministry of Economy and Finance, with the head of a tax office having jurisdiction over the place of tax payment, along with a stock sale/purchase agreement and a document prescribed by Ordinance of the Ministry of Economy and Finance which verifies his/her eligibility for tax support: Provided, That the person shall submit a certificate of re-investment in the form prescribed by Ordinance of the Ministry of Economy and Finance, to the head of the tax office having jurisdiction over the place of tax payment after making an re-investment. <Amended by Presidential Decree No. 27848, Feb. 7, 2017>
(13) "Grounds prescribed by Presidential Decree" in Article 46-8 (3) of the Act means any of the following:
1. Death of a stockholder of an enterprise for sale;
2. Emigration of all members of a household to a foreign country under the Emigration Act;
3. Occurrence of a serious loss to property occurs due to a natural disaster.
(14) If any of the grounds specified under paragraph (13) arises, the relevant stockholder shall file his/her tax return on capital gains and pay capital gains tax on the tax-deferred amount within the period specified in Article 105 of the Income Tax Act, deeming that the date the relevant ground arises, is the date of transfer. In such cases, the applicable capital gains tax rate shall be the tax rate prescribed in Article 104 (1) of the Income Tax Act valid as at the time stocks of the enterprise for sale are transferred. <Amended by Presidential Decree No. 27848, Feb. 7, 2017>
[This Article Newly Inserted by Presidential Decree No. 25211, Feb. 21, 2014]
 Articles 44 and 44-2 Deleted. <by Presidential Decree No. 21307, Feb. 4, 2009>
 Article 44-3 (Scope of Carry-Over Deficits to Be Succeeded at Time of Merger of Venture Business)
"Amount prescribed by Presidential Decree" in Article 47-3 of the Act, with the exception of its subparagraphs, means the amount of succeeded deficits under Article 81 (1) of the Enforcement Decree of the Corporate Tax Act. <Amended by Presidential Decree No. 18704, Feb. 19, 2005; Presidential Decree No. 22037, Feb. 18, 2010>
[This Article Newly Inserted by Presidential Decree No. 18176, Dec. 30, 2003]
 Article 44-4 (Special Taxation for Transfer of Redundant Assets following Merger)
(1) "Domestic corporations engaging in the type of business prescribed by Presidential Decree, including pharmaceutical business" in the former part of Article 47-4 (1) of the Act means domestic corporations engaging mainly in any of the following business activities. In such cases, the main business shall be determined according to the Korean Standard Industrial Classification based on the business year immediately preceding the business year in which the merger is registered; and where a domestic corporation engages in at least two different businesses, the one with the largest turnover shall be deemed the main business: <Newly Inserted by Presidential Decree No. 24368, Feb. 15, 2013; Presidential Decree No. 25211, Feb. 21, 2014; Presidential Decree No. 27848, Feb. 7, 2017; Presidential Decree No. 28636, Feb. 13, 2018>
1. Manufacture of pharmaceuticals, medicinal chemicals and botanical products;
2. Manufacture of medical appliances and instruments;
3. Construction;
4. Sea and coastal water transportation;
5. Building of ships and floating structures;
6. Manufacture of basic iron and steel;
7. Manufacture of basic organic chemicals;
8. Manufacture of synthetic rubber and plastics in primary forms.
(2) "Redundant asset" in the former part of Article 47-4 (1) of the Act means a tangible fixed asset for business, the use of which is identical or similar to an asset used directly for the business of corporations, parties to a merger (including a merger by division).
(3) Deleted. <by Presidential Decree No. 27848, Feb. 7, 2017>
(4) "Amount calculated by the formula prescribed by Presidential Decree" in the former part of Article 47-4 (1) of the Act means the aggregate of the amounts prescribed in subparagraphs 1 and 2: <Amended by Presidential Decree No. 22037, Feb. 18, 2010; Presidential Decree No. 27848, Feb. 7, 2017>
1. The amount calculated by applying mutatis mutandis Article 30 (4) 1. In such cases, "fixed assets for the pre-conversion business" shall be construed as "redundant assets";
2. In cases of a redundant asset succeeded from a merged corporation, the equivalent to the gains on the valuation of the redundant asset upon the merger or gains on the valuation of the redundant asset upon the division;
3. Deleted. <by Presidential Decree No. 27848, Feb. 7, 2017>
(5) Deleted. <by Presidential Decree No. 27848, Feb. 7, 2017>
(6) "Amount calculated by the formula prescribed by Presidential Decree" in the former part of Article 47-4 (2) of the Act means the full amount of capital gains excluded from gross income, where such capital gains are excluded from gross income in accordance with the former part of Article 47-4 (1) of the Act: <Amended by Presidential Decree No. 22037, Feb. 18, 2010; Presidential Decree No. 24368, Feb. 15, 2013; Presidential Decree No. 27848, Feb. 7, 2017>
1. and 2. Deleted. <by Presidential Decree No. 27848, Feb. 7, 2017>
(7) A corporation that wishes to be eligible under Article 47-4 (1) of the Act shall file a statement of capital gains and adjustment for inclusion in gross income in installments in the form prescribed by Ordinance of the Ministry of Economy and Finance, with the head of a tax office having jurisdiction over the place of tax payment, along with its tax return for the business year in which a redundant asset is transferred. <Amended by Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 24368, Feb. 15, 2013; Presidential Decree No. 27848, Feb. 7, 2017>
[This Article Newly Inserted by Presidential Decree No. 19329, Feb. 9, 2006]
SECTION 6 Special Taxation for Restructuring of Financial Institutions
 Article 45 (Special Taxation for Reserves for Structural Improvement)
(1) "Reserves for structural improvement prescribed by Presidential Decree" in Article 48 (1) of the Act means those reserved to use for structural improvement of a mutual savings bank, such as acquisition of an insolvent mutual savings bank and increase of capital of/lending to a mutual savings bank acquired, which purpose, management, operation methods, etc. thereto is publicly notified by the Financial Services Commission through discussion with the Minister of Economy and Finance.
(2) The amount to be included in the gross income pursuant to Article 48 (5) of the Act shall be as follows:
1. Cases falling under Article 48 (5) 1 or 3 of the Act: The balance of the reserves for structural improvement;
2. Cases falling under Article 48 (5) 2 of the Act: The equivalent to that transferred to other accounts of the Korea Federation of Saving Banks from the account of reserves for structural improvement.
(3) The Korea Federation of Saving Banks which intends to be eligible under Article 48 (1) through (4) of the Act shall submit, to the head of the tax office having jurisdiction over the place of tax payment, a specification for loss compensation reserves prescribed in Ordinance of the Ministry of Economy and Finance, along with its tax return.
[This Article Newly Inserted by Presidential Decree No. 21545, Jun. 19, 2009]
 Article 46 Deleted. <by Presidential Decree No. 17034, Dec. 29, 2000>
 Articles 47 and 48 Deleted. <by Presidential Decree No. 17458, Dec. 31, 2001>
 Articles 48-2 and 48-3 Deleted. <by Presidential Decree No. 21307, Feb. 4, 2009>
 Article 49 Deleted. <by Presidential Decree No. 16693, Jan. 10, 2000>
 Articles 50 and 51 Deleted. <by Presidential Decree No. 21307, Feb. 4, 2009>
 Article 51-2 (Special Taxation for Self-Managed Real Estate Investment Companies, etc.)
(1) and (2) Deleted. <by Presidential Decree No. 19888, Feb. 28, 2007>
(3) "Size prescribed Presidential Decree" in Article 55-2 (4) of the Act means the size of national housing defined under the Housing Act (referring to the area based on the exclusive use area per household in cases of multi-unit houses stipulated by Ordinance of the Ministry of Economy and Finance). <Amended by Presidential Decree No. 17458, Dec. 31, 2001; Presidential Decree No. 18146, Nov. 29, 2003; Presidential Decree No. 18557, Oct. 5, 2004; Presidential Decree No. 18704, Feb. 19, 2005; Presidential Decree No. 19329, Feb. 9, 2006; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 22037, Feb. 18, 2010>
(4) "Houses below the size prescribed by Presidential Decree" in Article 55-2 (5) 1 and 2 of the Act means the following houses: <Newly Inserted by Presidential Decree No. 23039, Jul. 25, 2011; Presidential Decree No. 26959, Feb. 5, 2016>
1. Houses referred to in Article 55-2 (5) 1 of the Act: Houses with a total floor area (or an exclusive use area, in cases of multi-family housing) of not more than 85 square meters;
2. Houses referred to in Article 55-2 (5) 2 of the Act: Houses with a total floor area (or an exclusive use area, in cases of multi-family housing) of not more than 149 square meters.
(5) Any self-managed real estate investment company that intends to be eligible under Article 55-2 (4) and (5) of the Act shall file an application for income deductions in the form stipulated by Ordinance of the Ministry of Economy and Finance, with the head of the tax office having jurisdiction over the place of tax payment, along with the tax return of corporate tax. <Newly Inserted by Presidential Decree No. 17458, Dec. 31, 2001; Presidential Decree No. 18704, Feb. 19, 2005; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 23039, Jul. 25, 2011>
[This Article Newly Inserted by Presidential Decree No. 17336, Aug. 14, 2001]
 Article 52 Deleted. <by Presidential Decree No. 17458, Dec. 31, 2001>
 Article 53 (Scope of Securities Market Stabilization Fund)
"Association determined by Presidential Decree" in Article 57 of the Act means the cooperative falling under any of the following subparagraphs: <Amended by Presidential Decree No. 16693, Jan. 10, 2000; Presidential Decree No. 18176, Dec. 30, 2003; Presidential Decree No. 18704, Feb. 19, 2005; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 22037, Feb. 18, 2010; Presidential Decree No. 29527, Feb. 12, 2019>
2. A cooperative established for stabilization of the investment trust market, that is prescribed by Ordinance of the Ministry of Economy and Finance.
SECTION 7 Special Taxation for Balanced Regional Development
 Article 54 (Scope of Factory)
(1) "Factory" in Articles 60, 63, and 63-2 of the Act means a manufacturing establishment or an automobile maintenance shop as prescribed by Ordinance of the Ministry of Economy and Finance, that is an independent entity by unit of manufacturing or business. <Amended by Presidential Decree No. 16584, Oct. 30, 1999; Presidential Decree No. 16693, Jan. 10, 2000; Presidential Decree No. 17458, Dec. 31, 2001; Presidential Decree No. 18176, Dec. 30, 2003; Presidential Decree No. 20720, Feb. 29, 2008>
(2) "Classification prescribed by Presidential Decree" in Article 60 (3) of the Act means the Class according to the Korea Standard Industrial Classification. <Amended by Presidential Decree No. 16584, Oct. 30, 1999; Presidential Decree No. 16693, Jan. 10, 2000; Presidential Decree No. 17458, Dec. 31, 2001; Presidential Decree No. 18176, Dec. 30, 2003; Presidential Decree No. 23590, Feb. 2, 2012>
(3) and (4) Deleted. <by Presidential Decree No. 16584, Oct. 30, 1999>
 Article 55 Deleted. <by Presidential Decree No. 16584, Oct. 30, 1999>
 Article 56 (Special Taxation for Corporate Tax on Relocating Factories to Outside of Large City)
(1) Relocation of a factory in a large city to a local area subject to Article 60 (2) of the Act shall fall under any of the following cases: Provided, That, where the site of factories in a large city or of provincial factories exceeds the standard size for factory sites prescribed by Ordinance of the Ministry of Economy and Finance, Article 60 (2) of the Act shall not apply to such excess: <Amended by Presidential Decree No. 16584, Oct. 30, 1999; Presidential Decree No. 17458, Dec. 31, 2001; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 22037, Feb. 18, 2010>
1. Where a factory in a large city is transferred within two years from the date a business is commenced at a factory relocated to a local area;
2. Where a business is commenced at an existing factory acquired in a local area within one year from the date a factory in a large city is transferred;
3. Where a business is commenced after completing the construction of a factory in a local area within three years from the date a factory in a large city is transferred.
(2) "Large city prescribed by Presidential Decree" in the former part of Article 60 (2) of the Act means any of the following areas: <Amended by Presidential Decree No. 17829, Dec. 30, 2002; Presidential Decree No. 18704, Feb. 19, 2005; Presidential Decree No. 19329, Feb. 9, 2006; Presidential Decree No. 20620, Feb. 22, 2008; Presidential Decree No. 21196, Dec. 31, 2008>
1. Over-concentration control region of the Seoul Metropolitan area;
2. Jurisdictional areas of the Busan Metropolitan City (excluding Gijang-gun), Daegu Metropolitan City (excluding Dalseong-gun), Gwangju Metropolitan City, Daejeon Metropolitan City, and Ulsan Metropolitan City: Provided, That the industrial complex designated by the Industrial Sites and Development Act shall be excluded.
(3) "Amount computed by the formula prescribed by Presidential Decree" in Article 60 (2) of the Act means the amount calculated by multiplying the amount under subparagraph 1 less the amount under subparagraph 2 by the ratio under subparagraph 3: <Newly Inserted by Presidential Decree No. 16584, Oct. 30, 1999; Presidential Decree No. 17034, Dec. 29, 2000; Presidential Decree No. 18704, Feb. 19, 2005; Presidential Decree No. 21307, Feb. 4, 2009; Presidential Decree No. 29527, Feb. 12, 2019>
1. The amount obtained by subtracting the book value of a factory in a large city from the transfer value of the factory;
2. The amount of loss carried forward under Article 13 (1) 1 of the Corporate Tax Act as at the end of the business year immediately preceding the business year in which the date of transfer falls;
3. The ratio of the aggregate of the expenses for relocation of factory facilities and of the amount required for the acquisition, replacing, enlargement, or extension of the buildings, appurtenant land, and machinery of a relocated factory to the transfer value of the factory in a large city (the ratio shall not exceed 100/100).
(4) For the purposes of paragraph (3), the estimated price indicated in the written plan for relocation shall apply to any case falling under paragraph (1) 2 or 3 by not later than the date a business is commenced at the factory under paragraph (1) 2 or 3, respectively. <Amended by Presidential Decree No. 16584, Oct. 30, 1999; Presidential Decree No. 17458, Dec. 31, 2001>
(5) "Where a domestic corporation fails to commence a business by acquiring a local factory, as prescribed by Presidential Decree, or closes its business, or is dissolved" in the former part of Article 60 (4) of the Act means any of the following cases: <Amended by Presidential Decree No. 17458, Dec. 31, 2001; Presidential Decree No. 22037, Feb. 18, 2010>
1. Where it fails to commence the business under the conditions as listed under paragraph (1);
2. Where the business is discontinued or dissolved.
(6) "Amount calculated by the formula prescribed by Presidential Decree" in Article 60 (4) of the Act means any of the following amounts: <Newly Inserted by Presidential Decree No. 16584, Oct. 30, 1999; Presidential Decree No. 22037, Feb. 18, 2010>
1. Where a domestic corporation that has not included the transfer margin in its gross income under Article 60 (2) of the Act, fails to commence a business suited to paragraph (1) 2 or 3, the amount not included in gross income;
2. Where the amount not included in gross income based on the estimated value under paragraph (4), exceeds the amount calculated pursuant to paragraph (3), such excess;
3. Where the business is discontinued or dissolved before the amount not included in gross income under Article 60 (2) of the Act is included in full in gross income, the amount not included in gross income at the time of business discontinuance or dissolution.
(7) Any domestic corporation which intends to be eligible under Article 60 (6) of the Act shall submit, to the head of the tax office having jurisdiction over the place of tax payment, a specification of gains from the transfer of land, etc. prescribed by Ordinance of the Ministry of Economy and Finance accompanied by the following documents, along with its tax return for the taxable year in which the factory in a large city is transferred: <Amended by Presidential Decree No. 16584, Oct. 30, 1999; Presidential Decree No. 16693, Jan. 10, 2000; Presidential Decree No. 17458, Dec. 31, 2001; Presidential Decree No. 18312, Mar. 17, 2004; Presidential Decree No. 18704, Feb. 19, 2005; Presidential Decree No. 20120, Jun. 28, 2007; Presidential Decree No. 20720, Feb. 29, 2008>
1. In cases falling under paragraph (1) 1, a report on completion of re- location prescribed by Ordinance of the Ministry of Economy and Finance;
2. In cases falling under paragraph (1) 2 or 3, a written plan for the relocation prescribed by Ordinance of the Ministry of Economy and Finance. In such cases, where a business is commenced under para- graph (1) 2 or 3, a report on completion of relocation prescribed by Ordinance of the Ministry of Economy and Finance shall be furnished, along with its tax return for the taxable year in which such business is commenced.
 Article 57 (Special Taxation for Corporate Tax on Capital Gains following Relocation of Corporation's Head Office to Outside of Over-Concentration Control Region of Seoul Metropolitan Area)
(1) Deleted. <by Presidential Decree No. 17829, Dec. 30, 2002>
(2) A domestic corporation is eligible under Article 61 (3) of the Act in any of the following cases: <Amended by Presidential Decree No. 16584, Oct. 30, 1999; Presidential Decree No. 17458, Dec. 31, 2001; Presidential Decree No. 17829, Dec. 30, 2002>
1. Where the domestic corporation transfers the site and buildings of the head office or principal place of business in the over-concentration control region of the Seoul Metropolitan area (hereinafter referred to as "head office in the over-concentration control region of the Seoul Metropolitan area") within two years from the date it has relocated the head office in the over-concentration control region of the Seoul Metropolitan area to an area outside of the over-concentration control region of the Seoul Metropolitan area;
2. Where the domestic corporation relocates the head office or principal place of business to an area outside of the over-concentration control region of the Seoul Metropolitan area within three years from the date it has transferred the site and buildings of the head office in the over-concentration control region of the Seoul Metropolitan area.
(3) Deleted. <by Presidential Decree No. 17458, Dec. 31, 2001>
(4) "Amount computed by the formula prescribed by Presidential Decree" in Article 61 (3) of the Act means the amount calculated by multiplying the amount of subparagraph 1 minus the amount of subparagraph 2 by the ratio of subparagraph 3: <Newly Inserted by Presidential Decree No. 16584, Oct. 30, 1999; Presidential Decree No. 17829, Dec. 30, 2002; Presidential Decree No. 18704, Feb. 19, 2005; Presidential Decree No. 21307, Feb. 4, 2009; Presidential Decree No. 29527, Feb. 12, 2019>
1. The transfer value of the head office in the over-concentration control region of the Seoul Metropolitan area minus the book value of such asset;
2. The amount of carried-forward losses referred to in Article 13 (1) 1 of the Corporate Tax Act as at the end of the business year immediately preceding the business year in which the head office in the over-concentration control region of the Seoul Metropolitan area is transferred;
3. The ratio of the aggregate of the following amounts to the transfer value of the head office in the over-concentration control region of the Seoul Metropolitan area (the ratio shall not exceed 100/100):
(a) The acquisition value or lease deposit (including the key money for lease on a deposit basis; hereinafter the same shall apply) of the site and buildings of the head office or principal place of business of a corporation located outside of the over-concentration control region of the Seoul Metropolitan area: Provided, That, if a portion of the buildings is not used directly by the corporation, it shall be calculated by multiplying the acquisition value or lease deposit by the ratio of the floor area used directly by such corporation to the total floor area of such buildings;
(b) The acquisition value of a fixed business asset (excluding the site and buildings referred to in item (a)) belonging to the head office or principal place of business of a corporation located outside of the over-concentration control region of the Seoul Metropolitan area within one year from the date the head office in the over-concentration control region of the Seoul Metropolitan area is transferred;
(c) Expenses incurred in relocating the head office in the over-concentration control region of the Seoul Metropolitan area.
(5) Where a portion of a corporation' head office in the over-concentration control region of the Seoul Metropolitan area is used directly by the corporation for its business, and other portions are used by any third person, Article 61 of the Act shall apply to the portion that the corporation has used directly for its business for at least two years retroactively from the date of transfer (or the date the head office in the over-concentration control region of the Seoul Metropolitan area is relocated, in cases falling under paragraph (2) 1), as calculated by the ratio of the area used directly by it to the total floor area. <Amended by Presidential Decree No. 27848, Feb. 7, 2017>
(6) For the purposes of paragraph (4), the estimated prices stated in a relocation plan or plan for use of disposal proceeds referred to in the former part of paragraph (11) 2 shall be used in cases falling under paragraphs (2) 2 and (4) 3 (b) by no later than the completion of relocation or use. <Newly Inserted by Presidential Decree No. 16584, Oct. 30, 1999; Presidential Decree No. 17458, Dec. 31, 2001>
(7) "Where the domestic corporation relocates its head office or principal place of business to an area outside of the over-concentration control region of the Seoul Metropolitan area, as prescribed by Presidential Decree" in Article 61 (5) 1 of the Act means relocation prescribed under paragraph (2). <Amended by Presidential Decree No. 17458, Dec. 31, 2001; Presidential Decree No. 17829, Dec. 30, 2002; Presidential Decree No. 22037, Feb. 18, 2010>
(8) "Exceeding the criteria prescribed by Presidential Decree" in Article 61 (5) 2 of the Act means where the annual average number of full-time employees engaging in the affairs of the head office in the office located in the over-concentration control region of the Seoul Metropolitan area (referring to the number of personnel calculated by aggregating the number of full-time employees as at the end of each month in the relevant taxable year and then dividing the total number of full-time employees by the number of months; hereafter in this Article and Article 60-2, the same shall apply) after the end of the taxable year falling on the third anniversary from the date of relocation of the head office to an area outside of the over-concentration control region of the Seoul Metropolitan area, is at least 50/100 of the annual average number of full-time employees engaging in the affairs of the head office. <Amended by Presidential Decree No. 18176, Dec. 30, 2003; Presidential Decree No. 22037, Feb. 18, 2010; Presidential Decree No. 26070, Feb. 3, 2015>
(9) "Where the domestic corporation disburses the proceeds for any purpose other than purposes prescribed by Presidential Decree" in Article 61 (5) 3 of the Act means disbursing the proceeds for any purposes other than the following purposes. In such cases, if any portion of the site and buildings of the head office located outside of the over-concentration control region of the Seoul Metropolitan area, which are not used directly by the relevant corporation for the purpose of subparagraph 1, such portion shall be deemed used for other purposes: <Amended by Presidential Decree No. 17458, Dec. 31, 2001; Presidential Decree No. 17829, Dec. 30, 2002; Presidential Decree No. 22037, Feb. 18, 2010>
1. Where the site and buildings of the head office located outside of the over-concentration control region of the Seoul Metropolitan area, are acquired or leased within the period specified under paragraph (2);
2. Where the fixed business assets belonging to the head office located outside of the over-concentration control region of the Seoul Metropolitan area (excluding the site and buildings referred to in subparagraph 1), are acquired within one year from the date the head office in the over-concentration control region of the Seoul Metropolitan area is transferred.
(10) "Amount calculated by the formula prescribed by Presidential Decree" in the former part of Article 61 (5) of the Act, with the exception of its subparagraphs, means the following applicable amount: <Newly Inserted by Presidential Decree No. 16584, Oct. 30, 1999; Presidential Decree No. 17458, Dec. 31, 2001; Presidential Decree No. 22037, Feb. 18, 2010>
1. In cases falling under Article 61 (5) 1 or 2 of the Act, the amount not yet included in gross income as at the date the relevant event occurs;
2. In cases falling under Article 61 (5) 3 of the Act or where the amount is not yet included in gross income based on the estimated value under paragraph (6), the amount not yet included in gross income minus the amount calculated under paragraph (4);
3. Where a domestic corporation closes its business or is dissolved before it fully including the amount not yet included in gross income under Article 61 (3) of the Act in gross income, the amount not yet included in gross income as at the time of business closure or dissolution.
(11) A domestic corporation that intends to be eligible under Article 61 (6) of the Act shall file a statement of capital gains on transfer of land, etc. in the form prescribed by Ordinance of the Ministry of Economy and Finance and the following documents, with the head of the tax office having jurisdiction over the place of tax payment, along with its tax return for the taxable year in which the date of transfer of its head office in the over-concentration control region of the Seoul Metropolitan area falls: <Amended by Presidential Decree No. 16584, Oct. 30, 1999; Presidential Decree No. 17458, Dec. 31, 2001; Presidential Decree No. 17829, Dec. 30, 2002; Presidential Decree No. 20720, Feb. 29, 2008>
1. In cases falling under paragraph (2) 1, a relocation completion report and a plan for use of the disposal proceeds in the forms prescribed by Ordinance of the Ministry of Economy and Finance. In such cases, where the domestic corporation acquires a fixed business asset referred to in paragraph (4) 3 (b) or (9) 2, it shall submit a statement on use of the disposal proceeds in the form prescribed by Ordinance of the Ministry of Economy and Finance, along with its tax return for the taxable year in which the date of acquisition falls;
2. In cases falling under paragraph (2) 2, a relocation plan and a plan for use of the disposal proceeds in the forms prescribed by Ordinance of the Ministry of Economy and Finance. In such cases, where the domestic corporation relocates its head office or principal place of business outside of the over-concentration control region of the Seoul Metropolitan area under paragraph (2) 2, it shall submit a relocation completion report and a statement on use of the disposal proceeds in the forms prescribed by Ordinance of the Ministry of Economy and Finance, along with its tax return for the taxable year in which the date of relocation falls.
(12) “Classification prescribed by Presidential Decree” in Article 61 (4) of the Act means the Class under the Korean Standard Industrial Classification. <Newly Inserted by Presidential Decree No. 26070, Feb. 3, 2015>
 Article 58 (Reduction or Exemption of Corporate Tax for Public Institutions Relocating to Innovation Cities)
(1) "Real estate prescribed by Presidential Decree" in the former part of Article 62 (1) of the Act means the buildings, when and how to sell which are stipulated in a plan for disposal of previous real estate formulated under Article 43 of the Special Act on the Construction and Construction and Development of Innovation Cities and sites therefor. <Newly Inserted by Presidential Decree No. 24368, Feb. 15, 2013; Presidential Decree No. 28686, Feb. 27, 2018>
(2) "Amount computed by the formula prescribed by Presidential Decree" in the former part of Article 62 (1) of the Act means the amount calculated by applying mutatis mutandis Article 57 (4) through (6). In such cases, "in the over-concentration control region of the Seoul Metropolitan area" shall be construed as "in the Seoul Metropolitan area"; and "area outside of the over-concentration control region of the Seoul Metropolitan area" as "innovation city and Sejong City," respectively. <Amended by Presidential Decree No. 25211, Feb. 21, 2014>
(3) The scope to which Article 61 (5) of the Act shall apply mutatis mutandis pursuant to Article 62 (2) of the Act shall be limited to Article 57 (7) through (10).
(4) Article 57 (11) shall apply mutatis mutandis to submission of a statement of capital gains on transfer of land, etc. and other required documents under Article 62 (3) of the Act. In such cases, "in the over-concentration control region of the Seoul Metropolitan area" shall be construed as "in the Seoul Metropolitan area"; and "area outside the over-concentration control region of the Seoul Metropolitan area" as "innovation city and Sejong City," respectively. <Amended by Presidential Decree No. 25211, Feb. 21, 2014>
(5) "Income prescribed by Presidential Decree" in Article 62 (4) 1 of the Act means the amount (if such amount is negative, it shall be deemed zero) calculated by subtracting losses on disposal of fixed assets, losses on disposal of marketable securities, and interest paid (excluding losses on disposal of marketable securities and interest paid that constitute operating expenses under the Korea Financial Accounting Standards, in cases of a public institution that engages in financial or insurance business (excluding financial holding companies under the Financial Holding Companies Act)), from the sum of gains on disposal of fixed assets, gains on disposal of marketable securities, interest received, dividend received, and gains on assets contributed (excluding gains on disposal of marketable securities, interest received, and dividend received that constitute operating revenues under the Korea Financial Accounting Standards (excluding financial holding companies under the Financial Holding Companies Act)). <Amended by Presidential Decree No. 26959, Feb. 5, 2016>
(6) Deleted. <by Presidential Decree No. 28636, Feb. 13, 2018>
(7) "Executive officers prescribed by Presidential Decree" in Article 62 (6) of the Act means the persons falling under any subparagraph of Article 40 (1) of the Enforcement Decree of the Corporate Tax Act: Provided, That such executive officers do not include non full-time executive officers. <Amended by Presidential Decree No. 28636, Feb. 13, 2018; Presidential Decree No. 29527, Feb. 12, 2019>
(8) "Cases prescribed by Presidential Decree" in Article 62 (7) 2 of the Act means any of the following cases: <Amended by Presidential Decree No. 27848, Feb. 7, 2017>
1. Where an agency fails to commence its business by December 31, 2018 after relocating its head office to an innovation city;
2. Where an agency fails to transfer its head office in the Seoul Metropolitan area within two years after commencing its business in its head office relocated to an innovation city.
(9) "At least the scale prescribed by Presidential Decree" in Article 62 (7) 3 of the Act means where the annual average number of full-time employees engaging in the affairs of the head office in the office in the Seoul Metropolitan area, is at least 50/100 of the annual average number of full-time employees engaging in the affairs of the head office.
(10) The amount of tax payable under Article 62 (7) of the Act shall be calculated as follows: <Amended by Presidential Decree No. 24368, Feb. 15, 2013>
1. In cases falling under Article 62 (7) 1 of the Act: Amount of tax reduced or exempted within three years retrospectively from the date of business closure or the date of corporate dissolution;
2. In cases falling under Article 62 (7) 2 of the Act: Amount of tax reduced or exempted within five years retrospectively from the date the relevant agency falls under paragraph (8);
3. In cases falling under Article 62 (7) 3 of the Act: Amount of tax reduced or exempted within five years retrospectively from the date the relevant agency establishes an office of at least the scale provided for in paragraph (9);
4. In cases falling under Article 62 (7) 4 of the Act: Amount of tax reduced or exempted within five years retrospectively from the date the relevant agency fails to meet the prescribed percentage.
(11) Any corporation that wishes to be granted a reduction or exemption of corporate tax under Article 62 (4) and (9) of the Act shall file an application for tax reduction or exemption and a statement of calculation of tax reduction or exemption, in the forms stipulated by Ordinance of the Ministry of Economy and Finance, with the head of the tax office having jurisdiction over the place of tax payment, along with its tax return.
[This Article Newly Inserted by Presidential Decree No. 23590, Feb. 2, 2012]
 Article 59 Deleted. <by Presidential Decree No. 18176, Dec. 30, 2003>
 Article 60 (Tax Reduction or Exemption for Small or Medium Enterprises Relocating Outside of Over-Concentration Control Region of Seoul Metropolitan Area)
(1) To be entitled to a tax reduction or exemption pursuant to Article 63 (1) of the Act, an owner of factory facilities located in the over-concentration control region of the Seoul Metropolitan area shall commence a business upon relocating the factory facilities he/she has operated for at least two years retroactively from the date he/she stopped operation to relocate such factory facilities to an area outside the over-concentration control region of the Seoul Metropolitan area (the period for which the owner suspended operation, upon an order to improve, relocate, or suspend the operation of discharge facilities or pollutant discharge preventing facilities, issued under the Clean Air Conservation Act, the Water Environment Conservation Act, or the Noise and Vibration Control Act shall be deemed a period of operation) to an area outside the over-concentration control region of the Seoul Metropolitan area, upon meeting the following conditions: <Amended by Presidential Decree No. 17458, Dec. 31, 2001; Presidential Decree No. 17829, Dec. 30, 2002; Presidential Decree No. 18704, Feb. 19, 2005; Presidential Decree No. 20428, Nov. 30, 2007; Presidential Decree No. 22037, Feb. 18, 2010; Presidential Decree No. 22224, Jun. 28, 2010; Presidential Decree No. 28583, Jan. 16, 2018>
1. Where such owner shall transfer an old factory in the over-concentration control region of the Seoul Metropolitan to a third person, or it is impracticable for the owner to operate the relevant factory facilities remaining in the old factory by fully removing or closing such facilities within one year from the date of relocation to an area outside the over-concentration control region of the Seoul Metropolitan area;
2. Where such owner shall commence a business in an area outside the over-concentration control region of the Seoul Metropolitan area within one year from the date he/she transfers or closes the factory in the over-concentration control region of the Seoul Metropolitan area (or the date he/she suspends operation to relocate the factory facilities furnished on a site or in a building leased; hereafter in this subparagraph, the same shall apply): Provided, That, where he/she builds a new factory, he/she shall commence a business within three years from the date of transfer or closure of the old factory.
(2) "Area prescribed by Presidential Decree" in Article 63 (1) of the Act means the following: <Amended by Presidential Decree No. 24368, Feb. 15, 2013>
Any area with the jurisdiction of Gumi-si, Gimhae-si, Asan-si, Wonju-si, Iksan-si, Jeonju-si, Jeju-si, Jinju-si, Changwon-si, Cheonan-si, Cheongju-si, Chuncheon-si, Chungju-si, Pohang-si, Dangjin-gun, Eumseong-gun, Jincheon-gun, Hongcheon-gun (excluding Nae-myeon), and Hoengseong-gun
(3) "Amount of tax calculated, as prescribed by Presidential Decree" in Article 63 (2) of the Act, with the exception of its subparagraphs, means the amount of income tax or corporate tax reduced or exempted as prescribed in Article 63 (1) of the Act after the date of relocation of the factory. In such cases, if at least two factories are relocated to an area outside of the over-concentration control region of the Seoul Metropolitan, qualifying for Article 63 (2) 3 of the Act (excluding where the headquarters is established), such amount shall be limited to the portion reduced or exempted, following relocation of a factory producing the same products as those manufactured at the factory in the over-concentration control region of the Seoul Metropolitan area. <Newly Inserted by Presidential Decree No. 17458, Dec. 31, 2001; Presidential Decree No. 17829, Dec. 30, 2002; Presidential Decree No. 22037, Feb. 18, 2010>
(4) "Starting its business after having relocated its factory outside of the over-concentration control region of the Seoul Metropolitan area, as prescribed by Presidential Decree" in Article 63 (2) 2 of the Act means starting a business after relocating the factory as prescribed in paragraph (1). <Newly Inserted by Presidential Decree No. 17458, Dec. 31, 2001; Presidential Decree No. 17829, Dec. 30, 2002; Presidential Decree No. 22037, Feb. 18, 2010>
(5) Any person who wishes to be eligible under Article 63 (1) of the Act shall file an application for tax reduction or exemption and a statement of calculation of tax reduction or exemption, in the forms prescribed by Ordinance of the Ministry of Economy and Finance, with the head of a tax office having jurisdiction over the place of tax payment, along with his/her tax return. <Amended by Presidential Decree No. 18176, Dec. 30, 2003; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 22037, Feb. 18, 2010>
(6) "Classification prescribed by Presidential Decree" in Article 63 (5) of the Act means the sub-sectors under the Korean Standard Industrial Classification. <Newly Inserted by Presidential Decree No. 23590, Feb. 2, 2012>
(7) “Merging with any enterprise that is not a small or medium enterprise under the Framework Act on Small and Medium Enterprises or due to any of the grounds prescribed by Presidential Decree" in Article 63 (6) of the Act means the events specified under Article 2 (2). <Newly Inserted by Presidential Decree No. 27848, Feb. 7, 2017>
 Article 60-2 (Reduction or Exemption of Corporate Tax for Relocating Factories and Head Offices to Areas Outside of Seoul Metropolitan Area)
(1) "Real estate business, construction business, consumer service business, non-store retailing business, or shipping brokerage business prescribed by Presidential Decree" in the proviso to Article 63-2 (1) of the Act, with the exception of its subparagraphs, means the following types of business and consumer service business: Provided, That "relocated public agencies" defined in subparagraph 2 of Article 2 of the Special Act on the Construction and Development of Innovation Cities shall be excluded herefrom: <Newly Inserted by Presidential Decree No. 17458, Dec. 31, 2001; Presidential Decree No. 18176, Dec. 30, 2003; Presidential Decree No. 18704, Feb. 19, 2005; Presidential Decree No. 19329, Feb. 9, 2006; Presidential Decree No. 19888, Feb. 28, 2007; Presidential Decree No. 20620, Feb. 22, 2008; Presidential Decree No. 21307, Feb. 4, 2009; Presidential Decree No. 22037, Feb. 18, 2010; Presidential Decree No. 22953, Jun. 3, 2011; Presidential Decree No. 23590, Feb. 2, 2012; Presidential Decree No. 26070, Feb. 3, 2015; Presidential Decree No. 28686, Feb. 27, 2018>
1. Real estate lease business;
2. Real estate brokerage business;
3. Real estate trading business defined in Article 122 (1) of the Enforcement Decree of the Income Tax Act;
4. Deleted; <by Presidential Decree No. 19888, Feb. 28, 2007>
5. Construction business (including development and subdividing of residential buildings under the Korean Standard Industrial Classification (excluding the re-sale of purchased residential buildings));
6. Non-store retailing business defined in subparagraph 9 of Article 2 of the Distribution Industry Development Act;
7. Shipping brokerage business defined in subparagraph 5 of Article 2 of the Marine Transportation Act.
(2) For the purposes of Article 63-2 (1) 1 of the Act, the period shall be calculated based on the following: <Amended by Presidential Decree No. 17829, Dec. 30, 2002; Presidential Decree No. 18176, Dec. 30, 2003; Presidential Decree No. 18704, Feb. 19, 2005; Presidential Decree No. 19329, Feb. 9, 2006; Presidential Decree No. 19888, Feb. 28, 2007; Presidential Decree No. 20428, Nov. 30, 2007; Presidential Decree No. 22037, Feb. 18, 2010; Presidential Decree No. 22224, Jun. 28, 2010; Presidential Decree No. 28583, Jan. 16, 2018>
1. Where a corporation relocates its factory, the corporation shall have the actual records of operation (the period of suspending operation under an order to improve, relocate or suspend operation of the discharge facilities or the pollutant discharge preventing facilities established under the Clean Air Conservation Act, the Water Environment Conservation Act, or the Noise and Vibration Control Act shall be deemed the period of operation) within the over-concentration control region of the Seoul Metropolitan area for at least three consecutive years retroactively from the date of suspending operation in order to relocate the factory facilities to an area outside of the Seoul Metropolitan area defined in Article 2 (1) 9 of the Act (hereinafter referred to as "Seoul Metropolitan area");
2. Where a corporation relocates its head office or principal place of business (hereafter in this Article, referred to as "head office"), the corporation shall have the actual records of operating a business at the head office within the over-concentration control region of the Seoul Metropolitan area for at least three consecutive years retroactively from the date such relocation is registered.
(3) Deleted. <by Presidential Decree No. 17829, Dec. 30, 2002>
(4) A corporation that relocates its entire factory facilities or head office pursuant to Article 63-2 (1) 2 of the Act shall meet any of the following requirements. In such cases, Article 63-2 (5) of the Act shall apply only to the transfer of a factory or head office located in the over-concentration control region of the Seoul Metropolitan area: <Amended by Presidential Decree No. 17034, Dec. 29, 2000; Presidential Decree No. 17458, Dec. 31, 2001; Presidential Decree No. 17829, Dec. 30, 2002; Presidential Decree No. 18176, Dec. 30, 2003; Presidential Decree No. 19329, Feb. 9, 2006; Presidential Decree No. 21307, Feb. 4, 2009; Presidential Decree No. 22037, Feb. 18, 2010; Presidential Decree No. 23590, Feb. 2, 2012; Presidential Decree No. 26070, Feb. 3, 2015; Presidential Decree No. 28636, Feb. 13, 2018>
1. It shall be impracticable for the corporation to operate using the relevant factory facilities, by either transferring the factory in the over-concentration control region of the Seoul Metropolitan area to any third person or fully removing or permanently closing the factory facilities remaining in the over-concentration control region of the Seoul Metropolitan area within two years from the date of commencing a business by relocating the factory to an area outside the Seoul Metropolitan area;
2. The corporation shall commence its business outside of the Seoul Metropolitan area during the period from the date it transfers to any third person or permanently closes the factory in the over-concentration control region of the Seoul Metropolitan area (referring to the date it suspends operations for the relocation of the factory, if the corporation has its own factory facilities on a leased site for the factory or in a leased building) to December 31, 2020, or shall acquire a building site by no later than December 31, 2020 (including where the corporation possesses a building site) and commence its business by no later than December 31, 2023, if the corporate builds a new factory for relocation;
3. The corporation shall transfer the head office in the over-concentration control region of the Seoul Metropolitan area or alters its head office for any other purposes (including where it is used as an office below the scale provided for in paragraph (11); hereafter in this Article, the same shall apply) within two years from the date of commencing a business by relocating the head office to an area outside of the Seoul Metropolitan area;
4. The corporation shall commence its business outside of the Seoul Metropolitan area during the period from the date it transfers its head office in the over-concentration control region of the Seoul Metropolitan area to any third person or alters its head office for any other purpose to December 31, 2020, or shall acquire a building site by no later than December 31, 2020 (including where the corporation owns a building site) and commence its business by no later than December 31, 2023, if the corporation builds a new head office for relocation.
(5) "Other areas prescribed by Presidential Decree" in Article 63-2 (2) of the Act, with the exception of its subparagraphs, means areas provided for in Article 60 (2). <Amended by Presidential Decree No. 23590, Feb. 2, 2012>
(6) "Income prescribed by Presidential Decree" in Article 63-2 (2) 2 (a) of the Act means the amount (if such amount is negative, it shall be deemed zero) calculated by subtracting losses from the disposal of fixed assets, losses from the disposal of marketable securities, and interest paid (excluding losses from the disposal of marketable securities and interest paid that constitute operating expenses under the Korea Financial Accounting Standards, in cases of a public institution that engages in financial business or insurance business (excluding financial holding companies under the Financial Holding Companies Act)), from the sum of gains on the disposal of fixed assets, gains on the disposal of marketable securities, interest received, dividend received, and gains on assets contributed (excluding gains on the disposal of marketable securities, interest received, and dividend received that constitute operating revenues under the Korea Financial Accounting Standards (excluding financial holding companies defined under the Financial Holding Companies Act)). <Newly Inserted by Presidential Decree No. 22583, Dec. 30, 2010; Presidential Decree No. 26959, Feb. 5, 2016>
(7) “Consignment processing trade prescribed by Presidential Decree” in Article 63-2 (2) 2 (d) of the Act means that all or some of the raw materials to be processed (including manufacturing, assembling, recycling, and alteration; hereafter in this Article, the same shall apply) under the condition that fees for processing be paid in return, are exported to the other contractual party or procured from foreign countries and then the goods, etc. processed with such materials are imported or delivered to a foreign country. <Newly Inserted by Presidential Decree No. 26070, Feb. 3, 2015>
(8) The accounting of turnover generated from the consignment processing trade referred to in Article 63-2 (2) 2 (d) of the Act shall be kept separately from other turnover. <Amended by Presidential Decree No. 26070, Feb. 3, 2015; Presidential Decree No. 28636, Feb. 13, 2018>
(9) "Executive officers prescribed by Presidential Decree" in Article 63-2 (4) 2 of the Act means persons falling under any subparagraph of Article 40 (1) of the Enforcement Decree of the Corporate Tax Act: Provided, That non full-time executive officers shall be excluded herefrom. <Newly Inserted by Presidential Decree No. 18704, Feb. 19, 2005; Presidential Decree No. 21307, Feb. 4, 2009; Presidential Decree No. 21545, Jun. 19, 2009; Presidential Decree No. 26070, Feb. 3, 2015; Presidential Decree No. 28636, Feb. 13, 2018; Presidential Decree No. 29527, Feb. 12, 2019>
(10) "Where the corporation does not qualify as starting its business after having relocated its factory or head office outside of the over-concentration control region of the Seoul Metropolitan area, as prescribed by Presidential Decree" in Article 63-2 (7) 2 of the Act means where it fails to satisfy any of the requirements prescribed under paragraph (4). <Amended by Presidential Decree No. 17034, Dec. 29, 2000; Presidential Decree No. 17458, Dec. 31, 2001; Presidential Decree No. 17829, Dec. 30, 2002; Presidential Decree No. 22037, Feb. 18, 2010; Presidential Decree No. 26070, Feb. 3, 2015>
(11) “At least scale prescribed by Presidential Decree" in Article 63-2 (7) 5 of the Act means where the annual average number of full-time employees engaging in the affairs of the head office in the office located in the Seoul Metropolitan area after the end of the taxable year falling under the third anniversary from the date of relocation of the head office to an area outside of the over-concentration control region of the Seoul Metropolitan area, is at least 50/100 of the annual average number of full-time employees engaging in the affairs of the head office. <Amended by Presidential Decree No. 18176, Dec. 30, 2003; Presidential Decree No. 22037, Feb. 18, 2010; Presidential Decree No. 26070, Feb. 3, 2015>
(12) The amount of tax payable under Article 63-2 (7) of the Act shall be calculated as follows: <Amended by Presidential Decree No. 18176, Dec. 30, 2003; Presidential Decree No. 18704, Feb. 19, 2005>
1. In cases under Article 63-2 (7) 1 of the Act: Amount of tax reduced or exempted within three years retrospectively from the date of business closure or the date of corporate dissolution;
2. In cases under Article 63-2 (7) 2 of the Act: Amount of tax reduced or exempted within five years retrospectively from the date the relevant corporation fails to satisfy any of the requirements prescribed under paragraph (4);
3. In cases under Article 63-2 (7) 3 of the Act: Amount of tax reduced or exempted within five years retrospectively from the date of establishing the head office or factory. In such cases, if at least two relocated factories produce different products, respectively, it shall be limited to the portion reduced or exempted, following the relocation of a factory producing the same products as those of the factories within the Seoul Metropolitan area;
4. In cases under Article 63-2 (7) 5 of the Act: Amount of tax reduced or exempted within five years retrospectively from the date of establishing the office above the scale provided for in paragraph (11);
5. In cases under Article 63-2 (7) 6 of the Act: Amount of tax reduced or exempted within five years retrospectively from the date the relevant corporation falls short of the ratio that is set in the same subparagraph.
(13) Any corporation that wishes to be granted a reduction or exemption of corporation tax under Article 63-2 (2) of the Act shall submit an application for tax reduction or exemption and a statement of amount of tax reduced or exempted, in the forms stipulated by Ordinance of the Ministry of Economy and Finance, to the head of the tax office having jurisdiction over the place of tax payment, along with its tax return. <Amended by Presidential Decree No. 17458, Dec. 31, 2001; Presidential Decree No. 18176, Dec. 30, 2003; Presidential Decree No. 20720, Feb. 29, 2008>
(14) The amount of property tax to be collected additionally under Article 63- 2 (9) of the Act means the difference between the amount of property tax paid pursuant to Article 63-2 (6) of the Act and the amount of property tax payable pursuant to Article 106 (1) 1 or 2 of the Local Tax Act during the following applicable periods; and the amount of comprehensive real estate holding tax to be collected additionally under Article 63-2 (9) of the Act means the amount of comprehensive real estate holding tax payable pursuant to Article 182 (1) 1 or 2 of the Local Tax Act during the following applicable periods: <Newly Inserted by Presidential Decree No. 20620, Feb. 22, 2008; Presidential Decree No. 22395, Sep. 20, 2010>
1. In cases under Article 63-2 (7) 1 of the Act: Within three years retrospectively from the date of business closure or the date of corporate dissolution;
2. In cases under Article 63-2 (7) 2 of the Act: Within five years retrospectively from the date the relevant corporation fails to satisfy any of the requirements prescribed under paragraph (4);
3. In cases under Article 63-2 (7) 3 of the Act: Within five years retrospectively from the date the factory is established.
(15) The additional amount equivalent to interest under Article 63-2 (9) of the Act shall be calculated by multiplying the difference of the amount of property tax and the amount of comprehensive real estate holding tax under paragraph (14), by the period of subparagraph 1 and the rate of subparagraph 2: <Newly Inserted by Presidential Decree No. 20620, Feb. 22, 2008; Presidential Decree No. 29527, Feb. 12, 2019>
1. The period from the date following the deadline for tax payment of the taxable year in which a corporation was eligible under Article 63-2 (6) of the Act, until the date the amount of tax to be collected additionally under Article 63-2 (9) of the Act is notified;
2. 25/100,000 per day.
(16) "Classification prescribed by Presidential Decree" in Article 63-2 (10) of the Act means the Class according to the Korea Standard Industrial Classification. <Newly Inserted by Presidential Decree No. 23590, Feb. 2, 2012>
[This Article Newly Inserted by Presidential Decree No. 16693, Jan. 10, 2000]
 Article 60-3 Deleted. <by Presidential Decree No. 21307, Feb. 4, 2009>
 Article 61 (Tax Reduction or Exemption for Enterprises that Occupy Agro-Industrial Complexes)
(1) "Agro-industrial complex prescribed by Presidential Decree" in Article 64 (1) 1 of the Act means any agro-industrial complex located in an area outside of the over-concentration control region of the Seoul Metropolitan area, other than a city area with a population of at least 200,000 persons as at the date of designation as an agro-industrial complex. <Amended by Presidential Decree No. 17034, Dec. 29, 2000; Presidential Decree No. 17829, Dec. 30, 2002; Presidential Decree No. 22037, Feb. 18, 2010>
(2) “Area prescribed by Presidential Decree" in Article 64 (1) 2 of the Act means an area for special support for local small or medium enterprises located outside of the over-concentration control region of the Seoul Metropolitan area, other than a city area with a population of at least 200,000 persons as at the date of designation as an area for special support for local small or medium enterprises, which is prescribed by Ordinance of the Ministry of Economy and Finance. <Amended by Presidential Decree No. 17034, Dec. 29, 2000; Presidential Decree No. 17829, Dec. 30, 2002; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 22037, Feb. 18, 2010; Presidential Decree No. 26070, Feb. 3, 2015>
(3) "Cumulative investments prescribed by Presidential Decree" in Article 64 (3) 1 of the Act means the sum of investments in the business assets prescribed by Ordinance of the Ministry of Economy and Finance by the relevant taxable year in which a reduction or exemption of corporate tax or income tax is granted pursuant to Article 64 (2) of the Act. <Newly Inserted by Presidential Decree No. 29527, Feb. 12, 2019>
(4) "Service business prescribed by Presidential Decree" in Article 64 (3) 2 of the Act means a service business under Article 23 (4): <Newly Inserted by Presidential Decree No. 29527, Feb. 12, 2019>
(5) The amount of income tax or corporate tax payable under Article 64 (5) of the Act shall be calculated by the following formula (where the amount is a negative figure, it shall be deemed nil; if the number of full-time employees has decreased for two consecutive taxable years after the end of the taxable year in which tax reductions or exemptions are granted, such amount payable in the second taxable year means an amount less the amount paid in the first taxable year); and such amount shall be paid as income tax or corporate tax, when filing the tax return for the taxable year in which the number of full-time employees has decreased: <Newly Inserted by Presidential Decree No. 29527, Feb. 12, 2019>
The aggregate of amounts of tax reduced or exempted under Article 64 (3) 2 of the Act within two taxable years immediately preceding the taxable year in which the number of full-time employees of the relevant enterprise has decreased - [the number of full-time employees at the place of business eligible for reduction or exemption for the taxable year in which the number of full-time employees has decreased × 15 million won (or 20 million won in cases of a service business under Article 64 (3) 2 of the Act)]
(6) Article 11-2 (5) through (7) shall apply mutatis mutandis to the scopes of full-time employees and full-time youth employees and the methods for calculating the number of full-time employees and full-time youth employees in applying Article 64 (3) and (5). <Newly Inserted by Presidential Decree No. 29527, Feb. 12, 2019>
(7) Any person who intends to be eligible under Article 64 (1) of the Act shall file an application for tax reduction or exemption in the form prescribed by Ordinance of the Ministry of Economy and Finance, with the head of the tax office over the place of tax payment, along with his/her tax return. <Amended by Presidential Decree No. 20720, Feb. 29, 2008>
 Article 62 Deleted. <by Presidential Decree No. 17034, Dec. 29, 2000>
 Article 63 (Corporation Tax Exemption for Agricultural Partnerships)
(1) "Amount prescribed by Presidential Decree" in Article 66 (1) of the Act means any of the following amounts of income accruing from the business of an agricultural partnership referred to in Article 11 (1) of the Enforcement Decree of the Act on Fostering and Supporting Agricultural and Fisheries Business Entities: <Amended by Presidential Decree No. 25211, Feb. 21, 2014; Presidential Decree No. 26070, Feb. 3, 2015>
1. Amount of income accruing from business growing crops, other than business growing cereal crops and other crops for food (hereafter in this Article and Article 65, referred to as “food-crop growing business”), which does not exceed the amount calculated by the following formula each business year:
Amount of income accruing from business growing crops, other than food-crop growing business × {600 million won × Number of members × (Number of months in a business year ÷ 12) ÷ Amount of revenues from business growing crops, other than food-crop growing business}
2. Amount of income, other than the income accruing from business growing crops, which does not exceed the amount calculated by the following formula each business year:
{12 million won × Number of members × (Number of months in a business year ÷ 12)}
(2) "Amount prescribed by Presidential Decree" in the former part of Article 66 (2) of the Act means the full amount of dividend income if such dividend income accrues from the income exempt from corporate tax under paragraph (1) 1, or the amount not exceeding 12 million won each taxable year out of the dividend income if it accrues from the total income of an agricultural partnership minus the income from food-crop growing business and the income exempt from corporate tax under paragraph (1) 1. <Amended by Presidential Decree No. 25211, Feb. 21, 2014>
(3) The dividend income referred to in the latter part of Article 66 (2) of the Act shall be calculated by the following formula at each dividend payment. In such cases, the amount of income shall be the income for a business year immediately preceding the business year during which distribution of the dividend is determined; and if such amount of income is less than zero, it shall be deemed nil: <Amended by Presidential Decree No. 25211, Feb. 21, 2014>
1. Dividend income accruing from food-crop growing business:
{Dividend income paid by an agricultural partnership × (Amount of income accruing from food-crop growing business ÷ Total amount of income)}
2. Dividend income accruing from income exempt from corporate tax under paragraph (1) 1:
{Dividend income paid by an agricultural partnership × (Amount of income exempt from corporate tax under paragraph (1) 1 ÷ Total amount of income)}
3. Dividend income accruing from the total income minus the income from food-crop growing business and the income exempt from corporate tax under paragraph (1) 1:
[Dividend income paid by an agricultural partnership × {1 - (Amount of income accruing from food-crop growing business + Amount of income exempt from corporate tax under paragraph (1)) 1 ÷ Total amount of income}]
(4) "Farmer prescribed by Presidential Decree" in the main sentences of Articles 66 (4) and 68 (2) of the Act means a farmer defined in subparagraph 2 of Article 3 of the Framework Act on Agriculture, Rural Community and Food Industry, who has directly cultivated farmland for at least four years while residing in a Si (including the Special Self-Governing City and the administrative Si established under Article 10 (2) of the Special Act on the Establishment of Jeju Special Self-Governing Province and the Development of Free International City; hereafter in this Article, the same shall apply), Gun, or Gu (referring to an autonomous Gu; hereafter in this Article, the same shall apply) in which he/she has the farmland, grassland, or real estate invested in kind (hereafter in this Article, referred to as "farmland, etc.") or in any Si/Gun/Gu adjacent to such Si/Gun/Gu, or in an area within the radius of 30 kilometers from such farmland, etc.; "farmer prescribed by Presidential Decree" in Articles 66 (7) and 68 (3) of the Act means a farmer defined in subparagraph 2 of Article 3 of the Framework Act on Agriculture, Rural Community and Food Industry, who has directly cultivated farmland for at least four years while residing in a Si/Gun/Gu in which he/she has the farmland, etc. invested in kind or in any Si/Gun/Gu adjacent to such Si/Gun/Gu, or in an area within the radius of 30 kilometers from such farmland, etc. <Amended by Presidential Decree No. 18704, Feb. 19, 2005; Presidential Decree No. 20620, Feb. 22, 2008; Presidential Decree No. 21847, Nov. 26, 2009; Presidential Decree No. 22037, Feb. 18, 2010; Presidential Decree No. 24368, Feb. 15, 2013; Presidential Decree No. 25211, Feb. 21, 2014; Presidential Decree No. 26070, Feb. 3, 2015; Presidential Decree No. 26754, Dec. 22, 2015; Presidential Decree No. 26922, Jan. 22, 2016; Presidential Decree No. 27848, Feb. 7, 2017>
(5) Farmland eligible for full exemption from capital gains tax on the income accruing from making an investment in kind with farmland or grassland under Article 66 (4) or 68 (2) of the Act shall be rice paddies or dry fields actually used for cultivation, irrespective of land categories on the Cadastral Record, and the land used for a farmer's hut, compost barrack, pumping station, lake and pond, farm road, waterway, etc. directly necessary for such cultivation: Provided, That any farmland listed under Article 66 (4) shall be excluded herefrom. <Amended by Presidential Decree No. 18704, Feb. 19, 2005; Presidential Decree No. 26959, Feb. 5, 2016; Presidential Decree No. 27848, Feb. 7, 2017>
(6) Capital gains tax referred to in Article 66 (5) of the Act shall be paid only where the period during which a farmer has directly cultivated farmland before making an investment in kind with such farmland and the period from the date of the investment in kind with such farmland to the date of transfer of his/her equity shares does not exceed eight years in total; and the amount of tax payable shall be calculated by multiplying the amount of tax reduction or exemption on the relevant farmland by the ratio of the equity shares transferred within three years to the total equity shares. Where an heir continues to cultivate inherited farmland (referring to cultivation while the heir resides in a Si/Gun/Gu in which he/she has the farmland, etc. invested in kind under paragraph (4), or in any Si/Gun/Gu adjacent to such Si/Gun/Gu, or in an area within the radius of 30 kilometers from such farmland, etc.) for at least one year, the heir is deemed to have cultivated the relevant farmland for the sum of the following periods, for the purposes of calculating the period of cultivation of the inherited farmland: <Amended by Presidential Decree No. 17034, Dec. 29, 2000; Presidential Decree No. 26070, Feb. 3, 2015; Presidential Decree No. 26959, Feb. 5, 2016>
1. The period during which the decedent has cultivated the farmland after acquisition (limited to the period for which the former decedent has cultivated the farmland);
2. The period during which the decedent’s spouse had cultivated the farmland after acquisition, if the decedent inherited the farmland from his/her spouse and has cultivated it.
(7) An agricultural partnership that wishes to be granted an exemption of corporate tax under Article 66 (1) of the Act shall file its tax return, an application for tax exemption and a statement of exempted amount of tax in the forms prescribed by Ordinance of the Ministry of Economy and Finance, and a certificate of registration (registration of modification) as an agricultural or fisheries business entity under Article 4 of the Act on Fostering and Supporting Agricultural and Fisheries Business Entities (hereinafter referred to as "registration certificate as an agricultural or fisheries business entity"), with the head of the tax office having jurisdiction over the place of tax payment: Provided, That the same shall not apply where it has no corporate tax payable. <Amended by Presidential Decree No. 18176, Dec. 30, 2003; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 25211, Feb. 21, 2014>
(8) A person who wishes to be granted an exemption of income tax on dividend income under Article 66 (2) of the Act shall file an application for tax exemption in the form prescribed by Ordinance of the Ministry of Economy and Finance, with the relevant agricultural partnership, at the time he/she receives the relevant dividend. In such cases, the agricultural partnership shall submit the applications for tax exemption filed by its members and its registration certificate as an agricultural or fisheries business entity, to the head of the tax office having jurisdiction over withholding taxes, by the end of the month following the month in which dividends are paid. <Amended by Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 25211, Feb. 21, 2014>
(9) “Equivalent to the interest calculated by the formula prescribed by Presidential Decree" in Article 66 (6) and (10) of the Act means the equivalent to the amount of tax payable under Article 66 (5) or (9) of the Act, multiplied by the period of subparagraph 1 and the rate of subparagraph 2: <Newly Inserted by Presidential Decree No. 21307, Feb. 4, 2009; Presidential Decree No. 25211, Feb. 21, 2014; Presidential Decree No. 29527, Feb. 12, 2019>
1. The period from the day following the deadline for payment of capital gains tax on farmland, etc. invested initially in kind, until the date the amount of tax calculated under Article 66 (5) or (9) of the Act is paid;
2. 25/100,000 per day.
(10) A person who wishes to be granted a reduction or exemption of capital gains tax or to be carried forward capital gains tax under Article 66 (8) of the Act shall file his/her tax return, an application for tax reduction or exemption or an application for taxation carried forward in the form prescribed by Ordinance of the Ministry of Economy and Finance, with the head of the tax office having jurisdiction over the place of tax payment, along with copies of the registration certificate of the relevant agricultural partnership as an agricultural or fisheries business entity and an agreement on the investment in kind. In such cases, the application for taxation carried forward shall be filed jointly with the agricultural partnership: <Amended by Presidential Decree No. 18704, Feb. 19, 2005; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 22467, Nov. 2, 2010; Presidential Decree No. 25211, Feb. 21, 2014; Presidential Decree No. 26959, Feb. 5, 2016>
1. and 2. Deleted. <by Presidential Decree No. 22467, Nov. 2, 2010>
(11) Upon receipt of an application for tax reduction or exemption or an application for taxation carried forward under paragraph (10), the head of the tax office having jurisdiction over the place of tax payment shall verify the certified copy of the registry of the relevant farmland by matching it against administrative information available for sharing under Article 36 (1) of the Electronic Government Act. <Newly Inserted by Presidential Decree No. 22467, Nov. 2, 2010; Presidential Decree No. 26959, Feb. 5, 2016>
(12) Article 28 (10) shall apply mutatis mutandis to the guidelines for determining where a farmer disposes of at least 50/100 of the stocks or equity shares he/she has acquired by making an investment in kind, for the purposes of Article 66 (9) of the Act. <Newly Inserted by Presidential Decree No. 25211, Feb. 21, 2014>
(13) Capital gains tax referred to in Article 66 (9) of the Act shall be paid only where the period during which a farmer has directly used the relevant real estate before making an investment in kind with such real estate and the period from the date of the investment in kind with such real estate to the date of disposal of stocks or equity shares does not exceed eight years in total. In such cases, for the purpose of calculating the period of use of the inherited real estate, the period for which the inherited real estate has been used by the decedent shall be deemed the period for which it has been used by the heir. <Newly Inserted by Presidential Decree No. 25211, Feb. 21, 2014>
(14) For the purposes of paragraphs (4) and (6), if the sum of the amount of business income calculated under Article 19 (2) of the Income Tax Act (excluding the income from agriculture or forestry, the income from the real estate leasing business under Article 45 (2) of the same Act, and the side business income of a farm household under Article 9 of the Enforcement Decree of the same Act) and the gross wage and salary income calculated under Article 20 (2) of the same Act is at least 37 million won for a certain taxable year, such period shall be excluded from the period during which the relevant decedent (including his/her spouse; hereafter in this paragraph, the same shall apply) or resident has cultivated farmland. <Newly Inserted by Presidential Decree No. 26070, Feb. 3, 2015; Presidential Decree No. 26959, Feb. 5, 2016>
(15) "Income prescribed by Presidential Decree" in the proviso to Article 66 (4) of the Act means the amount calculated by the following formula, out of the amount of capital gains provided for in Article 95 (1) of the Income Tax Act (hereafter in this Article, referred to as "amount of capital gains"). In such cases, if land is sold through negotiations or expropriated under the Act on Acquisition of and Compensation for Land for Public Works Projects or any other Act, the assessed value based on which the amount of compensation is calculated, shall be deemed the assessed value at the time of transfer, but the assessed value for the immediately preceding period, shall apply where land is acquired or transferred, or where the date of incorporation into a residential area, commercial area, or industrial area under the National Land Planning and Utilization Act (hereafter in this Article through Article 66 and Articles 66-2, 66-3 and 67, referred to as "residential area, etc.") or the date of designation as land reserved for replotting arrives, before newly assessed value is publicly notified: <Newly Inserted by Presidential Decree No. 27848, Feb. 7, 201; Presidential Decree No. 28636, Feb. 13, 2018>
Amount of capital gains × {(assessed value as at the date of incorporation into a residential area, etc. or the date of designation as land reserved for replotting - assessed value at the time of acquisition) ÷ (assessed value at the time of transfer - assessed value at the time of acquisition)}
 Article 64 (Corporate Tax Exemptions for Fishery Partnerships)
(1) The income exempt from corporate tax pursuant to Article 67 (1) of the Act shall be the income accruing from the business of a fishery partnership established under Article 11 (2) of the Enforcement Decree of the Act on Fostering and Supporting Agricultural and Fisheries Business Entities, which shall not exceed the amount calculated by the following formula each business year:
{12 million won × number of its members × (number of months in a business year ÷ 12)}
(2) The dividend income exempt from income tax pursuant to Article 67 (2) of the Act shall not exceed 12 million won each taxable year.
(3) "Fisherman prescribed by Presidential Decree" in Article 67 (4) of the Act means a fisherman defined under the Fisheries Act, or a business operator engaging in the production of seeds for fisheries defined under the Fisheries Seed Industry Promotion Act (limited to business operators engaging in the production of seeds for fisheries in the sea, at the seashore, or in inland waters artificially created for the purpose of producing seeds for fisheries), who has directly used land for fisheries for fishery activities for at least four years, while residing in a Si (including the Special Self-Governing City and the administrative Si established under Article 10 (2) of the Special Act on the Establishment of Jeju Special Self-Governing Province and the Development of Free International City; hereafter in this Article, the same shall apply), Gun, or Gu (referring to an autonomous Gu; hereafter in this Article, the same shall apply) in which he/she has land or a building for fisheries (hereinafter referred to as “land, etc.”) invested in kind, or in any Si/Gun/Gu adjacent to such Si/Gun/Gu, or in an area within the radius of 30 kilometers from such land, etc. for fisheries. <Amended by Presidential Decree No. 18704, Feb. 19, 2005; Presidential Decree No. 20620, Feb. 22, 2008; Presidential Decree No. 22037, Feb. 18, 2010; Presidential Decree No. 24368, Feb. 15, 2013; Presidential Decree No. 26070, Feb. 3, 2015; Presidential Decree No. 26922, Jan. 22, 2016; Presidential Decree No. 26959, Feb. 5, 2016; Presidential Decree No. 27245, Jun. 21, 2016>
(4) "Land, etc. for fisheries prescribed by Presidential Decree" in Article 67 (4) of the Act means land and buildings used directly for the inland seawater aquaculture referred to in Article 41 (3) 2 of the Fisheries Act or the production of seeds and seedlings for fisheries under Article 21 (1) of the Fisheries Seed Industry Promotion Act (limited to business producing seeds for fisheries in the sea, at the seashore, or in inland waters artificially created for the purpose of producing seeds for fisheries). <Amended by Presidential Decree No. 22037, Feb. 18, 2010; Presidential Decree No. 26959, Feb. 5, 2016; Presidential Decree No. 27245, Jun. 21, 2016>
(5) Capital gains tax referred to in Article 67 (5) of the Act shall be paid only where the period during which a fisherman has directly used the relevant land, etc. for the fisheries for fisheries activities before making an investment in kind with such land, etc. and the period from the date of the investment in kind with such land, etc. to the date of transfer of his/her equity shares does not exceed eight years in total. Where the heir continues to use inherited land, etc. (referring to using the inherited land, etc. directly for fisheries while the heir resides in a Si/Gun/Gu in which he/she has the land, etc. for fisheries invested in kind, or in any Si/Gun/Gu adjacent to such Si/Gun/Gu, or in an area within the radius of 30 kilometers from the relevant land, etc. for fisheries) directly for fisheries for at least one year, an heir shall be deemed to have used the inherited land, etc. directly for fisheries for the sum of the following periods, for the purposes of calculating the period of use of the inherited land, etc. for fisheries directly for fisheries: <Newly Inserted by Presidential Decree No. 26959, Feb. 5, 2016>
1. The period during which the decedent used the land, etc. directly for fisheries after acquisition (limited to the period for which the former decedent used it directly for fisheries);
2. The period during which the decedent's spouse had used the land, etc. directly for fisheries after acquisition, if the decedent inherited it from his/her spouse and has used the land, etc. directly for fisheries.
(6) The amount of tax payable under Article 67 (5) of the Act shall be calculated by multiplying the amount of tax reduced or exempted on the relevant land, etc. for fisheries, by the ratio of equity shares transferred within three years to the total equity shares acquired by an investment in kind. <Amended by Presidential Decree No. 17034, Dec. 29, 2000; Presidential Decree No. 26959, Feb. 5, 2016>
(7) "Cases prescribed by Presidential Decree" in the proviso to Article 67 (5) of the Act means where all members of a household emigrate to a foreign country under the Emigration Act. <Amended by Presidential Decree No. 18704, Feb. 19, 2005; Presidential Decree No. 22037, Feb. 18, 2010>
(8) A fishery partnership that wishes to be granted an exemption of corporate tax under Article 67 (1) of the Act shall file its tax return, an application for tax exemption and a statement of amount of tax exempted, in the forms prescribed by Ordinance of the Ministry of Economy and Finance, and a registration certificate as an agricultural or fisheries business entity, with the head of the tax office having jurisdiction over the place of tax payment: Provided, That this shall not apply where it has no corporate tax payable. <Amended by Presidential Decree No. 18176, Dec. 30, 2003; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 25211, Feb. 21, 2014>
(9) A person who wishes to be granted an exemption of income tax on dividend income under Article 67 (2) of the Act shall file an application for tax exemption in the form prescribed by Ordinance of the Ministry of Economy and Finance, with the relevant fishery partnership, at the time he/she receives the relevant dividend. In such cases, the fishery partnership shall submit the applications for tax exemption filed by its members and its registration certificate as an agricultural or fisheries business entity, to the head of the tax office having jurisdiction over withholding taxes, by the end of the month following the month in which dividends are paid. <Amended by Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 25211, Feb. 21, 2014>
(10) A person who intends to apply for a reduction or exemption of capital gains tax under Article 67 (6) of the Act shall file an application for tax reduction or exemption (including filing through the Home Tax Service Network) in the form prescribed by Ordinance of the Ministry of Economy and Finance, and copies of the registration certificate of the relevant fisheries partnership as an agricultural or fisheries business entity and an agreement on the investment in kind, with the head of the tax office having jurisdiction over the place of tax payment, along with his/her tax return for the taxable year in which the relevant land, etc. for fisheries was transferred. In such cases, the head of the tax office having jurisdiction over the place of tax payment shall verify the a certificate of registered matters of the land, etc. for fisheries by matching it against administrative information available for sharing under Article 36 (1) of the Electronic Government Act. <Amended by Presidential Decree No. 20120, Jun. 28, 2007; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 22151, May 4, 2010; Presidential Decree No. 22467, Nov. 2, 2010; Presidential Decree No. 25211, Feb. 21, 2014; Presidential Decree No. 26959, Feb. 5, 2016; Presidential Decree No. 28636, Feb. 13, 2018>
(11) For the purposes of paragraphs (3) and (5), if the sum of the business income calculated under Article 19 (2) of the Income Tax Act (excluding the income from fisheries, the income from the real estate lease business under Article 45 (2) of the Income Tax Act, and the income from the side business of a farm household under Article 9 of the Enforcement Decree of the same Act) and the gross wage and salary income calculated under Article 20 (2) of the same Act is at least 37 million won for a certain taxable period, such period shall be excluded from the period during which the relevant decedent (including his/her spouse; hereafter in this paragraph, the same shall apply) or resident has used land, etc. directly for fisheries. <Newly Inserted by Presidential Decree No. 26959, Feb. 5, 2016>
(12) "Income prescribed by Presidential Decree" in the proviso to Article 67 (4) of the Act means the amount calculated by the following formula, of the amount of capital gains provided for in Article 95 (1) of the Income Tax Act (hereafter in this paragraph, referred to as "amount of capital gains"). In such cases, if land is sold through negotiations or expropriated under the Act on Acquisition of and Compensation for Land for Public Works Projects or any other statute, the assessed value based on which the amount of compensation is calculated, shall be deemed the assessed value at the time of transfer, but the assessed value for the immediately preceding period, shall apply where land is acquired or transferred, or the date of incorporation into a residential area, etc. or the date of designation as land reserved for replotting arrives, before a new assessed value is publicly notified: <Newly Inserted by Presidential Decree No. 27848, Feb. 7, 2017>
Amount of capital gains × {(assessed value as at the date of incorporation into a residential area, etc. or the date of designation as land reserved for replotting - assessed value at the time of acquisition) ÷ (assessed value at the time of transfer - assessed value at the time of acquisition)}
 Article 65 (Tax Reductions or Exemptions for Agricultural Companies)
(1) "Amount prescribed by Presidential Decree" in Article 68 (1) of the Act means up to the amount calculated by the following formula: <Newly Inserted by Presidential Decree No. 25211, Feb. 21, 2014>
Amount of income accruing from business growing crops, other than food-crop growing business × {5 billion won × (Number of months in a business year ÷ 12) ÷ Revenues from business growing crops, other than food-crop growing business}
(2) "Income prescribed by Presidential Decree" in Article 68 (1) of the Act means the following income (excluding the income accruing from the types of business prescribed by Ordinance of the Ministry of Economy and Finance, in cases of an agricultural company prescribed by Ordinance of the Ministry of Economy and Finance which is controlled by a nonfarmer): <Amended by Presidential Decree No. 20620, Feb. 22, 2008; Presidential Decree No. 20854, Jun. 20, 2008; Presidential Decree No. 21774, Oct. 8, 2009; Presidential Decree No. 21847, Nov. 26, 2009; Presidential Decree No. 22037, Feb. 18, 2010; Presidential Decree No. 23590, Feb. 2, 2012; Presidential Decree No. 25211, Feb. 21, 2014; Presidential Decree No. 26754, Dec. 22, 2015; Presidential Decree No. 29527, Feb. 12, 2019>
1. Income accruing from the livestock breeding business or forestry defined in Article 2 of the Enforcement Decree of the Framework Act on Agriculture, Rural Community and Food Industry;
2. Income accruing from the incidental business of an agricultural company established under Article 19 (1) of the Enforcement Decree of the Act on Fostering and Supporting Agricultural and Fisheries Business Entities (hereafter in this Article, referred to as "agricultural company");
3. Income accruing from the distribution, processing, and sale of agricultural products referred to in