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ENFORCEMENT RULE OF THE ADJUSTMENT OF INTERNATIONAL TAXES ACT

Ordinance Of the Economy and Finance No. 564, Mar. 30, 1996

Amended by Ordinance Of the Economy and Finance No. 605, Dec. 31, 1996

Ordinance Of the Economy and Finance No. 86, May 24, 1999

Ordinance Of the Economy and Finance No. 196, Apr. 3, 2001

Ordinance Of the Economy and Finance No. 298, Jan. 23, 2003

Ordinance Of the Economy and Finance No. 428, Mar. 19, 2005

Ordinance Of the Economy and Finance No. 533, Dec. 15, 2006

Ordinance Of the Economy and Finance No. 14, Apr. 28, 2008

Ordinance Of the Economy and Finance No. 63, Mar. 27, 2009

Ordinance Of the Economy and Finance No. 143, Mar. 31, 2010

Ordinance Of the Economy and Finance No. 189, Mar. 18, 2011

Ordinance Of the Economy and Finance No. 272, Feb. 28, 2012

Ordinance Of the Economy and Finance No. 336, Feb. 23, 2013

Ordinance Of the Economy and Finance No. 417, Mar. 14, 2014

Ordinance Of the Economy and Finance No. 484, Mar. 13, 2015

Ordinance Of the Economy and Finance No. 499, Sep. 30, 2015

Ordinance Of the Economy and Finance No. 520, Dec. 2, 2015

Ordinance Of the Economy and Finance No. 559, Apr. 6, 2016

Ordinance Of the Economy and Finance No. 613, Mar. 17, 2017

Ordinance Of the Economy and Finance No. 663, Mar. 19, 2018

 Article 1 (Purpose)
The purpose of this Rule is to prescribe matters delegated by the Adjustment of International Taxes Act and the Enforcement Decree of the same Act and matters necessary for the enforcement thereof.
[This Article Wholly Amended by Ordinance of the Ministry of Economy and Finance No. 272, Feb. 28, 2012]
 Article 2 (Assessment of Comparability and Conformity)
(1) In assessing whether high comparability exists as provided in Article 5 (2) of the Enforcement Decree of the Adjustment of International Taxes Act (hereinafter referred to as the "Decree"), the following matters shall be analyzed:
1. Types and characteristics of goods or services:
(a) In cases of trading tangible goods: Physical properties, quality and reliability, and supply conditions such as supply quantity and timing, of goods;
(b) In cases of providing services: Characteristics and scope of services provided;
(c) In cases of trading intangible assets: Type of transaction (license, sale, etc.), type of assets (patent right, trademark right, know-how, etc.), term and degree of protection, and expected benefits from the use of assets;
2. Functions of business activities: Core functions being performed, such as design, manufacture, assembly, research and development, services, purchasing, distribution, marketing, advertising, transportation, finance, and management;
3. Risks involved in transactions: Risks arising from uncertainties in the market, such as fluctuations in manufacturing costs and prices of products; investment risk involved in investing in and using tangible assets and the success or failure in the investment in research and development, etc.; financial risks, such as fluctuations in exchange rates and interest rates; and credit risks related to the collection of accounts receivable;
4. Assets used: Types of assets (tangible assets, intangible assets, etc.) and properties of assets (durable years, market value, areas where they are used, legal protection mechanism, etc.);
5. Contract terms and conditions: Type of apportionment of liabilities, risks, expected benefits, etc. involved in transactions among the parties to the contract (including de facto contractual relationship);
6. Economic conditions: Market conditions (including geographical location of the market, market size, trade levels such as wholesale and retail, and degree of competition in the market) and characteristics of cyclical business fluctuations (economy, product cycle, etc.);
7. Business strategy: Corporate strategy, such as market penetration, technological innovation and development of new products, business diversification, and risk avoidance.
(2) In assessing whether high conformity exists as provided in Article 5 (3) of the Decree, the analysis shall be conducted based on the following considerations:
1. Where applying the comparable uncontrolled price method: Whether there is a homogeneity between the goods or services being compared. In such cases, reasonable adjustments shall be able to be made with respect to differences arising from timing of transactions, trading markets, terms and conditions of transactions, and whether intangible assets are used;
2. Where applying the resale price method: Whether the tested party conducts sale, etc. without a critical processing or manufacturing function. In such cases, preferential consideration shall be given to whether functional homogeneity exists between the tested party and comparables rather than the features of the goods or services traded; and difference arising from causes, such as use of unique intangible assets (trademark right, unique marketing organization, etc.) shall be reasonably adjustable;
3. Where applying the cost plus method: Whether intermediate goods such as half-finished products are traded or services are provided between related parties. In such cases, preferential consideration shall be given to whether functional homogeneity exists between the tested party and comparables; but the gross profit to be compared between the tested party and comparables shall be highly correlated to the cost and shall be measurable against the same accounting standard;
4. Where applying the profit split method: Where related parties perform highly integrated functions such as involvement in forming a specific intangible asset, whether it is reasonably expected that the allocation of profit between independent parties not in a special relationship corresponds to each party’s contribution;
5. Where applying the transactional net margin method: Whether a high correlation exists between the net profit margin indicator (referring to the ratio of net profit provided in items of Article 4 (2) 1 of the Decree; hereinafter the same shall apply) and business activities. In such cases, it shall be possible to secure a stricter similarity between transactions with a related party and comparable transactions than other arm's length price computation methods; or reasonable adjustments shall be able to be made with respect to differences in situations being compared.
(3) Each net profit margin indicator referred to in paragraph (2) 5 shall be selected in consideration of the following matters unless there is a compelling reason not to do so. In such cases, the same standards shall be applied to calculate net profit margin indicators of the tested party and an independent third party; and the net profit margin indicator shall be measured by segmenting the financial information of all companies to a reasonable level based upon considerations of direct and indirect relationship with the transactions among related parties, relationship with business activities, etc.:
1. The ratio of net profit to sales shall be used where a product purchased from a related party is resold to an independent third party. In such cases, the same accounting standard shall apply to the tested party and comparables with respect to the sales incentive, sales discount, and foreign exchange gains and losses;
2. The ratio of net profit to assets shall be used for tangible asset-intensive manufacturing activities, capital-intensive financial activities, and other activities where a high correlation exists between assets and the net profit generated by the tested party. In such cases, the scope of assets includes tangible operating assets such as land, buildings, facilities and equipment, intangible operating assets used for business activities, such as patent rights and know-how, and working capital such as inventory assets and accounts receivable (excluding accounts payable): Provided, That investment assets and cash shall be construed as operating assets only in the case of the financial industry;
3. The ratio of net profit to cost of sales and operating expenses shall be used where a high correlation exists among net profit, cost of sales, and operating expenses. In such cases, cost of sales and operating expenses shall be measured based on the considerations of correlation among the assets used, risks borne, and functions performed by the tested party, and business activities;
4. The ratio of gross sales profit to operating expenses shall be used where the tested party performs simple sales activities without bearing any burden of inventories (referring to engaging in simple intermediary activities, etc. such as purchasing goods from a related party and selling them to another related person).
[This Article Wholly Amended by Ordinance of the Ministry of Economy and Finance No. 272, Feb. 28, 2012]
 Article 2-2 (Analysis Procedures for Computing Arm's Length Price)
(1) Analysis procedures in determining an arm's length price pursuant to Article 6 (1) of the Decree shall be followed according to the following steps: Provided, That if any other analysis procedure can be deemed reasonable, such analysis procedure may be applied:
1. Selection of the year to be analyzed;
2. Analysis of business environment: Analysis of general business environment related to transactions, such as industry, competition, and regulatory factors;
3. Analysis of transactions among related parties: Analysis for identifying etc. tested parties in and outside Korea, selection of appropriate arm's length price computation method, and core factors of comparability analysis;
4. Collection and examination of data on internal comparable transactions: Collection of data on transactions with independent business entities not in a special relationship, and analysis thereof;
5. Collection and examination of data on external comparable transactions: Collection of available data such as commercial databases to ascertain transactions between third parties not in a special relationship, and analysis of correlation with transactions between related parties;
6. Selection of the most reasonable arm's length price computation method and financial indicators (including net profit margin indicator) required by the selected computation method;
7. Selection of comparable transactions: Selection after examining characteristics required for transactions between independent third parties to be selected as comparable transactions, based on the factors of comparability analysis;
8. Reasonable adjustment of difference: Reasonable adjustment of factors causing substantial differences in prices, profits, etc. between transactions with related parties and transactions between independent third parties, such as accounting standards, financial information, functions performed, assets used, and risks borne;
9. Interpreting collected data and determination of an arm's length price.
(2) "Interest rate construed as a normal interest rate as prescribed by Ordinance of the Ministry of Economy and Finance" in Article 6 (7) 2 of the Decree means an interest rate classified as follows: <Newly Inserted by Ordinance of the Ministry of Economy and Finance No. 613, Mar. 17, 2017>
1. Where a resident grants a loan to a foreign related party: The interest rate on overdraft referred to in Article 43 (2) of the Enforcement Rule of the Corporate Tax Act;
2. Where a resident borrows funds from a foreign related party: The London Inter-Bank Offered Rate on 12-month loans by currency as at the end of the immediately preceding business year plus 15/1,000: Provided, That in cases of a currency for which no London Inter-Bank Offered Rate on 12-month loans exists, the interest rate shall be the London Inter-Bank Offered Rate on the United States currency loans with maturity of 12 months plus 15/1,000.
(3) Cases where it is unreasonable to compute the price, profit, or net profit by individual transaction as prescribed in Article 6 (8) of the Decree shall be as follows: <Amended by Ordinance of the Ministry of Economy and Finance No. 613, Mar. 17, 2017>
1. Where their product groups are closely mutually related, such as those within the same product line;
2. Where core parts are provided to the manufacturer with know-how;
3. Where a roundabout transaction is conducted, involving a related person;
4. Where sale of one product is directly related to sale of another product (such as printer and toner, and coffee maker and coffee capsules);
5. Where it is deemed reasonable to evaluate individual transactions by integrating them in light of the substance and practices of the transactions.
(4) Cases where it is unreasonable to compute the price, profit, or net profit from the pertinent business year's data alone as provided in Article 6 (9) of the Decree shall be as follows: <Amended by Ordinance of the Ministry of Economy and Finance No. 613, Mar. 17, 2017>
1. Where business strategies, such as market penetration strategy and sales strategy that consider product life cycle, affect the price of the product over many business years;
2. Where changes in economic conditions, such as economic fluctuations, affect the price of the product over many business years;
3. Where it is deemed reasonable to use data accumulated during many business years based upon the substance and practices of the transaction.
[This Article Wholly Amended by Ordinance of the Ministry of Economy and Finance No. 272, Feb. 28, 2012]
 Article 2-3 (Computation Method of Expected Risks, Expenses, and Expected Benefits of Payment Guarantee)
(1) An arm's length price computed by the method referred to in Article 6-2 (3) 1 of the Decree shall be the amount calculated by adding the cost actually borne by the guarantor for the payment guarantee, to the expected risks of the guarantor to be borne by the guarantee. In such cases, the expected risks of the guarantor shall be computed based upon expected default rate depending on the credit rating of the principal debtor and the rate at which the creditor is able to collect debt from the principal debtor upon default (hereafter in this Article referred to as "expected recovery rate of guaranteed amount").
(2) An arm's length price computed by the method referred to in Article 6-2 (3) 2 of the Decree shall be the amount calculated by subtracting the financing cost of the principal debtor under a payment guarantee from the financing cost of the principal debtor without a payment guarantee. In such cases, the financing cost of the principal debtor shall be the amount calculated based upon the borrowing interest rate or the interest rate of the corporate bond calculated based upon the credit ratings of the guarantor and the principal debtor depending on whether a payment guarantee exists.
(3) An arm's length price computed by the method referred to in Article 6-2 (3) 3 of the Decree shall apply if arm's length prices are computed by the method prescribed in paragraphs (1) and (2), respectively and if the price computed by the method referred to in paragraph (2) exceeds that computed by the method referred to in paragraph (1); and shall be reasonably adjusted within the range of the prices computed by the methods referred to in paragraphs (1) and (2), based upon expected risks and expenses of the guarantor, expected benefits of the principal debtor, terms and conditions of the payment guarantee contract, etc.
(4) Where an arm's length price is computed by the methods referred to in paragraphs (1) through (3), credit rating, expected default rate, expected recovery rate of guaranteed amount, borrowing interest rate, interest rate of corporate bond, etc. shall be calculated using reasonable data based upon the availability, usability, reliability, comparability, etc. of data. In such cases, credit rating, expected default rate, and expected recovery rate of guaranteed amount shall be determined or calculated based on the following considerations:
1. Credit rating: In addition to the historic financial information, reasonably foreseeable financial information, and non-financial information such as the state, region, type of business, technology level, market position, and credit risk of the business group to which the guarantor and the principal debtor belong (hereafter in this paragraph, referred to as "business group");
2. Expected default rate: Credit rating of the principal debtor, possibility of support from the business group, etc.;
3. Expected recovery rate of guaranteed amount: Financial status and size of tangible assets of the principal debtor, characteristics of the industry, whether collateral is provided, timing, maturity, etc.
[This Article Newly Inserted by Ordinance of the Ministry of Economy and Finance No. 336, Feb. 23, 2013]
[Previous Article 2-3 moved to Article 2-4]
 Article 2-4 (Reports on Methods of Computing Arm's Length Prices)
(1) When a resident submits reports on an arm's length price computation method selected by him or her and grounds for the selection to the head of the tax office having jurisdiction over the place for tax payment pursuant to Article 7 (1) of the Decree, such reports shall be submitted in the following forms:
1. In cases of an international transaction of an intangible asset: A report on arm's length price computation method for an intangible asset in attached Form 1;
2. In cases of an international transaction of service referred to in Article 6-2 (1) of the Decree: A report on arm's length price computation method for transaction of services in attached Form 1-2;
3. In cases of any international transaction other than those referred to in subparagraphs 1 and 2: A report on arm's length price computation method in attached Form 1-3.
(2) A trade price adjustment report under Article 7 (2) of the Decree shall be submitted in attached Form 2.
[This Article Wholly Amended by Ordinance of the Ministry of Economy and Finance No. 272, Feb. 28, 2012]
[Moved from Article 2-3]
 Article 3 (Application for Arm's Length Computation Method Agreement)
(1) An application for arm's length computation method agreement under Article 9 (1) 1 of the Decree shall be submitted in attached Form 3.
(2) An application for commencing mutual agreement procedures under Article 9 (1) 6 of the Decree shall be submitted in attached Form 4.
[This Article Wholly Amended by Ordinance of the Ministry of Economy and Finance No. 272, Feb. 28, 2012]
 Article 3-2 (Statement of Adjustment of Apportionment of Cost)
A statement of adjustment of apportionment of cost, etc. under Article 14-6 of the Decree shall be submitted in attached Form 5.
[This Article Wholly Amended by Ordinance of the Ministry of Economy and Finance No. 272, Feb. 28, 2012]
 Article 3-3 (Submission of Application for Pre-Adjustment)
A person who intends to apply for pre-adjustment of an arm's length price for national taxes and method of determining the dutiable value for customs duties pursuant to Article 6-3 (1) of the Adjustment of International Taxes Act (hereinafter referred to as the "Act") shall submit an application for pre-adjustment of the arm’s length price for national tax and the dutiable value in attached Form 3-2, along with the following documents: <Amended by Ordinance of the Ministry of Economy and Finance No. 663, Mar. 19, 2018>
1. An application for arm's length computation method agreement under Article 3 (1) and accompanying documents;
2. An application under Article 31 (1) of the Enforcement Decree of the Customs Act and accompanying documents.
[This Article Newly Inserted by Ordinance of the Ministry of Economy and Finance No. 484, Mar. 13, 2015]
 Article 4 (Notice of Temporary Secondary Adjustment)
(1) A notice of temporary secondary adjustment under Article 15 (2) of the Decree shall be issued in attached Form 6.
(2) A request to dispose of transferred income under Article 15 (3) 2 of the Decree shall be in attached Form 6-2.
[This Article Wholly Amended by Ordinance of the Ministry of Economy and Finance No. 272, Feb. 28, 2012]
 Article 4-2 (Certificate of Return of Transferred Income)
(1) A person who intends to have it verified that the amount to be included in gains in accordance with Article 9 (1) of the Act and Article 15-2 of the Decree has been returned to a domestic corporation by a foreign related party, shall submit a certificate of return of transferred income in attached Form 6-3, along with a detailed statement on the remittance of the amount actually returned by the foreign related party to the domestic corporation. <Amended by Ordinance of the Ministry of Economy and Finance No. 663, Mar. 19, 2018>
(2) "Interest rate determined by Ordinance of the Ministry of Economy and Finance" in the calculation formula provided in Article 15-2 (1) of the Decree shall be the London Inter-Bank Offered Rate on 12-month loans by currency as at the end of the business year immediately preceding each business year subject to calculation of the interest: Provided, That in cases of a currency for which no London Inter-Bank Offered Rate on 12-month loans exists, the interest rate shall be the London Inter-Bank Offered Rate on the United States currency loans with maturity of 12 months. <Amended by Ordinance of the Ministry of Economy and Finance No. 613, Mar. 17, 2017>
[This Article Wholly Amended by Ordinance of the Ministry of Economy and Finance No. 272, Feb. 28, 2012]
 Article 4-3 (Notice of Transferred Income)
A notice of transferred income under Article 16 (2) of the Decree shall be issued in attached Form 6-4.
[This Article Wholly Amended by Ordinance of the Ministry of Economy and Finance No. 272, Feb. 28, 2012]
 Article 5 (Special Application for Income Adjustment)
A special application for income adjustment under Article 17 (1) and (2) of the Decree shall be submitted in attached Form 7.
[This Article Wholly Amended by Ordinance of the Ministry of Economy and Finance No. 272, Feb. 28, 2012]
 Article 5-2 (Claim for Rectification)
A person who intends to file a claim for rectification pursuant to Article 17-2 of the Decree shall submit a request for rectification of tax base and tax amount in attached Form 7-2, along with a copy of the original tax base and tax amount return and documents objectively substantiating grounds for the rectification claim.
[This Article Newly Inserted by Ordinance of the Ministry of Economy and Finance No. 272, Feb. 28, 2012]
 Article 5-3 (Application for Adjustment of Taxation on International Trade Price)
A person who intends to apply for adjustment of taxation on international trade price pursuant to Article 17-4 of the Decree shall submit an application for adjustment of taxation on international trade price in attached Form 7-3, along with materials substantiating grounds for the application of adjustment.
[This Article Newly Inserted by Ordinance of the Ministry of Economy and Finance No. 272, Feb. 28, 2012]
 Article 6 (Statement of International Transactions)
(1) A statement of international transactions under Article 11 (1) of the Act shall be submitted in attached Form 8 (A). In such cases, If any intra-group payment guarantee referred to in Article 6-2 of the Decree exists, a statement of intra-group payment guarantee shall also be submitted in attached Form 8 (B).
(2) When filing a statement of international transactions pursuant to paragraph (1), the taxpayer shall also submit a condensed income statement of the foreign related party substantiating the details of international transactions in attached Form 8-2: Provided, That in any of the following cases, the relevant condensed income statement of the foreign related party need not be submitted: <Amended by Ordinance of the Ministry of Economy and Finance No. 484, Mar. 13, 2015>
1. Where the total amount of transactions of goods with the foreign related party does not exceed one billion won and the total amount of intra-group service transactions does not exceed two hundred million won in the relevant business year;
2. Where a statement of overseas subsidiary and a statement of financial position of overseas subsidiary are submitted.
[This Article Wholly Amended by Ordinance of the Ministry of Economy and Finance No. 272, Feb. 28, 2012]
 Article 6-2 (Consolidated Reports on International Transaction Information)
(1) "Total volume of transactions of goods, etc. prescribed by Ordinance of the Ministry of Economy and Finance" in Article 21-2 (1) 1 (a) of the Decree means the total amount of transactions of goods, transactions of services, and transactions of lending and borrowing. <Amended by Ordinance of the Ministry of Economy and Finance No. 613, Mar. 17, 2017>
(2) In applying Article 21-2 (1) of the Decree, the total amount of transactions and sales of a taxpayer who has engaged in business in the relevant taxable year for less than one year shall be calculated as an annual amount. <Newly Inserted by Ordinance of the Ministry of Economy and Finance No. 663, Mar. 19, 2018>
(3) In applying Article 21-2 (1) 2 of the Decree, the sales in the consolidated financial statements shall include all items of income in the income statement such as non-operating income and special income. <Newly Inserted by Ordinance of the Ministry of Economy and Finance No. 663, Mar. 19, 2018>
(4) "Corporations in a special relationship prescribed by Ordinance of the Ministry of Economy and Finance with the taxpayer" in Article 21-2 (2) 1 of the Decree means corporations determined and publicly notified by the Minister of Economy and Finance as corporations required to prepare consolidated financial statements which include the accounts of the taxpayer in accordance with international accounting standards. <Amended by Ordinance of the Ministry of Economy and Finance No. 613, Mar. 17, 2017; Ordinance of the Ministry of Economy and Finance No. 663, Mar. 19, 2018>
(5) A consolidated business report, an individual business report, and a report by country under Article 21-2 (2) 1 through 3 of the Decree shall be submitted in the forms classified as follows: <Newly Inserted by Ordinance of the Ministry of Economy and Finance No. 613, Mar. 17, 2017; Ordinance of the Ministry of Economy and Finance No. 663, Mar. 19, 2018>
1. Consolidated business report: Attached Form 8-3 (A);
2. Individual business report: Attached Form 8-3 (B);
3. Report by country: Attached Form 8-3 (C).
(6) "Corporations, etc. in a special relationship prescribed by Ordinance of the Ministry of Economy and Finance with the taxpayer" in Article 21-2 (2) 3, with the exception of its items, of the Decree means corporations, etc. determined and publicly notified by the Minister of Economy and Finance as corporations required to prepare consolidated financial statements which include the accounts of the taxpayer in accordance with international accounting standards. <Newly Inserted by Ordinance of the Ministry of Economy and Finance No. 613, Mar. 17, 2017; Ordinance of the Ministry of Economy and Finance No. 663, Mar. 19, 2018>
(7) Where at least two taxpayers prepare the same consolidated business reports pursuant to Article 21-2 (4) of the Decree, a taxpayer determined and publicly notified by the Minister of Economy and Finance may submit a consolidated business report representing such taxpayers. <Amended by Ordinance of the Ministry of Economy and Finance No. 613, Mar. 17, 2017; Ordinance of the Ministry of Economy and Finance No. 663, Mar. 19, 2018>
(8) "Data prescribed by Ordinance of the Ministry of Economy and Finance" in Article 21-2 (7) of the Decree means the data to be entered in attached Form 8-4. <Newly Inserted by Ordinance of the Ministry of Economy and Finance No. 613, Mar. 17, 2017; Ordinance of the Ministry of Economy and Finance No. 663, Mar. 19, 2018>
[This Article Newly Inserted by Ordinance of the Ministry of Economy and Finance No. 559, Apr. 6, 2016]
[Previous Article 6-2 moved to Article 6-3]
 Article 6-3 (Submission of Data)
(1) "Data specified by Ordinance of the Ministry of Economy and Finance" in Article 19 (1) 13 of the Decree means the following:
1. A service contract;
2. A diagram showing the relationship between the resident and a foreign related party;
3. An internal organization charts of the parties to the service transactions, and data explaining each organ thereof;
4. Statement of expenses by each expenditure item incurred to provide services (limited to where the price for services is computed in accordance with the latter part of Article 6-2 (1) 3 of the Decree, with the exception of its items).
(2) "Data specified further by Ordinance of the Ministry of Economy and Finance" in Article 19 (1) 14 of the Decree means the following:
1. Cost sharing agreement including the following:
(a) A list of contract parties;
(b) Types and details of the assets provided by the contract parties;
(c) Relationship of rights and duties between contract parties;
2. A modified agreement on sharing of cost including the matters set forth in items of subparagraph 1 (limited to where a person newly participates in or withdraws from the agreement on the sharing of cost, etc. pursuant to Article 14-5 of the Decree);
3. Accounting principles and details of the assessment applied to the assessment of assets provided;
4. Details of assessment of the expected benefits to be acquired by parties and beneficiaries;
5. Details of measurement of expected benefits actually realized (hereafter in this Article referred to as "actual benefits");
6. Details of settlement of difference between expected benefits and actual benefits.
[This Article Wholly Amended by Ordinance of the Ministry of Economy and Finance No. 272, Feb. 28, 2012]
[Moved from Article 6-2]
 Article 7 (Application for Extension of Deadline for Submission)
(1) An application for extension of the deadline for submission under Articles 7 (3), 14-6 (2), and 20 (1) of the Decree shall be submitted in attached Form 9.
(2) A notice of approval or rejection of extension of the deadline for submission under Articles 7 (4), 14-6 (3), and 20 (2) of the Decree shall be issued in accordance with the notice of approval or rejection of extension of the deadline for submission shown in attached Form 10.
[This Article Wholly Amended by Ordinance of the Ministry of Economy and Finance No. 272, Feb. 28, 2012]
 Article 7-2 (Statement of Adjustment of Interest Paid to Foreign Controlling Stockholders)
Taxation on interest paid to a foreign controlling stockholder pursuant to Articles 25 and 27 of the Decree shall be adjusted in accordance with the statements of adjustment of interest paid to foreign controlling stockholders shown in attached Forms 10-2 (A), 10-2 (B), and 10-2 (C); and with the statement of computation of accumulated amount borrowed by a domestic branch of a foreign bank from its foreign controlling stockholder shown in attached Form 10-2 (D).
[This Article Wholly Amended by Ordinance of the Ministry of Economy and Finance No. 272, Feb. 28, 2012]
 Article 7-3 (Statement of Adjustment of Withholding Tax)
Where a domestic corporation has an additional amount of tax to pay or can apply for a refund pursuant to Article 28 of the Decree, it shall prepare and submit a statement of adjustment of withholding tax in attached Form 10-3.
[This Article Wholly Amended by Ordinance of the Ministry of Economy and Finance No. 272, Feb. 28, 2012]
 Article 7-4 (Statement of Adjustment of Net Interest Expenses Paid to Foreign Related Party)
A statement of adjustment of the net interest expenses paid to a foreign related party under Article 28-3 (6) of the Decree shall be submitted in attached Form 10-10.
[This Article Newly Inserted by Ordinance of the Ministry of Economy and Finance No. 663, Mar. 19, 2018]
 Article 7-5 (Statement of Adjustment of Interest Expenses Involved in Hybrid Financial Instruments)
(1) A statement of adjustment of the interest expenses involved in hybrid financial instruments under Article 28-4 (8) of the Decree shall be submitted in attached Form 10-11.
(2) When filing a report pursuant to Article 15-3 (2) or (3) of the Act, evidential data on whether the tax has been levied, such as actual inclusion of the relevant amount in the taxable income, shall be submitted, along with the statement referred to in paragraph (1).
[This Article Newly Inserted by Ordinance of the Ministry of Economy and Finance No. 663, Mar. 19, 2018]
 Article 8 (Generally Accepted Accounting Principles)
(1) Generally accepted accounting principles applied in preparing financial statements under Article 29 of the Decree shall be the accounting standards established or approved by the government of the state of residence or by an institution authorized by said government, which shall be the general standards for accounting and reporting that an enterprise in the relevant state of residence is required to apply when preparing financial statements.
(2) The Korean corporate accounting principles referred to in Article 29 of the Decree shall be the principles prescribed in subparagraphs of Article 79 of the Enforcement Decree of the Corporate Tax Act.
[This Article Wholly Amended by Ordinance of the Ministry of Economy and Finance No. 272, Feb. 28, 2012]
 Article 8-2 (Scope of Income Actually Earned)
"Asset specified by Ordinance of the Ministry of Economy and Finance" in Article 29 (3) of the Decree means stocks or investment certificates. <Amended by Ordinance of the Ministry of Economy and Finance No. 14, Apr. 28, 2008; Ordinance of the Ministry of Economy and Finance No. 143, Mar. 31, 2010>
[This Article Newly Inserted by Ordinance of the Ministry of Finance and Economy No. 533, Dec. 15, 2006]
 Article 9 (Tax Law of State of Residence)
(1) The tax law of the state of residence under Article 30 of the Decree shall be the law that prescribes items and tax rates of the tax to be imposed on, and collected from, the citizens or residents by the state or a local government that has taxation authority.
(2) Deleted. <by Ordinance of the Ministry of Economy and Finance No. 417, Mar. 14, 2014>
[This Article Wholly Amended by Ordinance of the Ministry of Economy and Finance No. 272, Feb. 28, 2012]
 Article 9-2 (Adjustment of Surplus Funds)
(1) "Matters prescribed by Ordinance of the Ministry of Economy and Finance" in the main sentence and proviso of Article 31 (1), with the exception of its subparagraphs, of the Decree means any of the following: <Amended by Ordinance of the Ministry of Economy and Finance No. 336, Feb. 23, 2013>
1. Including an amount treated as a voluntary reserve in the statement of appropriation of earned surplus accrued prior to the relevant business year;
2. Excluding an amount treated as the amount brought in as a voluntary reserve in the statement of appropriation of earned surplus accrued prior to the relevant business year;
3. Where a specific foreign corporation holds distributable retained earnings computed on or before December 31, 1996, being the date Article 9-2 of the Enforcement Rule of the Adjustment of International Taxes Act (Ordinance of the Prime Minister No. 605) enters into force, excluding the amount calculated according to the following formula:
The relevant distributable retained earnings - the accumulated amount of earned surplus disposed of on or after December 31, 1996 pursuant to Article 31 (1) 1 and 2 of the Decree.
(2) Deleted. <by Ordinance of the Ministry of Economy and Finance No. 417, Mar. 14, 2014>
[This Article Wholly Amended by Ordinance of the Ministry of Economy and Finance No. 272, Feb. 28, 2012]
 Article 10 (Conversion of Amount of Deemed Dividends by Foreign Currency)
The exchange rate to be applied under Article 33 of the Decree shall be the basic exchange rate or arbitrated exchange rate under the Foreign Exchange Transactions Act.
[This Article Wholly Amended by Ordinance of the Ministry of Economy and Finance No. 272, Feb. 28, 2012]
 Article 10-2 Deleted. <by Ordinance of the Ministry of Economy and Finance No. 417, Mar. 14, 2014>
 Article 10-3 (Scope of Same Area)
"Same area prescribed by Ordinance of the Ministry of Economy and Finance" in Article 18 (4) of the Act means the following areas: <Amended by Ordinance of the Ministry of Economy and Finance No. 336, Feb. 23, 2013>
1. The European Union (EU);
2. China and Hong Kong.
[This Article Wholly Amended by Ordinance of the Ministry of Economy and Finance No. 272, Feb. 28, 2012]
 Article 10-4 (Statement of Foreign Tax Credit)
Tables 5 and 5-2 of the attached Form 8 of the Enforcement Rule of the Corporate Tax Act shall apply mutatis mutandis to preparation of a statement of foreign tax credit under Article 36-5 of the Decree. <Amended by Ordinance of the Ministry of Economy and Finance No. 417, Mar. 14, 2014>
[This Article Wholly Amended by Ordinance of the Ministry of Economy and Finance No. 272, Feb. 28, 2012]
 Article 10-5 (Non-Inclusion of Actually Distributed Dividends in Taxable Gains)
(1) Where a Korean national calculates an amount treated as gross income carried forward or deemed not to constitute dividend income out of actual dividends under Article 36-6 of the Decree, he or she shall prepare and submit in attached Form 10-8, a statement of the gross income carried forward out of actual dividends (the amount not constituting dividend income). <Amended by Ordinance of the Ministry of Economy and Finance No. 417, Mar. 14, 2014>
(2) Where a Korean national calculates an amount treated as gross income carried forward or deemed not to constitute income generated from the transfer of stocks under Article 20 (2) of the Act, he or she shall prepare and submit in attached Form 10-9, a statement of the gross income carried forward (the amount not constituting the income generated from the transfer of stocks) as at the time of the transfer of stocks, etc. before actual payment of dividends.
[This Article Wholly Amended by Ordinance of the Ministry of Economy and Finance No. 272, Feb. 28, 2012]
 Article 11 (Submission of Data for Tax Assessment)
(1) A statement on calculation of retained earnings of a specific foreign corporation under Article 37 (1) 3 of the Decree shall be submitted in attached Forms 10-5 (A) and 10-5 (B).
(2) A statement on judgment of the accumulative taxation on retained earnings of a specific foreign corporation under Article 37 (1) 4 of the Decree shall be submitted in attached Forms 10-4 (A), 10-4 (B), and 10-4 (C).
(3) A statement on judgment of the scope of application of accumulative taxation on retained earnings of a specific foreign corporation under Article 37 (1) 5 of the Decree shall be submitted in attached Forms 10-7 (A) and 10-7 (C).
(4) A statement on overseas investment under Article 37 (1) 6 of the Decree shall be submitted in attached Form 11.
[This Article Wholly Amended by Ordinance of the Ministry of Economy and Finance No. 417, Mar. 14, 2014]
 Article 11-2 (Conversion of Paid Foreign Tax into Korean Currency)
(1) The conversion of paid foreign tax into the Korean currency under Article 38-2 (3) of the Decree shall be based on the basic exchange rate or arbitrated exchange rate under the Foreign Exchange Transactions Act as at the date of payment of the gift tax under the foreign statutes and regulations.
(2) Where a gift taxpayer pays gift tax after the lapse of the period for payment prescribed by the foreign statutes and regulations, the conversion shall be based on the basic exchange rate or arbitrated exchange rate under the Foreign Exchange Transactions Act as at the last date of said period for payment, notwithstanding paragraph (1).
(3) Where a gift taxpayer owes additional gift tax or is eligible to claim a refund of gift tax in Korea due to reasons such as correction in a foreign country after obtaining a foreign tax credit in Korea, the conversion shall be based on the basic exchange rate or arbitrated exchange rate under the Foreign Exchange Transactions Act as at the date classified as follows:
1. Where the basic exchange rate or arbitrated exchange rate as at the date of payment of the gift tax is applied to a foreign tax credit received under paragraph (1): The date on which gift tax has been paid pursuant to paragraph (1);
2. Where the basic exchange rate or arbitrated exchange rate as at the last day of the period for payment is applied to a foreign tax credit received under paragraph (2): The last date of the period for payment under paragraph (2).
[This Article Newly Inserted by Ordinance of the Ministry of Economy and Finance No. 484, Mar. 13, 2015]
 Article 11-3 (Application for Foreign Tax Credit)
An application for foreign tax credit under Article 38-2 (4) of the Decree shall be submitted in attached Form 11-2.
[This Article Newly Inserted by Ordinance of the Ministry of Economy and Finance No. 484, Mar. 13, 2015]
 Article 12 (Application for Commencing Mutual Agreement Procedure)
(1) An application for commencing the mutual agreement procedure under Article 39 (2) 1 of the Decree shall be submitted in attached Form 4.
(2) and (3) Deleted. <by Ordinance of the Ministry of Economy and Finance No. 336, Feb. 23, 2013>
(4) A quarterly report on the current status of application to commence, and progress in performing, the mutual agreement procedure under Article 39 (3) of the Decree shall be submitted in attached Form 14.
[This Article Wholly Amended by Ordinance of the Ministry of Economy and Finance No. 272, Feb. 28, 2012]
 Article 13 (Application for Special Applicability of Appeal Period)
An application for special applicability of deferment of collection, etc. under Article 40 (3) 1 of the Decree shall be submitted in attached Form 15.
[This Article Wholly Amended by Ordinance of the Ministry of Economy and Finance No. 272, Feb. 28, 2012]
 Article 14 (Notice of Closing Mutual Agreement Procedure)
A notice of closing the mutual agreement procedure under Article 42 (2) of the Decree shall be issued in attached Form 16.
[This Article Wholly Amended by Ordinance of the Ministry of Economy and Finance No. 272, Feb. 28, 2012]
 Article 14-2 (Application for Extended Application of Terms and Conditions Mutually Agreed upon)
An application for extended application of terms and conditions mutually agreed upon under Article 42-2 (1) of the Decree shall be submitted in attached Form 16-2.
[This Article Wholly Amended by Ordinance of the Ministry of Economy and Finance No. 272, Feb. 28, 2012]
 Article 15 (Residence Certificates)
(1) An application for issuance of a residence certificate under Article 43 (1) of the Decree shall be submitted in attached Form 17.
(2) A residence certificate under Article 43 (2) of the Decree shall be issued in attached Form 18.
[This Article Wholly Amended by Ordinance of the Ministry of Economy and Finance No. 272, Feb. 28, 2012]
 Article 16 (Request to Entrust Tax Collection)
A request to entrust tax collection between countries under Article 44 (1) 1 of the Decree shall be submitted in attached Form 19.
[This Article Wholly Amended by Ordinance of the Ministry of Economy and Finance No. 272, Feb. 28, 2012]
 Article 17 (Notice on Details of Information Provided)
(1) A notice on details of information provided under Article 47 (3) of the Decree shall be issued in attached Form 20. <Amended by Ordinance of the Ministry of Economy and Finance No. 336, Feb. 23, 2013>
(2) A statement on provision of information under Article 47 (6) of the Decree shall be submitted in attached Form 20-2. <Newly Inserted by Ordinance of the Ministry of Economy and Finance No. 336, Feb. 23, 2013>
[This Article Wholly Amended by Ordinance of the Ministry of Economy and Finance No. 272, Feb. 28, 2012]
 Article 18 (Report on Overseas Financial Accounts)
A report on overseas financial accounts under Article 50 (3) of the Decree; a revised report of overseas financial accounts under Article 50-3 (1) of the Decree; and a subsequent report on overseas financial accounts under Article 50-3 (2) of the Decree shall be submitted in attached Form 21. <Amended by Ordinance of the Ministry of Economy and Finance No. 417, Mar. 14, 2014>
[This Article Wholly Amended by Ordinance of the Ministry of Economy and Finance No. 272, Feb. 28, 2012]
 Article 19 (Certificate of Source of Unreported Amount of Overseas Financial Accounts)
A certificate of the source of unreported amount of overseas financial accounts under Article 50-2 of the Decree shall be submitted in attached Form 22.
[This Article Newly Inserted by Ordinance of the Ministry of Economy and Finance No. 417, Mar. 14, 2014]
 Article 20 (Forms and Appending Documents of Voluntary Report on Overseas Income and Property)
(1) A voluntary report on overseas income and property under Article 50-6 (1) of the Decree shall be submitted in attached Form 23 and the Table thereof.
(2) Documents to be attached to a voluntary report on overseas income and property referred to in paragraph (1) shall be as follows:
1. A written return of tax base by tax item and the calculation of tax for payment required by each tax law (limited to tax items subject to voluntary reporting; including the relevant documents to be attached);
2. A report on overseas financial accounts under Article 18 (limited to persons obligated to file a report on overseas financial accounts under Article 34 of the Act);
3. Documents set forth in subparagraphs of Article 165-2 (1) of the Income Tax Act or subparagraphs of Article 121-2 (1) of the Corporate Tax Act (limited to persons obligated to submit the documents prescribed in the relevant provisions).
[This Article Newly Inserted by Ordinance of the Ministry of Economy and Finance No. 499, Sep. 30, 2015]
<<This Article shall remain in effect until December 31, 2016 under Article 2 of the Addenda to Ordinance of the Ministry of Economy and Finance No. 499 dated Sep. 30, 2015.>>
 Article 21 (Written Notice of Intent to File Voluntary Report)
A written notice of intent to file a voluntary report under Article 50-6 (2) of the Decree shall be submitted in attached Form 24.
[This Article Newly Inserted by Ordinance of the Ministry of Economy and Finance No. 499, Sep. 30, 2015]
<<This Article shall remain in effect until December 31, 2016 under Article 2 of the Addenda to Ordinance of the Ministry of Economy and Finance No. 499 dated Sep. 30, 2015.>>
 Article 21-2 (Written Notice of Determination Made on Voluntary Report)
Notice of determination made on a voluntary report under Article 50-10 (2) of the Decree shall be in attached Form 24-2.
[This Article Newly Inserted by Ordinance of the Ministry of Economy and Finance No. 559, Apr. 6, 2016]
 Article 21-3 (Written Objection and Notice of Result of Review)
(1) A person who intends to file an objection under Article 50-11 (1) of the Decree shall submit an application therefor in attached Form 24-3, along with the following documents:
1. Details of objection;
2. Evidentiary documents concerning the details of objection.
(2) Notice of the results of review under Article 50-11 (3) of the Decree shall be in attached Form 24-4.
[This Article Newly Inserted by Ordinance of the Ministry of Economy and Finance No. 559, Apr. 6, 2016]
 Article 22 (Application for Pre-Eligibility Review and Notice of Results)
(1) An application for pre-eligibility review under Article 50-13 (1) of the Decree shall be submitted in attached Form 25.
(2) Where the Minister of Economy and Finance notifies an applicant for pre-eligibility review, of the results of review under Article 50-13 (4) of the Decree, such notice shall be in attached Form 26.
[This Article Newly Inserted by Ordinance of the Ministry of Economy and Finance No. 499, Sep. 30, 2015]
<<This Article shall remain in effect until December 31, 2016 under Article 2 of the Addenda to Ordinance of the Ministry of Economy and Finance No. 499 dated Sep. 30, 2015.>>
ADDENDA
(1) (Enforcement Date) This Rule shall enter into force on the date of its promulgation: Provided, That the provisions of Articles 8 through 11 shall enter into force on January 1, 1997.
(2) Omitted.
ADDENDA <Ordinance of the Prime Minister No. 605, Dec. 31, 1996>
(1) (Enforcement Date) This Rule shall enter into force on the date of its promulgation.
(2) (Applicability to Calculation of Income) The provisions of this Rule concerning income shall begin to apply from the first portion of income accruing after this Rule enters into force.
ADDENDA <Ordinance of the Ministry of Finance and Economy No. 86, May 24, 1999>
Article 1 (Enforcement Date)
This Rule shall enter into force on the date of its promulgation. (Proviso Omitted.)
Articles 2 through 18 Omitted.
ADDENDA <Ordinance of the Ministry of Finance and Economy No. 196, Apr. 3, 2001>
(1) (Enforcement Date) This Rule shall enter into force on the date of its promulgation.
(2) (Applicability to Forms) The amended provisions concerning forms shall begin to apply from the first portion reported or submitted after this Rule enters into force.
ADDENDA <Ordinance of the Ministry of Finance and Economy No. 298, Jan. 23, 2003>
(1) (Enforcement Date) This Rule shall enter into force on the date of its promulgation.
(2) (Applicability to Forms) The amended provisions concerning forms shall begin to apply from the first portion reported, determined, corrected, or submitted after this Rule enters into force.
ADDENDA <Ordinance of the Ministry of Finance and Economy No. 428, Mar. 19, 2005>
(1) (Enforcement Date) This Rule shall enter into force on the date of its promulgation.
(2) (Applicability to Forms) The amended provisions concerning forms shall apply to the portions reported or submitted after this Rule enters into force: Provided, That the amended provisions of Article 9 (2) and attached Forms 10-3 (A) and 10-3 (B) shall begin to apply from the taxable year commencing on or after January 1, 2005.
ADDENDA <Ordinance of the Ministry of Finance and Economy No. 533, Dec. 15, 2006>
(1) (Enforcement Date) This Rule shall enter into force on the date of its promulgation.
(2) (Applicability to Forms) The amended provisions concerning forms shall begin to apply from the first portion reported, notified, or applied after this Rule enters into force.
(3) Omitted.
ADDENDUM <Ordinance of the Ministry of Economy and Finance No. 14, Apr. 28, 2008>
This Rule shall enter into force on the date of its promulgation.
ADDENDA <Ordinance of the Ministry of Economy and Finance No. 63, Mar. 27, 2009>
Article 1 (Enforcement Date)
This Rule shall enter into force on the date of its promulgation.
Article 2 (Applicability to Forms)
The amended provisions concerning forms shall begin to apply from the first portion reported or submitted after this Rule enters into force: Provided, That the amended provisions of attached Form 8 shall begin to apply from the taxable year to which the enforcement date of this Rule belongs.
ADDENDA <Ordinance of the Ministry of Economy and Finance No. 143, Mar. 31, 2010>
Article 1 (Enforcement Date)
This Rule shall enter into force on the date of its promulgation.
Article 2 (Applicability to Statement of International Transactions)
The amended provisions of the proviso of Article 6 (2) shall begin to apply from the first portion of a statement of international transactions submitted after this Rule enters into force.
Article 3 (Applicability to Forms)
The amended provisions concerning forms shall begin to apply from the first portion reported or submitted after this Rule enters into force.
ADDENDA <Ordinance of the Ministry of Economy and Finance No. 189, Mar. 18, 2011>
Article 1 (Enforcement Date)
This Rule shall enter into force on the date of its promulgation.
Article 2 (General Applicability)
This Rule shall begin to apply from the taxable year to which the enforcement date of this Rule belongs.
Article 3 (Applicability to Taxation System concerning Transfer Pricing)
The amended provisions of Articles 2 and 2-2 shall begin to apply from the first portion reported after this Rule enters into force.
Article 4 (Applicability to Forms)
The amended provisions concerning forms shall begin to apply from the first portion reported or submitted after this Rule enters into force: Provided, That attached Form 10-7 (B) shall begin to apply from the taxable year to which the enforcement date of this Rule belongs.
Article 5 Omitted.
ADDENDA <Ordinance of the Ministry of Economy and Finance No. 272, Feb. 28, 2012>
Article 1 (Enforcement Date)
This Rule shall enter into force on the date of its promulgation.
Article 2 (General Applicability)
This Rule shall begin to apply from the taxable year to which the enforcement date of this Rule belongs.
Article 3 (Applicability to Submission of Statement of Payment Guarantee Service)
The amended provisions of Article 6 (1) shall begin to apply from the taxable year in which the first report is submitted after this Rule enters into force.
Article 4 (Applicability to Forms)
The amended provisions concerning forms shall begin to apply from the first report or submission made after this Rule enters into force.
ADDENDA <Ordinance of the Ministry of Economy and Finance No. 336, Feb. 23, 2013>
Article 1 (Enforcement Date)
This Rule shall enter into force on the date of its promulgation.
Article 2 (General Applicability)
This Rule shall begin to apply from the taxable year to which the enforcement date of this Rule belongs.
Article 3 (Applicability to Adjustment of Surplus Funds)
The amended provisions of Article 9-2 (1) 3 shall apply where a specific foreign corporation pays earned surplus as a bonus or retirement benefit or disposes thereof as other disbursement of income in accordance with the decision to dispose of the retained earnings, after this Rule enters into force.
Article 4 (Applicability to Forms)
The amended provisions concerning forms shall apply to reports, applications, or submissions made after this Rule enters into force: Provided, That the amended provisions of attached Forms 10-4 (A), 10-4 (B), 10-4 (C), 10-5, 10-6, 10-7 (A), 10-7 (B), 10-7 (C), 10-8, and 10-9 shall begin to apply from the taxable year to which the enforcement date of this Rule belongs.
ADDENDA <Ordinance of the Ministry of Economy and Finance No. 417, Mar. 14, 2014>
Article 1 (Enforcement Date)
This Rule shall enter into force on the date of its promulgation.
Article 2 (Applicability to Forms)
The amended provisions concerning forms shall apply to reports or submissions made after this Rule enters into force.
ADDENDA <Ordinance of the Ministry of Economy and Finance No. 484, Mar. 13, 2015>
Article 1 (Enforcement Date)
This Rule shall enter into force on the date of its promulgation.
Article 2 (Applicability to Omission of Submission of Condensed Income Statements by Foreign Related Parties)
The amended provisions of Article 6 (2) shall begin to apply from the taxable year commencing on or after January 1, 2015.
Article 3 (Applicability to Forms)
The amended provisions concerning forms shall apply to reports, applications, submissions, and notifications made after this Rule enters into force.
ADDENDA <Ordinance of the Ministry of Economy and Finance No. 499, Sep. 30, 2015>
Article 1 (Enforcement Date)
This Rule shall enter into force on the date of its promulgation.
Article 2 (Term of Validity)
The amended provisions of Articles 20 through 22, attached Form 23 and Table thereof, and attached Forms 24 through 26 shall remain valid until December 31, 2016.
ADDENDA <Ordinance of the Ministry of Economy and Finance No. 520, Dec. 2, 2015>
Article 1 (Enforcement Date)
This Rule shall enter into force on the date of its promulgation.
Article 2 (Term of Validity)
The amended provisions of attached Form 23 shall remain valid until December 31, 2016.
Article 3 (Applicability)
The amended provisions of attached Form 23 shall begin to apply to reports made under Article 38 (1) of the Act after this Rule enters into force.
ADDENDUM <Ordinance of the Ministry of Economy and Finance No. 559, Apr. 6, 2016>
This Rule shall enter into force on the date of its promulgation.
ADDENDA <Ordinance of the Ministry of Economy and Finance No. 613, Mar. 17, 2017>
Article 1 (Enforcement Date)
This Rule shall enter into force on the date of its promulgation.
Article 2 (Applicability to Forms)
The amended provisions concerning Article 6-2 (3) and (6), and forms shall begin to apply to applications, submissions, or reports made after this Rule enters into force.
ADDENDA <Ordinance of the Ministry of Economy and Finance No. 663, Mar. 19, 2018>
Article 1 (Enforcement Date)
This Rule shall enter into force on the date of its promulgation.
Article 2 (Applicability to Consolidated Reports on International Transaction Information)
The amended provisions of Article 6-2 shall begin to apply from the taxable year commencing on or after January 1, 2018.