CHAPTER I GENERAL PROVISIONS
The purpose of this Decree is to prescribe matters mandated by the Corporate Tax Act and matters necessary for the enforcement thereof. [This Article Newly Inserted on Feb. 12, 2019]
[Previous Article 1 Moved to Article 2 <Feb. 12, 2019>]
| (1) | "Partnership corporations, etc., prescribed by Presidential Decree" in subparagraph 2 (b) of Article 2 of the Corporate Tax Act (hereinafter referred to as “Act”) means the following corporations: <Amended by Presidential Decree No. 16658, Dec. 31, 1999; Presidential Decree No. 17457, Dec. 31, 2001; Presidential Decree No. 18706, Feb. 19, 2005; Presidential Decree No. 19328, Feb. 9, 2006; Presidential Decree No. 22951, Jun. 3, 2011; Presidential Decree No. 24357, Feb. 15, 2013; Presidential Decree No. 27828, Feb. 3, 2017; Feb. 12, 2019> |
| 1. | Cooperatives (including corporations for joint projects of cooperatives) and the National Agricultural Cooperative Federation established under the Agricultural Cooperatives Act; |
| 2. | Cooperatives established under the Consumer Cooperatives Act, their federation, and the national federation of such cooperatives; |
| 3. | Cooperatives (including fishing fraternities and corporations for joint projects of cooperatives) and the National Federation of Fisheries Cooperatives established under the Fisheries Cooperatives Act; |
| 4. | Forestry cooperatives (including forestry fraternities) and the National Forestry Cooperatives Federation established under the Forestry Cooperatives Act; |
| 6. | and 7. Deleted; <by Presidential Decree No. 16658, Dec. 31, 1999> |
| 9. | Credit cooperatives, their federation, and the National Federation established under the Credit Unions Act; |
| 11. | The Korea Salt Manufacture's Association established under the Salt Manufacture Act. |
| (2) | "Corporation that meets the standards prescribed by Presidential Decree" in subparagraph 3 of Article 2 of the Act means any of the following organizations: <Newly Inserted by Presidential Decree No. 24357, Feb. 15, 2013; Feb. 12, 2019> |
| 1. | An organization endowed with legal personality pursuant to the law of the State in which it was incorporated; |
| 2. | An organization formed only with limited partners; |
| 3. | Deleted. <Feb. 12, 2019> |
| 4. | Other foreign organization, if a domestic organization, whose type of business is the same as, or similar to, the type of business of such foreign organization, is a corporation under the Commercial Act or other statutes of the Republic of Korea. |
| (3) | The Commissioner of the National Tax Service may publicly notify a list of foreign corporations referred to in paragraph (2) by category. <Newly Inserted by Presidential Decree No. 24357, Feb. 15, 2013> |
| (4) | The application of the criteria for foreign corporations specified in paragraph (2) shall not affect the determination of whether a treaty on taxation is applicable. <Newly Inserted by Presidential Decree No. 24357, Feb. 15, 2013> |
| (5) | “Stocks prescribed by Presidential Decree” referred to in subparagraph 10-2 (c) of Article 2 of the Act mean any of the following stocks: <Newly Inserted on Feb. 28, 2023> |
| 1. | Stocks held by an employee stock ownership association referred to in the Framework Act on Labor Welfare (hereinafter referred to as “employee stock ownership association”); |
| 2. | Stocks issued or transferred pursuant to the exercise of stock options pursuant to the main clause, with the exception of the items, of subparagraph 19-2 of Article 19 (including stocks transferred to a third party by a person who has exercised the stock option). |
| (6) | "Cases prescribed by Presidential Decree" referred to in subparagraphs 10-2 (d) of Article 2 of the Act mean where a wholly-owning parent corporation referred to in Article 76-8 (1) of the Act (hereinafter referred to as "wholly-owning parent corporation") holds stocks or investment shares of another domestic corporation through a wholly controlled subsidiary referred to in the same paragraph (hereinafter referred to as “wholly controlled subsidiary”). <Newly Inserted on Feb. 28, 2023> |
| (7) | The percentage of stocks or investment shares in another domestic corporation held by a wholly-owning parent corporation through a wholly controlled subsidiary under subparagraphs 10-2 (d) of Article 2 of the Act shall be calculated in accordance with the following formula. In such cases, where there are two or more wholly controlled subsidiaries, the percentage calculated according to the following formula for each wholly controlled subsidiary shall be aggregated: <Newly Inserted on Feb. 28, 2023> |
| (8) | “Person who has an economic relationship with a corporation or a relationship prescribed by Presidential Decree, such as a management control relationship” in subparagraph 12 of Article 2 of the Act means a person in any of the following relationships: <Newly Inserted on Feb. 12, 2019; Feb. 28, 2023> |
| 2. | A shareholder or investor who is not a minority shareholder, etc. referred to in Article 50 (2) (hereinafter referred to as “non-minority shareholder, etc.”) and his or her relatives; |
| 3. | Any of the following persons and his or her relatives who makes a living with them: |
| (a) | An executive officer or employee of a corporation, or an employee of a non-minority shareholder, etc. (if a non-minority shareholder, etc. is a for-profit corporation, referring to executive officers thereof; and if it is a non-profit corporation, referring to directors and a founder thereof); |
| (b) | A person whose livelihood depends on money or other assets of a corporation or non-minority shareholder, etc.; |
| 6. | A corporation or individual owning at least 30/100 of a corporation which owns at least 30/100 of the relevant corporation; |
| 7. | Where the relevant corporation belongs to a corporate group prescribed in the Monopoly Regulation and Fair Trade Act, other affiliates belonging to the corporate group and executive officers of such the affiliates. |
[Enforcement Date: Jan. 1, 2024] Article 2 (5), (6), (7), and (8)
| Article 3 (Scope of Profit-Making Business) |
| (1) | "Business specified by Presidential Decree" in Article 4 (3) 1 of the Act means a business that generates income, except for businesses falling under any of the following: <Amended by Presidential Decree No. 16658, Dec. 31, 1999; Presidential Decree No. 17457, Dec. 31, 2001; Presidential Decree No. 17826 Dec. 30, 2002; Presidential Decree No. 18174, Dec. 30, 2003; Presidential Decree No. 18706, Feb. 19, 2005; Presidential Decree No. 19328, Feb. 9, 2006; Presidential Decree No. 19891, Feb. 28, 2007; Presidential Decree No. 20619, Feb. 22, 2008; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 20799, Jun. 5, 2008; Presidential Decree No. 21302, Feb. 4, 2009; Presidential Decree No. 22035, Feb. 18, 2010; Presidential Decree No. 22577, Dec. 30, 2010; Presidential Decree No. 23356, Dec. 8, 2011; Presidential Decree No. 23589, Feb. 2, 2012; Presidential Decree Nos. 24017 & 24018, Aug. 3, 2012; Presidential Decree No. 24357, Feb. 15, 2013; Presidential Decree No. 24638, Jun. 28, 2013; Presidential Decree No. 25279, Mar. 24, 2014; Presidential Decree No. 28074, May 29, 2017; Presidential Decree No. 28640, Feb. 13, 2018; Feb. 12, 2019; Feb. 17, 2021; Feb. 15, 2022; Feb. 17, 2022; Feb. 28, 2023> |
| 1. | The farming of animal (including support activities for animal production) and agriculture, excluding landscaping care and maintenance service activities; |
| 2. | Research and development (excluding rendering research and development services in return for a price under a contract, etc.); |
| 2-2. | Business rendering ship classification and survey services; |
| 3. | Educational service business provided at any of the following educational facilities pursuant to the curriculum prescribed in the relevant statutes: |
| 4. | Social welfare services provided by any of the following social welfare facilities, from among human health and social work activities: |
| (a) | A social welfare halls, a facility for vagrants and the homeless, or a facility for those suffer from tuberculosis and Hansen's disease from among the social welfare facilities referred to in Article 34 of the Social Welfare Services Act; |
| (d) | A welfare facility for older persons (excluding geriatric hospital) referred to in Article 31 of the Welfare of Older Persons Act; |
| 5. | The following pension or mutual aid business: |
| (b) | Business operated by an organization established under any special Act or upon authorization or permission of the Government (limited to fundraising and benefit services); |
| 7. | Business of providing services exempt from value-added tax under Article 26 (1) 18 of the Value-Added Tax Act among services provided by religious organizations (including their affiliated organizations) registered with the competent authorities; |
| 8. | Any of the following businesses from among Activities Auxiliary to Financial Service and Insurance Activities: |
| (a) | Business of operating deposit insurance systems, such as deposit insurance through the Deposit Insurance Fund and the Redemption Fund for Deposit Insurance Fund Bonds established under the Depositor Protection Act, and funding or debt settlement related thereto; |
| (c) | Business of operating deposit protection systems, such as deposit insurance and funding through the Depositor Protection Reserve Fund established under the Community Credit Cooperatives Act; |
| (d) | Any business related to the acquisition and liquidation of non-performing assets, etc. through the Structural Adjustment Fund established under Article 43-2 of the Act on the Establishment of Korea Asset Management Corporation; |
| (e) | Business of operating deposit insurance systems, such as deposit insurance and funding through the Credit Union Depositor Protection Fund established under the Credit Unions Act; |
| (f) | Business of operating deposit insurance systems, such as deposit insurance and funding through the Mutual Finance Depositor Protection Fund established under the Forestry Cooperatives Act; |
| 10. | Business of operating the guarantee system of reverse mortgage loan-backed old age pension through the account of guarantee on the reverse mortgage loan-backed old age pension pursuant to the Korea Housing Finance Corporation Act (limited to the guarantee business and business of paying reverse mortgage loan-backed old age pensions); |
| 11. | Business of lending money for business start-up, etc. to persons prescribed by Ordinance of the Ministry of Economy and Finance, such as eligible recipients and the second-lowest income bracket as defined in Article 2 of the National Basic Living Security Act, and which meet the requirements prescribed by Ordinance of the Ministry of Economy and Finance; |
| 12. | Any business conducted by a non-profit corporation (limited to a corporation established for the purposes of construction and expansion of private school buildings, expansion of facilities thereof and improvement of an educational environment) for providing school facilities to the operators of foreigners' schools; |
| 15. | Student loan business operated by the Korea Student Aid Foundation established under the Act on the Establishment of Korea Student Aid Foundation using a student loan account referred to in Article 24-2 of the same Act; |
| 16. | Other business similar to those referred to in subparagraphs 1, 2, 2-2, 3 through 15 and prescribed by Ordinance of the Ministry of Economy and Finance. |
| (2) | "Revenues specified by Presidential Decree" in the proviso to Article 4 (3) 5 of the Act means revenues accruing from the disposal of tangible and intangible assets that have been continuously used for the proper purpose business specified in relevant statutes or regulations or articles of incorporation (excluding the businesses that generate revenue under paragraph (1)) for at least three years until the date of disposal of relevant tangible and intangible assets (referring to the date of relocation of a public institution, in cases of a public institution relocated pursuant to Article 25 of the Special Act on Local Autonomy, Decentralization, and Balanced Regional Development). In such cases, where there are incidental revenues, such as ticket prices and admission fees, from maintaining and managing relevant assets, they shall also be deemed assets directly used for the proper purpose business; and where a non-profit corporation disposes of a assets used for any business that generates revenue after transferring such assets to the proper purpose business, the value assessed at the time of such transfer shall be deemed the acquisition value of the assets for the purpose of calculating the revenue from the disposal of such fixed asset. <Amended by Presidential Decree No. 28640, Feb. 13, 2018; Feb. 12, 2019; Jul. 7, 2023> |
| (3) | "Revenues prescribed by Presidential Decree" in Article 4 (3) 7 of the Act means profits (referring to profits on sale of bonds, etc., less losses from sale of bonds, etc.) on sale of bonds, etc. (excluding interest income exempt from corporate tax) referred to in Article 46 (1) of the Income Tax Act: Provided, That excluded herefrom shall be profits on trading of the bonds, etc., devolved on the business referred to in paragraph (1) 8. <Amended by Presidential Decree No. 17826, Dec. 30, 2002; Presidential Decree No. 18706, Feb. 19, 2005; Presidential Decree No. 21302, Feb. 4, 2009; Presidential Decree No. 22035, Feb. 18, 2010; Presidential Decree No. 22184, Jun. 8, 2010; Feb. 12, 2019> |
| Article 3-2 (Trust Income) |
| (1) | “Trust that meets the requirements prescribed by Presidential Decree” referred to in the former part, with the exception of the subparagraphs, of Article 5 (2) of the Act means a trust meeting each of the following requirements: <Amended on Feb. 28, 2023> |
| 2. | A trust shall not fall under paragraph (2) 1. |
| (2) | “Trust that meets the requirements prescribed by Presidential Decree” referred to in Article 5 (3) of the Act means any of the following trusts: <Amended on Feb. 28, 2023> |
| 1. | A trustor shall substantially dominate and control trust property, holding the right to terminate a trust, the right to designate or change a beneficiary, the right to inherit the remaining property after the termination of a trust, etc.; |
| 2. | The beneficiary of the right to receive trust principal shall be a trustor; and the beneficiary of the right to receive trust income shall be the spouse, or a lineal ascendant or descendant who lives at the same address or residence (including the spouse’s lineal ascendant or descendant) of a controlling shareholder, etc. referred to in Article 43 (7) of the trustor. |
[This Article Newly Inserted on Feb. 17, 2021]
| Article 4 (Start Date of Business Year) |
| (1) | The start date of the first business year of a corporation shall be any of the followings: <Amended by Presidential Decree No. 18706, Feb. 19, 2005; Presidential Decree No. 24357, Feb. 15, 2013; Feb. 12, 2019> |
| 1. | For a domestic corporation, the registration date of its incorporation: Provided, That it shall be any of the following dates with respect to an organization deemed a corporation under subparagraph 2 (c) of Article 2 of the Act (hereinafter referred to as "organization deemed a corporation"): |
| (a) | For an organization established under statutes or regulations, the establishment date of which is prescribed by statutes or regulations, the establishment date; |
| (b) | For an organization which requires permission or authorization of the competent authorities for establishment and an organization which has registered with the competent authorities under statutes or regulations, the date of permission, authorization, or registration; |
| (c) | For an unregistered organization, which is a foundation having endowments donated for the public interest, the date such endowments are donated; |
| 2. | For a foreign corporation, the date it establishes a domestic place of business (hereinafter referred to as "domestic place of business") under Article 94 of the Act (if it has no domestic place of business, the date on which it initially earns the income specified in Article 6 (4) of the Act). |
| (2) | In applying paragraph (1), where profits and losses generated before the start date of the first business year actually have devolved on a corporation and there is no concern about tax evasion, such profits and losses may be included in the profits and losses for the first business year of the corporation, as long as the period of the first business year does not exceed one year. In such cases, the start date of the first business year shall be the date on which the earnings and losses that have devolved on the relevant corporation are first generated. |
| Article 5 (Reports on Change of Business Year) |
A corporation which intends to report a change in its business year under Article 7 (1) of the Act shall file a report on change of business year (including submission through the national tax information and communications network) to the head of the tax office having jurisdiction over the place of tax payment by the filing deadline, in the form stipulated by Ordinance of the Ministry of Economy and Finance. <Amended by Presidential Decree No. 18312, Mar. 17, 2004; Presidential Decree No. 20720, Feb. 29, 2008>
| Article 6 (Scope of Registration Dates of Mergers) |
| (1) | "The registration date of a merger" in the Act and this Decree means any of the following dates: <Amended on Feb. 12, 2019> |
| 1. | A corporation surviving a merger: the registration date of change; |
| 2. | A corporation established through a merger: the registration date of incorporation. |
| (2) | "The registration date of a division" in the Act and this Decree means any of the following dates: <Amended on Feb. 12, 2019> |
| 1. | A corporation surviving a division: the registration date of change; |
| 2. | A corporation established through a division: the registration date of incorporation. |
| Article 7 (Scope of Place of Tax Payment) |
| (1) | "Place prescribed by Presidential Decree" in the proviso to Article 9 (1) of the Act means the location of the place of business of an organization, but if it is an organizations the main income of which is real estate rental income, it means the location of the real estate. In such cases, as for an organization with at least two places of business or real estate, it means the location of the main place of business or primary real estate, and for an organization with no place of business, it means the location of its main office stipulated in the articles of incorporation of the relevant organization (as for an organization that has not stipulated its main office in the articles of incorporation, it means the address of its representative or manager). <Presidential Decree No. 22951, Jun. 3, 2011> |
| (2) | "Location of the main place of business or primary real estate" in paragraph (1) means the location of the place of business or the real estate generating the largest amount of business revenue provided in subparagraph 1 of Article 11 (hereinafter referred to as "amount of business revenue") in the immediately preceding business year. |
| (3) | "Location of the main place of business prescribed by Presidential Decree" in Article 9 (3) of the Act means the location determined by applying mutatis mutandis paragraph (2): Provided, That this shall apply only when the place of tax payment is first determined. <Amended by Presidential Decree No. 17826, Dec. 30, 2002; Presidential Decree No. 22951, Jun. 3, 2011> |
| (4) | "Place prescribed by Presidential Decree" in Article 9 (3) of the Act means the place reported as the place of tax payment by a foreign corporation among places where domestic source income is generated. In such cases, the foreign corporation shall file a report on the place of tax payment in the form stipulated by Ordinance of the Ministry of Economy and Finance to the head of the tax office having jurisdiction over the place of tax payment within one month from the date on which domestic source income is generated from at least two categories thereof. <Amended by Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 22951, Jun. 3, 2011> |
| (5) | Where it is impractical to determine the domestic place of business of a foreign corporation engaged in the construction industry, etc. as the place of tax payment because the domestic place of business of such corporation is on in the territorial waters or on other grounds, the place of tax payment of such corporation shall be its domestic location in the register: Provided, That no location is entered in the register, the place in which overall management of the business is performed in the Republic of Korea shall be the place of tax payment. <Newly Inserted by Presidential Decree No. 21302, Feb. 4, 2009> |
| (6) | "The location of the relevant person liable for withholding prescribed by Presidential Decree" in the main sentence of Article 9 (4) of the Act means a place according to the following classification: <Newly Inserted on Feb. 12, 2019> |
| 2. | Where the relevant person liable for withholding is a corporation: the location according to the following: |
| (a) | The headquarters or main office of the relevant corporation, and its actual business management place (hereinafter referred to as "headquarters, etc.") if its headquarters or main office is not located in the Republic of Korea (referring to the location provided in paragraph (1) in the case of an organization deemed a corporation; the location of the main domestic place of business in the case of a foreign corporation); |
| (b) | Notwithstanding item (a), where a branch, business office, or other place of business of a corporation keeps separate accounting under the self-supporting accounting system, it means the location of the relevant place of business (excluding the location of the place of business if it is located in any foreign country): Provided, That if a corporation collectively computes the amount of tax withheld on the income paid through its branches, business offices, and other places of business by an electronic computer system in its headquarters, etc., has filed a report thereon with the head of the tax office having jurisdiction over its headquarters, etc., and has registered each of business establishments with the head of the competent tax office in accordance with Article 8 (3) and (4) of the Value-Added Tax Act, it shall be the location of the headquarters, etc. of the relevant corporation. |
| (2) | "The place prescribed by Presidential Decree" in the proviso to Article 9 (4) of the Act means places according to the following classification: <Newly Inserted on Feb. 12, 2019> |
| 1. | Where domestic-sourced real estate transfer income referred to in subparagraph 7 (b) of Article 93 of the Act or other income specified in any subparagraph of Article 132 (8) of this Decree accrues: the location of the domestic place of business of a domestic corporation or foreign corporation which has issued the relevant securities; |
| 2. | In cases other than those under subparagraph 1: the place designated by the Commissioner of the National Tax Service. |
| (8) | Matters necessary for the procedures for batch calculation and reporting pursuant to the proviso of paragraph (6) 2 (b) shall be determined by Ordinance of the Ministry of Economy and Finance. <Newly Inserted on Feb. 12, 2019> |
| Article 8 (Designation of and Notices on Place of Tax Payment) |
| (1) | "Circumstances prescribed by Presidential Decree" in Article 10(1) of the Act means any of the following cases: <Presidential Decree No. 22951, Jun. 3, 2011; Feb. 12, 2019> |
| 1. | Where the location of the headquarters, etc. of a domestic corporation is not the same as its registered address; |
| 2. | Where the location of the headquarters, etc. of a domestic corporation is separate from its assets or place of business and thus tax evasion could occur; |
| 3. | Where the location of the main place of business of a foreign corporation with at least two domestic places of business cannot be determined under Article 7 (3); |
| 4. | Where a foreign corporation with at least two property prescribed in the proviso to Article 9 (2) of the Act does fail to file a report under Article 7 (4). |
| (2) | In cases falling under any subparagraph of paragraph (1), the commissioner of the competent regional tax office may designate the place of tax payment under Article 10 (1) of the Act. In such cases, where the place of tax payment to be designated is in another jurisdiction, the Commissioner of the National Tax Service may designate the place of tax payment. |
| (3) | A notice on the designation of the place of tax payment under Article 10 (2) of the Act shall be given within 45 days from the end date of the relevant business year of the relevant corporation. |
| (4) | Where a notice referred to in paragraph (3) is not given within the deadline, the previous place of tax payment shall be the place of tax payment of the relevant corporation. |
| Article 9 (Report on Change of Place of Tax Payment) |
| (1) | Where a corporation reports a change of its place of tax payment under Article 11 (1) of the Act, it shall submit a report (including submission through the national tax information and communications network) on the change of the place of tax payment in the form stipulated by Ordinance of the Ministry of Economy and Finance to the head of the tax office having jurisdiction over the place of tax payment after the change. <Amended by Presidential Decree No. 17826, Dec. 30, 2002; Presidential Decree No. 18312, Mar. 17, 2004; Presidential Decree No. 20720, Feb. 29, 2008> |
| (2) | The head of a tax office in receipt of a report on the change of the place of tax payment under Article 11(1) of the Act shall inform the head of a tax office having jurisdiction over the place of tax payment before the change of the details of the report. |
| (3) | Where any corporation disappears in a merger or division during a business year, the place of payment for corporate tax on the income (including transfer gains or losses due to a merger or division) of a merged corporation, a divided corporation, or a counterpart corporation to a disappearing corporation through a division and merger (hereinafter referred to as "merged corporation, etc.") during the business year may be the place of corporate tax payment of the surviving corporation, the corporation established through the division, or the counterpart corporation to the merger and division (hereinafter referred to as "surviving corporation, etc.") (in the case of a division, it means the place of tax payment of the corporation which succeeds to the highest assets value). In such cases, a report on the change of the place of tax payment shall be filed under Article 11 (1) of the Act. <Amended by Presidential Decree No. 17457, Dec. 31, 2001; Presidential Decree No. 22184, Jun. 8, 2010> |
CHAPTER II CORPORATE TAX ON INCOME OF DOMESTIC CORPORATION FOR EACH BUSINESS YEAR
SECTION 1 Tax Base and Calculation
Subsection 1 Common Provisions
| Article 10 (Deduction of Losses) |
| (1) | "Corporations specified by Presidential Decree, such as ... enterprises performing a rehabilitation plan" in the proviso, with the exception of its subparagraphs, of Article 13 (1) of the Act; the part, with the exception of the subparagraphs, of Article 45 (5) of the Act; the part, with the exception of the subparagraphs, of Article 46-4 (5) of the Act means corporations falling under any of the following: <Newly Inserted on Feb. 12, 2016; Apr. 29, 2016; Feb. 3, 2017; Feb. 12, 2019; Feb. 11, 2020; Feb. 17, 2021> |
| 3. | A corporation in the course of performing a business normalization plan under an agreement concluded to perform the business normalization plan with any financial company, etc., as defined in subparagraph 1 of Article 2 of the Act on Real Name Financial Transactions and Confidentiality, among those that have claims against the corporation or an institution prescribed by Ordinance of the Ministry of Economy and Finance among public institutions defined in the Act on the Management of Public Institutions that conduct the financial business or corporate restructuring business pursuant to any other Act; |
| 4. | A corporation who meets all the following requirements, among corporations established with an objective to issue securities under the Financial Investment Services and Capital Markets Act or to borrow funds (hereafter in this paragraph referred to as "securitization"), based on receivables, real estate, or other property rights (hereafter in this paragraph referred to as "securitized assets"): |
| (a) | The corporation shall be either a stock company or limited company under the Commercial Act or any other statute; |
| (b) | The corporation shall be established for a limited duration with no full-time executive officer or employee; |
| (c) | The corporation's articles of incorporation, etc., shall limit its business operations to those necessary for securitization and shall prohibit a merger, liquidation, or dissolution not prearranged in securitization; |
| (d) | A contract for outsourcing business process and a contract for outsourcing asset management shall be signed to manage and operate the company's assets for securitization; |
| (e) | The acquisition of securitized assets shall be completed by December 31, 2015; |
| (2) | In deducting losses under subparagraph 1 of Article 13 of the Act, the losses shall be deducted sequentially beginning with the losses first generated in the relevant business year. <Amended on Feb. 12, 2016; Feb. 12, 2019> |
| (3) | In applying subparagraph 1 of Article 13 of the Act, any of the following losses shall be deemed deducted when calculating the tax base for each business year: <Amended by Presidential Decree No. 19328, Feb. 9, 2006; Presidential Decree No. 22812, Mar. 31, 2011; Feb. 12, 2016; Feb. 12, 2019; Feb. 15, 2022> |
| 1. | Losses appropriated under Article 17 (2) of the Act; |
| 2. | Losses carried forward that is appropriated by the value of assets gratuitously acquired or the amount of reduced debts due to exemption from or expiration of debts under subparagraph 6 of Article 18 of the Act; |
| (4) | Losses referred to in Article 13 (1) 1 of the Act shall include any amount within the limit of succeeded losses referred to in Articles 81 (2) and 83 (2). <Amended on Jun. 8, 2010; Feb. 12, 2016; Feb.12, 2019> |
| (5) | Where any loss incurs in a business year of a corporation which has included a loss exceeding the allocation limit referred to in Article 100-18 (2) of the Enforcement Decree of the Restriction of Special Taxation Act in deductible expenses, the loss additionally allocated or the loss of the business year, whichever is smaller, shall be deemed the loss incurred in the business year in which the last day of the business year of a partnership enterprise which has generated a loss exceeding the allocation ends, falls for purposes of paragraph (2). <Newly Inserted by Presidential Decree No. 21302, Feb. 4, 2009; Presidential Decree No. 26981, Feb. 12, 2016> |
Subsection 2 Calculation of Gross Income
| Article 11 (Scope of Earnings) |
Except as otherwise provided for in the Act and this Decree, profits or earnings specified in Article 15 (1) of the Act (hereinafter referred to as “earnings”) shall include each of the following: <Amended by Presidential Decree No. 17033, Dec. 29, 2000; Presidential Decree No. 19328, Feb. 9, 2006; Presidential Decree No. 19891, Feb. 28, 2007; Presidential Decree No. 20619, Feb. 22, 2008; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 21302, Feb. 4, 2009; Presidential Decree No. 22035, Feb. 18, 2010; Presidential Decree No. 23589, Feb. 2, 2012; Feb. 12, 2019; Feb. 28, 2023> | 1. | The amount of business income [excluding the amounts of sales overcharge and sales discount calculated under the corporate accounting standards (referring to the accounting standards referred to in the subparagraphs of Article 79; hereinafter the same shall apply); hereinafter the same shall apply] generating from each business prescribed in the Korean Standard Industrial Classification prepared and publicly notified by the Commissioner of the Statistics Korea pursuant to Article 22 of the Statistics Act (hereinafter referred to as the “Korean Standard Industrial Classification”): Provided, That the amount of income from security deposits or deposit money in real estate rent when making estimations under the proviso to Article 66 (3) of the Act shall be calculated by multiplying the interest rate prescribed by Ordinance of the Ministry of Economy and Finance in consideration of the term deposits of financial companies, etc. (hereinafter referred to as "term deposits interest rate(s)"); |
| 2. | The amount of assets transferred; |
| 2-2. | The amount of treasury stocks (including where a surviving corporation acquires the stocks of the surviving corporation held by a merged corporation following a merger). In such cases, where shares are transferred according to the exercise of stock options pursuant to the main clause, with the exception of the items, of subparagraph 19-2 of Article 19, it shall be an amount calculated at the market price at the time of the exercise of stock options; |
| 4. | Marginal profits from the evaluation of assets; |
| 5. | The value of assets gratuitously received; |
| 6. | The amount (including the amount computed under the proviso to Article 17 (1) 1 of the Act) of debts reduced due to exemption from, or expiration of debts; |
| 7. | The returned amount included in deductible expenses; |
| 8. | Profits distributed from a specially related party through capital transactions referred to in any of the items of Article 88 (1) 8 and subparagraph 8-2 of the same paragraph; |
| 9. | Any of the following provisional payments as referred to in Article 28 (1) 4 (b) of the Act and interest thereon (hereafter referred to as "provisional payment, etc." in this Article): Provided, That where any justifiable grounds prescribed by Ordinance of the Ministry of Economy and Finance exists, such as where collection is impossible due to litigation about claims or debts: |
| (a) | Provisional payment, etc. (excluding the interest included in the gross income under item (b)) not collected until the date of termination of the special relationship referred to in Article 2 (8); |
| (b) | Interest accrued where the special relationship under Article 2 (8) is not terminated and where the interest on the provisional payment referred to in Article 28 (1) 4 (b) of the Act is not collected by the first anniversary of the end date of the business year in which the interest accrual date falls; |
| 10. | The amount of a decrease in the liability reserve fund accumulated by an insurance company defined in the Insurance Business Act (hereinafter referred to as “insurance company”) pursuant to Article 120 of the same Act (excluding a decrease in the assessed value of the liability reserve fund due to changes in the discount rate), which is appropriated as earnings in accordance with the accounting standards referred to in paragraph (3) of the same Article (hereinafter referred to as “insurance supervisory accounting standards”) |
| 11. | Other earnings reverted or to be reverted to a corporation. |
[Enforcement Date: Jan. 1, 2024] Subparagraph 9 of Article 11
| Article 12 (Scope of Surpluses Untaxed upon Capitalization) |
| (1) | "An amount prescribed by Presidential Decree" in Article 16 (1) 2 (a) of the Act means the amount specified in any subparagraph of Article 17 (1) of the Act: Provided, That the following amounts shall be excluded therefrom: <Amended on Apr. 13, 2012; Feb. 15, 2013; Feb. 12, 2019> |
| 1. | An excess referred to in the proviso to Article 17 (1) 1 of the Act; |
| 2. | Profits accruing by retiring treasury stocks or investment shares (excluding the capitalized amount after the secondary anniversary of the date of the retirement if the market price referred to in Article 52 (2) of the Act does not exceed the acquisition value at the time of retirement); |
| 3. | In the case of a qualified merger referred to in Article 44 (2) of the Act (including cases deemed a qualified merger pursuant to paragraph (3) of the same Article; hereinafter referred to as “qualified merger”), the aggregate of the following amounts (in the case of a corporation other than a stock company, referring to the amount computed by applying this mutatis mutandis). In such cases, an aggregated amount shall not exceed the amount prescribed in Article 17 (1) 5 of the Act (hereafter in this Article referred to as “merger gain”): |
| (a) | As of the merger registration date, where the value of the property that a merging corporation succeeds to exceeds the book value (where tax settlement matters referred to in subparagraph 1 of Article 85 exist, such value shall be calculated by adding the amount not included in gross income and by subtracting the amount not included in deductible expenses, out of the tax settlement matters; hereafter in this paragraph the same shall apply) of such property of a merged corporation, the amount in excess; |
| (b) | An amount equivalent to a surplus referred to in the main clause, with the exception of its items, of Article 16 (1) 2 of the Act (hereafter in this Article referred to as "capital surplus subject to fictious dividend") out of the capital surplus prescribed by Ordinance of the Ministry of Economy and Finance; |
| (c) | The amount equivalent to the earned surplus of a merged corporation; |
| 4. | In the case of a qualified division prescribed in Article 46 (2) of the Act (hereinafter referred to as “qualified division”), the aggregate of the following amounts (in the case of a corporation other than a stock company, referring to the amount computed by applying this mutatis mutandis). In such cases, the limit shall be an amount prescribed in Article 17 (1) 6 of the Act (hereafter in this Article referred to as “marginal profits from a division”): |
| (a) | As of the registration date of a division, where the value of the property that a corporation established through division, etc. (referring to a corporation established through division, etc. referred to in the former part, with the exception of the subparagraphs, of Article 46 (1) of the Act; hereinafter the same shall apply) succeeds to is greater than the book value of such property of a divided corporation, the amount in excess; |
| (b) | Where a decrease in surplus other than the capital surplus subject to fictious dividend out of the capital of a divided corporation following a division and the capital surplus prescribed by Ordinance of the Ministry of Economy and Finance falls short of the book value of net assets as at the division registration date of the divided business division, such shortfall. In such cases, such shortfall shall be limited to the aggregate of the retained earnings before the division as at the division registration date of the divided corporation and the amount equivalent to the capital surplus subject to fictious dividends before the division; |
| (c) | Deleted. <Feb. 12, 2019> |
| (d) | Deleted. <Feb. 12, 2019> |
| (2) | In applying paragraph (1) 3 and 4, where some of marginal profits from a merger or marginal profits from a division is converted into capital or investment, the amount other than the amount pursuant to the relevant subparagraph shall be converted first. <Amended on Feb. 12, 2019> |
| (3) | In applying paragraph (1) 3 and 4, although reserve funds are succeeded to under Article 459 (2) of the Commercial Act, surpluses shall be calculated, deeming such reserve funds are not succeeded. |
| (4) | Where some of the revaluation reserve referred to in Article 16 (1) 2 (b) of the Act are converted into capital or investment, it shall be deemed that conversion is made based on the rate of the amount to which Article 13 (1) 1 of the Assets Revaluation Act applies and other amount. |
[This Article Wholly Amended by Presidential Decree No. 23589, Feb. 2, 2012]
| Article 13 (Timing for Constructive Dividend Payment or Distribution of Surpluses) |
The date on which profit dividends or surpluses are distributed under Article 16 (1) of the Act means the dates according to the following classification: <Amended on Feb. 19, 2005; Feb. 13, 2018; Feb. 12, 2019> | 1. | In cases falling under Article 16 (1) 1 through 3 of the Act: the date on which a general meeting of stockholders, general meeting of employees, or meeting of the board of directors adopts a resolution to retire stocks, reduce capital or financing, or convert surpluses into capital or financing (referring to the date determined under Article 461 (3) of the Commercial Act in cases of a resolution by the board of directors: Provided, That it refers to the record date under Article 354 of the Commercial Act, if stockholders on the date of resolution on the cancellation of stocks or the reduction of capital or investment are different from the stockholders on the record date under said Article of said Act) or the date of retirement or withdrawal of a partner; |
| 2. | In cases falling under Article 16 (1) 4 of the Act: the date on which the value of the residual assets of the relevant corporation is determined; |
| 3. | In cases falling under Article 16 (1) 5 of the Act: the registration date the relevant corporation is merged; |
| 4. | In cases falling under Article 16 (1) 6 of the Act: the registration date of the division of the relevant corporation. |
| Article 14 (Evaluation of Values of Assets) |
| (1) | The value of an asset, other than cash, which has been acquired under any subparagraph of Article 16 (1) of the Act shall be determined as follows: <Amended by Presidential Decree No. 17033, Dec. 29, 2000; Presidential Decree No. 17457, Dec. 31, 2001; Presidential Decree No. 18174, Dec. 30, 2003; Presidential Decree No. 18706, Feb. 19, 2005; Presidential Decree No. 21302, Feb. 4, 2009; Presidential Decree No. 22184, Jun. 8, 2010; Presidential Decree No. 23589, Feb. 2, 2012; Presidential Decree No. 26981, Feb. 12, 2016; Presidential Decree No. 27828, Feb. 3, 2017; Presidential Decree No. 28640, Feb. 13, 2018; Feb. 12, 2019; Feb. 15, 2022> |
| 1. | Where the acquired assets are stocks or investment shares (hereinafter referred to as "stocks, etc."), the following amounts: |
| (a) | In cases of stocks, etc., referred to in Article 16 (1) 2 and 3 of the Act: the par value or the amount of investment: Provided, That in cases of stocks, etc. acquired by a corporation referred to in Article 51-2 (1) 2 of the Act (hereafter referred to as "investment company, etc." in this Article, Articles 70, 75, and 86-3), the amount shall be deemed nil; |
| (b) | In cases of stocks, etc., referred to in Article 16 (2) 1 and 2 of the Act: Where the requirements referred to in Article 44 (2) 1 and 2 (excluding the part related to holding of stocks, etc.) or Article 46 (2) 1 and 2 (excluding the part related to holding of stocks, etc.) are met or in cases falling under Article 44 (3) of the Act, the previous book value (it refers to the market value, if a portion of costs of a merger or a division under Article 16 (2) 1 or 2 of the Act is paid in cash or by any other asset and the appraised market price of the stocks, etc. acquired through the merger or division is smaller than the previous book value): Provided, That the amount of stocks, etc. acquired by an investment company, etc. shall be deemed nil; |
| (c) | In cases of a stock dividend referred to in Article 462-2 of the Commercial Act: issued price (if an investment company, etc. is given with any stock dividend, such stock dividend shall be deemed nil); |
| (d) | In other cases: the market price at the time of acquisition provided for in Article 52 of the Act (hereinafter referred to as "market price"): Provided, That where profits are distributed from an affiliated person under Article 88 (1) 8, it shall be the amount less the profits; |
| 1-2. | Where the acquired assets are stocks, etc. that meet all of the following requirements, the previous book value (it refers to market value, if costs of a merger under Article 16 (2) 1 of the Act is partially paid in cash or by any other asset and the appraised market value of the stocks, etc. acquired through the merger is smaller than the previous book value): |
| (a) | Where a foreign corporation holds the total number of outstanding stocks of another foreign corporation or the total amount of investment and is merged to the latter foreign corporation; or where a domestic corporation holds the total number of outstanding stocks of, or the total amount of investment in, two separate foreign corporations and the separate foreign corporations are merged with each other (including cases where the sum of stocks, etc. of a foreign corporation held respectively by a domestic corporation and by another foreign corporation whose total number of outstanding stocks or whose total amount of investment is held by the domestic corporation equals to the total number of outstanding stocks of, or the total amount of investment in, the former foreign corporation and the two foreign corporations are merged with each other); |
| (b) | The surviving corporation and the merged corporation are corporations in one and the same state with which the Republic of Korea has signed a tax treaty; |
| (c) | The state referred to in item (b) does not levy corporate tax on any domestic corporation that is a stockholder of the merged corporation or defers the levying of corporate tax on such domestic corporation; |
| (d) | The corporation shall submit the documents that can prove the matters referred to in items (a) through (c) to the head of the tax office having jurisdiction over the place of tax payment; |
| 2. | Where the acquired assets are not stocks, etc., the market price of the assets at the time of acquisition. |
| (2) | Where stocks, etc. are acquired under the proviso to Article 16 (1) 2 of the Act, the book value of one stock or share of new or old stocks, etc. shall be as follows:Book value of one stock or share=Book value of one stock or share |
of old stock, etc.1 ＋ number of one stock or share of old stock, etc. allotted to one share of new stock, etc.
| (3) | In applying Article 16 (1) 1 of the Act, where stocks, etc. referred to in the proviso, with the exception of the items, of subparagraph 2 of the same paragraph are acquired within two years prior to the retirement of stocks, etc. (including the reduction of capital or financing; hereafter in this paragraph the same shall apply), such stocks, etc. shall be deemed retired first, and the initial acquisition value of such stocks, etc. shall be deemed nil, notwithstanding paragraph (2). In such cases, where some stocks, etc. are disposed of during this period, such stocks, etc. are deemed disposed of in proportion of such stocks, etc. to other stocks, etc., and the book value of one stock or share after the retirement of the stocks, etc. shall be the aggregate of book values after the retirement divided by the total number of stocks, etc. after the retirement, notwithstanding paragraph (2). <Amended on Feb. 12, 2019> |
| (4) | In cases of paragraph (1) 1 (a), the value of non-par-value stocks shall be calculated by dividing the amount transferred to the capital on the date specified in any subparagraph of Article 13 by the number of the stocks newly issued in return for the amount transferred to capital. <Amended by Presidential Decree No. 25194, Feb. 21, 2014> |
| Article 15 (Amount in Excess of Par Value of Issued Stocks) |
| (1) | "Amounts prescribed by Presidential Decree" in Article 17 (2) of the Act means the following amounts: <Newly Inserted by Presidential Decree No. 19328, Feb. 9, 2006; Presidential Decree No. 22951, Jun. 3, 2011; Presidential Decree No. 27115, Apr. 29, 2016; Presidential Decree No. 27828, Feb. 3, 2017; Feb. 12, 2019> |
| 1. | The amount of stocks issued in excess of the market price of such stocks, etc. (or the par value if the market price is less than the par value), if any corporation whose rehabilitation plan to convert its debts to investments has been approved under the Debtor Rehabilitation and Bankruptcy Act converts its debts to investments; |
| 2. | An amount in excess of the market price (or the par value if the market price is less than the par value) of the relevant stocks, etc., if any enterprise that shows the sign of insolvency and has signed an agreement to implement a corporate improvement plan aimed at converting its debts into investments converts its debts into investments under the Corporate Restructuring Promotion Act; |
| 3. | An amount in excess of the market price (or the par value if the market price is less than the par value) of the relevant stocks, etc., if any corporation converts its debts to investments after having signed an agreement to implement a management normalization program aimed at converting its debts to investments with any financial company, etc. defined in subparagraph 1 of Article 2 of the Act on Real Name Financial Transactions and Confidentiality, which holds its claims against the relevant corporation; |
| (2) | Where any domestic corporation discontinues its business or is dissolved before appropriating the total amount excluded from the gross income to cover losses under Article 17 (2) of the Act, the total amount that is not appropriated to cover losses shall be included in the gross income when calculating the amount of income of the business year in which the relevant grounds arise. <Newly Inserted on Feb. 9, 2006; Feb. 12, 2019> |
| Article 16 (Losses Carried Forward) |
| (1) | “Losses carried forward as prescribed by Presidential Decree” referred to in subparagraph 6 of Article 18 means any of the following: <Amended on Dec. 29, 2000; Dec. 30, 2003; Feb. 19, 2005; Feb. 9, 2006; Mar. 29, 2006; Jun. 8, 2010; Mar. 31, 2011; Apr. 29, 2016; Feb. 12, 2019> |
| 1. | Losses referred to in Article 14 (2) of the Act (excluding losses succeeded to under Article 44-3 (2) or 46-3 (2) of the Act) that is not deducted when calculating the tax base for each business year thereafter under Article 13 (1) 1 of the Act; |
| 2. | Any of the following losses referred to in Article 14 (2) of the Act among those excluded from the tax base reported under Article 60 of the Act for each business year: |
| (b) | Losses determined by a creditor financial institution council as those of a corporation that has signed an agreement to implement a corporate improvement plan under the Corporate Restructuring Promotion Act. |
| (2) | Article 10 (2) and (3) shall apply mutatis mutandis to the calculation of carried forward losses referred to in paragraph (1). <Amended on Feb. 12, 2019> |
[Moved from Article 18, Previous Article 16 Deleted]
| Article 17 Deleted. <by Presidential Decree No. 19891, Feb. 28, 2007> |
| Article 17-2 (Non-Inclusion of Domestic Corporations' Dividend Income in Gross Income) |
| (1) | For the purpose of Article 18-2 (1) 1 of the Act, the ratio of investment made by a domestic corporation in another domestic corporation (hereafter in this Article referred to as “invested corporation”) shall be calculated based on the latter's stocks, etc. that has been held for at least three months as at the ex-dividend date of the invested domestic corporation. In such cases, in calculating the number of the retained shares, etc., if some stocks of the same kind are transferred, the stocks, etc. first acquired shall be deemed the stocks, etc. first transferred. <Amended on Feb. 12, 2019> |
| (2) | For the purpose of Article 18-2 (1) 2 of the Act, the borrowings and interest thereon shall not include the amount excluded from deductible expenses under Article 55. <Amended on Feb. 12, 2019> |
| (3) | The amount calculated pursuant to Article 18-2 (1) 2 of the Act shall be the sum of deductions calculated according to the following formula: <Amended on Feb. 12, 2019> |
Amount deducted = A x B/C x D
A = Interest on the borrowings of domestic corporations
B = The accumulated amount during the corresponding period (referring to the total amount of the daily balances; hereinafter the same shall apply) of the book value of the stocks, etc. (excluding stocks, etc. invested in kind by the State or local governments) of the invested corporation
C = The accumulated amount of the total assets during the corresponding period, as indicated in the statement of financial position, as of the end of the business year of the domestic corporation
D = The ratio of non-inclusion in gross income pursuant to the classification under Article 18-2 (1) 1 of the Act |
|
| (4) | “Corporation prescribed by Presidential Decree” referred to in Article 18-2 (2) 4 means any of the following corporations: <Amended on Feb. 12, 2019> |
| (5) | Any corporation that wishes to be governed by Article 18-2 (1) of the Act shall submit a detailed statement of dividend 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, along with the report provided for in Article 60 of the Act. <Amended on Feb. 29, 2008; Feb. 12, 2019> |
[This Article Newly Inserted on Dec. 29, 2000]
[Title Amended on Feb. 12, 2019]
| Article 17-3 Deleted. <Feb. 28, 2023> |
| Article 18 (Non-Inclusion of Dividend Income of Foreign Subsidiaries in Gross Income) |
| (1) | "Corporation that meets the requirements prescribed by Presidential Decree" in Article 18-4 (1) of the Act means a domestic corporation that directly holds at least 10/100 (at least 5/100 in the case of a foreign corporation that engages in an overseas resources development project under Article 22 of the Act on Special Taxation Restrictions) of the total number of issued voting stocks or the total amount of investments of a foreign corporation for at least six months as of the dividend base date of the foreign corporation (where a domestic corporation succeeds to the stocks, etc. of a foreign subsidiary owned by another domestic corporation through a qualified merger, qualified division, qualified spin-off, or qualified investment in kind, such domestic corporation shall be deemed to have held relevant stocks, etc. from the time when such another domestic corporation acquired the stocks, etc. of the foreign subsidiary before the succession). |
| (2) | "The amount of dividend income prescribed by Presidential Decree" referred to in Article 18-4 (4) 1 of the Act means each of the following amounts for the relevant business year in which a specific foreign corporation, to which Article 27 (1) of the Adjustment of International Taxes Act applies, has actual tax liability prescribed in subparagraph 1 of the same paragraph of up to 15 percent of its actual accrued income: |
| 1. | Profit dividends (including interim dividends from disposing of retained earnings during the relevant business year) or surplus distributions out of the proceeds of disposing of retained earnings; |
| 2. | An amount deemed a dividend or distribution under Article 16 of the Act. |
| (3) | "Financial instrument prescribed by Presidential Decree" referred to in Article 18-4 (4) 2 of the Act means financial instruments that meet the requirements according to the following classification: |
| 1. | In the case of the Republic of Korea: Pursuant to the tax law of the Republic of Korea, the relevant financial instruments are deemed capital, and the interest and discount fees paid to a domestic corporation by its foreign subsidiary, the counterparty to a transaction, following the transaction of the relevant financial instrument shall be treated as dividend income; |
| 2. | In the case of a country where a foreign subsidiary is located: Pursuant to the tax law of that country, the relevant financial instrument is deemed a liability, and the interest and discount fees paid to a domestic corporation, the counterparty to a transaction, by its subsidiary following the transaction of the relevant financial instrument shall be treated as interest expenses. |
| (4) | A domestic corporation that intends to be governed by Article 18-4 (1) of the Act shall submit a detailed statement of dividend income of a foreign subsidiary prescribed by Ordinance of the Ministry of Economy and Finance when filing the tax base return under Article 60 of the Act to the head of the tax office having jurisdiction over the place of tax payment. |
[This Article Newly Inserted on Feb. 28. 2023]
Subsection 3 Calculation of Deductible Expenses
| Article 19 (Scope of Deductible Expenses) |
Losses or expenses (hereinafter referred toas deductible expenses) referred to in Article 19 (1) of the Act include each of the follows, except as otherwise provided for in the Act and this Decree: <Amended by Presidential Decree No. 17033, Dec. 29, 2000; Presidential Decree No. 17457, Dec. 31, 2001; Presidential Decree No. 17826, Dec. 30, 2002; Presidential Decree No. 18706, Feb. 19, 2005; Presidential Decree No. 19328, Feb. 9, 2006; Presidential Decree No. 19891, Feb. 28, 2007; Presidential Decree No. 20619, Feb. 22, 2008; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 21302, Feb. 4, 2009; Presidential Decree No. 22035, Feb. 18, 2010; Presidential Decree No. 22075, Mar. 15, 2010; Presidential Decree No. 22516, Dec. 7, 2010; Presidential Decree No. 23527, Jan. 25, 2012; Presidential Decree No. 23589, Feb. 2, 2012; Presidential Decree No. 24575, Jun. 11, 2013; Presidential Decree No. 24638, Jun. 28, 2013; Presidential Decree No. 25194, Feb. 21, 2014; Presidential Decree No. 26068, Feb. 3, 2015; Presidential Decree No. 27828, Feb. 3, 2017; Presidential Decree No. 28640, Feb. 13, 2018; Feb. 12, 2019; Feb. 11, 2020; Mar. 31, 2020; Feb. 17, 2021; Feb. 15, 2022; Feb. 28, 2023> | 1. | The purchase value (excluding the amount of purchase allowances and the discounted purchase amount computed according to the Korea Financial Accounting Standards) of raw materials of products or goods sold and incidental expenses; |
| 1-2. | Incidental expenses relating to sale, such as expenses for storage, packing or transportation, sales subsidies, and sales allowances of products or goods sold (including payment of sales subsidies and sales allowances without a prior arrangement); |
| 2. | The book value of transferred assets as at the time of transfer; |
| 3. | Labor costs [including the labor cost (limited to cases where the labor cost paid by the relevant domestic corporation is less than 50/100 of the total labor cost paid by the relevant domestic corporation and the overseas investing corporation) of executive officers or employees dispatched to an overseas local corporation in which a domestic corporation {limited to small and medium enterprises referred to in Article 2 of the Enforcement Decree of the Act on Restriction on Special Cases concerning Taxation and meddle-standing enterprises referred to in Article 6-4 (1) of the same Decree; hereafter in this subparagraph the same shall apply} directly or indirectly holds 100/100 of the total number of issued stocks or investment shares]; |
| 4. | Repair expenses of tangible assets; |
| 5. | Depreciation costs of tangible and intangible assets; |
| 5-2. | An amount equivalent to the depreciation costs calculated by applying mutatis mutandis Articles 24 through 26, 26-2, 26-3, 27 through 29, 29-2 and 30 through 34 to the following amounts, if the value of assets recorded in the accounting books according to the Korea Financial Accounting Standards is lower than the market price, while such fixed assets are acquired from an affiliated person: |
| (a) | The difference between the market price and the amount recorded in the accounting books, where the actual acquisition value is higher than the market price; |
| (b) | The difference between the actual acquisition value and the amount recorded in the accounting books, where the actual acquisition value is lower than the market price; |
| 9. | Losses from evaluation of assets; |
| 10. | Various taxes and public charges (Including foreign corporate tax amount where both exclusion from gross income pursuant to Article 18-4 of the Act and tax credit pursuant to Article 57 (1) of the Act are not applied); |
| 11. | Membership fees paid to corporations, or associations or unions registered with the competent authorities, which are organizations established by business operators; |
| 12. | Exploring expenses in the mining industry (including expenses for developing areas for exploring); |
| 13. | The value of free medical examinations and treatment provided by free medical care vouchers or New Village medical care vouchers prescribed by the Minister for Health and Welfare; |
| 13-2. | The book value (the amount in this case shall not be included in the donations referred to in Article 24 (1) of surplus food donated by a domestic corporation engaging in the manufacturing, wholesale, or retail business of food and necessities of life defined in subparagraphs 1 and 1-2 of Article 2 of the Act on Encouraging the Donation of Food (hereafter in this subparagraph referred to as "food, etc."), where the domestic corporation gratuitously donates surplus food, etc., left over in the course of its business operations to a provider defined in subparagraph 4 of Article 2 of the same Act, or a person designated by such provider; |
| 14. | Expenses for business-related overseas inspections and training; |
| 15. | Any of the following operational expenses or allowances: |
| (a) | Expenses incurred in operating special classes or middle and high schools affiliated to industrial enterprises, which are established under the Elementary and Secondary Education Act for working teenagers; |
| 16. | The book value of stocks of a company that contributes to an employee stock ownership association or money and goods contributed to such association; |
| 17. | The acquisition value (limited to the one worth less than 10 million won for each transaction) of an artwork, where the acquisition value of an artwork exhibited at all times in a space open to the public, such as an office and corridor, for the purpose of decoration or beautification, is counted as a deductible expense for the business year in which such artwork is acquired; |
| 18. | The purchase cost of articles donated for advertisement and publicity (up to 50 thousand won annually in cases of an article (excluding an article worth 30 thousand won or less per piece) donated to a specific person); |
| 19. | Where an executive officer or employee exercises any of the following stock options or receives the bonus, paid with stocks or money equivalent to the value of the stocks, which is prescribed by Ordinance of the Ministry of Economy and Finance (hereinafter referred as "share-based payment"), the amount compensated as the exercise or payment expenses to the relevant corporation that has offered stock options or made the share-based payment (hereinafter referred as "stock options, etc."): |
| (b) | Stock options, etc. granted or offered from an overseas parent corporation prescribed by Ordinance of the Ministry of Economy and Finance, which are prescribed by Ordinance of the Ministry of Economy and Finance; |
| (a) | The price of stock options or employee stock option received in either of the following cases: |
| (i) | The amount of money or the price of stocks of the relevant corporation, where the difference between the agreed purchase price of the stocks at the agreed time of purchase of the stocks and the market price of such stocks is paid in cash or by stocks of the relevant corporation; |
| (ii) | The difference between the actual purchase price and the market price of stocks, where stocks are issued at a price lower than the market price in response to the exercise of stock options or employee stock option at the agreed time of purchase of the stocks; |
| (b) | The amount of money if paid in shared-based payment; |
| 21. | The amount of money paid temporarily to the bereaved family of an executive officer (excluding the controlling stockholder, etc. referred to in Article 43 (7)) or an employee for school expenses, etc. after the death of the executive officer or employee and that meets the criteria prescribed by Ordinance of the Ministry of Economy and Finance; |
| 22. | Money and other valuables contributed to the following funds: |
| 23. | An increase in the liability reserve funds accumulated by an insurance company pursuant to Article 120 of the Insurance Business Act (excluding an increase in the assessed value of the liability reserve funds due to changes in the discount rate), which is appropriated as expenses in accordance with the insurance supervisory accounting standards; |
| 24. | Other deductible expenses attributable or to be attributable to the relevant corporation. |
[Enforcement Date: Jan. 1, 2024] Subparagraph 16 of Article 19
| Article 19-2 (Non-Inclusion of Bad Debts in Deductible Expenses) |
| (1) | "Irrecoverable claims ... due to grounds prescribed by Presidential Decree, such as bankruptcy of the debtor" in Article 19-2 (1) of the Act means any of the following: <Amended by Presidential Decree No. 22035, Feb. 18, 2010; Presidential Decree No. 22577, Dec. 30, 2010; Feb. 15, 2013; Jul. 26, 2017; Feb. 12, 2019; Jul 1, 2019; Feb. 11, 2020; Aug. 11, 2020; Feb. 17, 2021> |
| 1. | Accounts receivables and outstanding amounts, the extinctive prescription of which has lapsed under the Commercial Act; |
| 3. | Checks, the extinctive prescription of which has lapsed under the Check Act; |
| 4. | Loans and advance money, the extinctive prescription of which has lapsed under the Civil Act; |
| 5-2. | Claims determined to be exempted from liability pursuant to the agreement on credit recovery support referred to in Article 75 of the Microfinance Support Act after going through debt settlement prescribed in the same Act; |
| 7. | Claims arising from export of goods or provision of services in a foreign country, determined to be irrecoverable by the Korea Trade Insurance Corporation established under Article 37 of the Trade Insurance Act for falling under the grounds prescribed by Ordinance of the Ministry of Economy and Finance pursuant to the statutes pertaining to trade; |
| 8. | Irrecoverable claims because of bankruptcy of a debtor, compulsory execution, execution of punishment, discontinuance of business, or death, missing or unknown whereabouts of a debtor; |
| 9. | Checks, or bills in relation to which at least six months have passed since it was dishonored, or accounts receivable (limited to accounts receivable of small and medium enterprises, which have occurred before the date of dishonor): Provided, That this shall not apply where the relevant corporation has taken the property of a debtor as security; |
| 9-2. | Accounts receivables and uncollected amounts of small and medium enterprises (hereafter in this subparagraph referred to as “accounts receivables, etc.”), the recovery date of which has passed by at least two years: Provided, That accounts receivables, etc. arising from transactions with a specially related person shall be excluded therefrom; |
| 10. | Claims that have the effect of a final and conclusive judgment, such as a judicial settlement, that have been determined to be uncollectible pursuant to Ordinance of the Ministry of Economy and Finance; |
| 11. | Claim, the value of which does not exceed 20 thousand won (based on the total value of claims by debtor) among the claims for which at least six months have passed since the deadline for collection; |
| 12. | The following claims (limited to claims to a new technology business operator in cases of a new technology financial business operator which is a specialized credit finance business company referred to in Article 61 (2) 13) among claims of a financial company, etc. referred to in the proviso to Article 61 (2), with the exception of its subparagraphs: |
| (a) | What has been approved as bad debts by the Governor of the Financial Supervisory Service for a financial company, etc., according to the standards for bad debts disposition procedures determined by the Governor of the Financial Supervisory Service upon consultation with the Minister of Economy and Finance; |
| (b) | What has been counted as bad debts by a financial company, etc., being claims requested by the Governor of the Financial Supervisory Service to dispose of as bad debts, because he/she recognizes that they meet the standards referred to in item (a); |
| 13. | Claims to the founder of a small and medium enterprise start-up investment company defined in subparagraph 10 of Article 2 of the Venture Investment Promotion Act, which are recognized to meet the standards determined by the Minister of Small and Medium Enterprises (SMEs) and Startups upon consultation with the Minister of Economy and Finance. |
| (2) | The date a check or bill is dishonored under paragraph (1) 9 is the date of payment (referring to the date of confirmation, if the relevant check or bill is presented to a financial company, etc. before the date of payment and confirmed as being dishonored) of a dishonored check or bill in possession. In such cases, the amount countable in deductible expenses as bad debts shall be an amount computed by subtracting one thousand won from the amount of the relevant claim uncollected as at the end of the relevant business year. <Amended by Presidential Decree No. 22035, Feb. 18, 2010; Feb. 12, 2019> |
| (3) | “Business year prescribed by Presidential Decree” referred to in Article 19-2 (1) of the Act means a business year in which any of the following dates falls in: <Amended on Feb. 12, 2019; Jul. 1, 2019> |
| 1. | The date the relevant grounds have arisen in any case falling under paragraph (1) 1 through 5, 5-2 and 6; |
| 2. | The date such bad debts are counted as deductible expenses, because the relevant grounds have arisen in cases, other than those falling under subparagraph 1. |
| (4) | Notwithstanding paragraph (3) 2, where a corporation merges with another corporation or splits off, but fails to count bad debts referred to in paragraph (1) 8 through 13 in deductible losses by the business year in which the registration date of the merger or the registration date of the division falls, such bad debts shall be deemed deductible losses for the business year under which the registration date of merger or the registration date of division falls. <Amended on Feb. 12, 2019> |
| (5) | Where a domestic corporation counts the difference between the book value and the present value of claims following readjustment of claims according to the Korea Financial Accounting Standards, it shall be included in the deductible losses, and the amount counted in the deductible losses shall be included in the gross income by the method of transfer under the Korea Financial Accounting Standards. |
| (6) | "Debt guarantees prescribed by Presidential Decree, such as debt guarantees referred to in any of the subparagraphs of Article 24 of the Monopoly Regulation and Fair Trade Act" in Article 19-2 (2) 1 of the Act means any of the following debt guarantees: <Amended by Presidential Decree No. 22035, Feb. 18, 2010; Presidential Decree No. 27828, Feb. 3, 2017; Presidential Decree No. 28640, Feb. 13, 2018; Feb. 12, 2019; Dec 28, 2021; Feb. 28, 2023> |
| 2. | Debt guarantees provided by a financial company, etc. referred to in any subparagraph of Article 61 (2); |
| 3. | Debt guarantees provided by a corporation engaging in credit guarantee business under any Act; |
| 4. | Debt guarantees provided by an entrusting enterprise provided for in the Act on the Promotion of Collaborative Cooperation between Large Enterprises and Small-Medium Enterprises for an entrusted enterprise, which is a member of the council of entrusted enterprises; |
| 5. | Debt guarantees provided by a domestic corporation engaging in construction business or telecommunications business for a person, other than an affiliated person in direct connection with a construction project (including securitization referred to in Article 10 (1) 4 based on unsold housing units): Provided, That debt guarantees for the persons specified by Ordinance of the Ministry of Economy and Finance, including a concessionaire defined in subparagraph 7 of Article 2 of the Act on Public-Private Partnerships in Infrastructure, shall include debt guarantees for affiliated persons; |
| 6. | Debt guarantees provided by an overseas resources developer defined in the Overseas Resources Development Business Act for a corporation established overseas in direct connection with overseas resources development projects; |
| 7. | Debt guarantees provided by an overseas construction business operator defined in the Overseas Construction Promotion Act for a corporation established overseas in direct connection with overseas construction business for developing overseas resources; |
| (7) | An amount (referring to the amount less the amount appropriated as claims for indemnity among the amount paid by subrogation) appropriated by a corporation referred to in Article 63 (2) as deductible expenses in the relevant business year among the amount which the corporation makes payment by subrogation under a credit guarantee agreement shall be deemed a claim for indemnity and shall be excluded from the calculation of deductible expenses. In such cases, the amount excluded from deductible expenses shall be included in deductible expenses, when the amount of income in the business year in which any ground provided for in each subparagraph of subparagraph (1) arises. <Newly Inserted by Presidential Decree No. 22577, Dec. 30, 2010; Feb. 12, 2019> |
| (8) | A domestic corporation that intends to qualify for Article 19-2 (1) of the Act shall submit a detailed adjustment statement on appropriation for bad debts and on bad debts in the form prescribed by Ordinance of the Ministry of Economy and Finance, to the head of the tax office having jurisdiction over the place of tax payment, accompanied by the report referred to in Article 60 of the Act. <Amended on Dec. 30, 2010; Feb. 12, 2019> |
[This Article Newly Inserted by Presidential Decree No. 21302, Feb. 4, 2009]
| Article 20 Deleted. <Feb. 12, 2019> |
| Article 21 (Scope of Non-Performance of Duties) |
The non-performance duties as referred to in subparagraph 1 of Article 21 of the Act means a failure to collect indirect national taxes, a failure to pay taxes, and other non-performance of duties.
| Article 22 (Inclusion of Input Tax of Value-Added Tax in Deductible Expenses) |
| (1) | "The amount of tax ... in circumstances prescribed by Presidential Decree" in subparagraph 1 of Article 21 of the Act means any of the following amounts: <Amended by Presidential Decree No. 18706, Feb. 19, 2005; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 22184, Jun. 8, 2010; Presidential Decree No. 22951, Jun. 3, 2011; Presidential Decree No. 24357, Feb. 15, 2013; Presidential Decree No. 24638, Jun. 28, 2013; Feb. 12, 2019> |
| 3. | Other amounts of input tax verified as being actually borne by the relevant corporation, and stipulated by Ordinance of the Ministry of Economy and Finance. |
| (2) | The fictitious input tax amount deducted under Article 42 of the Value-Added Tax Act and the amount of input tax deducted under Article 108 of the Restriction of Special Taxation Act shall be deducted from the purchase price of the relevant raw materials in calculating the amount of income of the relevant corporation for the business year. <Amended by Presidential Decree No. 18706, Feb. 19, 2005; Presidential Decree No. 24638, Jun. 28, 2013; Feb. 12, 2019> |
| Article 23 (Scope of Punitive Damages) |
"Amount specified by Presidential Decree" in Article 21-2 of the Act means either of the following amounts (hereafter referred to as "punitive damages excluded from deductible expenses" in this Article): | 1. | An amount exceeding the amount of damage actually incurred, among the damages paid under any of the following provisions of the relevant statutes: |
| (c) | Article 29-2 (1) of the Protection of Public Interest Reporters Act; |
| (g) | Deleted. <Aug. 4, 2020> |
| 2. | An amount exceeding the amount of damage actually incurred, where damages are paid in excess of the damage actually incurred among the damages paid pursuant to statutes or regulations of a foreign country. |
| (2) | If the amount of damage actually incurred is unclear in applying paragraph (1), the amount calculated by multiplying the damages paid by a domestic corporation by 2/3 shall be deemed damages excluded from deductible expenses. |
[This Article Newly Inserted by Presidential Decree No. 28640, Feb. 13, 2018]
| Article 24 (Scope of Depreciable Assets) |
| (1) | "Tangible and intangible assets prescribed by Presidential Decree, such as buildings, machinery, equipment, and patent rights" in Article 23 (1) of the Act means any of the following tangible and intangible assets (excluding assets referred to in paragraph (3); hereinafter referred to as "depreciable assets"): <Amended by Presidential Decree No. 17457, Dec. 31, 2001; Presidential Decree No. 17826, Dec. 30, 2002; Presidential Decree No. 18706, Feb. 19, 2005; Presidential Decree No. 18903, Jun. 30, 2005; Presidential Decree No. 22184, Jun. 8, 2010; Presidential Decree No. 22577, Dec. 30, 2010; Presidential Decree No. 23589, Feb. 2, 2012; Presidential Decree No. 27972, Mar. 29, 2017; Presidential Decree No. 28640, Feb. 13, 2018; Feb. 12, 2018; Feb. 12, 2019; Jul. 28, 2020; Aug. 26, 2020; Feb. 17, 2021> |
| 1. | Any of the following tangible assets: |
| (a) | Buildings (including auxiliary facilities) and structures (hereinafter referred to as "buildings"); |
| (b) | Vehicles or transportation equipment, instruments, tools and furnishings; |
| (d) | Machinery and equipment; |
| (f) | Other tangible assets similar to the assets referred to in items (a) through (e); |
| 2. | Any of the following intangible fixed assets: |
| (a) | Goodwill (excluding goodwill appropriated by a surviving corporation, etc. due to a merger or division), design rights, utility model rights, and trademark rights; |
| (b) | Patent rights, fishing rights, aquaculture rights, extraction rights defined in the Submarine Mineral Resources Development Act, toll road management rights, irrigation rights, rights to use electricity and gas provision facilities, rights to use industrial waterworks, rights to use waterworks, and rights to use heating provision facilities; |
| (c) | Mining rights, rights to use telephone and telegraph exclusive-use facilities, rights to use exclusive rail lines, rights to manage sewage treatment and disposal plants, and waterworks facility management rights; |
| (e) | Deleted; <by Presidential Decree No. 17826, Dec. 30, 2002> |
| (f) | Development costs: Costs incurred in applying the outcomes of research or related knowledge to planning or design in order to create or substantially improve the materials, apparatus, products, processes, systems or services prior to commercial production or use, which satisfy development cost requirements according to corporate accounting standards (including an amount expended by members of the Industrial Technology Research Cooperatives established under the Industrial Technology Research Cooperatives Support Act for research and development and the acquisition of research facilities, etc. to the relevant Cooperatives); |
| (g) | The value of assets donated for use and profiting therefrom: The book value of assets, other than money, donated to the State or any local government, any corporation referred to in Article 24 (2) 1 (d) through (f) of the Act or any corporation provided in Article 39 (1) 1 of this Decree, if such assets are used or profits are generated therefrom; |
| (2) | "Intangible assets prescribed by Presidential Decree" in Article 23 (2) of the Act, with the exception of its subparagraphs, means any of the following: <Newly Inserted by Presidential Decree No. 22577, Dec. 30, 2010; Presidential Decree No. 23589, Feb. 2, 2012; Feb. 12, 2019> |
| 1. | Intangible assets, the service life of which cannot be determined and applied when the depreciation costs are appropriated as deductible expenses among the intangible assets (hereinafter referred to as "service life for settlement of accounts") which meet all requirements prescribed by Ordinance of the Ministry of Economy and Finance; |
| (3) | Depreciable assets shall not include any of the following: |
| 1. | Those not used for business (excluding idle facilities); |
| 2. | Those under construction; |
| 3. | Those whose value does not decline over time. |
| (4) | Where a corporation appropriates the total value of depreciable assets purchased on a long-term installment plan, etc. under Article 68 (4) as assets and uses them for business, they shall be included as depreciable assets, regardless of whether full payments have been made or ownership has been transferred. <Amended by Presidential Decree No. 22577, Dec. 30, 2010; Feb. 12, 2019> |
| (5) | In applying paragraph (1), among the assets (hereafter referred to as "lease assets" in this paragraph) lent by a person who runs a facilities leasing business (hereafter referred to as "lease corporation" in this paragraph), assets for financial lease prescribed by the corporate accounting standards (hereafter referred to as "financial lease" in this paragraph) shall be the depreciable assets of a lease user, and lease assets, other than those for financial lease, shall be the depreciable assets of a lease corporation. <Amended by Presidential Decree No. 18706, Feb. 19, 2005; Presidential Decree No. 19891, Feb. 28, 2007; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 22577, Dec. 30, 2010> |
| (6) | In applying paragraph (5), where a special purpose company for the asset securitization defined in the Asset-Backed Securitization Act assumes charge of assets for financial lease under its asset securitization plan submitted under the same Act, such assets shall be deemed the depreciable assets of a lease user. <Newly Inserted by Presidential Decree No. 17033, Dec. 29, 2000; Presidential Decree No. 18706, Feb. 19, 2005> |
| Article 25 (Method of Appropriating Depreciation Costs as Deductible Expenses) |
| (1) | Where a corporation appropriates the depreciation costs of depreciable assets as deductible expenses in each business year or includes them in deductible expenses under Article 23 (2) of the Act, it shall choose either the method of directly reducing the book value of the relevant depreciable assets or the method of appropriating them in the cumulative total amount of depreciation, instead of reducing the book value. <Amended by Presidential Decree No. 22577, Dec. 30, 2010; Feb. 12, 2019> |
| (2) | Where a corporation appropriates the depreciation costs in the cumulative total amount of depreciation, it shall separately appropriate such depreciation costs for each item of asset, and where the corporation keeps a detailed statement on the settlement of depreciation costs separately prepared for each item of asset under Article 33, it may appropriate the total amount of depreciation costs in a lump-sum as the cumulative total amount of depreciation. |
[Title Amended on Feb. 12, 2019]
| Article 26 (Calculation of Allowable Depreciation) |
| (1) | "Amount computed, as prescribed by Presidential Decree" in Article 23 (1) of the Act means the amount computed by the method (hereinafter referred to as "allowable depreciation") reported by a corporation to the head of the tax office having jurisdiction over the place of tax payment, among the following depreciation methods for respective depreciable assets: <Amended by Presidential Decree No. 17457, Dec. 31, 2001; Presidential Decree No. 17826 Dec. 30, 2002; Presidential Decree No. 18706, Feb. 19, 2005; Presidential Decree No. 21302, Feb. 4, 2009; Presidential Decree No. 23589, Feb. 2, 2012; Presidential Decree No. 26068, Feb. 3, 2015; Presidential Decree No. 27972, Mar. 29, 2017; Feb. 12, 2019; Jul. 28, 2020> |
| 1. | Buildings and intangible assets (excluding assets referred to in subparagraphs 3 and 6 through 8): The straight-line method; |
| 2. | Tangible assets, other than buildings (excluding any tangible assets used for mining under subparagraph 4): The declining balance method or the straight-line method; |
| 4. | Tangible assets used for mining: The units-of-production method, the straight-line method, or the declining balance method; |
| 5. | Deleted; <by Presidential Decree No. 17826, Dec. 30, 2002> |
| 6. | Development costs: The method of depreciating in proportion to the number of elapsed months by each business year based on the annually reported service life within the period of 20 years from the point of time when the sale or use of related products becomes possible; |
| 7. | The value of assets donated for use and profiting therefrom: The method of depreciating the amount (referring to the balance thereof if the relevant donated assets are destroyed or a contract thereof is rescinded) that is equally divided for the period (referring to the reported service life, if there is no any provisions stipulating such period) during which the relevant assets are used and generate profits; |
| (2) | The depreciation methods referred to in paragraph (1) are as follows: <Amended by Presidential Decree No. 22577, Dec. 30, 2010; Presidential Decree No. 26068, Feb. 3, 2015; Presidential Decree No. 26981, Feb. 12, 2016> |
| 1. | The straight-line method: Depreciation method of uniformly applying the allowable depreciation for each business year, calculated by multiplying the acquisition value of the relevant depreciable asset (referring to the acquisition value provided for in Article 72; hereafter in this Article the same shall apply) by the depreciation rate based on the service life of such asset; |
| 2. | The declining balance method: Depreciation method of annually reducing the allowable depreciation for each business year, as calculated by multiplying the balance (hereinafter referred to as "undepreciated balance") after deducting the amount included as depreciation costs in deductible expenses (including the amount not included in deductible expenses under Article 27-2 (2) and (3) of the Act in cases of passenger vehicles for business use under Article 27-2 (1) of the Act (hereinafter referred to as "passenger vehicles for business use")) from the acquisition value of the relevant depreciable asset by the depreciation rate for the service life of such assets; |
| 3. | The units-of-production method: Depreciation method by which an amount falling under any of the following is the depreciation range for each business year: |
| (a) | The amount calculated by dividing the acquisition value of the relevant depreciable assets by the estimated total mining output of the mining area and then multiplying the amount so calculated by the mining output from the mining area during the relevant business year; |
| (b) | The amount calculated by dividing the acquisition value of the relevant depreciable asset by the estimated total landfill volume in the waste landfill facility, which is the relevant asset, and then multiplying the amount so calculated by the landfill volume in the waste landfill facility during the relevant business year. |
| (3) | Where a corporation intends to report depreciation methods under paragraph (1), it shall choose one method for each item of asset provided for in the same paragraph and submit a report on depreciation methods (including submission through the national tax information and communications network) in the form stipulated by Ordinance of the Ministry of Economy and Finance, to the head of the tax office having jurisdiction over the place of tax payment by the filing deadline of the corporate tax base for the business year in which any of the following dates falls: <Amended by Presidential Decree No. 18312, Mar. 17, 2004; Presidential Decree No. 20720, Feb. 29, 2008; Feb. 12, 2019> |
| 1. | For newly established corporations and non-profit corporations which have newly started profit-making business, the start date of the business; |
| 2. | For corporations, other than those referred to in subparagraph 1, which have acquired new depreciable assets according to the following classification, the date of acquisition. |
| (4) | Where a corporation fails to submit a report on depreciation methods under paragraph (3), the allowable depreciation for the relevant depreciable asset shall be calculated pursuant to the depreciation methods classified as follows: <Amended by Presidential Decree No. 17457, Dec. 31, 2001; Presidential Decree No. 17826 Dec. 30, 2002; Feb. 12, 2019> |
| 1. | Assets referred to in paragraph (1) 1: The straight-line method; |
| 2. | Assets referred to in paragraph (1) 2: The declining balance method; |
| 3. | Assets referred to in paragraph (1) 3 and 4: The units-of-production method; |
| 4. | Assets referred to in paragraph (1) 6: The method of depreciating an equal amount in each year for five years from the time when the sale or use of related products becomes possible; |
| 5. | Assets referred to in paragraph (1) 7 and 8: The methods prescribed in the same subparagraphs. |
| (5) | Each corporation shall continue to apply the depreciation method reported under paragraph (3) (where the depreciation method is not reported, the depreciation method referred to in each subparagraph of paragraph (4)) in the subsequent business years. <Amended on Feb. 12, 2019> |
| (6) | In calculating the allowable depreciation, the residual value of depreciable assets shall be deemed zero: Provided, That where the allowable depreciation is calculated by the declining balance method, it shall be the amount equivalent to 5/100 of the acquisition value, and that amount shall be added to the allowable depreciation of the business year, which the undepreciated balance of the relevant depreciable assets first does not exceed 5/100 of the acquisition value. |
| (7) | For depreciable assets, the depreciation of which ends, the lesser amount of 5/100 of the acquisition value or one thousand won shall be the book value of the relevant depreciable assets, notwithstanding paragraph (6), and such amount shall be excluded from deductible expenses of the relevant corporation. |
| (8) | In applying paragraph (1), where the business year referred to in Article 7 or 8 of the Act is less than one year, the allowable depreciation shall be the amount calculated by multiplying the allowable depreciation by the number of months in the relevant business year and dividing it by 12. In such cases, the number of months shall be calculated based on the calendar months, and the number of days that falls short of one month shall be deemed one month. |
| (9) | In applying paragraph (1), the allowable depreciation of any depreciable assets acquired to use for business during a business year shall be calculated based on the number of months from the day on which such assets are used for business to the end date of the relevant business year. In such cases, the number of months shall be calculated based on the calendar months, and the number of days that falls short of one month shall be deemed one month. <Amended by Presidential Decree No. 17457, Dec. 31, 2001> |
| Article 26-2 (Calculation of Previous Depreciation Costs) |
| (1) | Assets referred to in Article 23 (2) 1 of the Act shall be depreciable assets acquired by a corporation on or before December 31, 2013 (hereafter in this Article and Article 26-3, referred to as "currently owned assets") before the business year immediately preceding the business year (hereafter in this Article and Article 26-3, referred to as "reference year") during which the Korean International Financial Reporting Standards are first applied and the same type (according to the classification of depreciable assets prescribed by Ordinance of the Ministry of Economy and Finance; hereafter in this Article and Article 26-3, the same shall apply) of assets as the currently owned assets, which shall be used for the same type of business (according to the classification of type of business prescribed by Ordinance of the Ministry of Economy and Finance, and it shall be limited to where the relevant corporation continuously conducts the relevant business after adopting the Korean International Financial Reporting Standards; hereafter in this Article and Article 26-3, the same shall apply) as the currently owned assets (hereafter in this Article and Article 26-3, referred to as "same type of assets"). <Amended by Presidential Decree No. 25194, Feb. 21, 2014; Presidential Decree No. 29269, Oct. 30, 2018; Feb. 12, 2019> |
| (2) | Depreciation costs of the depreciable assets referred to in Article 23 (2) 1 of the Act shall be included in deductible expenses within the amount computed under subparagraph 1 in which the total amount of depreciation costs of each item of asset additionally included in deductible expenses under Article 23 (2) of the Act per same type of assets does not exceed the amount computed under subparagraph 2 (hereafter in this Article, referred to as "ceiling on inclusion in calculation of deductible expenses"): <Amended by Presidential Decree No. 25194, Feb. 21, 2014; Feb. 12, 2019> |
| 1. | Depreciation cost ceilings of each item of asset: The following amounts: |
| (a) | Where the depreciation method applied when appropriating the depreciation costs as deductible expenses with respect to the same type of asset as the relevant assets in the business year immediately preceding the business year during which the Korean International Financial Reporting Standards are first applied (hereinafter referred to as "depreciation method for settlement of accounts") is the straight-line method: An amount computed by multiplying the acquisition value of depreciable assets by the depreciation rate prior to adoption of the Korean International Financial Reporting Standards (hereafter in this Article and Article 26-3, referred to as "standard depreciation rate"); |
| (b) | Where the depreciation method for settlement of accounts with respect to the same type of asset as the relevant assets in the reference year is the declining balance method: An amount computed by multiplying the undepreciated balance by the standard depreciation rate. In such cases, the proviso to Article 26 (6) shall apply mutatis mutandis to the calculation of the allowable depreciation; |
| 2. | Depreciation cost ceilings of the same type of assets: The following amounts (where the amount is less than zero, it shall be deemed zero): |
| (a) | In cases falling under subparagraph 1 (a): Amount computed according to the following formula: |
A ceiling on amount: (A x B)-C
A: The aggregate of acquisition prices of assets of the same type, the depreciation costs of which are included in deductible expenses under Article 23 (1) of the Act for the relevant business year
B: Standard depreciation rate
C: The aggregate of depreciation costs included in deductible expenses under Article 23 (1) of the Act with respect to the same type of assets for the relevant business year |
|
| (b) | In cases falling under subparagraph 1 (b): Amount computed according to the following formula: |
A ceiling on amount: (A x B)-C
A: The aggregate of the undepreciated balance of assets of the same type, the depreciation costs of which are included in deductible expenses for the relevant business year under Article 23 (1) of the Act
B: Standard depreciation rate
C: The aggregate of depreciation costs included in deductible expenses under Article 23 (1) of the Act with respect to the same type of assets for the relevant business year |
|
| (3) | In applying each subparagraph of paragraph (2), where the depreciation costs of the same type of asset as the relevant assets are not appropriated as deductible expenses in the reference year, the depreciation method for settlement of accounts in the business year in which the depreciation costs of the same type of asset as the relevant assets are lastly appropriated as deductible expenses prior to the reference year shall be the depreciation method for settlement for accounts in the reference year. <Amended on Feb. 12, 2019> |
| (4) | In applying each subparagraph of paragraph (2), the standard depreciation rate shall be the average of the rates calculated under the following subparagraphs for the reference year and the respective two preceding business years. In such cases, where a corporation is newly established, merged or divided in the reference year and respective two preceding business years, the depreciation method changes under Article 27, or the service life is applied differently from the scope of service life under Article 29 or the applied service life is changed, the depreciation rate shall be calculated upon excluding the business year which ends before the relevant grounds arise: |
| 1. | In cases falling under paragraph 2 (1) (a): The rate of the total depreciation costs of the same type of assets included in deductible expenses to the total acquisition value of the same type of assets; |
| 2. | In cases falling under paragraph 2 (1) (b): The rate of the total depreciation costs of the same type of assets included in deductible expenses to the total undepreciated balance of the same type of assets. |
| (5) | In applying Article 23 (2) of the Act and paragraphs (1) through (4) of this Article, where a domestic corporation prepares the comparative financial statements by applying mutatis mutandis the international accounting standards in the business year immediately preceding the business year during which it first applies the Korean International Financial Reporting Standards and changes the depreciation method for settlement of accounts and the service life for settlement of accounts in the relevant business year same as the depreciation method and the service life used in preparing the comparative financial statements, it shall be deemed first applied the Korean International Financial Reporting Standards in the relevant business year. <Amended on Feb. 12, 2019> |
| (6) | The depreciation costs of assets under paragraph (1) (hereafter in this Article, referred to as "assets acquired through a qualified merger, division or spin-off"), which are acquired by a qualified merger, qualified division or qualified spin-off (hereinafter referred to as "assets acquired by a qualified merger, division or spin-off") in the business year during which a corporation shall apply the Korean International Financial Reporting Standards and in subsequent business years thereafter may be included in deductible expenses by the following methods: <Amended by Presidential Decree No. 23589, Feb. 2, 2012; Presidential Decree No. 28640, Feb. 13, 2018; Feb. 12, 2019> |
| 1. | Where corporations holding the same type of assets are merged through a qualified merger (including a division and merger constituting a qualified division; hereafter in this Article, the same shall apply): Recalculating the standard depreciation rate of the same type of assets under paragraph (4) as in the business year immediately preceding the business year in which the merger is registered and then including the depreciation costs calculated by applying the recalculated standard depreciation rate in deductible expenses under paragraph (2). In such cases, in applying each subparagraph of paragraph (4), the total depreciation costs of the same type of assets included in deductible expenses shall be the total depreciation costs of the relevant same type of assets included in the deductible expenses by a corporation that transfers (hereafter in this Article, referred to as "transferor corporation") the assets acquired through the qualified merger, division or spin-off and a corporation that assumes the charge of such assets (hereafter in this Article, referred to as "transferee corporation"), the total acquisition value of the same type of assets shall be the sum total of the acquisition value of the relevant same type of assets appropriated by the transferor corporation and the transferee corporation, and the total undepreciated balance of the same type of assets shall be the sum total of the undepreciated balance of the same type of assets appropriated by the transferor corporation and the transferee corporation; |
| 2. | In cases of assets that a corporation newly established through a qualified division or spin-off acquired through such qualified division or spin-off, where corporations that do not hold the same type of assets are merged through a qualified merger: The following methods: |
| (a) | Where the transferor corporation includes the depreciation costs of the relevant assets in deductible expenses under Article 23 (2) of the Act by applying the Korean International Financial Reporting Standards in and before the business year in which the registration date of the merger or division (hereafter in this Article, referred to as "registration date of the merger or division") falls: Including depreciation costs in deductible expenses under paragraph (2) by applying the standard depreciation rate already calculated by the transferor corporation for the relevant assets; |
| (b) | In cases other than item (a): Recalculating the standard depreciation rate under paragraph (4) by the type of business and type upon classifying the assets acquired through qualified merger, division or spin-off from other assets held by the transferee corporation with the business year immediately preceding the business year in which the registration date of the merger, division or spin-off falls and then including depreciation costs in the deductible expenses under paragraph (2) by applying the re-calculated depreciation rate. In such cases, in applying each subparagraph of paragraph (4), the depreciation costs of the same type of assets included in the deductible expenses shall be the depreciation costs included in the deductible expenses by the transferor corporation with respect to the assets acquired through a qualified merger, division or spin-off and the acquisition value and the undepreciated balance shall be the acquisition value of the assets acquired through the qualified merger, division or spin-off and the undepreciated balance appropriated by the transferor corporation, respectively. |
| (7) | In applying paragraph (1) when the depreciation costs of the assets acquired through a qualified merger, division or spin-off are included in the deductible expenses under paragraph (6), the date the transferor corporation acquires such assets shall be deemed the date of acquisition of the assets acquired through the qualified merger, division or spin-off and where the transferor corporation applies the international accounting standards prior to the business year in which the registration date of the merger, division or spin-off falls, paragraph (6) shall not apply to the assets, other than the same type of assets as the currently owned assets by the transferor corporation. |
| (8) | In applying paragraph (2) when the depreciation costs of the assets acquired through a qualified merger, division or spin-off are included in the deductible expenses under paragraph (6), the acquisition value of the assets acquired through the qualified merger, division or spin-off shall be the acquisition value by the transferor corporation and the undepreciated balance shall be the balance calculated by deducting the amount already included by the transferee corporation in the deductible expenses as depreciation costs from the book value (referring to the amount computed by subtracting the asset adjustment account under Article 80-4 (1) or 82-4 (1) from the market value as at the time of transfer) as at the time of transfer by the transferor corporation. <Amended by Presidential Decree No. 28640, Feb. 13, 2018> |
| (9) | In calculating the standard depreciation rate of the assets acquired by a qualified merger, division or spin-off and the ceiling on inclusion of such assets in deductible expenses under paragraph (6) 1 and 2, where the depreciation method for settlement of accounts of a transferor corporation or a transferee corporation has changed after the business year during which the Korean International Financial Reporting Standards are first applied, the depreciation method for settlement of accounts prior to such change shall be the depreciation method for settlement of accounts in the reference year and paragraphs (2) and (4) shall apply accordingly, and in applying paragraph (6) 1, where the depreciation method for settlement of accounts between corporations is different, the method of calculating the standard depreciation rate and the ceiling on inclusion in deductible expenses shall be prescribed by Ordinance of the Ministry of Economy and Finance. <Amended on Feb. 12, 2019> |
| (10) | Where a corporation which has included the depreciation costs of the assets acquired by a qualified merger, division or spin-off under paragraph (6) in the deductible expenses falls under Article 44-3 (3) of the Act in cases of a qualified merger, Article 46-3 (3) in cases of a qualified division, or Article 47 (2) of the Act in cases of a qualified spin-off (hereafter in this Article and Article 29-2, referred to as "ground for violation of qualified requirements"), the depreciation costs included in the deductible expenses shall be calculated by deeming that paragraph (6) is not applied in the business year during which paragraph (6) is first applied and the subsequent business years in calculating the amount of income after the business year in which the relevant grounds arise, and the amount calculating by subtracting the amount computed under subparagraph (2) from the amount computed under subparagraph (1) shall be included in the gross income in calculating the amount of income in the business year in which the ground for violation of qualified requirements arises: <Amended by Presidential Decree No. 28640, Feb. 13, 2018> |
| 1. | Total depreciation costs included in the deductible expenses from the business year during which paragraph (6) is first applied to the business year immediately preceding the relevant business year; |
| 2. | Total depreciation costs recalculated by deeming that paragraph (6) is not applied from the business year during which paragraph (6) is first applied to the business year immediately preceding the relevant business year. |
| (11) | Except as otherwise provided for in paragraphs (1) through (10), matters necessary for calculating the standard depreciation rates and the ceilings on inclusion in deductible expenses shall be prescribed by Ordinance of the Ministry of Economy and Finance. |
[This Article Newly Inserted by Presidential Decree No. 22577, Dec. 30, 2010]
| Article 26-3 (Calculation of Standard Depreciation Costs) |
| (1) | Assets referred to in Article 23 (2) 2 of the Act mean currently owned assets and assets of the same type that a corporation acquires as depreciable assets on or after January 1, 2014. |
| (2) | The depreciation costs of depreciable assets provided for in paragraph (1) shall be included in deductible expenses to the extent that the aggregate of depreciation costs of individual assets of the same type additionally included in deductible expenses under Article 23 (2) of the Act within the amount specified in subparagraph 1 does not exceed the amount specified in subparagraph 2 or 3, whichever is smaller: <Amended by Presidential Decree No. 26981, Feb. 12, 2016; Feb. 12, 2019> |
| 1. | Standard depreciation costs of an individual asset: An amount calculated by applying the depreciation method for the settlement of accounts for the relevant business year per asset and the standard service life stipulated by Ordinance of the Ministry of Economy and Finance (hereinafter referred to as "standard service life"); |
| 2. | Ceiling on the depreciation costs of assets of the same type in consideration of the standard depreciation costs (if the amount is smaller than zero, it shall be deemed zero): The aggregate of depreciation costs of assets of the same type for the relevant business year, calculated by applying the depreciation method applicable to the settlement of accounts for the relevant business year and the standard service life ? The aggregate of depreciation costs of assets of the same type, included in deductible expenses for the relevant business year under Article 23 (1) of the Act; |
| 3. | Ceiling on the depreciation costs of assets of the same type in consideration of the previous standard depreciation cost: The amount according to the following classification (if the amount is smaller than zero, it shall be deemed zero): |
| (a) | Where the depreciation method for the settlement of accounts for the reference year is the straight-line method: |
A ceiling on amount: (A x B)-C
A: The aggregate of acquisition prices of assets of the same type for which depreciation costs are included in deductible expenses for the relevant business year under Article 23 (1) of the Act B: Standard depreciation rate
C. The aggregate of depreciation costs included in deductible expenses under Article 23 (1) of the Act with respect to the same type of assets for the relevant business year
|
|
| (b) | Where the depreciation method for the settlement of accounts for the reference year is the declining balance method: |
A ceiling on amount: (A x B)-C
A: The aggregate of the undepreciated balance of assets of the same type, the depreciation costs of which are included in deductible expenses for the relevant business year under Article 23 (1) of the Act
B: Standard depreciation rate
C: The aggregate of depreciation costs included in deductible expenses under Article 23 (1) of the Act with respect to the same type of assets for the relevant business year |
|
| (3) | Notwithstanding paragraph (2), if the amount equivalent to 25/100 of the amount computed under paragraph (2) 3 is greater than the amount computed under paragraph (2) 2, the depreciation costs additionally included in deductible expenses under Article 23 (2) of the Act for individual assets may be included additionally in deductible expenses to the extent that the aggregate of depreciation costs of assets of the same type does not exceed 25/100 of the amount under paragraph (2) 3. |
| (4) | Article 26-2 (3) through (10) shall apply mutatis mutandis to the calculation of depreciation costs under paragraphs (2) and (3). |
[This Article Newly Inserted by Presidential Decree No. 25194, Feb. 21, 2014]
| Article 27 (Change of Depreciation Method) |
| (1) | In any of the following circumstances, a corporation may change the depreciation method upon obtaining approval from the head of the tax office having jurisdiction over the place of tax payment, notwithstanding Article 26 (5): <Amended by Presidential Decree No. 18706, Feb. 19, 2005; Presidential Decree No. 22577, Dec. 30, 2010> |
| 1. | Where corporations with different depreciation methods merge (including a merger and division); |
| 2. | Where a corporation assumes charge of, or succeeds to, the business of a business operator with a different depreciation method; |
| 3. | Where a foreign investor as defined in the Foreign Investment Promotion Act assumes charge of or holds at least 20/100 of the stocks, etc., of a domestic corporation; |
| 4. | Where the previous depreciation method needs to be changed due to changing business conditions or economic conditions of overseas markets; |
| 5. | Where the depreciation method for settlement of accounts has changed due to a change in the accounting policy prescribed by Ordinance of the Ministry of Economy and Finance (limited to where it has changed in the same method as the changed depreciation method for settlement of account). |
| (2) | A corporation which intends to obtain approval to change the depreciation method under paragraph (1) shall submit an application (including submitting such application through the national tax information and communications network) to change the method of depreciation in the form stipulated by Ordinance of Ministry of Economy and Finance, to the head of the tax office having jurisdiction over the place of tax payment by the end date of the first business year in which it intends to apply the changed depreciation method. <Amended by Presidential Decree No. 18312, Mar. 17, 2004; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 22577, Dec. 30, 2010> |
| (3) | Upon receipt of an application submitted under paragraph (2), the head of the tax office having jurisdiction over the place of tax payment shall determine whether to grant approval and notify the relevant corporation thereof within one month from the end date of the business year in which the application is submitted. <Amended by Presidential Decree No. 22577, Dec. 30, 2010> |
| (4) | Where the head of the tax office having jurisdiction over the place of tax payment intends to approve the change of the depreciation method on the grounds falling under paragraph (1) 4, he/she shall observe the standards determined by the Commissioner of the National Tax Service. |
| (5) | Where a corporation changes its depreciation method without obtaining approval required under paragraph (1), the allowable depreciation shall be calculated in the depreciation method before the change. |
| (6) | Where the depreciation method is changed under paragraph (1), the allowable depreciation shall be calculated by any of the following formulae. In such cases, the estimated total mining output in the formula referred to in subparagraph 3 means the total mining output recognized by the Korea Mine Rehabilitation and Mineral Resources Corporation established under the Korea Mine Rehabilitation and Mineral Resources Corporation Act, and the estimated total landfill volume means the total landfill volume approved by the Minister of Environment of the relevant Mayor/Do Governor at the time of granting a license for a waste treatment business under Article 25 (3) of the Waste Control Act: <Amended by Presidential Decree No. 16658, Dec. 31, 1999; Presidential Decree No. 18706, Feb. 19, 2005; Presidential Decree No. 21566, Jun. 26, 2009; Presidential Decree No. 24824, Nov. 5, 2013; Presidential Decree No. 26068, Feb. 3, 2015; Aug. 31, 2021> |
| 1. | A change from the declining balance method or the units-of-production method to the straight-line method: The allowable depreciation ＝ (the book value after deduction of the cumulative total amount of depreciation ＋ the amount in excess of the depreciation limit carried forward from the previous period) × the depreciation rate determined by the straight-line method for the reported service life under the main sentence of Article 28 (1) 2 and (6) (the standard service life in cases falling under the proviso to Article 28 (1) 2); |
| 2. | A change from the straight-line method or the units-of-production method to the declining balance method: The allowable depreciation ＝ (the book value after deduction of the cumulative total amount of depreciation ＋ the amount in excess of the depreciation limit carried forward from the previous period) × the depreciation rate determined by the declining balance method for the reported service life under the main sentence of Article 28 (1) 2 and (6) (the standard service life in cases falling under the proviso to Article 28 (1) 2); |
| 3. | A change from the declining balance method or the straight-line method to the units-of-production method: |
The allowable depreciation ＝ (the book value after deduction of the cumulative total amount of depreciation ＋ the amount in excess of the depreciation limit carried forward from the preceding term) × the mining output or landfill volume in the relevant business year / the estimated total mining output or landfill volume － the total mining output or landfill volume until the business year before the change.
| Article 28 (Service Life and Depreciation Rates) |
| (1) | The service life of depreciable assets and the corresponding depreciation rate based on the service life shall be according to the following classification: <Amended by Presidential Decree No. 17457, Dec. 31, 2001; Presidential Decree No. 17826 Dec. 30, 2002; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 22577, Dec. 30, 2010; Presidential Decree No. 26981, Feb. 12, 2016; Feb. 12, 2019> |
| 1. | For assets used for testing and research prescribed by Ordinance of the Ministry of Economy and Finance and intangible assets provided for in Article 24 (1) 2 (a) through (d): The service life prescribed by Ordinance of the Ministry of Economy and Finance and the corresponding depreciation rate determined by the depreciation method prescribed by Ordinance of the Ministry of Economy and Finance (hereinafter referred to as "depreciation rate"); |
| 2. | For depreciable assets (excluding intangible assets provided for in Article 24 (1) 2 (f) through (i)), other than those referred to in subparagraph 1: The service life chosen by a corporation and reported to the head of the tax office having jurisdiction over the place of tax payment (hereinafter referred to as "reported service life") within the scope of the standard service life (hereinafter referred to as "scope of service life") by adding or reducing 25/100 of the standard service life to or from such standard service life by structure or by type of asset or type of business, and the corresponding depreciation rate: Provided, That where no report is filed by the deadline specified under each subparagraph of paragraph (3), the standard service life and the corresponding depreciation rate shall apply. |
| (2) | In applying paragraph (1), where the business year referred to in Article 6 of the Act falls short of one year, it shall be in accordance with the service life calculated by the following formula and the corresponding depreciation rate. In such cases, the number of months shall be calculated according to the solar calendar, and days less than one month shall be counted as one month. <Amended on Feb. 12, 2019> |
Converted service life = (A or B) x 12/C
A: Service life pursuant to paragraph (1) 1
B: Reported service life or standard service life pursuant paragraph (1) 2
C: The number of months of a business year |
|
| (3) | When a corporation reports the service life under paragraph (1) 2 or (6), it shall submit the service life report (including submission via the national tax information and communications network) in the form stipulated by Ordinance of the Ministry of Economy and Finance to the head of the tax office having jurisdiction over the place of tax payment by the deadline for reporting the tax base of corporate tax for the business year in which any of the following dates falls: <Amended by Presidential Decree No. 18312, Mar. 17, 2004; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 24824, Nov. 5, 2013; Feb. 12, 2019> |
| 1. | For newly established corporations and non-profit domestic corporations which have newly started profit-making business, the start date of the business; |
| 2. | For corporations, other than those referred to in subparagraph 1, where they acquire depreciable assets with a different standard service life based on categories by type of assets or type of business or newly start a different type of business, the acquisition date of such assets or the start date of such business. |
| (4) | A corporation shall continue to apply the reported service life or standard service life by type of asset or type of business applied under paragraph (1) 2 or (6) in the subsequent business years. <Amended by Presidential Decree No. 24824, Nov. 5, 2013> |
| (5) | A report on the service life referred to in paragraphs (1) 2, (3), and (6) shall be submitted annually. <Amended by Presidential Decree No. 24824, Nov. 5, 2013> |
| (6) | Deleted. <Feb. 12, 2019> |
| (7) | Deleted. <Feb. 12, 2019> |
| Article 29 (Special Cases and Changes of Service Life) |
| (1) | In any of the following circumstances, a corporation may apply the service life different from the scope of service life or change the applied service life for a particular place of business within the scope of the period calculated by adding or reducing 50/100 (25/100 in cases falling under subparagraphs 5 and 6) of the standard service life to/from the standard service life upon obtaining approval from the commissioner of the competent regional tax office having jurisdiction over the place of tax payment, notwithstanding Article 28 (1) 2 and (4): <Amended by Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 22577, Dec. 30, 2010; Presidential Decree No. 25194, Feb. 21, 2014; Feb. 12, 2019> |
| 1. | Where the degree of corrosion, wear and tear, or deterioration of the assets is obvious due to the characteristics of the place of business; |
| 2. | For a corporation for which three years have passed since the starting of business, where the rate of operation prescribed by Ordinance of the Ministry of Economy and Finance (hereafter referred to as "rate of operation" in this paragraph) of production facilities (excluding buildings; hereinafter referred to as "production facilities") for the relevant business year is substantially higher than the average rate of operation for the immediately preceding three business years; |
| 3. | Where accelerated depreciation of existing production facilities is required on the grounds of the development, distribution, etc. of new production technology and new products; |
| 4. | Where operations are suspended or the rate of operation of production facilities is reduced due to changing economic conditions; |
| 5. | Where the service life for settlement of accounts in the business year during which the Korean International Financial Reporting Standards are first applied to the depreciable asset falling under Article 28 (1) 2 has changed (limited to where the service life for settlement of accounts is extended, the service life shall be extended and the service life for settlement of accounts is reduced, the service life shall be reduced, but it is impossible to change the service life to the service life shorter than the service life for settlement of accounts); |
| 6. | Where the standard service life of the depreciable asset falling under Article 28 (1) 2 has changed: Provided, That in the case of reducing the service life, where the service life for settlement of accounts is within the scope of adding or reducing 25/100 of the changed standard service life, it is impossible to change it to the service life shorter than the service life for settlement of accounts. |
| (2) | When a corporation intends to obtain approval of the service life or to change the service life under paragraph (1), it shall submit an application (including submitting such application through the national tax information and communications network) for approval of service life (or approval to change the service life) in the form stipulated by Ordinance of the Ministry of Economy and Finance to the commissioner of the regional tax office through the head of the competent tax office within three months from the date referred to in each subparagraph of Article 28 (3) or to the end date of the first business year in which it intends to apply the changed service life. In such cases, an application for approval of service life or approval to change the service life shall be annually submitted. <Amended by Presidential Decree No. 18312, Mar. 17, 2004; Presidential Decree No. 19328, Feb. 9, 2006; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 22577, Dec. 30, 2010> |
| (3) | Upon receipt of an application submitted under paragraph (2), the head of the tax office having jurisdiction over the place of tax payment shall notify the applicant as to whether the commissioner of the competent regional tax office grants approval within one month from the end date of the business year in which the application was submitted. <Amended by Presidential Decree No. 19328, Feb. 9, 2006; Presidential Decree No. 22577, Dec. 30, 2010> |
| (4) | Deleted. <by Presidential Decree No. 22577, Dec. 30, 2010> |
| (5) | Where a corporation which has changed (including re-change) the service life of the depreciable assets under paragraph (1) intends to re-change the service life of the relevant assets, it shall wait until three years pass from the end date of the business year during which the changed service life was first applied. |
| Article 29-2 (Allowable Depreciation of Used Assets) |
| (1) | Where a domestic corporation acquires (including succession of assets through a merger or division) assets (hereafter referred to as "used assets" in this Article), at least 50/100 of the standard service life (referring to the standard service life applied to the relevant domestic corporation) of which has lapsed from any other corporation or business operator provided for in Article 1-2 (1) 5 of the Income Tax Act, the service life equivalent to 50/100 of the standard service life of such assets and the service life chosen in the scope of the standard service life, on which a report is filed with the head of the tax office having jurisdiction over the place of tax payment (hereafter referred to as "revised service life" in this Article) may be deemed the service life. In such cases, the service life not exceeding one year in calculating the revised service life shall be dropped. <Amended by Presidential Decree No. 17457, Dec. 31, 2001; Presidential Decree No. 18706, Feb. 19, 2005; Presidential Decree No. 22035, Feb. 18, 2010; Presidential Decree No. 22577, Dec. 30, 2010; Feb. 11, 2020> |
| (2) | In determining the allowable depreciation of the assets acquired by a qualified merger, qualified division, qualified spin-off, or qualified investment in kind (referring to investment in kind meeting all the requirements prescribed in the subparagraphs of Article 47-2 (1) of the Act where an amount equivalent to the marginal profits from transfer is included in deductible expenses; hereinafter the same shall apply) (hereafter in this Article referred to as "qualified merger, etc.”), the acquisition value referred to in each subparagraph of Article 26 (2) and (6) shall be the acquisition value of a corporation which transfers the assets through a qualified merger or division (hereafter referred to as "transferor corporation" in this Article); and the undepreciated balance shall be the balance calculated by deducting the amount already included by the corporation that acquired such assets (hereafter referred to as "transferee corporation" in this Article) in deductible losses as depreciation costs from the book value as at the time of transfer by the transferor corporation, and the allowable depreciation of the relevant assets may be determined by any of the following methods. In such cases, such chosen method shall continue to apply in the subsequent business years: <Newly Inserted by Presidential Decree No. 22577, Dec. 30, 2010; Presidential Decree No. 22812, Mar. 31, 2011; Presidential Decree No. 23589, Feb. 2, 2012; Presidential Decree No. 25194, Feb. 21, 2014; Feb. 13, 2018; Feb. 12, 2019> |
| 1. | The method of succeeding to the allowable depreciation of the transferor corporation: In such cases, the allowable depreciation amount shall be the amount computed by the depreciation method and the service life applied by the transferor corporation under the Act and this Decree; |
| 2. | The method of succeeding to the allowable depreciation of the transferee corporation: In such cases, the allowable depreciation shall be the amount computed by the depreciation method and the service life applied by the transferee corporation under the Act and this Decree. |
| (3) | In applying paragraph (2) for a qualified spin-off or qualified investment in-kind, if the allowable depreciation exceeds the book value of the relevant asset, the excess amount may be included in deductible expenses. In such cases, when the asset is disposed of, the total amount included in deductible expenses pursuant to the former part shall be included in gross income for the business year in which the date of disposing of the asset falls. <Newly Inserted on Feb. 12, 2019> |
| (4) | Where a corporation to which paragraphs (2) and (3) applies falls under the ground for violation of qualified requirements, Article 26-2 (10) shall apply mutatis mutandis to the calculation of the amount of income and the depreciation costs included in the calculation of deductible expenses in the business year in which the relevant grounds arise and in the subsequent business years. In such cases, where an amount (including an amount included in deductible expenses pursuant to the former part of paragraph (3)) computed by subtracting the amount computed under Article 26-2 (10) 2 from an amount computed under subparagraph 1 of the same paragraph is smaller than zero, the amount shall be deemed zero, and the corporation shall file a report on the revised service life on the used assets among the assets acquired by the qualified merger or division under paragraph (1), along with the report provided in Article 60 of the Act in the business year during which the relevant grounds arise, and if it fails to do so, the transferee corporation shall be deemed reported the service life for the relevant asset as prescribed in Article 28 (1). <Newly Inserted by Presidential Decree No. 22577, Dec. 30, 2010; Feb. 12, 2019> |
| (5) | Paragraph (1) shall only apply where a domestic corporation files a report on the revised service life in the form prescribed by Ordinance of the Ministry of Economy and Finance by the following deadlines: <Amended by Presidential Decree No. 17457, Dec. 31, 2001; Presidential Decree No. 20720, Feb. 29, 2008; Feb. 12, 2019> |
| 1. | In cases of acquisition of any used assets, the filing deadline of the tax base on corporate tax for the business year in which the date of such acquisition falls; |
| 2. | In cases of succession of any assets through a merger or division, the filing deadline of the tax base on corporate tax for the business year in which the date of such merger or division falls. |
[This Article Newly Inserted by Presidential Decree No. 17033, Dec. 29, 2000]
| Article 30 (Constructive Depreciation) |
| (1) | Where a corporation is fully or partially exempted from corporate tax under the Act or other statutes, it shall include depreciation costs in deductible expenses or include them in deductible expenses up to the allowable depreciation under Article 23 (1) of the Act: Provided, That a corporation that applies the Korean International Financial Reporting Standards may include depreciation costs of individual assets additionally in deductible expenses pursuant to Article 23 (2) of the Act. <Amended by Presidential Decree No. 28640, Feb. 13, 2018; Feb. 12, 2019> |
| (2) | Where a determination by estimation or a correction is made under the proviso to Article 66 (3) of the Act, the depreciation cost of depreciated assets shall be deemed included in deductible expenses. <Newly Inserted by Presidential Decree No. 28640, Feb. 13, 2018> |
[This Article Wholly Amended by Presidential Decree No. 25194, Feb. 21, 2014]
| Article 31 (Constructive Instant Depreciation) |
| (1) | Deleted. <Feb. 12, 2019> |
| (2) | “Capital expenditure prescribed by Presidential Decree” referred to in Article 23 (4) 2 of the Act means repair costs expended by a corporation to extend the service life of its depreciable assets or to raise the real value of such assets, and includes expenditures for any of the following: <Amended on Feb. 12, 2019> |
| 1. | Remodeling to change the original use; |
| 2. | Installation of elevators or cooling/heating equipment; |
| 3. | Installation of evacuation facilities, etc. in a building, etc.; |
| 4. | Reinstatement of buildings, machinery, facilities, and equipment damaged or destroyed by a disaster or accident to the extent that they cannot be used for their original purposes; |
| 5. | Other improvements, expansions, or installations which are similar in nature to those referred to in subparagraphs 1 through 4. |
| (3) | Where any of the following repair costs expended by a corporation in a business year are appropriated as deductible expenses for the business year, they shall not be included in capital expenditures, notwithstanding paragraph (2): <Amended by Presidential Decree No. 22577, Dec. 30, 2010; Feb. 12, 2019; Feb. 11, 2020> |
| 1. | Where the amount expended as repair costs for each item of asset is less than six million won; |
| 2. | Where the amount expended as repair costs for each item of asset is less than 5/100 of the property value on the statement of financial position (referring to the balance of the cumulative total amount of depreciation deducted from the acquisition value) as at the end date of the immediately preceding business year; |
| 3. | Where repairs costs are periodically expended at intervals of less than three years. |
| (4) | Where the acquisition value of any depreciable assets is one million won or less per unit of transaction (excluding any of the following assets), such acquisition value shall be included in deductible expenses, limited to those appropriated as deductible expenses for the business year in which they were used for business: <Amended on Feb. 12, 2019> |
| 1. | Assets held in large quantities by the nature of the proper business; |
| 2. | Assets acquired to start or expand the business. |
| (5) | For purposes of paragraph (4), "unit of transaction" means the unit of acquired assets which the acquiring corporation may use independently and directly for its business. |
| (6) | Notwithstanding paragraph (4), any of the following assets shall be included in deductible expenses, limited to those appropriated as deductible expenses for the business year in which they were used for the business: <Amended by Presidential Decree No. 16658, Dec. 31, 1999; Presidential Decree No. 22577, Dec. 30, 2010; Feb. 12, 2019; Feb. 11, 2020> |
| 1. | Fishing tools used in the fisheries industry (including tools used for fishing boats); |
| 2. | Movie film, tools, furniture, electrical appliances, gas machinery, household appliances and fixtures, clocks, test equipment, measurement equipment, and signboards; |
| 3. | Videotapes for rental business and compact disks for music play, the acquisition value of each of which shall be less than 300 thousand won; |
| 4. | Telephones (including cellular phone) and personal computers (including its peripherals). |
| (7) | In any of the following cases, the amount of the book value of the relevant assets minus one thousand won may be included in deductible expenses for the business year in which the date of discard falls: <Amended on Feb. 17, 2021> |
| 1. | Where parts of production facilities are discarded due to the replacement of facilities or outdated technology; |
| 2. | Where facilities are removed to restore a place of business leased under a lease contract to its original state due to the closure or relocation of the business. |
| (8) | Where the market value of depreciable assets is rapidly declining due to their obsolescence, physical damage, etc. and a corporation appropriates impairment losses according to the corporate account standards (excluding cases falling under Article 42 (3) 2 of the Act), the relevant amount shall be deemed to have been appropriated in deductible expenses as depreciation costs and Article 23 (1) of the Act shall apply accordingly. <Newly Inserted by Presidential Decree No. 22577, Dec. 30, 2010; Feb. 12, 2019> |
| Article 32 (Disposition of Disallowed Amount of Depreciation) |
| (1) | An amount that a corporation does not include in deductible expenses by reason of exceeding the allowable depreciation pursuant to Article 23 (5) of the Act (hereafter referred to as "disallowed amount of depreciation" in this Article) shall be confirmed as deductible expenses if the depreciation costs appropriated as deductible expenses by the corporation for the following business year falls short of the allowable depreciation, limited to the amount of the shortfall (hereafter referred to as "approved shortfall" in this Article). In such cases, the disallowed amount of depreciation shall be confirmed as deductible expenses up to the limit of the allowable depreciation even where the corporation fails to appropriate the depreciation costs as deductible expenses. <Amended on Feb. 12, 2019> |
| (2) | An approved shortfall may not be allocated for the disallowed amount of depreciation in any subsequent business year. |
| (3) | Where a corporation increases the book value of depreciable assets under Article 42 (1) 1 of the Act (hereafter referred to as "evaluation increase" in this Article), the disallowed amount of depreciation for the relevant depreciable assets shall be deemed to have been included in gross income up to the limit of the evaluation increase and confirmed as deductible expenses, and the amount in excess of the evaluation increase shall be deemed the disallowed amount of depreciation to be carried forward to the following business year. In such cases, any approved shortfall shall be deemed erased. <Amended by Presidential Decree No. 22577, Dec. 30, 2010; Feb. 12, 2019> |
| (4) | Where a corporation concurrently carries out the depreciation and evaluation increase of depreciable assets, the corporation shall be deemed to have carried out depreciation first and then evaluation increase, and the allowable depreciation shall be calculated accordingly. |
| (5) | Where depreciable assets are transferred, the disallowed amount of depreciation of the relevant assets shall be included in deductible losses for the business year in which the date of the transfer falls. |
| (6) | In applying paragraph (5), where some of depreciable assets is transferred, the cumulative total amount of depreciation and the disallowed amount of depreciation or the approved shortfall of the relevant transferred assets shall be the amount computed by multiplying the cumulative total amount of depreciation and the disallowed amount of depreciation or the approved shortfall of all depreciable assets by the ratio of the value of the relevant transferred depreciable assets to their total value. In such cases, the total value shall be based on the book value as at the time of acquisition. |
| Article 33 (Detailed Statements on Depreciation Costs) |
Where a corporation appropriates depreciation costs as deductible expenses for each business year under Article 23 (1) of the Act or includes depreciation costs in deductible expenses under Article 23 (2) of the Act, it shall prepare and keep a detailed statement on the settlement of depreciation costs of each item of asset in the form stipulated by Ordinance of the Ministry of Economy and Finance, and submit, to the head of the tax office having jurisdiction over the place of tax payment, the aggregate balance sheet of detailed statements on the settlement of depreciation costs, the detailed statement on the disallowed and approved depreciation costs, and the detailed statement on the settlement of depreciation costs of the acquired and transferred assets in the forms prescribed by Ordinance of the Ministry of Economy and Finance, along with the report provided for in Article 60 of the Act. <Amended by Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 22577, Dec. 30, 2010; Feb. 12, 2019>
| Article 34 (Detailed Regulations concerning Depreciation Costs) |
Other matters necessary for calculating the depreciation costs of depreciable assets shall be prescribed by Ordinance of the Ministry of Economy and Finance. <Amended by Presidential Decree No. 20720, Feb. 29, 2008>
| Article 35 (Scope of Donations) |
“Transfer prescribed by Presidential Decree” referred to in Article 24 (1) of the Act means transferring any asset to a person, other than a specially related person, for a price below the arm's length price or purchasing any asset from such person for a price above the arm's length price without any good cause. In such cases, the arm's length price shall be within 30/100 higher or lower than the market price. [This Article Wholly Amended on Feb. 12, 2019]
| Article 36 (Value of Donations) |
| (1) | Where a corporation offers assets, other than money, as donations referred to in any subparagraph of Article 24 of the Act, the value of such assets shall be calculated according to the following classification: <Amended on Feb. 12, 2019; Feb. 17, 2021> |
| 1. | Donation referred to in Article 24 (2) 1 of the Act: The book value of the relevant donation as at the time of making the donation; |
| 2. | Donation referred to in Article 24 (3) 1 of the Act made to a person other than any specially related person: The book value of the relevant donation as at the time of making the donation; |
| 3. | Cases not falling under subparagraph 1 or 2: The greater of the book value and the market price of the donation as at the time of making the donation. |
| (2) | Where a corporation defers the appropriation of donations referred to Article 24 of the Act as provisional payments, etc., they shall be deemed donations in the business year in which such provisional payments were made, and they shall not be deemed donations in the following business years. |
| (3) | Where a corporation appropriates donations referred to in Article 24 of the Act as accounts payable, they shall not be deemed donations in calculating the amount of income for the relevant business year until they are actually paid. |
| Article 37 (Scope of Inclusion of Donations in Deductible Expenses) |
| (2) | Contributions for national defense referred to in Article 24 (2) 1 (b) of the Act shall include donations made directly to the Reserve Forces established under the Reserve Forces Act or donations made through an institution or organization approved by the Minister of National Defense. <Amended on Feb. 19, 2005; Mar. 2, 2011; Nov. 29, 2016; Feb. 12, 2019; Feb. 17, 2021> |
| (3) | When a corporation makes donations under Article 24 of the Act, it shall prepare detailed statements on donations in the form stipulated by Ordinance of the Ministry of Economy and Finance separately for donations referred to in Article 24 (2) 1 of the Act and donations referred to in paragraph (3) 1 of the same Article, and submit them to the head of the tax office having jurisdiction over the place of tax payment, along with a report provided for in Article 60 of the Act. <Amended on Dec. 31, 2001; Feb. 19, 2005; Feb. 29, 2008; Dec. 30, 2010; Feb. 12, 2019; Feb. 17, 2021> |
| Article 38 (Requirements for Korean Schools) |
| (3) | "Schools that meet requirements prescribed by Presidential Decree" in Article 24 (2) 1 (d) (ix) of the Act mean schools that meet each of the following requirements: <Amended on Mar. 31, 2011; Feb. 2, 2012; Feb. 21, 2014; Feb. 12, 2019; Feb. 17, 2021> |
| 1. | A school shall have its own website on which the amount of donations collected and the outcomes of using such donations may be disclosed to the public; |
| 2. | Where the designation of a school was revoked under paragraph (14), three years shall have passed since the date of revocation, while, where a school fails to obtain re-designation under the aforesaid paragraph, three years shall have passed since the period of designation ends. |
| (4) | "Corporations that meet requirements prescribed by Presidential Decree" in Article 24 (2) 1 (f) of the Act mean the corporations that meet each of the following requirements: <Amended on Mar. 31, 2011; Feb. 2, 2012; Feb. 21, 2014; Feb. 12, 2016; Feb. 13, 2018; Oct. 30, 2018; Feb. 12, 2019; Feb. 17, 2021> |
| 1. | They shall have their own website on which the annual collection of donations and the outcomes of utilization thereof may be disclosed to the public; |
| 5. | The average amount disbursed for distributing donations for five business years [where the period from the establishment date to the end date of the business year immediately preceding the application date is less than five years, referring to the period (limited where the period is at least one year) from the establishment date of the relevant corporation to the end date of the month immediately preceding the month in which the application date falls; hereafter in subparagraph 6, the same shall apply] immediately preceding the application date under paragraph (6) shall be at least 80/100 of the total amount disbursed, and the expenses incurred in collecting and distributing the donations and in managing and operating the corporation shall not exceed 10/100 of the donation income. In such cases, matters concerning the calculation of the total amount disbursed and the amount disbursed for distribution shall be prescribed by Ordinance of the Ministry of Economy and Finance; |
| 6. | The average amount disbursed for distributing donations for five business years immediately preceding the application date per corporation (including an organization; hereafter in this subparagraph, the same shall apply) shall not exceed 25/100 of the total amount disbursed for distributing, and no amount disbursed for distribution of donations shall exist with respect to a non-profit corporation referred to in Article 2-2 (1) 4, 5, or 8 of the Enforcement Decree of the Inheritance Tax and Gift Tax Act as a contributor provided for in Article 38 (10) of the same Enforcement Decree or a specially related person of such contributor referred to in Article 2-2 (1) of the same Enforcement Decree; |
| 7. | Where the designation was revoked under paragraph (14), three years shall have passed since the date of revocation, while, where a corporation fails to obtain re-designation under the aforesaid paragraph, three years shall have passed since the period of designation ends. |
| (5) | Deleted. <Feb. 13, 2018> |
| (6) | The competent authorities shall recommend schools or corporations referred to in paragraph (3) or (4) (hereinafter referred to as "schools, etc.") to the Minister of Economy and Finance, upon receipt of an application from the relevant schools, etc., by submitting documents specified by Ordinance of the Ministry of Economy and Finance, by no later than one month after the end of each quarter, and the Minister of Economy and Finance shall designate and publicly notify such schools, etc. by no later than the end of each quarter. <Amended on Mar. 31, 2011; Feb. 2, 2012; Feb. 21, 2014; Feb. 13, 2018> |
| (7) | Donations paid to schools, etc., publicly notified by the Minister of Economy and Finance under paragraph (6) shall be included in deductible expenses as donations prescribed in Article 24 (2) 1 of the Act for six years from January 1 of the year in which the public notice under paragraph (6) is made (hereafter in this Article, referred to as "period of designation"). <Amended on Mar. 31, 2011; Feb. 2, 2012; Feb. 13, 2018; Feb. 12, 2019; Feb. 17, 2021> |
| (8) | Schools, etc. shall perform the following obligations during the period of designation: <Newly Inserted on Mar. 31, 2011; Feb. 2, 2012; Feb. 21, 2014; Feb. 13, 2018; Feb. 17, 2021> |
| 1. | The annual collection of donations and the outcomes of utilization thereof shall be disclosed to the public on the websites of relevant schools, etc. and of the National Tax Service within four months from the end of each business year in the form prescribed by Ordinance of the Ministry of Economy and Finance: Provided, That where matters prescribed in Article 50-3 (1) 2 of the Inheritance Tax and Gift Tax Act are disclosed pursuant to the standard form provided in Article 43-3 (4) of the Enforcement Decree of the same Act, the amount of donations raised and utilization outcomes thereof shall be deemed to be disclosed: |
| 2. | Deleted. <Feb. 13, 2018> |
| 3. | At least 80/100 of the expenditures of the relevant business year, excluding the expenditures for a profit-making business, shall be disbursed directly for a proper purpose business. |
| (9) | Schools, etc. shall report on whether they fulfill the requirements prescribed in paragraph (3) or (4) and whether they have performed the obligations prescribed in paragraph (8) (hereafter in this Article, referred to as "whether the requirements, etc. are met") to the competent authorities, as prescribed by Ordinance of the Ministry of Economy and Finance. In such cases, where the relevant corporation or organization fails to report on whether they meet the requirements, etc., the competent authorities shall require such corporation or organization to report, as prescribed by Ordinance of the Ministry of Economy and Finance. <Newly Inserted on Mar. 31, 2011; Feb. 2, 2012; Feb. 13, 2018> |
| (10) | The competent authorities shall review the details reported under paragraph (9) and notify the Commissioner of the National Tax Service of the results thereof (where the relevant corporation fails to report on whether the requirements, etc. are met, notwithstanding having been required under the latter part of paragraph (9), such fact shall be included), as prescribed by Ordinance of the Ministry of Economy and Finance. <Newly Inserted on Mar. 31, 2011; Feb. 2, 2012; Feb. 21, 2014> |
| (11) | In any of the following cases, the Commissioner of the National Tax Service shall request the Minister of Economy and Finance to revoke the designation of the relevant school, etc., as prescribed by Ordinance of the Ministry of Economy and Finance: <Newly Inserted on Mar. 31, 2011; Feb. 2, 2012; Feb. 21, 2014; Feb. 3, 2017; Feb. 13, 2018; Feb. 12, 2019; Feb. 17. 2021> |
| 2. | Where a school, etc. has violated public interest by engaging in any business, other than its proper purpose business, or by violating conditions for permission of its establishment; has violated any of the requirements prescribed in paragraphs (3) and (4) 1 and 5 through 7; has breached any of the obligations prescribed in paragraph (8); or fails to report on whether the requirements, etc. are met, even after receipt of a request made under the latter part of paragraph (9); |
| 5. | Where a school, etc. is dissolved. |
| (12) | Where a school, etc. falls under paragraph (11) 2, 4, or 5, the competent authorities shall immediately notify the Commissioner of the National Tax Service of the name of the school, etc. and the details thereof. <Newly Inserted on Feb. 21, 2014> |
| (13) | Where the Commissioner of the National Tax Service becomes aware, after the period of designation of a school, etc. ends, that any event prescribed in the subparagraph of paragraph (11) occurred in relation to the school, etc. during the period of designation, he/she shall not re-designate the school, etc. or shall request the Minister of Economy and Finance to revoke the re-designation, as prescribed by Ordinance of the Ministry of Economy and Finance, where the school, etc. has been already re-designated. <Newly Inserted on Mar. 31, 2011; Feb. 2, 2012; Feb. 21, 2014; Feb. 3, 2017> |
| (14) | Upon receipt of a request under paragraph (11) or (13), the Minister of Economy and Finance may revoke the designation of the school, etc., or may elect not to re-designate the school, etc. <Newly Inserted on Feb. 21, 2014> |
| (15) | Where the Minister of Economy and Finance revokes the designation of a school, etc. under paragraph (14), he or she shall publish the name of the school, etc., relevant facts, and period of exclusion from designation (referring to the period required to elapse after the date of revocation of designation under paragraph (3) 2 or (4) 7) in the Official Gazette by December 31 of the year in which the designation is revoked (referring to January 31 of the following year, where the designation is revoked in December). <Newly Inserted on Feb. 21, 2014; Feb. 13, 2018; Feb. 17, 2021> |
[This Article Newly Inserted on Dec. 30, 2010]
[Title Amended on Feb. 7, 2021]
| Article 39 (Scope of Donations Determined in Consideration of Public Interest) |
| (1) | "Donations prescribed by Presidential Decree" referred to in Article 24 (3) 1 of the Act means any of the following: <Amended on Dec. 29, 2000; Dec. 31, 2001; Feb. 19, 2005; Feb. 9, 2006; Feb. 28, 2007; Feb. 22, 2008; Feb. 29, 2008; Feb. 4, 2009; Feb. 18, 2010; Aug. 25, 2010; Dec. 30, 2010; Mar. 31, 2011; Feb. 2, 2012; Aug. 3, 2012; Feb. 15, 2013; Feb. 21, 2014; Feb. 12, 2016; Feb. 3, 2017; May 29, 2017; Feb. 13, 2018; Feb. 12, 2019; Feb. 11, 2020; Feb. 17, 2021; Feb. 15, 2022; Feb. 17. 2022> |
| 1. | For the following non-profit corporations (including organizations and foreign non-profit corporations; hereafter in this Article, referred to as "public service corporation"), donations paid as proper purpose business expenses of the relevant public service corporation: Provided, That donations paid to any corporation designated and publicly notified under item (f) shall be limited to donations paid for three years from January 1 of the year in which the date of such designation falls (where redesignation occurs within two years of the end of the designated period, it shall be six years from January 1 of the business year in which the redesignation date falls; hereafter in this Article, referred to as "period of designation"): |
| (e) | Non-profit corporations (including organizations affiliated thereto) established for the purpose of missionary work and for other evangelical purposes with the permission of the Minister of Culture, Sports and Tourism or the head of a local governments pursuant to Article 32 of the Civil Act; |
| (f) | Juristic persons designated and publicly notified by the Minister of Economy and Finance upon recommendation of the Commissioner of the National Tax Service (Including the head of the tax office having jurisdiction over the location of the main office or head office; hereafter in this Article the same shall apply) as those that meet each of the follow requirements among non-profit corporations established with permission from competent authorities pursuant to Article 32 of the Civil Act (hereafter in this Article, referred to as "non-profit corporations under the Civil Act"), social cooperatives established pursuant to Article 85 of the Framework Act on Cooperatives (hereafter in this Article, referred to as "social cooperatives"), public institutions under Article 4 of the Act on the Management of Public Institutions (excluding public enterprises referred to in Article 5 (4) 1 of said Act; hereafter in this Article, referred to as "public institutions") and institutions established or registered directly pursuant to any statute. In such cases, the Commissioner of the National Tax Service shall make a recommendation to the Minister of Economy and Finance at the request of the relevant corporation: |
| (i) | Requirements for each category of juristic person: |
| a. | A non-profit corporation under the Civil Act or a foreign non-profit corporation: Its articles of incorporation shall stipulate that revenues shall be used not for members’ interest but for public interest and that persons benefitting directly from its business shall be many and unspecified people (In cases of a foreign non-profit corporation, it is additionally required that the objective of such corporation shall be to provide cooperation and assistance to overseas Koreans defined in the Act on the Immigration and Legal Status of Overseas Koreans, conduct promotional activities for the Republic of Korea or promote international exchange and cooperation): Provided, That where it falls under the proviso, with the exception of the items, of Article 38 (8) 2 of the Enforcement Decree of the Inheritance Tax and Gift Tax Act, the relevant requirements shall be deemed to be met; |
| c. | A public institution or an institution established or registered directly pursuant to any statute: The purpose of its establishment shall be to conduct activities for public interest, such as social welfare, charity, culture, arts, education, science or scholarship; |
| (ii) | The articles of incorporation shall stipulate that, upon dissolution, residual assets shall vest in the State, a local government, or another non-profit corporation established for a similar purpose; |
| (iii) | A non-profit corporation shall operate a website; its articles of incorporation shall stipulate that it shall disclose the amount of donations annually collected and details of the use of such donations on the website; and the website of the relevant corporation shall be connected to the websites created by institutions managing and supervising public interest violations such as the Anti-Corruption and Civil Rights Commission, the National Tax Service, the competent authority, etc. (hereinafter referred to as “institutions managing and supervising public interest violations”) so that any violation of public interest can be reported to at least one such institution; |
| (iv) | A non-profit corporation shall have no record of having been involved in an election campaign prescribed in Article 58 (1) of the Public Official Election Act, for a particular political party or person in the name of the non-profit corporation or its representative during the year in which it was designated and publicly notified as a non-profit corporation and the immediately preceding year; |
| (v) | Three years shall have passed since the date of revocation, where designation was revoked under paragraph (12), or three years shall have passed since the expiration of a period of designation, where a juristic person fails to obtain recommendation under paragraph (9): Provided, That the foregoing shall not apply where designation was revoked or a juristic person failed to obtain recommendation only on the ground that it breached the obligation under paragraph (5) 1; |
| 2. | The following donations: |
| (c) | Donations designated and publicly notified by the Minister of Economy and Finance as those to be used for public interest, such as social welfare, culture, arts, education, religion, charity and science; |
| 3. | Deleted; <by Presidential Decree No. 28640, Feb. 13, 2018> |
| 4. | The value of money and other valuables donated to any facility or institution which can be used gratuitously or at a reasonable cost among any of the following social welfare facilities or institutions: Provided, That where a person who has established an institution for the aged among the welfare facilities for the aged referred to in item (b) (i) bears any costs incurred in establishing and operating the relevant facility, the amount to the extent of any loss incurred in operating the relevant facility among the charges (referring to the amount of loss for the relevant taxable period calculated according to the corporate accounting standards) shall be included: |
| (b) | Facilities, other than the following facilities, among welfare facilities for older persons referred to in Article 31 of the Welfare of Older Persons Act: |
| (i) | Institutions for older persons, communal living home for older persons, and welfare houses for older persons for which the inmates pay all expenses for admission among the residential welfare facilities for the aged referred to in Article 32 (1) of the Welfare of Older Persons Act; |
| (ii) | Intermediate care institutions for older persons, medical treatment and communal living home for older persons and special hospitals for older persons among the medical welfare institutions for older persons for which the inmates pay all expenses for admission referred to in Article 34 (1) of the Welfare of Older Persons Act; |
| (iii) | Facilities for which the users pay all costs for using welfare at home among welfare institutions for older persons at home referred to in Article 38 of the Welfare of Older Persons Act; |
| (iii) | Paid welfare facilities for person with disabilities; |
| 5. | Deleted; <by Presidential Decree No. 28640, Feb. 13, 2018> |
| 6. | Donations paid to the international organizations specified and publicly notified by the Minister of Economy and Finance as international organizations that meet each of the following requirements: |
| (a) | Such organizations shall engage in business activities for public interest, such as social welfare, culture, art, education, religion, charity, or scholarship; |
| (b) | The Republic of Korea shall be a member of such organizations. |
| (2) | The amount of income generated by the profit-making business of organizations, other than organizations provided for in each subparagraph of Article 56 (1) among organizations deemed corporations, which is used for proper purpose business expenses, shall be deemed a donation provided for in Article 24 (3) 1 of the Act. <Amended by Presidential Decree No. 17457, Dec. 31, 2001; Presidential Decree No. 18174, Dec. 30, 2003; Presidential Decree No. 18706, Feb. 19, 2005; Feb. 12, 2019; Feb. 17, 2021> |
| (3) | "Proper purpose business expenses" in the main sentence of paragraph (1) 1 and paragraph (2) means an amount to be used for any business operated by the relevant non-profit corporation or organization to accomplish objectives provided for in statutes or regulations concerning the relevant non-profit corporation or organization or the articles of incorporation of the non-profit corporation or organization, other than profit-making businesses specified in Article 3 (1) (excluding health service providers, among health service providers and social welfare service providers). <Amended by Presidential Decree No. 17457, Dec. 31, 2001; Presidential Decree No. 28640, Feb. 13, 2018; Feb. 12, 2019> |
| (4) | Where a corporation which has disbursed donations intends to include such donations in deductible expenses under Article 24 of the Act, it shall keep a donation receipt determined by Ordinance of the Ministry of Economy and Finance. <Newly Inserted by Presidential Decree No. 18174, Dec. 30, 2003; Presidential Decree No. 20720, Feb. 29, 2008> |
| (5) | A public service corporation, etc. referred to in the items (excluding item (e)) of paragraph (1) 1 shall perform the following obligations. In such cases, a public service corporation, etc. referred to in item (f) of the same subparagraph shall perform the relevant obligations during the period of designation (including the year immediately preceding the year in which the date of designation falls in the case of subparagraph 4): <Newly Inserted by Presidential Decree No. 25194, Feb. 21, 2014; Presidential Decree No. 26981, Feb. 12, 2016; Presidential Decree No. 28640, Feb. 13, 2018; Presidential Decree No. 29269, Oct. 30, 2018; Feb. 11, 2020; Feb. 17, 2021; Feb. 15, 2022; Feb. 28, 2023> |
| 1. | A designated organization or corporation receiving donations shall meet each of the requirements prescribed in paragraph (1) 1 (f) (i) through (iii) (limited to juristic persons referred to in paragraph (1) 1 (f)); |
| 2. | A designated organization or corporation receiving donations shall perform the following obligations: |
| (a) | In cases of a non-profit corporation under the Civil Act or a foreign non-profit corporation: Revenues shall be used for public interest, not for members’ personal interest and persons benefitting directly from its business shall be many and unspecified people (In cases of a foreign non-profit corporation, it is additionally required that the objective of such corporation shall be to provide cooperation and assistance to overseas Koreans defined in Article 2 of the Act on the Immigration and Legal Status of Overseas Koreans, conduct promotional activities for the Republic of Korea or promote international exchange and cooperation): Provided, That where it falls under the proviso, with the exception of the items, of Article 38 (8) 2 of the Enforcement Decree of the Inheritance Tax and Gift Tax Act, the relevant obligations shall be deemed to have been fulfilled; |
| (c) | In cases of a public institution or an institution established or registered directly pursuant to any Act: It shall perform activities for public interest, such as social welfare, charity, culture, arts, education, science or scholarship; |
| (a) | The information shall be disclosed on the website of a public service corporation, etc.; |
| (b) | The information shall be disclosed on the website of the National Tax Service. In such cases, the disclosure shall be made in accordance with the statement of the amount of donations collected and the details of the use of such donations in the form prescribed by the Ministry of the Economy and Finance; |
| 4. | A public service corporation, etc. shall have no record confirmed by competent authorities that it has been involved in an election campaign prescribed in Article 58 (1) of the Public Official Election Act, for a particular political party or a particular person under the name of the public service corporation, etc. or its representative; |
| 5. | A designated organization or corporation receiving donations shall spend at least 80/100 of its expenditure, excluding the expenditure in its profit-making business, directly for its proper purpose business; |
| 5-2. | There shall be expenditure details for a proper purpose business for the past two years as of the end date of each business year; |
| (6) | A public service corporation, etc. referred to in each item of paragraph (1) 1 (excluding public service corporation, etc. falling under the following) shall report to the Commissioner of the National Tax Service on whether it has performed the obligations of each business year under paragraph (5) (hereafter in this Article, referred to as "whether obligations have been performed"), as prescribed by Ordinance of the Ministry of Economy and Finance. In such cases, where the relevant public service corporation, etc. fails to report on whether obligations have been performed, the Commissioner of the National Tax Service shall request it to report thereon, as prescribed by Ordinance of the Ministry of Economy and Finance: <Newly Inserted by Presidential Decree No. 22035, Feb. 18, 2010; Presidential Decree No. 22812, Mar. 31, 2011; Presidential Decree No. 25194, Feb. 21, 2014; Presidential Decree No. 28640, Feb. 13, 2018; Feb. 11, 2020; Feb. 17, 2021; Feb. 28, 2023> |
| 1. | A public service corporation, etc. referred to in items (b) and (c) (only applicable to kindergartens) of paragraph (1) 1 (limited to where no donation is collected in the relevant business year); |
| 2. | A public service corporation, etc. referred to in paragraph (1) 1 (e). |
| (7) | The Commissioner of the National Tax Service shall examine the details reported pursuant to paragraph (6), and if the examination results show that the amount of donations collected or the use thereof prescribed in paragraph (5) 3 is not disclosed or that there are errors in the disclosure, the Commissioner may request that the relevant public service corporation, etc. submit details on donation expenditure. In such cases, the public service corporation, etc. shall submit donation expenditure details within one month from the date of receiving the request. <Amended on Feb. 11, 2020; Feb. 17, 2021> |
| (8) | In any of the following cases, the Commissioner of the National Tax Service shall request the Minister of Economy and Finance to revoke the designation of a corporation referred to in paragraph (1) 1 (f): <Newly Inserted by Presidential Decree No. 19891, Feb. 28, 2007; Presidential Decree No. 20619, Feb. 22, 2008; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 22035, Feb. 18, 2010; Presidential Decree No. 22812, Mar. 31, 2011; Presidential Decree No. 23589, Feb. 2, 2012; Presidential Decree No. 25194, Feb. 21, 2014; Presidential Decree No. 27828, Feb. 3, 2017; Presidential Decree No. 28640, Feb. 13, 2018; Feb. 12, 2019; Feb. 17, 2021> |
| 2. | Where a public service corporation, etc. breaches public interest by engaging in any business other than its proper purpose business or by breaching any condition attached to the permission for incorporation, breaches the obligation under paragraph (5) 1 through 5 and 5-2, or fails to report on whether obligations have been performed, even upon receipt of a request made under the latter part of paragraph (6); |
| 4. | Where a representative, executive officer, agent, employee, or any other servant of a public service corporation, etc. violates the Act on Collection and Use of Donations, and a sentence of imprisonment with labor or a fine imposed upon the relevant public service corporation, etc. or individual becomes final; |
| 5. | Where a public service corporation is dissolved. |
| (9) | Where the Commissioner of the National Tax Service becomes aware, after the end of the period of designation of a public service corporation, etc. referred to in paragraph (1) 1 (f), that any event specified in the subparagraphs of paragraph (8) occurred during the period of designation, he or she shall not recommend the relevant public service corporation, etc. for three years from the end of the designation period, and shall request the Minister of Economy and Finance to revoke designation where the public service corporation, etc. has already been re-designated. <Newly Inserted on Feb. 18, 2010; Feb. 21, 2014; Feb. 3, 2017; Feb. 13, 2018; Feb. 11, 2020; Feb. 17, 2021> |
| (10) | Before requesting the Minister of Economy and Finance to revoke designation under paragraphs (8) and (9), the Commissioner of the National Tax Service shall notify the relevant public service corporation, etc. of the fact that it is subject to revocation of designation, the grounds therefor, legal basis, etc. <Newly Inserted on Feb. 12, 2016; Feb. 13, 2018; Feb. 11, 2020; Feb. 17, 2021> |
| (11) | Where a public service corporation, etc. in receipt of the notice prescribed in paragraph (10) has any objection thereto, it may submit its opinions to the Commissioner of the National Tax Service within one month from receiving the notice. <Newly Inserted on Feb. 11, 20120; Feb. 17, 2021> |
| (12) | Upon receipt of a request under paragraphs (8) and (9), the Minister of Economy and Finance may revoke the designation of the relevant public service corporation, etc. <Amended on Feb. 11, 2020; Feb. 17, 2021> |
| (13) | Where a public service corporation, etc. referred to in paragraph (1) 1 (f) is designated or its designation is revoked, the Commissioner of the National Tax Service shall notify the competent authority of the fact; and the competent authority shall notify the Commissioner of the National Tax Service of the relevant fact, if a public-service corporation, etc. referred to in the same item falls under any subparagraph of paragraph (8), including it engaging in any business other than its purpose business or violating any condition of its establishment permit. <Amended on Feb. 11, 2020; Feb. 17, 2021> |
| (14) | Notwithstanding Paragraph (16), even when a designated organization, etc. receiving donations referred to in Article 36 (1) 1 (c), (d) or (h) of the previous Enforcement Decree of the Corporate Tax Act (referring to the Enforcement Decree before being amended by Presidential Decree No. 28640) does not make an application prescribed in the latter part of paragraph (1) 1 (f) from January 1 to October 12, 2021, the Minister of Economy and Finance may make designation and public notification pursuant to paragraph (1) 1 (f) by March 31, 2022, upon receipt of a recommendation from the relevant designated organization, etc. receiving donations, as determined and publicly notified by the Minister of Economy and Finance. <Newly Amended on Feb. 15, 2022> |
| (15) | Notwithstanding the proviso, with the exception of the items, of paragraph (1) 1, donations made or to be made to a designated organization, etc. receiving donations designated and publicly notified under paragraph (14) for three years from January 1, 2021 (where it is redesignated within two years after the end of the period of designation, for five years from January 1 of the year in which the date of redesignation falls) shall be deemed donations prescribed in Article 24 (3) 1 of the Act. <Newly Inserted on Feb. 15, 2022> |
| (16) | Matters necessary for the methods of applying for and recommending a public service corporation, etc., procedures for designation, methods for verifying the requirements for designation and documents to be submitted, the procedures for revoking designation, etc. pursuant to paragraph (1) 1 (f) shall be prescribed by Ordinance of the Ministry of Economy and Finance. <Newly Inserted on Feb. 28, 2007; Feb. 29, 2008; Feb. 18, 2010; Dec. 30, 2010; Feb. 15, 2013; Feb. 21, 2014; Feb. 12, 2016; Feb. 13, 2018; Feb. 11, 2020; Feb. 17, 2021; Feb. 15, 2022> |
[Title Amended on Feb. 17, 2021]
| Article 40 (Scope of Business Promotion Expenses) |
| (1) | Business promotion expenses paid by a corporation that should have been borne by any of its stockholders or investors (hereinafter referred to as "stockholders, etc.") or any person who holds any of the following positions (hereinafter referred to as "executive officer") shall not be deemed business promotion expenses: <Amended on Feb. 22, 2008; Feb. 13, 2018; Feb. 12, 2019; Feb. 28, 2023> |
| 1. | All members of the board of directors of a corporation, including Chairperson, President, Vice-Presidents, Chief Director, Chief Executive Officer, Senior Managing Directors, and Managing Directors, and the liquidator of a corporation; |
| 2. | General partners or directors of a general partnership, a limited partnership or limited company; |
| 3. | General officers of a limited liability company; |
| 5. | Other persons who hold any position equivalent to any of those specified in subparagraphs 1 through 4. |
| (2) | Where a corporation pays welfare facilities expenses of an association or organization organized by its employees, and the association or organization is a corporation, such expenses shall be deemed business promotion expenses, and where the association or organization is not a corporation, such expenses shall be deemed a part of the account of the corporation. <Amended on Feb. 12, 2019; Feb. 28, 2023> |
| (3) | Deleted. <Feb. 22, 2008> |
| (4) | Deleted. <Feb. 4, 2009> |
| (5) | Deleted. <Feb. 4, 2009> |
[Title Amended on Feb. 28, 2023]
[Moved from Article 42, Previous Article 40 Deleted]
| Article 41 (Use of Credit Cards for Business Promotion Expenses) |
| (1) | "Amount prescribed by Presidential Decree" referred to in the main clause, with the exception of the subparagraphs, of Article 25 (2) of the Act means an amount classified in the following: <Amended on Feb. 9, 2006; Feb. 28, 2007; Feb. 4, 2009; Jun. 3, 2011; Feb. 17, 2021> |
| 1. | Celebration or condolence money: 200,000 won; |
| 2. | For cases other than that provided in subparagraph 1: 30,000 won. |
| (2) | "Expenditure prescribed by Presidential Decree, such as those paid in any foreign country for farmers or fishermen" in the proviso, with the exception of the subparagraphs, of Article 25 (2) of the Act means each of the following: <Amended on Feb. 2, 2012; Feb. 12, 2019; Feb. 28, 2023> |
| 1. | Where it is impractical to obtain evidentiary documents provided in the subparagraphs of Article 25 (2) of the Act by reason of the lack of a means of payment, other than cash in a foreign country where business promotion expenses are expended (including any place similar to the place in neighboring areas where the relevant place is located), the expenditure made in the relevant foreign country; |
| 2. | Expenditure made in return for goods directly supplied from farmers or fishermen (referring to those engaged in the growing of crops of agriculture, farming of animals, mixed farming, forestry or fishing but excluding corporations) as payments made through financial companies, etc. defined in subparagraph 1 of Article 2 of the Act on Real Name Financial Transactions and Confidentiality (limited to where the relevant corporation files a report on tax base under Article 60 of the Act, along with the statements of remittance on which the fact of remittance is entered, to the head of the tax office having jurisdiction over the place of tax payment). |
| (3) | "Items prescribed by Presidential Decree" in Article 25 (2) 1 (a) of the Act mean any of the following: <Amended on Feb. 12, 2019> |
| 2. | A credit card issued in a foreign country; |
| (5) | For the purpose of Article 25 (3) of the Act, when being issued sales slips, etc. in the name of a credit card merchant, etc. other than the one that actually supply the relevant goods or services, the trade name and business location stated on the sales slips, etc. should be different from the trade name and business location of the credit card merchant, etc. that has supplied goods or services. <Newly Inserted on Dec. 29, 2000; Feb. 12, 2019> |
| (6) | For the purpose of paragraphs (1) through (3) and (5), credit cards, etc. referred to in Article 25 (2) 1 of the Act shall be the credit cards, etc. issued in the name of the relevant corporation. <Newly Inserted on Feb. 12, 2019> |
[Title Amended on Feb. 28, 2023]
| Article 42 (Standard for Calculating Business Promotion Expenses as Amount of Income) |
| (1) | "The amount of income prescribed by Presidential Decree" in the main clause of Article 25 (4) 2 of the Act means the amount of sales {including the amount of sales from any business category suspended during the relevant business year and in the case of transactions of derivatives-combined securities provided for in Article 4 (7) of the Financial Investment Services and Capital Markets Act and derivatives provided for in Article 5 (1) of the same Act, it means the net profit calculated by summing up the income and losses from the relevant transactions (if such net profit is smaller than zero, it shall be zero); hereinafter referred to as "amount of sales"} calculated according to the corporate accounting standards: Provided, That in the case of any of the following corporations, the amount of sales means an amount computed by any of the following formulas: <Amended on Feb. 12, 2019; Feb. 17, 2022> |
| 4. | The Export-Import Bank of Korea established under the Export-Import Bank of Korea Act: Sales + Amount equivalent to six times the guarantee fees received; |
| 5. | The Korea Asset Management Corporation incorporated under the Act on the Establishment of Korea Asset Management Corporation: Sales + Amount equivalent to six times the fees for handling business affairs specified in Article 31 (1) of the same Act; |
| 6. | A corporation specified in each subparagraph of Article 63 (1): Sales ＋ Amount equivalent to six times guarantee fees received. |
| (2) | "Domestic corporation that meets the criteria prescribed by Presidential Decree" in Articles 25 (5) and 27-2 (5) of the Act means a domestic corporation that meets all of the following criteria: <Newly Inserted by Presidential Decree No. 27828, Feb. 3, 2017; Feb. 12, 2019; Feb. 11, 2020; Feb. 15, 2022> |
| 1. | The sum of stocks, etc., held by the controlling stockholder, etc., of the domestic corporation under Article 43 (7) as at the end of the relevant business year shall exceed 50/100 of the total number of outstanding stocks or the total amount of investment of the domestic corporation; |
| 2. | The domestic corporation shall engage mainly in real estate leasing business in the relevant business year or the sum of the following amounts shall be at least 50/100 of the sales computed according to the Korea Financial Accounting Standards (if the amounts specified in items (a) through (c) are not included, the amounts shall be included in the computation): |
| 3. | The number of full-time employees for the relevant business year shall be less than five persons. |
| (3) | Where a domestic corporation engages in at least two different businesses, the business that generates more business revenue shall be deemed its main business for the purpose of applying paragraph (2) 2. <Newly Inserted by Presidential Decree No. 27828, Feb. 3, 2017; Feb. 12, 2019> |
| (4) | In applying paragraph (2) 3, full-time employees shall be limited to Korean employees who have entered into an employment contract pursuant to the Labor Standards Act: Provided, That the following employees shall be excluded herefrom: <Newly Inserted by Presidential Decree No. 27828, Feb. 3, 2017; Feb. 12, 2019> |
| 3. | Employees whose employment contract term is less than one year: Provided, That employees whose employment contract term exceeds one year as a result of consecutive renewal of his/her employment contract; |
| (6) | Article 36 (1) 3 shall apply mutatis mutandis to calculating the value of business promotion expenses. <Newly Inserted on Feb. 12, 2019; Feb. 28, 2023> |
[Title Amended on Feb. 28, 2023]
| Article 42-2 Deleted. <by Presidential Decree No. 21302, Feb. 4, 2009> |
| Article 43 (Non-Inclusion of Bonuses in Deductible Expenses) |
| (1) | Bonuses paid by a corporation to its executive officers or employees to dispose of profits shall not be included in deductible expenses. In such cases, remuneration paid to partners who invest through work and labor in unlimited partnerships or limited partnerships shall be deemed bonuses from the disposal of profits. <Amended by Presidential Decree No. 28640, Feb. 13, 2018; Feb. 12, 2019> |
| (2) | Where a corporation pays bonuses to its executive officers in excess of the amount to be paid under the salary payment standards determined by the articles of incorporation or by resolution at the general meeting of stockholders, the general meeting of partners, or the board of directors, such excess shall not be included in deductible expenses. |
| (3) | Where a corporation pays remuneration to an executive officer or employee who is a controlling stockholder, etc. (including any related party; hereafter the same shall apply this paragraph) in excess of the amount paid to executive officers or employees in the same position, other than the controlling stockholder, etc. without any justifiable grounds, such excess shall not be included in deductible expenses. <Amended by Presidential Decree No. 20619, Feb. 22, 2008; Feb. 12, 2019> |
| (4) | The remuneration paid to a non-standing executive officer of a corporation shall be included in deductible expenses, except in cases falling under Article 52 of the Act. |
| (5) | Dissolution bonuses or retirement bonuses paid to executive officers or employees of a corporation due to its dissolution shall be included in deductible expenses of the final business year. <Amended on Feb. 12, 2019> |
| (6) | Deleted. <by Presidential Decree No. 21302, Feb. 4, 2009> |
| (7) | "Controlling stockholder, etc." in paragraph (3) means a stockholder, etc. (hereinafter referred to as "controlling stockholder, etc.") who, holding at least 1/100 of the total number of issued stocks or total investment amount of a corporation, have the most stocks or investment shares after summing up those held by the stockholder, etc. and any related party. <Newly Inserted by Presidential Decree No. 20619, Feb. 22, 2008> |
| (8) | "Related party" in paragraphs (3) and (7) means a person who has any of the following relationships with the relevant stockholder, etc.: <Newly Inserted by Presidential Decree No. 20619, Feb. 22, 2008; Presidential Decree No. 21302, Feb. 4, 2009; Presidential Decree No. 23589, Feb. 2, 2012; Feb. 12, 2019; Feb. 28, 2023> |
| 1. | A person with any of the following relationships if the relevant stockholder, etc. is an individual: |
| (b) | A corporation in a relationship referred to in Article 2 (8) 1; |
| (c) | A corporation in which the relevant stockholder, etc. and the persons falling under items (a) or (b) invest at least 30/100 of the total number of issued stocks or total investment amount; |
| (d) | A non-profit corporation in which the relevant stockholder, etc. and his/her relatives occupy a majority of the directors or contribute at least 30/100 of contribution (limited to contributions for establishment) and one of them is the founder; |
| (e) | A corporation in which a corporation falling under items (c) or (d) invest at least 30/100 of the total number of issued stocks or total investment amount; |
| 2. | A person in a relationship falling under such subparagraph (excluding subparagraph 3) of Article 2 (8) if the relevant stockholder, etc. is a corporation. |
| Article 44 (Non-Inclusion of Retirement Benefits in Deductible Expenses) |
| (1) | Retirement benefits (referring to benefits defined in subparagraph 5 of Article 2 of the Guarantee of Workers' Retirement Benefits Act; hereinafter the same shall apply) paid by a corporation to its executive officers or employees shall be included in deductible expenses within the extent of the amount actually paid when an executive officer or employee actually retires (hereafter referred to as "actual retirement" in this Article). <Amended by Presidential Decree No. 19328, Feb. 9, 2006; Feb. 12, 2019> |
| (2) | Actual retirement includes any of the following cases, in which a corporation actually pays retirement benefits: <Amended by Presidential Decree No. 18706, Feb. 19, 2005; Presidential Decree No. 19010, Aug. 19, 2005; Presidential Decree No. 19328, Feb. 9, 2006; Presidential Decree No. 21302, Feb. 4, 2009; Presidential Decree No. 22035, Feb. 18, 2010; Feb. 12, 2019; Feb. 15, 2022> |
| 1. | Where an employee of a corporation becomes an executive officer of the corporation; |
| 2. | Where an employee or executive officer of a corporation retires due to the reorganization, merger, division, or transfer of the business of the corporation; |
| 3. | Where retirement benefits are paid upon making interim settlement pursuant to Article 8 (2) of the Act on the Guarantee of Employees' Retirement Benefits (where retirement benefits were partly paid by interim settlement in the past, referring to the interim settlement of retirement benefits starting from the day after the end of the immediately preceding interim settlement period; hereafter in subparagraph 5 the same shall apply); |
| 4. | Deleted; <by Presidential Decree No. 26068, Feb. 3, 2015> |
| 5. | Where retirement benefits are paid upon making interim settlement to executive officers for reasons prescribed by Ordinance of the Ministry of Economy and Finance, such as long-term medical care as prescribed in the articles of incorporation or the regulations on payment of retirement benefits delegated by the articles of incorporation benefits. |
| (3) | Where a corporation pays retirement benefits to an executive officer (excluding the controlling stockholder, etc., and persons related to the controlling stockholder. etc., as defined in Article 43 (8)) or employee, which is calculated by adding the period during which the executive officer or employee worked for the corporation and the period worked for a corporation with a special relationship, an amount equivalent to the relevant retirement benefits shall be included in deductible expenses divided in proportion to the corporations, as prescribed by Ordinance of the Ministry of Economy and Finance. In such cases, the corporation for which the relevant executive officer or employee worked most recently may submit the detailed statements of withholding and payment under the Income Tax Act concerning the relevant retirement benefits all together. <Newly Inserted by Presidential Decree No. 21302, Feb. 4, 2009; Presidential Decree No. 23589, Feb. 2, 2012; Presidential Decree No. 24357, Feb. 15, 2013; Feb. 12, 2019> |
| (4) | The amount of retirement benefits paid to an executive officer of a corporation in excess of any of the following amounts shall be excluded from deductible expenses: <Amended by Presidential Decree No. 17033, Dec. 29, 2000; Presidential Decree No. 18706, Feb. 19, 2005; Presidential Decree No. 19328, Feb. 9, 2006; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 21302, Feb. 4, 2009; Presidential Decree No. 22812, Mar. 31, 2011; Feb. 12, 2019> |
| 1. | Where the amount to be paid as retirement benefits (including retirement bonuses, etc.) is prescribed by the articles of incorporation, the amount prescribed by the articles of incorporation; |
| 2. | In cases, other than those referred to in subparagraph 1, the amount computed by multiplying the amount equivalent to 10/100 of the total amount of salaries paid to the relevant executive officer for one year retroactively from the date of retirement [referring to the amount referred to in Article 20 (1) 1 and 2 of the Income Tax Act (excluding the nontaxable income under Article 12 of the same Act), excluding the amount excluded from deductible expenses as prescribed in Article 43] by the number of years of continuous service as calculated by the method prescribed by Ordinance of the Ministry of Economy and Finance. In such cases, where no retirement benefits have been paid when the relevant executive officer became an executive officer from an employee, the period in which he/she has worked as an employee may be added to the number of years of continuous service. |
| (5) | Paragraph (4) 1 shall include cases where the calculation standards for retirement benefits for executive officers are stipulated by the articles of incorporation, and where the payment of retirement benefits to executive officers are otherwise stipulated by the articles of incorporation, such retirement benefits shall be calculated pursuant to the relevant provisions. <Amended by Presidential Decree No. 19328, Feb. 9, 2006; Presidential Decree No. 21302, Feb. 4, 2009> |
| (6) | In determining whether a corporation is in the special relationship referred to in Article 43 (8) with a controlling stockholder, etc., under paragraph (3), an executive officer in the relationship referred to in Article 2 (8) 7 with the controlling stockholder, etc., shall not be deemed in the special relationship. <Newly Inserted by Presidential Decree No. 22035, Feb. 18, 2010; Feb. 12, 2019; Feb. 28, 2023> |
[Title Amended on Feb. 9, 2006]
| Article 44-2 (Non-Inclusion of Retirement Insurance Premiums in Deductible Expenses) |
| (1) | Insurance premiums, installments, or charges (hereafter in this Article referred to as "insurance premium, etc.") paid or borne by a domestic corporation to pay retirement benefits to its executive officers and employees, other than those included in deductible expenses under paragraphs (2) through (4), shall be excluded from deductible expenses. <Amended by Presidential Decree No. 19328, Feb. 9, 2006; Presidential Decree No. 22035, Feb. 18, 2010; Presidential Decree No. 26068, Feb. 3, 2015; Feb. 12, 2019> |
| (2) | The amount paid as charges by a domestic corporation for a pension prescribed by Ordinance of the Ministry of Economy and Finance (hereafter in this Article referred to as "retirement pension, etc.") with the retirement benefits to its executive officers and employees making the retirement of executive officers or employees as the condition for payment and with its executive officers or employees named as qualified recipients shall be included in deductible expenses for purposes of calculating the amount of income for the relevant business year. <Amended by Presidential Decree No. 19328, Feb. 9, 2006; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 22577, Dec. 30, 2010; Feb. 12, 2019> |
| (3) | Total amount of charges for the defined contribution retirement pension, etc., (referring to the defined contribution retirement pension provided for in Article 19 of the Act on the Guarantee of Workers' Retirement Benefits, a SME retirement pension fund established under Article 23-6 of the same Act, the individual retirement pension system provided for in Article 24 of the same Act, and the defined contribution retirement pension among the retirement pensions provided for in the Korea Scientists and Engineers Mutual-Aid Association Act; hereinafter the same shall apply) among the amounts expended under paragraph (2) shall be included in deductible expenses: Provided, That Article 44 (4) shall apply to charges for executive officers, deeming that the sum total of the charges borne by a corporation until its executive officers retire to be retirement benefits; where any amount in excess of the ceiling on inclusion in deductible expenses, the amount equivalent to the amount in excess of the ceiling on inclusion in deductible expenses among the charges for the business year in which the date of retirement falls, shall be excluded from deductible expenses; and where the amount in excess of the ceiling on inclusion in deductible expenses exceeds the charges for the business year in which the date of retirement falls, such excess amount shall be included in gross income for the business year in which the date of retirement falls. <Amended by Presidential Decree No. 22035, Feb. 18, 2010; Presidential Decree No. 22577, Dec. 30, 2010; Presidential Decree No. 23724, Apr. 13, 2012; Presidential Decree No. 26981, Feb. 12, 2016; Feb. 15, 2022> |
| (4) | The amount, other than the charges for the defined contribution retirement pension, etc., among the amounts expended under paragraph (2), shall be included in deductible expenses up to the amount computed by subtracting the amount referred to in subparagraph 2 from the larger of the amounts referred to in subparagraphs 1 and 1-2, and, if at least two charges exist, the charges for the retirement pension, etc., for which a contract is first concluded shall be included in deductible expenses: <Newly Inserted by Presidential Decree No. 22035, Feb. 18, 2010; Presidential Decree No. 22577, Dec. 30, 2010; Presidential Decree No. 23724, Apr. 13, 2012; Presidential Decree No. 25194, Feb. 21, 2014; Presidential Decree No. 26981, Feb. 12, 2016; Feb. 12, 2019> |
| 1. | Charges for the pension equivalent to the estimated amount payable as retirement benefits (excluding the amount excluded from deductible expenses under Article 44 and the amount included in deductible expenses under the main sentence of paragraph (3)), less retirement benefit appropriation funds accumulated as at the end of the relevant business year, if all executive officers or employees who hold offices as at the end of the relevant business year; |
| 1-2. | Charges for the pension equivalent to the aggregate of the following amounts (excluding the amount excluded from deductible expenses under Article 44 and the amount included in deductible expenses under the main sentence of paragraph (3)), less retirement benefit appropriation funds accumulated as at the end of the relevant business year: |
| (a) | The amount referred to in Article 16 (1) 1 of the Act on the Guarantee of Workers' Retirement Benefits; |
| (b) | The aggregate of the estimated retirement benefits payable, if all persons who are not members of the defined contribution retirement pension referred to in subparagraph 8 of Article 2 of the Act on the Guarantee of Workers’ Retirement Benefits retire at once, and the estimated amount of retirement benefits payable for the duration that falls short of the duration of service, if all persons who are members of the defined contribution retirement pension but whose duration of membership falls short of the duration of service, retire at once, among executive officers or employees in service at the end of the relevant business year; |
| 2. | Charges paid by the last day of the immediately preceding business year. |
| (5) | A corporation that has included charges in deductible expenses under paragraph (2) shall submit a report referred to in Article 60 of the Act to the head of the tax office having jurisdiction over the place of tax payment, along with an adjustment statement of retirement pension charges in the form stipulated by Ordinance of the Ministry of Economy and Finance. <Amended by Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 22577, Dec. 30, 2010> |
[This Article Newly Inserted by Presidential Decree No. 17033, Dec. 29, 2000]
| Article 45 (Non-Inclusion of Expenses for Fringe Benefits in Deductible Expenses) |
| (1) | Expenses for fringe benefits paid by a corporation for its executive officers or employees, other than the following expenses, shall not be included in deductible expenses. In such cases, employees shall include temporary agency workers defined in Article 2 of the Act on the Protection of Temporary Agency Workers: <Amended by Presidential Decree No. 16703, Feb. 7, 2000; Presidential Decree No. 17457, Dec. 31, 2001; Presidential Decree No. 18706, Feb. 19, 2005; Presidential Decree No. 21302, Feb. 4, 2009; Presidential Decree No. 23356, Dec. 8, 2011; Presidential Decree No. 24357, Feb. 15, 2013; Presidential Decree No. 27828, Feb. 3, 2017; Feb. 12, 2019> |
| 1. | Expenses for sporting activities of employees; |
| 2. | Expenses for cultural activities of employees; |
| 2-2. | Dining expenses for employees; |
| 3. | Operational expenses of employee stock ownership associations; |
| 4. | Deleted; <by Presidential Decree No. 17033, Dec. 29, 2000> |
| 5. | Insurance premiums and charges to be borne as an employer under the National Health Insurance Act, and the Act on Long-Term Care Insurance for Older Persons; |
| 6. | Operational expenses of workplace childcare centers established under the Infant Care Act; |
| 8. | Other condolence and congratulatory expenses paid to executive officers or employees and similar to those referred to in subparagraphs 1 through 7, to the extent socially acceptable. |
| (2) | through (4) Deleted. <by Presidential Decree No. 17033, Dec. 29, 2000> |
| Article 46 (Non-Inclusion of Travel Expenses in Deductible Expenses) |
Travel expenses or education and training expenses reimbursed by a corporation to its controlling stockholders, etc. (including persons in a special relationship referred to in Article 43 (8)), other than executive officers or employees, shall not be included in deductible expenses for purposes of calculating the amount of income for the relevant business year. <Amended by Presidential Decree No. 20619, Feb. 22, 2008; Feb. 12, 2019>
| Article 47 Deleted. <by Presidential Decree No. 19328, Feb. 9, 2006> |
| Article 48 (Non-Inclusion of Joint Expenses in Deductible Expenses) |
| (1) | Among deductible expenses incurred or paid when a corporation jointly operates or manages one and the same organization, business, etc. with any person other than itself, the amount exceeding the following allotments shall not be included in deductible expenses in calculating the amount of income of the relevant corporation: <Amended by Presidential Decree No. 17033, Dec. 29, 2000; Presidential Decree No. 19891, Feb. 28, 2007; Presidential Decree No. 20619, Feb. 22, 2008; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 22035, Feb. 18, 2010; Presidential Decree No. 26981, Feb. 12, 2016; Feb. 12, 2019; Feb. 28, 2023> |
| 1. | Where a specific business is jointly operated through investment, the ratio of the investment by the relevant corporation to the total investment; |
| 2. | The following standards for expenses expended by all corporations, etc. (hereafter in this paragraph referred to as "non-investing joint business operators") related to the organization, business, etc., in cases other than the cases falling subparagraph 1: |
| (a) | Where non-investing joint business operators are in any of the relationships provided in the subparagraphs of Article 2 (8): The ratio of total sales (referring to the total asset value, if the total asset value is chosen) of the relevant corporation either to the total sales for the immediately preceding business year or for the relevant business year or to the total asset value (excluding book value of stocks of the other joint business holder, if either joint business operator holds shares of the other joint business operator; the same shall apply hereafter in this subparagraph), whichever is chosen by the corporation, (if neither the sales nor the total asset value has been chosen, the total sales shall be deemed chosen, and the amount shall apply for five consecutive business years from the business year in which the amount was chosen: Provided, That the standards prescribed by Ordinance of the Ministry of Economy and Finance concerning the number of participants, purchase amount, etc., may apply to the deductible expenses specified by Ordinance of the Ministry of Economy and Finance, including as joint event expenses and joint procurement expenses; |
| (b) | In cases other than the cases falling under item (a): The ratio of allotment under the agreement between non-investing joint business operators: Provided, That if no applicable ratio is stipulated, it means the ratio provided for in item (a); |
| 3. | Deleted. <by Presidential Decree No. 20619, Feb. 22, 2008> |
| (2) | In applying paragraph (1), matters necessary for the calculation of sales amount and amount of allotments shall be prescribed by Ordinance of the Ministry of Economy and Finance. <Amended by Presidential Decree No. 20720, Feb. 29, 2008> |
[Enforcement Date: Jan. 1, 2024] Article 48 (1) 2 (a)
| Article 49 (Scope of Non-Business Assets) |
| (1) | "Assets prescribed by Presidential Decree" in subparagraph 1 of Article 27 of the Act means any of the following assets: <Amended by Presidential Decree No. 16658, Dec. 31, 1999; Presidential Decree No. 17033, Dec. 29, 2000; Presidential Decree No. 18706, Feb. 19, 2005; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 22951, Jun. 3, 2011> |
| 1. | Any of the following real estate: Provided, That the real estate, the use of which is banned or restricted in accordance with statutes or regulations, the real estate transferred by a special purpose company incorporated under the Asset-Backed Securitization Act according to its asset securitization plan registered under Article 3 of the same Act and other real estate with inevitable circumstances prescribed by Ordinance of the Ministry of Economy and Finance shall be excluded herefrom: |
| (a) | Real estate which is not directly used for the business of a corporation: Provided, That it shall exclude such real estate that is held until the period prescribed by Ordinance of the Ministry of Economy and Finance (hereafter referred to as "grace period" in this Article) elapses; |
| (b) | Real estate which is not directly used for the business of a corporation and is transferred during the grace period: Provided, That this shall exclude corporations which operate a real estate sales business prescribed by Ordinance of the Ministry of Economy and Finance as their main business; |
| 2. | Any of the following moveable: |
| (a) | Paintings and curios: Provided, That any paintings and any curios that are on permanent display in the space, such as offices and corridors, for the purpose of ornamenting and environmentally beautifying such space that is visible to many people shall be excluded; |
| (b) | Cars, ships, and aircraft which are not directly used for business: Provided, That cars, ships and aircraft with inevitable circumstances prescribed by Ordinance of the Ministry of Economy and Finance, such as ships acquired for the purpose of exercising mortgages and getting credits repaid for which three years have yet to elapse from the date of such acquisition, shall be excluded; |
| (c) | Other assets similar to those referred to in items (a) and (b) which are not used directly for the business of a corporation. |
| (2) | Matters necessary for determining whether an asset is the real estate falls under paragraph (1) 1 shall be prescribed by Ordinance of the Ministry of Economy and Finance. <Amended by Presidential Decree No. 20720, Feb. 29, 2008> |
| (3) | "Amount prescribed by Presidential Decree" in subparagraph 1 of Article 27 of the Act means expenses incurred in acquiring and managing the assets provided in each subparagraph of paragraph (1) and their maintenance expenses, repair expenses and other related expenses. <Amended by Presidential Decree No. 22951, Jun. 3, 2011> |
| Article 50 (Non-Business Expenditures) |
| (1) | "Expenditures prescribed by Presidential Decree" in subparagraph 2 of Article 27 of the Act means any of the following: <Amended by Presidential Decree No. 21302, Feb. 4, 2009; Presidential Decree No. 22577, Dec. 30, 2010; Feb. 12, 2019> |
| 1. | Maintenance expenses, management expenses, and user fees and other related expenses of places, buildings, other things, etc. which the relevant corporation does not directly use but a third person (excluding executive officers, other than stockholders, etc., and executive officers and employees who are minority stockholders, etc.) mainly uses: Provided, That this shall not include expenses related to production facilities lent by a corporation to small and medium enterprises free of charge to transfer a business under Article 35 of the Act on the Promotion of Mutually Beneficial Cooperation between Large Enterprises and Small and Medium Enterprises to the relevant small and medium enterprises (limited to the operators of manufacturing business); |
| 2. | Maintenance expenses, management expenses, user fees and other related expenses for private residences used by stockholders, etc. (excluding minority stockholders, etc.), contributing executive officers of the relevant corporation or their relatives; |
| 3. | Expenses related to obtaining loans expended to acquire assets falling under any subparagraph of Article 49 (1); |
| (2) | "Minority stockholder, etc." in paragraph (1) 1 and 2 means a stockholder, etc. (excluding the related parties of the controlling stockholders, etc. of the relevant corporation which are not the State and local governments; hereinafter referred to as "minority stockholder, etc.") who owns less than 1/100 of the total number of issued stocks or total investment amount. <Amended by Presidential Decree No. 23589, Feb. 2, 2012; Feb. 12, 2019> |
| (3) | Losses incurred in disposing of claims falling under any subparagraph of Article 19-2 (2) of the Act shall not be included in deductible expenses. <Newly Inserted on Feb. 12, 2019> |
[This Article Wholly Amended by Presidential Decree No. 20619, Feb. 22, 2008]
| Article 50-2 (Special Cases concerning Exclusion of Expenses Incurred in Relation to Passenger Vehicles for Business Use from Deductible Expenses) |
| (1) | “Passenger vehicles specified by Presidential Decree and directly used for such business as transportation business or motor vehicle sales business and passenger vehicles used for the purpose of research and development, as prescribed by Presidential Decree” in Article 27-2 (1) of the Act means any of the following: <Amended on Feb. 11, 2020> |
| 2. | Passenger vehicles specified by Ordinance of the Ministry of Economy and Finance, among passenger vehicles similar to those specified in subparagraph 1; |
| (2) | "Expenses prescribed by Presidential Decree" in Article 27-2 (2) of the Act means expenses for acquiring and maintaining passenger vehicles for business use (hereafter in this Article referred to as "expenses incurred in relation to passenger vehicles for business use"), including depreciation costs, rental charges, fuel expenses, insurance premiums, repairing cost, motor vehicle tax, tolls, and finance lease liabilities. |
| (3) | Notwithstanding Articles 26 (1) 2 and 28 (1) 2, the straight line method shall apply as the depreciation method for passenger vehicles for business use, and the amount computed by applying the service years of five years shall be included in deductible expenses as depreciation costs. |
| (4) | "Expenses prescribed by Presidential Decree incurred for business use" in Article 27-2 (2) of the Act means the following amounts: <Amended by Presidential Decree No. 28640, Feb. 13, 2018; Feb. 12, 2019> |
| 1. | Where a corporation purchases motor vehicle insurance policies covering only the cases where any of the following persons operates a vehicle (hereinafter referred to as "motor vehicle insurance policies only for business use") during the entire period of the relevant business year (referring to the period of lease during the relevant business year, in cases of a leased passenger vehicle): The amount computed by multiplying expenses incurred in relation to passenger vehicles for business use by the business use ratio: |
| (a) | An executive officer or employee of the relevant corporation; |
| (b) | A person who operates a vehicle for the relevant corporation's business under a contract; |
| (c) | Any of the persons specified by Ordinance of the Ministry of Economy and Finance as those necessary for the relevant corporation's business; |
| 2. | Where a corporation does not purchase any motor vehicle insurance policy: Not recognizable as deductible expenses at all. |
| (5) | The business use ratio referred to in paragraph (4) 1 shall be defined as the ratio of the mileage of business use to the total mileage confirmed according to operation records, etc., prescribed by Ordinance of the Ministry of Economy and Finance (hereafter in this Article referred to as "operation records, etc."). |
| (6) | A domestic corporation that wishes to qualify for paragraph (4) 1 shall keep and maintain operation records, etc., for each passenger vehicle for business use and shall submit them immediately to the head of the tax office having jurisdiction over the place of tax payment, if requested. |
| (7) | If a corporation does not keep and maintain operation records, etc., for the application of paragraph (4) 1, either of the following rates shall apply as the business use ratio of the relevant passenger vehicles for business use, notwithstanding paragraph (5): <Amended by Presidential Decree No. 28640, Feb. 13, 2018; Feb. 11, 2020> |
| 1. | Where expenses incurred in relation to passenger vehicles for business use during the relevant business year do not exceed 15 million won (referring to the amount computed by multiplying 15 million won by the number of months of the relevant business year and then dividing it by 12, if the relevant business year is less than one year, or the amount computed by multiplying 15 million won by the number of months in the period of owing or lease and then dividing it by the number of months in the relevant business year, if a vehicle is owned or leased for a certain period in the relevant business year; hereafter in this Article the same shall apply): 100/100; |
| 2. | Where expenses incurred in relation to passenger vehicles for business use during the relevant business year exceed 15 million won: The rate computed by dividing 15 million won by the expenses incurred in relation to passenger vehicles for business use. |
| (8) | If a corporation has a special agreement on the lease of the leased passenger vehicles specified by Ordinance of the Ministry of Economy and Finance, which restricts operators to either of the following persons, it shall be deemed to have purchased motor vehicle insurance policies only for business use for the purpose of applying paragraph (4) 1: <Newly Inserted by Presidential Decree No. 27828, Feb. 3, 2017; Feb. 12, 2019> |
| 1. | Executive officers or employees of the corporation; |
| 2. | Persons who operate the vehicles under a contract for business of the corporation. |
| (9) | Where a corporation purchases a motor vehicle insurance policy only for business use only for a certain period in the entire period of the relevant business year (referring to the period of lease during the relevant business year, in cases of a leased passenger vehicle), the expenses incurred for business use under Article 27-2 (2) of the Act shall be computed by the following formula, notwithstanding paragraph (4) 2: <Newly Inserted by Presidential Decree No. 27828, Feb. 3, 2017; Presidential Decree No. 28640, Feb. 13, 2018>Expenses incurred in relation to passenger vehicles for business use × Business use ratio × (Number of days actually covered by motor vehicle insurance policies only for business use for the relevant business year ÷ Number of days that shall be mandatorily covered by motor vehicle insurance policies only for business use for the relevant business year) |
| (10) | The excess of the ceiling on depreciation costs referred to in the main sentence of Article 27-2 (3) of the Act shall be computed by subtracting eight million won (referring to an amount computed by multiplying the number of months of the relevant business year and then dividing it by 12, if the relevant business year is less than one year, or the amount computed by multiplying eight million won by the number of months in the period of owing or lease and then dividing it by the number of months in the relevant business year, if a vehicle is owned or leased for a certain period in the relevant business year) from the amount computed by multiplying the amount in either subparagraph of Article 27-2 (3) of the Act by the business use ratio. <Amended by Presidential Decree No. 28640, Feb. 13, 2018> |
| (11) | "Method prescribed by Presidential Decree" in Article 27-2 (3) of the Act, with the exception of its subparagphs, means the method of carrying over an amount within the maximum amount computed by the following methods and including the amount in deductible expenses: <Amended by Presidential Decree No. 27828, Feb. 3, 2017; Feb. 12, 2019; Feb. 11, 2020> |
| 1. | Carried-over depreciation costs for each passenger vehicle for business use: If depreciation costs, among expenses incurred for business use of the relevant passenger vehicle for business use for business years following the relevant business year, is less than eight million won, the depreciation costs shall be recognized subsequently as deductible expenses within the maximum amount of the shortfall; |
| 2. | Carried-over rents equivalent to depreciation costs provided for in paragraph (12) for each passenger vehicle for business use: If the amount equivalent to depreciation costs, among expenses incurred for business use of the relevant passenger vehicle for business use for business years following the relevant business year, is less than eight million won, the amount shall be included in deductible expenses within the maximum amount of the shortfall. |
| (12) | "Amount specified by Presidential Decree as equivalent to depreciation costs" in Article 27-2 (3) 2 of the Act means an amount specified by Ordinance of the Ministry of Economy and Finance as an amount exclusive of insurance premiums, motor vehicle tax, etc., among rents for a passenger vehicle for business use. |
| (13) | "Methods prescribed by Presidential Decree" in Article 27-2 (4) of the Act means the method by which eight million won shall be included in deductible expenses equally for each business year following the relevant business years, but the full amount of the remainder shall be included in deductible expenses for the business year in which the remainder is less than eight million won. |
| (14) | When a corporation that has included expenses incurred in relation to a passenger vehicle for business use or a loss on the disposal of such vehicle in deductible expenses files a return in accordance with Article 60 of the Act, it shall file the return with the head of the tax office having jurisdiction over the place of tax payment, accompanied by a statement of expenses incurred in relation to the passenger vehicle for business use. |
| (15) | When paragraph 7, 10, 11, or 13 applies to a domestic corporation that meets all of the requirements provided for in Article 42 (2), "15 million won" shall be construed as "five million won," and "eight million won" as "four million won," respectively. <Newly Inserted by Presidential Decree No. 27828, Feb. 3, 2017; Feb. 12, 2019; Feb. 11, 2020> |
| (16) | If the relevant business year is less than one year or if a vehicle has been owned or leased for a certain period in the relevant business year, the number of months shall be counted by calendar, but the number of days less than one month shall be deemed one month. <Newly Inserted by Presidential Decree No. 28640, Feb. 13, 2018> |
| (17) | Except as otherwise provided for in paragraphs (1) through (16), the scope of business use and other necessary matters shall be prescribed by Ordinance of the Ministry of Economy and Finance. <Amended by Presidential Decree No. 27828, Feb. 3, 2017; Presidential Decree No. 28640, Feb. 13, 2018> |
[This Article Newly Inserted by Presidential Decree No. 26981, Feb. 12, 2016]
| Article 51 (Scope of Interest on Debentures for Which Creditor is Unknown) |
| (1) | "Interest on debentures for which the creditor is unknown as prescribed by Presidential Decree" in Article 28 (1) 1 of the Act means interest on any of the following loans (including money and other valuables paid in borrowing money, irrespective of their names, such as brokerage commission and honorarium): Provided, That this shall not include the interest on loans if the whereabouts of the creditor becomes unknown after the creditor, whose residency was verified as at the date of the transaction by his/her resident registration card, receives repayment of the borrowed money: <Amended on Feb. 12, 2019> |
| 1. | Loans for which the name and address of the creditor cannot be verified; |
| 2. | Loans which cannot be recognized as the loans in cash by the creditor in view of his/her assets and abilities; |
| 3. | Loans for which the facts of the cash transaction or the details of the transaction with the creditor are unclear. |
| (2) | "Interest on, a discount of, or gains from bonds and securities prescribed by Presidential Decree" in Article 28 (1) 2 of the Act means, where the corporation which has issued bonds or securities directly pays the interest on, discount, or gains from such bonds or securities, the paid interest, discount, or gains, the payment of which are not objectively recognized. <Amended by residential Decree No. 22951, Jun. 3, 2011> |
| Article 52 (Scope of Interest on Loans Appropriated for Construction Capital) |
| (1) | "Interest on loans appropriated for construction capital prescribed by Presidential Decree" in Article 28 (1) 3 of the Act means interest paid on loans used for purchasing, producing or constructing tangible and intangible assets for business (hereafter referred to as "construction, etc." in this Article), irrespective however named, (excluding loans, the use of which for the construction, etc. of assets is unclear; hereafter referred to "special loan" in this Article) or other similar expenses (hereafter referred to "interest, etc. paid" in this Article). <Amended by Presidential Decree No. 22577, Dec. 30, 2010; Feb. 12, 2019> |
| (2) | Interest, etc. paid on a special loan shall be capital expenses included in the original capital until the date of the completion of the construction, etc.: Provided, That interest income accruing from the temporary deposit of the special loan shall be subtracted from the amount of capital expenses added to the original capital. <Amended by Presidential Decree No. 22577, Dec. 30, 2010> |
| (3) | Where some of special loans are converted to operational capital, interest, etc. paid on the corresponding amount shall be deemed deductible expenses. <Amended by Presidential Decree No. 22577, Dec. 30, 2010> |
| (4) | Where interest on special loans in arrears is added to the original capital, the added amount shall be deemed the capital expenditures of the relevant business year, and the interest paid on the added amount shall be deemed deductible expenses. <Amended by Presidential Decree No. 22577, Dec. 30, 2010> |
| (5) | Interest on any special loan remaining after the completion of the relevant construction, etc. shall be deemed deductible expenses for each business year. In such cases, the date of the completion of construction, etc. shall be the date on which all objectives of the relevant construction, etc. are completed. <Amended by Presidential Decree No. 22577, Dec. 30, 2010> |
| (6) | "Date of completion" in the main clause of paragraphs (2) and the latter part of paragraph (5) means any of the following dates: <Amended by Presidential Decree No. 18706, Feb. 19, 2005; Feb. 12, 2019> |
| 1. | Where land is purchased, the date the price is settled: Provided, That where the relevant land is used for business before the price is settled, it means the date on which the land was first used for business; |
| 3. | For other tangible and intangible assets used for business, the start date of use. |
| (7) | "Amount prescribed by Presidential Decree" in Article 28 (2) of the Act means the amount whichever is smaller between the amount computed by multiplying the construction, etc. of the tangible and intangible assets for each business during the relevant business year by the amount prescribed by subparagraph 2 and the rate by subparagraph 3, and the amount by subparagraph 1: <Newly Inserted by Presidential Decree No. 22577, Dec. 30, 2010; Feb. 12, 2019> |
| 1. | The sum total of the interest, etc. paid on the general loan (referring to the amount excluding the special loan among the loans repaid or not repaid during the relevant business year; hereafter the same shall apply in this Article) actually incurred in the period required for the construction, etc. during the relevant business year; |
| 2. | The amount computed by the following formula: |
Total amount expended for relevant construction, etc. during the relevant business year/ Number of days in the relevant business year
- Total amount of special loans during the relevant business year/Number of days in the relevant business year |
|
| 3. | The rate calculated by the following formula: |
| Sum total of interest, etc. paid, etc. on general loans÷Total amount of general loans during the relevant business year/Number of days in relevant business year |
|
| Article 53 (Non-Inclusion of Interest Paid on Non-Business Assets in Deductible Expenses) |
| (1) | "Provisional payments, etc. prescribed by Presidential Decree" in Article 28 (1) 4 (b) of the Act means the amount of loans for capital with no connection to the business of the relevant corporation, irrespective of however named, (for financial companies, etc. provided for in any subparagraph of Article 61 (2), including the amount of loans for capital which cannot be recognized as the main profit-making business): Provided, That the amount prescribed by Ordinance of the Ministry of Economy and Finance shall be excluded. <Amended by Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 22035, Feb. 18, 2010; Presidential Decree No. 22951, Jun. 3, 2011> |
| (2) | "Amount calculated, as prescribed by Presidential Decree" in Article 28 (1) 4 of the Act means the amount computed by the following formula: <Amended by Presidential Decree No. 22951, Jun. 3, 2011> |
Interest paid × [Sum total of asset value under paragraph (1) and Article 49 (1) (up to the limit of the total loans) / Total loans] | (3) | The sum of the total loans and the asset value referred to in paragraph (2) shall be calculated based on the accumulated amount during the corresponding period. In such cases, the assets referred to in paragraph (1) shall, if there concurrently exist the provisional payments to and suspense receipts from the same person, be the amount offsetting them, and the assets referred to in Article 49 (1) shall be the acquisition value (it shall be the acquisition value of assets as prescribed in Article 72, and shall include the amount exceeding market prices referred to in paragraph (4) 3 of the same Article). <Amended by Presidential Decree No. 17033, Dec. 29, 2000; Presidential Decree No. 17826 Dec. 30, 2002; Presidential Decree No. 23589, Feb. 2, 2012> |
| (4) | Loans provided in paragraph (2) shall not include any of the following amounts: <Amended by Presidential Decree No. 17033, Dec. 29, 2000; Presidential Decree No. 18706, Feb. 19, 2005; Presidential Decree No. 19815, Dec. 30, 2006; Presidential Decree No. 20619, Feb. 22, 2008; Presidential Decree No. 22035, Feb. 18, 2010> |
| 1. | The following amounts borrowed by a financial company, etc. under each subparagraph of Article 61 (2): |
| (b) | Amounts borrowed from the State or local governments (including associations of local governments); |
| (c) | Amounts borrowed from funds established under statutes or regulations; |
| (e) | Funds managed and operated after being received from many and unspecified customers on condition that a certificate of deposit shall be issued or compensation, such as the payment of regular interest through a bank account shall be made; |
| 2. | Amounts borrowed by a domestic corporation through business purchase financing loans under the rules prescribed by the Governor of Bank of Korea. |
| Article 54 Deleted. <by Presidential Decree No. 18706, Feb. 19, 2005> |
| Article 55 (Order of Application of Non-Inclusion of Paid Interest in Deductible Expenses) |
The following order shall apply where each subparagraph of Article 28 (1) of the Act applies simultaneously to the non-inclusion of paid interest in deductible expenses: <Amended by Presidential Decree No. 18706, Feb. 19, 2005; Presidential Decree No. 19328, Feb. 9, 2006> | 1. | Interest on debentures for which the creditor is unknown under Article 28 (1) 1 of the Act; |
| 2. | Interest on, a discount, or gains from bonds and securities for which the recipient is unknown under Article 28 (1) 2 of the Act; |
| 3. | Deleted; <by Presidential Decree No. 18706, Feb. 19, 2005> |
| 4. | Interest on loans appropriated for construction capital under Article 28 (1) 3 of the Act; |
| 5. | Deleted; <by Presidential Decree No. 19328, Feb. 9, 2006> |
| 6. | Interest paid as calculated under Article 53 (2). |
Subsection 4 Inclusion of Reserve Funds and Appropriation Funds in Deductible Expenses
| Article 56 (Inclusion of Reserve Funds for Proper Purpose Business in Deductible Expenses) |
| (1) | "Organizations prescribed by Presidential Decree" in the part of Article 29 (1) of the Act, with the exception of its subparagraphs, means the following organizations: <Amended by Presidential Decree No. 17457, Dec. 31, 2001; Presidential Decree No. 22035, Feb. 18, 2010; Presidential Decree No. 22577, Dec. 30, 2010; Presidential Decree No. 27444, Aug. 11, 2016; Presidential Decree No. 27445, Aug. 11, 2016; Presidential Decree No. 28640, Feb. 13, 2018; Feb. 12, 2019> |
| 2. | Deleted; <by Presidential Decree No. 17457, Dec. 31, 2001> |
| 3. | Any Fund established under the statutes or regulations; |
| (2) | Any of the following amounts of interest income shall be deemed the amount provided for in Article 29 (1) 1 (a) of the Act: <Amended by Presidential Decree No. 19891, Feb. 28, 2007; Presidential Decree No. 20619, Feb. 22, 2008; Feb. 12, 2019; Feb. 11, 2020> |
| 1. | The amount of interest income generated when a non-profit domestic corporation engaging in financial or insurance business temporarily deposits funds to financial instruments with a contractual term of up to three months (including demand deposits with no contractual term) of any corporation engaging in financial and insurance activities listed on the Korea Standard Industrial Classification; |
| 2. | The amount of interest income generated when a person engaging in the business provided for in Article 3 (1) 5 (b) manages funds; |
| (3) | Income generated from a profit-making business referred to in Article 29 (1) 2 of the Act means the amount of income generated from a profit-making business for the relevant business year (the amount of income before including in deductible expenses the reserves for a proper purpose business and donations referred to in Article 24 (2) 1 of the Act, excluding the amount of income increased by correction prescribed in Article 66 (2) of the Act which is disposed of as bonus and other income to a specially related person of the relevant corporation pursuant to Article 106), minus an amount prescribed in Article 29 (1) 1 of the Act; losses (in cases of a corporation entitled to a deduction of 80/100 of its income for each business year under the proviso, with the exception of the subparagraphs, of the same paragraph, referring to an amount calculated by subtracting losses carried forward for not being deductible due to the application of the deduction limit) prescribed in Article 13 (1) 1 of the Act; and donations prescribed in Article 24 (2) 1 of the Act. <Amended on Feb. 12, 2019; Feb. 11, 2020; Feb. 17, 2021; Feb. 28, 2023> |
| (4) | Deleted. <by Presidential Decree No. 18324, Mar. 22, 2004> |
| (5) | A proper purpose business referred to in paragraph (1), with the exception of the subparagraphs, of Article 29 of the Act means the business directly operated by the relevant non-profit domestic corporation for accomplishing its purpose of establishment stipulated by the statutes or regulations, or the articles of incorporation, other than the profit-making business provided for in Article 3 (1). |
| (6) | In applying Article 29 (1) through (5) of the Act, the following amounts shall be deemed expended or used for the proper purpose business: Provided, That, if a domestic non-profit corporation disposes of a tangible and intangible asset without directly using the asset for at least three years for the proper purpose business or health services prescribed by statutes or regulations or stipulated by its articles of incorporation (limited to domestic non-profit corporations providing health services (hereafter referred to as "medical corporation" in this Article) after acquiring the fixed asset, the amount specified in subparagraph 1 or 3 shall not be deemed an amount expended or used for its proper purpose business: <Amended by Presidential Decree No. 17033, Dec. 29, 2000; Presidential Decree No. 17457, Dec. 31, 2001; Presidential Decree No. 17826, Dec. 30, 2002; Presidential Decree No. 18174, Dec. 30, 2003; Presidential Decree No. 18706, Feb. 19, 2005; Presidential Decree No. 19328, Feb. 9, 2006; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 22577, Dec. 30, 2010; Presidential Decree No. 22812, Mar. 31, 2011; Presidential Decree No. 23589, Feb. 2, 2012; Presidential Decree No. 25194, Feb. 21, 2014; Presidential Decree No. 26922, Jan. 22, 2016; Presidential Decree No. 27828, Feb. 3, 2017; Presidential Decree No. 28640, Feb. 13, 2018; Feb. 12, 2019; Aug. 19, 2020> |
| 1. | The amount of expenses directly incurred in operating the proper purpose business of a non-profit domestic corporation, such as the acquisition expenses (including capital expenditures referred to in Article 31 (2)) of tangible and intangible assets and personnel expenses; |
| 2. | The amount of reserve funds for proper purpose business recognized as deductible expenses that are accumulated as funds or reserve funds under the statutes or regulations by a non-profit domestic corporation, established under special Acts (including an organization deemed a corporation under Article 13 of the Framework Act on National Taxes from among the Funds established and operated in the relevant corporation), operating the health insurance business, pension fund management business, mutual aid business, and the business referred to in Article 3 (1) 8; |
| 3. | Any of the following amounts expended by a medical corporation: |
| (a) | An amount expended to acquire assets specified by Ordinance of the Ministry of Economy and Finance, such as medical equipment; |
| (b) | An amount expended for the purposes specified by Ordinance of the Ministry of Economy and Finance, such as the development of overseas markets for medical services under subparagraph 1 of Article 2 of the Act on Support for Overseas Expansion of Healthcare System and Attraction of International Patients; |
| (c) | An amount expended for research and development projects prescribed by Ordinance of the Ministry of Economy and Finance; |
| 4. | The amount of loans that the National Agricultural Cooperative Federation established under the Agricultural Cooperatives Act provides to its members free of charge from the reserve funds for proper purpose business, appropriated under Article 29 (2) of the Act; |
| 6. | The amount contributed by the National Federation of Fisheries Cooperatives established under the Fisheries Cooperatives Act to the Mutual Finance Depositor Protection Fund created under the Act on the Prevention of Insolvency and Structural Improvement of Fisheries Cooperatives |
| 7. | The amount contributed by the National Credit Union Federation of Korea established under the Credit Unions Act to the Credit Union Depositor Protection Fund created under the same Act; |
| 8. | The amount contributed by the Korean Federation of Community Credit Cooperatives established under the Community Credit Cooperatives Act to the Depositor Protection Reserves created under the same Act; |
| 9. | The amount contributed by the National Forestry Cooperatives Federation established under the Forestry Cooperatives Act to the Mutual Finance Depositor Protection Fund created under the same Act; |
| (7) | "Amount equivalent to the interest calculated, as prescribed by Presidential Decree" in Article 29 (7) of the Act means the amount computed by multiplying the amount referred to in subparagraph 1 by the rate referred to in subparagraph 2: <Amended by Presidential Decree No. 17826 Dec. 30, 2002; Presidential Decree No. 22577, Dec. 30, 2010; Feb. 12, 2019; Feb. 15, 2022> |
| 1. | The difference in the amount of corporate tax for the business year in which the balance of the relevant reserve funds for proper purpose business was included in deductible expenses, generated by including the balance in deductible expenses; |
| 2. | 22/100,000 per day for the period from the first day of the business year following the business year in which the balance was included in deductible expenses falls until the last day of the business year in which the balance was included in gross income falls. |
| (8) | "Circumstances prescribed by Presidential Decree" in Article 29 (8) of the Act means circumstances in which the income accruing from the profit-making business of the relevant non-profit domestic corporation is subject to the application of the non-taxation, exemption, inclusion of reserve funds in deductible expenses, income deductions or tax reductions or exemptions (excluding tax credits) provided for in the Act or the Restriction of Special Taxation Act: Provided, That this shall not apply where a revised return is filed only for the application of the reserve funds for proper purpose business. <Newly Inserted by Presidential Decree No. 19328, Feb. 9, 2006; Presidential Decree No. 22577, Dec. 30, 2010; Feb. 12, 2019> |
| (9) | A non-profit domestic corporation that wishes to qualify for Article 29 (1) of the Act shall submit a detailed statement on the adjustment of reserve funds for proper purpose business in the form prescribed by Ordinance of the Ministry of Economy and Finance to the head of the tax office having jurisdiction over the place of tax payment, along with the report referred to in Article 60 of the Act. <Amended by Presidential Decree No. 20720, Feb. 29, 2008> |
| (10) | A medical corporation that wishes to qualify for paragraph (6) 3 shall manage the amount equivalent to reserved funds for proper purpose business that was appropriated as deductible expenses in a separate medical development account prescribed by Ordinance of the Ministry of Economy and Finance. <Newly Inserted by Presidential Decree No. 17033, Dec. 29, 2000; Presidential Decree No. 20720, Feb. 29, 2008; Feb. 12, 2019> |
| (11) | Where the sum total of wages and salaries referred to in each subparagraph of Article 20 (1) of the Income Tax Act paid to executive officers and employees of any of the following corporations for the relevant business year (hereinafter referred to as "total amount of wages" and, where the period of employment for the relevant business year is less than one year, it means the amount computed by multiplying the amount, which is divided by the total amount of wages by the number of months in the period of employment, by 12. In such cases, the number of months shall be calculated according to the solar calendar, and days less than one month shall be counted as one month) exceeds 80 million won, such excess amount shall not be deemed personnel expenses referred to in paragraph 6 (1): Provided, That the same shall not apply where the relevant corporation obtains approval from the competent authorities with respect to the payment regulations on personnel expenses for the relevant executive officers and employees before it files a report on the tax base under Article 60 of the Act for the relevant business year: <Newly Inserted by Presidential Decree No. 23589, Feb. 2, 2012; Feb. 12, 2019> |
| 1. | A non-profit domestic corporation which includes the income in deductible expenses as reserve funds for proper purpose business in excess of the amount computed by multiplying the amount of income generated by profit-making business under Article 29 (1) 2 of the Act by 50/100; |
| 2. | A non-profit domestic corporation which falls under Article 74 (1) 2 and 8 of the Restriction of Special Taxation Act and includes the income in deductible expenses as reserve funds for proper purpose business in excess of the amount computed by multiplying the amount of income generated by the profit-making business by 50/100. |
| (12) | The competent authorities in receipt of a request to approve the payment regulations on personnel expenses under the proviso to paragraph (11) or (13) shall approve such regulations where it is deemed socially acceptable. <Newly Inserted by Presidential Decree No. 23589, Feb. 2, 2012> |
| (13) | A person who has obtained approval of the payment regulations on personnel expenses under paragraph (12) shall re-obtain approval every three years from the date of the approval: Provided, That where the payment regulations on personnel expenses are revised within such period, he/she shall re-obtain approval until the filing deadline of tax bases specified under Article 60 of the Act for the business year in which such grounds arise. <Newly Inserted by Presidential Decree No. 23589, Feb. 2, 2012> |
| (14) | A corporation which has obtained approval from the competent authorities under paragraph (12) shall submit the payment regulations on personnel expenses and the documents to verify the approval of the competent authorities to the head of the tax office having jurisdiction over the place of tax payment when filing a report under Article 60 of the Act. <Newly Inserted by Presidential Decree No. 23589, Feb. 2, 2012> |
| Article 57 (Inclusion of Liability Reserve Funds in Deductible Expenses) |
| (1) | Liability reserve funds referred to in Article 30 (1) of the Act shall be included in deductible expenses up to the sum of the following amounts in calculating the amount of income for the relevant business year: <Amended by Presidential Decree No. 16658, Dec. 31, 1999; Presidential Decree No. 18706, Feb. 19, 2005; Presidential Decree No. 19891, Feb. 28, 2007; Presidential Decree No. 20619, Feb. 22, 2008; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 21302, Feb. 4, 2009; Presidential Decree No. 22220, Jun. 28, 2010; Presidential Decree No. 22577, Dec. 30, 2010; Presidential Decree No. 23589, Feb. 2, 2012; Presidential Decree No. 24357, Feb. 15, 2013; Presidential Decree No.24441, Mar. 23, 2013; Presidential Decree No. 25751, Nov. 19, 2014; Presidential Decree No. 28211, Jul. 26, 2017; Feb. 12, 2019; Jan. 5, 2021; Feb. 28, 2023> |
| 2. | Where an insured accident has occurred as on the last day of the relevant business year but the amount of insurance money payable is not determined, the amount of insurance money estimated (including the amount estimated to be used for damage assessment, subrogation of insurance and exercise of indemnity rights) in consideration of losses; |
| 3. | The amount (referring to the amount approved by the Minister of Oceans and Fisheries in cases of mutual aid business under the Fisheries Cooperatives Act after consultation with the Minister of Economy and Finance; the amount approved by the Minister of the Interior and Safety after consultation with the Minister of Economy and Finance in cases of mutual aid business under the Community Credit Cooperatives Act) which is a dividend reserve fund accumulated for distribution to the policy-holders. |
| (2) | The amount referred to in paragraph (1) 1 and 2 out of the amounts included in deductible expenses under paragraph (1) shall be included in the gross income when calculating the amount of income for the following business year; and where the amount referred to in paragraph (1) 3 is distributed to the policy-holders, it shall be offset by the dividend in order of appropriation; however, where any balance is left after offset by the third anniversary of the last day of the business year in which it is included in deductible expenses, it shall be included in the gross income when calculating the amount of income for the business year in which the third anniversary falls. <Newly Inserted by Presidential Decree No. 21302, Feb. 4, 2009> |
| (3) | "Grounds prescribed by Presidential Decree, such as dissolution, occur before three years pass" in Article 30 (2) of the Act means any of the following: <Newly Inserted by Presidential Decree No. 21302, Feb. 4, 2009; Presidential Decree No. 22184, Jun. 8, 2010; Presidential Decree No. 22577, Dec. 30, 2010; Feb. 12, 2019> |
| 1. | Dissolution: Provided, That this shall not apply where a corporation is dissolved following a merger or division and a surviving corporation, etc., engaging in insurance business succeeds to the balance; |
| 2. | Revocation of a license to engage in insurance business. |
| (4) | The amount succeeded to by a surviving corporation, etc., under the proviso to paragraph (3) 1 shall be deemed included in deductible expenses by the surviving corporation, etc., in the business year in which the merged corporation, etc., included in deductible expenses. <Newly Inserted by Presidential Decree No. 21302, Feb. 4, 2009; Presidential Decree No. 22184, Jun. 8, 2010; Presidential Decree No. 22577, Dec. 30, 2010; Feb. 12, 2019> |
| (5) | The amount equivalent to interest referred to in Article 30 (3) of the Act shall be the amount computed by applying mutatis mutandis Article 56 (7). <Newly Inserted on Feb. 12, 2019> |
| (6) | A domestic corporation that wishes to be governed by Article 30 (1) of the Act shall submit a detailed statement on liability reserve funds 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 report referred to in Article 60 of the Act. <Amended on Feb. 29, 2008; Feb. 4, 2009; Dec. 30, 2010; Feb. 12, 2019> |
[Title Amended on Feb. 12, 2019]
| Article 58 (Inclusion of Contingency Reserve Funds in Deductible Expenses) |
| (1) | Contingency reserve funds referred to in Article 31 (1) of the Act (hereafter in this Article referred to as “contingency reserve funds”) shall be included in deductible expenses to the extent of the amount (hereafter in this Article referred to as "accumulation standard amount by insurance type") calculated by multiplying the sum of insurance premiums subject to accumulation by insurance type (referring to fire insurance, marine insurance, automobile insurance, specialty insurance, warranty insurance, overseas disaster and overseas origin insurance; hereafter in this Article the same shall apply) for the relevant business year by the accumulation standard rates by insurance type determined by the Financial Services Commission under Article 63 (4) of the Enforcement Decree of the Insurance Business Act. <Amended on Feb. 28, 2023> |
| (2) | The accumulated amount of contingency reserve funds to be included in deductible expenses pursuant to paragraph (1) shall not exceed 50/100 of the sum of insurance premiums subject to accumulation by insurance type for the relevant business year (it shall be 40/100 in cases of automobile insurance, and 150/100 in cases of warranty insurance). <Amended on Feb. 28, 2023> |
| (3) | "Amount calculated, as prescribed by Presidential Decree" in Article 31 (2) of the Act means 90/100 of the sum of accumulation standard amounts by insurance type. |
| (4) | The treatment of contingency reserve funds included in deductible expenses pursuant to paragraphs (1) and (2) and the method for calculating insurance premiums subject to accumulation shall be as prescribed and publicly notified by the Financial Services Commission under Article 63 (4) of the Enforcement Decree of the Insurance Business Act. <Amended on Feb. 28, 2023> |
| (5) | A domestic corporation that wishes to be governed by Article 31 (1) of the Act shall submit a detailed statement on contingency reserve funds 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 report referred to in Article 60 of the Act. |
[This Article Newly Inserted on Feb. 12, 2019]
| Article 59 (Inclusion of Surrender Value Reserve Fund in Deductible Expenses) |
| (3) | An insurance company that wishes to be governed by Article 32 (1) of the Act shall submit a detailed statement on surrender value reserve funds 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 reporting a tax base pursuant to Article 60 of the Act. |
[This Article Newly Inserted on Feb. 28, 2023]
| Article 60 (Inclusion of Retirement Benefit Appropriation Funds in Deductible Expenses) |
| (1) | "Amount calculated, as prescribed by Presidential Decree" in Article 33 (1) of the Act means the amount equivalent to 5/100 of the total salaries (refers to the total amount of salaries referred to in Article 44 (4) 2) paid to executive officers or employees eligible to receive retirement benefits (excluding those for whom the defined contribution retirement pension, etc. have been established; hereafter the same shall apply in this Article) in the relevant business year. <Amended by Presidential Decree No. 19328, Feb. 9, 2006; Presidential Decree No. 21302, Feb. 4, 2009; Presidential Decree No. 22951, Jun. 3, 2011; Feb. 12, 2019> |
| (2) | The amount of accumulated retirement benefit appropriation funds included in deductible expenses under paragraph (1) shall be limited to the amount calculated by multiplying the estimated retirement benefits payable if all executive officers or employees currently in service at the end of the pertinent business year retire at once or the aggregate of the amounts under Article 44-2 (4) 1-2, whichever is larger (excluding the amount not included in deductible expenses under Article 44), by any of the following rates: <Amended by Presidential Decree No. 19328, Feb. 9, 2006; Presidential Decree No. 22577, Dec. 30, 2010; Presidential Decree No. 23589, Feb. 2, 2012; Presidential Decree No. 23724, Apr. 13, 2012; Presidential Decree No. 25194, Feb. 21, 2014; Feb. 12, 2019> |
| 1. | The business year that commences during the period from January 1, 2010 to December 31, 2010: 30/100; |
| 2. | The business year that commences during the period from January 1, 2011 to December 31, 2011: 25/100; |
| 3. | The business year that commences during the period from January 1, 2012 to December 31, 2012: 20/100; |
| 4. | The business year that commences during the period from January 1, 2013 to December 31, 2013: 15/100; |
| 5. | The business year that commences during the period from January 1, 2014 to December 31, 2014: 10/100; |
| 6. | The business year that commences during the period from January 1, 2015 to December 31, 2015: 5/100; |
| 7. | Business years that commences after January 1, 2016: 0/100. |
| (3) | Where the amount less the retirement benefits paid to executive officers or employees during the business year following the business year during which retirement benefit appropriation funds are included in deductible expenses from the accumulated amount of retirement benefit appropriation funds included in deductible expenses within the limit set by each subparagraph of paragraph (2) exceeds the amount multiplied by the rate set by each subparagraph of paragraph (2) to the estimated amount referred to paragraph (2), such excess shall not be included in gross income. <Newly Inserted by Presidential Decree No. 22577, Dec. 30, 2010; Feb. 12, 2019> |
| (4) | The amount appropriated as retirement benefits conversion funds under the National Pension Act by a domestic corporation shall be added to the limit of the accumulated amount of retirement benefit appropriation funds included in deductible expenses, notwithstanding paragraph (2). <Amended by Presidential Decree No. 18706, Feb. 19, 2005> |
| (5) | A domestic corporation which intends to be applicable under Article 33 (1) of the Act shall submit a detailed statement on the settlement of retirement benefit appropriation funds in the form stipulated by Ordinance of the Ministry of Economy and Finance to the head of the tax office having jurisdiction over the place of tax payment, along with the report provided for in Article 60 of the Act. <Amended by Presidential Decree No. 20720, Feb. 29, 2008> |
| Article 61 (Inclusion of Allowances for Bad Debts in Deductible Expenses) |
| (1) | “Credit sales accounts, loans, and other claims equivalent thereto” in Article 34 (1) of the Act are as follows: <Amended by Presidential Decree No. 26981, Feb. 12, 2016; Feb. 12, 2019> |
| 1. | Credit sales accounts: The amount receivable upon selling commodities and goods, and the amount of business revenue receivable with respect to processing fees and upon provision of services; |
| 2. | Loans: The amount of loans provided to other persons under a consumer cash loan contract; |
| 3. | Other equivalent claims: Receivable claims on bills, outstanding accounts, and other claims with respect to which allowances for bad debts shall be created in accordance with Korean Financial Accounting Standards (excluding bonds equivalent to the excess of market price prescribed in Article 88 (1) 1 shall apply). |
| (2) | "Amount calculated, as prescribed by Presidential Decree" in Article 34 (1) of the Act means the amount equivalent to 1/100 of the sum of book values of all credit sales accounts, loans, and other equivalent claims provided for in paragraph (1) as of the last day of the relevant business year (hereafter in this Article referred to as "balance of receivable claims") or the amount computed by multiplying the balance of receivable claims by the rate of actual bad debts, whichever is greater: Provided, That, as for the financial companies, etc., specified in subparagraphs 1 through 4, 6 through 17, 17-2, and 24 it means the amount that shall be accumulated in accordance with the accumulation standards of allowances for bad debts, as prescribed by the Financial Services Commission (referring of Ministry of the Interior and Safety in cases of subparagraph 24) in consultation with the Minister of Economy and Finance, the amount equivalent to 1/100 of the balance of receivable claims, or the amount computed by multiplying the balance of receivable claims by the rate of actual bad debts, whichever is greater: <Amended by Presidential Decree No. 16658, Dec. 31, 1999; Presidential Decree No. 17033, Dec. 29, 2000; Presidential Decree No. 17457, Dec. 31, 2001; Presidential Decree No. 17791, Dec. 5, 2002; Presidential Decree No. 17826 Dec. 30, 2002; Presidential Decree No. 18174, Dec. 30, 2003; Presidential Decree No. 18324, Mar. 22, 2004; Presidential Decree No. 18706, Feb. 19, 2005; Presidential Decree No. 19328, Feb. 9, 2006; Presidential Decree No. 19891, Feb. 28, 2007; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 21302, Feb. 4, 2009; Presidential Decree No. 22035, Feb. 18, 2010; Presidential Decree No. 22220, Jun. 28, 2010; Presidential Decree No. 22493, Nov. 15, 2010; Presidential Decree No. 22951, Jun. 3, 2011; Presidential Decree No. 23589, Feb. 2, 2012; Presidential Decree No. 24357, Feb. 15, 2013; Presidential Decree No. 25279, Mar. 24, 2014; Presidential Decree No. 26981, Feb. 12, 2016; Presidential Decree No. 27037, Mar. 11, 2016; Presidential Decree No. 27205, May 31, 2016; Presidential Decree No. 27322, Jul. 6, 2016; Presidential Decree No. 27828, Feb. 3, 2017; Aug. 11, 2020; Feb. 17, 2021; Feb. 17, 2022; Feb. 28, 2023> |
| 1. | Banks established upon approval granted under the Banking Act; |
| 5. | Deleted; <by Presidential Decree No. 25945, Dec. 30, 2014> |
| 6. | The National Agricultural Cooperative Federation (limited to the business activities provided for in Article 134 (1) 4 of the same Act) and the Nonghyup Bank established under the Agricultural Cooperatives Act; |
| 10. | The Korea Federation of Savings Banks (limited to deposits for reserve requirement) and the mutual savings banks established under the Mutual Savings Banks Act; |
| 26. | The Korea Deposit Insurance Corporation and a financial company authorized to perform liquidation under the Depositor Protection Act; |
| 30. | The Korea Asset Management Corporation (including the non-performing asset management fund) incorporated under the Act on the Establishment of Korea Asset Management Corporation; |
| 32. | through 38. Deleted. <by Presidential Decree No. 21302, Feb. 4, 2009> |
| (3) | The rate of actual bad debts referred to in paragraph (2) means the rate calculated by the following formula: <Amended by Presidential Decree No. 21302, Feb. 4, 2009> |
Rate of actual bad debts = [Bad debts for the relevant business year under Article 19-2 (1) of the Act / Amount of receivable claims as on the end date] of the immediately preceding business year
| (4) | In calculating the ceilings on the amount of allowances for bad debts to be included in deductible expenses under Article 34 (1) of the Act, the funds for bad debts recognized in relation to the bad debts provided for in Article 19-2 (5) shall be excluded. <Newly Inserted by Presidential Decree No. 22035, Feb. 18, 2010> |
| (5) | A domestic corporation that wishes to qualify for Article 34 (1) of the Act shall submit a detailed statement on the settlement of allowances for bad debts and bad debts in the form stipulated by Ordinance of the Ministry of Economy and Finance to the head of the tax office having jurisdiction over the place of tax payment, along with the report provided for in Article 60 of the Act. <Amended by Presidential Decree No. 20720, Feb. 29, 2008; Feb. 12, 2019> |
| Article 62 Deleted. <by Presidential Decree No. 21302, Feb. 4, 2009> |
| Article 63 (Inclusion of Allowances to Redeem Claims for Indemnity in Deductible Expenses) |
| (1) | "Corporation prescribed by Presidential Decree" in Article 35 (1) of the Act means any of the following: <Amended by Presidential Decree No. 17033, Dec. 29, 2000; Presidential Decree No. 17826 Dec. 30, 2002; Presidential Decree No. 18146, Nov. 29, 2003; Presidential Decree No. 18174, Dec. 30, 2003; Presidential Decree No. 18324, Mar. 22, 2004; Presidential Decree No. 18706, Feb. 19, 2005; Presidential Decree No. 18736, Mar. 8, 2005; Presidential Decree No. 20619, Feb. 22, 2008; Presidential Decree No. 21302, Feb. 4, 2009; Presidential Decree No. 22035, Feb. 18, 2010; Presidential Decree No. 22577, Dec. 30, 2010; Presidential Decree No. 22626, Jan. 17, 2011; Presidential Decree No. 23589, Feb. 2, 2012; Presidential Decree No. 26369, Jun. 30, 2015; Presidential Decree No. 26981, Feb. 12, 2016; Presidential Decree No. 27828, Feb. 3, 2017; Dec. 8, 2020> |
| 1. | Corporations referred to in Article 61 (2) 18 through 23 and 29; |
| 10. | Electric Constructors' Financial Cooperatives established under the Electric Constructors' Financial Cooperative Act; |
| (2) | "Corporation prescribed by Presidential Decree" in Article 35 (2) of the Act means the corporation referred to in paragraph (1) 2. <Newly Inserted by Presidential Decree No. 22577, Dec. 30, 2010> |
| (3) | "Amount calculated, as prescribed by Presidential Decree" in Article 35 (1) and (2) of the Act means the amount computed by multiplying the credit guarantee balance related to the credit guarantee business as of the last day of the relevant business year by 1/100 or by the incidence of claims for indemnity (referring to the rate of claims for indemnity accrued in the relevant business year among the credit guarantee balance related to the credit guarantee business as of the last day of the immediately preceding business year), whichever is smaller. <Amended by Presidential Decree No. 20619, Feb. 22, 2008; Presidential Decree No. 22577, Dec. 30, 2010; Presidential Decree No. 23589, Feb. 2, 2012> |
| (4) | "Bad debts prescribed by Presidential Decree" in Article 35 (3) of the Act means bad debts incurred from any of the following claims for indemnity: <Amended by Presidential Decree No. 17033, Dec. 29, 2000; Presidential Decree No. 17826, Dec. 30, 2002; Presidential Decree No. 18706, Feb. 19, 2005; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 21302, Feb. 4, 2009; Presidential Decree No. 22577, Dec. 30, 2010; Presidential Decree No. 23589, Feb. 2, 2012; Presidential Decree No. 26369, Jun. 30, 2015> |
| 1. | Claims for indemnity falling under any subparagraph of Article 19-2 (1); |
| 2. | Claims for indemnity that a steering committee established under the Act concerning the incorporation of the relevant corporation (referring to the credit guarantee deliberation committee for farmers and fishers in cases of the Credit Guarantee Fund for Farmers and Fishers, the Korean Federation of Credit Guarantee Foundations established under Article 35 of the Regional Credit Guarantee Foundation Act in cases of a credit guarantee foundation, and the board of directors in cases of the Korea Housing and Urban Guarantee Corporation and the Korea Labor Welfare Corporation) recognizes as those that meet the standards, in consultation with the Minister of Economy and Finance. |
| (5) | A domestic corporation that wishes to qualify for Article 35 (1) of the Act shall submit a detailed statement on the settlement of allowances for redemption of claims for indemnity in the form stipulated by Ordinance of the Ministry of Economy and Finance to the head of the tax office having jurisdiction over the place of tax payment, along with accompanied by the report provided for in Article 60 of the Act. <Amended by Presidential Decree No. 20720, Feb. 29, 2008> |
| Article 64 (Inclusion of National Subsidies in Deductible Expenses) |
| (1) | "Business assets prescribed by Presidential Decree" in Article 36 (1) of the Act means tangible and intangible business assets and petroleum. <Amended by presidential Decree No. 22951, Jun. 3, 2011; Feb. 12, 2019> |
| (2) | The amount that may be included in deductible expenses under Article 36 (1) of the Act shall be limited to the amount of subsidies granted under the Subsidy Management Act, or any Act specified in the subparagraphs of paragraph (6) (hereafter referred to as "national subsidies, etc." in this Article) and used to acquire or improve relevant business assets, among the value of each business asset. In such cases, if national subsidies, etc., are paid after acquiring or improving business assets, the amount equivalent to depreciation costs already included in deductible expenses for any business year before the business year in which such subsidies are paid shall be excluded from the amount that may be included otherwise in deductible expenses. <Amended by Presidential Decree No. 16658, Dec. 31, 1999; Presidential Decree No. 17457, Dec. 31, 2001; Presidential Decree No. 18706, Feb. 19, 2005; Presidential Decree No. 23589, Feb. 2, 2012; Presidential Decree No. 25194, Feb. 21, 2014; Feb. 13, 2021> |
| (3) | The amount included in deductible expenses under paragraph (2) shall be appropriated as lump sum depreciation reserve funds or as compressed account reserve funds in accordance with the following classifications for each type of the relevant business assets: |
| 1. | Depreciable assets: Lump sum depreciation reserve funds; |
| 2. | Assets other than those referred to in subparagraph 1: Compressed account reserve funds. |
| (4) | Lump sum depreciation reserve funds and compressed accounts reserve funds appropriated as deductible expenses under paragraph (3) shall be included in gross income by any of the following methods: <Amended on Feb. 12, 2019> |
| 1. | The lump sum depreciation reserve funds shall offset the depreciation costs of the relevant business assets (limited to an amount equivalent to the relevant lump sum depreciation reserve funds among the acquisition value): Provided, That where the relevant assets are disposed of, the balance after offset shall be included in gross income for the business year in which such assets are disposed of; |
| 2. | The full amount of the compressed accounts reserve funds shall be included in gross income for the business year in which the relevant business assets are disposed of. |
| (5) | In applying paragraph (4), the amount included in gross income when the relevant business assets are partially disposed of shall be computed by multiplying the value of the relevant business assets by the ratio of the proportion occupied by the lump sum depreciation reserve funds or the compressed accounts reserve funds. <Amended on Feb. 12, 2019> |
| (6) | "Acts prescribed by Presidential Decree" in Article 36 (1) of the Act means each of the following Acts: <Newly Inserted by Presidential Decree No. 17457, Dec. 31, 2001; Presidential Decree No. 17826, Dec. 30, 2002; Presidential Decree No. 18706, Feb. 19, 2005; Presidential Decree No. 18736, Mar. 8, 2005; Presidential Decree No. 19328, Feb. 9, 2006; Presidential Decree No. 22951, Jun. 3, 2011; Feb. 11, 2020> |
| (7) | "Grounds prescribed by Presidential Decree" in the latter part of Article 36 (2) of the Act means any of the following: <Newly Inserted by Presidential Decree No. 20619, Feb. 22, 2008> |
| 1. | Where permission, authorization, etc., of construction is delayed; |
| 2. | Where the period for construction is extended because the construction site is not determined, etc.; |
| 3. | Where litigation on compensation for land, etc., is pending; |
| 4. | Where any grounds corresponding to those provided for in subparagraphs 1 through 3 have arisen. |
| (8) | A domestic corporation which seeks the benefit of Article 36 (1) and (2) of the Act shall submit a detailed statement on settlement of the inclusion of an amount equivalent to National subsidies, etc., in deductible expenses (a plan to use National subsidies, etc.) in the form stipulated by Ordinance of the Ministry of Economy and Finance, accompanied by the report provided for in Article 60 of the Act, to the head of the tax office having jurisdiction over the place of tax payment. <Amended by Presidential Decree No. 16658, Dec. 31, 1999; Presidential Decree No. 20720, Feb. 29, 2008> |
| Article 65 (Inclusion of Construction Charges in Deductible Expenses) |
| (1) | "Projects prescribed by Presidential Decree" in Article 37 (1) 5 of the Act means any of the following projects: <Amended by Presidential Decree No. 17457, Dec. 31, 2001; Presidential Decree No. 18706, Feb. 19, 2005; Presidential Decree No. 21698, Aug, 21, 2009; Presidential Decree No. 22951, Jun. 3, 2011; Dec. 8, 2020> |
| (2) | The amount that may be included in deductible expenses under Article 37 (1) of the Act shall be limited to the amount equivalent to the value of relevant asset by business asset (referring to the amount equivalent to construction charges, if an asset has been acquired with construction charges). In such cases, if construction charges are paid after acquiring or improving assets, the amount equivalent to depreciation costs already included in deductible expenses for any business year before the business year in which such construction charges are paid shall be excluded from the amount that may be included in deductible expenses. <Amended by Presidential Decree No. 25194, Feb. 21, 2014; Feb. 12, 2019> |
| (3) | Article 64 (3) through (5) and (7) shall apply mutatis mutandis to the inclusion of an amount equivalent to the value of assets prescribed in paragraph (2) in deductible expenses or gross income. <Amended on Feb. 12, 2019> |
| (4) | Deleted. <by Presidential Decree No. 20619, Feb. 22, 2008> |
| (5) | A domestic corporation which intends to be applicable under Article 37 (1) and (2) of the Act shall submit a detailed statement on the inclusion of an amount equivalent to construction charges in deductible expenses (a plan to use construction charges) in the form stipulated by Ordinance of the Ministry of Economy and Finance, along with the report provided in Article 60 of the Act, to the head of the tax office having jurisdiction over the place of tax payment. <Amended by Presidential Decree No. 20720, Feb. 29, 2008> |
| Article 66 (Inclusion of Insurance Marginal Profits in Deductible Expenses) |
| (1) | The same type of assets referred to in Article 38 (1) of the Act mean tangible assets acquired to replace assets subject to insurance that have been destroyed, the use or purpose of which is the same as the assets subject to insurance that have been destroyed. <Amended on Feb. 12, 2019> |
| (2) | The amount to be included in deductible expenses under Article 38 (1) of the Act shall be the amount equivalent to the insurance marginal profits used to acquire or improve the relevant asset out of the value of the relevant asset by asset subject to insurance. In such cases, where the value of the relevant asset subject to insurance falls shorts of the insurance money paid, the amount of the insurance money, other than insurance marginal profits, is deemed first used. <Amended on Feb. 12, 2019> |
| (3) | Article 64 (3) 1, (4) 1 and (5) shall apply mutatis mutandis to the inclusion of an amount equivalent to insurance marginal profits under paragraph (2) in deductible expenses and gross income. |
| (4) | A domestic corporation which intends to be applicable under Article 38 (1) and (2) of the Act shall submit the detailed statement on the inclusion of an amount equivalent to insurance marginal profits in deductible expenses (plan to use insurance marginal profits) in the form stipulated by Ordinance of the Ministry of Economy and Finance, along with the report provided in Article 60 of the Act, to the head of the tax office having jurisdiction over the place of tax payment. <Amended by Presidential Decree No. 20720, Feb. 29, 2008> |
| Article 67 Deleted. <by Presidential Decree No. 17457, Dec. 31, 2001> |
Subsection 5 Periods during Which Gross Income and Deductible Expenses Accrue
| Article 68 (Business Year in Which Gains and Losses from Sale of Assets Accrue) |
| (1) | In applying Article 40 (1) and (2) of the Act, the business year in which gross income or deductible expenses accrue from the transfer, etc., of assets shall be the business year in which any of the following dates falls: <Amended by Presidential Decree No. 19891, Feb. 28, 2007; Presidential Decree No. 23589, Feb. 2, 2012; Presidential Decree No. 27828, Feb. 3, 2017> |
| 1. | Sale of commodities (excluding real estate), manufactured goods, or other products (hereafter in this Article referred to as "commodities"): The date on which such commodities, etc., are delivered; |
| 2. | Trial sale of commodities, etc.: The date on which the other party expresses its intention to purchase the commodities, etc.: Provided, That where the sale is finalized by a special contract which states that if the commodities, etc., are not returned or the intention to reject them is not expressed within a certain period, it shall be the expiration date of such period; |
| 3. | Transfer of assets, other than commodities, etc.: The date the price is settled [for the portion of exchange rate fluctuations in the amount of acquisition capital that is a foreign currency price (hereafter referred to as "foreign currency price" in this subparagraph), which is not converted into won currency, received in exchange for transferring foreign currency-denominated assets, such as foreign currency bonds, acquired and held by the Bank of Korea under the Bank of Korea Act, the date the foreign currency price is sold and converted into Korean won in such a manner as determined by the Bank of Korea]: Provided, That where the registration of the transfer of rights of possession, the delivery of the relevant assets, or the use of the relevant assets by the other party takes place before the date on which the price is settled, it shall be the registration date of the transfer (including the date of registration), the date of delivery, or the date on which the other party started to use the relevant assets, whichever is sooner; |
| 4. | Consignment sales and purchases of assets: The date on which the consignee buys or sells the consigned assets; |
| (2) | In the settlement of accounts for the business year which includes the date of the delivery of assets sold or transferred on a long-term installment plan (for assets falling under paragraph (1) 3, the date specified in the proviso to the same subparagraph; hereafter in this Article the same shall apply), where the amount collected or to be collected in the relevant business year and the corresponding expenses are recognized as earnings and expenses respectively, the amount collected or to be collected pursuant to the long term installment plan in each business year and the corresponding expenses shall be included in the gross income and deductible expenses for each business year, notwithstanding paragraph (1) 1 and 3: Provided, That where a corporation that is a small and medium enterprise has sold or transferred the assets on a long term installment plan, the amount collected or to be collected pursuant to the long term installment plan in each business year and the corresponding expenses shall be included in the gross income and deductible expenses. <Amended by Presidential Decree No. 22577, Dec. 30, 2010> |
| (3) | In applying paragraph (2), the amount collected or to be collected prior to the date of delivery shall be deemed collected on the date of delivery, and where the relevant corporation closes its business during the period of long term installment, the amount not included in gross income as on date of closure and the corresponding expenses shall be included in the gross income and deductible expenses, respectively, for the business year in which the date of closure falls. <Newly Inserted by Presidential Decree No. 22577, Dec. 30, 2010> |
| (4) | "Long term installment plan" in paragraph (2) means the sale or transfer of assets (for overseas transactions, including leases of assets under conditional agreements for the transfer of ownership), the sales proceeds or income of which is paid monthly, yearly, or by another periodic method by which payments are made in at least two installments, and the last payment is made one year or later from the day after the date of the delivery of the relevant assets. |
| (5) | In applying paragraph (1), where a corporation sells at a discount, the amount of sales discount shall be subtracted from the amount of sales for the business year which includes the date of payment under the agreement with the other party (where the date of payment is not prescribed, the date the payment is made). |
| (6) | Where a corporation has evaluated the debentures generated upon the transfer or sale of assets under a long term installment plan referred to in paragraph (4) at the present value as determined by the corporate accounting standards and appropriates the realization balance, the amount equivalent to the realization balance entered or to be entered shall be included in the gross income for each business year during the collection period of the relevant debentures in accordance with the corporate accounting standards. <Amended by Presidential Decree No. 22577, Dec. 30, 2010> |
| (7) | Matters necessary for the scope of the dates of delivery referred to in paragraph (1) 1 shall be prescribed by Ordinance of the Ministry of Economy and Finance. <Amended by Presidential Decree No. 20720, Feb. 29, 2008> |
| Article 69 (Business Year on Which Gains and Losses from Provision of Services Devolve) |
| (1) | In applying Article 40 (1) and (2) of the Act, in the case of gains and losses generated from construction, manufacturing or the provision of other services (including contracts and subscription sales; hereafter referred to as "construction, etc." in this Article), the gains and expenses, which are calculated based on the construction completion rate, as prescribed by Ordinance of the Ministry of Economy and Finance (hereafter referred to as "progress rate of work" in this Article) shall be included in the gross income and deductible expenses for each business year from the business year which includes the commencement date of construction, etc. of the object to the business year in which the date of delivery (referring to the date on which services are completely provided, if services are involved; hereafter the same shall apply in this Article) of the object falls: Provided, That in any of the following cases, gains and losses may be included in the gross income and deductible expenses for each business year from the business year which includes the date of delivery of the object: <Amended by Presidential Decree No. 22577, Dec. 30, 2010; Presidential Decree No. 23589, Feb. 2, 2012; Presidential Decree No. 24357, Feb. 15, 2013> |
| 1. | In the case of construction, etc. with less than one year of the period of the construction contract conducted by a corporation which is a small and medium enterprise; |
| 2. | Where they are appropriated, according to the corporate accounting standards, as the gross income and deductible expenses for the business year in which the date of delivery of the object falls. |
| (2) | Where it is recognized that the progress rate of work cannot be calculated when applying paragraph (1), as prescribed by Ordinance of the Ministry of Economy and Finance, gains and losses shall be included in the gross income and deductible expenses for the business year in which the date of delivery of the object falls. <Amended on Feb. 28, 2023> |
| (3) | In applying paragraph (1), if there is any difference between the gross income or deductible expenses based on the progress rate of work and the amount determined due to the termination of a construction contract, such difference shall be included in the gross income or deductible expenses for the business year which includes the date of termination of the construction contract. <Newly Inserted by Presidential Decree No. 23589, Feb. 2, 2012> |
| Article 70 (Business Year on Which Interest Income Accrues) |
| (1) | In applying Article 40 (1) and (2) of the Act, the business year in which the interest, etc. reverts to gross income or deductible expenses shall be according to the following classification: <Amended by Presidential Decree No. 17457, Dec. 31, 2001; Presidential Decree No. 18706, Feb. 19, 2005; Presidential Decree No. 21302, Feb. 4, 2009; Presidential Decree No. 21972, Dec. 31, 2009; Feb. 12, 2019; Feb. 17, 2021> |
| 1. | Interest and discounts paid to a corporation: Business year in which the date of receipt of income provided for in Article 45 of the Enforcement Decree of the Income Tax Act falls (for any corporation that runs the financial and insurance business listed in the Korean Standard Industrial Classification, the date of actually receiving the income, excluding any prepaid interest and discounts): Provided, That in the settlement of accounts, where the interest and discounts on a period which has already passed (excluding interest and discounts withheld as prescribed in Articles 73 and 73-2 of the Act) are appropriated as profits for the relevant business year, it shall be included in gross income for the relevant business year; |
| 2. | Interest and discounts paid by a corporation: Business year in which the date of receipt of income provided in Article 45 of the Enforcement Decree of the Income Tax Act falls: Provided, That in the settlement of accounts, where the interest and discounts on a period which has already passed (excluding interest and discounts on transactions with a specially related person where the interest payment date exceeds one year from the date of borrowing) are appropriated as losses for the relevant business year, it shall be included in deductible expenses for the relevant business year. |
| (2) | In applying Article 40 (1) and (2) of the Act, dividends paid to a corporation shall be included in gross income for the business year in which the date of receipt of income provided for in Article 46 of the Enforcement Decree of the Income Tax Act falls: Provided, That as for dividends paid by a special purpose company as defined in the Asset-Backed Securitization Act, which has been established jointly by financial companies, etc. referred to in any subparagraph of Article 61 (2) in order to help debt delinquents recover credit, etc. and to jointly collect claims, such dividends shall be included in gross income for the business year in which the date such dividends were actually paid falls. <Amended by Presidential Decree No. 22035, Feb. 18, 2010> |
| (3) | In applying Article 40 (1) and (2) of the Act, insurance premiums, installments, guarantee fees, or fees (hereafter referred to as "insurance premiums, etc." in this paragraph), excluding prepaid insurance premiums, etc. (including the prepaid accumulated insurance premiums appropriated as liabilities where a corporation falling under Article 63 (2) settles accounts), received by a corporation that runs the financial and insurance activities listed in the Korean Standard Industrial Classification shall revert to the business year in which the date of actually receiving the insurance premiums falls: Provided, That in the settlement of accounts, where insurance premiums on a period which has already passed are appropriated as gains for the relevant business year (including where a corporation falling under Article 63 (2) appropriates the returned amount of prepaid accumulated insurance premiums as gains upon settling accounts), they shall be included in gross income for the relevant business year and where an investment dealer or investment broker prescribed in the Financial Investment Services and Capital Markets Act has traded securities defined in Article 4 of the same Act (hereafter referred to as "securities" in this Article) by a standardized dealing method, the business year to which the commission thereof reverts shall be the business year in which the date on which the transaction contract thereon is concluded falls. <Amended by Presidential Decree No. 17457, Dec. 31, 2001; Presidential Decree No. 18706, Feb. 19, 2005; Presidential Decree No. 21302, Feb. 4, 2009; Presidential Decree No. 22577, Dec. 30, 2010> |
| (4) | Where interest, discounts and dividend income for a period that already passed among the gains relating to investment in securities, etc. have been appropriated as gains of the relevant business year when an investment company, etc. settles accounts, such gains shall be included in gross income for the relevant business year in which such appropriation is made, notwithstanding paragraphs (1) and (2). <Newly Inserted by Presidential Decree No. 17457, Dec. 31, 2001; Presidential Decree No. 18174, Dec. 30, 2003; Presidential Decree No. 18706, Feb. 19, 2005; Presidential Decree No. 21302, Feb. 4, 2009; Presidential Decree No. 21972, Dec. 31, 2009> |
| (5) | Notwithstanding paragraphs (1) and (2), the business year to which the amount of income provided in the subparagraphs of Article 73 (1) of the Act that belongs to the trust property operated by the trust business entity registered under the Financial Investment Services and Capital Markets Act (excluding the investment trust property defined in the same Act; hereafter the same shall apply in Articles 111 and 113) reverts shall be the business year in which the date of withholding under Article 111 (6) falls. <Newly Inserted by Presidential Decree No. 21302, Feb. 4, 2009; Presidential Decree No. 21972, Dec. 31, 2009> |
| (6) | Notwithstanding paragraphs (1) and (3), items reflected in calculating liability reserve funds prescribed in Article 120 of the Insurance Business Act, such as interest, discounts, and premiums received or paid by an insurance company in connection with insurance contracts, shall be appropriated as gross income or deductible expenses for the business year in which such items are appropriated as earnings or deductible expenses pursuant to the insurance supervisory accounting standards. <Newly Inserted on Feb. 28, 2023> |
| Article 71 (Business Year on Which Other Gains and Losses, such as Rental Fees Devolve) |
| (1) | In applying Article 40 (1) and (2) of the Act, the business year in which gains and losses generated from the rental of assets accrue shall be the business year which includes any of the following dates: Provided, That in settling accounts, where any amount equivalent to the rental fee for any period that has already passed and expenses corresponding thereto is appropriated as gains, and the payment period of such rental fee exceeds one year, an amount equivalent to the rental fee on the period that has already passed and other expenses shall be included in gross income or deductible expenses of the relevant business year: <Amended by Presidential Decree No. 17457, Dec. 31, 2001> |
| 1. | Where the date of payment of rental fees is prescribed by a contract, the payment date; |
| 2. | Where the date of payment of rental fees is not prescribed by a contract, the date on which payment is received. |
| (2) | In applying Article 40 (1) and (2) of the Act, where a corporation operating a business, to which Article 162 of the Income Tax Act and Article 36 (4) of the Value-Added Tax Act applies, installs and uses a cash register, the business year to which the prices receivable for goods and services revert may be the business year in which such prices are actually received. <Amended by Presidential Decree No. 18706, Feb. 19, 2005; Presidential Decree No. 24638, Jun. 28, 2013> |
| (3) | In applying Article 40 (1) and (2) of the Act, where any corporation issues bonds, an amount (hereafter referred to as "bond discount" in this paragraph) computed by deducting the total amount of the value of issued bonds (excluding the commission for issuing such bonds and expenses spent directly and inevitably to issue such bonds) from the total amount of bonds to be redeemed shall be included in deductible expenses according to the method of depreciating bond discounts under the corporate accounting standards. <Newly Inserted by Presidential Decree No. 17457, Dec. 31, 2001> |
| (4) | In applying Article 40 (1) and (2) of the Act, where any corporation transfers the assets it owns by the method provided for in Article 13 of the Asset-Backed Securitization Act and endorses and transfers the accounts receivable or note receivable, the business year in which the relevant gains or losses are included shall be determined according to the recognition method of gains and losses under the corporate accounting standards. <Newly Inserted by Presidential Decree No. 22577, Dec. 30, 2010; Presidential Decree No. 23589, Feb. 2, 2012> |
| (5) | In applying Article 40 (1) and (2) of the Act, where any corporation appropriates any expenses as development costs provided for in Article 24 (1) 2 (f) but cancels the development before the time the relevant product becomes available for sale or use arrives, such expenses shall be included in the deductible expenses for the business year in which the date all of the following requirements are satisfied falls: <Newly Inserted by Presidential Decree No. 23589, Feb. 2, 2012; Feb. 12, 2019> |
| 1. | That it is impossible to discern the outcomes of improving the relevant material, device, product, process, system or service for commercial production or use from the relevant development; |
| 2. | That all relevant development costs shall be appropriated as deductible expenses. |
| (6) | In applying Article 40 (1) and (2) of the Act, any gains or losses arising from trading of derivatives in which the object of the contract are not delivered but the difference due to a change in the value of the object is paid with money shall be included in gross income or deductible expenses for the business year in which the payment date determined in the relevant trading falls. <Newly Inserted by Presidential Decree No. 23589, Feb. 2, 2012> |
| (7) | In applying Article 40 (1) and (2) of the Act, the business year to which gross income or deductible expenses reverts shall be prescribed by Ordinance of the Ministry of Economy and Finance, except as otherwise provided for in the Act (excluding Article 43), the Restriction of Special Taxation Act, and this Decree. <Amended by Presidential Decree No. 18706, Feb. 19, 2005; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 23589, Feb. 2, 2012> |
| Article 72 (Acquisition Value of Assets) |
| (1) | "Financial assets prescribed by Presidential Decree" in Article 41 (1) 1 of the Act means financial assets and derivatives classified as short-term trading items (hereafter referred to as "short-term financial assets, etc." in this Article) by the corporate accounting standards. <Newly Inserted by Presidential Decree No. 22577, Dec. 30, 2010> |
| (2) | The acquisition value of assets referred to in Article 41 (1) and (2) of the Act means the following amounts: <Amended by Presidential Decree No. 17457, Dec. 31, 2001; Presidential Decree No. 19328, Feb. 9, 2006; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 21302, Feb. 4, 2009; Presidential Decree No. 22035, Feb. 18, 2010; Presidential Decree No. 22184, Jun. 8, 2010; Presidential Decree No. 22577, Dec. 30, 2010; Presidential Decree No. 22812, Mar. 31, 2011; Presidential Decree No. 23589, Feb. 2, 2012; Presidential Decree No. 25194, Feb. 21, 2014; Presidential Decree No. 26068, Feb. 3, 2015; Presidential Decree No. 28640, Feb. 13, 2018; Feb. 12, 2019; Feb. 17, 2021; Feb. 28, 2023> |
| 1. | Assets purchased from a third person: The sum of the purchase price, acquisition tax (including special tax for rural areas and local education tax), registration and license tax, and other incidental expenses [where a corporation acquires land, the building built on the land, other structures, etc., (hereafter referred to "building, etc." in this subparagraph) and it is unclear to classify the value of the land and the value of the building, etc., such value shall be in proportion to the market price referred to in Article 52 (2) of the Act]; |
| 1-2. | Stocks, etc. acquired by a domestic corporation by acquiring its foreign subsidiary, if the amount of dividend income prescribed in Article 18-4 (1) of the Act (hereafter in this Article referred to as "dividend income") received by the domestic corporation from the foreign subsidiary according to the acquisition of such stocks, etc. meet each of the following requirements: the purchase price of such stocks, etc. minus the dividend income meeting each of the following requirements: |
| (a) | The dividend income shall be financed by retained earnings as of the day immediately preceding the day on which the domestic corporation comes to hold at least 10/100 of the total number of the issued voting stocks or the total amount of investment of the foreign subsidiary (5/100 in the case of a foreign corporation conducting an overseas resources development project under Article 22 of the Act on Restriction on Special Cases concerning Taxation); |
| (b) | The dividend income has not been included in gross income under Article 18-4 (1) of the Act; |
| 2. | Assets acquired by directly manufacturing, producing, or constructing the assets, or by other similar methods: The sum of raw materials costs, labor costs, shipping expenses, loading and unloading expenses, insurance premiums, fees, public charges (including acquisition tax and registration tax), installation costs, and other incidental expenses; |
| 3. | The following amounts in cases of assets acquired through a merger, division, or investment in kind: |
| (a) | In cases of a qualified merger or qualified division: The book value provided for in Article 80-4 (1) or 82-4 (1); |
| (b) | In other cases: The market value of the relevant assets; |
| 3-2. | The following amounts in cases of stocks, etc., acquired by a divided corporation due to a spin-off: The market value of net assets divided by the spin-off; |
| (a) | and (b) Deleted; <by Presidential Decree No.25194, Fed. 21, 2014> |
| 4. | The following amounts in cases of stocks, etc., acquired by an investing corporation through investment in kind: |
| (a) | In cases of an investment in kind with which an investing corporation (including persons who jointly invest with an investing corporation pursuant to Article 47-2 (1) 3 of the Act; hereinafter referred to as “investing corporation, etc.”) establishes an invested corporation and acquires only stocks, etc., in return for the new establishment: The market value of the net assets invested in kind; |
| (b) | In other cases: The market value of the relevant stocks, etc. |
| 4-2. | Stocks, etc., acquired by debt-equity swap: The acquisition value of such stocks, etc., at the time of acquisition: Provided, That for the stocks, etc., acquired by debt-equity swap meeting the requirements prescribed in any subparagraph of Article 15 (1), it shall be the book value of the claims that have converted into investment (excluding any claim falling under any subparagraph of Article 19-2 (2) of the Act); |
| 5. | Stocks, etc., acquired through a merger or division (excluding a spin-off): The amount calculated by subtracting the sum total of money or other property value among the costs of a merger provided for in Article 16 (2) 1 of the Act or the costs of a division provided for in Article 16 (1) 2 from the amount computed by adding the amounts provided for in Article 16 (1) 5 or 6 of the Act, and subparagraph 8 of Article 11 to the former book value; |
| 5-2. | Short-term financial assets, etc.: The purchase value; |
| 5-3. | Assets donated to a public corporation, etc., provided for in Article 12 of the Enforcement Decree of the Inheritance Tax and Gift Tax Act: An asset falling under the donation (limited to assets, other than money referred to in Article 36 (1)) provided for in Article 24 (3) 1 of the Act received from a person, other than any related party means the book value as at the time of donation [referring to the acquisition value computed under Article 89 of the Enforcement Decree of the Income Tax Act as at the acquisition of asset in cases of any asset not related to business revenue]: Provided, That for any contributed property excluded from the taxable value of the gift tax under the Inheritance Tax and Gift Tax Act, if the tax liability arise with respect to the contributed property excluded from the taxable value and an amount equivalent to the total amount of such inheritance tax or gift tax is imposed, the amount means the market price as at the time of contribution; |
| 7. | Assets acquired by other methods: The market price as at the time of acquisition. |
| (3) | In applying paragraph (2), the following amounts shall be included in the acquisition value: <Amended by Presidential Decree No. 19328, Feb. 9, 2006; Presidential Decree No. 22577, Dec. 30, 2010; Presidential Decree No. 25194, Feb. 21, 2014; Feb. 12, 2019> |
| 1. | The amount included in the gross income referred to in Article 15 (2) 1 of the Act; |
| 2. | The amount excluded from deductible expenses under Article 28 (1) 3 and (2) of the Act; |
| 3. | Where tangible assets are acquired and national and public bonds are also purchased, the difference between the purchase value of the national and public bonds and the current value thereof is counted as the amount of the acquisition value of the relevant tangible assets by corporate accounting standards. |
| (4) | In applying paragraph (2), the following amounts shall be excluded from the acquisition value: <Amended by Presidential Decree No. 17826, Dec. 30, 2002; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 22577, Dec. 30, 2010> |
| 1. | Where the present value of liabilities generated in acquiring assets through a long term installment plan provided for in Article 68 (4) is evaluated by corporate accounting standards and appropriated as the realization balance, such realization balance; |
| 2. | For annual income prescribed by Ordinance of the Ministry of Economy and Finance, the acquisition value and the amount divided and appropriated as paid interest; |
| 3. | The amount in excess of the market price pursuant to Article 88 (1) 1 and 8 (b); |
| 4. | Deleted. <by Presidential Decree No. 17457, Dec. 31, 2001> |
| (5) | Where any of the following cases occurs with respect to assets held by a corporation, the acquisition value thereof shall be as follows: <Amended by Presidential Decree No. 21302, Feb. 4, 2009; Presidential Decree No. 25194, Feb. 21, 2014; Feb. 12, 2019> |
| 1. | The evaluated value, if evaluation is conducted under each subparagraph of Article 42 (1) and Article 42 (3) of the Act; |
| 2. | The sum of the acquisition value and such capital expenditures, if capital expenditures are made under Article 31 (2); |
| 3. | The amount computed by adding profits, if any profit referred to in subparagraph 8 of Article 11 accrues as a result of a merger or a division and merger (excluding cases of paragraph (2) 5). |
| (6) | Articles 18-2 (1) 2, 28, 73, 73-2, 98, 120, and 120-2 of the Act shall not apply to the depreciation cost of the realization balance referred to in paragraph (4) 1 and the paid interest referred to in paragraph (4) 2. <Amended by Presidential Decree No. 18174, Dec. 30, 2003; Presidential Decree No. 22577, Dec. 30, 2010; Presidential Decree No. 25194, Feb. 21, 2014; Feb. 12, 2019; Feb. 28, 2023> |
| Article 73 (Scope of Assets and Liabilities Subject to Evaluation) |
"Inventory assets and other assets and liabilities prescribed by Presidential Decree" in Article 42 (1) 2 of the Act means the following: <Amended by Presidential Decree No. 17457, Dec. 31, 2001; Presidential Decree No. 18174, Dec. 30, 2003; Presidential Decree No. 18706, Feb. 19, 2005; Presidential Decree No. 19328, Feb. 9, 2006; Presidential Decree No. 19891, Feb. 28, 2007; Presidential Decree No. 20619, Feb. 22, 2008; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 21302, Feb. 4, 2009; Presidential Decree No. 22035, Feb. 18, 2010; Presidential Decree No. 22577, Dec. 30, 2010; Presidential Decree No. 22812, Mar. 31, 2011; Presidential Decree No. 23589, Feb. 2, 2012; Feb. 17, 2021> | 1. | Any of the following inventory assets: |
| (a) | Manufactured goods and commodities (including real estate held by a realtor for the purpose of sale, and excluding securities); |
| (b) | Semi-finished products, and goods in process; |
| 2. | Any of the following securities, etc.: |
| 3. | Monetary assets and liabilities denominated in a foreign currency according to the corporate accounting standards (hereinafter referred to as "monetary assets and liabilities denominated in a foreign currency"); |
| 4. | Currency forward, currency swap and exchange risk insurance prescribed by Ordinance of the Ministry of Economy and Finance (hereafter referred to as "currency forward, etc." in this Article and Article 76) among the currency-related derivatives held by financial companies, etc. referred to in Article 61 (2) 1 through 7; |
| 5. | Currency forward, etc. held by corporations, other than financial companies, etc. referred to in Article 61 (2) 1 through 7, in order to avoid the exchange risk of monetary assets and liabilities denominated in a foreign currency; |
| Article 74 (Evaluation of Inventory Assets) |
| (1) | The evaluation of inventory assets referred to in subparagraph 1 of Article 73 shall be conducted in the method chosen and reported to the head of the tax office having jurisdiction over the place of tax payment by a corporation among any of the following methods (referring to the method under any item of subparagraph 1 in the case falling under subparagraph 1): |
| 1. | The cost method: The method of using the acquisition value calculated by any of the following methods as the evaluated value of the assets: |
| (a) | The method of using the acquisition value of each inventory asset calculated on an individual basis as the evaluated value of the asset (hereinafter referred to as "individual method"); |
| (b) | The method of removing the inventory assets beginning with the first put into storage, and using the acquisition value calculated by deeming the assets acquired on the date nearest to the end date of the business year to be inventory assets as the evaluated value of the assets (hereinafter referred to as "first-in first-out method"); |
| (c) | The method of removing the inventory assets beginning with the assets most recently put into storage, and using the acquisition value calculated by deeming the assets acquired on the date furthest from the end date of the business year as inventory assets to be the evaluated value of the assets (hereinafter referred to as "last-in first-out method"); |
| (d) | The method of using the overall average acquisition value, calculated by adding the sum total of the acquisition value of assets as at the start date of the relevant business year to the sum total of the acquisition value of assets acquired during the relevant business year for each type of product and dividing by the total number of assets, as the evaluated value of the assets (hereinafter referred to as "gross average method"); |
| (e) | The method of using the average acquisition value calculated by the average unit price computed by dividing the total amount on the account books by the number of assets on the account books each time assets are acquired as the evaluated value of the assets (hereinafter referred to as "moving average method"); |
| (f) | The method of using the acquisition value calculated by deducting the estimated marginal earnings from sales from the estimated sales prices by the type of product on the end date of the relevant business year as the evaluated value of the assets (hereinafter referred to as "sales price reduction method"); |
| 2. | The low-of-cost-or-market method: The method of using the amount computed in the cost method provided in subparagraph 1 or the value evaluated as the market price according to corporate accounting standards as the evaluated value, whichever is lower, for the inventory assets. |
| (2) | In the evaluation of inventory assets under paragraph (1), a corporation may separate the relevant assets by type of assets under each item of subparagraph 1 of Article 73 and evaluate them each by a different method according to the types or places of business. In such cases, earnings and expenses shall be separated into types of business (according to Divisions or Groups under the Korean Standard Industrial Classification) or places of business and entered into the accounts, and a report on manufacturing costs and a comprehensive income statement (referring to a balance sheet if there is no comprehensive income statement; hereinafter the same shall apply) shall be made by type of business or place of business. <Amended by Presidential Decree No. 22577, Dec. 30, 2010> |
| (3) | When a corporation intends to report on the evaluation method of inventory assets under paragraph (1), it shall submit a report (or a change report) on the evaluation method of inventory assets, etc. (including submitting such report through the national tax information and communications network) in the form stipulated by Ordinance of the Ministry of Economy and Finance to the head of the tax office having jurisdiction over the place of tax payment by the following deadlines. In such cases, where the corporate reports the low-of-cost-or-market method, it shall also submit a report comparing the cost method and the market price: <Amended by Presidential Decree No. 18312, Mar. 17, 2004; Presidential Decree No. 20720, Feb. 29, 2008> |
| 1. | For a newly established corporation or non-profit domestic corporation which has commenced profit-making business: The filing deadline of reports on the corporate tax base for the business year which includes the date of the establishment of the relevant corporation or the commencement date of profit-making business; |
| 2. | For a corporation which has submitted a report under subparagraph 1 and intends to change the evaluation method: Three months prior to the end date of the business year in which it intends to use the changed evaluation method. |
| (4) | In any of the following circumstances, the head of the tax office having jurisdiction over the place of tax payment of a corporation shall evaluate inventory assets by the first-in first-out method (or by the individual method in cases of real estate owned for the purpose of sale): Provided, That in cases of subparagraph 2 or 3, where the amount evaluated by the reported appraisal method is greater than the amount appraised by the first-in first-out method (or by the individual method in cases of real estate owned for the purpose of sale), the reported appraisal method shall apply: <Amended by Presidential Decree No. 25194, Feb. 21, 2014> |
| 1. | Where the corporation fails to submit a report on the evaluation method of inventory assets by the deadline specified under paragraph (3) 1; |
| 2. | Where the corporation conducts evaluation by a method, other than the reported evaluation method; |
| 3. | Where the corporation changes the evaluation method of inventory assets without submitting a report to change the evaluation method by the deadline specified under paragraph (3) 2. |
| (5) | Where a corporation reports on the evaluation method of inventory assets after the deadline specified in each subparagraph of paragraph (3) expires, paragraph (4) shall apply mutatis mutandis to the business year which includes the date of the report, and the evaluation method reported by the corporation shall apply from the following business year. |
| (6) | If a corporation intends to apply an evaluation method different from the evaluation method prescribed by paragraph (4) for inventory assets, which has been applied to the corporation because it failed to file a report on the evaluation method, such corporation shall file a report on the change by no later than three months before the end of the business year for which it intends to apply the different evaluation method. <Newly Inserted by Presidential Decree No. 24357, Feb. 15, 2013> |
| (7) | A corporation which evaluates inventory assets under paragraph (1) shall submit a detailed statement on the settlement of the evaluation of inventory assets in the form stipulated by Ordinance of the Ministry of Economy and Finance, along with the report provided for in Article 60 of the Act, to the head of the tax office having jurisdiction over the place of tax payment. <Amended by Presidential Decree No. 20720, Feb. 29, 2008> |
| Article 75 (Evaluation of Securities) |
| (1) | Securities prescribed in subparagraph 2 (a) and (b) of Article 73 shall be evaluated according to the method reported by the relevant corporation to the head of the tax office having jurisdiction over the place of tax payment among the following methods: <Amended by Presidential Decree No 17457, Dec. 31, 2001; Presidential Decree No. 18174, Dec. 30, 2003; Presidential Decree No. 18706, Feb. 19, 2005; Presidential Decree No. 21302, Feb. 4, 2009; Presidential Decree No. 22184, Jun. 8, 2010; Presidential Decree No. 22812, Mar. 31, 2011> |
| 1. | The individual method (limited to bonds); |
| 2. | The gross average method; |
| 3. | The moving average method; |
| 4. | Deleted. <by Presidential Decree No. 21302, Feb. 4, 2009> |
| (2) | Article 74 (3) through (6) shall apply mutatis mutandis to the evaluation of securities. In such cases, "first in first out method" referred to in Article 74 (4) shall be construed as "gross average method", and "detailed statement on the settlement of the evaluation of inventory assets" referred to in paragraph (6) of the same Article shall be construed as "detailed statement on the settlement of the evaluation of securities". <Amended by Presidential Decree No. 22812, Mar. 31, 2011> |
| (3) | The property referred to in subparagraph 2 (c) of Article 73 held by an investment company, etc. shall be evaluated by the fair market value method: Provided, That the non-marketable assets referred to in Article 242 (2) of the Enforcement Decree of the Financial Investment Services and Capital Markets Act held by any closed-end fund provided for in Article 230 of the same Act shall be evaluated by a method reported by the relevant close-end fund to the head of the tax office having jurisdiction over the place of tax payment, along with the report provided for in Article 60 of the Act among the methods falling under any subparagraph of paragraph (1) or the fair market value method, and such method shall continuously apply thereafter. <Newly Inserted by Presidential Decree No. 21302, Feb. 4, 2009; Presidential Decree No. 22812, Mar. 31, 2011> |
| (4) | Assets referred to in subparagraph 2 (d) of Article 73 held by an insurance company shall be evaluated by a method reported by the relevant insurance company, along with the report provided for in Article 60 of the Act, to the head of the tax office having jurisdiction over the place of tax payment among the methods falling under any subparagraph of paragraph (1) or the fair market value method, and such method shall continuously apply thereafter. <Newly Inserted by Presidential Decree No. 21302, Feb. 4, 2009; Feb. 28, 2023> |
| Article 76 (Evaluation of Foreign Assets and Liabilities) |
| (1) | Monetary assets and liabilities denominated in a foreign currency, currency forwards, etc. held by financial companies, etc. referred to in Article 61 (2) 1 through 7 shall be evaluated in the following methods: <Amended by Presidential Decree No. 22577, Dec. 30, 2010; Presidential Decree No. 23589, Feb. 2, 2012> |
| 1. | Monetary assets and liabilities denominated in a foreign currency: Method of evaluation by the basic rate of exchange or arbitrated rate of exchange (hereinafter referred to as "basic rate of exchange, etc.") prescribed by Ordinance of the Ministry of Economy and Finance as of the date the relevant business year ends; |
| 2. | Currency forwards, etc.: Method of evaluation by the method reported to the head of the competent tax office among any of the following methods: Provided, That the method provided for in item (a) shall apply in the business year before the method provided for in item (b) is first reported and applied: |
| (a) | The method of evaluating the assets and liabilities denominated in a foreign currency stated in the contract in accordance with the basic rate of exchange, etc. as of the date of contract; |
| (b) | The method of evaluating the assets and liabilities denominated in a foreign currency stated in the contract in accordance with the basic rate of exchange, etc. as of the end of the relevant business year. |
| (2) | Monetary assets and liabilities denominated in a foreign currency (excluding liability reserve funds of insurance companies; hereafter in this Article the same shall apply) held by a corporation, other than financial companies, etc. referred to in Article 61 (2) 1 through 7 and currency forwards, etc. held to avoid the exchange risk arising from monetary assets and liabilities denominated in a foreign currency under subparagraph 5 of Article 73 (hereinafter referred to as "currency forwards, etc. to avoid exchange risk") shall be evaluated by the method reported to the head of the competent tax office among any of the following methods: Provided, That the method provided for in subparagraph 1 shall apply in the business year before the method provided for in subparagraph 2 is first reported and applied: <Amended by Presidential Decree No. 22577, Dec. 30, 2010; Presidential Decree No. 23589, Feb. 2, 2012; Feb. 28, 2023> |
| 1. | The method of evaluating the assets and liabilities denominated in a foreign currency stated in the contract of the monetary assets and liabilities denominated in a foreign currency, currency forwards, etc. to avoid exchange risk in accordance with the basic rate of exchange, etc. as of the acquisition date or the effective date (referring to the date of contract in the case of the currency forwards, etc.); |
| 2. | The method of evaluating the assets and liabilities denominated in a foreign currency stated in the contract of the monetary assets and liabilities denominated in a foreign currency, currency forwards, etc. to avoid exchange risk in accordance with the basic rate of exchange, etc. as of the end of the relevant business year. |
| (3) | The evaluation method reported under paragraphs (1) 2 and (2) by a corporation shall apply continuously in the subsequent business years: Provided, That a different evaluation method may be reported to apply the changed method after five business years, including the business year in which the evaluation method reported under paragraph (2) is applied. <Newly Inserted by Presidential Decree No. 20619, Feb. 22, 2008; Presidential Decree No. 22577, Dec. 30, 2010; Presidential Decree No. 25194, Feb. 21, 2014> |
| (4) | Marginal profits or losses in the evaluated won currency amount and the won currency account amount arising from the evaluation of the monetary assets and liabilities denominated in any foreign currency, currency forwards, etc., and currency forwards, etc. to avoid exchange risk referred to in paragraphs (1) and (2) shall be included in the gross income or deductible expenses for the relevant business year. In such cases, the won currency account amount as at the time of contract of currency forwards, etc., currency forwards, etc. to avoid exchange risk means the amount computed by multiplying the amount of assets and liabilities denominated in a foreign currency stated in the contract by the basic rate of exchange, etc. as at the date of contract. <Amended by Presidential Decree No. 17457, Dec. 31, 2001; Presidential Decree No. 19328, Feb. 9, 2006; Presidential Decree No. 19891, Feb. 28, 2007; Presidential Decree No. 20619, Feb. 22, 2008; Presidential Decree No. 22035, Feb. 18, 2010; Presidential Decree No. 22577, Dec. 30, 2010; Presidential Decree No. 23589, Feb. 2, 2012> |
| (5) | Marginal profits or losses in the won currency amount and the won currency account amount of foreign currency claims and liabilities to be repaid to or repaid by a domestic corporation shall be included in the gross income or deductible expenses during the relevant business year: Provided, That the portion of exchange fluctuations in the amount to be repaid or repay in any foreign currency (hereafter referred to as "foreign currency amount" in this paragraph) among the foreign currency claims and liabilities of the Bank of Korea under the Bank of Korea Act shall be included in the gross income or deductible expenses for the business year in which the foreign currency amount is sold and converted into Korean won in such a manner as determined by the Bank of Korea. <Amended by Presidential Decree No. 19891, Feb. 28, 2007> |
| (6) | A corporation that intends to apply the evaluation method provided in paragraph (1) 2 (b) or (2) 2 or to change the evaluation method under the proviso to paragraph (3) shall submit a report on the evaluation method of monetary assets, etc. denominated in a foreign currency in the form stipulated by Ordinance of the Ministry of Economy and Finance, along with the report provided for in Article 60 of the Act for the business year to which it intends to first apply the evaluation method provided for in paragraph (1) 2 (b) or (2) 2 or for the business year to which it intends to apply the evaluation method changed under the proviso to paragraph (3). <Newly Inserted by Presidential Decree No. 22577, Dec. 30, 2010; Presidential Decree No. 25194, Feb. 21, 2014> |
| (7) | A corporation which evaluates the monetary assets and liabilities denominated in a foreign currency, currency forwards, etc, and currency forwards, etc. to avoid exchange risk under paragraphs (1) and (2) shall submit a detailed statement on settlement on marginal profits and losses on the evaluation of assets, etc. denominated in a foreign currency in the form stipulated by Ordinance of the Ministry of Economy and Finance, along with the report provided for in Article 60 of the Act, to the head of the tax office having jurisdiction over the place of tax payment. <Amended by Presidential Decree No. 17457, Dec. 31, 2001; Presidential Decree No. 19328, Feb. 9, 2006; Presidential Decree No. 19891, Feb. 28, 2007; Presidential Decree No. 20619, Feb. 22, 2008; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 22577, Dec. 30, 2010; Presidential Decree No. 23589, Feb. 2, 2012> |
| Article 77 (Evaluation of Virtual Assets) |
Virtual assets shall be evaluated according to the first-in, first-out method.
[This Article Newly Inserted on Feb. 17, 2021]
| Article 78 (Marginal Losses from Evaluation of Inventory Assets) |
| (1) | "Grounds prescribed by Presidential Decree, such as a natural disaster and a fire" in Article 42 (3) 2 of the Act means any of the following: <Amended by Presidential Decree No. 22951, Jun. 3, 2011; Feb. 12, 2019> |
| 1. | Natural disasters, accidents, or fires; |
| 2. | Expropriation, etc. under statutes or regulations; |
| 3. | Mines abandoned due to non-fulfillment of estimated mining outputs (including where tangible assets used for mining, including land, cannot be used for their proper purposes). |
| (2) | "Stocks, etc. prescribed by Presidential Decree" in subparagraph 3, with the exception of the items, of Article 42 (3) of the Act means stocks, etc. according to the following classification: <Amended by Presidential Decree No. 18706, Feb. 19, 2005; Presidential Decree No. 19328, Feb. 9, 2006; Presidential Decree No. 20619, Feb. 22, 2008; Presidential Decree No. 21302, Feb. 4, 2009; Presidential Decree No. 22951, Jun. 3, 2011; Feb. 12, 2019; Aug. 23. 2022; Feb. 28, 2023> |
| 1. | Cases prescribed in Article 42 (3) 3 (a) through (c) of the Act: Stocks, etc. falling under any of the following: |
| (c) | Stocks, etc. issued by a corporation, among the corporations, other than stock-listed corporations, which is not in any relationship listed in any subparagraph of Article 2 (8). |
| 2. | Cases falling under Article 42 (3) 3 (d) of the Act: Stocks, etc.; |
| 3. | Deleted. <Feb. 12, 2019> |
| (3) | "Method prescribed by Presidential Decree" in the part, with the exception of the subparagraph, of Article 42 (3) of the Act means the method of reducing the book value of assets provided for in each subparagraph of the same paragraph by the value evaluated under each of the following subparagraphs in the business year (in cases falling under Article 42 (3) 2 of the Act, including a business year in which damage or destruction is determined) during which the grounds for reducing such book value arise and appropriating the reduced amount as deductible expenses for the relevant business year: <Amended by Presidential Decree No. 17457, Dec. 31, 2001; Presidential Decree No. 19328, Feb. 9, 2006; Presidential Decree No. 22951, Jun. 3, 2011; Feb. 12 ,2019> |
| 1. | For inventory assets provided for in Article 42 (3) 1 of the Act, the value evaluated as the market price which could be obtained through the disposal of the relevant inventory assets as of the end date of the business year; |
| 2. | For tangible assets provided for in Article 42 (3) 2 of the Act, the value evaluated as the market price as of the end date of the business year; |
| 3. | For stocks, etc. provided for in Article 42 (3) 3 of the Act, the value evaluated as the market price as of the end date of the business year (where the value evaluated as the market price of the total amount of stocks held by each corporation that issues stocks, etc. is 1,000 won or less, it shall be 1,000 won); |
| 4. | Deleted. <Feb. 28, 2023> |
| (4) | In determining whether having a special relationship with a corporation as prescribed in paragraph (2) 1 (c), a corporation that holds not more than 5/100 of the total number of issued stocks or total investment amount of the corporation issuing the stocks, etc. and its purchase price is less than one billion won shall be deemed as a minority stockholder, etc., for the purpose of determining whether the corporation is a related party, notwithstanding Article 50 (2). <Newly Inserted by Presidential Decree No. 22035, Feb. 18, 2010; Presidential Decree No. 23589, Feb. 2, 2012; Feb. 12, 2019> |
[Enforcement Date: Jan. 1, 2024] Article 78 (2) 1 (c)
| Article 78-2 (Non-Inclusion in Gross Income of Evaluation Marginal Profits of Inventory Assets of Domestic Corporation That Applies Korean International Financial Reporting Standards) |
| (1) | "Last-in first-out method prescribed by Presidential Decree" in the former part, with the exception of the subparagraphs, of Article 42-2 (1) of the Act means the last-in first-out method as prescribed in Article 74 (1) 1 (c). <Amended on Feb. 12, 2019> |
| (2) | "Other evaluation methods of inventory assets prescribed by Presidential Decree" in the former part, with the exception of the subparagraphs, of Article 42-2 (1) of the Act means the evaluation methods of inventory assets, excluding the last-in first-out method, among the evaluation methods of inventory assets provided in each subparagraph of Article 74 (1). <Amended on Feb. 12, 2019> |
| (3) | Where a domestic corporation includes the marginal profits from evaluation of inventory assets in the gross income under the latter part, with the exception of the subparagraphs, of Article 42-2 (1) of the Act, the amount computed by the following formula shall be included in the gross income for the relevant business year. In such cases, the number of months shall be calculated according to the solar calendar and the number of days that falls short of one month shall be deemed one month. Where the month in which the commencement date of the business year falls is included in the calculation, the month which includes the fifth anniversary of the commencement date of the business year shall be excluded from the calculation: <Amended on Feb. 12, 2019> |
Evaluation marginal profits of inventory assets x Number of months in the relevant business year ÷ 60 months
| (4) | A domestic corporation that intends to be applicable under Article 42-2 (1) of the Act shall submit an application for non-inclusion in the gross income of evaluation marginal profits of inventory assets in the form stipulated by Ordinance of the Ministry of Economy and Finance when filing a report on the tax base under Article 60 of the Act for the business year in which it first applies the Korean International Financial Reporting Standards to the head of the tax office having jurisdiction over the place of tax payment. <Amended on Feb. 12, 2019> |
[This Article Newly Inserted by Presidential Decree No. 23589, Feb. 2, 2012]
[Title Amended on Feb. 12, 2019]
| Article 78-3 (Special Cases concerning Calculation of Income for Insurance Company applying Korean International Financial Reporting Standards) |
| (2) | “Amount calculated by applying the formula prescribed by Presidential Decree” in Article 42-3 (1) of the Act means the amount of liability reserves (referring to liability reserves prescribed in the Insurance Business Act; hereafter in this Article the same shall apply) included in deductible expenses for the business year immediately preceding the business year for which the International Financial Reporting Standards for Insurance Contracts are first applied (hereafter in this Article referred to as "business year of first application”) added by an amount pursuant to subparagraph 2, minus an amount pursuant to subparagraph 1: |
| 1. | The sum of the following amounts: |
| (a) | Items prescribed by Ordinance of the Ministry of Economy and Finance, such as unamortized new contract expenses as of the end of the immediately preceding business year, which were classified as assets and included in gross income according to the insurance supervisory accounting standards in effect in the immediately preceding business year, but were changed to items reflected in calculating the amount of liability reserves under the new insurance supervisory accounting standards after the business year of first application; |
| 2. | Items prescribed by Ordinance of the Ministry of Economy and Finance, such as insurance payables as of the end of the immediately preceding business year, which were classified as other liabilities and included in deductible expenses according to the insurance supervisory accounting standards in effect in the immediately preceding business year, but were changed to items reflected in calculating liability reserves under the new insurance supervisory accounting standards after the business year of first application. |
| (3) | “Amount which is calculated by applying the formula prescribed by Presidential Decree” in Article 42-3 (2) of the Act means the amount of liability reserves (excluding changes in the assessed valuation of liability reserves due to changes in the discount rates) as at the start date of the business year of first application minus the amount of insurance contract assets and reinsurance contract assets. |
| (4) | “Amount which is calculated by applying the formula prescribed by Presidential Decree” in Article 42-3 (3) of the Act means the amount calculated under paragraph (2) minus the amount calculated under paragraph (3), multiplied by 1. |
| (5) | Where an insurance company includes in its gross income, pursuant to the latter part of Article 42-3 (3) of the Act, the converted profits prescribed in the former part of the same paragraph (hereafter in this Article referred to as "converted profits"), an amount calculated according to the following formula shall be included in its gross income for the relevant business year. In such cases, the number of days less than one month shall be one month, and where the month in which the start date of the business year falls is included in the calculation, the month in which the date that is three years after the start date of the business year falls shall be excluded from the calculation. |
| Converted profits x The number of months in the relevant business year/36 |
|
| (6) | An insurance company that wishes to be governed by Article 42-3 (3) of the Act shall submit an application for non-inclusion in gross income of converted profits, as prescribed by Ordinance of the Ministry of Economy and Finance, when filing a report on its tax base under Article 60 of the Act with respect to the income for the year of first application to the head of the tax office having jurisdiction over the place of tax payment. |
[This Article Newly Inserted on Feb. 28, 2023]
| Article 79 (Scope of Corporate Accounting Standards and Practices) |
Corporate accounting standards or practices referred to in Article 43 of the Act shall be any of the following accounting standards (including practices generally deemed fair and appropriate which are not contrary to the relevant accounting standards): <Amended by Presidential Decree No. 18706, Feb. 19, 2005; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 21302, Feb. 4, 2009; Presidential Decree No. 22577, Dec. 30, 2010; Presidential Decree No. 28640, Feb. 13, 2018; Presidential Decree No. 29269, Oct. 30, 2018; Feb. 12, 2019> | 1. | Korean International Financial Reporting Standards; |
| 2. | Accounting standards by type of business enacted by the Securities and Futures Committee; |
| 5. | Accounting standards enacted under other statutes or regulations and approved by the Minister of Economy and Finance. |
Subsection 6 Special Cases concerning Mergers and Divisions
| Article 80 (Calculation of Capital Gains or Losses from Transfer upon Merger) |
| (1) | The transfer value referred to in Article 44 (1) 1 of the Act shall be any of the following amounts: <Amended by Presidential Decree No. 22577, Dec. 30, 2010; Presidential Decree No. 23589, Feb. 2, 2012; Presidential Decree No. 27828, Feb. 3, 2017> |
| 1. | In cases of a qualified merger: The net book value of the assets as of the registration date of the merger by the merged corporation referred to in Article 44 (1) 2 of the Act; |
| 2. | In cases other than those falling under subparagraph 1: An aggregate of the following amounts: |
| (a) | Sum total of the value of the stocks, etc. (hereinafter referred to as "stocks, etc., granted due to a merger") of a surviving corporation, etc., or the parent company of the surviving corporation, etc. (referring to a domestic corporation that owns the total number of issued stocks or total investment amount of the surviving corporation, etc., as of the registration date of the merger: hereinafter the same shall apply), money or other property value received by the stockholders, etc., of the merged corporation due to the merger: Provided, That where the surviving corporation, etc., acquired stocks, etc. (for a new merger or a merger of at least three corporations, including the stocks, etc., of another merged corporation, etc., acquired by the merged corporation; hereinafter referred to as "stocks, etc., combined due to a merger") of the merged corporation prior to the registration date of the merger, although the stocks, etc., granted due to a merger are not granted with respect to the stocks, etc., combined due to a merger, the stocks, etc., granted due to a merger shall be deemed granted by the equity ratio for the purposes of calculating the value of the stocks, etc., granted due to a merger; |
| (b) | Sum total of the corporate tax of the merged corporation paid by the surviving corporation, the national tax imposed on the corporate tax (including the amount of tax reduction or exemption) and the local corporate tax imposed under Article 88 (2) of the Local Tax Act. |
| (2) | Where any corporate tax is refunded under the Framework Act on National Taxes in calculating the net book value of assets of the merged corporation referred to in Article 44 (1) 2 of the Act, the amount equivalent to such refunded amount shall be added to the net book value of assets as on the registration date of the merger of the merged corporation. |
| (3) | Any merged corporation, etc., that wishes to qualify for paragraph (1) 1 shall file an application for special cases for taxation upon merger in the form prescribed by Ordinance of the Ministry of Economy and Finance, along with a surviving corporation, etc., in filing a report on tax base under Article 60 of the Act, with the head of the tax office having jurisdiction over the place of tax payment. In such cases, the surviving corporation, etc. shall also submit the detailed statement on the asset adjustment account referred to in Article 80-4 (11) to the head of the tax office having jurisdiction over the place of tax payment of the merged corporation. <Amended by Presidential Decree No. 22577, Dec. 30, 2010; Presidential Decree No. 28640, Feb. 13, 2018> |
[This Article Wholly Amended by Presidential Decree No. 22184, Jun. 8, 2010]
| Article 80-2 (Requirements for Qualified Merger) |
| (1) | "In inevitable circumstances prescribed by Presidential Decree" in the proviso to Article 44 (2) of the Act, with the exception of its subparagraphs, means the following circumstances: <Amended by Presidential Decree No. 22577, Dec. 30, 2010; Presidential Decree No. 22812, Mar. 31, 2011; Presidential Decree No. 23589, Feb. 2, 2012; Presidential Decree No. 25194, Feb. 21, 2014; Presidential Decree No. 25640, Sep. 26, 2014; Presidential Decree No. 27828, Feb. 3, 2017; Presidential Decree No. 28640, Feb. 13, 2018; Feb. 12, 2019> |
| 1. | Where inevitable circumstances are deemed to exist with respect to Article 44 (2) 2 of the Act: In any of the following cases: |
| (a) | Where the stockholders, etc., provided for in paragraph (5) (hereafter in this Article referred to as "relevant stockholders, etc.") dispose of not more than 1/2 of the stocks, etc., granted due to a merger. In such cases, where the relevant stockholders, etc., dispose of stocks, etc., granted due to a merger among them, they shall not be deemed to have disposed of stocks, etc.; and where the relevant stockholders, etc. dispose of stocks, etc. of a surviving corporation, they shall be deemed to have disposed of stocks, etc. selected by the surviving corporation. |
| (b) | Where the stocks, etc., are disposed of due to the death or bankruptcy of the relevant stockholders, etc.; |
| (c) | Where the relevant stockholders, etc., dispose of stocks, etc., due to a qualified merger, qualified division, qualified spin-off, or qualified investment in kind; |
| (g) | Where the relevant stockholders, etc., dispose of stocks, etc., to perform the obligations under the statutes or regulations; |
| 2. | Where inevitable circumstances are deemed to exist with respect to Article 44 (2) 3 of the Act: In any of the following cases: |
| (a) | Where the surviving corporation disposes of the succeeded assets due to its bankruptcy; |
| (b) | Where the surviving corporation discontinues its business due to a qualified merger, qualified division, qualified spin-off or investment in kind; |
| (d) | Where the surviving corporation, etc., disposes of the succeeded assets upon obtaining approval from the court according to the rehabilitation procedure under the Debtor Rehabilitation and Bankruptcy Act. |
| 3. | Where inevitable circumstances are deemed to exist with respect to Article 44 (2) 4 of the Act: In any of the following cases: |
| (b) | Where the surviving corporation fails to maintain the ratio of employees following bankruptcy; |
| (c) | Where the surviving corporation fails to maintain the ratio of employees due to a qualified merger, division, spin-off, or investment in kind; |
| (d) | Where the number of Korean nationals employed by the merged corporation as of one month before the registration date of the merger under an employment contract made under the Labor Standards Act is less than five. |
| (2) | "Corporation prescribed by Presidential Decree" in the proviso to Article 44 (2) 1 and the proviso to subparagraph 3 of the same paragraph of the Act means a corporation that meets all requirements referred to in the items of Article 6 (4) 14 of the Enforcement Decree of the Financial Investment Services and Capital Markets Act as a special purpose acquisition company prescribed in the same subparagraph (hereafter in this Article referred to as “special purpose acquisition company”). <Newly Inserted by Presidential Decree No. 22577, Dec. 30, 2010; Feb. 15, 2022> |
| (3) | The total costs of the merger received by the stockholders, etc., of the merged corporation referred to in Article 44 (2) 2 of the Act shall be the amount computed under Article 80 (1) 2 (a), and where a surviving corporation acquired stocks, etc., combined due to a merger within two years prior to the registration date of the merger for the purpose of determining whether the value of the stocks, etc., of the total costs of the merger exceeds the rate referred to in Article 44 (2) 2 of the Act, any of the following amounts shall be deemed granted with money. In such cases, for the new merger or merger of at least three corporations, where the merged corporation acquired the stocks, etc., of another merged corporation, etc., the amount computed by applying any of the followings shall be added to the total costs of the merger by deeming the merged corporation that acquired the stocks, etc. of another merged corporation, etc., to be the surviving corporation, etc.: <Amended by Presidential Decree No. 23589, Feb. 2, 2012> |
| 1. | Where the surviving corporation, etc., is not the controlling stockholder, etc., of the merged corporation referred to in Article 43 (7) as of the registration date of the merger: Where the stocks, etc., combined due to the merger acquired by the surviving corporation, etc., within two years prior to the registration date of the merger exceed 20/100 of the total number of issued stocks or the total investment amount of the merged corporation, the value of the stocks, etc., granted due to the merger with respect to the stocks, etc., combined due to the merger (where the stocks, etc., granted due to a merger are deemed granted under the proviso to Article 80 (1) 2 (a), including such stocks, etc.); |
| 2. | Where the surviving corporation, etc., is the controlling stockholder, etc., of the merged corporation referred to in Article 43 (7) as of the registration date of the merger: The value of the stocks, etc., granted due to the merger with respect to the stocks, etc., combined due to the merger (in cases where the stocks, etc., granted due to a merger are deemed granted under the proviso to Article 80 (1) 2 (a), including such stocks, etc.) acquired within two years prior to the registration date of the merger. |
| (4) | In allocating stocks received due to a merger to the stockholders, etc., of the merged corporation under Article 44 (2) 2 of the Act, the stocks, etc., in excess of the value calculated by the following formula shall be allocated to the relevant stockholders, etc.: <Amended by Presidential Decree No. 22577, Dec. 30, 2010; Presidential Decree No. 23589, Feb. 2, 2012>Sum total of the value of the stocks, etc., granted due to a merger under Article 80 (1) 2 (a) received by the stockholders, etc., of the merged corporation × the equity ratio of each relevant stockholder, etc. in the merged corporation |
| (5) | "Stockholders, etc., of the merged corporation prescribed by Presidential Decree" in Article 44 (2) 2 of the Act means stockholders, etc., other than the following persons, among the controlling stockholders, etc., of the merged corporation, etc. referred to in Article 43 (3): <Amended by Presidential Decree No. 25194, Feb. 21, 2014; Feb. 15, 2022; Feb. 28, 2023> |
| 1. | Relatives by blood in the fourth or any closer degree, among relatives referred to in Article 43 (8) 1 (a); |
| 2. | Persons whose equity ratio in the merged corporation is less than 1/100 or the value of the equity share appraised at the market price is less than one billion won as on the registration date of the merger; |
| 3. | Persons who are the controlling stockholders, etc., of the merged corporation that merges with any special purpose acquisition company; |
| 4. | Controlling shareholders, etc. of a special purpose acquisition company that is a merged corporation. |
| (6) | "Employees specified by Presidential Decree" in Article 44 (2) 4 of the Act means Korean nationals employed under an employment contract entered into under the Labor Standards Act: Provided, That the following employees shall be excluded herefrom: <Newly Inserted by Presidential Decree No. 28640, Feb. 13, 2018; Feb. 12, 2019> |
| 1. | Executive officers specified in any subparagraph of Article 40 (1); |
| 3. | Employees who died before the end of the business year in which the merger is registered or employees who retired due to any of the causes specified by Ordinance of the Ministry of Economy and Finance, such as illness or injury; |
| 5. | Employees whose employment contract term is less than six months: Provided, That employees whose employment contract term is not less than one year as of one month before the registration date of the merger due to consecutive renewals of the employment contract shall be excluded herefrom; |
| 6. | Employees who retired due to any fault for which employees are liable, as specified by Ordinance of the Ministry of Economy and Finance, such as employees sentenced to imprisonment without labor or any heavier punishment. |
| (7) | Where a surviving corporation disposes of at least 1/2 of the value of assets (It refers to the value of tangible assets, intangible assets, and investment assets (hereinafter the same shall apply in this Subsection and Article 156 (2)) which it succeeded to from a merged corporation on or before the last day of the business year in which the registration date of the merger falls or fails to use them for its business, it shall be deemed not to fall under Article 44 (2) 3 of the Act: Provided, That where the surviving corporation, etc., retires the treasury stocks upon succeeding to the stocks of the surviving corporation, etc., held by the merged corporation, whether the surviving corporation continues the business shall be determined based on the assets succeeded to from the merged corporation, other than the relevant stocks of the surviving corporation; and where the succeeded assets are only the stocks of the surviving corporation, the surviving corporation, etc., shall be deemed to continue the business. <Amended on Dec. 30, 2010; Feb. 13, 2018; Feb. 12, 2019> |
| (8) | A corporation that intends to be governed by the latter part of paragraph (1) 1 (a) shall, where requested by the head of the tax office having jurisdiction over the place of tax payment, submit data necessary to verify the order of disposition of shares selected by the relevant corporation <Newly Inserted on Feb. 12, 2019> |
[This Article Newly Inserted by Presidential Decree No. 22184, Jun. 8, 2010]
| Article 80-3 (Disposition of Difference between Transfer Value and Net Market Price of Assets upon Merger) |
| (1) | Where the transfer value is less than the net market price of assets as prescribed in Article 44-2 (2) of the Act and a surviving corporation includes the difference between them (hereinafter referred to as "marginal profits from merger") in gross income, it shall include the amount computed by the following formula from the business year in which the registration date of the merger falls to the business year in which the fifth anniversary of the registration date of the merger falls. In such cases, the number of months shall be calculated based on the calendar months; however, the number of days that falls short of one month shall be deemed one month. Where the month which includes the registration date of the merger is calculated as one month, the month which includes the fifth anniversary of the registration date of the merger shall be excluded from the calculation: |
Marginal profits from merger × (Number of months in the relevant business year / 60 months)
| (2) | "Circumstances prescribed by Presidential Decree" in Article 44-2 (3) of the Act means the circumstances in which the surviving corporation, etc. deemed that the company name, transaction relationships and other trade secrets of the merged corporation have business value and paid the consideration therefor. |
| (3) | Where the transfer value exceeds the net market price of assets under Article 44-2 (3) of the Act, paragraph (1) shall apply mutatis mutandis to the inclusion of the difference thereof (hereinafter referred to as "marginal losses from merger") in deductible expenses, method of inclusion and other matters. |
[This Article Newly Inserted by Presidential Decree No. 22184, Jun. 8, 2010]
[Title Amended on Feb. 12, 2019]
| Article 80-4 (Follow-Up Management Based on Special Provisions concerning Taxation upon Qualified Merger) |
| (1) | Where a surviving corporation acquires assets of the merged corporation transferred at the book value under Article 44-3 (1) of the Act, it shall recognize the market price as of the registration date of the merger as the value of the transferred assets and liabilities. The surviving corporation shall include the difference between the market price and the book value of the merged corporation in gross income, and shall include the same amount in deductible expenses in the asset adjustment account, if the amount computed by subtracting the book value (where tax settlement matters referred to in subparagraph 1 of Article 85 exist, such value shall be calculated by adding the amount not included in gross income and by subtracting the amount not included in deductible expenses, among the tax settlement matters) of the merged corporation from the market price is greater than zero. The surviving corporation shall include the difference between the market price and the book value in deductible expenses, and shall include the same amount in gross income in the asset adjustment account, if the difference is smaller than zero. In such cases, where the recognized asset adjustment account shall be handled as follows: <Amended by Presidential Decree No. 27828, Feb. 3, 2017> |
| 1. | An asset adjustment account set for depreciable assets: Where the difference is included in deductible expenses in the asset adjustment account, it shall be offset against the depreciation cost of the relevant assets (limited to the portion equivalent to those in the relevant asset adjustment account), while it shall be added to depreciation costs, if it is included in gross income in the asset adjustment account. In such cases, the amount left over after set-off or addition, where relevant assets are disposed of, shall be fully included in gross income or deductible expenses for the business year in which such assets are disposed of; |
| 2. | An asset adjustment account set for assets, other than those provided for in subparagraph 1: It shall be all included in the gross income or deductible expenses for the business year in which the relevant assets are disposed of: Provided, That where the treasury stocks are retired, it shall be extinguished without being included in the gross income or deductible expenses. |
| (2) | Where a surviving corporation, etc., acquires assets of the merged corporation transferred at the book value as prescribed in paragraph (1), it is eligible for the tax reduction or exemption, or tax credits upon succeeding to the tax reduction or exemption, or tax credits under Article 59 of the Act which applied to the merged corporation before the merger. In such cases, where provisions governing the requirements, etc., for the tax reduction or exemption, or tax credits in the Act or other statutes, the same shall apply only where the surviving corporation, etc., meets all the requirements, etc. <Newly Inserted by Presidential Decree No. 22577, Dec. 30, 2010> |
| (3) | "Period prescribed by Presidential Decree" in the main sentence of Article 44-3 (3) of the Act, with the exception of its subparagraphs, means two years (or three years in cases under Article 44-3 (3) 3 of the Act) beginning on the first day of the business year following the business year in which the registration date of the merger falls. <Amended by Presidential Decree No. 23589, Feb. 2, 2012; Presidential Decree No. 28640, Feb. 13, 2018> |
| (4) | Where a surviving corporation, etc., falls under any subparagraph of Article 44-3 (3) of the Act, the sum total of the balance in the asset adjustment account recognized under paragraph (1) (limited to cases where the sum total is greater than zero; and where it is smaller than zero, it shall be deemed nil) and the amount deducted among the deficits which it succeeded to from the merged corporation under Article 44-3 (2) of the Act shall be included in the gross income. In such cases, the asset adjustment account recognized under paragraph (1) shall be deemed extinguished. <Amended by Presidential Decree No. 22577, Dec. 30, 2010> |
| (5) | Where the sum total of the balance in the asset adjustment account is included in the gross income under paragraph (4), the amount equivalent to capital gains or losses from sale upon merger shall be disposed of by the following methods: <Amended by Presidential Decree No. 22577, Dec. 30, 2010> |
| 1. | Where the transfer value paid by a surviving corporation, etc., to a merged corporation upon the merger is less than the net market price of assets of the merged corporation as on the registration date of the merger: The amount equivalent to the capital gains from sale upon the merger shall be included in the deductible losses for the business year which includes the date on which any ground referred to in any subparagraph of Article 44-3 (3) of the Act arises, and the amount equivalent thereto shall be included in the gross income in installment by the fifth anniversary of the registration date of the merger in accordance with the following classifications: |
| (a) | The business year in which any grounds referred to in any subparagraph of Article 44-3 (3) of the Act arise: The amount computed by multiplying the capital gains from sale upon the merger by the ratio calculated by dividing the number of months in the relevant business year from the registration date of the merger to the last day of the relevant business year by 60 months shall be included in the gross income (the number of months shall be calculated based on the calendar months, and the number of days that falls short of one month shall be deemed one month); |
| (b) | The business year which includes the fifth anniversary of the registration date of the merger from the business year since the business year referred to in item (a): The amount computed by multiplying the capital gains from sale upon the merger by the ratio calculated by dividing the number of months for the relevant business year by 60 months (where the number of the month that includes the registration date of the merger falls short of one month, the month that includes the fifth anniversary of the registration date of the merger shall be deemed nil) shall be included in the gross income; |
| 2. | Where the transfer value paid by a surviving corporation, etc. to a merged corporation upon merger exceeds the net market price of assets of the merged corporation as of the registration date of the merger: The amount equivalent to the capital losses from sale upon a merger shall be included in the gross income for the business year which includes the date on which any grounds referred to in any subparagraph of Article 44-3 (3) of the Act arise, and the relevant amount shall, limited to the cases falling under Article 80-3 (2), be included in the deductible expenses in installment until the fifth anniversary of the registration date of the merger by the following classifications: |
| (a) | The business year in which any grounds referred to in any subparagraph of Article 44-3 (3) of the Act arise: The amount computed by multiplying the capital losses from sale upon the merger by the ratio calculated by dividing the number of months in the relevant business year from the registration date of the merger to the last day of the relevant business year by 60 months shall be included in the deductible expenses (the number of months shall be calculated based on the calendar months, and the number of days that falls short of one month shall be deemed one month); |
| (b) | The business year which includes the fifth anniversary of the registration date of the merger from the business year since the business year referred to in item (a): The amount computed by multiplying the capital losses from sale upon the merger by the ratio calculated by dividing the number of months in the relevant business year by 60 months (where the number of the month that includes the registration date of the merger is less than one month, the month that includes the fifth anniversary of the registration date of the merger shall be deemed nil) shall be included in the deductible expenses. |
| (6) | Where a surviving corporation falls under any subparagraph of Article 44-3 (3) of the Act, it shall add the amount not included in the gross income and subtract the amount not included in the deductible expenses among the tax settlement matters succeeded under subparagraph 1 of Article 85 for the purposes of calculating the amount of income and the tax base of the surviving corporation and add the amount equivalent to tax reduction or exemption or tax credits granted upon succession from a merged corporation to the corporate tax of the business year in which the relevant grounds arise and pay such amount, and it shall not apply from the business year in which the relevant grounds arise. <Newly Inserted by Presidential Decree No. 22577, Dec. 30, 2010; Presidential Decree No. 23589, Feb. 2, 2012> |
| (7) | "Where inevitable circumstances prescribed by Presidential Decree exist" in the proviso to Article 44-3 (3) of the Act, with the exception of its subparagraphs, means the following cases: <Amended by Presidential Decree No. 22577, Dec. 30, 2010; Presidential Decree No. 28640, Feb. 13, 2018> |
| 1. | Where inevitable circumstances are deemed to exist with respect to Article 44-3 (3) 1 of the Act: Where the surviving corporation, etc., falls under any item of Article 80-2 (1) 2; |
| 2. | Where inevitable circumstances are deemed to exist with respect to Article 44-3 (3) 2 of the Act: Where the stockholders, etc., provided for in paragraph (9) fall under any item of Article 80-2 (1)1; |
| 3. | Where inevitable circumstances are deemed to exist with respect to Article 44-3 (3) 3 of the Act: Where the surviving corporation falls under any provision of Article 80-2 (1) 3 (a) through (c). |
| (8) | Where a surviving corporation, etc., disposes of at least 1/2 of the value of assets which it succeeded to from a merged corporation during the period referred to in paragraph (3) or fails to use them for the succeeded business, it shall be deemed to discontinue the business which the corporation succeeded to from the merged corporation: Provided, That where the surviving corporation, etc., retires the treasury stocks upon succeeding to the stocks of the surviving corporation, etc., held by the merged corporation, whether the surviving corporation continues the business shall be determined based on the assets which it succeeded to from the merged corporation, other than the relevant stocks of the surviving corporation, etc., and where the succeeded assets are only the stocks of the surviving corporation, etc., the surviving corporation, etc., shall be deemed to continue the business. <Amended by Presidential Decree No. 22577, Dec. 30, 2010; Feb. 12, 2019> |
| (9) | "Stockholders, etc., of a merged corporation prescribed by Presidential Decree" in Article 44-3 (3) 2 of the Act means the stockholders, etc., referred to in Article 80-2 (5). <Amended by Presidential Decree No. 22577, Dec. 30, 2010> |
| (10) | "Employees specified by Presidential Decree" in Article 44-3 (3) 3 of the Act means Korean nationals employed under an employment contract entered into under the Labor Standards Act. <Newly Inserted by Presidential Decree No. 28640, Feb. 13, 2018> |
| (11) | Any surviving corporation, etc., that recognizes the asset adjustment account under paragraph (1) shall submit a detailed statement on asset adjustment account in the form prescribed by Ordinance of the Ministry of Economy and Finance to the head of the tax office having jurisdiction over the place of tax payment, accompanied by the report provided for in Article 60 of the Act. |
[This Article Newly Inserted by Presidential Decree No. 22184, Jun. 8, 2010]
| Article 81 (Succession of Losses Carried Forward upon Merger) |
| (1) | "Rate of value of asset prescribed by Presidential Decree" in Article 45 (1) of the Act means the rate of value of business asset of a surviving corporation and a merged corporation as of the registration date of the merger. In such cases, the value of business asset of the merged corporation, which is succeeded to by the surviving corporation shall be determined by the value as at the registration date of the merger of the asset, limited the asset that is continuously held (including where the asset is replaced after disposal) and used by the end of each business year in which succeeded losses are deducted. <Amended by Presidential Decree No. 21302, Feb. 4, 2009; Feb. 12, 2019> |
| (2) | Losses succeeded to and deducted by a surviving corporation when the surviving corporation calculates the tax base of each business year under Article 45 (2) of the Act shall be the losses referred to in Article 13 (1) 1 of the Act (referring to the amount computed by deeming the registration date of the merger to be the start date of a business year) of the merged corporation as at the registration date of the merger, and the amount of such losses (hereafter referred to as "limit of succeeded losses" in this Article) shall be calculated each year by deeming that one year has passed sequentially from the business year following the business year in which the registration date of the merger falls. <Amended by Presidential Decree No. 21302, Feb. 4, 2009; Feb. 12, 2019> |
| (3) | A surviving corporation, etc. may obtain a tax reduction or exemption, or tax credit succeeded by a merged corporation under Article 44-3 (2) of the Act as follows: <Newly Inserted by Presidential Decree No. 22577, Dec. 30, 2010> |
| 1. | For reductions or exemptions provided for in Article 59 (1) 1 of the Act (limited to reductions or exemptions for a fixed term): The surviving corporation shall apply such reductions or exemptions on income generated by the business succeeded for each business year which ends within the residual reduction period as at the time of the merger; |
| 2. | For tax credits provided for in Article 59 (1) 3 of the Act (including foreign tax credits) which are the un-deducted amounts carried forward: The surviving corporation apply tax credits for each business year which ends within the remaining period for credits carried forward pursuant to the following items: |
| (a) | Un-deducted amounts of foreign tax credits carried forward: The deduction shall be made up to the amount computed by multiplying the foreign source income accruing from the succeeded business divided by the tax base for the relevant business year by the amount of tax for the relevant business year; |
| (c) | Un-deducted amounts carried forward under Article 144 of the Restriction of Special Taxation Act because there is no tax payable other than tax referred to in the items (a) and (b) and the amount is not deducted: The deduction shall be made up to the amount of corporate tax computed with respect to the succeeded business category. |
| (4) | Articles 80-2 (7) and 80-4 (8) shall apply mutatis mutandis to determination as to the continuation or closure of business and application thereof with respect to the deduction of losses; inclusion in gross income; addition of corporate tax; and inclusion of an amount exceeding the ceiling on donations in deductible expenses of a surviving corporation which has succeeded to the business of a merged corporation. <Amended by Presidential Decree No. 22184, Jun. 8, 2010; Presidential Decree No. 22577, Dec. 30, 2010; Presidential Decree No. 28640, Feb. 13, 2018; Feb. 17, 2021> |
| (5) | and (6) Deleted. <by Presidential Decree No. 21302, Feb. 4, 2009> |
| Article 82 (Calculation of Capital Gains or Losses from Transfer upon Division) |
| (1) | The transfer value referred to in Article 46 (1) 1 of the Act means any of the following amounts: <Amended by Presidential Decree No. 22577, Dec. 30, 2010; Presidential Decree No. 23589, Feb. 2, 2012; Presidential Decree No. 27828, Feb. 3, 2017; Feb. 12, 2019> |
| 1. | In cases of a qualified division: The net book value of assets as of the registration date of the division of a divided corporation, etc. (hereinafter referred to as "divided corporation, etc.") referred to in Article 46 (1) 2 of the Act; |
| 2. | In cases other than those provided for in subparagraph 1: Sum total of the following amounts: |
| (a) | Sum total of the value of the stocks (including stocks of the domestic corporation that holds the total number of outstanding stocks or the total amount of investment of the counterpart corporation as of the registration date of the division in cases of a division and merger; hereinafter the same shall apply) of a corporation established through division, etc. and money or the value of other property, paid to stockholders of the divided corporation upon division by the corporation established through division, etc.: Provided, That in cases of a division and merger, where the counterpart corporation to the division and merger acquired the stocks [for the new division and merger or the division and merger of at least three corporations, including the stocks of another divided corporation acquired by the divided corporation prior to the registration date of the division (limited to the stocks succeeded by the counterpart corporation to the division and merger following the division and merger), the stocks of the disappearing counterpart corporation to the division and merger acquired by the counterpart corporation to the division and merger prior to the registration date of the division or the stocks acquired by the disappearing counterpart corporation to the division and merger prior to the registration date of the division and the stocks of another disappearing counterpart corporation to the division and merger: hereinafter referred to as "stocks combined due to division and merger"] of the divided corporation prior to the registration date of the division, although the stocks of the corporation established through division, etc. (hereinafter referred to the "stocks granted due to division and merger") are not granted with respect to such stocks, the stocks granted due to division and merger shall be deemed granted by the equity ratio for the purposes of calculating the value of the stocks of the counterpart corporation to the division and merger; |
| (b) | Sum total of the corporate tax of the divided corporation paid by the corporation established through division, etc., the national tax imposed on the corporate tax (including the amount of tax reduction or exemption) and the local corporate tax imposed under Article 88 (2) of the Local Tax Act. |
| (2) | Where any corporate tax is refunded under the Framework Act on National Taxes in calculating the net book value of assets of a divided corporation, etc., under Article 46 (1) 2 of the Act, the amount equivalent to such refunded amount shall be added to the net book value of assets as on the registration date of the division of the divided corporation, etc. |
| (3) | Any divided corporation, etc., that wishes to qualify for paragraph (1) 1 shall file an application for special cases for taxation upon division in the form prescribed by Ordinance of the Ministry of Economy and Finance, together with any corporation established through division, etc., in filing a report on tax base under Article 60 of the Act, with the head of the tax office having jurisdiction over the place of tax payment. In such cases, the corporation established through division, etc., shall also submit the detailed statement on the asset adjustment account referred to in Article 82-4 (10) to the head of the tax office having jurisdiction over the place of tax payment of the corporation established through division, etc. <Amended by Presidential Decree No. 22577, Dec. 30, 2010; Presidential Decree No. 28640, Feb. 13, 2018> |
[This Article Wholly Amended by Presidential Decree No. 22184, Jun. 8, 2010]
| Article 82-2 (Requirements for Qualified Divisions) |
| (1) | "Inevitable circumstances prescribed by Presidential Decree" in the proviso to Article 46 (2) of the Act, with the exception of its subparagraphs, means the following circumstances: <Amended by Presidential Decree No. 26981, Feb. 12, 2016; Presidential Decree No. 28640, Feb. 13, 2018; Feb. 17, 2021> |
| 1. | Where inevitable circumstances are deemed to exist with respect to Article 46 (2) 2 of the Act: Where a stockholder referred to in paragraph (8) falls under any item of Article 80-2 (1) 1; |
| 2. | Where inevitable circumstances are deemed to exist with respect to Article 46 (2) 3 of the Act: Where a corporation established through division, etc., falls under any item of Article 80-2 (1) 2; |
| 3. | Where inevitable circumstances are deemed to exist with respect to Article 46 (2) 4 of the Act: Where a corporation established through division, etc. falls under any item of Article 80-2 (1) 3 or where the number of employees under Article 82-4 (9) who work for the divided division (referring to the division succeeded from a divided corporation; hereafter the same shall apply in this Article and subparagraph 1 of Article 85) as of one month before the registration date of division is less than five. |
| (2) | “Business division prescribed by Presidential Decree, such as a business division mainly engaged in the real estate rental business“ in Article 46 (3) of the Act means any of the following business divisions: <Newly Inserted on Feb. 21, 2014; Feb. 12, 2019; Feb. 17, 2021> |
| 1. | A business division mainly engaging in real estate rental business prescribed by Ordinance of the Ministry of Economy and Finance; |
| 2. | A business division whose assets, as referred to in Article 94 (1) 1 and 2 of the Income Tax Act, are at least 80/100 of the value of assets for business use acquired by the divided corporation by succession (excluding the value of the assets for business use prescribed by Ordinance of the Ministry of Economy and Finance); |
| 3. | Deleted. <Feb. 17, 2021> |
| (3) | The division of a business division consisting solely of stocks. etc. and assets and liabilities related thereto shall be deemed to be a division of an independent business division that can be operated separately pursuant to Article 46 (2) 1 (a) of the Act, provided that the business division to be divided falls under any of the following. <Newly Inserted on Feb. 21, 2014; Feb. 17, 2021> |
| 1. | A business division composed only of all stocks, etc., that the divided corporation holds for the purpose of control on the day immediately preceding the registration date of the division (referring to stocks, etc., prescribed by Ordinance of the Ministry of Economy and Finance as stocks, etc., held for the purpose of control; hereafter in this Article the same shall apply) and assets and liabilities related to such stocks, etc.; |
| 2. | A business division (In cases of a division and merger falling under any of the following, including a business division that can establish a holding company) that establishes a holding company defined in the Monopoly Regulation and Fair Trade Act and the Financial Holding Companies Act (hereafter in this Article referred to as “holding company”): Provided, That the foregoing shall be limited to cases where a divided business division succeeds only to stocks, etc., held as a controlling stockholder and assets and liabilities related to such stocks, etc.: |
| (a) | Where a counterpart corporation in a division and merger is converted into a holding company through the division and merger; |
| (b) | Where a counterpart corporation in a division and merger is a holding company as at the registration date of division; |
| 3. | Cases prescribed by Ordinance of the Ministry of Economy and Finance, and similar to the cases of subparagraph 2. |
| (4) | "Those prescribed by Presidential Decree, such as assets and liabilities that are indivisible, including the assets jointly used and the liabilities, the debtor of which cannot be changed" in the proviso to Article 46 (2) 1 (b) of the Act means the following assets and liabilities: <Amended by Presidential Decree No. 23589, Feb. 2, 2012; Presidential Decree No. 25194, Feb. 21, 2014> |
| (a) | Substation facilities, waste water treatment facilities, electricity facilities, water supply facilities, or steam facilities; |
| (b) | Offices, warehouses, restaurants, training centers, company houses, and in-house training facilities; |
| (c) | Joint production facilities, business supporting facilities and land attached thereto and assets which cannot be divided physically; |
| (d) | Assets prescribed by Ordinance of the Ministry of Economy and Finance, and similar to those under items (a) through (c); |
| (b) | Borrowings with respect to which the change of the name of the borrower is limited on the conditions for borrowing; |
| (c) | Borrowings with respect to which the conditions for borrowing of the borrower under the agreement are adversely changed due to a division; |
| (d) | Joint loans that are not directly used in the divided business division; |
| (e) | Liabilities prescribed by Ordinance of the Ministry of Economy and Finance, and similar to those under items (a) through (d); |
| 3. | Assets and liabilities that the divided division shall succeed to, which shall not exceed 20/100 of the total assets and total liabilities evaluated by the market value as at the time of the division. In such cases, the value of assets and liabilities that the divided division shall acquire by succession shall be calculated, as prescribed by Ordinance of the Ministry of Economy and Finance, but stocks, assets referred to in subparagraph 1, and liabilities referred to in subparagraph 2 shall be excluded therefrom. |
| (5) | Where a divided business division succeed to stocks, etc., by succession, the assets and liabilities of the divided business division shall not be deemed those comprehensively acquired by succession under Article 46 (2) 1 (b) of the Act: Provided, That the same shall not apply where stocks, etc., are acquired by succession under any subparagraph of paragraph (3) or cases prescribed by Ordinance of the Ministry of Economy and Finance as similar to such cases. <Newly Inserted by Presidential Decree No. 25194, Feb. 21, 2014> |
| (6) | The total costs of a division referred to in Article 46 (2) 2 of the Act shall be the amount provided for in Article 82 (1) 2 (a), and where the counterpart corporation to a division and merger acquired the stocks combined due to the division and merger of the divided corporation within two years prior to the registration date of the division for the purposes of determining whether the value of the stocks, etc., among the total costs of the division as prescribed in Article 46 (2) 2 of the Act exceeds the rate referred to in Article 44 (2) 2 of the Act in cases of the division and merger, any of the following amounts shall be deemed granted with money. In such cases, for the new division and merger, or division and merger of at least three corporations, where the divided corporation acquired the stocks of another divided corporation, the divided corporation that acquired the stocks of another divided corporation shall be deemed a counterpart corporation to the division and merger for the following purposes. Where the disappearing counterpart corporation to the division and merger acquired the stocks of the divided corporation, such disappearing counterpart corporation to the division and merger shall be deemed a counterpart corporation to the division and merger and the amount computed by applying each subparagraph shall be deemed granted with money: <Amended by Presidential Decree No. 23589, Feb. 2, 2012> |
| 1. | Where the counterpart corporation to the division and merger is not the controlling stockholder, etc., of the divided corporation referred to in Article 43 (7) as of the registration date of the division: Where the stocks combined due to the division and merger acquired by the counterpart corporation to the division and merger within two years prior to the registration date of the division exceed 20/100 of the total number of issued stocks of the divided corporation, etc., the value of the stocks, etc., granted due to the division and merger granted with respect to the stocks, etc., combined due to the division and merger (if the stocks, etc., granted due to the division and merger are deemed granted under the proviso to Article 82 (1) 2 (a), it shall include such stocks, etc.); |
| 2. | Where the counterpart corporation to the division and merger is the controlling stockholder, etc., of the divided corporation referred to in Article 43 (7) as of the registration date of the division: The value of the stocks, etc., granted due to the division and merger granted with respect to the stocks, etc., combined due to the division and merger (if the stocks, etc., granted due to the division and merger are deemed granted under the proviso to Article 82 (1) 2 (a), it shall include such stocks, etc.) acquired within two years prior to the registration date of the division. |
| (7) | In allocating stocks received due to a division and merger to the stockholders of the divided corporation, etc., under Article 46 (2) 2 of the Act, the stocks in excess of the value calculated by the following formula shall be allocated respectively to the stockholders referred to in paragraph (8): <Amended by Presidential Decree No. 22577, Dec. 30, 2010; Presidential Decree No. 23589, Feb. 2, 2012; Presidential Decree No. 26981, Feb. 12, 2016>Sum total of the value of the stocks, etc., of the corporation established through division, etc., as prescribed in Article 82 (1) 2 (a) received by the stockholders, etc., of the divided corporation, etc. x the equity ratio of each stockholder referred to in paragraph (8) with respect to the divided corporation, etc. |
| (8) | "Stockholders of the divided corporation, etc., prescribed by Presidential Decree" in Article 46 (2) 2 of the Act means stockholders, other than the following persons, among controlling stockholders, etc., of the divided corporation, etc., as prescribed in Article 43 (3): <Amended by Presidential Decree No. 25194, Feb. 21, 2014; Feb. 28, 2023> |
| 1. | Relatives by blood in the fourth degree, among relatives referred to in Article 43 (8) 1 (a); |
| 2. | Persons whose equity ratio in the divided corporation, etc., is less than 1/100 and the value of such equity appraised at the market price is less than one billion won as of the registration date of the division. |
| (9) | Article 80-2 (7) shall apply mutatis mutandis to determination as to whether a corporation established through division, etc., continues the business acquired by succession from the divided corporation, etc. under Article 46 (2) 3 of the Act. <Amended by Presidential Decree No. 22577, Dec. 30, 2010; Presidential Decree No. 28640, Feb. 13, 2018> |
| (10) | Article 80-2 (6) shall apply mutatis mutandis to the scope of employees specified by Presidential Decree pursuant to Article 46 (2) 4 of the Act, but any of the following employees may be excluded from the scope. In such cases, "registration date of merger" shall be construed as "registration date of division": <Newly Inserted by Presidential Decree No. 28640, Feb. 13, 2018> |
| 1. | Employees working for both the business division surviving the division and the divided business division; |
| 2. | Employees who are not deemed to work for the divided business division but who perform any of the duties specified by Ordinance of the Ministry of Economy and Finance. |
[This Article Newly Inserted by Presidential Decree No. 22184, Jun. 8, 2010]
| Article 82-3 (Disposition of Difference between Transfer Value and Net Market Price of Assets upon Division) |
| (1) | Where the transfer value is less than the net market price of assets, as prescribed in Article 46-2 (2) of the Act, Article 80-3 (1) shall apply mutatis mutandis to the inclusion of the difference (hereinafter referred to as "marginal profits from division") in gross income, method of inclusion and other matters. |
| (2) | "Circumstances prescribed by Presidential Decree" in Article 46-2 (3) of the Act means the case where the corporation established through division, etc. deemed that the company name, transaction relationships and other trade secrets of the divided corporation, etc. have business value and paid the consideration therefor. |
| (3) | Where the transfer value exceeds the net market price of assets as prescribed in Article 46-2 (3) of the Act, Article 80-3 (3) shall apply mutatis mutandis to the inclusion of the difference (hereinafter referred to as "marginal losses from division") in deductible expenses, method of inclusion and other matters. |
[This Article Newly Inserted by Presidential Decree No. 22184, Jun. 8, 2010]
[Title Amended on Feb. 12, 2019]
| Article 82-4 (Follow-Up Management Based on Special Provisions concerning Taxation upon Qualified Division) |
| (1) | Where a corporation established through division has assets transferred from the divided corporation at book value in accordance with Article 46-3 (1) of the Act, it shall recognize the market price as of the registration date of the division as the value of the assets and liabilities so transferred but shall include the difference between the market price and the book value in gross income and include the same amount in deductible expenses in the asset adjustment account, if the amount computed by subtracting the book value (where tax settlement matters provided for in subparagraph 1 of Article 85 exist, such value shall be calculated by adding the amount not included in gross income and by subtracting the amount not included in deductible expenses, among the tax settlement matters) of the divided corporation from the market price is greater than zero, while it shall include the difference between the market price and the book value in deductible expenses and shall include the same amount in gross income in the asset adjustment account, if the difference is smaller than zero. In such cases, Article 80-4 (1) shall apply mutatis mutandis to the handling of the asset adjustment account. <Amended by Presidential Decree No. 25194, Feb. 21, 2014; Presidential Decree No. 27828, Feb. 3, 2017> |
| (2) | Where a corporation established through division, etc., has assets transferred from the divided corporation, etc., at book value under paragraph (1), it may obtain tax reductions or exemptions or tax credits upon succeeding to tax reductions or exemptions or tax credits provided for in Article 59 of the Act which applied to the merged corporation before the merger. In such cases, where there are provisions governing the requirements, etc., for tax reductions or exemptions or tax credits in the Act or other statutes, the same shall apply only where the corporation established through division, etc., meets such requirements, etc., and the corporation established through division, etc., may obtain tax reductions or exemptions or tax credits only applicable to the succeeded business by the following classifications: <Newly Inserted by Presidential Decree No. 22577, Dec. 30, 2010; Feb. 12, 2019> |
| 1. | Where tax reductions or exemptions or tax credits carried forward are related to a specific business or asset: To be deducted by the corporation established through division, etc., that has succeeded to the specific business or asset; |
| 2. | In cases of tax reductions or exemptions or tax credits carried forward, other than those falling under subparagraph 1: To be applied respectively by corporations, etc., established through the division by dividing proportionally at the rate of value of business assets succeeded by such corporations, etc., established through the division from among the value of business assets of the divided corporation, etc. |
| (3) | "Period prescribed by Presidential Decree" in the main sentence of Article 46-3 (3) of the Act, with the exception of its subparagraphs, means two years (or three years in cases under Article 46-3 (3) 3 of the Act) beginning on the first day of the business year following the business year in which the registration date of a division falls. <Amended by Presidential Decree No. 23589, Feb. 2, 2012; Presidential Decree No. 28640, Feb. 13, 2018> |
| (4) | Where a corporation, etc., established through a division falls under any subparagraph of Article 46-3 (3) of the Act, Article 80-4 (4) and (5) shall apply mutatis mutandis to the inclusion of losses, etc., in gross income and the inclusion of the amount equivalent to capital gains from the transfer or capital losses from the transfer in deductible expenses or gross income and other matters. <Amended by Presidential Decree No. 22577, Dec. 30, 2010> |
| (5) | Where a corporation, etc., established through a division falls under any subparagraph of Article 46-3 (3) of the Act, it shall add the amount not included in gross income and subtract the amount not included in deductible expenses among the tax settlement matters succeeded under subparagraph 1 of Article 85 for the purposes of calculating the amount of income and the tax base of the corporation, etc., established through the division and add the amount equivalent to the amount of tax reductions or exemptions or tax credits upon succession from a merged corporation to the corporate tax of the business year during which the relevant grounds arise and pay such amount, and it shall not apply from the business year during which the relevant grounds arise. <Newly Inserted by Presidential Decree No. 22577, Dec. 30, 2010; Presidential Decree No. 23589, Feb. 2, 2012> |
| (6) | "Inevitable circumstances prescribed by Presidential Decree" in the proviso to Article 46-3 (3) of the Act, with the exception of its subparagraphs, means the following circumstances: <Amended by Presidential Decree No. 22577, Dec. 30, 2010; Presidential Decree No. 28640, Feb. 13, 2018> |
| 1. | Where inevitable circumstances are deemed to exist with respect to Article 46-3 (3) 1 of the Act: Where a corporation, etc., established through a division falls under any item of Article 80-2 (1) 2; |
| 2. | Where inevitable circumstances are deemed to exist with respect to Article 46-3 (3) 2 of the Act: Where stockholders referred to in paragraph (8) falls under any item of Article 80-2 (1) 1; |
| 3. | Where inevitable circumstances are deemed to exist with respect to Article 46-3 (3) 3 of the Act: Where a corporation, etc. established through a division falls under any provision of Article 80-2 (1) 3 (a) through (c). |
| (7) | Article 80-4 (8) shall apply mutatis mutandis to determination as to whether a corporation, etc., established through a division continues the business succeeded to from a divided corporation, etc., under Article 46-3 (3) 1 of the Act. <Amended by Presidential Decree No. 22577, Dec. 30, 2010> |
| (8) | "Stockholders of a divided corporation, etc., prescribed by Presidential Decree" in Article 46-3 (3) 2 of the Act means the stockholders provided for in Article 82-2 (8). <Amended by Presidential Decree No. 25194, Feb. 21, 2014> |
| (9) | "Employees specified by Presidential Decree" in Article 46-3 (3) 3 of the Act, with the exception of its items, means Korean nationals employed under an employment contract entered into under the Labor Standards Act: Provided, That the employees who fall under any subparagraph of Article 82-2 (10), among employees working for the divided business division, may be excluded herefrom. <Newly Inserted by Presidential Decree No. 28640, Feb. 13, 2018> |
| (10) | A corporation, etc., established through a division which has made appropriation in the asset adjustment account under paragraph (1) shall file a detailed statement on the asset adjustment account in the form prescribed by Ordinance of the Ministry of Economy and Finance with the head of the tax office having jurisdiction over the place of tax payment, accompanied by the report provided for in Article 60 of the Act. |
[This Article Newly Inserted by Presidential Decree No. 22184, Jun. 8, 2010]
| Article 83 (Succession of Losses Carried Forward upon Division) |
| (1) | "Rate of value of assets prescribed by Presidential Decree" in Article 46-4 (1) of the Act means the rate of the value of the business assets of a divided corporation (limited to the business succeeded) and of a counterpart corporation to a division and merger (including a disappearing corporation; hereafter the same shall apply in this Article) as of the registration date of the division and merger. In such cases, the value of the business assets of the divided corporation, etc. succeeded by the corporation, etc. established through the division shall be limited to the assets held or used continuously (including acquisition of replacing assets after disposition) as of the end date of each business year during which the succeeded losses are deducted and shall be based on the value of such business assets as of the registration date of the division and merger. <Amended on Feb. 12, 2019> |
| (2) | Losses succeeded to and deducted by a corporation, etc. established through a division when it calculates the tax base of each business year under Article 46-4 (2) of the Act shall be the losses that belong to the business succeeded to by the corporation, etc. established through the division among the amount of losses referred to in Article 13 (1) 1 of the Act (referring to the amount computed by deeming the registration date of the division to be the start date of the business year) of the divided corporation, etc. as at the registration date of the division, and the amount of such losses shall be calculated each year by deeming that one year has passed sequentially from the business year following the business year in which the registration date of the division falls. <Amended on Feb. 12, 2019> |
| (3) | Losses that belong to the business succeeded as prescribed in paragraph (2) shall be the amount computed by proportionally dividing the losses of the divided corporation, etc. by the rate of the business assets succeeded to by corporations, etc. established through the division among the value of the business assets of the divided corporation, etc. as at the registration date of the division. <Amended on Feb. 12, 2019> |
| (4) | Article 81 (3) shall apply mutatis mutandis where any corporation, etc. established through a division applies tax reductions or exemptions or tax credits succeeded from a divided corporation, etc. under Article 46-3 (2) of the Act. <Newly Inserted by Presidential Decree No. 22577, Dec. 30, 2010> |
| (5) | An amount exceeding the ceiling on donations referred to in Article 46-4 (6) of the Act (hereinafter referred to as “amount exceeding the ceiling on donations”) belonging to a business succeeded from a divided corporation, etc. pursuant to paragraph (7) of the same Act shall be the amount exceeding the ceiling on donations of a divided corporation, etc. as at the registration date of division, divided by the ratio of the business asset value respectively succeeded by a corporation established through division, etc. to the business asset value of the divided corporation, etc. <Newly Inserted on Feb. 17, 2021> |
| (6) | Articles 80-2 (7) and 80-4 (8) shall apply mutatis mutandis to determination as to whether a corporation, etc. established through a division continues the business succeeded to from a divided corporation, etc. and the application thereof for the purposes of deduction of losses; inclusion in gross income; addition of corporate tax; inclusion of an amount exceeding the ceiling on donations in deductible expenses. <Amended by Presidential Decree No. 22577, Dec. 30, 2010; Presidential Decree No. 28640, Feb. 13, 2018; Feb. 17, 2021> |
[This Article Wholly Amended by Presidential Decree No. 22184, Jun. 8, 2010]
[Title Amended on Dec. 30, 2010]
| Article 83-2 (Special Cases concerning Calculation of Income Amount for Divided Corporations Surviving Division) |
| (1) | The transfer value referred to in Article 46-5 (1) 1 of the Act shall be any of the following amounts: <Amended by Presidential Decree No. 22577, Dec. 30, 2010; Presidential Decree No. 23589, Feb. 2, 2012; Presidential Decree No. 27828, Feb. 3, 2017> |
| 1. | In cases of a qualified division: The net book value of assets as on the registration date of the division of the business category divided by a divided corporation, etc., under Article 46-5 (1) 2 of the Act; |
| 2. | In cases other than those falling under subparagraph 1: Sum total of the following amounts: |
| (a) | Sum total of the value of the stocks of a corporation established through division, etc., money or other property value paid by the corporation established through division, etc., to the stockholders of the divided corporation due to the division: Provided, That, in cases of a division and merger, where a counterpart corporation to the division and merger acquired the stocks combined due to the division and merger, although the stocks granted due to division and merger are not granted with respect to such stocks, the stocks granted due to the division and merger shall be deemed granted by the equity ratio for the purposes of calculating the value of the stocks of the counterpart corporation to the division and merger; |
| (b) | Sum total of the corporate tax of the divided corporation paid by the corporation established through the division, etc., the national tax imposed on the corporate tax (including the amount of tax reduction or exemption) and the local corporate tax imposed under of Article 88 (2) of the Local Tax Act. |
| (2) | Where any corporate tax is refunded under the Framework Act on National Taxes in calculating the net book value of assets of a divided corporation, etc., under Article 46-5 (1) 2 of the Act, the amount equivalent to such refunded amount shall be added to the net book value of assets as on the registration date of the division of the divided corporation, etc. |
| (3) | Any divided corporation, etc., that wishes to qualify for paragraph (1) 1 shall file an application for special cases for taxation upon division in the form prescribed by Ordinance of the Ministry of Economy and Finance, together with any corporation established through division, etc., in filing a report on tax base under Article 60 of the Act, with the head of the tax office having jurisdiction over the place of tax payment. In such cases, the corporation established through division, etc., shall also submit the detailed statement on the asset adjustment account referred to in Article 82-4 (10) to the head of the tax office having jurisdiction over the place of tax payment of the corporation established through division, etc. <Amended by Presidential Decree No. 22577, Dec. 30, 2010; Presidential Decree No. 28640, Feb. 13, 2018> |
[This Article Wholly Amended by Presidential Decree No. 22184, Jun. 8, 2010]
| Article 84 (Inclusion of Amount Equivalent to Capital Gains from Transfer of Assets upon Spin-off in Deductible Expenses) |
| (1) | Of the value of stocks, etc., acquired from a corporation established through a division (hereafter in this Article referred to as "stocks, etc. of a corporation established through a division"), the amount that a divided corporation may include in deductible expenses under Article 47 (1) of the Act shall be the amount equivalent to capital gains from the transfer of assets generated by the spin-off. <Amended by Presidential Decree No. 23589, Feb. 2, 2012; Presidential Decree No. 24357, Feb. 15, 2013> |
| (2) | The amount included in deductible expenses under paragraph (1) shall be recognized as accelerated depreciation allowances of stocks, etc., of a corporation established through division. <Amended by Presidential Decree No. 23589, Feb. 2, 2012; Presidential Decree No. 24357, Feb. 15, 2013> |
| (3) | "Amount prescribed by Presidential Decree" in the main sentence of Article 47 (2) of the Act, with the exception of its subparagraphs, means the amount computed by multiplying the accelerated depreciation allowances of stocks, etc., of a corporation established through division as of the last day (referring to the registration date of the division for the business year in which the registration date of the division falls; hereafter in this Article the same shall apply) of the immediately preceding business year by the rate calculated by subtracting the rate calculated by multiplying the rates provided for in subparagraphs 1 and 2 from the rate calculated by adding the rates provided for in subparagraphs 1 and 2: <Amended by Presidential Decree No. 23589, Feb. 2, 2012; Presidential Decree No. 24357, Feb. 15, 2013> |
| 1. | The ratio of the book value of stocks, etc., of a corporation established through division disposed of pursuant to Article 47 (2) 1 of the Act in the relevant business year to the book value of stocks, etc., of the corporation established through division, acquired pursuant to Article 47 (1) of the Act and held by a divided corporation as of the last day of the immediately preceding business year; |
| 2. | The ratio of capital gains from the transfer of the succeeded assets disposed of in the relevant business year to capital gains from the transfer of the assets provided for in paragraph (4) succeeded to from a divided corporation pursuant to Article 47 (1) of the Act (hereafter in this Article referred to as "succeeded assets") and held by a corporation established through division as of the last day of the immediately preceding business year. |
| (4) | "Assets prescribed by Presidential Decree" in Article 47 (2) 2 of the Act means depreciable assets (including assets provided for in Article 24 (3) 1), land, stocks, etc. <Amended by Presidential Decree No. 23589, Feb. 2, 2012> |
| (5) | "Where a corporation established through division becomes subject to a qualified merger or qualified division or where such corporation is in other extenuating circumstances specified by Presidential Decree" in the proviso to Article 47 (2) of the Act means any of the following: <Amended on Feb. 17, 2021> |
| 1. | Where a divided corporation or a corporation established through division disposes of stocks, etc. and assets for the first time through a qualified merger, a qualified division, a qualified spin-off, a qualified investment in kind, an all-inclusive exchange, etc. of stocks on which taxation has been deferred under Article 38 of the Restriction of Special Taxation Act, or an in-kind investment of stocks on which taxation has been deferred under Article 38-2 of the same Act (hereafter in this Article and Article 84-2 referred to as "qualified restructuring"); |
| 2. | Where a divided corporation owns all of the issued stocks or the total amount of investment of a corporation established through division in cases falling under any of the following: |
| (a) | Where a divided corporation qualifiedly merges with a corporation established through division (including a qualified division and merger referred to in Article 46-4 (3) of the Act; hereafter in this Article the same shall apply) or is qualifiedly merged by a corporation established through division, and the divided corporation or corporation established through division disposes of stocks, etc. and assets; |
| (b) | Where a divided corporation or corporation established through division disposes of stocks, etc. and assets in a qualified merger, qualified division, qualified spin-off, or qualified investment in-kind: Provided, That this shall be limited to cases where the relevant divided corporation owns all of the issued shares or total investment amount of the merging corporation, corporation established through division or invested corporation following such qualified merger, qualified division, qualified spin-off, or qualified investment in-kind, either directly or indirectly as prescribed by Ordinance of the Ministry of Economy and Finance; |
| 3. | Where a divided corporation or corporation established through division disposes of stocks, etc. and assets in a qualified division or qualified spin-off of a business division falling under any subparagraph of Article 82-2 (3). |
| (6) | Where a divided corporation becomes subject to the proviso to Article 47 (2) of the Act on the grounds specified in paragraph (5), the accelerated depreciation allowances of the stocks, etc., of the corporation established through division, held by the divided corporation, shall be set aside as follows: <Amended by Presidential Decree No. 27828, Feb. 3, 2017> |
| 1. | The amount computed by multiplying the balance of the accelerated depreciation allowances of the stocks, etc., of the corporation established through division by the ratio specified in paragraph (3) 2 [transferred assets disposed of for purposes of computing the rate mean those that constitute transferred assets disposed of to the corporation (hereafter in this Article referred to as "corporation succeeding to assets") that succeeds to assets of the corporation established through division from the corporation established through division through qualified restructuring] shall be set aside as accelerated depreciation allowances of the stocks, etc. of the corporation succeeding to assets (hereafter in this Article referred to as "stocks, etc., of the corporation succeeding to assets"), which the divided corporation or the corporation established through division newly acquires: Provided, That, if the corporation succeeding to assets is the divided corporation, the amount computed by apportioning the balance of accelerated depreciation allowances of the stocks, etc., of the corporation established through division in proportion to capital gains accruing from assets at the time of the initial spin-off, among assets transferred to the divided corporation, shall be set aside as temporary depreciation allowances, if the assets are depreciated assets, or as accelerated depreciation allowances of such assets, if such assets are not depreciated assets; |
| 2. | The amount computed by multiplying the balance of accelerated depreciation allowances of the stocks, etc., of the corporation established through division by the ratio specified in paragraph (3) 1 [stocks disposed of for purposes of computing the rate mean those that constitute stocks, etc., of the corporation established through division, which have been disposed of to the corporation (hereafter in this Article referred to as "corporation succeeding to stocks") that succeeds stocks, etc. of the corporation established through division from the divided corporation through qualified restructuring] shall be set aside as accelerated depreciation allowances of the stocks, etc., of the corporation established through division, to which the corporation succeeding to stocks has succeeded. |
| (7) | Where either of the following events occurs in relation to a divided corporation that has newly set aside accelerated depreciation allowances pursuant to paragraph (6), the corporation established through division, or the corporation succeeding to stocks, the corporation shall include the amount computed by applying paragraph (3) mutatis mutandis in gross income when computing the amount of income for the business year in which such event occurs; however, in cases of the proviso to paragraph (6) 1, the amount computed by the methods prescribed in Article 64 (4) shall be included in gross income: Provided, That this shall not apply to cases falling under subparagraph 2 or 3 of paragraph (5). <Newly Inserted by Presidential Decree No. 24357, Feb. 15, 2013; Presidential Decree No. 26981, Feb. 12, 2016; Presidential Decree No. 27828, Feb. 3, 2017; Feb. 17, 2021> |
| 1. | Where a divided corporation or the corporation established through division disposes of the stocks, etc. of the corporation succeeding to assets, which it newly acquired upon qualified restructuring, or where the corporation succeeding to stocks disposes of the stocks, etc., of the corporation established through division, to which it succeed upon qualified restructuring; |
| 2. | Where the corporation succeeding to assets disposes of assets provided for in paragraph (4), among assets to which it succeeded from the corporation established through division, or where the corporation established through division disposes of transferred assets. In such cases, the corporation established through division or corporation succeeding to assets shall notify the divided corporation, corporation established through division, corporation succeeding to stocks, or corporation succeeding to assets of the disposition of such assets within one month from the date of the disposition. |
| (8) | Where a divided corporation, corporation established through division or corporation succeeding to stocks becomes subject to the proviso, with the exception of the subparagraphs, of paragraph (7) on the grounds specified in paragraph (5) 2 or 3, paragraph (6) shall apply mutatis mutandis to the method for substituting compressed account reserve funds of the stocks, etc., of the corporation established through division or corporation succeeding to stocks, held by the divided corporation. <Newly Inserted on Feb. 17, 2021> |
| (9) | If either of the following events occurs in relation to a divided corporation that has set aside accelerated depreciation allowances pursuant to paragraph (6), a corporation established through division, or a corporation succeeding to assets during the period set forth in paragraph (13), such corporation shall include the balance of the accelerated depreciation allowances fully in gross income when computing the amount of income for the business year in which such event occurs: <Newly Inserted by Presidential Decree No. 24357, Feb. 15, 2013; Presidential Decree No. 25194, Feb. 21, 2014; Presidential Decree No. 26981, Feb. 12, 2016; Presidential Decree No. 27828, Feb. 3, 2017; Feb. 17, 2021> |
| 1. | Where the corporation succeeding to assets closes the business to which it succeeded from the corporation established through division upon qualified restructuring, or where the corporation established through division closes the business to which it succeeded from the divided corporation; |
| 2. | Where the ratio of the stocks, etc., of the corporation succeeding to assets, which are held by the divided corporation or the corporation established through division, to the total number of outstanding stocks or the total amount of investment of the corporation succeeding to assets (hereafter in this Article referred to as "ratio of shares of the corporation succeeding to assets") is less than 50/100 of the ratio of shares of the corporation succeeding to assets on the acquisition date of stocks, etc., of the corporation succeeding to assets, or where the ratio of the stocks, etc., of the corporation established through division, which are held by the corporation succeeding to assets, to the total number of outstanding stocks or the total amount of investment of the corporation established through division (hereafter in this Article referred to as "ratio of shares of the corporation established through division") is less than 50/100 of the ratio of shares of the corporation established through division on the acquisition date of stocks, etc., of the corporation established through division. |
| (10) | A divided corporation, corporation established through division or corporation succeeding to stocks that establishes compressed account reserve funds pursuant to paragraph (8) shall, if any reason prescribed in the subparagraphs of paragraph (7) occurs, include an amount calculated by applying mutatis mutandis paragraph (3) in its gross income for the purpose of calculating the amount of income for the business year in which the date of the occurrence of the relevant reason falls; however, in cases falling under the proviso of paragraph (6) 1, the amount shall be included in gross income in the manner prescribed in each subparagraph of Article 64 (4): Provided, That this shall not apply to cases falling under paragraph (5) 2 or 3. <Newly Inserted on Feb. 17, 2021> |
| (11) | A divided corporation, corporation established through division or corporation succeeding to stocks that establishes compressed account reserve funds pursuant to paragraph (8) shall, if any reason prescribed in the subparagraphs of paragraph (9) occurs within the period prescribed in paragraph (13), include the entire balance of the compressed account reserve funds in its gross income for the purpose of calculating the amount of income for the business year in which the date of the occurrence of the relevant reason falls. <Newly Inserted on Feb. 17, 2021> |
| (12) | "Extenuating circumstances prescribed by Presidential Decree" in the proviso to Article 47 (1) of the Act, with the exception of its subparagraphs, and the proviso to Article 47 (3) of the Act means the following circumstances: <Amended by Presidential Decree No. 22577, Dec. 30, 2010; Presidential Decree No. 23589, Feb. 2, 2012; Presidential Decree No. 28640, Feb. 13, 2018; Feb. 17, 2021> |
| 1. | Where such circumstances are related to Article 46 (2) 2 or 47 (3) 2 of the Act: Where a divided corporation falls under any item of Article 80-2 (1) 1; |
| 2. | Where such circumstances are related to Article 46 (2) 3 or 47 (3) 1 of the Act: Where a corporation established through division, etc., falls under any item of Article 80-2 (1) 2; |
| 3. | Where such circumstances are related to Article 46 (2) 4 or 47 (3) 3 of the Act: In either of the following cases: |
| (a) | Where such circumstances are related to Article 46 (2) 4 of the Act: Where a corporation established through division, etc. falls under any provision of Article 80-2 (1) 3 (a) through (c) or where the number of employees under Article 82-4 (9) who work for the divided division as of one month before the registration date of division is less than five; |
| (b) | Where such circumstances are related to Article 47 (3) 3 of the Act: Where a corporation established through division, etc. falls under any provision of Article 80-2 (1) 3 (a) through (c). |
| (13) | "Period prescribed by Presidential Decree" in the main sentence of Article 47 (3) of the Act, with the exception of its subparagraphs, means two years (or three years in cases under Article 47 (3) 3 of the Act) beginning on the first day of the business year following the business year in which the registration date of the division falls. <Amended by Presidential Decree No. 23589, Feb. 2, 2012; Presidential Decree No. 27828, Feb. 3, 2017; Presidential Decree No. 28640, Feb. 13, 2018; Feb. 17, 2021> |
| (14) | "Employees specified by Presidential Decree" in Article 47 (3) 3 of the Act means Korean nationals employed under an employment contract entered into under the Labor Standards Act: Provided, That the employees who fall under any subparagraph of Article 82-2 (10), among employees working for the divided business division, may be excluded herefrom. <Newly Inserted by Presidential Decree No. 28640, Feb. 13, 2018; Feb. 17, 2021> |
| (15) | Where a divided corporation recognized accelerated depreciation allowances in accordance with paragraph (1) or (2), the corporation established through division may succeed to the tax reductions, exemptions or credits under Article 59 of the Act, which the divided corporation was entitled before the division, to be entitled to such tax reductions, exemptions or credits. In such cases, if the Act or other statutes provides for requirements, etc. for such tax reductions, exemptions or credits, such provisions shall apply only where a corporation established through division meets such requirements, etc. and a corporation established through division may be entitled only to the tax reductions, exemptions or credits applicable to the business to which the corporation succeeds as follows: <Newly Inserted by Presidential Decree No. 28640, Feb. 13, 2018; Feb. 17, 2021> |
| 1. | Where carried-over tax reductions, exemptions or credits are related to a specific business or asset: The corporation established through division who succeeded to the specific business or asset shall be entitled to deductions; |
| 2. | Where carried-over tax reductions, exemptions or credits are not related to any specific business or asset referred to in subparagraph 1: The corporation established through division shall be entitled to deductions in proportion to the ratio of the value of the fixed assets for business year to which the corporation established through division succeeded to the value of fixed assets of the divided corporation for business use. |
| (16) | Article 81 (3) shall apply mutatis mutandis where a corporation established through division applies to the tax reductions, exemptions or credits succeeded by the divided corporation under Article 47 (4) of the Act. <Newly Inserted by Presidential Decree No. 28640, Feb. 13, 2018; Feb. 17, 2021> |
| (17) | Articles 80-2 (7) and 80-4 (8) shall apply mutatis mutandis to determination as to whether a corporation established through division or a corporation succeeding to assets continues or closes the succeeded business and the application thereof. <Amended by Presidential Decree No. 22577, Dec. 30, 2010; Presidential Decree No. 24357, Feb. 15, 2013; Presidential Decree No. 27828, Feb. 3, 2017; Presidential Decree No. 28640, Feb. 13, 2018; Feb. 17, 2021> |
| (18) | A domestic corporation which wishes to qualify for Article 47 (1) of the Act shall file an application for special taxation on spin-off in the form prescribed by Ordinance of the Ministry of Economy and Finance and the detailed statement on capital gains on a transfer of assets with the head of the tax office having jurisdiction over the place of tax payment at the time of filing a return pursuant to Article 60 of the Act, jointly with the corporation established through division or the corporation succeeding to assets. <Amended by Presidential Decree No. 23589, Feb. 2, 2012; Presidential Decree No. 26981, Feb. 12, 2016; Presidential Decree No. 27828, Feb. 3, 2017; Feb. 17, 2021> |
[This Article Wholly Amended by Presidential Decree No. 22184, Jun. 8, 2010]
| Article 84-2 (Inclusion of Amount Equivalent to Capital Gains from Transfer of Assets upon Investment in Kind in Deductible Expenses) |
| (1) | Of the value of stocks, etc., acquired from an invested corporation (hereafter in this Article referred to as "stocks, etc., of an invested corporation"), the amount that an investing corporation shall include in deductible expenses under Article 47-2 (1) of the Act shall be the amount equivalent to capital gains from the transfer of assets accruing from the investment in kind. <Amended by Presidential Decree No. 23589, Feb. 2, 2012; Presidential Decree No. 24357, Feb. 15, 2013> |
| (2) | The amount included in deductible expenses under paragraph (1) shall be recognized as accelerated depreciation allowances of the stocks, etc., of the invested corporation. <Amended by Presidential Decree No. 23589, Feb. 2, 2012; Presidential Decree No. 24357, Feb. 15, 2013> |
| (3) | "Amount prescribed by Presidential Decree" in the main sentence of Article 47-2 (2) of the Act, with the exception of its subparagraphs, means the amount computed by multiplying accelerated depreciation allowances of the stocks, etc., of an invested corporation as on the last day (referring to the date of the investment in kind for the business year in which the date of the investment in kind falls; hereafter in this Article the same shall apply) of the immediately preceding business year, by the rate calculated by subtracting the rate calculated by multiplying the ratios provided for in subparagraphs 1 and 2 from the rate calculated by adding the rates provided for in subparagraphs 1 and 2: <Amended by Presidential Decree No. 23589, Feb. 2, 2012; Presidential Decree No. 24357, Feb. 15, 2013> |
| 1. | The ratio of the book value of stocks, etc., of an invested corporation disposed of pursuant to Article 47-2 (2) 1 of the Act in the relevant business year to the book value of stocks, etc., of the invested corporation acquired pursuant to Article 47-2 (1) of the Act and held by an investing corporation as on the last day of the immediately preceding business year; |
| 2. | The ratio of capital gains from the transfer of the succeeded assets disposed of in the relevant business year to the capital gains (referring to the amount computed by subtracting the book value of the succeeded assets held by an investing corporation, etc., on the date preceding the date of the investment in kind from the market price of the succeeded assets as on the date of the investment in kind) from the transfer of the assets provided for in paragraph (4) succeeded to from the investing corporation, etc., pursuant to Article 47-2 (1) of the Act (hereafter in this Article referred as "succeeded assets") and held by an invested corporation as on the last day of the immediately preceding business year. |
| (4) | "Assets prescribed by Presidential Decree" in Article 47-2 (2) 2 of the Act means depreciable assets (including the assets provided for in Article 24 (3) 1), land, stocks, etc. <Amended on Presidential Decree No. 23589, Feb. 2, 2012> |
| (5) | "Where an invested corporation becomes subject to a qualified merger or qualified division, or where such corporation is in other extenuating circumstances prescribed by Presidential Decree" in the proviso to Article 47-2 (2) of the Act, with the exception of its subparagraphs, means any of the following cases: <Amended on Feb. 17, 2021> |
| 1. | Where an investing corporation or invested corporation disposes of its stocks, etc. and assets for the first time pursuant to qualified restructuring; |
| 2. | Where an investing corporation owns all of the issued stocks or the total amount of investment of an invested corporation in cases falling under any of the following: |
| (a) | Where an investing corporation qualifiedly merges with an invested corporation (including a qualified division and merger referred to in Article 46-4 (3) of the Act; hereafter in this Article the same shall apply) or is qualifiedly merged by an invested corporation, and the investing corporation or invested corporation disposes of stocks, etc. and assets; |
| (b) | Where an investing corporation or invested corporation disposes of stocks, etc. and assets through a qualified merger, qualified division, qualified spin-off, or qualified investment in-kind: Provided, That this shall be limited to cases where the relevant investing corporation owns all of the issued shares or the total investment amount of the merging corporation, corporation established through division or invested corporation following such qualified merger, qualified division, qualified spin-off, or qualified investment in-kind, either directly or indirectly as prescribed by Ordinance of the Ministry of Economy and Finance; |
| 3. | Where an investing corporation or invested corporation disposes of stocks, etc. and assets through a qualified division or qualified spin-off of a business division falling under any subparagraph of Article 82-2 (3). |
| (6) | Where an investing corporation becomes subject to the proviso to Article 47-2 (2) of the Act pursuant to paragraph (5), the accelerated depreciation allowances of the stocks, etc., of the invested corporation, held by the investing corporation, shall be set aside as follows: <Amended by Presidential Decree No. 27828, Feb. 3, 2017> |
| 1. | The amount of accelerated depreciation allowances of the stocks, etc., of the corporation succeeding to assets, which the investing corporation or the invested corporation shall newly acquire (hereafter in this Article referred to as "stocks, etc., of the corporation succeeding to assets") shall be computed by multiplying the balance of the accelerated depreciation allowances of the stocks, etc., of the invested corporation by the ratio specified in paragraph (3) 2 (the transferred assets disposed of for purposes of calculating the ratio means those that constitute transferred assets disposed of to the corporation that succeeds to assets of the invested corporation from the invested corporation (hereafter in this Article referred to as "corporation succeeding to assets")): Provided, That, if the corporation succeeding to assets is the investing corporation, the amount computed by apportioning the balance of accelerated depreciation allowances of the stocks, etc., of the invested corporation in proportion to capital gains accruing from assets at the time of the initial investment in kind, among assets transferred to the investing corporation, shall be set aside as the temporary depreciation allowances, if the assets are depreciated assets, or as compressed accounts reserve funds of such assets, if such assets are not depreciated assets; |
| 2. | The amount computed by multiplying the balance of accelerated depreciation allowances of the stocks, etc., of the invested corporation by the ratio specified in paragraph (3) 1 [stocks disposed of for purposes of computing the rate mean those that constitute stocks, etc., of the corporation established through division, which have been disposed of to the corporation (hereafter in this Article referred to as "corporation succeeding to stocks") that succeeds stocks, etc., of the invested corporation from the investing corporation through qualified restructuring] shall be set aside as accelerated depreciation allowances of the stocks, etc., of the invested corporation, to which the corporation succeeding to stocks has succeeded. |
| (7) | Where either of the following events occurs in relation to an investing corporation, an invested corporation, or a corporation succeeding to stocks, which has newly set aside as accelerated depreciation allowances pursuant to paragraph (6), the amount computed by applying paragraph (3) mutatis mutandis shall be included in gross income at the time of computing the amount of income for the business year in which such event occurs; however, in cases of the proviso to paragraph (6) 1, such amount shall be included in gross income by the methods prescribed in Article 64 (4): Provided, That this shall not apply in cases falling under the ground prescribed in paragraph (5) 2 or 3: <Newly Inserted by Presidential Decree No. 24357, Feb. 15, 2013; Presidential Decree No. 26068, Feb. 3, 2015; Presidential Decree No. 27828, Feb. 3, 2017; Feb. 17, 2021> |
| 1. | Where the investing corporation or the invested corporation disposes of stocks, etc., of the corporation succeeding to assets, newly acquired upon qualified restructuring, where the corporation succeeding to assets disposes of the stocks, etc., of the invested corporation, to which it has succeeded upon qualified restructuring; |
| 2. | Where the corporation succeeding to assets disposes of assets provided for in paragraph (4), to which it has succeeded from the invested corporation upon qualified restructuring, or where the invested corporation disposes of transferred assets. In such cases, the invested corporation or corporation succeeding to assets shall notify the investing corporation, invested corporation, corporation succeeding to stocks, or corporation succeeding to assets of the disposition of such assets within one month from the date of the disposition. |
| (8) | Where an investing corporation, invested corporation or corporation succeeding to stocks becomes subject to the proviso, with the exception of the subparagraphs, of paragraph (7) on the ground specified in paragraph (5) 2 or 3, paragraph (6) shall apply mutatis mutandis to the method for substituting compressed account reserve funds of the stocks, etc., of the invested corporation or corporation succeeding to stocks, held by the relevant corporation. <Newly Inserted on Feb. 17, 2021> |
| (9) | Where either of the following events occurs in relation to an investing corporation that has newly set aside as accelerated depreciation allowances pursuant to paragraph (6), an invested corporation, or a corporation succeeding to assets during the period set forth in paragraph (13), the accelerated depreciation allowances shall be fully included in gross income in computing the amount of income for the business year in which such event occurs: <Newly Inserted by Presidential Decree No. 24357, Feb. 15, 2013; Presidential Decree No. 26068, Feb. 3, 2015; Presidential Decree No. 26981, Feb. 12, 2016; Presidential Decree No. 27828, Feb. 3, 2017; Feb. 17, 2021> |
| 1. | Where the corporation succeeding to assets closes the business to which it succeeded from the invested corporation upon qualified restructuring, or where the invested corporation closes the business to which it succeeded from the investing corporation; |
| 2. | Where the ratio of the stocks, etc., of the corporation succeeding to assets, which are held by the investing corporation or the invested corporation, to the total number of outstanding stocks or the total amount of investment of the corporation succeeding to assets (hereafter in this Article referred to as "ratio of shares of the corporation succeeding to assets") is less than 50/100 of the ratio of shares of the corporation succeeding to assets on the acquisition date of stocks, etc., of the corporation succeeding to assets, or where the ratio of the stocks, etc., of the invested corporation, which are held by the corporation succeeding to assets, to the total number of outstanding stocks or the total amount of investment of the invested corporation (hereafter in this Article referred to as "ratio of shares of the invested corporation") is less than 50/100 of the ratio of shares of the invested corporation on the acquisition date of stocks, etc. of the invested corporation. |
| (10) | An investing corporation, invested corporation or corporation succeeding to stocks that newly establishes compressed account reserve funds pursuant to paragraph (8) shall, if any reason prescribed in the subparagraphs of paragraph (7) occurs, include an amount calculated by applying mutatis mutandis paragraph (3) in its gross income for the purpose of calculating the amount of income for the business year in which the date of the occurrence of the relevant reason falls; however, in cases falling under the proviso to paragraph (6) 1, the amount shall be included in gross income in the manner prescribed in each subparagraph of Article 64 (4): Provided, That this shall not apply to cases falling under paragraph (5) 2 or 3. <Newly Inserted on Feb. 17, 2021> |
| (11) | An investing corporation, invested corporation or corporation succeeding to stocks that establishes compressed account reserve funds pursuant to paragraph (8) shall, if any reason prescribed in the subparagraphs of paragraph (9) occurs within the period prescribed in paragraph (13), include the entire balance of the compressed account reserve funds in its gross income for the purpose of calculating the amount of income for the business year in which the date of the occurrence of the relevant reason falls. <Newly Inserted on Feb. 17, 2021> |
| (12) | "Extenuating circumstances prescribed by Presidential Decree" in the provisos to Article 47-2 (1) and (3) of the Act, with the exception of their subparagraphs, means the following cases: <Amended by Presidential Decree No. 22812, Mar. 31, 2011; Presidential Decree No. 23589, Feb. 2, 2012; Feb. 17, 2021> |
| 1. | Where such circumstances are related to Article 47-2 (1) 4 or (3) 2 of the Act: Where an investing corporation falls under any item of Article 80-2 (1) 1; |
| 2. | Where such circumstances are related to Article 47-2 (1) 2 or (3) 1 of the Act: Where an invested corporation falls under any item of Article 80-2 (1) 2. |
| (13) | "Period prescribed by Presidential Decree" in the main sentence of Article 47-2 (3) of the Act, with the exception of its subparagraphs, means two years beginning on the first day of the business year following the business year in which investment in kind is made. <Amended by Presidential Decree No. 23589, Feb. 2, 2012; Presidential Decree No. 27828, Feb. 3, 2017; Feb. 17, 2021> |
| (14) | Articles 80-2 (7) and 80-4 (8) shall apply mutatis mutandis to determination as to whether an invested corporation or a corporation succeeding to assets continues or closes the business to which it succeeded and the application thereof. <Amended by Presidential Decree No. 22577, Dec. 30, 2010; Presidential Decree No. 24357, Feb. 15, 2013; Presidential Decree No. 27828, Feb. 3, 2017; Presidential Decree No. 28640, Feb. 13, 2018; Feb. 17, 2021> |
| (15) | Deleted. <Feb. 13, 2018> |
| (16) | Deleted. <Feb. 13, 2018> |
| (17) | A investing corporation or corporation succeeding to stocks that wishes to qualify for Article 47-2 (1) of the Act shall file an application for special taxation on investment in kind in the form prescribed by Ordinance of the Ministry of Economy and Finance and the detailed statement on the capital gains on the transfer of assets, with the head of the tax office having jurisdiction over the place of tax payment, jointly with the invested corporation or the corporation succeeding to assets, at the time of filing a return under Article 60 of the Act. <Amended by Presidential Decree No. 23589, Feb. 2, 2012; Presidential Decree No. 27828, Feb. 3, 2017; Feb. 17, 2021> |
[This Article Wholly Amended by Presidential Decree No. 22184, Jun. 8, 2010]
| Article 85 (Succession of Assets and Liabilities upon Merger or Division) |
In the case of a merger or division of a domestic corporation, the amount included or not included in gross income or deductible expenses (hereafter referred to as "tax settlement matters" in this Article) in the calculation of the amount of income and the tax base of a merged corporation, etc. for each business year under the latter part of Article 44-2 (1), Article 44-3 (2), the latter part of Article 46-2 (1), or Article 46-3 (2) of the Act or according to a spin-off shall be transferred by succession as follows, unless otherwise provided for in the Act or other statutes: <Amended by Presidential Decree No. 22577, Dec. 30, 2010; Presidential Decree No. 23589, Feb. 2, 2012; Presidential Decree No. 25194, Feb. 21, 2014; Feb. 12, 2019> | 1. | In the case of a qualified merger or qualified division: All of the tax settlement matters (in the cases of a division, limited to the tax settlement matters of the divided business category) shall be succeeded to a surviving corporation, etc.; |
| 2. | In cases other than those falling under subparagraph 1: Where retirement benefit appropriation funds or appropriation for bad debts are succeeded to a surviving corporation, etc. under Articles 33 (3) and (4) and 34 (4) of the Act, all of the tax settlement matters related thereto shall be succeeded to the surviving corporation, etc. and other tax settlement matters shall not be succeeded to the surviving corporation, etc. |
[This Article Wholly Amended by Presidential Decree No. 22184, Jun. 8, 2010]
| Article 85-2 (Liability to Pay Tax on Transfer Marginal Profits or Losses upon Merger or Division) |
Where a corporation disappears due to a merger or division, the surviving corporation, etc., etc. shall be liable to pay the corporate tax (including the corporate tax on profits or losses from transfer upon a merger or division) on the income for each business year which the merged corporation, etc. has not paid.
[This Article Newly Inserted by Presidential Decree No. 22184, Jun. 8, 2010]
| Article 86 (Inclusion of Amount Equivalent to Transfer Marginal Profits of Assets due to Exchange in Deductible Expenses) |
| (1) | "Business prescribed by Presidential Decree" in Article 50 (1) of the Act means business, other than the business provided for in Articles 29 (3) and 60 (1) 1 through 3 of the Enforcement Decree of the Restriction of Special Taxation Act. <Amended by Presidential Decree No. 17457, Dec. 31, 2001; Presidential Decree No. 18324, Mar. 22, 2004; Presidential Decree No. 18706, Feb. 19, 2005; Presidential Decree No. 20619, Feb. 22, 2008; Presidential Decree No. 22577, Dec. 30, 2010; Feb. 15, 2022> |
| (2) | "Assets prescribed by Presidential Decree" in Article 50 (1) of the Act means land, buildings, assets eligible for deduction provided for in Article 24 (1) 1 of the Act on Restriction on Special Cases concerning Taxation, and other assets prescribed by Ordinance of the Ministry of Economy and Finance. <Amended by Presidential Decree No. 17338, Aug. 14, 2001; Presidential Decree No. 18706, Feb. 19, 2005; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 22035, Feb. 18, 2010; Presidential Decree No. 22951, Jun. 3, 2011; Feb. 17, 2021> |
| (3) | "Exchange among several corporations prescribed by Presidential Decree" in Article 50 (1) of the Act means an exchange of assets among at least three corporations under one exchange contract. <Amended by Presidential Decree No. 22951, Jun. 3, 2011> |
| (4) | The amount equivalent to the transfer marginal profits included in deductible expenses under Article 50 (1) of the Act shall be an amount computed by subtracting the amount provided for in subparagraph 2 (if the amount is in excess of the amount computed by subtracting the book value from the market price of the business assets, such excess amount shall be excluded) from the amount provided in subparagraph 1: <Amended by Presidential Decree No. 17457, Dec. 31, 2001; Feb. 12, 2019> |
| 1. | The value of assets acquired through exchange; |
| 2. | If some payments are made in cash, such amount and the book value of business assets. |
| (5) | Article 64 (3) through (5) shall apply mutatis mutandis to the inclusion of an amount equivalent to transfer marginal profits included in deductible expenses under paragraph (4) in the calculation of deductible expenses or gross income. <Amended on Feb. 12, 2019> |
| (6) | A domestic corporation that intends to be applicable under Article 50 (1) of the Act shall submit a detailed statement on assets exchanges in the form stipulated by Ordinance of the Ministry of Economy and Finance, along with the report provided for in Article 60 of the Act, to the head of the tax office having jurisdiction over the place of tax payment. <Amended by Presidential Decree No. 20720, Feb. 29, 2008> |
| Article 86-2 (Restriction on Deduction of Carried-forward Losses in Cases of Business Acquisition) |
| (1) | "Cases prescribed by Presidential Decree" referred to in Article 50-2 of the Act mean cases meeting all of the following criteria: |
| 1. | The acquired assets are at least 70/100 of the total assets of the transferor corporation and at least 90/100 of the total assets minus the total liabilities of the transferor corporation as of the date of acquisition of the business; |
| 2. | The transferor corporation and transferee corporation are in a special relationship as of the date of the contract for the transfer and acquisition of the business. |
| (2) | “Percentage of the value of assets prescribed by Presidential Decree” referred to in Article 50-2 of the Act means the ratio of the business asset value of the transferee corporation as of the date of business acquisition to the business asset value of the acquired business division. In such cases, the value of the business assets of the acquired business division shall be the value of the assets as of the date of business acquisition that are held (including assets replaced after disposal) and used as of the end of each business year for which the losses of the transferee corporation are deducted. |
[This Article Newly Inserted on Feb. 15, 2022]
Subsection 6-2 Income Tax Deduction
| Article 86-3 (Income Deductions for Special Purpose Companies) |
| (1) | "Distributable profits prescribed by Presidential Decree" in Article 51-2 (1) of the Act, with the exception of its subparagraphs, means the amount calculated by subtracting corporate tax expenses on the financial statements prepared in accordance with the Korean Financial Accounting Standards, adding carried-over retained earnings to the profit for the year or deducting carried-over losses from the net income, and then deducting earned surplus reserves accumulated under Article 458 of the Commercial Act. In such cases, the following amounts shall be excluded therefrom: <Amended by Presidential Decree No. 26981, Feb. 12, 2016> |
| 1. | Dividends provided for in subparagraph 8 of Article 18 of the Act; |
| 2. | Gains or losses on the valuation of assets under subparagraph 2 (a) through (c) of Article 73, among the profit for the year, carried-over retained earnings, and carried-over losses: Provided, That gains or losses on the valuation of assets of an investment company, etc., under subparagraph 2 (c) of Article 73, as evaluated by the market value method under Article 75 (3), shall be included in distributable income. |
| (2) | "Corporation prescribed by Presidential Decree" in Article 51-2 (1) 6 of the Act means a corporation incorporated upon meeting the requirements for investment companies referred to in Article 4 (1) 3 (c) of the Enforcement Decree of the Special Act on Private Rental Housing to engage in rental business. <Newly Inserted by Presidential Decree No. 19328, Feb. 9, 2006; Presidential Decree No. 20849, Jun. 20, 2008; Presidential Decree No. 22577, Dec. 30, 2010; Presidential Decree No. 26763, Dec. 28, 2015> |
| (3) | Deleted. <Feb. 17, 2021> |
| (4) | Deleted. <Feb. 17, 2021> |
| (5) | Deleted. <Feb. 17, 2021> |
| (6) | Deleted. <Feb. 17, 2021> |
| (7) | Deleted. <Feb. 17, 2021> |
| (8) | Deleted. <Feb. 17, 2021> |
| (9) | Any corporation that wishes to qualify for Article 51-2 (1) of the Act shall file an application for income deduction in the form stipulated by Ordinance of the Ministry of Economy and Finance with the head of the tax office having jurisdiction over the place of tax payment, along with the report on the tax base provided for in Article 60 of the Act and a statement by real beneficiary of the relevant dividend income (referring to a person who holds the right to dispose of the relevant income, taking legal or economic risks in connection with the income, and actually holds the ownership of such income; hereinafter the same shall apply): Provided, That any corporation that wishes to qualify for Article 51-2 (1) of the Act pursuant to the proviso to Article 51-2 (2) 1 shall submit the written confirmation of the application of special case of taxation on partnership enterprise and the partnership taxation in the form stipulated by Ordinance of the Ministry of Economy and Finance which is submitted by the partnership enterprise that receives dividends by the filing deadline specified under Article 100-23 (1) of the Restriction of Special Taxation Act. <Amended by Presidential Decree No. 22035, Feb. 18, 2010; Feb. 28, 2023> |
| (10) | "Corporation meeting the standards prescribed by Presidential Decree" in Article 51-2 (2) 2 of the Act means a corporation that meets all of the following requirements: <Newly Inserted by Presidential Decree No. 19328, Feb. 9, 2006; Presidential Decree No. 22035, Feb. 18, 2010> |
| 1. | The corporation shall be incorporated by means of private offering of shares; |
| 2. | Not more than two individuals or one individual and his/her relatives (hereafter in this subparagraph referred to as "individuals, etc.") shall own at least 95/100 of the total number of issued stocks or the total amount of investment: Provided, That this shall not apply where the individuals, etc., do not have the right to claim the distribution of dividends and residual assets. |
[This Article Newly Inserted by Presidential Decree No. 16658, Dec. 31, 1999]
Subsection 7 Special Cases concerning Calculation of Amounts of Income
| Article 87 Deleted. <Feb. 12, 2019> |
| Article 88 (Types of Wrongful Calculations) |
| (1) | "Where ... the tax burden of a domestic corporation has been unjustly reduced" in Article 52 (1) of the Act means any of the following cases: <Amended by Presidential Decree No. 18706, Feb. 19, 2005; Presidential Decree No. 19328, Feb. 9, 2006; Presidential Decree No. 19891, Feb. 28, 2007; Presidential Decree No. 20619, Feb. 22, 2008; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 21302, Feb. 4, 2009; Presidential Decree No. 22035, Feb. 18, 2010; Presidential Decree No. 22184, Jun. 8, 2010; Presidential Decree No. 22951, Jun. 3, 2011; Presidential Decree No. 23589, Feb. 2, 2012; Presidential Decree No. 26981, Feb. 12, 2016; Presidential Decree No. 28640, Feb. 13, 2018; Feb. 12, 2019; Feb. 11, 2020; Feb. 17, 2021> |
| 1. | Where assets are purchased or received as investments in kind at a price higher than the market price or the assets are over-depreciated; |
| 2. | Where unprofitable assets are purchased or received as investments in kind or expenses are borne for such assets; |
| 3. | Where assets are transferred or invested in kind gratuitously or at a price lower than the market price: Provided, That excluded herefrom shall be the cases where stocks are transferred upon the exercise or grant of stock options, etc. under the main sentence of subparagraph 19-2 of Article 19, with the exception of its items; |
| 3-2. | For a merger (including a division and merger) or division of corporations which are related parties, where capital gains or losses from a transfer upon the merger or division are reduced because the merger or division is made at an unfair ratio: Provided, That excluded herefrom shall be a merger (including a division and merger) or division referred to in Article 165-4 of the Financial Investment Services and Capital Markets Act; |
| 4. | Where doubtful or inferior assets are refunded or non-performing loans are transferred; |
| 5. | Where contributions are made in place of another party; |
| 6. | Where money, other assets or services are lent or provided gratuitously or at an interest rate, tariff, or rent lower than the market price: Provided, That this shall not apply to any of the following cases: |
| (a) | Where money is paid to the exercise or grant of stock options, etc. referred to in the subparagraph 19-2 of Article 19 with the exception of its items; |
| (b) | Where company houses (including rental company houses prescribed by Ordinance of the Ministry of Economy and Finance) are provided to executive officers (including executive officers who are minority stockholders, etc.) and employees, other than stockholders, contributors, etc.; |
| (c) | Providing services pursuant to the requirements prescribed by Ordinance of the Ministry of Economy and Finance, such as the absence of any change in the amount of consolidated corporate tax among consolidated corporations subject to the consolidated tax return system prescribed in Article 76-8 of the Act; |
| 7. | Where money, other assets or services are borrowed or received at an interest rate, tariff, or rental rate higher than the market price: Provided, That excluded herefrom shall be cases of receiving services in compliance with the requirements prescribed by Ordinance of the Ministry of Economy and Finance, such as the absence of any change in the amount of consolidated corporate tax among consolidated corporations subject to the consolidated tax return system prescribed in Article 76-8 of the Act; |
| 7-2. | Where profits are distributed in such a manner as not exercising the derivative-based rights prescribed by Ordinance of the Ministry of Economy and Finance or as adjusting the period of exercise; |
| 8. | Where profits are distributed by a corporation which is a stockholder (excluding minority shareholders, etc.; hereafter in this Article the same shall apply) to another stockholder, etc., who is a related party of the corporation through any of the following capital transactions: |
| (a) | Where stocks are evaluated higher or lower than their market price and a merger is made at an unfair ratio in the merger (including a division and merger) between corporations that are related parties: Provided, That this shall not apply to any merger (including a division and merger) prescribed in Article 165-4 of the Financial Investment Services and Capital Markets Act; |
| (b) | Where the right to allot and assume control of new stocks (including convertible bonds, warrant bonds, exchangeable bonds, etc.; hereafter in this item the same shall apply) in transactions that increases the capital (including the amount of investments) of a corporation is partially or fully waived (excluding where the waived stocks are allotted by means of public offering provided for in Article 9 (7) of the Financial Investment Services and Capital Markets Act) or bought at a price higher than the market price of the new stocks; |
| (c) | Where stocks held by some stockholders are retired in the reduction of capital of a corporation at a rate which is not proportional to the stocks held by the relevant stockholders; |
| 8-2. | Cases other than those provided for in subparagraph 8, where it is deemed that a corporation has distributed its profits through a capital transaction, such as the increase or reduction of capital, a merger (including a division and merger), a division, the conversion or exchange of stocks through convertible bonds, etc., into or for stocks or the acceptance of stocks with convertible bonds, etc., pursuant to Article 40 (1) of the Inheritance Tax and Gift Tax Act: Provided, That excluded herefrom shall be where stocks are issued upon the exercise of stock options, among the stock options, etc., provided for in subparagraph 19-2 of Article 19 with the exception of its items; |
| 9. | Other cases in which it is deemed that activities, calculations, or other distributions of the profit of a corporation equivalent to those provided for in subparagraphs 1 through 3, 3-2, 4 through 7, 7-2, 8 and 8-2 have occurred. |
| (2) | Paragraph (1) shall apply to transactions between the relevant corporation and any related party (including transactions made through a person, other than a related party) as at the time of the activities: Provided, That the determination as to whether a corporation is a related party for the purposes of paragraph (1) 8 (a) shall be made based on the period beginning on the first day of the business year immediately preceding the business year which includes the registration date of the merger (in cases of a merger between corporations with different starting dates, it shall be the earlier date) and ending on the registration date of the merger. <Amended by Presidential Decree No. 17457, Dec. 31, 2001; Presidential Decree No. 23589, Feb. 2, 2012> |
| (3) | Paragraph (1) 1, 3, 6, 7 and 9 (limited to any activity or calculation similar to those provided for in paragraph (1) 1, 3, 6 and 7) shall only apply where the difference between the market price and the transaction price is at least three hundred million won or at least an amount equivalent to 5/100 of the market price. <Newly Inserted by Presidential Decree No. 19891, Feb. 28, 2007> |
| (4) | Paragraph (3) shall not apply where stocks issued by a listed corporation are traded. <Newly Inserted by Presidential Decree No. 19891, Feb. 28, 2007; Presidential Decree No. 21302, Feb. 4, 2009; Feb. 17, 2021> |
| Article 89 (Scope of Market Price) |
| (1) | In applying Article 52 (2) of the Act, where there is a price at which the relevant corporation has continuously made transactions with many and unspecified persons, other than a related party, or a price at which transactions have been made ordinarily between third parties who are not related parties in a situation similar to the relevant transaction, such price shall be used: Provided, That where shares issued by a listed corporation are traded in any of the following methods, the market value of such shares shall be the final market value (referring to the final market value immediately preceding the trading day if the shares are traded during the closure of an exchange) of an exchange referred to in Article 8-2 (2) of the Financial Investment Services and Capital Markets Act (hereinafter referred to as the "exchange") of the trading day; where a de facto transfer of management rights is involved as prescribed by Ordinance of the Ministry of Economy and Finance (excluding where the relevant shares fall under any subparagraph of Article 53 (8) of the Enforcement Decree of the Inheritance Tax and Gift Tax Act), 20/100 of the value shall be added: <Amended by Presidential Decree No. 19891, Feb. 28, 2007; Presidential Decree No. 21302, Feb. 4, 2009; Presidential Decree No. 23589, Feb. 2, 2012; Feb. 17, 2021; Feb. 28, 2023> |
| 1. | Trading outside the securities market prescribed in Article 8-2 (4) 1 of the Act on the Capital Market and Financial Investment Business. |
| 2. | Methods prescribed by Ordinance of the Ministry of Economy and Finance, including bulk trading. |
| (2) | If the market value is unclear when applying Article 52 (2) of the Act, the amount shall be computed by sequentially applying the following subparagraphs: <Amended by Presidential Decree No. 17826, Dec. 30, 2002; Presidential Decree No. 18174, Dec. 30, 2003; Presidential Decree No. 18706, Feb. 19, 2005; Presidential Decree No. 22577, Dec. 30, 2010; Presidential Decree No. 24357, Feb. 15, 2013; Presidential Decree No. 25194, Feb. 21, 2014; Presidential Decree No. 26981, Feb. 12, 2016; Presidential Decree No. 27472, Aug. 31, 2016; Presidential Decree No. 27828, Feb. 3, 2017; Presidential Decree No. 28640, Feb. 13, 2018; Feb. 12, 2019; Feb. 17, 2021> |
| 1. | The value appraised by an appraisal firm under the Act on Appraisal and Certified Appraisers (the average appraised value, if the value is appraised by at least two appraisal firms), if such value is available: Provided, That this shall not apply to stocks, etc. and virtual assets; |
| (3) | In lending or borrowing money referred to in Article 88 (1) 6 and 7, the lessee’s incremental borrowing rate of interest (hereinafter referred to as "lessee’s incremental borrowing rate of interest") prescribed by Ordinance of the Ministry of Economy and Finance shall be the rate prevailing in the market, notwithstanding paragraphs (1) and (2): Provided, That in any of the following cases, the interest rate prevailing in the market on overdraft (hereinafter referred to as "interest rate on overdraft") prescribed by Ordinance of the Ministry of Economy and Finance according to the classification in each subparagraph shall apply: <Amended by Presidential Decree No. 22577, Dec. 30, 2010; Presidential Decree No. 23589, Feb. 2, 2012; Presidential Decree No. 25194, Feb. 21, 2014> |
| 1. | Where it is impracticable to apply the lessee’s incremental borrowing rate of interest and there exists a ground prescribed by Ordinance of Ministry of Economy and Finance: The interest rate prevailing in the market on overdraft shall apply only to relevant loans or borrowings; |
| 1-2. | Where there are loans, the maturity period of which exceeds five years, and other cases prescribed by Ordinance of Ministry of Economy and Finance: The interest rate prevailing in the market on overdraft shall apply only to relevant loans or borrowings; |
| 2. | Where the relevant corporation chooses the interest rate prevailing in the market on overdraft, as prescribed by Ordinance of the Ministry of Economy and Finance, upon filing a report under Article 60 of the Act: The interest rate prevailing in the market on overdraft shall apply to the business year for which interest rate prevailing in the market on overdraft is chosen and two consecutive business years thereafter. |
| (4) | Where paragraphs (1) and (2) cannot apply to the provision of assets (excluding money) or services referred to in Article 88 (1) 6 and 7, the amount computed as follows shall be deemed their market price: <Amended by Presidential Decree No. 17033, Dec. 29, 2000; Presidential Decree No. 17457, Dec. 31, 2001; Presidential Decree No. 23589, Feb. 2, 2012; Feb. 17, 2021> |
| 1. | Where tangible or intangible assets are provided or received, the amounts calculated by multiplying the term deposit interest rate by the amount equivalent to 50/100 of the market value of the relevant assets less the amount of rental key money or deposits received in connection with such assets; |
| 2. | Where construction or other services are provided or received, the sum of the amount required to provide the relevant services (including direct and indirect expenses; hereafter in this subparagraph referred to as "costs") and costs multiplied by the rate of profit (referring to the rate divided by the balance of sales calculated according to Korean Financial Accounting Standards less the costs, divided by the costs) during the relevant business year from transactions providing similar services to persons other than related parties or from general service provision transactions between third parties who are not special related persons. |
| (5) | If a corporation has conducted any of the wrongful calculations provided for in Article 88, the difference, etc., of the market price prescribed in paragraphs (1) through (4) shall be included in gross income for purposes of calculating the amount of the income of that corporation for each business year under Article 52 (1) of the Act: Provided, That this shall not apply to any cash loan prescribed by Ordinance of the Ministry of Economy and Finance. <Amended by Presidential Decree No. 20720, Feb. 29, 2008> |
| (6) | Articles 38, 39, 39-2, 39-3, 40 and 42-2 of the Inheritance Tax and Gift Tax Act and Articles 28 (3) through (7), 29 (2), 29-2 (1) and (2), 29-3 (1), 30 (5), and 32-2 of the Enforcement Decree of the same Act shall apply mutatis mutandis to the calculation of the amounts to be included in gross income under paragraph (5) if profits are distributed to a related party under Article 88 (1) 8 and 8-2. In such cases, "large stockholder" and "related party" shall be construed as "related party" provided for in this Decree, and "profits" and "profits prescribed by Presidential Decree" as "profits distributed to a related party", respectively. <Amended by Presidential Decree No. 16658, Dec. 31, 1999; Presidential Decree No. 17826, Dec. 30, 2002; Presidential Decree No. 18706, Feb. 19, 2005; Presidential Decree No. 19328, Feb. 9, 2006; Presidential Decree No. 19891, Feb. 28, 2007; Presidential Decree No. 20619, Feb. 22, 2008; Presidential Decree No. 22951, Jun. 3, 2011; Presidential Decree No. 23589, Feb. 2, 2012; Presidential Decree No. 26981, Feb. 12, 2016> |
| Article 90 (Submission of Detailed Statements on Transactions between Related Party) |
| (1) | Corporations that conduct transactions with related parties in each business year shall submit a detailed statement on transactions between related parties in the form stipulated by Ordinance of the Ministry of Economy and Finance under Article 52 (3) of the Act, along with the report provided for in Article 60 of the Act, to the head of the tax office having jurisdiction over the place of tax payment: Provided, That the particulars of international trades submitted to the head of the tax office having jurisdiction over the place of tax payment as prescribed in Article 16 of the Adjustment of International Taxes Act may be omitted. <Amended by Presidential Decree No. 18706, Feb. 19, 2005; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 21302, Feb. 4, 2009; Presidential Decree No. 23589, Feb. 2, 2012; Feb. 17, 2021> |
| (2) | Where it is deemed necessary to verify the particulars of the detailed statements submitted under paragraph (1), the head of the tax office having jurisdiction over the place of tax payment or the commissioner of the competent regional tax office may request the relevant corporation to submit the calculation of the market price applied to the transaction, the grounds for calculation, and other necessary data. |
| Article 91 (Special Cases concerning Calculation of Amount of Income from Transactions with Foreign Corporations) |
| Article 91-2 (Application for and Change of Calculation Method of Tax Bases for Corporations Adopting Functional Currencies) |
| (1) | A corporation that intends to apply the calculation method of tax bases provided for in Article 53-2 (1) 2 or 3 of the Act shall submit a report on the calculation method of tax bases in the form stipulated by Ordinance of the Ministry of Economy and Finance to the head of the tax office having jurisdiction over the place of tax payment, along with the report provided for in Article 60 of the Act for the business year during which it intends to first apply the calculation method of tax base provided for in Article 53-2 (1) 2 or 3 of the Act. |
| (2) | "Circumstances prescribed by Presidential Decree" in Article 53-2 (2) of the Act means any of the following cases: |
| 1. | Where the reported functional currency is changed; |
| 2. | Where corporations using a different calculation method of tax bases provided in each subparagraph of Article 53-2 (1) of the Act merge (including a division and merger) (hereafter referred to as "calculation method of tax bases" in this Article and Article 91-3); |
| 3. | Where a corporation assumes charge of the business of another corporation using a different calculation method of tax bases; |
| 4. | Where the calculation method of tax bases of a domestic corporation to which the consolidated tax return system first applies is different from the calculation method of tax base of the relevant consolidated group (limited to change to the calculation method of tax base of the relevant consolidated group). |
| (3) | Where a corporation which applies the calculation method of tax bases provided for in Article 53-2 (1) 2 or 3 of the Act intends to change the calculation method of tax bases as it falls under any subparagraph of paragraph (2), it shall submit an application for changing the calculation method of tax bases in the form stipulated by Ordinance of Ministry of Economy and Finance to the head of the tax office having jurisdiction over the place of tax payment, by the end date of the business year during which it intends to apply the changed calculation method of tax bases. |
| (4) | Upon receipt of an application submitted under paragraph (3), the head of the tax office having jurisdiction over the place of tax payment shall determine whether to grant approval and notify the relevant corporation of the determination within one month from the end date of the business year. |
| (5) | Where a corporation changes the calculation method of tax bases without obtaining approval under paragraph (4), the tax base shall be calculated in accordance with the calculation method of tax bases before the change. |
[This Article Newly Inserted by Presidential Decree No. 22577, Dec. 30, 2010]
| Article 91-3 (Detailed Regulations on Calculation Method of Tax Bases for Corporations Adopting Functional Currencies) |
| (1) | For the purpose of applying the calculation method of tax bases provided for in Article 53-2 (1) 1 of the Act, with respect to the items included in deductible expenses in calculating the amount of income in each business year only when they are appropriated as deductible expenses, the amount to be appropriated as deductible expenses shall be calculated based on the amount on the financial statements to be otherwise prepared when no currency, other than Korean won, is adopted as the functional currency (hereafter referred to as "won-denominated financial statements" in this Article and Article 91-5). <Amended on Feb. 12, 2019> |
| (2) | For the purpose of applying the calculation method of tax bases provided for in Article 53-2 (1) 2 of the Act, gross income and deductible expenses referred to in the Act and this Decree and losses referred to in Article 13 (1) 1 of the Act, non-taxable income referred to in subparagraph 2 of the same paragraph, and the amount of income deductions referred to in subparagraph 3 of the same paragraph shall be denominated in the functional currency and the tax base shall be calculated and the calculated tax base shall be converted into Korean won. <Amended on Feb. 12, 2019> |
| (3) | A corporation which applies the calculation method of tax bases provided for in Article 53-2 (1) 2 of the Act shall apply the rate of exchange reported to the head of the tax office having jurisdiction over the place of tax payment, along with the report provided for in Article 91-2 (1) or (3), among the basic rate of exchange, etc. as of the end date of the business year or the average rate of exchange provided for in paragraph (5) in any of the following cases: <Amended on Feb. 12, 2019; Feb. 17, 2021; Feb. 28, 2023> |
| 1. | Where the tax base denominated in the functional currency is converted into Korean won; |
| 2. | Where the limit of business promotion expenses referred to in each subparagraph of Article 25 (4) of the Act is converted into the functional currency; |
| (4) | The foreign currency referred to in subparagraphs 3 and 5 of Article 73, and Article 76 (1) and (2) in applying the calculation method of tax bases provided for in Article 53-2 (1) 2 or 3 shall be in a currency, other than the functional currency. |
| (5) | The exchange rate referred to in Article 53-2 (1) 3 and (3) 2 of the Act shall be the basic rate of exchange, etc. on the relevant day and the average exchange rate of the business year shall be the average exchange rate (hereafter referred to as "average exchange rate" in this Article and Article 91-5) of the relevant business year prescribed by Ordinance of the Ministry of Economy and Finance. |
| (6) | "Items prescribed by Presidential Decree" in Article 53-2 (1) 3 of the Act means the depreciation costs, retirement benefit appropriation funds, appropriation for bad debts, appropriation for redemption of claims for indemnity, the amount of equivalent to the realization balance referred to in Article 68 (6), profits and losses from provision of construction, etc. referred to in the main sentence of Article 69 (1), interest and discounts referred to in the proviso to Article 70 (1) 1 and 2, the amount equivalent to insurance premiums, etc. referred to in the proviso to Article 70 (3), interest, discounts and dividend income referred to in Article 70 (4), the amount equivalent to the rental fee and expenses corresponding thereto referred to in the proviso to the part other than the subparagraphs of Article 71 (1), bond discount referred to in Article 71 (3), and other similar items prescribed by Ordinance of the Ministry of Economy and Finance. |
| (7) | For the purpose of applying the calculation method of tax bases provided for in Article 53-2 (1) 3 of the Act, with respect to the depreciation costs, retirement insurance premiums (referring to the charges of the defined contribution retirement pension, etc. referred to in Article 44-2 (4)), allowances for retirement benefits, allowances for bad debts, allowances to redeem claims for indemnity, and other similar items prescribed by Ordinance of the Ministry of Economy and Finance, the amount included in deductible expenses shall be determined by indicating the amount appropriated as deductible expenses and the ceilings on inclusion in deductible expenses in the functional currency, respectively. |
| (8) | The amount included in gross income under Article 53-2 (3) of the Act shall be included in deductible expenses upon appropriating it as lump-sum depreciation reserve funds or compressed accounts reserve funds by applying mutatis mutandis Article 64 (3) and the amount included in deductible expenses shall be included in gross income by applying mutatis mutandis Article 64 (4) and (5). |
[This Article Newly Inserted by Presidential Decree No. 22577, Dec. 30, 2010]
| Article 91-4 (Application for and Change of Calculation Method of Tax Bases for Overseas Place of Business) |
| (1) | "Circumstances prescribed by Presidential Decree" in Article 53-3 (2) of the Act means any of the following cases: |
| 1. | Where corporations using a different calculation method of tax bases provided for in each subparagraph of Article 53-3 (1) of the Act merge (including a division and merger) (hereafter referred to as "calculation method of tax bases" in this Article and Article 91-5); |
| 2. | Where a corporation assumes charge of the business of another corporation using a different calculation method of tax base. |
| (2) | Article 91-2 (1) shall apply mutatis mutandis to an application for the calculation method of tax bases provided for in Article 53-3 (1) 2 or 3 of the Act and Article 91-2 (3) through (5) shall apply mutatis mutandis to the change of the calculation method of tax bases of a corporation which applies the calculation method of tax bases provided for in Article 53-3 (1) 2 or 3 of the Act. |
[This Article Newly Inserted by Presidential Decree No. 22577, Dec. 30, 2010]
| Article 91-5 (Detailed Regulations on Calculation Method of Tax Bases for Overseas Place of Business) |
| (1) | For the purpose of applying the calculation method of tax bases provided for in Article 53-3 (1) 1 of the Act, with respect to the items included in deductible expenses in calculating the amount of income in each business year only when they are appropriated as deductible expenses, the amount to be appropriated as deductible expenses shall be calculated based on the amount on the won-denominated financial statements. |
| (2) | For the purpose of applying the calculation method of tax bases provided for in Article 53-3 (1) 2 of the Act, the gross income and deductible expenses of the overseas place of business established under the Act and other statutes shall be denominated in the functional currency of the overseas place of business and the tax base shall be calculated and the calculated tax base shall be converted into Korean won. The tax base of the relevant corporation shall be calculated by applying mutatis mutandis Article 13 of the Act to the sum total of the tax base of the overseas place of business converted into Korean won and the tax base of its headquarters. |
| (3) | For the purpose of applying the calculation method of tax bases provided for in Article 53-3 (1) 2 of the Act, the tax base of the overseas place of business denominated in the functional currency shall be converted into Korean won by applying the exchange rate reported to the head of the tax office having jurisdiction over the place of payment, along with the report provided for in Article 91-4 (2), among the basic rate of exchange, etc. or average exchange rate as at the end date of the business year. <Amended by Presidential Decree No. 22812, Mar. 31, 2011> |
| (4) | For the purpose of applying the calculation method of tax bases provided for in Article 53-3 (1) 2 of the Act, the donations, business promotion expenses, reserve funds for proper purpose business, liability reserve funds, contingency reserve funds, retirement benefits, retirement insurance premiums (referring to the charges of the defined contribution retirement pension, etc. under Article 44-2 (4)), retirement benefit appropriation funds, appropriation for bad debts, appropriation for redemption of claims for indemnity, and other deductible expense items with the ceilings on inclusion in deductible expenses under the Act and this Decree shall not be included in deductible expenses. <Amended by Presidential Decree No. 22812, Mar. 31, 2011; Feb. 28, 2023> |
| (5) | The amount not included in deductible expenses under paragraph (4) shall be converted into Korean won by applying the exchange rate referred to in paragraph (3) and the converted amount shall be added to the corresponding item of the headquarters. Then it shall be included in deductible expenses up to the ceilings on inclusion in deductible expenses of the relevant corporation (including the headquarters and the overseas place of business; hereafter the same shall apply in this Article) for the purpose of calculating the amount of income. In such cases, for the purpose of calculating the ceiling on inclusion in deductible expenses of the relevant corporation, the financial statements of the overseas place of business shall be converted into Korean won by applying the exchange rate referred to in paragraph (3). |
| (6) | For the purpose of applying the calculation method of tax bases provided for in Article 53-3 (1) 2 and 3 of the Act, the foreign currency referred to in subparagraphs 3 and 5 of Article 73 and Article 76 (1) and (2) shall be a currency other than the functional currency of the overseas place of business. |
| (7) | "Exchange rate as at the end date of the business year" in Article 53-3 (1) 3 of the Act means the basic rate of exchange, etc. as of the end date of the business year and "exchange rate prescribed by Presidential Decree" means the following exchange rates: |
| 1. | In case of items falling under Article 91-3 (6): The average exchange rate; |
| 2. | In other cases than those falling under subparagraph 1: The exchange rate reported to the head of the tax office having jurisdiction over the place of payment, along with the report provided for in Article 91-4 (2) among the basic rate of exchange, etc. or average exchange rate as at the last of the trading day of the relevant item. |
[This Article Newly Inserted by Presidential Decree No. 22577, Dec. 30, 2010]
SECTION 2 Calculation of Amount of Tax
| Article 92 (Calculation of Number of Months) |
The number of months pursuant to the latter part of Article 55 (2) of the Act shall be calculated according to the solar calendar, and days less than one month shall be counted as one month. [This Article Wholly Amended on Feb. 12, 2019]
| Article 92-2 (Special Provisions concerning Taxation on Capital Gains on Transfer of Land) |
| (1) | Deleted. <by Presidential Decree No. 21526, Jun. 8, 2009> |
| (2) | "Residential house prescribed by Presidential Decree" in the main sentence of Article 55-2 (1) 2 of the Act means any residential house located in the Republic of Korea, except the following: Provided, That if the registration of a rental house (limited to houses governed by Article 5 (1) of the Addenda of the Special Act on Private Rental Housing, amended by Act No. 17482) falling under subparagraphs 1, 1-2, 1-4 and 1-12 is cancelled on the date when the period of mandatory rental expires pursuant to Article 6 (5) of the Special Act on Private Rental Housing, it shall be deemed that the rental period requirements prescribed in subparagraphs 1, 1-2, 1-4 and 1-12 are met on the date when the period of mandatory rental expires:<Newly Inserted by Presidential Decree No. 18174, Dec. 30, 2003; Presidential Decree No. 18706, Feb. 19, 2005; Presidential Decree No. 19225, Dec. 31, 2005; Presidential Decree No. 19328, Feb. 9, 2006; Presidential Decree No. 20619, Feb. 22, 2008; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 20930, Jul. 24, 2008; Presidential Decree No. 21063, Oct. 7, 2008; Presidential Decree No. 21431, Apr. 21, 2009; Presidential Decree No. 21748, Sep. 29, 2009; Presidential Decree No. 21935, Dec. 31, 2009; Presidential Decree No. 22184, Jun. 8, 2010; Presidential Decree No. 22390, Sep. 20, 2010; Presidential Decree No. 22812, Mar. 31, 2011; Presidential Decree No. 22951, Jun. 3, 2011; Presidential Decree No. 23220, Oct. 14, 2011; Presidential Decree No. 25194, Feb. 21, 2014; Presidential Decree No. 26369, Jun. 30, 2015; Presidential Decree No. 26763, Dec. 28, 2015; Presidential Decree No. 27444, Aug. 11, 2016; Presidential Decree No. 28640, Feb. 13, 2018; Presidential Decree No. 29045, Jul. 16, 2018; Feb. 12, 2019; Aug. 7, 2020; Oct. 7, 2020; Aug. 2, 2022> |
| (a) | Deleted; <by Presidential Decree No. 24357, Feb. 15, 2013> |
| (b) | That it shall have been rented for at least five years; |
| (a) | That the site area shall not exceed 298 square meters, and the total floor area (including the portion that is deemed housing under the main sentence of Article 154 (3) of the Enforcement Decree of the Income Tax Act and the area of the basement exclusively used for residential purposes, and referring to the exclusive area in cases of collective housing) shall not exceed 149 square meters; |
| (b) | That it shall have been rented for at least five years; |
| (a) | That the site area shall not exceed 298 square meters, and the total floor area (including the portion that is deemed housing under the main sentence of Article 154 (3) of the Enforcement Decree of the Income Tax Act and the area of the basement exclusively used for residential purposes, and referring to the exclusive area in cases of collective housing) shall not exceed 149 square meters; |
| (b) | That it shall have been rented for at least 10 years; |
| (c) | That it shall be located outside the Seoul Metropolitan Area; |
| 1-4. | The houses that meet each of the following requirements for buy-to-rent private housing defined in subparagraph 3 of Article 2 of the Special Act on Private Rental Housing, or for buy-to-rent public housing defined in subparagraph 1-3 of Article 2 of the Special Act on Public Housing [limited to unsold housing units (referring to housing units supplied by a project operator referred to in Article 54 of the Housing Act in accordance with the same Article on a first-come first-served basis, because the project operator fails to sign sale contracts for the housing units by June 10, 2008 in a housing complex for which the deadline for concluding contracts with buyers according to the public notice of inviting buyers has elapsed; hereafter in this subparagraph, the same shall apply), for which sale contracts are signed with down payments made during the period from June 11, 2008 to June 30, 2009]. In such cases, the corporation that sells such housing units shall submit a copy of the certificate of unsold housing units, which is issued by the head of the relevant Si/Gun/Gu, accompanied by the copies of sale contracts for purchasing the housing units, to the head of the tax office having jurisdiction over the place of tax payment, at the time of filing the return on the tax base for the business year in which such houses are sold: |
| (a) | That the site area shall not exceed 298 square meters and the total floor area (including the portion that is deemed housing under the main sentence of Article 154 (3) of the Enforcement Decree of the Income Tax Act and the area of the basement exclusively used for residential purposes, and referring to the exclusive area in cases of collective housing) shall not exceed 149 square meters; |
| (b) | That it shall have been rented for at least five years; |
| (c) | That it shall be located outside the Seoul Metropolitan area; |
| (d) | That the number of buy-to-rent housing units meeting all requirements provided for in items (a) thorough (c) (hereafter in this Article, referred to as "unsold housing unit") shall be at least five in the same Si (including the Seoul Special Metropolitan City and any Metropolitan City)/Gun [where the number of buy-to-rent housing units referred to in subparagraph 1 is at least five or the number of buy-to-rent housing units referred to in subparagraph 1-3 is at least five, the total number of buy-to-rent housing units and the unsold housing units referred to in subparagraph 1 or 1-3 shall be at least five]; |
| (e) | It shall not be a buy-to-rent private house where the rental property is an apartment from among long-term private rental housing referred to in subparagraph 5 of Article 2 of the Special Act on Private Rental Housing (referring to the Special Act on Private Rental Housing prior to it being amended by Act No. 17482; hereinafter the same shall apply) or short-term private rental house referred to in subparagraph 6 of the same Article with respect to which an application for registration of a rental business entity (including a report on changes in registered matters filed to add a house to be rent) is filed under Article 5 of the same Act after July 11, 2020; |
| 1-5. | An unsold housing unit (referring to housing supplied by a project operator referred to in Article 54 of the Housing Act under the same Article on a first-come first-served basis after the deadline for signing a contract has elapsed, followed by the publication of recruitment of occupants; hereafter in this paragraph, the same shall apply) directly acquired by February 11, 2010 (including conclusion of a sale and purchase contract and making a down payment by February 11, 2011) by a corporate restructuring real estate investment company defined in subparagraph 1 (c) of Article 2 of the Real Estate Investment Company Act, or a real estate fund provided for in subparagraph 2 of Article 229 of the Financial Investment Services and Capital Markets Act (hereafter in this paragraph, referred to as "corporate restructuring real estate investment company, etc."), which meets each of the following requirements: |
| (a) | That all real estate acquired by the corporate restructuring real estate investment company, etc., shall be unsold housing units located outside the Seoul Special Metropolitan City (excluding the designated area under Article 104-2 of the Income Tax Act; hereafter in this Article, the same shall apply) and the ratio of the housing units located outside the Seoul Metropolitan Area shall be at least 60/100; |
| (b) | That the period of existence of the corporate restructuring real estate investment company, etc., shall not exceed five years; |
| 1-6. | An unsold housing unit acquired by a person who has signed a purchase agreement at the time a corporate restructuring real estate investment company, etc., acquired the unsold housing unit under subparagraph 1-5, 1-8 or 1-10 under the purchase agreement (in cases falling under subparagraph 1-8, limited to unsold housing units locate outside the Seoul Metropolitan Area), and three years have not passed since the acquisition date of the unsold housing unit at issue; |
| 1-7. | An unsold housing unit directly acquired by February 11, 2010 (including cases of concluding a sale and purchase contract and making the down payment by February 11, 2010) by a trust business entity (hereafter in this subparagraph, referred to as "trust business entity") as provided for in the Financial Investment Services and Capital Markets Act as trust property under a trust contract, which meets each of the following requirements: |
| (a) | That money financed by a housing constructor (hereafter in this Article, referred to as "constructor") by issuing bonds shall be trusted to a trust business entity and the bonds issued by the relevant constructor shall be securitized under the Asset-Backed Securitization Act upon obtaining the credit guarantee of the Korea Housing Finance Corporation incorporated under the Korea Housing Finance Corporation Act; |
| (b) | That the real estate acquired by the trust business entity as trust property shall be unsold housing units located outside the Seoul Special Metropolitan City (limited to housing units constructed under the guarantee for sale by the Korea Housing and Urban Guarantee Corporation established under the Housing and Urban Fund Act) and the ratio of the number of housing units (where many constructors trust money to the trust business entity, such housing units mean all unsold housing units acquired by the trust business entity as trust property) located outside the Seoul Metropolitan Area shall be at least 60/100; |
| (c) | That the period of management (where the trust contract is extended, including such period extended) of the trust property shall not exceed five years; |
| 1-8. | An unsold housing unit directly acquired (including conclusion of a sale and purchase contract and making a down payment by April 30, 2011) by a corporate restructuring real estate investment company, etc., by April 30, 2011, which are located outside the Seoul Metropolitan Area and meets each of the following requirements: |
| (a) | That all real estate acquired by the corporate restructuring real estate investment company, etc., shall be unsold housing units as of February 11, 2010 located outside the Seoul Special Metropolitan City and the ratio of the housing units located outside the Seoul Metropolitan Area shall be at least 50/100; |
| (b) | That the period of existence of the corporate restructuring real estate investment company, etc., shall not exceed five years; |
| 1-9. | An unsold housing unit directly acquired (including conclusion of a sale and purchase contract and making a down payment by April 30, 2011) by a trust business entity (hereafter in this subparagraph, referred to as "trust business entity") as provided for in the Financial Investment Services and Capital Markets Act as trust property under a trust contract which meets each of the following requirements, by April 30, 2011: |
| (a) | That money financed by a constructor by issuing bonds shall be trusted to a trust business entity and the bonds issued by the relevant constructor shall be securitized under the Asset-Backed Securitization Act upon obtaining the credit guarantee of the Korea Housing Finance Corporation incorporated under the Korea Housing Finance Corporation Act; |
| (b) | That all real estate acquired by the trust business entity as trust property shall be unsold housing units as of February 11, 2010 located outside the Seoul Special Metropolitan City (limited to housing units constructed under the guarantee for sale by the Korea Housing and Urban Guarantee Corporation established pursuant to the Housing and Urban Fund Act) and the ratio of the housing units (where many constructors trust money to the trust business entity, such housing units shall be all unsold housing units acquired by the trust business entity as trust property) located outside the Seoul Metropolitan Area shall be at least 50/100; |
| (c) | That the period of management (where the trust contract is extended, including such extended period) of the trust property shall not exceed five years; |
| 1-10. | An unsold housing unit directly acquired (including conclusion of a sale and purchase contract and making a down payment by December 31, 2014) by a corporate restructuring real estate investment company, etc., which meets each of the following requirements, by December 31, 2014: |
| (a) | That all real estate acquired by the corporate restructuring real estate investment company, etc., shall be unsold housing units; |
| (b) | That the period of existence of the corporate restructuring real estate investment company, etc., shall not exceed five years; |
| 1-11. | An unsold housing unit (limited to housing units constructed under the credit guarantee of the Korea Housing and Urban Guarantee Corporation established under the Housing and Urban Fund Act) directly acquired by December 31, 2012 (including conclusion of a sale and purchase contract and making down payment by December 31, 2012) by a trust business entity (hereafter in this subparagraph, referred to as "trust business entity") as provided for in the Financial Investment Services and Capital Markets Act as trust property under a trust contract, which meets each the following requirements: |
| (a) | That money financed by a constructor by issuing bonds shall be trusted to a trust business entity and the bonds issued by the relevant constructor shall be securitized under the Asset-Backed Securitization Act upon obtaining the credit guarantee by the Korea Housing Finance Corporation incorporated under the Korea Housing Finance Corporation Act; |
| (b) | That the period of management (where the trust contract is extended, including such extended period) of the trust property shall not exceed five years; |
| 1-12. | A public support private rental housing unit defined in subparagraph 4 of Article 2 of the Special Act on Private Rental Housing, or a long-term private rental housing unit defined in subparagraph 5 of Article 2 of said Act, (hereafter referred to as "long-term private rental housing unit, etc." in this Article), which meets each of the following requirements, among buy-to-rent private housing units defined in subparagraph 3 of Article 2 of said Act [in the case of long-term private rental housing defined in subparagraph 5 of Article 2 of the Special Act on Private Rental Housing, limited to housing units with respect to which the registration of rental business entities is filed before June 17, 2020 (including a report on changes in registered matters to add houses to be rent)]: Provided, That this shall not apply to short-term private rental housing, defined in subparagraph 6 of Article 2 of the previous Special Act on Private Rental Housing, registered under Article 5 of the same Act for which a report on change to long-term private rental housing, etc. is filed after July 11, 2020 under Article 5 (3) of the same Act; |
| (a) | That the housing unit has been rented for at least ten years; |
| (b) | That the sum of the reference market value of the house and the land appurtenant thereto as at the date on which the house was registered as a private rental housing unit and began to be leased under Article 5 of the Special Act on Private Rental Housing shall not exceed 600 million won (or 300 million won in cases of an area outside of the Seoul Metropolitan area); |
| (a) | That the area of its building site shall not exceed 298 square meters and that the floor area of the house (including the area of the part deemed a residential house under the Enforcement Decree of the Income Tax Act and the area of the basement used exclusively for dwelling; and referring to the exclusive area in cases of multi-family housing) shall not exceed 149 square meters; |
| (b) | That the housing unit has been rented for at least ten years; |
| (c) | That the sum of the reference market value of the house and the land appurtenant thereto as at the date on which the house was registered as a private rental housing unit and began to be leased under Article 5 of the Special Act on Private Rental Housing shall not exceed 900 million won; |
| (d) | No rental agreement has been concluded in excess of 5/100 of the rate of increase in the rental security deposits or rents (hereafter in this subparagraph referred to as "rent, etc.") compared with the immediately preceding rental agreement. In such cases, where the rental security deposit and monthly rent are converted in concluding a rental agreement in which the rent, etc. is increased, the rate of increase in rent, etc. shall be calculated pursuant to the standards prescribed in Article 44 (4) of the Special Act on Private Rental Housing; |
| (e) | No rental agreement requiring an increase in rent, etc. has been concluded within one year after concluding a rental agreement or increasing rent, etc. in accordance with an agreement. |
| 2. | A company house provided to an executive officer who is neither a stockholder, etc. nor a contributor, or an employee, and a house owned by a corporation and gratuitously provided, the provision period of which as company house or gratuitous provision period of which is at least 10 years; |
| 3. | A house acquired upon exercising a mortgage or in place of disbursement of liabilities, for which three years have yet to lapse from the date of acquisition; |
| 4. | A houses held on inevitable grounds, which are determined by Ordinance of the Ministry of Economy and Finance. |
| (3) | "Circumstances prescribed by Presidential Decree" in Article 55-2 (4) 2 of the Act means circumstances provided for in Article 153 (1) of the Enforcement Decree of the Income Tax Act. In such cases, "cultivation while residing in the location of farmland" in the proviso to subparagraph 3 of the same paragraph shall be construed as "cultivation." <Amended by Presidential Decree No. 18706, Feb. 19, 2005; Presidential Decree No. 19225, Dec. 31, 2005; Presidential Decree No. 22951, Jun. 3, 2011> |
| (4) | "Income accruing on the grounds prescribed by Presidential Decree" in Article 55-2 (4) 3 of the Act means any of the following incomes: <Amended by Presidential Decree No. 18706, Feb. 19, 2005; Presidential Decree No. 19225, Dec. 31, 2005; Presidential Decree No. 19328, Feb. 9, 2006; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 21744, Sep. 21, 2009; Presidential Decree No. 22184, Jun. 8, 2010; Presidential Decree No. 22951, Jun. 3, 2011; Presidential Decree No. 23589, Feb. 2, 2012; Presidential Decree No. 26068, Feb. 3, 2015; Presidential Decree No. 26763, Dec. 28, 2015; Presidential Decree No. 26981, Feb. 12, 2016; Presidential Decree No. 29045, Jul. 16, 2018; Feb. 17, 2021; Aug. 2, 2022> |
| 1. | Income accruing from change of the land category or lot number following the disposition of replotting land or from the appropriation of a land secured by the authorities for the development outlay referred to in the Urban Development Act and other statutes. In such cases, the disposition of replotting land and an area of land secured by the authorities for the development outlay shall be as provided for in Article 152 of the Enforcement Decree of the Income Tax Act; |
| 2. | Income accruing from a qualified division, qualified merger, qualified spin-off, qualified investment in kind, the alteration of organization or exchange (limited to any alteration of organization or any exchange meeting the requirements provided for in Article 50 of the Act); |
| 3. | Income accruing from the transfer of housing construction sites among land created by a development project performed under the Korea Land and Housing Corporation Act by the Korea Land and Housing Corporation established under the same Act; |
| 4. | Income that accrues to a corporation that builds new housing units for sale (including where built-to-rent private housing units defined in subparagraph 2 of Article 2 of the Special Act on Private Rental Housing or built-to-rent public housing units defined in subparagraph 1-2 of Article 2 of the Special Act on Public Housing are provided to tenants referred to in the same Act or are sold to another rental business operator) from the sale of such housing units and the land appurtenant thereto with the area specified in either of the following items, whichever is greater: |
| (a) | The total floor area of the housing units (excluding the basement area, the parking lot area on the ground, and the area of joint facilities for residents provided for in subparagraph 3 of Article 2 of the Regulations on Standards for Housing Construction); |
| 6. | Income accruing from transferring land for house construction by December 31, 2024 to a person (limited to a person who has concluded an agreement with a public housing project operator referred to in Article 4 of the Special Act on Public Housing for constructing and transferring buy-to-rent public housing) who intends to construct buy-to-rent public housing defined in subparagraph 1-3 of Article 2 of the same Act (hereafter in this subparagraph referred to as "buy-to-rent public housing"); |
| 7. | Other income accruing on any grounds prescribed by Ordinance of the Ministry of Economy and Finance, including a transfer for public purposes. |
| (5) | "Land, etc., prescribed by Presidential Decree" in the proviso to Article 55-2 (5) of the Act means any of the following: <Amended by Presidential Decree No. 19225, Dec. 31, 2005; Presidential Decree No. 22951, Jun. 3, 2011> |
| 1. | Land, etc., the registration of acquisition of which is impracticable at the time of its transfer under the provisions of statutes or a court ruling; |
| (6) | Article 68 shall apply mutatis mutandis to the business year to which capital gains on the transfer of land, etc., revert under Article 55-2 (1) of the Act, the timing for transfer or acquisition thereof: Provided, That Article 68 (1) 3 shall apply to the transfer of land, etc., on a long-term installment plan under Article 68 (4), notwithstanding Article 68 (2). <Amended by Presidential Decree No. 18174, Dec. 30, 2003; Feb. 11, 2020> |
| (7) | In applying Article 55-2 (1) 1 of the Act, where land, etc., is transferred through subscription sale, such land, etc., shall be deemed transferred on the date of contract for such subscription sale. <Amended by Presidential Decree No. 18174, Dec. 30, 2003> |
| (8) | With respect to capital gains on the transfer of land, etc., deemed transferred on the date of contract under paragraph (7), profits and expenses respectively generated during the period for which the land, etc., are included in the designated area provided for in Article 55-2 (1) 1 (a) and (b) shall be calculated as gross income and deductible expenses of the relevant business year among profits and expenses calculated based on the progress rate of work provided for in Article 69 (2): Provided, That where it is deemed impracticable to calculate the progress rate of work provided for in Article 69 (2) in circumstances determined by Ordinance of the Ministry of Economy and Finance, the amount that accrues and is incurred during the period for which the land, etc., are included in the designated area provided for in Article 55-2 (1) 1 (a) and (b) of the Act shall be calculated as gross income and deductible expenses, respectively, of the relevant business year among the amount computed by equally distributing the contract amount and the estimated total construction cost during the period from the date of commencement to the date of transfer of the object of contract. <Amended by Presidential Decree No. 18174, Dec. 30, 2003; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 21526, Jun. 8, 2009> |
| (9) | Where a corporation transfers at least two parcels of land, etc., to which Article 55-2 of the Act applies in each business year, capital gains on the transfer of such land, etc., shall be the sum of the amounts calculated as prescribed in Article 55-2 (6) of the Act by asset transferred in the relevant business year. In such cases, where there is land, etc., the book value of which at the time of transfer exceeds the amount of transfer among the transferred assets, capital gains on the transfer of land, etc., shall be calculated by deducting the excess amount (hereafter in this paragraph referred to as "capital losses from transfer") sequentially from capital gains from the transfer of the following assets: <Amended by Presidential Decree No. 21302, Feb. 4, 2009> |
| 1. | Capital gains from the transfer of assets, to which the same tax rate as that of assets with capital losses from transfer applies; |
| 2. | Capital gains from the transfer of assets to which the tax rate different from that of assets with capital losses from transfer applies. |
[This Article Newly Inserted by Presidential Decree No. 17457, Dec. 31, 2001]
| Article 92-3 (Standards for Period of Idle Land) |
"Period specified by Presidential Decree" in Article 55-2 (2) of the Act, with the exception of its subparagraphs, means any of the following periods: <Amended by Presidential Decree No. 21302, Feb. 4, 2009; Presidential Decree No. 22951, Jun. 3, 2011; Presidential Decree No. 26068, Feb. 3, 2015> | 1. | Any of the following periods, if the period of holding the relevant land is at least five years: |
| (a) | The period exceeding two years among the five years immediately preceding the date of transfer; |
| (b) | The period exceeding one year among three years immediately preceding the date of transfer of the relevant land; |
| (c) | The period exceeding the period equivalent to 40/100 of the period of holding the relevant land. In such cases, the period shall be calculated in the number of days. |
| 2. | Any of the following periods, if the period of holding the relevant land is not less than three years but less than five years: |
| (a) | The period exceeding the period computed by subtracting three years from the period of holding the relevant land; |
| (b) | The period exceeding one year among three years immediately preceding the date of transfer of the relevant land; |
| (c) | The period exceeding the period equivalent to 40/100 of the period of holding the relevant land. In such cases, the period shall be calculated in the number of days; |
| 3. | Both of the following periods, if the period of holding the relevant land is less than three years: Provided, That item (a) shall not apply, if the period of holding is less than two years: |
| (a) | The period exceeding the period computed by subtracting two years from the period of holding the relevant land; |
| (b) | The period exceeding the period equivalent to 40/100 of the period of holding the relevant land. In such cases, the period shall be calculated in the number of days. |
[This Article Newly Inserted by Presidential Decree No. 19225, Dec. 31, 2005]
| Article 92-4 (Determination of Land Categories) |
In applying Article 55-2 (2) of the Act, whether land is farmland, forest land, a ranch area or other land shall be determined based on its current state, except as otherwise provided for in this Decree: Provided, That if the current state is unclear, the determination shall be made based on the current entries in the public register. [This Article Newly Inserted by Presidential Decree No. 19225, Dec. 31, 2005]
| Article 92-5 (Scope of Farmland) |
| (1) | "Farmland" in Article 55-2 (2) 1 of the Act means a dry field, a paddy field, and an orchard that is actually used as the land for cultivation, regardless of its land category in the Cadastral Record. In such cases, the pieces of land, including a farm hut, barnyard, pumping station, pond, marsh, farm road, or waterway, which are directly used for the management of the farmland, shall be included. |
| (2) | In applying Article 55-2 (2) 1 (a) of the Act, the main business shall be determined according to the following standards: |
| 1. | Where a corporation runs at least two different kinds of business, the main business shall be the business that accrues larger revenue among such businesses; |
| 2. | Notwithstanding subparagraph 1, if a corporation uses agricultural products produced from the farmland that it directly uses for farming as raw materials to manufacture and produce goods and keeps separate accounting for the agriculture and the manufacturing business, etc., the main business of that corporation shall be deemed agriculture. In such cases, if the ratio of agricultural products used as raw materials to manufacture and produce goods (hereafter referred to as "use ratio" in this paragraph) among the agricultural products produced by the corporation does not exceed 50/100, such corporation shall be deemed to run agriculture as its main business to the extent of the farmland area, which is up to two times the area equivalent to the use ratio of the relevant farmland area. |
| (3) | "Farmland prescribed by Presidential Decree" in the proviso to Article 55-2 (2) 1 (a) of the Act means any of the following farmlands: <Amended by Presidential Decree No. 20619, Feb. 22, 2008; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 22951, Jun. 3, 2011; Presidential Decree No. 26068, Feb. 3, 2015> |
| 4. | Farmland owned by a clan (limited to farmland acquired on or before December 31, 2005); |
| 6. | Farmland prescribed by Ordinance of the Ministry of Economy and Finance that is permitted to be owned under the Farmland Act and other statutes. |
| (4) | "Area designated by Presidential Decree" in the main sentence of Article 55-2 (2) 1 (b) of the Act means a green belt area and a development restriction area classified under the National Land Planning and Utilization Act. <Amended by residential Decree No. 22951, Jun. 3, 2011> |
| (5) | "Period set by Presidential Decree" in the proviso to Article 55-2 (2) 1 (b) of the Act means three years. <Amended by residential Decree No. 22951, Jun. 3, 2011; Presidential Decree No. 26068, Feb. 3, 2015> |
[This Article Newly Inserted by Presidential Decree No. 19225, Dec. 31, 2005]
| Article 92-6 (Scope of Forest Land) |
| (1) | "Forest land prescribed by Presidential Decree" in Article 55-2 (2) 2 (a) of the Act means any of the following forest lands: <Amended by Presidential Decree No. 19891, Feb. 28, 2007; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 20763, Apr. 3, 2008; Presidential Decree No. 21025, Sep. 22, 2008; Presidential Decree No. 21528, Jun. 9, 2009; Presidential Decree No. 22073, Mar. 9, 2010; Presidential Decree No. 22951, Jun. 3, 2011> |
| 2. | A temple forest or forest owned by a village; |
| 3. | Forest land in a park nature preservation area or a park natural environmental area classified under the Natural Parks Act; |
| 4. | Forest land in an urban park created under Act on Urban Parks, Green Areas; |
| 6. | A courtyard owned by any traditional temple preserved under the Korea Traditional Temples Preservation and Support Act; |
| 9. | Forest land in a clearance area provided for in the Road Act; |
| 11. | Forest land in a flood management area provided for in the River Act; |
| 13. | Other forest land, prescribed by Ordinance of the Ministry of Economy and Finance, which is necessary for public interests and for protecting and fostering forests. |
| (2) | In applying Article 55-2 (2) 2 (b) of the Act, if a corporation runs at least two different kinds of business, the corporation's main business shall be the business with the larger value of assets among its total value of assets as at the end date of the business year. |
| (4) | "Forest land prescribed by Presidential Decree" in Article 55-2 (2) 2 (c) of the Act means any of the following forest lands: <Amended by Presidential Decree No. 19891, Feb. 28, 2007; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 22951, Jun. 3, 2011; Presidential Decree No. 26068, Feb. 3, 2015; Presidential Decree No. 26416, Jul. 20, 2015; Jan. 5, 2021> |
| 4. | Forest land directly used by any forest association or forest fraternity for its proper purpose business; |
| 6. | Forest land owned by a clan (limited to forest land acquired on or before December 31, 2005); |
| 7. | Forest land prescribed by Ordinance of the Ministry of Economy and Finance and directly related to a corporation's business, in consideration of its owner, location, utilization, holding period, area, etc. |
[This Article Newly Inserted by Presidential Decree No. 19225, Dec. 31, 2005]
| Article 92-7 (Scope of Ranch Areas) |
| (1) | "Ranch area" in Article 55-2 (2) 3 of the Act means a barn, the land on which appurtenant facilities are installed, grassland and grazing fields, all of which are used for livestock purposes. |
| (2) | "Ranch area prescribed by Presidential Decree" in the proviso to Article 55-2 (2) 3 of the Act, with the exception of its items, means any of the following ranch areas: <Amended by Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 22951, Jun. 3, 2011> |
| 1. | A ranch area owned by a clan (limited to a ranch area acquired on or before December 31, 2005); |
| 3. | A ranch area directly used by any non-profit business operator referred to in the main sentence of subparagraph 1 of Article 186 of the Local Tax Act for memorial services, religion, charity, academic purpose, arts and crafts, and public services; |
| 4. | A ranch area prescribed by Ordinance of the Ministry of Economy and Finance and directly related to a corporation's business, in consideration of its owner, location, utilization, holding period, area, etc. |
| (3) | In applying Article 55-2 (2) 3 (a) of the Act, the main business shall be determined based on the following: |
| 1. | Where a corporation runes at least two different kinds of business, the main business shall be the business with larger revenue: Provided, That any agricultural cooperative and the National Agricultural Cooperative Federation established under the Agricultural Cooperatives Act shall be deemed a corporation, the main business of which is the livestock business; |
| 2. | Notwithstanding the main sentence of subparagraph 1, where a corporation uses livestock products produced in the ranch area directly used for running its livestock business as raw materials to process them and keeps separate accounting of the livestock business and the processing business, the corporation's main business shall be deemed the livestock business. In such cases, if the ratio of livestock products used as raw materials to process them among the livestock products produced by the relevant corporation (hereafter referred to as "use ratio" in this paragraph) is less than 50/100, such corporation shall be deemed to run the livestock business as its main business to the extent of the relevant ranch area, which is up to two times the area equivalent to the use ratio among the area of the relevant ranch area. |
| (4) | "Standard size of the livestock area prescribed by Presidential Decree" in Article 55-2 (2) 3 (a) of the Act means the land size calculated by applying the standard size by domestic animal and the number of domestic animals prescribed in attached Table 1. <Amended by Presidential Decree No. 22035, Feb. 18, 2010; Presidential Decree No. 22951, Jun. 3, 2011> |
| (5) | "Area prescribed by Presidential Decree" in Article 55-2 (2) 3 (a) of the Act means a green area or development restriction zone classified under the National Land Planning and Utilization Act. <Newly Inserted by Presidential Decree No. 20619, Feb. 22, 2008; Presidential Decree No. 22951, Jun. 3, 2011> |
| (6) | "Period set by Presidential Decree" in Article 55-2 (2) 3 (a) of the Act means three years. <Amended by residential Decree No. 22951, Jun. 3, 2011; Presidential Decree No. 26068, Feb. 3, 2015> |
[This Article Newly Inserted by Presidential Decree No. 19225, Dec. 31, 2005]
| Article 92-8 (Scope of Other Land Used for Business) |
| (1) | "Land prescribed by Presidential Decree" in Article 55-2 (2) 4 (c) of the Act means any of the following lands: <Amended by Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 21881, Dec. 14, 2009; Presidential Decree No. 22395, Sep. 20, 2010; Presidential Decree No. 22951, Jun. 3, 2011; Presidential Decree No. 26302, Jun. 1, 2015; Presidential Decree No. 27245, Jun. 21, 2016; Jan. 5, 2021; Jan. 10, 2023> |
| 1. | Any of the following lands used for sports facilities, including sports stadiums or fields: |
| (a) | Land used for sports facilities exclusive for athletes: |
| (i) | Land used for sports facilities exclusive for athletes, which continues to be furnished by any corporation that has a company sports team pursuant to the National Sports Promotion Act and is not wider than the standard area prescribed by Ordinance of the Ministry of Economy and Finance: Provided, That the same shall not apply where the company sports team fails to meet the requirements for athletes and coaches, which are prescribed by Ordinance of the Ministry of Economy and Finance; |
| (ii) | Land on which sports facilities are installed and used directly by any corporation that runs the business of athletic sports and is not wider than the standard area prescribed by Ordinance of the Ministry of Economy and Finance; |
| (b) | Land used for sports facilities for employees: Land not wider than the standard area for sports facilities installed for employees, which is prescribed by Ordinance of the Ministry of Economy and Finance among the lands used to install sports facilities for the welfare of employees: Provided, That the same shall not apply where the sports facilities fails to meet the standards for sports facilities for employees, which are prescribed by Ordinance of the Ministry of Economy and Finance; |
| (c) | Land used directly by any corporation that runs the business of sports facilities provided for in the Installation and Utilization of Sports Facilities Act after installing the sports facilities and equipment that meet the standards therefor pursuant to the same Act; |
| (d) | Land used directly by any corporation that runs the business of operating the sports stadiums; |
| 2. | Any of the following lands used for parking lots: |
| (a) | An annexed parking lot (excluding any parking lot annexed to housing; hereafter in this item the same shall apply) provided for in the Parking Lot Act, which is within the standard area for parking lots pursuant to the same Act: Provided, That the land used for an annexed parking lot in the land used for the recreational establishment business provided for in subparagraph 6 shall be subject to subparagraph 6; |
| (b) | Land used for a parking lot for business motor vehicles (excluding any passenger motor vehicles, motorcycle, or bus used for transporting employees) that are indispensably owned by any corporation, other than business operators provided for in Article 101 (3) 1 of the Enforcement Decree of the Local Tax Act: Provided, That such land shall be limited to the land within the area computed by multiplying 1.5 by the area (hereinafter referred to as "minimum standard area for the parking lot") aggregating the area calculated by multiplying the number of business cars by each car type by the minimum standard area for the parking lot per car by car type to be secured under the Passenger Transport Service Act or the Trucking Transport Business Act; |
| (c) | Land used for the parking lot business: Land owned by any corporation that mainly operates parking lots, and used as an off-road parking lot provided for in the Parking Lot Act and the ratio of the amount of annual revenue to the value of the land is the same as or more than the ratio set by Ordinance of the Ministry of Economy and Finance; |
| 3. | Land created through any public-private partnership project performed by a project operator designated under the Act on Public-Private Partnerships in Infrastructure and other land created by the project operator pursuant to other statutes, both of which are prescribed by Ordinance of the Ministry of Economy and Finance: Provided, That any land for which two years have passed from the date its creation is completed shall be excluded; |
| 4. | Land used for juvenile training facilities established under the Juvenile Activity Promotion Act, which meets facility and equipment standards provided for in the same Act: Provided, That excluded herefrom is any land which exceeds the standard area set by Ordinance of the Ministry of Economy and Finance; |
| 5. | Land owned for conducting reservists training for employees, etc., which meets all of the following requirements: |
| (a) | The land category shall not be a housing site or factory site; |
| (c) | The land shall meet the facility standards set by Ordinance of the Ministry of Economy and Finance and be within the standard area set by Ordinance of the Ministry of Economy and Finance; |
| (d) | The land shall be owned by a person entrusted with the reservists training from the head of mandatory corps; |
| 6. | Land used for recreation establishment business prescribed by Ordinance of the Ministry of Economy and Finance, such as the specialized recreation business and the integrated recreation business registered under the Tourism Promotion Act and be within the standard area set by Ordinance of the Ministry of Economy and Finance; |
| 7. | Land used for a storage yard, etc.: A storage yard, open-area storage yard, or piling-up yard (including any land attached to a building built as a warehouse without obtaining a building permit or filing a required report pursuant to the Building Act) that are separately set up to keep and manage goods and the land area does not exceed 120/100 of the maximum area used to keep and manage goods in the relevant business year; |
| 8. | Land used to extract aggregate: Any land used by a corporation to extract aggregate under terms of an aggregate extraction permit issued by the head of a Si/Gun/Gu (limited to the head of an autonomous Gu) pursuant to the Aggregate Extraction Act; |
| 9. | Land used by a corporation that runs wastes treatment business upon obtaining permission therefor pursuant to the Wastes Control Act; |
| 10. | Land that is a mineral water spring (referring to the land used to run the business of bottling refreshing beverages and the hot spring business, etc., which is an outlet from which hot water or mineral water spout from underground and a site for maintaining it) and the ratio of annual revenue to the value of the land is the same as or more than the ratio set by Ordinance of the Ministry of Economy and Finance; |
| 11. | Any of the following lands, which is used for a fish farm, lake, or pond (referring to a dam, reservoir, small pond, naturally formed lake or marsh used to operate an inland fish farming business or fishing pond business and the site necessary to maintain such facility), as defined in the Act on the Establishment, Management of Spatial Data: |
| (b) | Land used by anyone who obtains a license or permission from the head of a Si/Gun/Gu (referring to the head of an autonomous Gu, and in cases of Han River of the Seoul Special Metropolitan City, referring to the head of the agency in charge of managing Han River; hereafter in this item the same shall apply) or file a report with the head of a Si/Gun/Gu pursuant to the Inland Water Fisheries Act, for his/her licensed fishing business, permitted fishing business, or reported fishing business; |
| (c) | Land, other than the lands referred to in items (a) and (b), whose ratio of annual revenue to the value of the land is the same as or more than the ratio set by Ordinance of the Ministry of Economy and Finance; |
| 12. | Land used to engage in the business of producing blocks, stone products, and earthen pipes, the land used to run facilities business for selling flowering plants, the land used to engage in the business of planting landscape trees, the land used by any private institute that teaches how to repair automobiles and heavy vehicles and to drive heavy vehicles or teaches farming courses, and other land similar to the former, whose ratio of annual revenue to the value of the land is the same as or more than the ratio set by Ordinance of the Ministry of Economy and Finance; |
| 13. | Other land similar to the lands referred to in subparagraphs 1 through 12, which is prescribed by Ordinance of the Ministry of Economy and Finance, as being directly related to the business of a corporation, in consideration of its current utilization and its observance, etc., of the relevant statutes or regulations. |
| (2) | In applying paragraph (1) 2 (c), 10, 11 (c) and 12, "ratio of annual revenue to the value of the land" (hereafter in this paragraph referred to as "ratio of the revenue amount") shall be calculated by the business year, whichever is higher between the following ratios. In such cases, if the revenue accruing from the relevant land can be divided by the plot of land, the ratio of the revenue shall be calculated by the plot of land: |
| 1. | The ratio computed by dividing annual revenue in the relevant business year by the value of land in the relevant business year; |
| 2. | (Annual revenue in the relevant business year + Annual revenue in the immediately preceding business year) ÷ (the value of land in the relevant business year + the value of land in the immediately preceding business year). |
| (3) | "Annual revenue" in paragraph (2) means the amount calculated by any of the following formulae: <Amended by Presidential Decree No. 24638, Jun. 28, 2013> |
| 1. | The amount of annual revenue accruing from the business related to the relevant land, building, facility, etc., for one business year, and if key money or security deposit is received after a lease or rental contract is concluded on such land, building, facility, etc., an amount calculated by applying mutatis mutandis the formula provided for in Article 65 (1) of the Enforcement Decree of the Value-Added Tax Act shall be added; |
| 2. | Where the revenue amount for one business year is commonly related to the relevant land, building, facility, etc. (hereafter in this subparagraph referred to as "relevant land, etc.") and other land, building, facility, etc. (hereafter in this subparagraph referred to as "other land, etc."), making it impracticable to tell from which such revenue accrues, the revenue amount for one business year related to the relevant land, etc., shall be calculated by the following formula: |
The revenue amount for one business year related to the relevant land, etc. = the revenue amount in the one business year commonly related to the relevant land, etc., and other land, etc. × (the value of the relevant land in the relevant business year ÷ the total amount of the value of the relevant land in the relevant business year and the value of other land);
| 3. | Where the period during which the business is run on the relevant land during one business year is less than one year due to the commencement of a new business, the closure of business, the transfer of land, a prohibition on use of land imposed pursuant to statutes or regulations or on other inevitable grounds, the revenue amount during such period shall be calculated as the revenue amount in one business year after converting the revenue amount accruing during the relevant period to that of one year. |
| (4) | "Value of land in the relevant business year" in paragraphs (2) and (3) means the standard market price on the last day of the relevant business year (referring to the date of transfer, where such land is transferred during the relevant business year). |
| (5) | In applying Article 55-2 (2) of the Act, where several lots of contiguous land is used for one purpose and the total area of the land exceeds the standard area, based on which whether such land is idle land (hereafter in this paragraph referred to as "standard area"), all or part of such land shall be deemed a portion in excess of the standard area in the following order: |
| 1. | Where no building or facility exists on the land: |
| (a) | The land that is acquired later; |
| (b) | Where the land is acquired at the same time, the land chosen by the relevant corporation; |
| 2. | Where any building or facility exists on the land: |
| (a) | The land that is acquired later, among the lands except the floor area of the building or the horizontal projection area of the facility; |
| (b) | Where the land is acquired at the same time, the land chosen by the relevant corporation. |
| (6) | In applying Article 55-2 (2) of the Act, where at least one building (including facilities, etc.; hereafter in this paragraph the same shall apply) stands on the land and the building that is divided into the portion (including the portion of a building used for a specific business among multiple buildings; hereafter in this paragraph referred to as "portion for the specific use"), which is used for the specific business of a corporation and the portion that is not used for the specific business thereof, the area, etc., of the appurtenant land, etc., for the portion for the specific use among the floor area of the building and the area of the appurtenant land (hereafter in this paragraph referred to as "area of the appurtenant land, etc.") shall be calculated by the following formulae: |
| 1. | Where one building is used for multiple purposes: |
The area of the appurtenant land, etc., for the portion for the specific use = the area of the appurtenant land, etc., to the building × the total floor area of the portion for the specific use ÷ the floor area of the building;
| 2. | Where multiple buildings with different uses stand within the same boundary: |
The area of the appurtenant land for the portion for the specific use = the area of the entire land appurtenant to the multiple buildings × the floor area for the portion for the specific use ÷ the entire floor area of the multiple buildings.
| (7) | In applying Article 55-2 (2) of the Act, the types of business shall be classified according to the Korean Standard Industrial Classification publicly notified by the Commissioner of Statistics Korea pursuant to Article 17 of the Statistics Act, except as otherwise provided for in this Decree. |
[This Article Newly Inserted by Presidential Decree No. 19225, Dec. 31, 2005]
| Article 92-9 (Scope of Land Attached to Housing) |
"Multiple rate set by Presidential Decree by area" in Article 55-2 (2) 5 of the Act means the following multiple rates: <Amended by Presidential Decree No. 22951, Jun. 3, 2011> | 1. | Five times for the land in an urban area; |
| 2. | Ten times for the land outside an urban area. |
[This Article Newly Inserted by Presidential Decree No. 19225, Dec. 31, 2005]
| Article 92-10 (Scope of Resort Villas and Applicable Standards) |
"If such residential house meets the scope and criteria prescribed by Presidential Decree" in the proviso to Article 55-2 (1) 2 of the Act means a residential house and the land appurtenant thereto that meets all of the following criteria: <Amended by residential Decree No. 22951, Jun. 3, 2011; Presidential Decree No. 26068, Feb. 3, 2015> | 1. | The total floor area of the building shall not exceed 150 square meters and the area of the land appurtenant to the building shall not exceed 660 square meters; |
| 2. | The value of the building and the appurtenant land shall not exceed the standard market price of 200 million won; |
[This Article Newly Inserted by Presidential Decree No. 19225, Dec. 31, 2005]
| Article 92-11 (Criteria for Determining Land That is Not Deemed Idle Lands on Grounds of Inevitability) |
| (1) | Pursuant to Article 55-2 (3) of the Act, any of the following land shall be deemed not to fall under any subparagraph of Article 55-2 (2) of the Act during the period specified in the corresponding subparagraph for the purposes of determining whether the land is the idle land (hereafter referred to as "idle land" in this Article) as provided for in Article 55-2 (2) of the Act: <Amended by Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 21302, Feb. 4, 2009; Jan. 5, 2021> |
| 1. | The land, the use of which is prohibited or restricted pursuant to statutes or regulations after it is acquired: The period during which its use is prohibited or restricted; |
| 2. | The land in any cultural heritage protection area designated under the Cultural Heritage Protection Act after it is acquired: The period during which the land is designated as the protection area; |
| 3. | Land that falls under the grounds of inevitability prescribed by Ordinance of the Ministry of Economy and Finance, in consideration of the public interest, legal restriction due to corporate restructuring or inevitable reasons, current state of land, grounds for acquiring the land, current state of utilization of the land, etc: The period prescribed by Ordinance of the Ministry of Economy and Finance. |
| (2) | Pursuant to Article 55-2 (3) of the Act, any of the following land shall be deemed transferred on the date specified in the corresponding subparagraph for the purposes of determining whether it is the idle land by applying Article 92-3: <Amended by Presidential Decree No. 20720, Feb. 29, 2008> |
| 3. | Land that requires a certain period for its transfer and falls under the grounds of inevitability prescribed by Ordinance of the Ministry of Economy and Finance: The date prescribed by Ordinance of the Ministry of Economy and Finance. |
| (3) | Pursuant to Article 55-2 (3) of the Act, none of the following land shall be deemed the idle land: <Amended by Presidential Decree No. 19328, Feb. 9, 2006; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 21063, Oct. 7, 2008; Presidential Decree No. 21302, Feb. 4, 2009; Presidential Decree No. 25194, Feb. 21, 2014; Jan. 5, 2021; May 4, 2021> |
| 1. | Land to be transferred within three years from the date of acquisition due to a merger or division of a corporation; |
| (a) | Land of which business authorization is published on or before December 31, 2006 |
| (b) | Land, the acquisition date of which is five years before the project authorization is publicly notified; |
| 3. | Farmland owned by a clan (limited to the farmland acquired on or before December 31, 2005) as farmland falling under Article 55-2 (2) 1 (b) of the Act; |
| 4. | Land donated (including contribution) to an educational foundation under the Private School Act; |
| 5. | Land that falls under the grounds of inevitability prescribed by Ordinance of the Ministry of Economy and Finance, in consideration of the public interest, legal restriction due to corporate restructuring or inevitable reasons, current state of land, grounds for acquiring the land, current state of utilization of the land, etc. |
[This Article Newly Inserted by Presidential Decree No. 19225, Dec. 31, 2005]
[Title Amended on Jan. 5, 2021]
| Article 93 Deleted. <Feb. 12, 2019> |
| Article 94 (Deduction of Foreign Tax Credits) |
| (1) | "Amount of foreign corporate tax prescribed by Presidential Decree" in Article 57 (1) of the Act, with the exception of the calculation formula, means the following amounts of tax (excluding additional tax) paid or payable by a foreign government (including a local government; hereinafter the same shall apply): Provided, That where the amount imposed by a foreign government on amounts not returned to a foreign-related party and reserved to a domestic corporation among the amounts of the domestic corporation reduced as prescribed in Article 12 (1) of the Adjustment of International Taxes Act and the relevant tax amount exceed the amount of tax calculated pursuant to the provisions on non-taxation, tax exemption, or restrictive tax rates of the tax treaty, such excess tax amount shall be excluded.: <Amended by Presidential Decree No. 18706, Feb. 19, 2005; Presidential Decree No. 21302, Feb. 4, 2009; Presidential Decree No. 22951, Jun. 3, 2011; Presidential Decree No. 23589, Feb. 2, 2012; Feb. 12, 2019; Feb. 17, 2021; Feb. 15, 2022> |
| 1. | The amount of excess profit tax and other taxes imposed with other income, etc., of the corporation as the tax base; |
| 2. | The amount of value-added tax imposed with the income, etc., of the corporation as the tax base; |
| 3. | The amount of tax imposed with the amount of earnings, other than income, as the tax base and other corresponding taxes falling under the same tax items as the tax imposed with the income, etc., of the corporation as the tax base. |
| (2) | Foreign source income to which Article 57 (1) of the Act applies shall be income generated abroad and calculated pursuant to the regulations governing the calculation of the tax base of income for each business year of a domestic corporation; and the amount of the foreign source income for the purpose of calculating a deduction limit amount referred to in the same paragraph shall be the relevant foreign source income minus the following expenses corresponding to the foreign source income (hereafter in this Article referred to as "expenses corresponding to foreign source income") as an amount included in deductible expenses in calculating the tax base for the relevant business year (excluding an amount included in deductible expenses at the time of taxation in the country where the foreign source income is generated). In such cases, where a domestic corporation applies the calculation method prescribed by Ordinance of the Ministry of Economy and Finance with respect to expenses prescribed by Ordinance of the Ministry of Economy and Finance, such as expenses related to research and development, the amount calculated accordingly shall be the expenses corresponding to foreign source income; and if a domestic corporation applies the calculation method prescribed by Ordinance of the Ministry of Economy and Finance, such calculation method shall be applied for five consecutive business years from the business year for which the calculation method is to be adopted: <Amended on Feb. 12, 2019; Feb. 11, 2020; Feb. 17, 2021> |
| 1. | Direct expenses: expenses that directly relate and correspond to the relevant foreign source income. In such cases, expenses commonly related to the relevant foreign source income and other income shall be excluded; |
| 2. | Distributed expenses: expenses related to foreign source income calculated pursuant to the distribution method prescribed by Ordinance of the Ministry of Economy and Finance, out of the expenses commonly related to the relevant foreign source income and other income. |
| (3) | The amount of tax paid in a foreign country under Article 57 (1) of the Act shall be deducted from the calculated amount of tax for the business year in which the relevant foreign source income is included in the tax base. In such cases, a domestic corporation that wishes to qualify for Article 57 (1) of the Act shall submit a tax statement on foreign tax credits in the form stipulated by Ordinance of the Ministry of Economy and Finance to the head of the tax office having jurisdiction over the place of tax payment, along with the report provided for in Article 60 of the Act. <Amended by Presidential Decree No. 21302, Feb. 4, 2009; Feb. 17, 2021> |
| (4) | Where a domestic corporation is unable to submit a tax statement on foreign tax credits, along with a report under Article 60 of the Act, due to the foreign government's delay in determining and notifying the foreign source income or due to discrepancy in taxable periods, it may submit the tax statement on foreign tax credits, accompanied with supporting documents, within three months after receiving the notice from the foreign government on the determination of corporate tax on the foreign source income. <Amended by Presidential Decree No. 26068, Feb. 3, 2015; Presidential Decree No. 27828, Feb. 3, 2017> |
| (5) | Paragraph (4) shall apply mutatis mutandis where the amount of tax paid in a foreign country is revised due to the correction of determination made by the foreign government on the amount of corporate tax on the foreign source income. In such cases, if a tax refund is granted, it may be appropriated or refunded as prescribed in Article 51 of the Framework Act on National Taxes. <Amended by Presidential Decree No. 21302, Feb. 4, 2009> |
| (6) | For the purposes of paragraph (2), if there is any loss carried forward, non-taxable income, or income deduction (hereafter in this paragraph referred to as "amount of deduction, etc.") deducted at the time of calculating the tax base for each business year, the foreign source income shall be the amount gained by subtracting the amount of deduction, etc. calculated by applying mutatis mutandis the subparagraphs of Article 96. In such cases, “business subject to reductions or exemptions” referred to in the subparagraphs of Article 96 shall be deemed “foreign source income”. <Amended on Feb. 12, 2019> |
| (7) | If a corporation has overseas places of business in at least two countries, it shall calculate the limit on the tax credits under Article 57 (1) of the Act separately for each country. <Amended by Presidential Decree No. 26068, Feb. 3, 2015; Feb. 12, 2019; Feb. 17, 2021> |
| (8) | "Amount computed, as prescribed by Presidential Decree" in Article 57 (4) of the Act means the amount computed by the following formula. In such case, the amount of corporate tax of a foreign subsidiary for the relevant business year shall be calculated by including the amount equivalent to 50/100 of either of the following amounts of tax, if the foreign subsidiary had the amount deducted or deductible as the amount of tax paid in the foreign country or had the amount of tax fully or partially exempted for overseas income in a country where the foreign subsidiary is located, with regard to the relevant amount of dividend income or the income imputed to a branch in a third country (referring to a country other than the country in which a corporation has its head office, principal place of business, or actual place of business control), while the amount of dividend income (including the amount of dividend income that the foreign subsidiary has received from the foreign second-tier subsidiary) shall be deemed allocated or distributed in the order of accrual of profits or surpluses, starting from the amount accruing first: <Amended by Presidential Decree No. 26068, Feb. 3, 2015> |
Amount of corporate tax of the foreign subsidiary for the relevant business year × (Dividend income ÷ (Amount of income of the foreign subsidiary for the relevant business year - Amount of corporate tax of the foreign subsidiary for the relevant business year)
| 1. | The amount of tax that a foreign subsidiary paid in the country where a foreign second-tier subsidiary is located, for the dividends received from the foreign second-tier subsidiary pursuant to the law of the country; |
| 2. | The amount of tax that a foreign subsidiary paid in a third country for the income imputed to a branch or a similar entity in the third country. |
| (9) | "Corporation that meets the requirements prescribed by Presidential Decree" in Article 57 (5) of the Act means a domestic corporation which directly holds (where a domestic corporation succeeds to the stocks, etc. of a foreign subsidiary owned by another domestic corporation through a qualified merger, qualified division, qualified spin-off, or qualified investment in-kind, the domestic corporation shall be deemed to have held such stocks, etc. since the time when such another domestic corporation acquired the stocks, etc. of the foreign subsidiary before such succession) at least 10/100 (5/100 in the case of a foreign corporation conducting an overseas resources development project under Article 22 of the Act on Restriction on Special Cases concerning Taxation) of the total number of outstanding voting stocks or the total amount of investment of the foreign company for at least six consecutive months as on the determination date of dividends. <Amended on Feb. 28, 2023> |
| (10) | "Foreign second-tier subsidiary" in paragraph (8) means a corporation that meets all of the following requirements: <Newly Inserted by Presidential Decree No. 20619, Feb. 22, 2008; Presidential Decree No. 22035, Feb. 18, 2010; Presidential Decree No. 26068, Feb. 3, 2015; Feb. 28, 2023> |
| 1. | The relevant foreign subsidiary shall directly hold at least 10/100 (referring to 5/100 in cases of a foreign corporation which operates overseas resources development business under Article 22 of the Restriction of Special Taxation Act) of the total number of outstanding voting stocks or total amount of investment of a foreign second-tier subsidiary for at least six consecutive months as on the dividend record date of the foreign second-tier subsidiary; |
| 2. | A domestic corporation shall indirectly hold at least 10/100 (referring to 5/100 in cases of a foreign corporation which operates overseas resources development business under Article 22 of the Restriction of Special Taxation Act) of the total number of outstanding voting stocks or total amount of investment of a foreign second-tier subsidiary through a foreign subsidiary pursuant to Article 57 (5) of the Act. In such cases, the indirect holding ratio of stocks shall be calculated by multiplying the ratio of stocks of the foreign subsidiary held by the domestic corporation by the ratio of stocks of the foreign second-tier subsidiary held by the foreign subsidiary. |
| (11) | and (12) Deleted. <by Presidential Decree No. 26068, Feb. 3, 2015> |
| (13) | "Otherwise meets the requirements prescribed by Presidential Decree" in Article 57 (6) of the Act means: <Newly Inserted by Presidential Decree No. 22577, Dec. 30, 2010> |
| 1. | Where the income of a foreign corporation accrues in a country in which its headquarters or main office is located (hereafter in this paragraph referred to as "residential country"): Where a domestic corporation which is a stockholder or investor not the relevant foreign corporation shall directly have a tax liability for the income of the relevant foreign corporation pursuant to the tax law of the residential country; |
| 2. | Where the income of a foreign corporation accrues in the country other than the residential country (hereafter in this paragraph referred to as "withholding country"): All of the following requirements are met: |
| (a) | That the domestic corporation which is a stockholder or investor not the relevant foreign corporation shall directly have a tax liability for the income of the relevant foreign corporation pursuant to the tax law of the residential country; |
| (b) | That the domestic corporation which is a stockholder or contributor not the relevant foreign corporation shall directly have a tax liability for the income of the relevant foreign corporation pursuant to the tax law of the withholding country. |
| (14) | "Amount computed, as prescribed by Presidential Decree" in Article 57 (6) of the Act means the amount computed by the following formula: <Newly Inserted by Presidential Decree No. 22577, Dec. 30, 2010> |
Amount of corporate tax that a domestic corporation paid for income of the foreign corporation for the relevant business year ×Dividend income(Income of the foreign corporation for the relevant business year x the ratio of distribution of profits of the domestic corporation for the relevant business year) - Amount of corporate tax that a domestic corporation paid for income of the foreign corporation for the relevant business year
| (15) | The main clause of Article 57 (2) of the Act shall not apply to foreign corporate tax related to expenses corresponding to foreign source income (referring to an amount pursuant to subparagraph 1 minus an amount pursuant to subparagraph 2) out of foreign corporate tax exceeding the deduction limit amount referred to in Article 57 (1) of the Act. In such cases, the relevant foreign corporate tax may be included in deductible expenses for the purpose of calculating the amount of income for the business year following the business year for which the tax credit is not applied: <Amended on Feb. 12, 2019; Feb. 11, 2020; Feb. 17, 2021; Feb. 28, 2023> |
| 1. | Deduction limit amount calculated based on foreign source income to which Article 57 (1) of the Act is applied, calculated pursuant to the former part, with the exception of the subparagraphs, of paragraph (2); |
| 2. | Deduction limit amount pursuant to Article 57 (1) of the Act. |
| (16) | Except as otherwise provided for in paragraphs (8) through (10), procedures for calculating the amount of tax deductible for a foreign subsidiary or foreign second-tier subsidiary and other necessary matters shall be prescribed by Ordinance of the Ministry of Economy and Finance. <Amended by Presidential Decree No. 20619, Feb. 22, 2008; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 22577, Dec. 30, 2010; Presidential Decree No. 26068, Feb. 3, 2015> |
| Article 94-2 (Special Cases concerning Foreign Tax Credits on Income Paid by Indirect Investment Companies, etc.) |
| (1) | Where a company falling under any item of Article 57-2 (1) 1 of the Act (hereafter in this Article and Article 111 referred to as "indirect investment company, etc.") has paid indirect investment foreign corporate tax referred to in subparagraph 2 of the same paragraph (hereafter in this Article and Article 111 referred to as the "indirect investment foreign corporate tax"), the indirect investment foreign corporate tax corresponding to the income paid by the indirect investment company, etc. to each domestic corporation is the amount computed by aggregating each of the following: |
| 1. | Where an indirect investment company, etc. makes an investment in a manner other than acquiring securities issued by another indirect investment company, etc.: The sum of the amounts calculated for each day according to the following formula: |
The daily amount of indirect investment foreign corporate tax for each domestic corporation
= A x B
A: The daily amount of foreign corporate tax paid by an indirect investment company, etc. per unit or per share (referring to the total amount of foreign corporate tax paid by an indirect investment company, etc. divided by the total number of units or shares issued by an indirect investment company, etc.);
B. The number of units or shares held by a domestic corporation in an indirect investment company, etc. (referring to the number of units or shares held by a domestic corporation at the time an indirect investment company, etc. pays foreign corporate tax). |
|
| 2. | Where an indirect investment company, etc. makes an investment in a manner of acquiring securities issued by another indirect investment company, etc.: The sum of the amounts calculated for each day according to the following formula: |
The daily amount of indirect investment foreign corporate tax for a domestic corporation
= A x B x C
A: The daily amount of foreign corporate tax paid by another indirect investment company, etc. per unit or per share (referring to the total amount of foreign corporate tax paid by another indirect investment company, etc. divided by the total number of units or shares issued by such another indirect investment company, etc.);
B. The number of units or shares held by an indirect investment company, etc. in another indirect investment company, etc. (referring to the number of units or shares held by an indirect investment company, etc. at the time such another indirect investment company, etc. pays foreign corporate tax);
C. The ratio of the number of units or shares held by a domestic corporation in an indirect investment company, etc. (referring to the number of units or shares held by a domestic corporation at the time when another indirect investment company, etc. pays the foreign corporate tax, divided by the total number of units or shares issued by the indirect investment company, etc.). |
|
| (3) | The amount to be deducted from the calculated tax amount of a domestic corporation pursuant to Article 57-2 (2) 2 of the Act is the amount of indirect investment foreign corporate tax for each domestic corporation under paragraph (1), multiplied by the rate calculated pursuant to the formula classified as follows: |
| 1. | In the case of investment trust proceeds referred to in Article 73 (1) 2 of the Act: |
| (a) | When the withholding tax rate referred to in Article 73 (1) of the Act is lower than the foreign withholding tax rate applied to the amount of indirect investment foreign corporate tax: |
| Withholding tax rate pursuant to Article 73 (1) of the Act / Foreign withholding tax rate applied to indirect investment foreign corporate tax - Restrictive tax rate for corporate tax base referred to in Article 55 (1) of the Act |
|
| (b) | When the withholding tax rate referred to in Article 73 (1) of the Act is greater than or equal to the foreign withholding tax rate applied to the amount of indirect investment foreign corporate tax; |
| 1 ? Restrictive tax rate for corporate tax base referred to in Article 55 (1) of the Act |
|
| 2. | In the case of income, other than that of subparagraph 1, received from an indirect investment company, etc. |
| 1 ? Restrictive tax rate for corporate tax base referred to in Article 55 (1) of the Act |
|
| (4) | For the purpose of paragraph (3) 1, the foreign withholding tax rate is the rate of the amount calculated according to the following classification. In such cases, where an indirect investment company, etc., falls under both subparagraphs 1 and 2, the respective rate pursuant to subparagraphs 1 and 2 calculated by applying a weighted average according to the investment ratio of each subparagraph shall apply: |
| 1. | Where an indirect investment company, etc. makes an investment in a manner other than acquiring securities issued by another indirect investment company, etc.: |
| The amount of foreign taxes paid by an indirect investment company, etc. for the immediately preceding business year or fiscal period + The amount of foreign source income corresponding to the relevant foreign tax |
|
| 2. | Where an indirect investment company, etc. makes an investment in a manner of acquiring securities issued by another indirect investment company, etc.: |
| Value calculated according to subparagraph 1 x The average rate of investment of an indirect investment company, etc. in another indirect investment companies, etc. for the immediately preceding business year or fiscal period |
|
| (5) | Notwithstanding paragraph (3), in the case of income falling under any of the following, the amount to be deducted from the calculated tax amount of a domestic corporation shall be the amount of indirect investment foreign corporate per domestic corporation pursuant to paragraph (1), multiplied by the rate calculated pursuant to the formula prescribed in paragraph (3) 2: |
| 1. | Income received from an indirect investment company, etc. from January 1, 2025 to December 31, 2025; |
| 2. | Income received from a newly established indirect investment company, etc. in the business year or fiscal period in which the date of establishment of such indirect investment company falls. |
| (6) | Where the indirect investment foreign corporate tax paid by an indirect investment company, etc. (if the indirect investment company, etc. makes an investment by acquiring securities issued by another indirect investment company, etc., including such another indirect investment company, etc.) is fully or partially refunded after the relevant business year or fiscal period, the indirect investment company, etc. shall pay the refund to the head of the tax office having jurisdiction over the place of taxation as prescribed by the Ministry of Economy and Finance. |
[This Article Newly Inserted on Feb. 28, 2023]
| Article 95 (Tax Credits for Losses from Disasters) |
| (1) | "Total amount of assets prescribed by Presidential Decree" in the former part of Article 58 (1) of the Act, with the exception of it subparagraphs, means the sum of the following assets: <Amended by Presidential Decree No. 22951, Jun. 3, 2011> |
| 1. | Business assets (excluding land); |
| 2. | Assets held by another person, the responsibility for compensation for the loss of which is borne by the relevant corporation. |
| (2) | In applying Article 58 (1) of the Act, the asset loss ratio shall be calculated based on the book value of the relevant corporation as of the date a disaster occurs, and where the book value is unavailable due to the loss or damage of the account books, it shall be calculated based on the value as of the date the disaster occurs as investigated and verified by the head of the tax office having jurisdiction over the place of tax payment. |
| (4) | Deleted. <by Presidential Decree No. 20619, Feb. 22, 2008> |
| (5) | A domestic corporation which intends to obtain a tax credit for losses from disasters pursuant to Article 58 (1) of the Act shall submit an application for tax credits for losses from disasters in the form 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 within the deadlines classified as follows: <Amended by Presidential Decree No. 20720, Feb. 29, 2008; Feb. 15, 2022> |
| 1. | For corporate tax, the filing deadline of the tax base of which has not expired as at the date of the disaster, the filing deadline: Provided, That where the period from the date of the disaster to the filing deadline is less than three months, three months from the date of the disaster; |
| 2. | For corporate tax unpaid or payable as at the date of the disaster, three months from the date of the disaster. |
| (6) | The head of the tax office having jurisdiction over the place of tax payment may, with respect to the corporate tax of the corporation deductible under Article 58 (1) of the Act, extend the due date for payment or the due date specified in a payment reminder under the National Tax Collection Act, or suspend the notice of payment, until the tax credit is verified. <Amended by Presidential Decree No. 18706, Feb. 19, 2005; Feb. 17, 2021> |
| Article 95-2 Deleted. <by Presidential Decree No. 22812, Mar. 31, 2011> |
| Article 95-3 (Tax Credits upon Correction of Wrongful Accounting) |
| (1) | "Sanctions prescribed by Presidential Decree, such as a warning or caution" in Article 58-3 (1) 2 of the Act means any of the following measures: <Amended by Presidential Decree No. 29269, Oct. 30, 2018> |
| (2) | Where any ground for requiring a correction, other than the grounds for requiring a correction under the main sentence of Article 58-3 (1) of the Act, exists in applying Article 58-3 of the Act, the amount of the tax credit shall be computed by the following formula:Overpaid tax amount x (Overstated tax base due to wrongful accounting under Article 58-3 (1) of the Act ÷ Sum of overstated tax bases) |
[This Article Newly Inserted by Presidential Decree No. 27828, Feb. 3, 2017]
| Article 96 (Calculation of Amount of Tax Reductions/Exemptions or Tax Credits) |
In the calculation of tax reductions or exemptions under Article 59 (2) of the Act, the income subject to tax reductions or exemptions is as follows if there are losses carried forward, non-taxable income, or income deductions (hereafter referred to as "deduction amount, etc." in this paragraph) applied when calculating the tax base for each business year: | 1. | Where the deduction amount, etc. arises from the business subject to reductions or exemptions, the full deduction amount; |
| 2. | Where it is unclear whether the deduction amount, etc. arises from the business subject to reductions or exemptions, the amount computed in proportion to the amount of income. |
[This Article Wholly Amended by Presidential Decree No. 22577, Dec. 30, 2010]
SECTION 3 Reports and Payment
| Article 97 (Report of Tax Bases) |
| (1) | In filing a report under Article 60 (1) of the Act, the tax base and amount of corporate tax on income for each business year calculated under Articles 14 through 54 of the Act (including the corporate tax on capital gains from the transfer of land under Article 55-2 of the Act) and other necessary matters shall be stated on the report, based on the account books kept under Article 112 of the Act. In such cases, when a corporation subject to external audit under Article 4 of the Act on External Audit of Stock Companies intends to report the tax base and amount of corporate tax through electronic filing under subparagraph 19 of Article 2 of the Framework Act on National Taxes, it shall file a written report, with its representative’s signature or seal affixed thereon, to the head of the tax office having jurisdiction over the place of tax payment. <Amended by Presidential Decree No. 17457, Dec. 31, 2001; Presidential Decree No. 24357, Feb. 15, 2013; Presidential Decree No. 29269, Oct. 30, 2018; Feb. 12, 2019> |
| (2) | The report referred to in paragraph (1) shall be filed in the corporate tax base and amount form prescribed by Ordinance of the Ministry of Economy and Finance. <Amended by Presidential Decree No. 20720, Feb. 29, 2008> |
| (3) | Where any currency, other than Korean won, is adopted as the functional currency according to the Korean Financial Accounting Standards, the statement of financial position, the consolidated income statement, and the earned surplus settlement statement (or deficits settlement statement) referred to in Article 60 (2) 1 of the Act and the cash flow chart referred to in paragraph (5) 1 of this Article (hereafter in this Article referred to as "financial statements") mean the financial statements denominated in the functional currency (hereafter in this Article referred to as "functional currency-denoted financial statements") which is prepared by applying mutatis mutandis the Korean Financial Accounting Standards. <Newly Inserted by Presidential Decree No. 22577, Dec. 30, 2010; Presidential Decree No. 22812, Mar. 31, 2011> |
| (4) | The tax settlement invoice referred to in Article 60 (2) 2 of the Act shall be the corporate tax base and amount settlement invoice prescribed by Ordinance of the Ministry of Economy and Finance. <Amended by Presidential Decree No. 20720, Feb. 29, 2008> |
| (5) | "Documents prescribed by Presidential Decree" in Article 60 (2) 3 of the Act means the following documents: Provided, That a corporation that has filed a report under Article 60 (1) of the Act through electronic filing as defined in subparagraph 19 of Article 2 of the Framework Act on National Taxes may choose not to submit the documents prescribed by Ordinance of the Ministry of Economy and Finance among the accompanying documents: <Amended by Presidential Decree No. 22184, Jun. 8, 2010; Presidential Decree No. 22577, Dec. 30, 2010; Presidential Decree No. 29269, Oct. 30, 2018> |
| 1. | Accompanying documents of the tax settlement invoice prepared as prescribed by Ordinance of the Ministry of Economy and Finance and the cash flow chart prepared according to the Korean Financial Accounting standards (limited to corporations subject to external audit under Article 4 of the Act on External Audit of Stock Companies); |
| 1-2. | Where the currency, other than Korean won, is adopted as the functional currency according to the Korean Financial Accounting Standards, the financial statements converted from the functional currency-denoted financial statements according to the Korean Financial Accounting Standards by having Korean won as the denomination currency (hereafter in this Article referred to as "denomination currency-denoted financial statements"); |
| 1-3. | Where a corporation which adopts the currency, other than Korean won, as the functional currency according to the Korean Financial Accounting Standards applies the calculation method of tax base provided for in Article 53-2 (1) 1 of the Act, the financial statements to be otherwise prepared by such corporation when it prepares the financial statements in Korean won by continuously applying mutatis mutandis the Korean Financial Accounting Standards without adopting the functional currency other than Korean won (hereafter in this Article, referred to as "Korean won-denoted financial statements"); |
| 2. | Any of the following documents, in cases of a merger or division (limited to the surviving corporation, etc.): |
| (a) | A statement of financial position of the merged corporation, etc., as on the registration date of the merger or the registration date of the division and a statement of the assets and liabilities that the surviving corporation, etc., has succeeded to due to the merger or division; |
| (b) | Documents stating the location of the headquarters, etc., of the surviving corporation, etc., the name of its representative, the name of the merged corporation, etc., the registration date of the merger or the registration date of the division, and other necessary matters. |
| (6) | Where the head of the tax office having jurisdiction over the place of tax payment or the commissioner of the competent regional tax office demands in writing that the documents not submitted accompanied by the report under the proviso to paragraph (5) be submitted in order to analyze the details of the report, the relevant corporation shall submit such documents. <Amended by Presidential Decree No. 24357, Feb. 15, 2013> |
| (7) | "Documents prescribed by Presidential Decree" in Article 60 (4) 2 of the Act means the documents stating the location of the headquarters, etc., of the surviving corporation, etc., the name of its representative, the name of the merged corporation, etc., the registration date of the merger or division, and other necessary matters. <Newly Inserted by Presidential Decree No. 22184, Jun. 8, 2010> |
| (8) | In applying Article 60 (5) of the Act, where a disappearing corporation due to a merger or division has filed the report on tax base and amount for the last business year, it shall be deemed to have filed a report under this Act although it has failed to submit the earned surplus settlement statement (or deficits settlement statement) among the documents provided for in paragraph (2) 1 of the same Article. <Amended by Presidential Decree No. 22035, Feb. 18, 2010> |
| (9) | and (10) Deleted. <by Presidential Decree No. 26981, Feb. 12, 2016> |
| (11) | The submission of financial statements, functional currency-denoted financial statements, Korean won-denoted financial statements, and denomination currency-denoted financial statements may be replaced with the submission of standard statement of financial position, standard income statements, and standard particulars, accompanying income statements (hereafter in this Article, referred to as "standard financial statements") prescribed by Ordinance of the Ministry of Economy and Finance through national tax information and communications networks provided for in subparagraph 19 of Article 2 of the Framework Act on National Taxes: Provided, That a corporation which applies the K-IFRS shall submit the standard financial statements. <Amended by Presidential Decree No. 22577, Dec. 30, 2010; Feb. 12, 2019; Jan. 5, 2021> |
| (12) | A domestic corporation that wishes to qualify for Article 60 (7) of the Act shall file an application for the extension of the filing deadline 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 three days before the expiration of the filing deadline specified in Article 60 (1). <Newly Inserted by Presidential Decree No. 22035, Feb. 18, 2010; Presidential Decree No.26981, Feb. 12, 2016> |
| Article 97-2 (Corporations subject to External Tax Settlement) |
| (1) | "Domestic corporation specified by Presidential Decree" in Article 60 (9) of the Act, with the exception of its subparagraphs, means any of the following corporations (hereinafter referred to as "corporation subject to external tax settlement"): Provided, That the corporations entitled to taxation on the profit for the year under Article 72 of the Restriction of Special Taxation Act shall be excluded herefrom: <Amended by Presidential Decree No. 29269, Oct. 30, 2018; Feb. 12, 2019> |
| 3. | A corporation whose revenue for the immediately preceding business year is at least 300 million won and whose balance of reserves under the Act and the Restriction of Special Taxation Act as at the end of the relevant business year is at least 300 million won; |
| 4. | A corporation in which case two years or less have passed since the end of the relevant business year and whose revenue for the relevant business year is at least 300 million won; |
| 5. | A corporation whose tax base and tax amount of corporate tax for the immediately preceding business year has been determined or corrected under the proviso to Article 66 (3) of the Act; |
| 6. | A surviving corporation, divided corporation, a corporation established through division, or the counterpart corporation to a division and merger, in which case three years or less has passed since the merger or division retroactively from the end of the relevant business year; |
| 7. | A corporation that has a place of business abroad or a foreign subsidiary, referred to in Article 57 (5) of the Act. |
| (2) | A corporation that is not subject to external tax settlement may submit a tax settlement statement prepared by a person referred to in any subparagraph of Article 60 (9) (hereinafter referred to as "certified tax accountant or other qualified person") for correct tax settlement at the time of filing a tax return on tax base, etc. |
| (3) | In applying paragraph (1) 1 through 3 to a corporation established in the relevant business year, the amount computed by converting its revenue for the relevant business year into revenue for one year shall be deemed its revenue for the immediately preceding business year. |
[This Article Newly Inserted by Presidential Decree No. 26981, Feb. 12, 2016]
| Article 97-3 (Settlement Team) |
| (1) | "Settlement team prescribed by Presidential Decree" in Article 60 (9) of the Act (hereafter in this Article, referred to as "settlement team") means each of the following entities that appoint their representative and have the representative designated by the commissioner of the competent regional tax office. In such cases, certified public tax accounts or other qualified persons shall belong to only one settlement team: <Amended on Feb. 15, 2022> |
| 1. | At least two certified public tax accounts or other qualified persons; |
| 4. | Law firms, limited liability law firms or law firm partnerships established under the Attorney-at-Law Act. |
| (2) | Matters concerning the application for and designation of the settlement team referred to in paragraph (1), the revocation of such designation, and the period of validity, and other necessary matters, shall be prescribed by Ordinance of the Ministry of Economy and Finance. |
[This Article Newly Inserted by Presidential Decree No. 26981, Feb. 12, 2016]
| Article 97-4 (Submission of Certificate of Confirmation on Compliant Filing, etc.) |
| (1) | "Any of the persons specified by Presidential Decree, such as a certified public tax accountant" in the main sentence of Article 60-2 (1) of the Act means a certified public tax accountant (including certified public accountants registered pursuant to Article 20-2 of the Certified Tax Accountant Act; hereafter the same shall apply in this Article), a tax accounting corporation or an accounting corporation (hereafter referred to as "certified public tax accountant or other relevant corporation" in this Article). |
| (3) | "Methods prescribed by Presidential Decree, such as in-kind investment of assets for business use" in Article 60-2 (1) 2 of the Act means the in-kind investment of tangible and intangible assets for business use, the transfer and acquisition of a business, etc. <Amended on Feb. 12, 2019> |
| (4) | In applying Article 60-2 (1) 2 of the Act, business operators subject to confirmation of compliant filing shall be limited to those who meet the criteria for a business operator subject to confirmation of compliant filing under Article 70-2 of the Income Tax Act in the year in which the relevant domestic corporation is established or the immediately preceding year. |
| (5) | Except as otherwise provided for in paragraphs (1) through (4), matters necessary for submitting a certificate of confirmation of compliant filing shall be determined by the Minister of Economy and Finance. <Amended on Feb. 12, 2019; Feb. 15, 2022> |
[This Article Newly Inserted by Presidential Decree No. 28640, Feb. 13, 2018]
[Title Amended on Feb. 12, 2019]
| Article 98 (Special Cases concerning Appropriation of Reserve Funds as Deductible Expenses) |
| (1) | When the reserve fund included in deductible expenses under Article 61 (1) of the Act is included in gross income, the accumulated funds shall be disposed of. In such cases, where the accumulated funds are disposed of before the relevant reserve fund is included in gross income, they shall not be deemed appropriated as deductible losses under the same paragraph. <Amended on Feb. 12, 2019> |
| (2) | Where a domestic corporation appropriates the lump sum depreciation reserve fund or compressed accounts reserve fund provided for in this Decree or the Enforcement Decree of the Restriction of Special Taxation Act in the tax settlement invoice provided for in Article 97 (4) and includes them in deductible expenses at the time of filing a report on the corporate tax base, such amount shall be deemed appropriated as deductible expenses. In such cases, the corporation shall submit the tax settlement invoice along with a detailed statement on the lump sum depreciation reserve fund or compressed accounts reserve fund and the depreciation costs of each item of asset. <Amended by Presidential Decree No. 18706, Feb. 19, 2005; Presidential Decree No. 25194, Feb. 21, 2014; Feb. 12, 2019> |
| Article 99 (Special Cases concerning Filing Return on Interest Income of Non-Profit Domestic Corporations) |
| (1) | In applying Article 62 (1) of the Act, a non-profit domestic corporation may elect not to file a report on the tax base even on a portion of interest income withheld. |
| (2) | The interest income, the tax base of which has not be filed under Article 62 (1) of the Act, may not be included in the tax base in a revised report, report after deadline or correction. <Amended by Presidential Decree No. 22035, Feb. 18, 2010> |
[Title Amended on Feb. 12, 2019]
| Article 99-2 (Special Cases concerning Reporting Capital Gains on Transfer of Assets by Non-Profit Domestic Corporations) |
| (1) | Deleted. <Feb. 15, 2022> |
| (2) | The special provisions concerning the taxation of capital gains on transfer of assets prescribed in each subparagraph of Article 62-2 (1) of the Act shall apply to each business year in which includes the date on transfer of assets provided for in each subparagraph of paragraph (1) of the same Article falls. In such cases, when such special provisions do apply by each business year, Article 62-2 of the Act shall not apply to any capital gain on transfer of assets during the relevant business year. |
| (3) | "Asset prescribed by Presidential Decree" in the proviso to Article 62-2 (4) of the Act means any asset transferred within three years from the date on of contribution: Provided, That any assets directly used for any of the following businesses (excluding any profit-making business under Article 3 (1), other than health services) for at least one year shall be excluded: <Amended by Presidential Decree No. 22951, Jun. 3, 2011; Presidential Decree No. 28640, Feb. 13, 2018; Feb. 12, 2019> |
| 1. | The business prescribed by statutes or regulations; |
| 2. | The business permitted or authorized by any administrative agency, if any; |
| 3. | In other cases than that referred to subparagraphs 1 and 2, the business stipulated as the proper purpose business on the corporate register. |
| (4) | paragraph (3) shall not apply where a tax liability arises with respect to any contributed asset not included in the taxable value of the inheritance tax or the taxable value of the gift tax under the Inheritance Tax and Gift Tax Act and the amount equivalent to the total amount of the inheritance tax or gift tax not included in such taxable value is subsequently imposed. <Amended by Presidential Decree No. 18706, Feb. 19, 2005> |
| (5) | A non-profit domestic corporation may file a report on its tax base under Article 60 (1) of the Act even after having made voluntary payments upon filing a preliminary return on the tax base of capital gains under Article 62-2 (7) of the Act. In such cases, the amount of tax paid upon filing a preliminary return shall be deducted from the amount of tax payable under Article 64 of the Act. |
| (6) | A preliminary return on tax base on capital gains referred to in Article 62-2 (7) of the Act shall be filed in the form prescribed by Ordinance of the Ministry of Economy and Finance. <Amended by Presidential Decree No. 20720, Feb. 29, 2008> |
[This Article Newly Inserted by Presidential Decree No. 17457, Dec. 31, 2001]
[Title Amended on Feb. 12, 2019]
| Article 100 (Interim Prepayment) |
| (1) | Where the interim tax is paid under Article 63-2 (1) 1 of the Act, the corporate tax interim prepayment invoice 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. <Amended by Presidential Decree No. 20720, Feb. 29, 2008; Feb. 12, 2019> |
| (2) | Where the interim tax is paid as prescribed in Article 63-2 (1) 2 of the Act, the corporate tax interim prepayment invoice prescribed by Ordinance of the Ministry of Economy and Finance, along with the documents referred to in the subparagraphs of Article 60 (2) of the Act (excluding the earned surplus settlement statement or deficits settlement statement) shall be submitted to the head of the tax office having jurisdiction over the place of tax payment. <Amended by Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 21302, Feb. 4, 2009; Feb. 12, 2019> |
| (3) | Article 101 (1) and (2) shall apply mutatis mutandis to payments made under paragraphs (1) and (2). |
| (4) | Deleted. <Feb. 12, 2019> |
| (1) | A corporation which intends to voluntarily pay corporate tax under Article 64 of the Act shall pay it along with the report provided for in Article 60 of the Act at the tax office having jurisdiction over the place of tax payment or using a tax payment notice issued under the National Tax Collection Act at the Bank of Korea (including its branches) or postal and communication offices. <Amended by Presidential Decree No. 18706, Feb. 19, 2005> |
| (2) | The amount of tax which may be paid in installments under Article 64 (2) of the Act is as follows: |
| 1. | Where the amount of tax payable is 20 million won or less, the amount in excess of 10 million won; |
| 2. | Where the amount of tax payable is in excess of 20 million won, the amount of 50/100 or less of the amount of tax. |
| Article 102 Deleted. <by Presidential Decree No. 26981, Feb. 12, 2016> |
SECTION 4 Determination, Correction, and Collection
Subsection 1 Determination and Correction of Tax Bases
| Article 103 (Determination and Correction) |
| (1) | The head of the tax office having jurisdiction over the place of tax payment shall determine or correct a tax base and tax amount pursuant to Article 66 of the Act: Provided, That where the Commissioner of the National Tax Service deems it to be particularly important, the commissioner of the competent regional tax office having jurisdiction over the place of tax payment may make such determinations or corrections. In such cases, the head of the tax office having jurisdiction over the place of tax payment shall, without delay, forward the documents necessary to determine or correct the relevant tax base to the commissioner of the competent regional tax office having jurisdiction over the place of tax payment. <Amended on Feb. 12, 2019> |
| (2) | Determinations or corrections referred to in Article 66 of the Act shall be based on the reports filed under Article 60 of the Act and accompanying documents or the on-site investigations of account books kept on record and other evidentiary documents. <Amended on Feb. 12, 2019> |
| (3) | The determination referred to in Act 66 (1) of the Act shall be made within one year from the filing deadline specified under Article 60 of the Act: Provided, That this shall not apply where the Commissioner of the National Tax Service otherwise prescribes the period for investigation or where any inevitable cause exists and approval is obtained from the Commissioner of the National Tax Service. <Amended on Feb. 12, 2019> |
| Article 103-2 Deleted. <by Presidential Decree No. 27828, Feb. 3, 2017> |
| Article 104 (Determinations and Corrections by Estimation) |
| (1) | "Grounds prescribed by Presidential Decree" in the proviso to Article 66 (3) of the Act means any of the following: <Amended by Presidential Decree No. 22951, Jun. 3, 2011; Feb. 12, 2019> |
| 1. | Where there are no account books or evidentiary documents necessary for calculating the income amount or important details are incomplete or false; |
| 2. | Where it is clear that the entered details are false in light of the scale of facilities, the number of employees, or the market prices of raw materials, commodities, manufactured goods, or various fees and charges; |
| 3. | Where it is clear that the entered details are false in light of the amount of raw materials used, power consumption, and other operational matters. |
| (2) | A determination by estimation or correction under the proviso to Article 66 (3) of the Act shall be made by any of the following methods: <Amended by Presidential Decree No. 17457, Dec. 31, 2001; Presidential Decree No. 18174, Dec. 30, 2003; Presidential Decree No. 18706, Feb. 19, 2005; Presidential Decree No. 21302, Feb. 4, 2009; Presidential Decree No. 24357, Feb. 15, 2013; Presidential Decree No. 25194, Feb. 21, 2014; Feb. 12, 2019> |
| 1. | The method of determining or correcting the amount of tax based on the tax base computed by deducting the following amounts from the amount of business revenue. In such cases, if the amount to be deducted is in excess of the amount of business revenue, the excess amount shall be deemed nil: |
| (a) | The amount expended or to be expended based on evidentiary documents as purchase expenses (excluding any expenses for the purchase of tangible or intangible business assets; hereafter the same shall apply in this Article) or rental fees for tangible or intangible business assets; |
| (b) | The amount paid or payable based on evidentiary documents as pays, wages and retirement benefits of the representative, executive officers or employees; |
| 2. | The method of determining or correcting the tax base with reference to the income amount of another corporation of the same business type which is deemed to have the most accurate accounting records where the standard expense rate is not determined or the account books and other evidentiary documents are destroyed by any natural disaster, etc.: Provided, That when there is no other corporation of the same business type and the account books and other evidentiary documents are destroyed after filing of the tax base report, the determination or correction of the tax base shall be made based on the report filed under Article 60 of the Act and the accompanying evidentiary documents, and where the account books and other evidentiary documents are destroyed before filing of the tax base, it shall be made based on the income rate of the immediately preceding business year; |
| 3. | The method of determining or correcting the amount of tax based on the tax base computed using the amount computed in accordance with either of the following items, whichever is smaller, where a small enterprise defined under Article 7 (1) 2 (a) of the Restriction of Special Taxation Act closed its business (excluding where a ground specified by Ordinance of the Ministry of Economy and Finance exists to believe that it is suspected to have evaded taxation): |
| (a) | An amount calculated by subtracting the amount computed by multiplying revenue by the applicable simple expense rate under Article 145 of the Enforcement Decree of Income Tax Act from revenue; |
| (b) | An amount calculated by multiplying revenue by the income rate for the immediately preceding business year; |
| (c) | An amount calculated by the method prescribed in subparagraph 1. |
| (3) | In making determination or correction by estimation under the proviso to Article 66 (3) of the Act, the sum of the amount computed under paragraph (2) and any of the following amounts shall be the tax base and the amount of tax shall be determined or corrected accordingly: <Amended by Presidential Decree No. 23589, Feb. 2, 2012; Feb. 12, 2019> |
| 1. | The amount computed by subtracting the following amounts from the amount of earnings (limited to earning accruing from the profit-making business under Article 4 (3) of the Act in the case of a non-profit corporation; hereafter referred to as "non-business earnings" in this subparagraph) provided for in Article 11 (excluding subparagraph 1): |
| (a) | The amount equivalent to costs which are directly corresponding to the non-business earnings and are verified by evidentiary documents or objective data; |
| (b) | Where any returned amount among the deductible expenses spent in the relevant business year is included in the non-business earnings, such returned amount; |
| (c) | Where the interest income of a corporation that leases real estate is included in the non-business earnings, the amount equivalent to the interest income accruing from key money or deposit money in real estate rent; |
| 2. | The amount included in gross earnings in the transactions with any related party under Articles 88 and 89; |
| 3. | In case of a corporation with reserve funds or appropriation funds to be included in gross income under Article 34 of the Act or the Restriction of Special Taxation Act, such reserve funds or appropriation funds to be included in gross income. |
| Article 105 (Calculation of Business Revenue When Making Determinations or Corrections by Estimation) |
| (1) | Where the amount of business revenue for each business year of a domestic corporation cannot be calculated based on the account books or other evidentiary documents, such amount of business revenue shall be calculated by the following methods: <Amended on Feb. 12, 2019; Jan. 5. 2021> |
| 1. | The method of calculating the amount of business revenue with reference to the amount of business revenue of other similar corporations of the same business type determined through investigation of the account books deemed proper; |
| 2. | Where there is an operational efficiency rate set by the Commissioner of the National Tax Service in consideration of the type, region, etc. of business, the quantity of business related personnel, physical facilities (such as employees, guest rooms, places of business, motor cars, waterworks, and electricity), or the value and sales, the method of calculating the amount of business revenue by applying such rate; |
| 3. | Where there is a production rate set by the Commissioner of the National Tax Service through investigation of the input of raw materials by each business type, the method of calculating the amount of business revenue by applying such rate and then applying the production output so computed to the market price of the amount sold during the relevant business year; |
| 4. | The method of calculating the amount of business revenue in accordance with any of the following standards prescribed by the Commissioner of the National Tax Service according to each business type or region: |
| (a) | A unit input amount which determines the relationship between the quantity of all or some of the raw materials and secondary materials put into production and the production output; |
| (b) | An expense related rate which determines the relationship between all or some of the labor costs, lease costs, raw materials costs, water, light, and heat costs, and other operating expenses and the sales; |
| (c) | A commodities turnover rate which determines the relationship between the average stock amount during a fixed period and the sales or the sales cost; |
| (d) | A transactions profit rate which determines the ratio of the sales to the total profits from sales during a fixed period; |
| (e) | A value-added rate which determines the ratio of the sales to the value-added amount during a fixed period; |
| 5. | Where the rates referred to in subparagraphs 2 through 4 can be calculated for corporations subject to determinations or corrections by estimation, the method of calculating the amount of business revenue by applying such rate; |
| 6. | For the business type which primarily engage in transactions with final consumers, the method of calculating the amount of business revenue in accordance with the direct investigation standards determined by the Commissioner of the National Tax Service. |
| (2) | Even when determining or correcting the amount of income by estimation under paragraph (1), where the amount of income can be calculated based on newly found account books and other evidentiary documents, the tax base and the amount of tax for the relevant business year shall be determined or corrected through on-site investigations. <Amended on Feb. 12, 2019> |
[Title Amended on Feb. 12, 2019]
| Article 106 (Disposal of Income) |
| (1) | The amount included in gross income under Article 67 of the Act shall be disposed of as follows. This shall also apply to non-profit domestic corporations and non-profit foreign corporations: <Amended by Presidential Decree No. 17457, Dec. 31, 2001; Presidential Decree No. 17826, Dec. 30, 2002; Presidential Decree No. 18706, Feb. 19, 2005; Presidential Decree No. 19328, Feb. 9, 2006; Presidential Decree No. 19891, Feb. 28, 2007; Presidential Decree No. 20619, Feb. 22, 2008; Presidential Decree No. 21302, Feb. 4, 2009; Presidential Decree No. 23589, Feb. 2, 2012; Presidential Decree No. 24357, Feb. 15, 2013; Presidential Decree No. 26981, Feb. 12, 2016; Feb. 12, 2019; Feb.11, 2020; Feb. 17, 2021> |
| 1. | Where it is clear that the amount included in gross income (including the amount not included in deductible expenses under Article 27-2 (2) of the Act) has flowed out of the company, it shall be disposed of as a dividend, bonus by disposal of profits, other income, or other outflow from the company under any of the following categories depending upon the person to whom it belongs: Provided, That if it is not clear to whom it belongs, it shall be deemed to belong to the representative (where an executive officer who is not a minority stockholder, etc., and persons who have the special relationship provided for in Article 43 (8) with such executive officer hold at least 30/100 of the total number of outstanding stocks or total investment amount of the relevant corporation and the executive officer actually controls the management of the corporation, the executive officer shall be deemed the representative, and where there are at least two representatives, the de facto representative shall be deemed the representative; hereafter in this Article the same shall apply): |
| (a) | Where a person to whom the income belongs is a stockholder, etc. (excluding stockholders, etc., who are executive officers or employees), a dividend to the person; |
| (b) | Where a person to whom the income belongs is an executive officer or employee, bonus to the person; |
| (c) | Where a person to whom the income belongs is a corporation or an individual operating a business, other outflows from the company: Provided, That this shall be limited to where the distributed profits constitute the income for each business year of a domestic corporation or the domestic place of business of a foreign corporation or the business revenue of a resident or the domestic place of business of a non-resident under Article 120 of the Income Tax Act; |
| (d) | Where a person to whom the income belongs is a person other than those provided for in items (a) through (c), the other income of the person; |
| 2. | Where the amount included in gross income has not flowed out of the company, it shall be deemed internal reserves; |
| 3. | The following amounts shall be deemed other outflows from the company, notwithstanding subparagraph 1: |
| (a) | An amount included in gross income in excess of the amount includible in deductible expenses for donations prescribed in Article 24 (2) 1 of the Act or donations prescribed in paragraph (3) 1 of the same Article pursuant to Article 24 of the Act; |
| (c) | The amount included in gross income under Article 27-2 (3) (limited to the amount under subparagraph 2 of the same paragraph) and (4) of the Act; |
| (d) | The amount equivalent to the amount of withholding tax for interest, discounts, and marginal profits included in gross income under Article 28 (1) 1 and 2 of the Act; |
| (e) | The amount included in gross income Article 28 (1) 4 of the Act; |
| (f) | Deleted; <by Presidential Decree No. 19328, Feb. 9, 2006> |
| (h) | Where the amount included in gross income under the proviso to subparagraph 1, with the exception of its items, and paragraph (2) is deemed disposed of, deeming that it belongs to the representative, the amount included in gross income which the relevant corporation pays as income tax, etc. on such disposal on behalf of the representative and appropriates as losses or does not collect until the special relationship with the representative ceases; |
| (i) | The amount included in gross income under Article 88 (1) 8, 8-2 and 9 (limited to any acts or calculations corresponding to those prescribed in subparagraphs 8 and 8-2 of the same paragraph), which is the amount imposed on a person to which such amount belongs as gift tax under the Inheritance Tax and Gift Tax Act; |
| (j) | In reporting, determining or correcting the corporate tax base on the income in each business year of the domestic business place of a foreign corporation, the income vested in the foreign corporation, which is an amount included in gross income; and income, which is an amount included in gross income pursuant to Articles 6, 7, 9, 12, and 15 of the Adjustment of International Taxes Act that has not been returned from a foreign related person. |
| (2) | The difference (referring to the amount before deduction of the amount of equivalent to the corporate tax) between the tax base determined under Article 104 (2) and the profit for the year on the statement of financial position of the corporation shall be the bonus to the representative upon disposal of profits: Provided, That in cases falling under the proviso to Article 68 of the Act, it shall be other outflows from the company. <Amended on Jan. 5, 2021> |
| (3) | In cases of paragraph (2), when a corporation reports losses, the losses shall be deemed nil. |
| (4) | Where a domestic corporation recovers any amount of illegal outflows, including the omission of sales from records and the processing costs and subsequently includes the recovered amount in gross income through tax adjustment within the filing deadline of revised returns specified under Article 45 of the Framework Act on National Taxes, the disposed income shall be deemed internal reserves: Provided, That the same shall not apply to any of the following cases where the domestic corporation includes the amount of outflows in gross income, knowing in advance that there would be the correction of tax: <Newly Inserted by Presidential Decree No. 18706, Feb. 19, 2005; Presidential Decree No. 22035, Feb. 18, 2010; Presidential Decree No. 24357, Feb. 15, 2013> |
| 1. | Where it receives a notice on the tax investigation; |
| 2. | Where it learns that the tax investigation has started; |
| 3. | Where a tax official goes on a local business trip or starts confirmation affairs to collect tax data or handle civil petitions; |
| 4. | Where it is notified of explanation of tax data from the head of the tax office having jurisdiction over the place of tax payment; |
| 5. | Where outflows are confirmed in the course of investigation by the investigation agency or trial; |
| 6. | Where it is deemed that it has learned the correction of tax in advance and it is similar to cases provided for in subparagraphs 1 through 5. |
| Article 107 (Special Cases concerning Calculation of Tax Bases and Amount by Estimation) |
"Tax base and amount are estimated, as prescribed by Presidential Decree" in the proviso to Article 68 of the Act means the case of determining or correcting tax base and amount by estimation as provided for in Article 104 (2) 2. <Amended by residential Decree No. 22951, Jun. 3, 2011>
| Article 108 (Determination of Occasional Imposition) |
| (1) | "Grounds prescribed by Presidential Decree" in the former part of Article 69 (1) of the Act means any of the following cases: <Amended by Presidential Decree No. 20619, Feb. 22, 2008> |
| 1. | Where the headquarters, etc. is moved without reporting thereon; |
| 2. | Where the business is suspended or closed due to a slump in business or other causes; |
| 3. | Where there are other reasonable grounds to believe that the relevant corporation could evade tax. |
| (2) | Where the head of the tax office having jurisdiction over the place of tax payment or the commissioner of the competent regional tax office occasionally imposes corporate tax under Article 69 (1) of the Act on a corporation which the has any grounds provided in each subparagraph of paragraph (1), he/she shall determine the tax base and the amount of tax by applying mutatis mutandis Articles 103 (2) and 104 (2) of this Decree and Article 55 (2) of the Act. In such cases, Articles 75 and 75-2 through 75-9 of the Act shall not apply. <Amended on Feb. 12, 2019> |
| (3) | Where a corporation receives the amount of business revenues from the United Nations Forces in Korea or a foreign institution through a foreign exchange bank in the form of foreign exchange certificates or Korean won, the head of the tax office having jurisdiction over the place of tax payment may determine the tax base for the amount to received under Article 69 of the Act. |
| (4) | Where corporate tax is occasionally imposed under paragraph (3), the amount thereof shall be an amount computed by applying mutatis mutandis Article 104 (2), multiplied by the tax rate provided in Article 55 of the Act. <Amended by Presidential Decree No. 17457, Dec. 31, 2001> |
| (5) | In applying mutatis mutandis Article 104 (2) pursuant to paragraph (2), the head of the tax office having jurisdiction over the place of tax payment or the commissioner of the competent regional tax office recognizes that there is no any clear tax evasion as a result of a tax investigation in cases falling under paragraph (1) 2, he/she shall determine the tax base and the amount of tax according to the method prescribed in the main sentence of Article 104 (2) 2 and if there exists no corporation of the same business type, he/she may determine the tax base and the amount of tax according to the method prescribed in the proviso to the same subparagraph. <Newly Inserted by Presidential Decree No. 16658, Dec. 31, 1999; Feb. 12, 2019> |
| Article 109 (Notification of Tax Base and Amount of Tax) |
| (1) | Where the head of the tax office having jurisdiction over the place of tax payment give notice on the tax base and the amount of tax under Article 70 of the Act, he/she shall give tax payment notice accompanied by a calculation statement on the tax base and the amount, and where there is no tax base or amount of tax payable for the business year, he/she shall notify the relevant corporation of the details of such determination. In such cases, the commissioner of the competent regional tax office having jurisdiction over the place of tax payment shall state in writing that he/she has investigated and determined the tax base determined under the proviso to Article 103 (1). <Amended on Feb. 17, 2021> |
| (2) | Where the head of the tax office having jurisdiction over the place of tax payment determines the tax base of a corporation under Article 104 (2), he/she shall give notice thereon upon stating the base revenue amount in the calculation statement referred to in paragraph (1). |
| (3) | In applying paragraph (1), where the tax base of a foreign corporation with no reported person responsible for management or a domestic corporation of which the location is unclear, it shall be served by publication. |
Subsection 2 Collection and Refund of Tax
| Article 110 (Calculation of Tax Refunds by Retroactive Deduction of Losses) |
| (1) | "Amount of corporate tax for the immediately preceding business year prescribed by Presidential Decree" in paragraph (1), with the exception of the subparagraphs, of Article 72 of the Act means the amount of corporate tax calculated for the immediately preceding business year (excluding the corporate tax on capital gains on transfer of land, etc. under Article 55-2 of the Act; hereafter the same shall apply in this Article) minus the amount of corporate tax deducted, reduced or exempted (hereinafter referred to as "amount of tax reduced or exempted") from the corporate tax on income for the immediately preceding business year (hereafter referred to as "amount of corporate tax for the immediately preceding business year" in this Article). <Amended by Presidential Decree No. 17457, Dec. 31, 2001; Presidential Decree No. 21302, Feb. 4, 2009; Presidential Decree No. 22951, Jun. 3, 2011; Feb. 12, 2019> |
| (2) | A corporation which intends to obtain refund under Article 72 (2) of the Act shall file an application (including filing such application through the national tax information and communications network) for refund of retroactively deducted corporate tax in the form stipulated by Ordinance of the Ministry of Economy and Finance within the filing deadline specified under Article 60 of the Act to the head of the tax office having jurisdiction over the place of tax payment. <Amended by Presidential Decree No. 18312, Mar. 17, 2004; Presidential Decree No. 20720, Feb. 29, 2008; Feb. 12, 2019> |
| (3) | The amount of corporate tax to be collected as losses have decreased under Article 72 (5) of the Act shall be calculated by the following formula: Provided, That where only some losses referred to in Article 14 (2) of the Act have been retroactively deducted, the losses which have not been retroactively deducted shall be deemed to have been first reduced: <Amended on Feb. 12, 2019> |
| The amount of tax refunded under Article 72 (3) of the Act (hereafter in this Article referred to as “initial tax refund”) × An amount in excess of the reduced losses which have not been retroactively deducted / The amount of retroactively deducted losses. |
|
| (4) | "An amount equivalent to the interest calculated, as prescribed by Presidential Decree" in Article 72 (5) of the Act, with the exception of its subparagraphs, means the amount calculated by multiplying the amount under subparagraph 1 by the rate under subparagraph 2: <Amended by Presidential Decree No. 17826, Dec. 30, 2002; Presidential Decree No. 21302, Feb. 4, 2009; Presidential Decree No. 23589, Feb. 2, 2012; Presidential Decree No. 24357, Feb. 15, 2013; Feb. 12, 2019; Feb. 11, 2020; Feb. 15, 2022> |
| 1. | The amount of tax refunded under Article 72 (5) of the Act; |
| (5) | In re-determining the initial tax refund under Article 72 (6) of the Act, where the amount of retroactively deducted losses is in excess of the amount of tax base, the amount of losses in excess shall not be construed as retroactively deducted losses. <Amended on Feb. 12, 2019> |
| Article 110-2 Deleted. <by Presidential Decree No. 27828, Feb. 3, 2017> |
| Article 111 (Withholding on Interest Income, etc. of Domestic Corporations) |
| (1) | “Income prescribed by Presidential Decree of a financial company, etc. prescribed by Presidential Decree” in paragraph (1), with the exception of the subparagraphs, of Article 73 of the Act means income paid to any of the following entities, excluding cases of paying interest, etc. (referring to interest, etc. under the former part of Article 73-2 (1) of the Act; hereafter the same shall apply in this Article and Articles 113, and 138-3) on bonds, etc. subject to withholding tax prescribed in the former part of Article 73-2 (1) of the Act (excluding short-term bonds, etc. falling under subparagraph 1 (b) of Article 2 of the Act on Electronic Registration of Stocks and Bonds with a maturity of up to one month, among those prescribed in the former part, with the exception of the subparagraphs, of Article 59 of the same Act) to an investment company prescribed in the Financial Investment Services and Capital Markets Act and to a corporation that is not a special purpose company for recapitalization referred to in subparagraph 16: <Amended on Dec. 30, 2002; Dec. 30, 2003; Feb. 19, 2005; Dec. 30, 2005; Feb. 22, 2008; Feb. 29, 2008; Feb. 4, 2009; Jun. 8, 2009; Dec. 31, 2009; Feb. 18, 2010; Oct. 23. 2015; Feb. 12, 2019; Jul. 1, 2019; Feb. 11, 2020; Feb. 17, 2021; Feb. 15, 2022> |
| 1. | Corporations referred to in Article 61 (2) 1 through 28; |
| 8. | Unions and the National Credit Union Federation of Korea established under the Credit Unions Act; |
| 11. | Exchange (limited to the joint compensation fund for loss incurred from contravention of contracts); |
| 14. | Funds (limited to a corporation or an organization deemed a corporation) to which the National Finance Act applies; |
| 15. | Corporations or funds, the principal purpose of which is to provide loans under applicable statutes (limited to those which keep accounts separately from other business); |
| 18. | Other corporations that operate a financial insurance business prescribed by Ordinance of the Ministry of Economy and Finance. |
| (2) | The amount to be deducted from the withholding tax of a domestic corporation pursuant to Article 73 (2) 2 of the Act shall be the amount of indirect investment foreign corporate tax per domestic corporation pursuant to Article 94-2 (1), multiplied by the rate calculated according to the respective formula in the following: <Newly Inserted on Feb. 28, 2023> |
| 1. | Where the withholding tax rate pursuant to Article 73 (1) of the Act is less than the foreign withholding tax rate (referring to the rate calculated in accordance with Article 94-2 (4); hereafter in this paragraph the same shall apply) applied to indirect investment foreign corporate tax: |
| Withholding tax rate pursuant to Article 73 (1) of the Act / Foreign withholding tax rate applied to indirect investment foreign corporate tax - Withholding tax rate pursuant to Article 73 (1) of the Act |
|
| 2. | Where the withholding tax rate pursuant to Article 73 (1) of the Act is greater than or equal to the foreign withholding tax rate applied to indirect investment foreign corporate tax: |
| 1- Withholding tax rate pursuant to Article 73 (1) of the Act |
|
| (3) | Notwithstanding paragraph (2), in the case of income falling under any of the following subparagraphs, the amount to be deducted from the withholding tax shall be the amount of indirect investment foreign corporate tax per domestic corporation pursuant to Article 94-2 (1), multiplied by the rate calculated in accordance with the formula prescribed in paragraph (2) 2: <Newly Inserted on Feb. 28, 2023> |
| 1. | Income received from an indirect investment company, etc. from January 1, 2025 through December 31, 2025; |
| 2. | Income received from a newly established indirect investment company, etc. for the business year or fiscal period in which the establishment date of such indirect investment company, etc. falls. |
| (4) | "Those prescribed by Presidential Decree, such as income, etc., on which corporate tax is not imposed or exempt" in Article 73 (4) of the Act, with the exception of its subparagraphs, means any of the following incomes: <Amended by Presidential Decree No. 16658, Dec. 31, 1999; Presidential Decree No. 16762, Mar. 28, 2000; Presidential Decree No. 17033, Dec. 29, 2000; Presidential Decree No. 17457, Dec. 31, 2001; Presidential Decree No. 18146, Nov. 29, 2003; Presidential Decree No. 18174, Dec. 30, 2003; Presidential Decree No. 18706, Feb. 19, 2005; Presidential Decree No. 19891, Feb. 28, 2007; Presidential Decree No. 20619, Feb. 22, 2008; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 21302, Feb. 4, 2009; Presidential Decree No. 21744, Sep. 21, 2009; Presidential Decree No. 21972, Dec. 31, 2009; Presidential Decree No. 26369, Jun. 30, 2015; Feb. 12, 2019; Jun. 25, 2019; Feb. 28, 2023> |
| 1. | Income on which corporate tax is not imposed or income exempt from corporate tax; |
| 2. | Deleted; <by Presidential Decree No. 21302, Feb. 4, 2009> |
| 3. | Income already included in the reported tax base, which has not been paid; |
| 4. | Interest revenue on loans to members of a non-profit corporation or members of its associations under the statutes or regulations, or the articles of incorporation, and interest revenue on deposits by the non-profit corporation in the cooperatives or the national federation of the relevant non-profit corporation; |
| 5. | Interest and discounts accruing by registering and continuing to hold the following State bonds, public bonds, etc., from the date of issuance to the date of payment of interest or date of repayment, which have been registered under the State Bond Act or electronically registered under the Act on Electronic Registration of Stocks and Bonds by a corporation prescribed by Ordinance of the Ministry of Economy and Finance, which manages and operates funds established under the applicable statutes, (hereafter referred to as "fund operating corporation" in this subparagraph) and a non-profit domestic corporation that operates the health insurance business, pension management business, or mutual-aid business (limited to the relevant fund business in cases of a fund operating corporation) among corporations prescribed by Ordinance of the Ministry of Economy and Finance: |
| (a) | Bonds or securities issued by the State or local governments; |
| (c) | Bonds or securities prescribed by Ordinance of the Ministry of Economy and Finance; |
| 6. | Interest revenue accruing from funds deposited jointly by a corporation, which is a member of any of the following associations (excluding any corporation that runs the financial and insurance activities under the Korea Standard Industrial Classification), according to the rules and regulations of such associations: |
| (a) | An association established for stabilizing the securities market through investment in the listed securities, and prescribed by Ordinance of the Ministry of Economy and Finance; |
| (b) | An association established for stabilizing the bond market and prescribed by Ordinance of the Ministry of Economy and Finance; |
| (5) | In applying Articles 73 and 73-2 of the Act, interest, etc., on relevant bonds shall be deemed paid in either of the following cases: <Newly Inserted by Presidential Decree No. 17033, Dec. 29, 2000; Presidential Decree No. 24357, Feb. 15, 2013; Feb. 12, 2019; Feb. 11, 2020> |
| 1. | Where convertible bonds are converted into equity stocks or exchangeable bonds are exchanged with equity bonds; |
| 2. | Where the preemptive right to new stocks on bonds with warrant is exercised (limited to where the price for new stocks is paid by the relevant bonds with warrant). |
| (6) | In applying Articles 73 and 73-2 of the Act, the payment date of interest income shall be the date specified in the subparagraphs of Article 190 of Enforcement Decree of the Income Tax Act: Provided, That a corporation referred to in Article 61 (2) 1 through 7 and 10 issues and sells promissory notes with the terms and conditions provided for in subparagraph 1 of Article 190 of Enforcement Decree of the Income Tax Act, the tax shall be withheld by deeming the date such promissory notes are sold at discounted prices to be the payment date of interest, etc., and the tax on the income amount that reverts to the trust property operated by a trust business entity referred to in the Financial Investment Services and Capital Markets Act shall be withheld by deeming that it is paid on a specific date specified under Article 155-2 of the Income Tax Act. <Newly Inserted by Presidential Decree No. 17033, Dec. 29, 2000; Presidential Decree No. 18706, Feb. 19, 2005; Presidential Decree No. 21302, Feb. 4, 2009; Presidential Decree No. 22035, Feb. 18, 2010; Feb. 12, 2019> |
| (7) | In applying Articles 73 and 73-2 of the Act, where a trust business entity referred to in the Financial Investment Services and Capital Markets Act directly operates, keeps, or manages trust property, the trust business entity shall be deemed to be in an agency or commission relationship with a person who pays the income amount referred to in the subparagraphs of Article 73 (1) of the Act to the trust property. <Newly Inserted by Presidential Decree No. 21302, Feb. 4, 2009; Dec. 31, 2009; Feb. 12, 2019> |
| (8) | For the purpose of Articles 73 and 73-2 of the Act, it shall be deemed that there exists a relationship of agency or delegation with respect to the duty to collect withholding tax between a person classified as follows and a person who has issued the relevant securities, etc. in connection with the interest income, etc. accruing from securities deposited with the Korea Securities Depository referred to in Article 294 of the Financial Investment Services and Capital Markets Act [referring to securities referred to in paragraph (1) of the same Article (excluding trust property to which paragraph (7) of this Article applies); hereafter in this paragraph referred to as "securities, etc."]: <Newly Inserted on Feb. 12, 2019> |
[Title Amended on Feb. 12, 2019]
[Enforcement: Jan. 1, 2025] Article 111 (2), (3) and (4)
| Article 112 Deleted. <by Presidential Decree No. 21302, Feb. 4, 2009> |
| Article 113 (Withholding on Amount Equivalent to Interest Accruing for Holding Period of Bonds, etc. of Domestic Corporation) |
| (1) | In applying Articles 73 and 73-2 of the Act, the income subject to withholding from the interest, etc. accruing from bonds, etc. (referring to the interest, etc. accruing from the sale of the bonds, etc., where the bonds, etc. are sold before the interest, etc. accruing therefrom are paid) shall be the amount of income accruing in the period during which a domestic corporation acquires and holds the bonds, etc. (including bonds, etc. that revert to trust property operated by a trust business entity referred to in the Financial Investment Services and Capital Markets Act) <Amended by Presidential Decree No. 18706, Feb. 19, 2005; Presidential Decree No. 21302, Feb. 4, 2009; Feb. 12, 2019> |
| (2) | In applying paragraph (1), the income that accrues in the period during which a domestic corporation acquires and holds bonds, etc. shall be the amount computed by applying the periods under items of subparagraph 1 and the interest rates under items of subparagraph 2 to the par value of the bonds, etc. (hereafter referred to as "amount equivalent to the interest during the holding period" in this Article, Articles 114-2 and 138-3): <Amended by Presidential Decree No. 16810, May 16, 2000; Presidential Decree No. 17033, Dec. 29, 2000; Presidential Decree No. 17457, Dec. 31, 2001; Presidential Decree No. 18706, Feb. 19, 2005; Presidential Decree No. 19214, Dec. 30, 2005; Presidential Decree No. 19328, Feb. 9, 2006; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 22035, Feb. 18, 2010; Presidential Decree No. 24357, Feb. 15, 2013> |
| 1. | The holding periods of bonds, etc.: |
| (a) | Where the bonds, etc. are sold before the interest income is paid, the period from the acquisition date of the relevant bonds, etc. or the date after the end date of the calculation period of the immediately preceding interest income until the date the bonds, etc. are sold (the date of actual sale in the case of good offices, mediation, or commission for sale of such bonds, etc.): Provided, That where there is an agreement stipulating to calculate the period from the acquisition date of the relevant bonds, etc. or the end date of the calculation period of the immediately preceding interest income until the day preceding the date the bonds, etc. are sold, the relevant period; |
| (b) | Where the interest income on the bonds, etc. has been paid, the period from the acquisition date of the relevant bonds, etc. or the date after the end date of the calculation period of the immediately preceding interest income until the end date of the calculation period of interest income: Provided, That where there is an agreement stipulating to calculate the period from the acquisition date of the relevant bonds, etc. or the end date of the calculation period of the immediately preceding interest income until the day preceding the date the bonds, etc. are sold, the relevant period; |
| 2. | Applicable interest rates: |
| (a) | The interest rate computed by adding the interest rate under the calculation method in the agreement on the interest calculation period of the relevant bonds, etc. and the discount rate at the time of issuance, and subtracting the premium rate at the time of issuance: Provided, That with respect to bonds issued on the open market pursuant to each subparagraph of Article 22-2 (1) and (2) of the Enforcement Decree of the Income Tax Act, the discount rate and premium rate at the time of issuance shall neither be added to nor subtracted from the interest rate; |
| (b) | For convertible bonds, exchangeable bonds, or bonds with warrant issued with a condition that the payment shall be made by adding the guaranteed rate for each interest calculation period on the redemption date at maturity, the additionally paid interest rate shall be added to the interest rate computed under item (a): Provided, That where convertible bonds, exchangeable bonds, or bonds with warrant are requested to be converted or exchanged for stocks and the interest payment is stipulated in the agreement, the stipulated interest rate shall be deemed the agreed interest rate from the date of the request for conversion or the date of the request for exchange, as prescribed by Ordinance of the Ministry of Economy and Finance. |
| (3) | In applying paragraphs (1) and (2), the sale of bonds, etc. shall include the onerous transfer of bonds, etc. acquired and held by a corporation in its own asset account to the account of assets managed by the corporation on behalf of others, the onerous transfer between such managed accounts, or the onerous transfer from such managed accounts to its own asset account: Provided, That this shall not apply to cases prescribed by Ordinance of the Ministry of Economy and Finance. <Amended by Presidential Decree No. 17033, Dec. 29, 2000; Presidential Decree No. 20720, Feb. 29, 2008> |
| (4) | “Income prescribed by Presidential Decree, such as the income on which corporate tax is not imposed or exempt” in Article 73-2 (2) of the Act means any of the following: <Newly Inserted on Feb. 12, 2019; Jun. 25, 2019; Feb. 28, 2023> |
| 1. | Income falling under any subparagraph of Article 111 (4); |
| 2. | Amount of the interest for the holding period of bonds subject to withholding tax, etc. (referring to bonds subject to withholding tax, etc. prescribed in the former part of Article 73-2 (1) of the Act) of an investment company prescribed in the Financial Investment Services and Capital Markets Act and a special purpose company for recapitalization referred to in Article 111 (1) 16 of this Decree; |
| (5) | In applying paragraph (1), where a corporation that acquired securities provided for in Article 26-2 (4) of the Enforcement Decree of the Income Tax Act among the collective investment securities referred to in the Financial Investment Services and Capital Markets Act has sold such securities (including securities acquired and sold by a collective investment business entity referred to in the Financial Investment Services and Capital Markets Act), in the middle of the period for computing proceeds from investment trust, the amount equivalent to interest for the holding period of such securities shall be computed pursuant to Article 26-2 (4) through (10) of the Enforcement Decree of the Income Tax Act, notwithstanding paragraph (2). <Amended by Presidential Decree No. 17033, Dec. 29, 2000; Presidential Decree No. 18174, Dec. 30, 2003; Presidential Decree No. 18706, Feb. 19, 2005; Presidential Decree No. 19891, Feb. 28, 2007; Presidential Decree No. 20619, Feb. 22, 2008; Presidential Decree No. 21302, Feb. 4, 2009; Presidential Decree No. 22035, Feb. 18, 2010; Presidential Decree No. 22577, Dec. 30, 2010> |
| (6) | Where the withholding tax deducted before the corresponding business year exceeds the amount of tax on the amount equivalent to the interest during the holding period calculated by applying mutatis mutandis paragraph (2) as a corporation sells bonds, etc. (hereinafter referred to as "original issue discount bonds, etc.") which are withheld on the date prescribed in subparagraph 1 of Article 190 of the Enforcement Decree of the Income Tax Act in the following business year before their maturity arrives although it duly reported its corporate tax with full deduction of such tax withheld at source on such bonds, etc. at the close of the corresponding business year in which it acquired them, such excess amount shall be paid in addition to the corporate tax payable for the business year during which such bonds, etc. are sold. <Amended by Presidential Decree No. 17033, Dec. 29, 2000; Presidential Decree No. 18706, Feb. 19, 2005; Presidential Decree No. 21302, Feb. 4, 2009> |
| (7) | A corporation that sells one kind of bonds, etc. acquired on different dates may select the method of computing the period under paragraph (2) 1 between the method applying mutatis mutandis Article 74 (1) 1 (a) through (c) and the method prescribed by Ordinance of the Ministry of Economy and Finance; and the corporation shall continue applying the same method it selects after reporting it to the head of the tax office having jurisdiction over the place of tax payment within the period given in any of the following subparagraphs. In such cases, if the corporation fails to report the method of computing the holding period or applies a computing method different from what it reported, the holding period shall be computed by applying mutatis mutandis the method provided for in Article 74 (1) 1 (b): <Amended by Presidential Decree No. 17033, Dec. 29, 2000; Presidential Decree No. 20720, Feb. 29, 2008> |
| 1. | The payment date of withholding tax on the amount equivalent to interest for the holding period; |
| 2. | The filing date of corporate tax base for the amount equivalent to interest for the holding period. |
| (9) | Where a financial company, etc., that is commissioned to withhold tax or withholds tax as an agent under Article 73 (7) of the Act sells (including the sale under Article 113 (3)) bills or debt certificates after assuming charge of, or buying such bills or debt certificates from the corporation that has issued them, the interest, etc. on bonds, etc. subject to withholding tax referred to in Article 73-2 of the Act shall not include the interest, etc. that reverts to the financial company, etc.: Provided, That in the case of bills other than those sold by the methods prescribed in subparagraph 1 of Article 190 of the Enforcement Decree of the Income Tax Act, the interest, etc. that reverts to the financial company, etc. shall be included: <Newly Inserted on Feb. 12, 2019; Feb. 28, 2023> |
| (10) | A trust business entity as referred to in the Financial Investment Services and Capital Markets Act shall prepare a written confirmation of the amount of withholding tax on the amount equivalent to the interest during the holding period of the bonds, etc., which revert to the relevant trust property and submit such written confirmation to the head of the tax office having jurisdiction over the place of tax payment by the end of the month following the month under which the specific date provided for in Article 155-2 of the Income Tax Act falls. <Amended by Presidential Decree No. 18706, Feb. 19, 2005; Presidential Decree No. 19214, Dec. 30, 2005; Presidential Decree No. 20619, Feb. 22, 2008; Presidential Decree No. 21302, Feb. 4, 2009> |
| 1. | and 2. Deleted; <by Presidential Decree No. 21302, Feb. 4, 2009 |
| 3. | Deleted. <by Presidential Decree No. 20619, Feb. 22, 2008> |
| (11) | Where a corporation sells original issue discount bonds, etc. (limited to bonds, etc. tax on which is withheld as at the time they are sold; hereafter the same shall apply in this paragraph) during an interest-calculation period, the corporation (referring to a financial company, etc., where the financial company, etc. brokers the sale of such bonds, etc.) shall be deemed to resell the relevant bonds, etc. on the date they are sold and tax on the calculated interest, etc. shall be withheld. <Newly Inserted by Presidential Decree No. 17457, Dec. 31, 2001; Presidential Decree No. 21302, Feb. 4, 2009; Presidential Decree No. 22035, Feb. 18, 2010> |
| (12) | “Financial company, etc. prescribed by Presidential Decree” referred to in Article 73-2 (3) 1 of the Act means corporations prescribed in the subparagraphs of Article 61 (2). <Amended on Feb. 12, 2019> |
| (13) | Where the bonds, etc. are deemed to be sold under paragraph (3), a withholding tax shall be imposed on the amount equivalent to the interest during the holding period of the managed property by deeming that the corporation that manages the relevant property sells the bonds, etc. <Newly Inserted by Presidential Decree No. 18706, Feb. 19, 2005> |
| (14) | Deleted. <Feb. 12, 2019> |
[Title Amended on Feb. 12, 2019]
[Enforcement Date: Jan. 1, 2025] Article 113 (4) and (9)
| Article 114 Deleted. <by Presidential Decree No. 18706, Feb. 19, 2005> |
| Article 114-2 (Tax Withheld at Source and Refund in Bond Transactions with Repurchase Agreement) |
| (1) | "Trading of repurchase bonds, etc., or other cases prescribed by Presidential Decree" in the former part of Article 73-2 (1) of the Act means any of the following transactions or a mixture of the following transactions: <Presidential Decree No. 22812, Mar. 31, 2011; Presidential Decree No. 26981, Feb. 12, 2016; Feb. 12, 2019; Feb. 17, 2021> |
| 2. | A transaction under which a financial company, etc., defined in any item of subparagraph 1 of Article 2 of the Act on Real Name Financial Transactions and Confidentiality, and a corporation referred to in any subparagraph of Article 111 (1) of this Decree lend bonds, etc., (including where such transactions are repeated subsequently) on the condition that bonds, etc. of the same type and in the same quantity will be returned upon expiration of a pre-determined period and the facts relevant to such transaction are confirmed by the transaction ledger (including the ledger in electronic form) prepared by the relevant bond lending and borrowing broker (referring to the Korea Securities Depository, a financial securities company, an investment trader or investment broker, as defined in the Financial Investment Services and Capital Markets Act). |
| (2) | Article 73-2 of the Act shall apply to the transactions provided for in paragraph (1), deeming that the amount equivalent to the interest income accruing from the bonds, etc., during the period beginning on the date of selling or lending such bonds, etc., and ending on the date such bonds, etc., are repurchased or returned belongs to the seller or lender (referring to the initial seller or lender, where relevant transactions are repeated subsequently or where the transactions provided for in paragraph (1) are mixed). <Amended by Presidential Decree No. 24357, Feb. 15, 2013; Presidential Decree No. 26981, Feb. 12, 2016; Feb. 12, 2019> |
| (3) | Where the bonds, etc. purchased or borrowed by a purchaser or borrower (hereafter in this Article referred to as "purchaser, etc.") through any of the transactions provided for in paragraph (1) are sold or lent to any third party, the amount of tax equivalent to the amount of the interest during the holding period shall be withheld under Articles 73-2 and 98-3 of the Act, and Articles 133-2 and 156-3 of the Income Tax Act from the purchaser, etc. (excluding any corporation that falls under subparagraphs of Article 111 (1)) and the purchaser, etc. may obtain a refund of the tax withheld under paragraph (4). <Amended on Feb. 12, 2019> |
| (4) | Any purchaser, etc., who intends to obtain a refund of the tax withheld under paragraph (3) shall file an application for refund, accompanied by the document prescribed by Ordinance of the Ministry of Economy and Finance substantiating that the bonds, etc., that have been sold or lent to any third party are purchased or borrowed through the transaction provided for in paragraph (1), with the head of the tax office having jurisdiction over the place of tax payment of the purchaser, etc., by no later than the 10th day of the month following the month in which the amount of tax withheld is paid, and the head of the competent tax office in receipt of the application for refund shall immediately refund the amount of tax after verifying the fact of the transaction and details of the application for fund. |
[This Article Wholly Amended by Presidential Decree No. 22184, Jun. 8, 2010]
| Article 115 (Payment of Withholding Tax) |
| (1) | Each person liable for withholding under Articles 73 and 73-2 of the Act shall pay the corporate at the tax office, etc., having jurisdiction over the place of tax payment of the person liable for withholding under the National Tax Collection Act, and shall submit a report (including submission through the national tax information and communications network) on the withholding performance status in the form 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 of the relevant person liable for withholding. <Amended by Presidential Decree No. 18312, Mar. 17, 2004; Presidential Decree No. 18706, Feb. 19, 2005; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 23589, Feb. 2, 2012; Feb. 12, 2019> |
| (2) | "Person liable for withholding prescribed by Presidential Decree" in Article 73 (9) of the Act means a person (excluding corporations that engage in financial and insurance business) who is liable for withholding taxes with not more than 20 regular employees during the immediately preceding year (referring to the semi-annual term in which an application is filed, in cases of a business operator who starts up a new business; the same shall apply hereafter in this Article) and who has been approved or designated by the head of the tax office having jurisdiction over withholding tax to pay semi-annually the amount of withholding tax under each subparagraph of Article 73 (1) of the Act, as determined by the Commissioner of the National Tax Service. <Amended by Presidential Decree No. 18174, Dec. 30, 2003; Presidential Decree No. 22035, Feb. 18, 2010; Presidential Decree No. 22951, Jun. 3, 2011; Presidential Decree No. 26068, Feb. 3, 2015; Feb. 28, 2023> |
| (3) | The number of regular employees in the immediately preceding year as referred to in paragraph (2) shall be the average number of regular employees as of the end of each month from January to December of the immediately preceding year. |
| (4) | A corporation which intends to obtain approval under paragraph (2) shall file an application with the head of the tax office having jurisdiction over withholding tax between the first and the last day of the month immediately preceding the semi-annual period, in which the corporation intends to pay the withholding corporate tax semi-annually. |
| (5) | Upon receipt of an application filed under paragraph (4), the head of the tax office having jurisdiction over withholding tax shall determine whether to grant approval in consideration of the reliability in filing reports and payment of the amount of withholding tax of the relevant person liable for withholding and notify the applicant of the determination by the end of the month after the semi-annual period which includes the date of application. |
| (6) | Matters necessary for semi-annual payment of withheld corporate tax under Article 73 (9) of the Act and other necessary matters shall be prescribed by the Commissioner of the National Tax Service. <Amended on Feb. 28, 2023> |
[Enforcement Date: Jan. 1, 2025] Article 115 (2) and (6)
| Article 116 (Succession to Obligation to Pay Withholding Tax) |
| (1) | In the dissolution of a corporation, where the corporate tax to be with- held under Articles 73 and 73-2 of the Act has not been collected or the collected corporate tax has not been paid and residual assets are distributed subsequently, the liquidator and the persons receiving the distributed residual assets shall be jointly and severally liable for payment of the corporate tax, up to the limit of the value of the assets distributed and the value of the assets received, respectively. <Amended on Feb. 12, 2019> |
| (2) | Where a corporation disappears in a merger or division, the surviving corporation, etc. shall be liable for payment of corporate tax of the merged corporation, etc., etc. which must be withheld under Articles 73 and 73-2 of the Act which is not collected or collected corporate tax which is not paid by the merged corporation. <Amended on Feb. 12, 2019> |
| Article 117 (Issuance of Withholding Receipts) |
| (2) | Paragraph (1) shall also apply to the issuance of withholding receipts for the amount of corporate tax withheld by a corporation which pays interest income on original issue discount bonds, etc. |
| Article 118 Deleted. <by Presidential Decree No. 19891, Feb. 28, 2007> |
| Article 119 Deleted. <by Presidential Decree No. 23589, Feb. 2, 2012> |
| Article 120 (Application of Additional Tax) |
| (1) | "Unclear with regards to the descriptions prescribed by Presidential Decree" in Article 75-2 (1) 3 of the Act means any of the following: Provided, That the same shall not apply where there exist any justifiable grounds, such as where a domestic corporation is unable to know the actual owners of stocks, etc.: <Newly Inserted by Presidential Decree No. 23589, Feb. 2, 2012; Feb. 12, 2019> |
| 1. | Where it is impossible to verify the details of stockholders, etc., since all or part of the matters stated under Article 152 (2) 1 and 2 (hereafter referred to as "necessary stated matters" in this paragraph) on the detailed statement on stockholders, etc., submitted under Article 109 (1) of the Act are not stated or falsely stated; |
| 2. | Where it is impossible to verify the details of stockholders, etc., since the necessary stated matters on the submitted detailed statement on stockholders, etc., are differently stated from the matters on the actual owners of stocks, etc. |
| (2) | "Unclear circumstances prescribed by Presidential Decree" in Article 75-2 (2) 3 of the Act means any of the following cases: Provided, That, the same shall not apply where there exist any justifiable grounds, such as where a domestic corporation is unable to know the actual owners of stocks, etc.: <Amended by Presidential Decree No. 21302, Feb. 4, 2009; Presidential Decree No. 22035, Feb. 18, 2010; Presidential Decree No. 23589, Feb. 2, 2012; Feb. 12, 2019> |
| 1. | Where the changes of stocks are not verifiable, because all or part of the matters stated under Article 161 (6) 1 through 3 (hereafter referred to as "necessary stated matters" in this paragraph) are not stated or falsely stated on the submitted statement on change of stocks; |
| 2. | Where the changes of the stocks are not verifiable, because the necessary stated matters on the submitted statement on change of stocks is different from the matters on the actual owners of stocks, etc. |
| (3) | "Corporation prescribed by Presidential Decree" referred to in Article 75-5 (1) and paragraph (1), with the exception of the subparagraphs, of Article 75-8 of the Act means a corporation falling under any of the following: <Amended on Dec. 29, 2000; Jun. 3, 2011; Feb. 2, 2012; Feb. 12, 2019> |
| 1. | The State and local governments; |
| 2. | Non-profit corporations (excluding portions related to profit-making businesses referred to in Article 3 (1)). |
| (4) | "Business operator prescribed by Presidential Decree" referred to in Article 75-5 (1) of the Act means a business operator falling under any subparagraph of Article 158 (1). <Amended on Jun. 3, 2011; Feb. 12, 2019> |
| (6) | “Revenue prescribed by presidential decree" referred to in Article 75-6 (2) 1 of the Act means the amount on which an invoice is issued pursuant to Article 121 of the Act or the amount on which a tax invoice is issued pursuant to Article 32 of the Value-Added Tax Act. <Newly Inserted on Feb. 12, 2019> |
| (7) | "Ratio, calculated as prescribed by Presidential Decree" in Article 75-6 (2) 1 of the Act means the ratio of the number of days (where the period spans at least two business years, each business year is separately applied) from the day following the day that is three months after the day it met the requirements provided for in Article 117-2 (1) of the Act to the day before the day it became an affiliate merchant to the number of days of the business year in which it has failed to become an affiliate merchant. <Newly Inserted on Feb. 4, 2009; Feb. 12, 2019> |
| (8) | "Cases prescribed by Presidential Decree, such as those subject to insurance benefits under the National Health Insurance Act" in Article 75-6 (2) 3 of the Act mean any of the following cases: <Newly Inserted on Feb. 12, 2019> |
| (9) | "Unclear with regards to the descriptions prescribed by Presidential Decree" in Article 75-7 (1) 2 of the Act means cases classified as follows: <Amended on Feb. 15, 2013; Feb. 3, 2015; Feb. 12, 2019; May 4, 2021> |
| 1. | In the case of detailed statements: When falling under any of the following: |
| (a) | Where it is impossible to ascertain whether payment has been made, because no or wrong information is stated in the payment statement submitted, with regard to the address, name, identification number (resident registration number, if an identification number is substituted by the resident registration number) or business registration number of the payer or receiver, the type of income, the year of accrual of the income, or the amount of payment; |
| (b) | Where it is impossible to identify the issuer of securities, because no or wrong standard code of securities is stated in the payment statement or the payment statement of interest and dividend income submitted; |
| (c) | Where a financial company, which is a domestic corporation, states no or wrong tax category on the payment statement of interest and dividend income submitted by the financial company; |
| (d) | Where no or wrong information is stated, with regard to the deferred retirement income tax referred to in Article 202-2 (1) of the Enforcement Decree of the Income Tax. |
| 2. | In the case of simple payment statements: Where it is impossible to ascertain whether payment has been made, because no or wrong information is stated in the simple payment statement submitted, with regard to the address, name, identification number (resident registration number, if an identification number is substituted by the resident registration number) or business registration number of the payer or receiver, the type of income, the year of accrual of the income, or the amount of payment; |
| 3. | Deleted. <Feb. 12, 2019> |
| 4. | Deleted. <Feb. 12, 2019> |
| (11) | “Ratio prescribed by Presidential Decree” in Article 75-7 (4) of the Act means 5/100. <Newly Inserted on May 4, 2021; Feb. 28, 2023> |
| (12) | Where a corporation referred to in Article 120 of the Act files a report on the tax base or determines or corrects the tax base under Article 84, 85, or 87 of the Act due to its merger, division or dissolution, the amount of payment referred to in Article 75-7 of the Act shall be the amount to be submitted by the registration date of the merger, the registration date of the division, or the registration date of the dissolution. <Amended by on Feb. 15, 2013; Feb. 12, 2019; May 5, 2021> |
| (13) | "Where all or some matters to be stated, as prescribed by Presidential Decree, are not stated or falsely stated" in Article 75-8 (1) 1 of the Act means where the business registration numbers of, or the supply value for each customer are not stated or are falsely stated: Provided, That this shall not include where matters to be stated on the submitted aggregate tax invoice for individual suppliers are falsely stated by mistake, but the facts of the transaction are verifiable by the issued tax invoice. <Newly Inserted on Feb. 28, 2007; Jun. 3, 2011; Feb. 12, 2019; May 5, 2021> |
| (14) | "Matters to be stated, as prescribed by Presidential Decree" in Article 75-8 (1) 2 of the Act means matters to be stated under Article 211 (1) 1 through 4 of the Enforcement Decree of the Income Tax Act (hereafter in this paragraph referred to as "necessary stated matters"): Provided, That where some of the necessary matters stated on the issued invoice are falsely stated by mistake, but the facts of the transaction are verifiable based on other matters stated on the relevant invoice, such invoice shall not be deemed an invoice on which matters are falsely stated under Article 75-8 (1) 2 of the Act. <Amended on Feb. 19, 2005; Jun. 3, 2011; Feb. 12, 2019; May 4, 2021> |
| (15) | "Matters to be stated, as prescribed by Presidential Decree" in Article 75-8 (1) 3 of the Act means the business registration number of, and the supply value for each customer: Provided, That where the matters stated on the submitted aggregate invoice for individual suppliers or purchasers are falsely stated by mistake, but the facts of the transaction are verifiable by the issued or received invoice, it shall not be deemed an aggregate invoice for individual suppliers or purchasers on which matters are falsely stated under Article 75-8 (1) 3 of the Act. <Amended on Jun. 3, 2011; Feb. 12, 2019; May 4, 2021> |
| (16) | "Unclear with regard to the descriptions specified by Presidential Decree" in Article 75-9 (1) 2 of the Act means whole or partial omission or misstatement of an amount that shall be included in calculating distributable retained earnings, resulting in miscalculating the amount of distributable retained earnings. <Newly Inserted by Presidential Decree No. 25194, Feb. 21, 2014; Feb. 12, 2019; May 4, 2021> |
CHAPTER II-2 SPECIAL CASES CONCERNING CORPORATE TAXATION ON INCOME FOR EACH BUSINESS YEAR OF CORPORATE TAXABLE TRUST PROPERTY
SECTION 1 Common Provisions
| Article 120-2 (Start Date of Business Year of Corporate Taxable Trust Property) |
The start date of the first business year of trust property deemed a domestic corporation pursuant to Article 5 (2) of the Act (hereinafter referred to as “corporate taxable trust property”) shall be the date on which the trust is established pursuant to Article 3 of the Trust Act. [This Article Newly Inserted on Feb. 17, 2021]
| Article 120-3 (Designation of Place of Tax Payment of Corporate Taxable Trust Property) |
The commissioner of a competent regional tax office or the Commissioner of the National Tax Service may, in any of the following cases where the place of tax payment of corporate taxable trust property under Article 75-12 (4) of the Act is recognized as not appropriate, designate the place of its tax payment: | 1. | Where the location of the head office, etc. of a corporate tax trustee referred to in Article 75-10 of the Act (hereinafter referred to as “corporate tax trustee”) is not the same as the registered address; |
| 2. | Where it is recognized that there is a risk of tax evasion because the location of the head office, etc. of a corporate tax trustee is separate from its assets or place of business. |
[This Article Newly Inserted on Feb. 17, 2021]
SECTION 2 Tax Base and Calculation Thereof
| Article 120-4 (Income Deduction for Corporate Taxable Trust Property) |
| (1) | Where the amount of dividends deducted pursuant to Article 75-14 (1) of the Act exceeds the amount of income for the business year subject to the disposition of surplus for which the dividends are resolved, the excess amount shall be deemed to be nil. |
| (2) | A corporate tax trustee that wishes to be governed by Article 75-14 (1) of the Act shall file an application for income deduction in the form stipulated by Ordinance of the Ministry of Economy and Finance (hereafter in this Article referred to as “application for income deduction”) with the head of the tax office having jurisdiction over the place of tax payment, along with a report on the tax base provided for in Article 60 of the Act: |
| (3) | A corporate tax trustee that wishes to be governed by Article 75-14 (1) of the Act pursuant to the proviso to paragraph (2) of the same Article shall submit an application for income deduction referred to in paragraph (2), along with a written confirmation of the application of special case of taxation on partnership enterprise and the partnership taxation in the form stipulated by Ordinance of the Ministry of Economy and Finance which is submitted by the partnership enterprise that receives dividends (referring to those submitted by the filing deadline specified in Article 100-23 (1) of the Act on Restriction on Special Cases concerning Taxation). |
[This Article Newly Inserted on Feb. 17, 2021]
SECTION 3 Report, Payment and Collection
| Article 120-5 (Withholding Tax on Corporate Taxable Trust Property) |
| (1) | “Income prescribed by Presidential Decree” referred to in Article 75-18 (1) of the Act means each of the following: |
| (2) | “Financial companies, etc. prescribed by Presidential Decree" in Article 75-18 (1) of the Act mean corporations falling under any subparagraph of Article 111 (1). |
[This Article Newly Inserted on Feb. 17, 2021]
| Article 120-6 Deleted. <Dec 30, 2010> |
| Article 120-7 Deleted. <Dec 30, 2010> |
| Article 120-8 Deleted. <Dec 30, 2010> |
| Article 120-9 Deleted. <Dec 30, 2010> |
| Article 120-10 Deleted. <Dec 30, 2010> |
| Article 120-11 Deleted. <Dec 30, 2010> |
CHAPTER II-3 CORPORATE TAX ON INCOME OF EACH CONSOLIDATED BUSINESS YEAR
SECTION 1 Common Provisions
| Article 120-12 (Corporations Excluded from Application of Consolidated Tax Return System) |
| (1) | "Corporation prescribed by Presidential Decree, such as a non-profit corporation" in the former part of Article 76-8 (1) of the Act means any of the following: <Amended by Presidential Decree No. 22035, Feb. 18, 2010; Presidential Decree No. 23589, Feb. 2, 2012; Presidential Decree No. 27828, Feb. 3, 2017; Feb. 17, 2021; Feb. 28, 2023> |
| 1. | A non-profit domestic corporation; |
| 2. | A corporation in the process of liquidation due to dissolution; |
| 4. | A corporation consolidated and controlled by another domestic corporation as prescribed in subparagraph 10-2 of Article 2 of the Act (excluding a non-profit domestic corporation); |
| 5. | Deleted; <by Presidential Decree No. 22577, Dec. 30, 2010> |
| (2) | "Corporation prescribed by Presidential Decree, such as a corporation in the process of liquidation" in the former part of Article 76-8 (1) of the Act means any corporation referred to in paragraph (1) 2, 3, 6, or 7. <Amended by Presidential Decree No. 23589, Feb. 2, 2012> |
| (3) | "Domestic corporation that meets the requirements prescribed by Presidential Decree" in Article 76-8 (3) of the Act means a domestic corporation that meets each of the following requirements, whose business year referred to in subparagraph 1 does not coincide with the consolidated business year among the domestic corporations prescribed by Ordinance of the Ministry of Economy and Finance: <Newly Inserted by Presidential Decree No. 22035, Feb. 18, 2010; Presidential Decree No. 29269, Oct. 30, 2018> |
| 1. | That it is impossible to change the business year voluntarily because it is provided for in the applicable statues or regulations, etc.; |
| 2. | That the quarterly or semi-annual financial statements shall be prepared at the end of the consolidated business year pursuant to the applicable statues or regulations, etc., and the auditor's opinion must be obtained under subparagraph 7 of Article 2 of the Act on External Audit of Stock Companies. |
| (4) | Deleted. <Feb. 28, 2023> |
| (5) | Upon occurrence of the cause provided for in Article 76-8 (6) 1 of the Act, any consolidated subsidiary of a surviving corporation may apply the consolidated tax return system as follows: <Newly Inserted by Presidential Decree No. 22577, Dec. 30, 2010; Presidential Decree No. 24357, Feb. 15, 2013; Presidential Decree No. 29269, Oct. 30, 2018> |
| 1. | The period beginning on the first day of the consolidated business year of the surviving corporation under which the registration date of the merger falls and ending on the registration date of the merger: To apply the consolidated tax return system, deeming the relevant period to be one consolidated business year with the surviving corporation as the consolidated parent corporation. In such cases, the surviving corporation and its consolidated subsidiary shall submit the financial statements for the relevant period and the auditor's opinion under subparagraph 7 of Article 2 of the Act on External Audit of Stock Companies to the commissioner of the competent regional tax office through the head of the tax office having jurisdiction over the place of tax payment; |
| 2. | The period beginning on the following day of the registration date of the merger and ending on the last day of the consolidated business year of the surviving corporation, etc.: To apply the consolidated tax return system, deeming the relevant period to be one consolidated business year with the surviving corporation as the consolidated parent corporation. In such cases, where the surviving corporation is not a corporation newly established through the merger, the existing consolidated subsidiary shall apply the consolidated tax return system as before and the consolidated subsidiary of the merged corporation shall apply the consolidated tax return system by summing up the period deemed to be one consolidated business year; |
| 3. | Any surviving corporation, etc., which intends to apply the consolidated tax return system under subparagraph 2 shall submit a report on change (a request for application of the consolidated tax return system in cases of a newly established corporation) of the consolidated corporation in the form stipulated by Ordinance of the Ministry of Economy and Finance within one month from the registration date of the merger to the commissioner of the competent regional tax office through the head of the tax office having jurisdiction over the place of tax payment. |
| (6) | Upon occurrence of the cause provided for in Article 76-8 (6) 2 of the Act, any consolidated subsidiary of a consolidated parent corporation (hereafter in this paragraph referred to as "existing consolidated parent corporation") which becomes a wholly controlled subsidiary of another corporation (hereafter in this paragraph referred to as "changed consolidated parent corporation") through the comprehensive exchange or transfer of stocks (hereafter in this paragraph, referred to as "exchange, etc.") may apply the consolidated tax return system as follows: <Newly Inserted by Presidential Decree No. 22577, Dec. 30, 2010; Presidential Decree No. 24357, Feb. 15, 2013; Presidential Decree No. 29269, Oct. 30, 2018; Feb. 28, 2023> |
| 1. | The period beginning on the first day of the consolidated business year of the existing consolidated parent corporation under which the date on exchange, etc., falls and ending on the date of exchange, etc.: To apply the consolidated tax return system, deeming the relevant period to be one consolidated business year with the existing consolidated parent corporation as the consolidated parent corporation. In such cases, the existing consolidated parent corporation and its consolidated subsidiary shall submit the financial statements for the relevant period and the auditor's opinion under subparagraph 7 of Article 2 of the Act on External Audit of Stock Companies to the commissioner of the competent regional tax office through the head of the tax office having jurisdiction over the place of tax payment; |
| 2. | The period beginning on the following day of the date of exchange, etc., and ending on the last day of the consolidated business year of the changed consolidated parent corporation: To apply the consolidated tax return system, deeming the relevant period to be one consolidated business year with the changed consolidated parent corporation as the consolidated parent corporation. In such cases, where the changed consolidated parent corporation has made the comprehensive exchange of stocks, the existing consolidated subsidiary shall apply the consolidated tax return system as before and the existing consolidated parent corporation and its consolidated subsidiary shall apply the consolidated tax return system by summing up the period deemed to be one consolidated business year; |
| 3. | The changed consolidated parent corporation which intends to apply the consolidated tax return system under subparagraph 2 shall submit a report on change (a request for application of the consolidated tax return system in the case of the changed consolidated parent corporation newly established through the comprehensive transfer) of the consolidated corporation in the form stipulated by Ordinance of the Ministry of Economy and Finance within one month from the date of exchange, etc., to the commissioner of the competent regional tax office through the head of the tax office having jurisdiction over the place of tax payment. |
| (7) | Upon occurrence of the cause provided for in Article 76-8 (6) 3 of the Act, any consolidated subsidiary of a divided corporation which becomes a wholly controlled subsidiary of the corporation newly established through division may apply the consolidated tax return system as follows: <Newly Inserted by Presidential Decree No. 22577, Dec. 30, 2010; Presidential Decree No. 24357, Feb. 15, 2013; Presidential Decree No. 29269, Oct. 30, 2018; Feb. 28, 2023> |
| 1. | The period beginning on the first day of the consolidated business year of the divided corporation in which the registration date of the division falls and ending on the registration date of the division: To apply the consolidated tax return system, deeming the relevant period to be one consolidated business year with the divided corporation as the consolidated parent corporation. In such cases, where the divided corporation does not disappear in a division, the existing consolidated subsidiary shall apply the consolidated tax return system as before and the consolidated subsidiary of the divided corporation which becomes the consolidated subsidiary of the corporation established through division shall apply the consolidated tax return system by summing up the period deemed to be one consolidated business year; |
| 2. | The period beginning on the following day of the registration date of the division and ending on the last day of the consolidated business year of the corporation established through the division: To apply the consolidated tax return system, deeming the relevant period to be one consolidated business year with the corporation established through the division as the consolidated parent corporation. In such cases, the corporation established through division which intends to apply the consolidated tax return system shall submit a request for application of the consolidated tax return system in the form stipulated by Ordinance of the Ministry of Economy and Finance within one month from the registration date of the division to the commissioner of the competent regional tax office through the head of the tax office having jurisdiction over the place of tax payment; |
| 3. | In cases of subparagraph 1, where the divided corporation disappears upon division, the divided corporation and its consolidated subsidiary shall submit the financial statements for the relevant period and the auditor's opinion under subparagraph 7 of Article 2 of the Act on External Audit of Stock Companies to the commissioner of the competent regional tax office through the head of the tax office having jurisdiction over the place of tax payment. |
[This Article Newly Inserted by Presidential Decree No. 21302, Feb. 4, 2009]
| Article 120-13 (Requests for Application of Consolidated Tax Return System) |
| (1) | Any domestic corporation that intends to apply the consolidated tax return system and its wholly controlled subsidiary provided for in Article 76-8 (1) of the Act (hereafter referred to as "corporation, etc. subject to consolidation" in this Article) shall submit a request for application of the consolidated tax return system in the form stipulated by Ordinance of the Ministry of Economy and Finance to the commissioner of the competent regional tax office through the head of the tax office having jurisdiction over the place of tax payment within ten days before the start date of the first consolidated business year. <Amended by Presidential Decree No. 24357, Feb. 15, 2013; Presidential Decree No. 25194, Feb. 21, 2014; Feb. 28, 2023> |
| (2) | Any corporation, etc. subject to consolidation that submits a request for application of the consolidated tax return system under paragraph (1) shall also report the consolidated business year. In such cases, the corporation, etc. subject to consolidation, the consolidated business year of which does not coincide with the business year shall be deemed reported the change of its business year as prescribed in Article 7 (1) of the Act. |
| (3) | Upon receipt of a request submitted under paragraph (1), the commissioner of the competent regional tax office shall notify the requesting person, in writing, of whether the request is approved by no later than two months before the start date of the first consolidated business year, but if he/she fails to notify the relevant corporation thereof by such date, the request shall be deemed approved. <Amended by Presidential Decree No. 24357, Feb. 15, 2013; Presidential Decree No. 25194, Feb. 21, 2014> |
[This Article Newly Inserted by Presidential Decree No. 21302, Feb. 4, 2009]
| Article 120-14 (Revocation of Consolidated Tax Return System) |
| (1) | When the commissioner of the competent regional tax office having jurisdiction over the place of tax payment of a consolidated parent corporation revokes approval for applying the consolidated tax return system under Article 76-9 (1) of Act, he/she shall notify the consolidated parent corporation of the grounds for revocation in writing. <Amended by Presidential Decree No. 24357, Feb. 15, 2013> |
| (2) | "Extenuating circumstances specified by Presidential Decree" in the proviso to Article 76-9 (2) of the Act means circumstances in which a consolidated group who has the approval for application of the consolidated tax return system revoked on the ground specified in Article 76-9 (1) 6 of the Act obtains approval for the application of the consolidated tax return system based on a new parent corporation (referring to another domestic corporation referred to in Article 76-9 (1) 6 of the Act) by filing an application therefor within one months from the date of revocation of approval. <Newly Inserted by Presidential Decree No. 26981, Feb. 12, 2016> |
| (3) | "Amount prescribed by Presidential Decree" in Article 76-9 (3) of the Act means losses incurred to the relevant corporation among the amount referred to in Article 76-13 (1) 1 of the Act, which have not been deducted from the tax base calculated for each consolidated business year. |
[This Article Newly Inserted by Presidential Decree No. 21302, Feb. 4, 2009]
| Article 120-15 (Reporting on Abandonment of Consolidated Tax Return System) |
When a consolidated parent corporation intends to abandon the consolidated tax return system under Article 76-10 (1) of the Act, it shall file a report of abandonment of the consolidated tax return system in the form stipulated by Ordinance of the Ministry of Economy and Finance with the Commissioner of the competent regional tax office through the head of the tax office having jurisdiction over the place of tax payment. <Amended by Presidential Decree No. 24357, Feb. 15, 2013> [This Article Newly Inserted by Presidential Decree No. 21302, Feb. 4, 2009]
| Article 120-16 (Reporting on Change of Consolidated Corporations) |
| (1) | When a consolidated parent corporation reports any change in its consolidated subsidiaries under Article 76-11 (3) of the Act, it shall file a report on change of consolidated corporations in the form stipulated by Ordinance of the Ministry of Economy and Finance with the commissioner of the competent regional tax office through the head of the tax office having jurisdiction over the place of tax payment. <Amended by Presidential Decree No. 24357, Feb. 15, 2013> |
| (2) | "Extenuating circumstances specified by Presidential Decree" in the proviso to Article 76-12 (2) of the Act, with the exception of its subparagraphs, means circumstances in which a consolidated subsidiary is dissolved due to bankruptcy or a consolidated subsidiary is dissolved as it is merged into another consolidated subsidiary. <Newly Inserted by Presidential Decree No. 26981, Feb. 12, 2016> |
[This Article Newly Inserted by Presidential Decree No. 21302, Feb. 4, 2009]
SECTION 2 Tax Base and Computation Thereof
| Article 120-17 (Tax Base) |
| (1) | "Consolidated corporations specified by Presidential Decree" in the proviso to Article 76-13 (1) of the Act means the corporations referred to in the subparagraphs of Article 10 (1). <Newly Inserted by Presidential Decree No. 26981, Feb. 12, 2016> |
| (2) | In the application of Article 76-13 (1) 1 of the Act, losses first incurred for the business year shall be first deducted. |
| (3) | An amount equivalent to losses referred to in Article 120-14 (2) of a corporation that does not apply the consolidated tax return system under Article 76-12 (3) of the Act shall be deducted from losses referred to in Article 76-13 (1) 1 of the Act. <Amended by Presidential Decree No. 26981, Feb. 12, 2016> |
| (4) | "Amount of income prescribed by Presidential Decree" in Article 76-13 (3) 1 of the Act means the amount (hereafter in this Chapter referred to as "individually allotted amount of consolidated income") calculated by applying one of the following formulas: <Feb. 28, 2023> |
| Amount of income for each consolidated business year pursuant to Article 76-14 (1) of the Act x Amount pursuant to Article 76-14 (1) 1 through 4 of the Act of the relevant corporation (limited to when the amount is greater than 0) / Sum total of the amounts pursuant to Article 76-14 (1) 1 through 4 of the Act of a consolidated group (limited to when the amount is greater than 0) |
|
| Amount of income for each consolidated business year pursuant to Article 76-14 (1) of the Act x Amount pursuant to Article 76-14 (1) 1 through 4 of the Act of the relevant corporation / Sum total of the amounts pursuant to Article 76-14 (1) 1 through 4 of the Act of a consolidated group |
|
| (5) | Where the amount of income computed under Article 76-14 (1) of the Act for each consolidated business year is less than zero, the amount allocated to each consolidated corporation from the relevant amount shall be the amount computed by the following formula: |
| Losses for each consolidated business year computed pursuant to Article 76-14 (1) of the Act × Amount computed pursuant to Article 76-14 (1) 1 through 4 of the Act of the relevant corporation (limited to when the amount is less than zero) / Sum total of the amounts computed under Article 76-14 (1) 1 through 4 of the Act of each consolidated corporation (limited to when the amount is less than zero) |
|
| (6) | In the application of paragraph (3) and Article 120-14 (3), where losses have incurred to at least two consolidated corporations in the same business year, the losses incurred to the relevant consolidated corporation shall be first deducted up to the individually allotted amount of consolidated income when the tax base for the consolidated business year is calculated, and losses of at least two other consolidated corporations that have not incurred from the relevant corporation shall be deemed deducted respectively in proportion to the scale of the relevant losses. <Amended by Presidential Decree No. 26981, Feb. 12, 2016> |
[This Article Newly Inserted by Presidential Decree No. 21302, Feb. 4, 2009]
| Article 120-18 (Deferment of Profits or Losses from Transfer of Assets between Consolidated Corporations) |
| (1) | "Assets prescribed by Presidential Decree, such as tangible and intangible assets" in Article 76-14 (1) 3 of the Act means the following assets (hereafter in this Chapter referred to as "transfer profit or loss deferred assets"), which are located in the Republic of Korea at the time of transfer: Provided, That assets falling under subparagraphs 1 through 3, the book value of which per transaction does not exceed 100 million won, may be excluded from the transfer profit or loss deferred assets. <Amended on Feb. 12, 2019> |
| 1. | Tangible assets (excluding buildings) provided for in Article 24 (1) 1; |
| 2. | Intangible assets provided for in Article 24 (1) 2; |
| 3. | Claims, such as account receivables, loans and amount receivables; |
| (2) | In applying Article 76-14 (1) 3 of the Act, capital gains or losses of a consolidated corporation (hereafter referred to as "transferor corporation" in this Article) that arise from the transfer of profit or loss deferred assets to another consolidated corporation (hereafter referred to as "transferee corporation" in this Article) shall not be included in the gross income or deductible expenses; however, the amount computed by the following formula shall be included in the gross income or deductible expenses of the transferor corporation for the business year in which the day any of the following causes occurred to the transferee corporation falls: Provided, That this shall not apply where Article 52 (1) of the Act is applied to the transfer of transfer profit or loss deferred assets: <Amended on Feb. 15, 2022> |
| 1. | Where capital gains or losses from transfer are depreciated: |
| Capital gains or losses from transfer x Amount of depreciation / Book value of the transferee corporation |
|
| 2. | Where the transfer profit or loss deferred assets are transferred (excluding cases of transferring to another consolidated corporation): |
| Capital gains or losses from transfer× Rate of transfer of transfer profit or loss deferred assets |
|
| 3. | Where bad debts are incurred to the transfer profit or loss deferred assets, or such transfer profit or loss deferred assets are destroyed: |
| Capital gains or losses from transfer × Amount of bad debts or destroyed amount / Book value of the transferee corporation |
|
| 4. | Where the payment of transferred claims becomes due: |
| Transfer price of the transferor corporation - Book value of the transferor corporation |
|
| Capital gains or losses from transfer x Book value of the retired assets / Book value of the transferee corporation |
|
| (3) | The amount included in the gross income or deductible expenses under paragraph (2) 1 may be calculated by the following formula instead of the formula referred to in paragraph (2) 1. In such cases, the number of months shall be calculated based on the calendar months; however, the number of days that is less than one month shall be counted as one month: |
Capital gains or losses from transfer × Number of months of the relevant business year / Number of months that have not passed among the service life of transfer profit or loss deferred assets
| (4) | Where the consolidated tax return system ceases to be applied to the transferor corporation or transferee corporation, the amount remaining after inclusion in the gross income or deductible expenses under the subparagraphs of paragraph (2) among the amount not included in the gross income or deductible when the transferor corporation transfers the transfer profit or loss deferred assets under paragraph (2) shall be included in the gross income or deductible expenses of the transferor corporation for the business year in which the date such corporation ceases to apply the consolidated tax return system falls. <Amended by Presidential Decree No. 23589, Feb. 2, 2012> |
| (5) | Where a transferor corporation or transferee corporation merges with another consolidated corporation, the surviving corporation shall be deemed a transferor corporation or transferee corporation for purposes of paragraph (2). |
| (6) | Where a transferor corporation is divided, the amount not included in the gross income or deductible expenses under paragraph (2) shall be respectively succeeded to by a divided corporation or corporation established through the division (including a counterpart corporation to a merger and division; hereafter the same shall apply in this Article) by proportionally distributing such gross income or deductible expenses based on the net asset as at the registration date of the division, and where a transferee corporation is divided and a corporation established through the division succeeds to the transfer profit or loss deferred assets, the corporation established through the division shall be deemed assumed charge of the relevant assets for purposes of paragraph (2). |
| (7) | Matters necessary for deferring capital gains or losses from transfer shall be prescribed by Ordinance of the Ministry of Economy and Finance including the calculation, etc. of the amount of income in cases where a transferee corporation that holds securities acquired from a consolidated corporation and the securities of the same kind acquired from a corporation, other than the consolidated corporation, transfers such securities. |
| (8) | Where there is any amount that a consolidated corporation does not include in deductible expenses under Article 34 (1) of the Act (hereafter referred to as "amount not included in deductible expenses" in this paragraph), the amount not included in deductible expenses shall be distributed in proportion to the amount of appropriation for bad debts per claim initially counted as deductible expenses and the amount computed by subtracting the amount not included in deductible expenses distributed from the amount equivalent to appropriation for bad debts earmarked for claims against another consolidated corporation shall not be included in deductible expenses under Article 76-14 (1) 3 of the Act. <Newly inserted by Presidential Decree No. 23589, Feb. 2, 2012; Feb. 12, 2019> |
[This Article Newly Inserted by Presidential Decree No. 21302, Feb. 4, 2009]
| Article 120-19 (Non-Inclusion of Dividend Income in Gross Income of Consolidated Corporation) |
| (1) | The amount not included in the gross income calculated by applying mutatis mutandis Article 18-2 of the Act, deeming a consolidated group to be one domestic corporation under Article 76-14 (1) 4 of the Act shall be allocated to the relevant consolidated corporation according to the rate of investment by the relevant consolidated corporation from the sum total of the investment rates of each consolidated corporation invested in the domestic corporation that has paid the dividend income, and shall not be included in the gross income. <Amended by Presidential Decree No. 23589, Feb. 2, 2012; Feb. 28, 2023> |
| (2) | In applying paragraph (1), the rate of investment provided for in Articles 18-2 (1) 1 of the Act shall be calculated by adding up the rates of investment of each consolidated corporation in the domestic corporation that has paid the dividend income, and loans and the interest thereon under subparagraph 2 of the same paragraph shall be calculated by adding up the loans and the interest thereon of each consolidated corporation, but less the loans and interest thereon (excluding where Article 52 (1) of the Act applies to the relevant loan transaction) between consolidated corporations. <Amended by Presidential Decree No. 23589, Feb. 2, 2012; Feb. 12, 2019; Feb. 28, 2023> |
| (3) | In applying paragraph (1), the total assets on a statement of financial position according to the formula of Articles 17-2 (3) shall be equal to the aggregate of the total assets on the statement of financial position of each consolidated corporation (referring to the amount after removing assets specified by Ordinance of the Ministry of Economy and Finance, such as loans to consolidated corporations, accounts receivable from sales to consolidated corporations, and equity stocks of consolidated corporations). <Amended by Presidential Decree No. 23589, Feb. 2, 2012; Presidential Decree No. 24357, Feb. 15, 2013; Feb. 12, 2019; Feb. 28, 2023> |
[This Article Newly Inserted by Presidential Decree No. 21302, Feb. 4, 2009]
| Article 120-20 (Non-Inclusion of Donations in Deductible Expenses of Consolidated Corporation) |
| (1) | The sum total of the following amounts shall be the amount allocated to each consolidated corporation among the amounts not included in the deductible expenses calculated by applying mutatis mutandis Article 24 of the Act, deeming a consolidated group to be one domestic corporation under Article 76-14 (1) 4 of the Act: <Amended by Presidential Decree No. 22577, Dec. 30, 2010; Presidential Decree No. 23589, Feb. 2, 2012; Feb. 12, 2019; Feb. 17, 2021> |
| 1. | A donation expended by the relevant consolidated corporation, which is a donation other than the donations provided for in Article 24 (2) 1 and (3) 1 of the Act; |
| 2. | The amount computed by the following formula with respect to the donations provided for in Article 24 (2) 1 and (3) 1 of the Act: |
| An amount not includible in deductible expenses of the relevant donations calculated by deeming a consolidated group to be one domestic corporation × The relevant donation expended by the relevant consolidated corporation x The sum total of relevant donations expended by each consolidated corporation |
|
| (2) | Where the amount in excess of the ceiling on inclusion in deductible expenses of donations prescribed in Article 24 (3) 1 of the Act and donations prescribed in paragraph (2) 1 of the same Article not included in deductible expenses under Article 76-14 (1) 4 of the Act is carried forward and included in deductible expenses under Article 24 (4) of the Act, the amount in excess of the ceilings on inclusion in deductible expenses for the business year that first incurs shall be included in deductible expenses and the amount allocated to each consolidated corporation among the amounts carried forward and included in deductible expenses shall be computed by the following formula: <Newly Inserted by Presidential Decree No. 23589, Feb. 2, 2012; Feb. 12, 2019; Feb. 11, 2020; Feb. 17, 2021> |
| An amount included in deductible expenses out of the amount carried over for exceeding the ceilings on inclusion in deductible expenses calculated by deeming a consolidated group to be one domestic corporation × An amount in excess of the ceilings on inclusion in deductible expenses of the relevant donations of the relevant consolidated corporation x The sum total of amount in excess of the ceilings on inclusion in deductible expenses of the relevant donation of each consolidated corporation |
|
[This Article Newly Inserted by Presidential Decree No. 21302, Feb. 4, 2009]
| Article 120-21 (Non-Inclusion of Business Promotion Expenses in Deductible Expenses of Consolidated Corporation) |
| (1) | The sum total of the following amounts shall be the amount allocated to each consolidated corporation among the amounts not included in deductible expenses calculated by applying mutatis mutandis Article 25 of the Act, deeming a consolidated group to be one domestic corporation under Article 76-14 (1) 4 of the Act: <Amended on Feb. 12, 2019; Feb. 28, 2023> |
| 1. | The amount calculated by the following formula, out of the amount not included in deductible expenses under Article 25 (4) of the Act: |
| The amount of business promotion expense not included in the deductible expenses calculated by deeming a consolidated group to be one domestic corporation × An amount expended for business promotion expenses by the relevant consolidated corporation / The sum total of amounts expended for business promotion expenses by each relevant consolidated corporation |
|
| 2. | The amount expended by the relevant consolidated corporation among the amounts not included in deductible expenses under Article 25 (2) of the Act. |
| (2) | In applying paragraph (1), the revenue amount referred to in Article 25 (4) 2 of the Act shall be the amount computed by subtracting the revenue amount upon the transfer of transfer gain or loss deferred assets between consolidated corporations from the sum total of the revenue amount of each consolidated corporation. <Amended on Feb. 12, 2019> |
[This Article Newly Inserted by Presidential Decree No. 21302, Feb. 4, 2009]
[Title Amended on Feb. 28, 2023]
SECTION 3 Computation of Amount of Tax
| Article 120-22 (Calculated Tax Amount of Each Consolidated Corporation) |
| (2) | The calculated amount of tax of each consolidated corporation under Article 76-15 (4) of the Act shall be an amount computed by multiplying the amount under subparagraph 1 by the rate under subparagraph 2. In such cases, where there is corporate tax on the capital gains from the transfer of land, etc., under Article 55-2 of the Act, it shall be added thereto: |
| 1. | The amount (hereafter referred to as "individually reverted amount of tax base" in this Chapter) computed by subtracting losses (referring to the amount deducted from the individually reverted amount of consolidated income of the relevant consolidated corporation) deducted when calculating the tax base for each consolidated business year under Article 76-13 (1) of the Act, and the non-taxable income and income deduction of the relevant consolidated corporation from the individually reverted amount of consolidated income of the relevant consolidated corporation; |
| 2. | The rate (hereafter referred to as "consolidated tax rate" in this Chapter) of the amount of the calculated consolidation tax (excluding corporate tax on capital gains from the transfer of land, etc., under Article 55-2 of the Act) under Article 76-15 (1) of the Act to tax base on the income for the consolidated business year under Article 76-13 (1) of the Act. |
| (3) | Where losses of another consolidated corporation is deducted from the individually reverted amount of consolidated income of at least two consolidated corporations when the individually reverted amount of tax base of each consolidated corporation is calculated pursuant to paragraph (2), such losses shall be deducted in proportion to the scale of each individually reverted amount of consolidated income (referring to the amount computed after subtracting losses incurred to the relevant corporation). <Amended on Feb. 3, 2015; Feb. 28, 2023> |
[This Article Newly Inserted by Presidential Decree No. 21302, Feb. 4, 2009]
| Article 120-23 (Tax Reductions or Exemptions for Consolidated Corporation) |
| (1) | In the application of Article 76-16 (1) and (2) of the Act, the amount of tax reduction or exemption for each consolidated corporation shall be the amount computed by multiplying the tax-reduced or tax-exempt income by the consolidated tax rate (in cases of reduction, the amount computed by multiplying such amount by the relevant reduction rate). In such cases, the tax-reduced or tax-exempt income shall be limited to the individually allotted amount of tax base and Article 96 shall apply mutatis mutandis to the calculation thereof. <Amended by Presidential Decree No. 23589, Feb. 2, 2012; Presidential Decree No. 25194, Feb. 21, 2014> |
| (2) | The amount to be allocated to each consolidated corporation out of the tax amount not eligible for tax credits or tax reduction because it falls short of the minimum amount of corporate tax provided for in Article 132 (1) of the Restriction of Special Taxation Act as a result of the application of Article 76-16 (1) or (2) of the Act shall be computed by the following formula. In such cases, the tax amount reduced by including deductible expenses or deducting income under Article 132 (1) 1 or 2 of the Restriction of Special Taxation Act shall be included in the computation, and the reduced tax amount shall be computed by multiplying the amount of deductible expenses included or income deducted by the consolidated tax rate: <Newly Inserted on Feb. 12, 2016; Feb. 12, 2019> |
| Tax amount that falls short of the minimum amount of corporate tax, as computed by deeming that a consolidated group is one domestic corporation x (Tax credits, tax reduction, etc. of the relevant consolidated corporation, as specified in any subparagraph of Article 132 (1) of the Act on Restriction on Special Cases concerning Taxation / Sum of tax credits, tax reductions, etc. of each consolidated corporation, as specified in any subparagraph of Article 132 (1) of the Act on Restriction on Special Cases concerning Taxation). |
|
[This Article Newly Inserted by Presidential Decree No. 21302, Feb. 4, 2009]
SECTION 4 Tax Return and Payment
| Article 120-24 (Filing Reports on Consolidated Tax) |
| (1) | The report referred to in Article 76-17 (1) of the Act shall be filed by a report on the tax base and amount of corporate tax on income for each consolidated business year in the form stipulated by Ordinance of the Ministry of Economy and Finance. |
| (2) | A consolidated parent corporation that wishes to qualify for the proviso to Article 76-17 (1) of the Act shall submit an application for extension of the filing deadline in the form 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 by three days before the expiration of the filing deadline specified under the main sentence of Article 76-17 (1). <Newly Inserted by Presidential Decree No. 22035, Feb. 18, 2010; Presidential Decree No. 26981, Feb. 12, 2016> |
| (3) | The adjustment statement on the amount of consolidated income referred to in Article 76-17 (2) 1 of the Act means the adjustment statement on the amount of consolidated income in the form stipulated by Ordinance of the Ministry of Economy and Finance. |
| (4) | "Documents prescribed by Presidential Decree, such as the investment and details of transactions between consolidated corporations" in Article 76-17 (2) 3 of the Act means the investment status report between consolidated corporations and the detailed statement of transactions between consolidated corporations in the form stipulated by Ordinance of the Ministry of Economy and Finance. <Amended by residential Decree No. 22951, Jun. 3, 2011> |
[This Article Newly Inserted by Presidential Decree No. 21302, Feb. 4, 2009]
| Article 120-25 (Consolidated Interim Prepayment) |
| (1) | The interim tax by consolidated corporation referred to in Article 76-18 (4) of the Act shall be an amount computed by multiplying the amount computed by dividing the amount computed by subtracting the following amounts from the calculated amount of tax of each consolidated corporation (including additional tax, however, excluding corporate tax on capital gains from the transfer of land, etc. under Article 55-2 of the Act) fixed in the immediately preceding consolidated business year by the number of months of the immediately preceding business year by six: |
| 1. | The reduced or exempted amount of corporate tax of the relevant consolidated corporation in the immediately preceding consolidated business year; |
| 2. | The amount of withholding tax paid as corporate tax by the relevant consolidated corporation in the immediately preceding consolidated business year. |
| (2) | Where a consolidated parent corporation calculates the consolidated interim tax as prescribed in Article 76-18 (1) 2 of the Act, the interim tax by consolidated corporation shall be an amount computed by subtracting the following amounts from the calculated amount of tax of each consolidated corporation computed under Article 120-22 by deeming the relevant interim prepayment period to be one business year, notwithstanding paragraph (1): <Amended on Feb. 12, 2019> |
| 1. | The reduced or exempted amount of corporate tax of the relevant consolidated corporation in the relevant interim prepayment period; |
| 2. | The amount of withholding tax paid as corporate tax by the relevant consolidated corporation in the relevant interim prepayment period. |
[This Article Newly Inserted by Presidential Decree No. 21302, Feb. 4, 2009]
CHAPTER III CORPORATE TAX ON LIQUIDATION INCOME OF DOMESTIC CORPORATIONS
SECTION 1 Tax Base and Calculation Thereof
| Article 120-26 (Scope of Corporate Restructuring) |
"Cases prescribed by Presidential Decree" in subparagraph 3 of Article 78 of the Act means the following cases: <Amended by Presidential Decree No. 26068, Feb. 3, 2015; Presidential Decree No. 27828, Feb. 3, 2017> | 1. | Where a law firm is restructured to a law firm with limited liability pursuant to the Attorney-at-Law Act; |
| 2. | Where a licensed customs brokerage corporation is restructured to a customs brokerage corporation pursuant to the Licensed Customs Broker Act; |
| 3. | Where a patent firm is restructured to a patent firm with limited liability pursuant to the Patent Attorney Act; |
| 5. | Where a local government-invested public corporation is restructured to a local government public corporation, or a local government public corporation is restructured to a local government-invested public corporation, pursuant to Article 80 of the Local Public Enterprises Act. |
[This Article Newly Inserted by Presidential Decree No. 25194, Feb. 21, 2014]
| Article 121 (Calculation of Liquidation Income Accruing from Dissolution) |
| (1) | The value of residual assets referred to in Article 79 (1) of the Act shall be the total amount of assets minus the total amount of liabilities. |
| (2) | "Total amount of assets" in paragraph (1) shall be the sum of all assets as at the registration date of the dissolution, and debentures to be collected and assets to be converted into cash shall be the amounts under each of the following subparagraphs: |
| 1. | For debentures to be collected and assets to be converted into cash, the amount as at the date of collection or conversion; |
| 2. | For cases of distribution prior to collection or conversion, the amount evaluated based on the market price as at the date of distribution. |
| (3) | "Losses carried forward prescribed by Presidential Decree" in the main sentence of Article 79 (4) of the Act means the losses carried forward as provided for in Article 16 (1): Provided, That the amount of losses carried forward already offset or deemed offset from the total amount of equity capital shall be excluded. <Newly Inserted by Presidential Decree No. 17457, Dec. 31, 2001; Presidential Decree No. 19328, Feb. 9, 2006; Presidential Decree No. 22951, Jun. 3, 2011; Feb. 12, 2019> |
| Articles 122 and 123 Deleted. <by Presidential Decree No. 22184, Jun. 8, 2010> |
SECTION 2 Reports and Payments
| Article 124 (Final Reports) |
| (1) | When filing a report under Article 84 (1) of the Act, a report on corporate tax base and tax amount on liquidation income in the form stipulated by Ordinance of the Ministry of Economy and Finance, which states the amount of liquidation income computed under Article 79 of the Act, shall be filed with the head of the tax office having jurisdiction over the place of tax payment, along with the documents provided for in each subparagraph of Article 84 (2) of the Act. <Amended by Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 22184, Jun. 8, 2010> |
| (2) | "Documents prescribed by Presidential Decree" in Article 84 (2) 2 of the Act means documents stating any of the following: <Amended by Presidential Decree No. 22184, Jun. 8, 2010; Presidential Decree No. 22951, Jun. 3, 2011> |
| 1. | For dissolution (excluding dissolution due to a merger or division), the location of the headquarters, etc. of the dissolved corporation, the name and address or residence of the liquidator, the date of the determination of the value of the residual assets and the expected date of distribution, and other necessary matters; |
| 2. | Deleted. <by Presidential Decree No. 22184, Jun. 8, 2010> |
| (3) | "Date the value of the residual assets prescribed by Presidential Decree is determined" in Article 84 (1) 1 of the Act means the following dates: <Amended by Presidential Decree No. 22951, Jun. 3, 2011> |
| 1. | The date of completion of the collection or conversion of the residual assets as of the registration date of dissolution; |
| 2. | Where the residual assets as of the registration date of dissolution are distributed as they are, the date of completion of distribution. |
| Article 125 (Interim Reports) |
| (1) | Where filing a report under Article 85 (1) of the Act, a report on corporate tax base and tax amount on liquidation income in the form stipulated by Ordinance of the Ministry of Economy and Finance, which states the amount of liquidation income computed under Article 86 (3) and (4) of the Act, shall be filed with the head of the tax office having jurisdiction over the place of tax payment, along with the documents provided in each subparagraph of Article 85 (2) of the Act. <Amended by Presidential Decree No. 20720, Feb. 29, 2008> |
| (2) | "Documents prescribed by Presidential Decree" in Article 85 (2) of the Act means documents stating the matters provided for in Article 124 (2) 1. <Amended by Presidential Decree No. 22951, Jun. 3, 2011> |
| (1) | Where the corporate tax on liquidation income is paid under Article 86 of the Act, it shall be paid along with the report provided for in Article 84 or 85 of the Act at the tax office having jurisdiction over the place of tax payment. In such cases, Article 101 (1) shall apply mutatis mutandis. |
| (2) | "Estimated value of the residual assets prescribed by Presidential Decree" in Article 86 (4) of the Act means the sum of the assets evaluated based on the market price as at the first anniversary of the registration date of the dissolution minus the total amount of liabilities. <Amended by Presidential Decree No. 22951, Jun. 3, 2011> |
| Article 127 Deleted. <by Presidential Decree No. 23589, Feb. 2, 2012> |
CHAPTER IV CORPORATE TAX ON INCOME OF FOREIGN CORPORATIONS FOR EACH BUSINESS YEAR
SECTION 1 Tax Base and Calculation Thereof
| Article 128 (Calculation of Tax Base) |
In calculating the corporate tax base on the income of a foreign corporation for each business year under Article 91 (1) of the Act, Article 10 (3) shall apply mutatis mutandis to the deduction of losses referred to in Article 91 (1) 1 of the Act. <Amended by Presidential Decree No. 26981, Feb. 12, 2016; Feb. 12, 2019>
| Article 129 (Calculation of Amount of Domestic Source Income) |
| (1) | In calculating the total amount of domestic source income of a foreign corporation for each business year under Article 92 of the Act, the gross income and deductible expenses shall be calculated pursuant to the following subparagraphs, except as otherwise provided for in the Act or this Decree: <Amended by Presidential Decree No. 17457, Dec. 31, 2001; Presidential Decree No. 21302, Feb. 4, 2009; Presidential Decree No. 22035, Feb. 18, 2010; Presidential Decree No. 23589, Feb. 2, 2012; Presidential Decree No. 25194, Feb. 21, 2014; Feb. 12, 2019; Feb. 11, 2020; Feb. 17, 2021> |
| 1. | Deductible expenses provided for in Article 14 of the Act shall be limited to the revenue amount and asset value related to domestic source income provided in Article 93 of the Act and the amount reasonably distributed to such domestic source income; |
| 2. | Where retirement benefit appropriation funds are earmarked under Article 33 of the Act, such funds shall be limited to those for executive officers or employees of the relevant foreign corporation who are employed in the Republic of Korea for the business operated by the relevant foreign corporation in the Republic of Korea and ordinarily work at the domestic place of business under Article 94 of the Act (hereinafter referred to as "domestic place of business") or at the location where the domestically sourced real estate income provided for in subparagraph 3 of Article 93 of the Act accrues; |
| 3. | Corporate tax, local corporate income tax, fines, minor fines, administrative fines, surcharges, forced collection charges, public charges, etc. referred to in subparagraphs 1, 3, 4 and 5 of Article 21 of the Act shall include those imposed under the law of any foreign country; |
| 4. | Tangible assets provided for in Article 24 (1) 1 and intangible assets provided for in subparagraph 2 (a) through (d) of Article 24 (1) shall be limited to the business assets that revert to the domestic place of business out of the tangible and intangible assets held by the relevant foreign corporation; |
| 5. | When the relevant foreign corporation ceases to have a domestic place of business during the period of a long term installment plan under Article 68 (4), the uncollected sales or transfer amount and the corresponding expenses shall be included respectively in the gross income and deductible expenses in the business year in which it ceases to have a domestic place of business; |
| 6. | Intangible assets provided in Article 24 (1) 2 (f) and (g) shall be limited to the intangible assets of the relevant foreign corporation, which revert to the business operated by such foreign corporation in the Republic of Korea or are related to the assets that revert to the domestic place of business; |
| 7. | Where a stock option, etc. prescribed by Ordinance of the Ministry of Economy and Finance that was granted to the executive officers and employees of a Korean branch of a foreign corporation prescribed by Ordinance of the Ministry of Economy and Finance is exercised or paid, the amount equivalent to the income accrued from the supply of labor in the Republic of Korea among the amounts compensated to the foreign corporation by its Korean branch as the expense for such exercise or payment, shall be included in deductible expenses. |
| (2) | The sales costs, general management costs, and other expenses incurred at any domestic place of business which is unrelated to the accrual of domestic source income as prescribed by Ordinance of the Ministry of Economy and Finance shall not be included in deductible expenses provided in Article 14 of the Act. <Amended by Presidential Decree No. 20720, Feb. 29, 2008> |
| (3) | "Acquisition value and transfer expenses of the relevant securities verified, as prescribed by Presidential Decree" in Article 92 (2) 1 (a) of the Act means the following amount among the acquisition value and transfer expenses of the relevant securities verified by the receipt for payment of equity investments or shares, transfer deeds, receipt of payment of proceeds, or other data substantiating the amount expended for investments, acquisition or transfer, that are submitted by the transferor of such securities or his/her agent under Article 132 (8) to the relevant person liable for withholding by the date of withholding: <Amended by Presidential Decree No. 17033, Dec. 29, 2000; Presidential Decree No. 20619, Feb. 22, 2008; Presidential Decree No. 22577, Dec. 30, 2010; Feb. 17, 2021; Feb. 15, 2022; Mar. 8, 2022> |
| 1. | The amount actually and directly expended to acquire or transfer the relevant securities (including tax, public charges, and brokerage commission directly paid for the acquisition or transfer): Provided, That where the relevant securities are the investment certificates or stocks which include the amounts accruing from the conversion of all or some of the surpluses of the corporation into the capital or financing, it shall be the amount computed by applying mutatis mutandis Article 14 (2); |
| 2. | The acquisition value of securities transferred by the donee or any corresponding person shall be the amount computed as provided for in subparagraph 1 by deeming that the original donator or any corresponding person to be the transferor of the relevant securities: Provided, That if the relevant securities are taxed under subparagraph 10 (c) of Article 93 of the Act, the acquisition value of such securities shall be the market price at the time of donation; |
| 3. | The acquisition value of securities acquired due to a capital transaction falling under any item of Article 88 (1) 8 or Article 88 (1) 8-2 shall be the sum total of the amount computed under subparagraph 1 and the amount provided in Article 132 (14). |
| (4) | “Amount prescribed by Presidential Decree” referred to in Article 92 (2) 1 (b) of the Act mean the amount of one virtual asset indicated by a virtual asset service provider or similar service provider prescribed in subparagraph 1 (n) of Article 2 of the Act on Reporting and Using Specified Financial Transaction Information (hereinafter referred to as “virtual asset service provider, etc.”) that keeps and manages the relevant virtual assets at the time a foreign corporation withdraws the virtual assets, multiplied by the number of virtual assets withdrawn. <Newly Inserted on Mar. 8, 2022> |
| (5) | "Acquisition value, etc. prescribed by Presidential Decree" referred to in Article 92 (2) 1 (b) of the Act means the amount calculated in accordance with the provisions on calculating the necessary expenses of virtual assets prescribed in Article 37 (1) 3, (5) and (6) of the Income Tax Act: Provided, That where a foreign corporation directly receives virtual assets from a virtual asset service provider, etc., the acquisition value of the received virtual assets shall be the value of one virtual asset indicated by the relevant virtual asset service provider at the time of receipt, multiplied by the quantity of received virtual assets. <Newly Inserted on Mar. 8, 2022> |
| (6) | When calculating the amount of income and acquisition value pursuant to paragraphs (4) and (5), if the value of virtual assets is not indicated in an amount of money, the amount shall be calculated by applying mutatis mutandis Article 88 (3) and (4) of the Enforcement Decree of the Income Tax Act. In such cases, "exchange transaction" shall be deemed "receipt or withdrawal of virtual assets". <Newly Inserted on Mar. 8, 2022> |
[Enforcement Date: January 1, 2025] Article 129
| Article 129-2 (Calculation of Capital Gains for Foreign Corporation without Domestic Place of Business) |
| (1) | "Land, etc. prescribed by Presidential Decree" in the proviso to Article 92 (3) 1 of the Act means the land, etc. transferred within three years from the date on which such land, etc, is contributed: Provided, That the same shall not apply to any land, etc. directly used for any of the following business (excluding the profit-making business provided for in Article 3 (1) with the exception of the health service business) for at least one year: <Amended by Presidential Decree No. 22577, Dec. 30, 2010; Presidential Decree No. 28640, Feb. 13, 2018; Feb. 12, 2019> |
| 1. | Any business prescribed by statutes or regulations; |
| 2. | Any business permitted or authorized by the relevant administrative agency. |
| (2) | paragraph (1) shall not apply where a reason for imposing tax arises with respect to any contributed property which is not included in the taxable value of the inheritance tax or gift tax under the Inheritance Tax and Gift Tax Act and an amount equivalent to the total amount of such inheritance tax or gift tax not included in such taxable value is imposed accordingly. <Amended by Presidential Decree No. 18706, Feb. 19, 2005> |
| (3) | For the purposes of Article 92 (3) 1 of the Act, the acquisition value of assets transferred by the donee or any corresponding person shall be an amount computed by deeming the original donee or any corresponding person to be the transferor of the transferred assets: Provided, That if the relevant assets are taxed under subparagraph 10 (c) of Article 93 of the Act, the acquisition value of such assets shall be an amount computed based on the market price at the time of transfer of such assets. <Amended by Presidential Decree No. 22577, Dec. 30, 2010> |
| (6) | Where any foreign corporation provided for in Article 91 (2) of the Act transfers assets prescribed in subparagraph 7 of Article 93 of the Act on at least two occasions in a business year, its capital gains referred to in Article 92 (3) of the Act shall be an amount computed by adding up the amount of income computed under Article 92 (3) of the Act by assets transferred in the relevant business year. In such cases, if the total amount provided for in Article 92 (3) 1 and 2 of the Act is in excess of the transfer value of the relevant assets among the transferred assets, capital gains shall be calculated by deducting such excess amount. |
[This Article Newly Inserted by Presidential Decree No. 17457, Dec. 31, 2001]
| Article 129-3 (Calculation of Profits and Losses of Interest Following Capital Transactions between Headquarters and Branch of Foreign Corporation) |
| (1) | Where money in the capital account of a domestic branch of a foreign corporation falls short of the amount (hereafter referred to as "estimated capital" in this Article) calculated by the following methods, interest paid (hereafter referred to as "interest paid on deemed capital" in this Article) to the amount equivalent to the shortage among the total amount provided from the headquarters or a foreign branch of the foreign corporation shall not be included in deductible expenses. In such cases, the domestic branch may choose any of the following amounts for application: <Amended on Jan. 5, 2021> |
| 1. | An amount computed by multiplying the total asset amount of the domestic branch by the rate of equity capital to the total asset amount on the statement of financial position as at the end of the relevant business year; |
| 2. | An amount computed by the method prescribed by Ordinance of the Ministry of Economy and Finance reflecting the function, assets in possession, share of risk, etc. of the domestic branch. |
| (2) | If the accounting method of the headquarters is different from that of the branch when the estimated capital is calculated, the accounting method of the headquarters may be used. In such cases, the domestic branch shall keep and maintain the data adjusted by the accounting method of the headquarters. |
| (3) | Where interest paid (hereafter referred to as "interest paid to insufficient capital" in this paragraph) that is not included in deductible expenses under Article 22 of the Adjustment of International Taxes Act and interest paid to deemed capital have accrued simultaneously, the following subparagraphs shall govern: <Amended on Feb. 17, 2021> |
| 1. | Where interest paid to deemed capital is less than interest paid to insufficient capital, the interest paid to deemed capital that is not included in deductible expenses shall be deemed nil; |
| 2. | Where interest paid to deemed capital is more than interest paid to insufficient capital, only the amount computed by subtracting the interest paid to insufficient capital from the interest paid to deemed capital shall not be included in deductible expenses. |
| (4) | Domestic branches eligible for paragraph (1) and other necessary matters shall be prescribed by Ordinance of the Ministry of Economy and Finance. |
[This Article Newly Inserted by Presidential Decree No. 21302, Feb. 4, 2009]
| Article 130 (Allocation of Headquarters Expenses) |
| (1) | In determining the income amount of a domestic place of business of a foreign corporation for each business year, domestic source income generated from transactions (hereinafter referred to as “internal transaction”) between domestic places of business and the headquarters or branches in foreign countries (hereafter referred to as “headquarters, etc.” in this Article) shall be the amount calculated based on arm’s length price under Article 131 (1) (hereafter referred to as “arm’s length price” in this Article) except as otherwise provided for in the Act or this Decree. <Newly Inserted by Presidential Decree No. 24357, Feb. 15, 2013> |
| (2) | In applying paragraph (1), the expenses accruing from an internal transaction shall be included in deductible expenses only if such expenses are necessarily or reasonably related to income that reverts to the domestic place of business within the arm’s length price, and expenses prescribed by Ordinance of the Ministry of Economy and Finance such as interest accruing from capital transaction (excluding interest under Article 129-3) shall not be included in deductible expenses: Provided, That this shall not apply if interest from financial transactions is includible in deductible expenses under a tax treaty. <Amended on Feb. 11, 2020> |
| (3) | In determining the income amount of a domestic place of business of a foreign corporation, common expenses reasonably related to the accrual of domestic source income of the domestic place of business, out of expenses of the headquarters, etc., shall be allocated to the domestic place of business and shall be included in its deductible expenses. <Amended by Presidential Decree No. 24357, Feb. 15, 2013> |
| (4) | When a foreign corporation calculates the amount of domestic source income from internal transactions pursuant to paragraphs (1) and (2), it shall submit documents prescribed by Ordinance of the Ministry of Economy and Finance, such as internal transaction statements and expense allocation statements, to the head of the tax office having jurisdiction over the place of tax payment within six months from the end of the month in which the end of the business year falls, and shall keep and furnish evidentiary documents regarding the calculation. <Newly Inserted on Feb. 11, 2020; Feb. 15, 2022> |
| (5) | In applying paragraphs (1) through (4), the procedures and methods for calculating the amount of domestic source income and capital from internal transactions, the scope of expenses allocated to the domestic place of business and method of allocating such expenses, the method of allocating expenses for each type of business, the method of converting a foreign currency into Korean won for allocating expenses, and other necessary matters shall be prescribed by Ordinance of the Ministry of Economy and Finance. <Newly Inserted on Feb. 15, 2013; Feb. 11, 2020> |
| Article 131 (Scope of Arm's Length Price) |
| (2) | "Special relationship prescribed by Presidential Decree" in Article 92 (2) 2 (a) of the Act means any of the following relationships: <Amended by Presidential Decree No. 18706, Feb. 19, 2005; Presidential Decree No. 19328, Feb. 9, 2006; Presidential Decree No. 22577, Dec. 30, 2010> |
| 1. | The relationship in which a party directly or indirectly owns at least 50/100 of the voting stocks of the other party; |
| 2. | Where a third party directly or indirectly owns at least 50/100 of the voting stocks of one or the other party, the relationship therebetween. |
| (5) | "Circumstances prescribed by Presidential Decree" in Article 92 (2) 2 (b) of the Act means where the difference between the arm's length price and the transaction price exceeds 300 million won or the amount equivalent to 5/100 of the arm's length price. <Newly Inserted by Presidential Decree No. 23589, Feb. 2, 2012> |
| Article 131-2 (Submission by Foreign Corporations of Data on Trading of Securities at Over-the-Counter Market) |
Any person who pays income accruing from the transfer of securities under Article 92 (2) 2 (a) of the Act not through the securities market provided for in Article 9 (13) of the Financial Investment Services and Capital Markets Act (hereinafter referred to as "securities market") shall submit a review report of stock transfer prices between foreign related parties in the form stipulated by Ordinance of the Ministry of Economy and Finance by the payment deadline of withholding tax specified under Article 98 (1) of the Act. <Amended by Presidential Decree No. 17338, Aug. 14, 2001; Presidential Decree No. 18706, Feb. 19, 2005; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 21302, Feb. 4, 2009; Presidential Decree No. 22577, Dec. 30, 2010; Presidential Decree No. 23589, Feb. 2, 2012> [This Article Newly Inserted by Presidential Decree No. 17033, Dec. 29, 2000]
| Article 131-3 (Domestic Source Dividend Income of Foreign Corporations) |
| (1) | “Profits prescribed by Presidential Decree” referred to in subparagraph 2 (c) of Article 93 of the Act means profits accruing from the repurchase or transfer of collective investment securities and the termination or dissolution of collective investment schemes (hereinafter referred to as "repurchases, etc.") pursuant to Article 150-7 (1) of the Enforcement Decree of the Income Tax Act: Provided, That profits or income falling under any of the following shall be excluded therefrom: <Amended on Feb. 28, 2023> |
| 1. | Income accruing from the transfer of stocks and investment shares out of the income prescribed in subparagraph 7 (b) of Article 93 of the Act or subparagraph 9 of the same Article (including income to be excluded from domestically sourced securities transfer income pursuant to the proviso to subparagraph 2 of Article 132 (8), the proviso to subparagraph 3 of the same paragraph, and the proviso to subparagraph 4 of the same paragraph); |
| (2) | "Profits prescribed by Presidential Decree" referred to in subparagraph 2 (d) of Article 93 of the Act mean any of the following: |
| 1. | Profits accruing from derivative-linked securities referred to in Article 4 (7) of the Financial Investment Services and Capital Markets Act (hereafter in this paragraph referred to as "derivative-linked securities"): Provided, That excluded herefrom shall be profits from securities or certificates representing the right to enter into transactions for trading securities or delivering money in a predetermined manner in connection with changes in the price of a particular security traded on a securities market or similar market in a foreign country or changes in the level of a stock index at the election of either party; |
| 2. | Profits accruing from trading securities or certificates listed and traded on a securities market (hereafter in this subparagraph referred to as "listed index securities"), which represent a contractual right to gain profits or hedge losses in a predetermined manner in connection with changes in the price, interest rate, indicator or unit of an underlying asset referred to in Article 4 (10) of the Financial Investment Services and Capital Markets Act among derivative-linked securities or changes in the index based thereon, by means of inter-account transfers, account name changes, or physical transfer of listed index securities: Provided, That profits from trading exchange-traded funds, which are intended to track changes in an index based solely on the price of shares traded on the securities market, by means of inter-account transfers, account name changes, and physical transfers of exchange-traded securities shall be excluded therefrom. |
[This Article Newly Inserted on Feb. 17, 2021]
| Article 132 (Scope of Domestic Source Income) |
| (1) | "Tools prescribed by Presidential Decree" in subparagraph 4 of Article 93 of the Act means delivery equipment, tools, furniture, and fixtures. <Newly Inserted by Presidential Decree No. 18174, Dec. 30, 2003; Presidential Decree No. 22951, Jun. 3, 2011> |
| (2) | "Income prescribed by Presidential Decree" in the main sentence of subparagraph 5 of Article 93 of the Act means the following income generated from any business operated in the Republic of Korea among the businesses provided for in Article 19 of the Income Tax Act: <Amended by Presidential Decree No. 17033, Dec. 29, 2000; Presidential Decree No. 18174, Dec. 30, 2003; Presidential Decree No. 18706, Feb. 19, 2005; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 22951, Jun. 3, 2011; Feb. 12, 2019> |
| 1. | Where a foreign corporation does not manufacture, process, develop, or do any other act overseas to increase the value of inventory assets it has acquired by transfer overseas (hereafter in this Article referred to as "manufacture, etc.") and transfers the inventory assets in the Republic of Korea (including transfer of such inventory assets after manufacture, etc., in the Republic of Korea), all income accruing from transfer in the Republic of Korea; |
| 2. | Where a foreign corporation transfers in the Republic of Korea inventory assets that have undergone manufacture, etc., overseas (including transfer of such inventory assets after manufacture, etc., in the Republic of Korea), the income accruing from the transfer when it is assumed that such inventory assets were acquired from another person who performed manufacture, etc., overseas under ordinary transaction conditions (including transfer after manufacture, etc., in the Republic of Korea); |
| 3. | Where a foreign corporation which has conducted manufacture, etc., of inventory assets in the Republic of Korea transfers them overseas (including transfer of such inventory assets after manufacture, etc. overseas), the income accruing from the transfer of the inventory assets that have undergone manufacture, etc., in the Republic of Korea when it is assumed that the relevant inventory assets manufactured in the Republic of Korea were transferred to any other person overseas under ordinary transaction conditions; |
| 4. | Where a foreign corporation conducts work in the Republic of Korea by procuring necessary labor or materials or entering into a contract concerning construction, installation, assembling, and other work in any foreign country, all income accruing from the relevant work; |
| 5. | Where a foreign corporation operates a non-life insurance business or life insurance business in the Republic of Korea and overseas, the income accruing from the office of business of the relevant business in the Republic of Korea or from insurance contracts concluded through agents for conclusion of insurance contracts; |
| 6. | Where a foreign corporation operating a publishing business or broadcasting business in the Republic of Korea and overseas conducts advertising-related business for other persons, the income accruing from the advertisement conducted in the Republic of Korea among the income accrued from such advertising-related business; |
| 7. | Where a foreign corporation operates an international transport business by ship in the Republic of Korea and overseas, the income of the foreign corporation accruing from business in the Republic of Korea, that is determined based on the revenue amount generated in connection with the passengers boarding or cargo loaded in the Republic of Korea; |
| 8. | Where a foreign corporation operates an international transport business by aircraft in the Republic of Korea and overseas, the income of the foreign corporation accruing from business in the Republic of Korea calculated by the method prescribed by Ordinance of the Ministry of Economy and Finance in consideration of the revenue amount and expenses generated in connection with the passengers boarding or cargo loaded in the Republic of Korea, the value of tangible and intangible assets for domestic business and how much the business in the Republic of Korea contributes to generating the income of such transport business; |
| 9. | Where a foreign corporation operates, in the Republic of Korea and overseas, a business other than those provided for in subparagraphs 1 through 8, the income generated in connection with the domestic business, that is determined in consideration of the income or the revenue amount and expenses generated in related to such domestic business and other reasonable factors assuming that the related business were separated into the domestic business and overseas business and such businesses are operated by independent business operators, and transactions took place between such independent business operators under ordinary transaction conditions; |
| 10. | Income accruing from investment in stocks or investment certificates listed or registered in the securities market, etc., among those issued by foreign corporations or from other similar acts; |
| 11. | Income accruing from the transfer of industrial, commercial or scientific machinery, equipment, installation, delivery equipment, tool, apparatus, fixture by a foreign corporation. |
| (3) | Notwithstanding paragraph (2), income accruing overseas and attributable to a domestic place of business shall be included in the domestically sourced business income provided for in subparagraph 5 of Article 93 of the Act: <Amended on Dec. 30, 2003; Feb. 29, 2008; Feb. 12, 2019; Feb. 11, 2020> |
| 1. | Deleted. <Feb. 11, 2020> |
| 2. | Deleted. <Feb. 11, 2020> |
| 3. | Deleted. <Feb. 11, 2020> |
| 4. | Deleted. <Feb. 11, 2020> |
| (4) | Where a foreign corporation engages in advertising, publicity, gathering and provision of information, market research, and other activities of preparatory or supporting nature overseas for any business operated in the Republic of Korea, or engages in such activities in the Republic of Korea for any business operated overseas, no income shall be deemed generated from such activities. <Amended on Feb. 11, 2020> |
| (5) | Where the inventory assets referred to in paragraph (2) 1 through 3 fall under any of the following cases, such inventory assets shall be deemed transferred in the Republic of Korea for purposes of the same paragraph: <Amended by Presidential Decree No. 18174, Dec. 30, 2003> |
| 1. | Where the relevant inventory assets are in the Republic of Korea immediately prior to being delivered to the transferee, or managed through business conducted at the domestic place of business of the relevant transferor foreign corporation; |
| 2. | Where a contract for the transfer of the relevant inventory assets has entered into in the Republic of Korea; |
| 3. | Where some of important activities, such as taking orders or deliberation to enter into a contract for the transfer of the relevant inventory assets are done in the Republic of Korea. |
| (6) | "Personal services prescribed by Presidential Decree" in the former part of subparagraph 6 of Article 93 of the Act means the following services, and "personal services prescribed by Presidential Decree, among personal services rendered abroad" means the services specified in subparagraph 4: <Amended on Feb. 9, 2006; Jun. 3, 2011; Feb. 3, 2017; Feb. 12, 2019> |
| 1. | Services provided by movie or stage actors, musicians, and public entertainers; |
| 2. | Services provided by professional athletes; |
| 3. | Services provided by attorneys-at-law, certified public accountants, architects, surveyors, patent attorneys, or free-lancers; |
| 4. | Services provided by persons who have professional knowledge and special skills in the fields of science, technology, and business administration using such knowledge or skills. |
| (7) | "Expenses prescribed by Presidential Decree" in the latter part of subparagraph 6 of Article 93 of the Act means air fares, accommodation charges, or meal expenses actually paid by any person provided with personal services to air carriers, accommodation business operators, or restaurant business operators (Including where payment is made through a person providing personal services) in relation to the provision of such personal services. <Newly Inserted on Feb. 9, 2006; Jun. 3, 2011; Feb. 11, 2020> |
| (8) | "Income prescribed by Presidential Decree" in subparagraph 9 of Article 93 of the Act, with the exception of its items, means the following income: <Amended by Presidential Decree No. 16658, Dec. 31, 1999; Presidential Decree No. 17033, Dec. 29, 2000; Presidential Decree No. 17338, Aug. 14, 2001; Presidential Decree No. 18706, Feb. 19, 2005; Presidential Decree No. 21302, Feb. 4, 2009; Presidential Decree No. 22035, Feb. 18, 2010; Presidential Decree No. 22577, Dec. 30, 2010; Presidential Decree No. 23589, Feb. 2, 2012> |
| 1. | Income accruing from the transfer of stocks or investment certificates by a foreign corporation with a domestic place of business; |
| 2. | Income accruing from the transfer of stocks or investment certificates by a foreign corporation with no domestic place of business: Provided, That excluded herefrom shall be any income accruing from the transfer of stocks or investment certificates through the securities market (including transfer of stocks through brokerage under Article 78 of the Financial Investment Services and Capital Markets Act) of which the relevant transferor corporation and a related party continue to own less than 25/100 of the total number of issued stocks or total investment amount (the total number of stocks or total investment amount listed on the securities market in the case of stocks or investment certificates issued by a foreign corporation) of the corporation that issued such stocks or investment certificates during the year in which the date of the transfer of the relevant stocks or investment certificates falls and the immediately preceding five year period; |
| 3. | Income accruing from the transfer of securities, other than stocks or investment certificates by a foreign corporation with a domestic place of business: Provided, That excluded herefrom shall be the taxable income referred to in subparagraph 1 of Article 93 of the Act at the time of the transfer of such securities; |
| 4. | Income accruing from the transfer of securities, other than stocks or investment certificates by a foreign corporation with no domestic place of business to a domestic corporation, resident, non-resident, or the domestic place of business of a foreign corporation: Provided, That excluded herefrom shall be the taxable income referred to in subparagraph 1 of Article 93 of the Act at the time of the transfer of such securities. |
| (9) | Any income earned by a foreign corporation with no domestic place of business by trading any of the following derivatives shall not be deemed domestic source income. <Amended on Dec. 31, 1999; Feb. 19, 2005; Feb. 4, 2009; Feb. 12, 2019> |
| 1. | Exchange-traded derivatives referred to in Article 5 (2) of the Financial Investment Services and Capital Markets; |
| 2. | Over-the-counter derivatives referred to in Article 5 (3) of the Financial Investment Services and Capital Markets, which are traded for the purpose of hedging under Article 186-2 of the Enforcement Decree of the same Act. |
| (10) | "Income prescribed by Presidential Decree" in subparagraph 10 (b) of Article 93 of the Act means the value of money or other goods paid or provided in excess of compensation for payment under the original contract, irrespective of its title, which is damages paid in penalty compensation for breach or termination of contracts on property rights. <Amended by Presidential Decree No. 17033, Dec. 29, 2000; Presidential Decree No. 22577, Dec. 30, 2010> |
| (11) | A determination as to whether another corporation excessively owns real estate, as referred to in the latter part of subparagraph 7 (b) (ii) of Article 93 of the Act, shall be based on whether the ratio of real estate owned by another corporation, as calculated by the following formula, is not less than 50/100: <Newly Inserted by Presidential Decree No. 26981, Feb. 12, 2016> |
| Value of assets owned by another corporation, as referred to in Article 94 (1) 1 or 2 of the Income Tax Act / Total value of assets of another corporation |
|
| (12) | The total amount of assets and asset value referred to in subparagraph 7 (b) of Article 93 of the Act shall be calculated by applying mutatis mutandis Article 158 (4) and (5) of the Enforcement Decree of the Income Tax Act. In such cases, "the date of transfer" shall be construed as "the start date of the business year in which the date of transfer falls." <Amended on Dec. 30, 2003; Feb. 19, 2005; Feb. 28, 2007; Feb. 4, 2009; Feb. 11, 2020> |
| (13) | "Related party prescribed by Presidential Decree" in subparagraph 10 (i) of Article 93 of the Act means a foreign corporation in any of the following special relationships: <Amended by Presidential Decree No. 19328, Feb. 9, 2006; Presidential Decree No. 22577, Dec. 30, 2010; Presidential Decree No. 23589, Feb. 2, 2012; Feb. 17, 2021> |
| 2. | The special relationship provided for in Article 131 (2) 1 or 2 with a non-resident or foreign corporation. |
| (14) | "Income accruing from an increase in the value of stocks, etc., that arises from capital transactions prescribed by Presidential Decree" in subparagraph 10 (i) of Article 93 of the Act means the income accruing from profits distributed to a foreign corporation that is a stockholder, etc., by other stockholders, etc., who are in any of the special relationships provided for in the subparagraphs of paragraph (13) due to the transaction referred to in any item of Article 88 (1) 8 or subparagraph 8-2 of the same paragraph. <Amended by Presidential Decree No. 19328, Feb. 9, 2006; Presidential Decree No. 21302, Feb. 4, 2009; Presidential Decree No. 22577, Dec. 30, 2010> |
| (15) | The amount equivalent to the reimbursement, including a dividend, etc., that is paid by the borrower of securities to any foreign corporation with no domestic place of business through the transactions of lending or borrowing securities (excluding bonds, etc.; hereafter in this paragraph the same shall apply) with any non-resident or foreign corporation with no domestic place of business under the Financial Investment Services and Capital Markets Act shall not be deemed the domestic source income. <Newly Inserted by Presidential Decree No. 18706, Feb. 19, 2005; Presidential Decree No. 21302, Feb. 4, 2009> |
| (16) | In the application of the proviso to paragraph (8) 2, where a foreign corporation acquires the stocks (hereafter in this paragraph referred to as "stocks, etc.") of a domestic corporation or a foreign corporation (limited to a foreign corporation listed on the securities market) or makes an investment (hereinafter referred to as "investment") therein through an investment scheme (referring to where a stockholder or an investor of a corporation is directly obligated to pay tax on any income accruing from the transfer of stocks or investment shares, for purposes of tax collection, in the country of residence of the corporation; hereinafter the same shall apply), the holding ratio of such stocks or the ratio of investment (hereinafter referred to as "ratio of investment") shall be calculated as follows: <Amended by Presidential Decree No. 22577, Dec. 30, 2010; Feb. 11, 2020> |
| 1. | Where the foreign corporation only makes an investment through the investment scheme (hereinafter referred to as "indirect investment"): The ratio of investment by such investment scheme. In such cases, if the investment is made through at least two investment schemes, the ratio of investment shall be calculated by aggregating the ratios of investment made respectively by such investment schemes; |
| 2. | Where the foreign corporation simultaneously makes an indirect investment as well as a direct investment not through the investment scheme(hereafter referred to as "direct investment" in this subparagraph), the larger of the ratios calculated by the following methods: |
| (a) | The ratio calculated by aggregating the ratio of direct investment and the ratio of indirect investment made by the foreign corporation. In such cases, the ratio of indirect investment made by a foreign corporation shall be calculated by multiplying the ratio of investment made by the foreign corporation in the investment scheme by the ratio of investment by the investment scheme; |
| (b) | The ratio of investment made by the investment scheme. In such cases, if the investment is made through at least two investment schemes, the ratio of investment shall be calculated by aggregating the ratios of investment made respectively by such investment schemes. |
| (17) | Deleted. <Feb. 15, 2022> |
| Article 132 (Scope of Domestic Source Income) |
| (1) | "Tools prescribed by Presidential Decree" in subparagraph 4 of Article 93 of the Act means delivery equipment, tools, furniture, and fixtures. <Newly Inserted by Presidential Decree No. 18174, Dec. 30, 2003; Presidential Decree No. 22951, Jun. 3, 2011> |
| (2) | "Income prescribed by Presidential Decree" in the main sentence of subparagraph 5 of Article 93 of the Act means the following income generated from any business operated in the Republic of Korea among the businesses provided for in Article 19 of the Income Tax Act: <Amended by on Dec. 29, 2000; Dec. 30, 2003; Feb. 19, 2005; Feb. 29, 2008; Jun. 3, 2011; Feb. 12, 2019> |
| 1. | Where a foreign corporation does not manufacture, process, develop, or do any other act overseas to increase the value of inventory assets it has acquired by transfer overseas (hereafter in this Article referred to as "manufacture, etc.") and transfers the inventory assets in the Republic of Korea (including transfer of such inventory assets after manufacture, etc., in the Republic of Korea), all income accruing from transfer in the Republic of Korea; |
| 2. | Where a foreign corporation transfers in the Republic of Korea inventory assets that have undergone manufacture, etc., overseas (including transfer of such inventory assets after manufacture, etc., in the Republic of Korea), the income accruing from the transfer when it is assumed that such inventory assets were acquired from another person who performed manufacture, etc., overseas under ordinary transaction conditions (including transfer after manufacture, etc., in the Republic of Korea); |
| 3. | Where a foreign corporation which has conducted manufacture, etc., of inventory assets in the Republic of Korea transfers them overseas (including transfer of such inventory assets after manufacture, etc. overseas), the income accruing from the transfer of the inventory assets that have undergone manufacture, etc., in the Republic of Korea when it is assumed that the relevant inventory assets manufactured in the Republic of Korea were transferred to any other person overseas under ordinary transaction conditions; |
| 4. | Where a foreign corporation conducts work in the Republic of Korea by procuring necessary labor or materials or entering into a contract concerning construction, installation, assembling, and other work in any foreign country, all income accruing from the relevant work; |
| 5. | Where a foreign corporation operates a non-life insurance business or life insurance business in the Republic of Korea and overseas, the income accruing from the office of business of the relevant business in the Republic of Korea or from insurance contracts concluded through agents for conclusion of insurance contracts; |
| 6. | Where a foreign corporation operating a publishing business or broadcasting business in the Republic of Korea and overseas conducts advertising-related business for other persons, the income accruing from the advertisement conducted in the Republic of Korea among the income accrued from such advertising-related business; |
| 7. | Where a foreign corporation operates an international transport business by ship in the Republic of Korea and overseas, the income of the foreign corporation accruing from business in the Republic of Korea, that is determined based on the revenue amount generated in connection with the passengers boarding or cargo loaded in the Republic of Korea; |
| 8. | Where a foreign corporation operates an international transport business by aircraft in the Republic of Korea and overseas, the income of the foreign corporation accruing from business in the Republic of Korea calculated by the method prescribed by Ordinance of the Ministry of Economy and Finance in consideration of the revenue amount and expenses generated in connection with the passengers boarding or cargo loaded in the Republic of Korea, the value of tangible or intangible assets for domestic business and how much the business in the Republic of Korea contributes to generating the income of such transport business; |
| 9. | Where a foreign corporation operates, in the Republic of Korea and overseas, a business other than those provided for in subparagraphs 1 through 8, the income generated in connection with the domestic business, that is determined in consideration of the income or the revenue amount and expenses generated in related to such domestic business and other reasonable factors assuming that the related business were separated into the domestic business and overseas business and such businesses are operated by independent business operators, and transactions took place between such independent business operators under ordinary transaction conditions; |
| 10. | Income accruing from investment in stocks or investment certificates listed or registered in the securities market, etc., among those issued by foreign corporations or from other similar acts; |
| 11. | Income accruing from the transfer of industrial, commercial or scientific machinery, equipment, installation, delivery equipment, tool, apparatus, fixture by a foreign corporation. |
| (3) | Notwithstanding paragraph (2), the income generated in any foreign country, which accrues to the domestic place of business shall be included in the domestic source business income provided for in subparagraph 5 of Article 93 of the Act: <Amended on Dec. 30, 2003; Feb. 29, 2008; Feb. 12, 2019; Feb. 11, 2020> |
| 1. | Deleted. <Feb. 11, 2020> |
| 2. | Deleted. <Feb. 11, 2020> |
| 3. | Deleted. <Feb. 11, 2020> |
| 4. | Deleted. <Feb. 11, 2020> |
| (4) | Where a foreign corporation engages in advertising, publicity, gathering and provision of information, market research, and other activities of preparatory or supporting nature overseas for any business operated in the Republic of Korea, or engages in such activities in the Republic of Korea for any business operated overseas, no income shall be deemed generated from such activities. <Feb. 11, 2020> |
| (5) | Where the inventory assets referred to in paragraph (2) 1 through 3 fall under any of the following cases, such inventory assets shall be deemed transferred in the Republic of Korea for purposes of the same paragraph: <Amended by Presidential Decree No. 18174, Dec. 30, 2003> |
| 1. | Where the relevant inventory assets are in the Republic of Korea immediately prior to being delivered to the transferee, or managed through business conducted at the domestic place of business of the relevant transferor foreign corporation; |
| 2. | Where a contract for the transfer of the relevant inventory assets has entered into in the Republic of Korea; |
| 3. | Where some of important activities, such as taking orders or deliberation to enter into a contract for the transfer of the relevant inventory assets are done in the Republic of Korea. |
| (6) | "Personal services prescribed by Presidential Decree" in the former part of subparagraph 6 of Article 93 of the Act means the following services, and "personal services prescribed by Presidential Decree, among personal services rendered abroad" means the services specified in subparagraph 4: <Amended on Feb. 9, 2006; Jun. 3, 2011; Feb. 3, 2017; Feb. 12, 2019> |
| 1. | Services provided by movie or stage actors, musicians, and public entertainers; |
| 2. | Services provided by professional athletes; |
| 3. | Services provided by attorneys-at-law, certified public accountants, architects, surveyors, patent attorneys, or free-lancers; |
| 4. | Services provided by persons who have professional knowledge and special skills in the fields of science, technology, and business administration using such knowledge or skills. |
| (7) | "Expenses prescribed by Presidential Decree" in the latter part of subparagraph 6 of Article 93 of the Act means air fares, accommodation charges, or meal expenses actually paid by any person provided with personal services to air carriers, accommodation business operators, or restaurant business operators (Including where payment is made through a person providing personal services) in relation to the provision of such personal services. <Newly Inserted on Feb. 9, 2006; Jun. 3, 2011; Feb. 11, 2020> |
| (8) | "Income prescribed by Presidential Decree" in subparagraph 9 of Article 93 of the Act, with the exception of its items, means the following income: <Amended by Presidential Decree No. 16658, Dec. 31, 1999; Presidential Decree No. 17033, Dec. 29, 2000; Presidential Decree No. 17338, Aug. 14, 2001; Presidential Decree No. 18706, Feb. 19, 2005; Presidential Decree No. 21302, Feb. 4, 2009; Presidential Decree No. 22035, Feb. 18, 2010; Presidential Decree No. 22577, Dec. 30, 2010; Presidential Decree No. 23589, Feb. 2, 2012> |
| 1. | Income accruing from the transfer of stocks or investment certificates by a foreign corporation with a domestic place of business; |
| 2. | Income accruing from the transfer of stocks or investment certificates by a foreign corporation with no domestic place of business: Provided, That excluded herefrom shall be any income accruing from the transfer of stocks or investment certificates through the securities market (including transfer of stocks through brokerage under Article 78 of the Financial Investment Services and Capital Markets Act) of which the relevant transferor corporation and a related party continue to own less than 25/100 of the total number of issued stocks or total investment amount (the total number of stocks or total investment amount listed on the securities market in the case of stocks or investment certificates issued by a foreign corporation) of the corporation that issued such stocks or investment certificates during the year in which the date of the transfer of the relevant stocks or investment certificates falls and the immediately preceding five year period; |
| 3. | Income accruing from the transfer of securities, other than stocks or investment certificates by a foreign corporation with a domestic place of business: Provided, That excluded herefrom shall be the taxable income referred to in subparagraph 1 of Article 93 of the Act at the time of the transfer of such securities; |
| 4. | Income accruing from the transfer of securities, other than stocks or investment certificates by a foreign corporation with no domestic place of business to a domestic corporation, resident, non-resident, or the domestic place of business of a foreign corporation: Provided, That excluded herefrom shall be the taxable income referred to in subparagraph 1 of Article 93 of the Act at the time of the transfer of such securities. |
| (9) | Any income earned by a foreign corporation with no domestic place of business by trading any of the following derivatives shall not be deemed domestic source income. <Amended on Dec. 31, 1999; Feb. 19, 2005; Feb. 4, 2009; Feb. 12, 2019> |
| 1. | Exchange-traded derivatives referred to in Article 5 (2) of the Financial Investment Services and Capital Markets; |
| 2. | Over-the-counter derivatives referred to in Article 5 (3) of the Financial Investment Services and Capital Markets, which are traded for the purpose of hedging under Article 186-2 of the Enforcement Decree of the same Act. |
| (10) | "Income prescribed by Presidential Decree" in subparagraph 10 (b) of Article 93 of the Act means the value of money or other goods paid or provided in excess of compensation for payment under the original contract, irrespective of its title, which is damages paid in penalty compensation for breach or termination of contracts on property rights. <Amended by Presidential Decree No. 17033, Dec. 29, 2000; Presidential Decree No. 22577, Dec. 30, 2010> |
| (11) | A determination as to whether another corporation excessively owns real estate, as referred to in the latter part of subparagraph 7 (b) (ii) of Article 93 of the Act, shall be based on whether the ratio of real estate owned by another corporation, as calculated by the following formula, is not less than 50/100: <Newly Inserted by Presidential Decree No. 26981, Feb. 12, 2016> |
| Value of assets owned by another corporation, as referred to in Article 94 (1) 1 or 2 of the Income Tax Act / Total value of assets of another corporation |
|
| (12) | The total amount of assets and asset value referred to in subparagraph 7 (b) of Article 93 of the Act shall be calculated by applying mutatis mutandis Article 158 (4) and (5) of the Enforcement Decree of the Income Tax Act. In such cases, "the date of transfer" shall be construed as "the start date of the business year in which the date of transfer falls." <Amended on Dec. 30, 2003; Feb. 19, 2005; Feb. 28, 2007; Feb. 4, 2009; Feb. 11, 2020> |
| (13) | "Related party prescribed by Presidential Decree" in subparagraph 10 (i) of Article 93 of the Act means a foreign corporation in any of the following special relationships: <Amended by Presidential Decree No. 19328, Feb. 9, 2006; Presidential Decree No. 22577, Dec. 30, 2010; Presidential Decree No. 23589, Feb. 2, 2012; Feb. 17, 2021> |
| 2. | The special relationship provided for in Article 131 (2) 1 or 2 with a non-resident or foreign corporation. |
| (14) | "Income accruing from an increase in the value of stocks, etc., that arises from capital transactions prescribed by Presidential Decree" in subparagraph 10 (i) of Article 93 of the Act means the income accruing from profits distributed to a foreign corporation that is a stockholder, etc., by other stockholders, etc., who are in any of the special relationships provided for in the subparagraphs of paragraph (13) due to the transaction referred to in any item of Article 88 (1) 8 or subparagraph 8-2 of the same paragraph. <Amended by Presidential Decree No. 19328, Feb. 9, 2006; Presidential Decree No. 21302, Feb. 4, 2009; Presidential Decree No. 22577, Dec. 30, 2010> |
| (15) | The amount equivalent to the reimbursement, including a dividend, etc., that is paid by the borrower of securities to any foreign corporation with no domestic place of business through the transactions of lending or borrowing securities (excluding bonds, etc.; hereafter in this paragraph the same shall apply) with any non-resident or foreign corporation with no domestic place of business under the Financial Investment Services and Capital Markets Act shall not be deemed the domestic source income. <Newly Inserted by Presidential Decree No. 18706, Feb. 19, 2005; Presidential Decree No. 21302, Feb. 4, 2009> |
| (16) | In the application of the proviso to paragraph (8) 2, where a foreign corporation acquires the stocks (hereafter in this paragraph referred to as "stocks, etc.") of a domestic corporation or a foreign corporation (limited to a foreign corporation listed on the securities market) or makes an investment (hereinafter referred to as "investment") therein through an investment scheme (referring to where a stockholder or an investor of a corporation is directly obligated to pay tax on any income accruing from the transfer of stocks or investment shares, for purposes of tax collection, in the country of residence of the corporation; hereinafter the same shall apply), the holding ratio of such stocks or the ratio of investment (hereinafter referred to as "ratio of investment") shall be calculated as follows: <Amended by Presidential Decree No. 22577, Dec. 30, 2010; Feb. 11, 2020> |
| 1. | Where the foreign corporation only makes an investment through the investment scheme (hereinafter referred to as "indirect investment"): The ratio of investment by such investment scheme. In such cases, if the investment is made through at least two investment schemes, the ratio of investment shall be calculated by aggregating the ratios of investment made respectively by such investment schemes; |
| 2. | Where the foreign corporation simultaneously makes an indirect investment as well as a direct investment not through the investment scheme(hereafter referred to as "direct investment" in this subparagraph), the larger of the ratios calculated by the following methods: |
| (a) | The ratio calculated by aggregating the ratio of direct investment and the ratio of indirect investment made by the foreign corporation. In such cases, the ratio of indirect investment made by a foreign corporation shall be calculated by multiplying the ratio of investment made by the foreign corporation in the investment scheme by the ratio of investment by the investment scheme; |
| (b) | The ratio of investment made by the investment scheme. In such cases, if the investment is made through at least two investment schemes, the ratio of investment shall be calculated by aggregating the ratios of investment made respectively by such investment schemes. |
| (17) | "Amount calculated as prescribed by Presidential Decree" in subparagraph 10 (k) of Article 93 of the Act means the amount of virtual asset income calculated in accordance with Article 92 (2) 1 (b) of the Act, assuming that the virtual asset is transferred at the time of withdrawing it. <Newly Inserted on Mar. 8, 2022> |
| Article 132-2 (Approval Requirements, etc. for Qualified Foreign Financial Company, etc.) |
| (1) | A foreign financial company, etc. that intends to obtain approval from the Commissioner of the National Tax Service as a qualified foreign financial company, etc. referred to in the former part of Article 93-3 (2) of the Act (hereinafter referred to as "qualified foreign financial company, etc.") shall be a foreign corporation that has its head office or main office in a country that has entered into a tax treaty with the Republic of Korea, which falls under any of the following: |
| 2. | A corporation capable of conducting the custody of securities issued in a country other than the relevant country. |
| (2) | A foreign financial company, etc. that intends to obtain approval as a qualified foreign financial company, etc. shall submit an application for approval as a qualified foreign financial company, etc. prescribed by Ordinance of the Ministry of Economy and Finance to the Commissioner of the National Tax Service through the Korea Securities Depository referred to in Article 294 of the Financial Investment Services and Capital Markets Act. |
| (3) | Upon receipt of an application referred to in paragraph (2), the Commissioner of the National Tax Service shall approve the applicant as a qualified foreign financial company, etc. if it falls under any subparagraph of paragraph (1). In such cases, the Commissioner of the National Tax Service may seek advice from the Korea Securities Depository referred to in Article 294 of the Financial Investment Services and Capital Markets Act as to whether the applicant falls under any subparagraph of paragraph (1). |
| (4) | The Commissioner of the National Tax Office may revoke the approval of a qualified foreign financial company, etc. if the qualified foreign financial company, etc. falls under any of the following: |
| 1. | Where it has obtained approval by fraud or other improper means, such as falsely stating the application documents; |
| 2. | Where there is a tax delinquent and its collection is deemed substantially difficult; |
| 3. | Where it is deemed inappropriate to have it perform the business of a qualified foreign financial company, etc. as it has failed to fulfill its obligations prescribed in Article 132-3 or for other reasons. |
[This Article Newly Inserted on Dec. 31, 2022]
| Article 132-3 (Compliance by Qualified Foreign Financial Companies, etc.) |
A qualified foreign financial company, etc. shall fulfill the following obligations:
| 1. | It shall identify the name, country of residence (meaning the country where the head office or main office of a foreign corporation is located; hereafter in Article 132-4 the same shall apply), location, etc. of the foreign corporation that acquires, holds, or transfers State bonds, etc. referred to in Article 93-3 (1) 1 of the Act (hereafter referred to as "State bonds, etc." in this Article and Article 132-4) through the relevant qualified foreign financial company, etc., and keep and furnish related data; |
| 2. | It shall keep and furnish data on each foreign corporation’s holding and transaction of State bonds, etc., including the acquisition date, acquisition amount, holding period, transfer date, transfer amount, etc. of the State bonds, etc.; |
| 3. | It shall report the data prescribed in subparagraph 2 to the head of the tax office with jurisdiction over the place of taxation of a person who pays the income prescribed in each subparagraph of Article 93-3 (1) of the Act (hereafter referred to as "income payer" in this Article and Article 132-4), as prescribed by Ordinance of the Ministry of Economy and Finance; |
| 4. | Where the Commissioner of the National Tax Service or an income payer requests the submission of data prescribed in subparagraph 1 or 2, it shall submit the relevant data within 30 days from the date of receipt of such request; |
| 5. | Where the Commissioner of the National Tax Service sets conditions when approving a qualified foreign financial company, etc., it shall comply with such conditions. |
[This Article Newly Inserted on Dec. 31, 2022]
| Article 132-4 (Application for Non-Taxation on Interest and Capital Gains of State Bonds, of Foreign Corporations) |
| (1) | An application for non-taxation by a foreign corporation under Article 93-3 (3) of the Act shall be made in accordance with the procedures classified as follows. In such cases, after non-taxation is granted based on the application, if the foreign corporation intends to apply for non-taxation on other interest and capital gains accruing from State bonds, etc. and if there is no change in the original application, the procedures classified as follows may be omitted: <Amended on Feb. 28, 2023> |
| 1. | Where the income prescribed in each subparagraph of Article 93-3 (1) of the Act is paid through a foreign investment scheme (excluding a foreign investment scheme deemed a real beneficiary for falling under any subparagraph of Article 93-2 (1) of the Act and a foreign investment scheme falling under any subparagraph of Article 93-3 (4) of the Act): The procedures in the order of the following: |
| (a) | The foreign corporation shall submit the following documents to the foreign investment scheme: |
| (i) | An application for non-taxation for submission to the head of a tax office in the form prescribed by Ordinance of the Ministry of Economy and Finance (hereinafter referred to as “foreign corporation application for non-taxation for submission to the head of a tax office”). |
| (ii) | A resident certificate issued by the competent authority of the country of residence of the foreign corporation or a document determined and publicly notified by the Commissioner of the National Tax Service; |
| (b) | The foreign investment scheme shall submit the documents submitted pursuant to item (a) to the income payer; |
| (c) | The income payer shall complete a statement of transactions and holdings in the form prescribed by the Ministry of Economy and Finance (hereinafter referred to as "income payer statement of transactions and holdings") and submits it, together with the documents submitted pursuant to item (b), to the head of the tax office having jurisdiction over the place of taxation by the 9th day of the month following the month in which the income is paid; |
| 2. | Cases other than those falling under subparagraph 1: The procedures in the order of the following: |
| (a) | The foreign corporation (including a foreign investment scheme deemed a real beneficiary for falling under any subparagraph of Article 93-2 (1) of the Act and a foreign investment scheme falling under any subparagraph of Article 93-3 (4) of the Act; hereafter in this subparagraph the same shall apply) shall submit the following documents to the income payer: |
| (i) | A foreign corporation application for non-taxation for submission to the head of a tax office (referring to an application for non-taxation by non-residents for submission to the head of a tax office referred to in Article 179-4 (1) 1 (a) (i) of the Enforcement Decree of the Income Tax Act if a foreign investment scheme deemed a real beneficiary for falling under any subparagraph of Article 93-2 (1) of the Act or a foreign investment scheme falling under any subparagraph of Article 93-3 (4) of the Act is a non-resident); |
| (ii) | A resident certificate issued by the competent authority of the country of residence of the foreign corporation or a document determined and publicly notified by the Commissioner of the National Tax Service; |
| (b) | The income payer shall complete an income payer statement of transactions and holdings and submits it, together with the documents submitted pursuant to item (a), to the head of the tax office having jurisdiction over the place of taxation by the 9th day of the month following the month in which the income is paid; |
| (2) | Notwithstanding paragraph (1) 1, the procedures in the order of the following may apply to State bonds, etc. acquired, held, or transferred through a qualified foreign financial company, etc.: |
| 1. | The foreign corporation shall submit the following documents to the foreign investment scheme: |
| (a) | An application for non-taxation for submission by a qualified foreign financial company, etc. in the form prescribed by Ordinance of the Ministry of Economy and Finance (hereinafter referred to as “foreign corporation application for non-taxation for submission by a qualified foreign financial company, etc.”); |
| (b) | A resident certificate issued by the competent authority of the country of residence of the foreign corporation or a document determined and publicly notified by the Commissioner of the National Tax Service; |
| 2. | The foreign investment scheme shall submit the documents submitted pursuant to subparagraph 1 to the qualified foreign financial company, etc.; |
| 3. | The qualified foreign financial company, etc. shall complete a statement of transactions and holdings of qualified foreign financial companies, etc. in the form prescribed by Ordinance of the Ministry of Economy and Finance (hereinafter referred to as "statement of transactions and holdings of qualified foreign financial companies, etc.") and an application for non-taxation for submission by qualified foreign financial companies, etc. in the form prescribed by Ordinance of the Ministry of Economy and Finance (hereinafter referred to as ”application for non-taxation for submission by qualified foreign financial companies, etc.”), and submit them to the income payer; |
| 4. | The income payer shall submit the documents submitted pursuant to subparagraph 3 to the head of the tax office having jurisdiction over the place of taxation by the 9th day of the month following the month in which the income is paid. |
| (3) | Notwithstanding paragraph (1) 2, the procedures in the order of the following may apply to State bonds, etc. acquired, held, or transferred through a qualified foreign financial company, etc.: |
| 1. | The foreign corporation shall submit each of the following documents to the qualified foreign financial company, etc.: |
| (a) | A foreign corporation application for non-taxation for submission by a qualified foreign financial company, etc.”; |
| (b) | A resident certificate issued by the competent authority of the country of residence of the foreign corporation or a document determined and publicly notified by the Commissioner of the National Tax Service; |
| 2. | The qualified foreign financial company, etc. shall complete a statement of transactions and holdings of qualified foreign financial companies, etc. and an application for non-taxation for submission by qualified foreign financial companies, etc., and submit them to the income payer; |
| 3. | The income payer shall submit the documents submitted pursuant to subparagraph 2 to the head of the tax office having jurisdiction over the place of taxation by the 9th day of the month following the month in which the income is paid. |
| (5) | Where a financial company, etc. referred to in Article 24 of the Enforcement Decree of the Income Tax Act acquires, trades or brokers State bonds, etc. of a foreign corporation or acts as an agent therefor, paragraphs (1) through (4) shall apply as if there is an agency or delegation relationship between the relevant financial company, etc. and the relevant foreign corporation. |
| (6) | Where an investment trader or investment broker referred to in the Financial Investment Services and Capital Markets Act withholds tax with respect to the transfer of State bonds, etc. pursuant to the main clause of Article 98 (7) of the Act, paragraphs (1) through (4) shall apply as if there is an agency or delegation relationship between the relevant investment trader or investment broker and the relevant foreign corporation. |
| (7) | In cases where paragraph (5) or (6) 6 does not apply and there is no address, residence, head office, main office, place of the actual management of business, or domestic place of business (including a domestic place of business referred to in Article 120 of the Income Tax Act) of the income payer in the Republic of Korea, notwithstanding paragraphs (1) through (3), the foreign investment scheme, foreign corporation, or qualified foreign financial company, etc. may submit the documents according to the following classification directly to the head of the tax office having jurisdiction over the place of tax payment: |
| 1. | For foreign investment schemes: Documents to be submitted to the income payer pursuant to paragraph (1) 1 (b); |
| 2. | For foreign corporations: Documents to be submitted to the income payer pursuant to paragraph (1) 2 (a); |
| 3. | For qualified foreign financial companies, etc.: Documents to be submitted to the income payer pursuant to paragraph 2 (3) or 3 (2). |
[This Article Newly Inserted on Dec. 31, 2022]
| Article 132-5 (Return on and Payment of Income Accruing from State Bonds, etc. of Domestic Corporations) |
| (1) | "Foreign investment scheme meeting the requirements prescribed by Presidential Decree" in Article 93-3 (4) 2 of the Act means a foreign investment scheme that has solicited subscriptions for acquiring securities from 50 or more public investors abroad by preparing an investment prospectus or in a similar manner. |
| (2) | A domestic corporation that has invested in a foreign investment scheme falling under any subparagraph of Article 93-3 (4) of the Act shall report and pay taxes on the income prescribed in the subparagraphs of paragraph (1) of the same Article pursuant to Articles 60 and 64 of the Act and Article 17 of the Income Tax Act. |
[This Article Wholly Amended on Feb. 28, 2023]
| Article 133 (Scope of Agent, etc. of Foreign Corporation, etc.) |
| (1) | "Person prescribed by Presidential Decree" in paragraph (3), with the exception of the subparagraphs, of Article 94 (3) of the Act means any of the following persons: <Presidential Decree No. 22951, Jun. 3, 2011; Feb. 12, 2019> |
| 1. | A person who regularly keeps custody and customarily distributes or delivers the assets of a foreign corporation; |
| 2. | A person who performs important business functions, such as concluding contracts for a particular foreign corporation as an intermediary, general commission agent, or other independent representative (including where such functions are performed in the ordinary course of his/her own business); |
| 3. | A person who collects insurance premiums for a foreign corporation operating an insurance business (excluding re-insurance business) or provides insurance guarantees for the insured items located in the Republic of Korea. |
| (2) | A foreign corporation referred to in paragraph (1) includes an oligopolistic stockholder of the foreign corporation, another corporation, the oligopolistic stockholder of which is the relevant foreign corporation, and other related party of the foreign corporation. <Amended by Presidential Decree No. 23589, Feb. 2, 2012> |
| (3) | “Person having a special relationship” referred to in subparagraph 1, with the exception of the items, of Article 94 (5) of the Act means a relationship prescribed in any subparagraph of Article 131 (2). <Newly Inserted on Feb. 12, 2019> |
[Title Amended on Feb. 12, 2019]
| Article 133-2 (Submission of Data on Current Status of Liaison Offices) |
| (1) | “Non-business functions prescribed by Presidential Decree, such as business liaison, market research” in Article 94-2 (1) of the Act mean activities of preliminary or supporting nature for the business performance of a foreign corporation, such as business liaison, market research and information collection. <Amended on Feb. 28, 2023> |
| (2) | “Data on its current status prescribed by Presidential Decree” in Article 94-2 (1) of the Act mean data containing the following matters, prepared as of December 31 of each year: <Amended on Feb. 28, 2023> |
| 1. | General status information, such as the name and identification number of a foreign corporation’s liaison office referred to in Article 94-2 (1) of the Act; |
| 2. | Matters relating to the name and location of a foreign corporation which has established a liaison office, and its trading, investment, etc. in the Republic of Korea; |
| 3. | Matters relating to operating the liaison office, such as the current status of lease of the liaison office and employees; |
| (3) | A foreign corporation shall prepare the status data prescribed in paragraph (2) pursuant to the form prescribed by Ordinance of the Ministry of Economy and Finance, and submit it to the head of the tax office having jurisdiction over the location of the foreign corporation’s liaison office. |
[This Article Newly Inserted on Feb. 15, 2022]
SECTION 2 Calculation of Tax
| Article 134 (Calculation of Taxable Income of Domestic Place of Business) |
| (1) | "Amount prescribed by Presidential Decree, such as an amount deemed to be reinvested in the business by the relevant domestic place of business" in Article 96 (2) 3 of the Act means all of the following amounts, and where the amount equivalent to capital as of the start date of the relevant business year is in excess of the amount equivalent to capital as at the end date of the relevant business year, such excess amount (hereinafter referred to as "capital reduction amount") shall be added to the amount of income for the relevant business year. In such cases, the sum amount shall not exceed the untaxed accumulated reserve income (limited to where such income is not a negative number) as of the end date of the immediately preceding business year: <Amended by Presidential Decree No. 22577, Dec. 30, 2010; Presidential Decree No. 22812, Mar. 31, 2011> |
| 1. | The amount equivalent to capital as of the end date of the relevant business year that is in excess of the amount equivalent to capital as of the start date of the relevant business year (hereinafter referred to as "capital increase amount"); |
| 2. | The amount computed by removing the negative sign from the untaxed accumulated reserve income (limited to where such income is a negative number): Provided, That the ceilings on such amount shall be the amount computed by subtracting the amount provided in Article 96 (2) 1, 2 and 4 of the Act and the capital increase amount from the income amount of each business year of a domestic place of business. |
| (2) | "Amount equivalent to capital" in paragraph (1) means the amount computed by subtracting the total amount of debts (including any appropriation funds, however, excluding any unpaid corporate tax) from the total amount of assets on the statement of financial position as at the end date of the relevant business year. <Amended by Presidential Decree No. 18706, Feb. 19, 2005; Jan. 5, 2021> |
| (3) | "Untaxed accumulated reserve income" in paragraph (1) means a portion of income for a business year, which is untaxed under Article 96 of the Act and corresponds to the amount calculated by subtracting the amount under subparagraph 2 from the amount under subparagraph 1: <Amended by Presidential Decree No. 22812, Mar. 31, 2011; Presidential Decree No. 25194, Feb. 21, 2014> |
| 1. | The sum of income for each taxable year until the business year immediately preceding the relevant business year minus both the sum of the losses for each business year until the business year immediately preceding the relevant taxable year and the sum of the corporate tax and local corporate income tax on the income for each business year until the business year immediately preceding the relevant business year; |
| 2. | The sum of taxable income provided in Article 96 of the Act for each business year until the business year immediately preceding the relevant business year. |
| (4) | Paragraph (1) shall apply mutatis mutandis to the calculation of the taxable income referred to in Article 96 (1) of the Act where losses are incurred in the relevant business year: Provided, That where the capital reduction amount is in excess of losses in the relevant business year, such excess amount shall be the taxable income, up to the limit of the untaxed accumulated reserve income computed under paragraph (3). |
| (5) | "Amount of remittance prescribed by Presidential Decree" in the main sentence of Article 96 (1) of the Act means profits actually remitted among the income of each business year (if profits actually remitted in each business year are in excess of the taxable income of the immediately preceding business year referred to in Article 96 (2) of the Act, the limit thereof shall be the untaxed accumulated reserve income provided for in paragraph (3) until the immediately preceding business year among such excess). <Newly Inserted by Presidential Decree No. 17457, Dec. 31, 2001; Presidential Decree No. 22951, Jun. 3, 2011> |
| (6) | Where a foreign corporation ceases to have a domestic place of business, the amount equivalent to capital as of the end date of the business year referred to in Article 8 (5) of the Act (hereafter referred to as "fictitious business year" in this Article) shall be deemed "zero", in calculating the taxable income of the fictitious business year pursuant to paragraphs (1) through (4). <Newly Inserted by Presidential Decree No. 19891, Feb. 28, 2007; Amended by Presidential Decree No. 23589, Feb. 2, 2012> |
| (7) | Where a foreign corporation ceases to have a domestic place of business, the amount equivalent to profits unremitted on the end date of the fictitious business year shall be deemed fully remitted on the end date of the fictitious business year, in calculating the taxable income of the fictitious business year pursuant to paragraph (5). <Newly Inserted by Presidential Decree No. 19891, Feb. 28, 2007> |
| Article 135 (Tax Credits for Losses from Disaster of Foreign Corporation) |
In applying tax credits for losses from disasters under Article 58 of the Act to a foreign corporation, the assets provided for in each subparagraph of Article 95 (1) shall be the assets held by the foreign corporation in the Republic of Korea.
SECTION 3 Reports, Payments, Settlements, Corrections, and Collection
| Article 136 (Reporting by Foreign Corporations) |
| (1) | Where a foreign corporation obligated to file a report on the tax base of corporate tax on income for each business year under Article 97 (1) of the Act cannot file the report provided for in Article 60 of the Act because the settlement of accounts of the headquarters has not been determined or on other inevitable grounds, the foreign corporation may apply for approval for extension of the filing deadline to the head of the tax office having jurisdiction over the place of tax payment, stating the grounds therefor within 60 days from the end date of the relevant business year. <Amended by Presidential Decree No. 21302, Feb. 4, 2009> |
| (2) | Upon receipt of an application filed under paragraph (1), the head of the tax office having jurisdiction over the place of tax payment shall determine whether to grant approval within seven days of receipt of the application. |
| (3) | Where the head of the tax office having jurisdiction over the place of tax payment determines whether to grant approval under paragraph (2), he/she shall notify the relevant foreign corporation of the determination without delay. |
| Article 136-2 Deleted. <by Presidential Decree No. 18706, Feb. 19, 2005> |
| Article 137 (Withholding for Foreign Corporations) |
| (2) | Notwithstanding paragraph (1), when a domestic corporation provided for in the subparagraphs of Article 51-2 (1) of the Act or a domestic corporation provided for in Article 104-31 (1) of the Act on Restriction on Special Cases concerning Taxation fail to pay dividend income accruing from disposal of the profits or surpluses by no later than three months after determination of the disposal, the dividend income shall be deemed paid on the day on which three months have passed. <Newly Inserted by Presidential Decree No. 19891, Feb. 28, 2007; Feb. 11, 2020; Feb. 17, 2021> |
| (4) | In withholding tax under Article 98 of the Act, the timing for paying domestically sourced interest income referred to in subparagraph 1 (b) of Article 93 of the Act shall be the last day of the filing deadline of the tax base on income for the relevant tax period or the relevant taxable year of a foreign corporation or non-resident that pays such income (referring to the last day of the extended filing deadline if the filing deadline is extended under Article 97 (2) of the Act). <Amended on Feb. 12, 2019> |
| (5) | In withholding tax under Article 98 of the Act, if the person liable for withholding has no domicile, residence, headquarters, main office, place for substantially managing its business, or domestic place of business (including a domestic place of business provided for in Article 120 of the Income Tax Act) in the Republic of Korea, the relevant foreign corporation shall appoint the tax manager under Article 82 of the Framework Act on National Taxes and reported thereon to the head of competent tax office. <Newly Inserted by Presidential Decree No. 17826, Dec. 30, 2002; Presidential Decree No. 18706, Feb. 19, 2005; Presidential Decree No. 19328, Feb. 9, 2006> |
| (6) | "Time prescribed by Presidential Decree" in Article 98 (14) of the Act means any of the following dates: <Newly Inserted by Presidential Decree No. 18174, Dec. 30, 2003; Presidential Decree No. 22577, Dec. 30, 2010> |
| 1. | In cases falling under Article 88 (1) 8 (a): Where a corporation disappears due to a merger, the registration date of the merger; where a corporation disappears or survives a division or divided merger, the registration date of the division or divided merger; |
| 2. | In cases falling under Article 88 (1) 8 (b) and (c): The date of determination for capital increase or decrease. |
| (7) | Any domestic corporation that has issued stocks, etc. shall withhold tax on other domestic source income provided for in subparagraph 10 (i) of Article 93 of the Act at the time specified in paragraph (6). <Newly Inserted by Presidential Decree No. 18174, Dec. 30, 2003; Presidential Decree No. 19891, Feb. 28, 2007; Presidential Decree No. 22577, Dec. 30, 2010; Feb. 12, 2019> |
| (8) | “Personal services prescribed by Presidential Decree” in the proviso to Article 98 (1) 4 of the Act mean services falling under Article 132 (6) 4. <Newly Inserted on Feb. 3, 2017; Feb. 12, 2019> |
| (9) | Where a transferee withholds tax as prescribed in Article 98 (1) of the Corporate Tax Act after a transferor files a report on and pays corporate tax as prescribed in Article 97 (1) of the Act when calculating the amount to be withheld under Article 98 (1) 5 of the Act, it shall be an amount computed after subtracting the amount that the relevant transferor has filed a report and paid. <Newly Inserted by Presidential Decree No. 21302, Feb. 4, 2009; Presidential Decree No. 22577, Dec. 30, 2010; Feb. 12, 2019> |
| (10) | “Amount prescribed by Presidential Decree" in the proviso to Article 98 (1) 8 (b) of the Act means the amount of virtual assets equivalent to the withholding amount according to the following formula: <Newly Inserted on Mar. 8, 2022> |
Virtual assets equivalent to the withholding amount = Amount calculated pursuant to Article 98 (1) 8 (b) (i) or (ii) of the Act / Amount of one virtual asset indicated by a virtual asset service provider that keeps and manages the relevant virtual assets at the time of exchanging or withdrawing the virtual assets
Note: When applying the denominator of this formula, the value when exchanging or withdrawing a virtual asset whose value is not expressed in a money amount shall be calculated by applying mutatis mutandis Article 88 (3) and (4) of the Enforcement Decree of the Income Tax Act. |
|
| (11) | “Amount prescribed by Presidential Decree” in Article 98 (1) 8 (c) of the Act means the market price at the time of acquisition. <Newly Inserted by Presidential Decree No. 24357, Feb. 15, 2013; Feb. 12, 2019; Feb. 11, 2020; Feb. 17, 2021; Feb. 15, 2022; Mar. 8, 2022> |
| (12) | Pursuant to Article 98 (16) of the Act, a virtual asset service provider, etc. shall, at the time of each withdrawal of virtual assets under its custody and management, sum up the amount payable per person according to the following formula on a monthly basis and pay it to the tax office having jurisdiction over the place of taxation, the Bank of Korea, or a post office. <Newly Inserted on Mar. 8, 2022> |
Amount due per person = (A ? D) x B/C
A: The cumulative amount of money withheld per person by a virtual asset service provider, etc. pursuant to Article 98 (1) 8 (b) of the Act (In the case of withholding following the exchange or withdrawal of virtual assets, referring to the amount pursuant to paragraph (10), expressed in units of virtual assets, sold for cash immediately upon exchange or withdrawal);
B: Withdrawal amount of virtual assets or cash per person. In such cases, the withdrawal amount of virtual assets means an amount pursuant to Article 129 (4).
C: The total amount of assets per person under the custody and management of a virtual asset service provider, etc.;
D: The cumulative amount of the amount payable per person calculated as of the time of the last withdrawal. |
|
| (13) | When applying the formula prescribed in paragraph (12), if a foreign corporation incurs a loss from a virtual asset transaction, a virtual asset service provider, etc. shall reflect the loss by adjusting the cumulative amount of money withheld for each person pursuant to Article 98 (1) 8 (b) of the Act (referring to value "A" in the formula prescribed in paragraph (12); hereafter in this paragraph referred to as "cumulative withholding amount") according to the following formula: <Newly Inserted on Mar. 8, 2022> |
Cumulative withholding amount at the time of the incurrence of loss = Cumulative withholding amount at the time of transaction immediately before the incurrence of loss - (the lesser of 20/100 of the loss amount and Z)
Z: Cumulative withholding amount at the time of transaction immediately before the incurrence of loss - The cumulative amount of money payable per person, calculated as of the withdrawal immediately prior to the loss. |
|
| (14) | A virtual asset service provider, etc. shall pay an amount equivalent to the amount deducted under paragraph (13) to a foreign corporation that incurs losses. <Newly Inserted on Mar. 8, 2022> |
| (15) | Pursuant to Article 98 (17) of the Act, a virtual asset service provider, etc. shall, for each taxpayer, verify whether a person who transfers, lends, or withdraws virtual assets in any of the following manners is subject to withholding before first withholding taxes pursuant to paragraph (16) of the same Article. <Newly Inserted on Mar. 8, 2022> |
| 1. | Receiving and verifying evidential data from the relevant taxpayer necessary to verify whether the taxpayer is subject to withholding; |
| 2. | Receiving and verifying information from the National Tax Service necessary to verify whether the tax payer is subject to withholding; |
| (16) | A virtual asset service provider, etc. shall verify whether the tax payer is still subject to withholding every three years from the verification conducted under paragraph (15). <Newly Inserted on Mar. 8, 2022> |
| Article 137-2 Deleted. <Feb. 28, 2023> |
| Article 138 (Withholding for Investment Brokers) |
In applying the proviso to Article 98 (1) 7 of the Act, where a foreign corporation which holds securities of the same type with different acquisition values (for bonds, it means bonds of the same type with the same issue conditions, such as the par value, date of issue and maturity and interest rates) transfer the securities, the acquisition value to be deducted from the transfer value shall be calculated in accordance with the moving average method. <Amended by Presidential Decree No. 21302, Feb. 4, 2009; Presidential Decree No. 22577, Dec. 30, 2010; Feb. 12, 2019>
| Article 138-2 (Special Cases concerning Reports on or Payment of Capital Gains on Transfer of Securities by Foreign Corporations) |
| (1) | A foreign corporation shall report and pay to the head of the tax office having jurisdiction over the location of a domestic corporation that issued the relevant securities, the amount equivalent to the withholding tax on its transfer gains from the transfer of stocks or investment certificates on which no withholding tax was imposed under Article 98-2 of the Act as the foreign corporation did not satisfy the taxation standards stipulated in the relevant tax treaty at the time of transfer of such stocks or investment certificates. |
| (2) | A foreign corporation that intends, pursuant to paragraph (1), to report and pay the tax equivalent to the withholding tax on its capital gains from the transfer of stocks or investment certificates on which no withholding tax was imposed at the time of transfer, shall submit an adjustment report on capital gains from the transfer of securities, separating the total amount of stocks it transferred and the total amount of stocks on which the withholding tax was not imposed during the same business year in the form stipulated by Ordinance of the Ministry of Economy and Finance. <Amended by Presidential Decree No. 20720, Feb. 29, 2008> |
| (3) | "Circumstances prescribed by Presidential Decree" in the main sentence of Article 98-2 (3) of the Act means the transfer of any of the following securities: <Newly Inserted by Presidential Decree No. 20619, Feb. 22, 2008; Presidential Decree No. 22951, Jun. 3, 2011> |
| 2. | Korean won-denominated securities (referring to securities that are traded outside the foreign securities market) that are traded in any foreign country. |
| (4) | A foreign corporation that intends to report and pay tax under Article 98-2 (3) of the Act shall report and pay it upon preparing a report on capital gains from transfer of securities by a foreign corporations in the form stipulated by Ordinance of the Ministry of Economy and Finance to the head of the tax office having the jurisdiction over the location of the domestic corporation that has issued the relevant securities, such as stocks. <Newly Inserted by Presidential Decree No. 20619, Feb. 22, 2008; Presidential Decree No. 20720, Feb. 29, 2008> |
| (5) | A foreign corporation that intends to report and pay tax under Article 98-2 (4) of the Act shall report and pay it upon preparing a report on donation income of a foreign corporation in the form stipulated by Ordinance of the Ministry of Economy and Finance to the head of the tax office having the jurisdiction over the location of the relevant assets (referring to the location of a domestic corporation that has issued the relevant securities, if such assets are the securities). <Newly Inserted by Presidential Decree No. 23589, Feb. 2, 2012> |
[This Article Newly Inserted by Presidential Decree No. 17033, Dec. 29, 2000]
| Article 138-3 (Special Cases concerning Withholding from Interest on Bonds of Foreign Corporations) |
| (1) | Anyone who pays interest, etc., on bonds, etc., subject to withholding tax to a foreign corporation to which Article 98 (1) of the Act applies (hereafter in this Article referred to as "foreign corporation") or who purchases bonds, etc., subject to withholding tax from a foreign corporation before being paid interest, etc., on bonds, etc., subject to withholding tax shall withhold the amount computed by applying the following tax rate to the paid amount, where the tax rate provided for in the Act, the Restriction of Special Taxation Act, or the relevant tax treaty (hereafter in this Article referred to as "applicable tax rate") is applied to such paid amount. In such cases, if the tax rate referred to in subparagraph 1 is higher than the one provided for in the former part of Article 73-2 (1) of the Act and a foreign corporation fails to prove the holding period of bonds, etc., subject to withholding tax, the total of the paid amount shall be deemed the amount equivalent to the interest that accrues during the holding period by the foreign corporation; and if the applicable tax rate referred to in subparagraph 1 is lower than the one provided for in the former part of Article 73-2 (1) of the Act and the foreign corporation fails to prove the holding period of bonds, etc., subject to withholding tax, the amount of the interest, etc., during the holding period by the relevant foreign corporation shall be deemed nil: <Amended by Presidential Decree No. 18706, Feb. 19, 2005; Presidential Decree No. 19328, Feb. 9, 2006; Presidential Decree No. 22577, Dec. 30, 2010; Presidential Decree No. 23589, Feb. 2, 2012; Feb. 12, 2019> |
| 1. | The applicable tax rate to the relevant foreign corporation with respect to the amount equivalent to the interest that accrues during the holding period by the relevant foreign corporation among the paid amount; |
| 2. | The tax rate provided for in the former part of Article 73-2 (1) 1 of the Act with respect to the amount paid less the amount equivalent to the interest that accrues during the holding period by the relevant foreign corporation under subparagraph1. |
| (2) | "Trading of repurchase bonds, etc., or other cases prescribed by Presidential Decree" in Article 98-3 (1) of the Act means any of the following transactions or a mixture of the following transactions: <Amended by Presidential Decree No. 22184, Jun. 8, 2010; Presidential Decree No. 22951, Jun. 3, 2011; Presidential Decree No. 26981, Feb. 12, 2016> |
| 1. | A transaction under which a foreign corporation sells or purchases bonds, etc. (including where such transactions are repeated subsequently) on the condition that it will repurchase or resell the bonds, etc., at certain prices upon expiration of a pre-determined period and the facts relevant to such transaction is confirmed by means of accounts of the Korea Securities Depository established under Article 294 of the Financial Investment Services and Capital Markets Act; |
| 2. | A transaction under which a foreign corporation lends bonds on the condition that it will have bonds of the same types and quantity returned upon expiration of a pre-determined period and the facts relevant to such transaction is confirmed by any transaction ledger (including an electronic transaction ledger) prepared by the bond lending and borrowing broker (referring to the Korea Securities Depository, a financial securities company, an investment trader or investment broker, as defined in the Financial Investment Services and Capital Markets Act). |
| (3) | Article 98-3 of the Act shall apply to the transactions provided for in paragraph (2), deeming that the amount equivalent to the interest income or dividend income accruing from the bonds, etc., during the period beginning on the date of selling or lending such bonds, etc., and ending on the date such bonds, etc., are repurchased or returned belongs to the seller or lender (referring to the initial seller or lender, where relevant transactions are repeated subsequently or where the transactions under paragraph (2) are mixed). <Amended by Presidential Decree No. 22184, Jun. 8, 2010; Presidential Decree No. 26981, Feb. 12, 2016> |
| (4) | Where the bonds, etc., sold to a purchaser or lent to a borrower (hereafter in this Article referred to as "purchaser, etc.") through the trading referred to in paragraph (2) are re-sold or re-lent to any third party, the tax equivalent to the amount of the interest during the holding period shall be withheld from the purchaser, etc. (excluding any corporation falling under any subparagraph of Article 111 (1)) under Articles 73-2 and 98-3 of the Act and Articles 133-2 and 156-3 of the Income Tax Act and the purchaser, etc., may be refunded the withheld tax pursuant to paragraph (5). <Amended by Presidential Decree No. 22184, Jun. 8, 2010; Feb. 12, 2019> |
| (5) | Any purchaser who intends to obtain a refund of the tax withheld under paragraph (4) shall file an application for refund, which shall be accompanied by the documents prescribed by Ordinance of the Ministry of Economy and Finance substantiating that the bonds, etc., sold or lent to any third party have been purchased or borrowed through the trading referred to in paragraph (2), with the head of the tax office having jurisdiction over the place of tax payment of the purchaser by no later than the tenth day of the month following the month in which the payment date of the withheld falls, and the head of the competent tax office in receipt of such application shall immediately refund the tax after verifying the fact of trading and the contents of the refund application. <Amended by Presidential Decree No. 22184, Jun. 8, 2010> |
| (6) | Article 111 (6) shall apply mutatis mutandis to the timing for paying interest, etc., on bonds, etc., to a foreign corporation. Article 113 shall apply mutatis mutandis to the computation of the holding period of bonds, etc., the computation method of the amount equivalent to the interest for the holding period, and the method of proving the holding period. Article 137 (2) shall apply mutatis mutandis to the payment of withholding tax. <Amended by Presidential Decree No. 21972, Dec. 31, 2009> |
| (7) | Deleted. <by Presidential Decree No. 18706, Feb. 19, 2005> |
[This Article Newly Inserted by Presidential Decree No. 17033, Dec. 29, 2000]
| Article 138-4 (Applying for Non-Taxation or Tax Exemption for Foreign Corporations under Tax Treaties) |
| (1) | A real beneficiary of domestic source income who intends to file an application for non-taxation or tax exemption under Article 98-4 (1) of the Act shall present an application for non-taxation or tax exemption in the form stipulated by Ordinance of the Ministry of Economy and Finance and a document certifying the real beneficiary of domestic source income (hereafter in this Article referred to as "application, etc.”) to the relevant income payer, who shall, in turn, file the application with the head of a tax office having the jurisdiction over the place of tax payment of the income payer, by the ninth day of the month immediately following the month in which the income payer pays the income. In such cases, in the case of a foreign investment scheme falling under the latter part of Article 98-4 (1) of the Act, a report on a foreign investment scheme subject to special cases of a real beneficiary in the form prescribed by Ordinance of the Ministry of Economy and Finance (hereafter in this Article and Articles 138-7 and 138-8 referred to as "report on a foreign investment scheme subject to special cases of a real beneficiary") shall be also submitted. <Amended on Jun. 8, 2009; Feb. 18, 2010; Dec. 30, 2010; Feb. 21, 2014; Feb. 3, 2017; Feb. 12, 2019; Feb. 11, 2020; Feb. 28, 2023> |
| (2) | Documents certifying the real beneficiary of domestic source income referred to in paragraph (1) shall be documents classified as follows: Provided, That if the domestic source income is paid through a foreign investment scheme (including a foreign investment scheme falling under the latter part of Article 98-4 (1) of the Act) and if the real beneficiary of domestic source income is a governmental organization of the other country to a tax treaty prescribed by the Ministry of Economy and Finance, subparagraph 2 shall apply regardless of the amount of tax applied for non-taxation or tax exemption: <Amended on Feb. 28, 2023> |
| 1. | When the amount of tax applied for non-taxation or tax exemption pursuant to Article 98-4 (1) of the Act is at least one billion won (including cases where the total amount of tax granted for non-taxation or exemption within one year from the end of the month in which the payment date of the domestic source income applied for non-taxation or tax exemption pursuant to the same article falls is at least one billion won): Documents according to the following classification: |
| (a) | A resident certificate issued by the competent authority of the country of residence of the relevant foreign entity; |
| (b) | The names and addresses of the members of the board of directors of the relevant foreign corporation, and the personal information and shareholding status of the shareholders, etc.: Provided, That where the number of shareholders, etc. exceeds 100, it shall be replaced with a statement of the number of shareholders, etc. by country and the total amount of investment; |
| (c) | Audit reports submitted by the foreign corporation to the country of residence for the last three years (in the case of a foreign corporation for which three years have not passed since its establishment, referring to the period from the date of its establishment to the day before the date of submission of an application, etc.); |
| (d) | Documents verifying the place of registration and the owner or licensee of the rights, assets, or information falling under any item of subparagraph 8 of Article 93 of the Act (hereafter in this item referred to as "rights, etc."), such as a license agreement, etc. of the rights, etc. (only applicable when the domestic source income applied for non-taxation or tax exemption is domestically sourced royalty income referred to in subparagraph 8 of Article 93 of the Act); |
| 2. | In cases other than subparagraph 1: A resident certificate issued by the competent authority of the country of residence of the foreign corporation. |
| (3) | A foreign corporation may authorize its agent (including any tax manager designated under Article 82 of the Framework Act on National Taxes) to file an application for non-taxation or tax exemption referred to in paragraph (1). <Amended by Presidential Decree No. 18706, Feb. 19, 2005> |
| (4) | Where a financial company, etc., assumes charge of, trades, brokers bonds, etc., of a foreign corporation or makes such transactions as an agent in accordance with Article 98-3 of the Act, the agency or delegation relationship shall be deemed to exist between the financial company, etc., and the foreign corporation for purposes of paragraph (1). <Amended by Presidential Decree No. 23589, Feb. 2, 2012> |
| (5) | Where an investment trader or broker, or a corporation that has issued stocks withholds tax in connection with the transfer of securities under Article 98 (7) of the Act, the agency or delegation relationship shall be deemed to exist among the investment trader or broker, or the corporation that has issued stocks and the relevant foreign corporation for purposes of paragraph (1). <Amended by Presidential Decree No. 23589, Feb. 2, 2012> |
| (6) | Where paragraphs (4) and (5) are not applicable and an income payer does not have his/her domicile, residence, headquarters, principal place of business, place for substantially managing its business, or a place of business in the Republic of Korea (including any domestic place of business defined under Article 120 of the Income Tax Act), the real beneficiary of domestic source income may directly file an application, etc. with the head of a tax office having jurisdiction over its place of tax payment, without presenting the application to the income payer, notwithstanding paragraph (1). <Amended by Presidential Decree No. 17826, Dec. 30, 2002; Presidential Decree No. 18706, Feb. 19, 2005; Presidential Decree No. 19328, Feb. 9, 2006; Presidential Decree No. 25194, Feb. 21, 2014; Feb. 28, 2023> |
| (7) | An application, etc. need not be filed with respect to any of the following income, which is the domestic source income provided for in Article 93 of the Act, notwithstanding paragraph (1): <Amended by Presidential Decree No. 18706, Feb. 19, 2005; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 21302, Feb. 4, 2009; Presidential Decree No. 21526, Jun. 8, 2009; Presidential Decree No. 22577, Dec. 30, 2010; Feb. 28, 2023> |
| 2. | Deleted; <by Presidential Decree No. 21302, Feb. 4, 2009> |
| 3. | Other domestic source income prescribed by Ordinance of the Ministry of Economy and Finance. |
| (8) | Deleted. <Feb. 12, 2019> |
| (9) | In the application of paragraph (1), where domestic source income is paid through a foreign investment scheme, the foreign investment scheme shall receive an application, etc. from the real beneficiary and present the application so presented for non-taxation or tax exemption to the income payer, along with a report on the foreign investment scheme in the form stipulated by Ordinance of the Ministry of Economy and Finance (hereafter in this Article and Articles 138-7 and 138-8 referred to as “report on the foreign investment scheme”), accompanied by a detailed statement of the real beneficiary, and the income payer shall, in turn, file the application, etc. with the head of the tax office having jurisdiction over the place of tax payment by no later than the ninth day of the month immediately following the month in which the income is paid: Provided, That the foregoing shall not apply where the foreign investment scheme is a foreign public-offering collective investment scheme, defined under the proviso to Article 138-7 (3), who presents the following documents: <Newly Inserted by Presidential Decree No. 25194, Feb. 21, 2014; Feb. 12, 2019; Feb. 11, 2020; Feb. 28, 2023> |
| 1. | A document providing the matters specified in Article 138-7 (3); |
| 2. | A report on the foreign investment scheme, including statements of the number of real beneficiaries of the foreign investment scheme in each country and the total investment amount; |
| 3. | An application for non-taxation or tax exemption, prepared in the name of the foreign public-offering collective investment scheme. |
| (10) | For the purpose of paragraph (9), where a foreign investment scheme (hereafter in this Article referred to as “primary foreign investment scheme”) invests in another foreign investment scheme (hereafter in this Article referred to as “secondary foreign investment scheme”), the primary foreign investment scheme shall receive an application, etc. for each real beneficiary from the secondary foreign investment scheme and present a report on the foreign investment scheme, including statements (referring to the document proving that the secondary foreign investment scheme is a foreign public-offering collective investment scheme, as is the case, and statements of the number of real beneficiaries of the foreign investment scheme in each country and the total investment amount), and the application, etc. so received. In such cases, if several foreign investment schemes are related with one another successively in investments, the immediately preceding invested foreign investment scheme shall be deemed the primary foreign investment scheme, while the investing foreign investment scheme shall be deemed the secondary foreign investment scheme. <Newly Inserted by Presidential Decree No. 25194, Feb. 21, 2014; Feb. 28, 2023> |
| (11) | A person who falls under any subparagraph of Article 138-7 (5) in applying paragraphs (1) and (9) shall be deemed a real beneficiary. <Newly Inserted by Presidential Decree No. 25194, Feb. 21, 2014> |
| (12) | For the purpose of paragraph (1) or (9), an application, etc.; report on a foreign investment scheme subject to special cases of a real beneficiary; or report on a foreign investment scheme need not be presented for three years from the date the initial application is presented in accordance with paragraph (1) or (9): Provided, That if there is any change in the details thereof, a report on the change shall be presented in accordance with paragraph (1) or (9) by no later than the ninth day of the month immediately following the month in which income is initially paid after the change occurs. <Newly Inserted by Presidential Decree No. 25194, Feb. 21, 2014; Feb. 11, 2020; Feb. 28, 2023> |
| (13) | “If an income payer has not received an application, etc., if an income payer is unable to identify a real beneficiary with the documents received, or if an income payer has any other ground specified by Presidential Decree” in Article 98-4 (3) of the Act means any of the following cases. In such cases, subparagraph 2 or 3 shall apply only to the portion relating to which such an event occurs, and subparagraph 3 shall not apply to any foreign public-offering collective investment scheme: <Newly Inserted by Presidential Decree No. 25194, Feb. 21, 2014; Feb. 11, 2020; Feb. 28, 2023> |
| 1. | Where an income payer has not received an application, etc., report on a foreign investment scheme subject to special cases of a real beneficiary, or report on a foreign investment scheme; |
| 2. | Where a person fails to comply with a request to supplement the details of the application, etc., report on a foreign investment scheme subject to special cases of a real beneficiary, or report on a foreign investment scheme, already presented; |
| 3. | Where it is impossible to identify the real beneficiary with the application, etc., report on a foreign investment scheme subject to special cases of a real beneficiary, or report on a foreign investment scheme, already presented; |
| (14) | Each income payer and each foreign investment scheme shall preserve relevant documents, including applications, etc., reports on a foreign investment scheme subject to special cases of a real beneficiary, and reports on the foreign investment scheme for five years from the day immediately after the deadline under paragraph (1). In such cases, upon receipt of a request from the head of the tax office having jurisdiction over the income payer’s place of tax payment, the income payer or foreign investment scheme shall submit such documents. <Newly Inserted by Presidential Decree No. 25194, Feb. 21, 2014; Feb. 11, 2020; Feb. 28, 2023> |
| (15) | A person who intends to request a correction in accordance with Article 98-4 (5) of the Act shall file a request for correction for the application of non-taxation or tax exemption in the form stipulated by Ordinance of the Ministry of Economy and Finance with the head of the tax office having jurisdiction over the income payer’s place of tax payment, along with the following documents. In such cases, such documents shall be accompanied by translations in Korean. However, English documents only may be submitted in cases acknowledged by the Commissioner of the National Tax Service: <Newly Inserted by Presidential Decree No. 25194, Feb. 21, 2014; Feb. 12, 2019; Feb. 11, 2020; Feb. 28, 2023> |
| 2. | Deleted. <Feb. 28, 2023> |
| 3. | A report of a foreign investment scheme subject to special cases of a real beneficiary (limited to where a report of a foreign investment scheme subject to special cases of a real beneficiary is to be submitted under the latter part of paragraph (1)) or a report on the foreign investment scheme (limited to where a report on the foreign investment scheme is to be submitted under paragraph (9)); |
| (16) | Article 138-6 (2) through (4) shall apply mutatis mutandis to the procedure for requesting corrections under paragraph (15). <Newly Inserted by Presidential Decree No. 25194, Feb. 21, 2014> |
[This Article Newly Inserted by Presidential Decree No. 17457, Dec. 31, 2001]
| Article 138-5 (Procedures for Prior Approval to Apply Non-Taxation, Tax Exemption, or Restricted Tax Rates under Tax Treaties) |
| (1) | A person who intends to obtain prior approval under the proviso to Article 98-5 (1) shall file an application for prior approval of special cases concerning withholding in the form stipulated prescribed by Ordinance of the Ministry of Economy and Finance with the Commissioner of the National Tax Service, along with the following documents: Provided, That the details of the original report have been changed due to changes in terms and conditions of a contract after prior approval is granted under paragraph (2), an application for prior approval shall be re-filed: <Amended by Presidential Decree No. 20619, Feb. 22, 2008; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 21302, Feb. 4, 2009; Presidential Decree No. 23589, Feb. 2, 2012> |
| 1. | The resident certificate issued by a signatory state to the relevant tax treaty (hereinafter referred to as "signatory state to the relevant tax treaty"); |
| 2. | Copies of the report on incorporation or establishment of the relevant corporation or organization and the articles of incorporation or association; |
| 3. | The names and addresses of the members of the board of directors; |
| 4. | Personal details of stockholders, etc., and their current equity holdings; |
| 5. | The number of employees of the relevant corporation or organization and the division of work by employee; |
| 6. | A statement detailing the economic and business motives related to investment to earn the relevant domestic source income; |
| 7. | Means to raise the investment fund to earn the relevant domestic source income; |
| 8. | A statement or plan detailing how to dispose of the relevant domestic source income after receipt thereof; |
| 9. | Tax reports, audit reports, financial statements and accompanying documents submitted to the tax authorities of a signatory state to the relevant tax treaty for the past three years (in the case of a corporation with respect to which three years have not passed yet after its incorporation, it shall be the period from the date of incorporation to the date of application); |
| 10. | In cases falling under paragraph (2) 3, matters registered for listing on the securities market of a signatory state to the relevant tax treaty and documents verifying that transactions are regularly conducted on that securities market; |
| 11. | In cases falling under paragraph (2) 5, documents verifying eligible beneficiaries of pensions and funds; |
| 12. | In cases falling under paragraph (2) 7, documents verifying that the financial authorities of a signatory state to the relevant tax treaty properly regulate and documents verifying the stocks and equity shares currently held by the investors in the relevant investment company, etc. referred to in the same subparagraph. |
| (2) | Upon receipt of an application for prior approval filed under paragraph (1), the Commissioner of the National Tax Service may grant prior approval to a corporation, if the corporation that is directly and indirectly entitled to receive the income referred to in subparagraph 1, 2, 8, or 9 of Article 93 of the Act (hereafter in this Article referred to as "corporation entitled to receive the income") falls under any of the following cases in connection with the relevant domestic source income: <Amended by Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 22577, Dec. 30, 2010; Presidential Decree No. 23589, Feb. 2, 2012; Presidential Decree No. 27828, Feb. 3, 2017> |
| 1. | Where the corporation entitled to receive the income is a real beneficiary and is a corporation of a signatory state to the relevant tax treaty; |
| 2. | Where the corporation entitled to receive the income is a government agency, etc. (hereinafter referred to as "government agency, etc.") of a signatory state to the relevant tax treaty, which is prescribed by Ordinance of the Ministry of Economy and Finance; |
| 3. | Where the stocks issued by the corporation entitled to receive the income are the stocks of any corporation listed on the securities market (hereafter in this Article referred to as "listed corporation") recognized under statutes or regulations of a signatory state to the relevant tax treaty and transactions prescribed by Ordinance of the Ministry of Economy and Finance are regularly conducted; |
| 4. | Where at least 50/100 of the total number of issued stocks (including equity shares) of the corporation entitled to receive the income are owned, either directly or indirectly, by any individual, government agency, etc., or listed corporation of a signatory state to the relevant tax treaty; |
| 5. | Where the corporation entitled to receive the income is any pension, fund or similar organization of a signatory state to the relevant tax treaty, at least 50/100 of persons who benefit from such pension, fund or organization are the residents of a signatory state to the relevant tax treaty; |
| 6. | Where the ratio of the revenue amount (in cases of any corporation that has been incorporated within three years, the revenue amount that has been earned from its incorporation to the present time) that accrues for the most recent three years from the holding or transfer of stocks and bonds or the use or transfer of intangible assets does not exceed 10/100 of the revenue amount for the most recent three years (in cases of any corporation that has been incorporated within three years, the revenue amount that has been earned from its incorporation to the present time) of the corporation entitled to receive the income; |
| 7. | Where the corporation entitled to receive the income meets the requirements provided for in Article 138-7 (3) 1 and 2; |
| 8. | Where the tax to be borne by the corporation entitled to receive the income on the relevant income is at least 50/100 of marginal profits between the tax calculated by applying the tax rate referred to in Article 98 of the Act and the amount to be taxed under the tax treaty of the relevant country. |
| (3) | When it is deemed necessary to supplement and correct the details of an application for prior approval filed under paragraph (1), the Commissioner of the National Tax Service may request the relevant applicant to supplement and correct it within a given period not exceeding 30 days. In such cases, the period for supplement and collection shall be included in the period referred to in paragraph (5). |
| (4) | A request for supplement and correction referred to in paragraph (3) shall be made in writing stating the following: |
| 1. | Matters to be supplemented and corrected; |
| 2. | Grounds for requesting the supplement and correction; |
| 3. | The period for the supplement and correction; |
| 4. | Other necessary matters. |
| (5) | The Commissioner of the National Tax Service shall notify each applicant of whether he/she grants approval within three months of the receipt of the application filed under paragraph (1). |
| (6) | The Commissioner of the National Tax Service shall revoke the prior approval granted if the submitted documents is found to contain any false representation. |
| (8) | In applying paragraph (1), an application for prior approval of special cases concerning withholding and accompanying documents shall be submitted along with translations in Korean: Provided, That English documents only may be submitted in cases acknowledged by the Commissioner of the National Tax Service. <Newly Inserted by Presidential Decree No. 21302, Feb. 4, 2009> |
[This Article Newly Inserted by Presidential Decree No. 19328, Feb. 9, 2006]
| Article 138-6 (Procedures for Requesting Corrections to Apply Non-Taxation, Tax Exemption, or Restricted Tax Rates under Tax Treaties) |
| (1) | Anyone who intends to request a correction under Article 98-5 (2) of the Act shall file a request for correction to apply the special cases concerning withholding in the form stipulated by Ordinance of the Ministry of Economy and Finance, which shall be accompanied by documents provided for in Article 138-5 (1) 1 through 9, with the head of the tax office having jurisdiction over the place of the tax payment of the person liable for withholding. In such cases, supporting documents shall be submitted along with translations in Korean. However, English documents only may be submitted in cases acknowledged by the Commissioner of the National Tax Service. <Amended by Presidential Decree No. 20720, Feb. 29, 2008; Feb. 12, 2019> |
| (2) | Where the person who has received the income referred to in subparagraph 1, 2, 8, or 9 of the Act, with respect to which a request for correction has been filed under paragraph (1), is the real beneficiary of such income, the head of the tax office shall make a correction. <Amended by Presidential Decree No. 20619, Feb. 22, 2008> |
| (3) | When it is deemed necessary to supplement the details of a request for correction filed under paragraph (1), the head of the tax office may request the applicant to supplement it within a given period not exceeding 30 days. In such cases, the period for supplement shall not be included in the period provided for in Article 98-5 (3) of the Act. |
| (4) | A request for correction referred to in paragraph (3) shall be filed in writing stating the following matters: |
| 1. | Matters to be corrected; |
| 2. | Grounds for requesting a correction; |
| 3. | The period for correction; |
| 4. | Other necessary matters. |
[This Article Newly Inserted by Presidential Decree No. 19328, Feb. 9, 2006]
| Article 138-7 (Special Cases concerning Withholding Procedures to Apply Restricted Tax Rates under Tax Treaties to Foreign Corporations) |
| (1) | Where a real beneficiary of any domestic source income that intends to apply the restrictive tax rates under Article 98-6 (1) of the Act, he/she shall submit a request for application of restrictive tax rates (hereafter referred to as "request for application of restrictive tax rates" in this Article) to the domestic source income in the form stipulated by Ordinance of the Ministry of Economy and Finance to the relevant person liable for withholding before receiving the relevant domestic source income. In such cases, in the case of a foreign investment scheme falling under the latter part of Article 98-6 (1) of the Act, a report on a foreign investment scheme subject to special cases of a real beneficiary shall also be submitted; a request for application of restrictive tax rates may not be submitted with respect to the domestic source income paid to a foreign securities depository referred to in subparagraph 5 of Article 296 of the Financial Investment Services and Capital Markets Act through an account opened at the Korea Securities Depository under Article 294 of the same Act. <Amended on Feb. 12, 2019; Feb. 11, 2020> |
| (2) | Deleted. <Feb. 12, 2019> |
| (3) | In applying paragraph (1), where the domestic source income is paid through a foreign investment scheme, the foreign investment scheme shall receive a request for application of restrictive tax rates from the relevant real beneficiary and submit a report on foreign investment schemes along with the detailed statement on real beneficiaries, to the person liable for withholding before receiving the domestic source income: Provided, That the same shall not apply where a foreign investment scheme that meets all of the following requirements (hereafter referred to as "overseas public-offering collective investment scheme" in this Article) submits a report on the foreign investment scheme, along with documents verifying the following matters and the detailed statements on the number of the real beneficiaries of the relevant foreign investment scheme per country and the total investments: <Amended on Feb. 12, 2019> |
| 2. | That it shall not issue securities through private offering and the number of investors as at the end date of the immediately preceding business year (referring to the submission date of a report on the foreign investment scheme in the case of a newly established foreign investment scheme) is 100 or more (where the investor is another foreign investment scheme, such foreign investment scheme shall be deemed one person); |
| 3. | That it shall not be any foreign investment scheme to which the benefits under the tax treaty do not apply. |
| (4) | Where a foreign investment scheme (hereafter referred to as "primary foreign investment scheme" in this Article) receives an investment from another foreign investment scheme (hereafter referred to as "secondary foreign investment scheme" in this Article), the primary foreign investment scheme shall receive a report on the foreign investment scheme, along with the detailed statement on real beneficiaries (where the relevant secondary foreign investment scheme is an overseas public-offering collective investment scheme, referring to the documents to verify such fact, and the detailed statements on the real beneficiaries of the relevant foreign investment scheme per country and the total investments) from the second foreign investment scheme and submit them. In such cases, where several foreign investment schemes are in a serial investment relationship, the immediately preceding invested foreign investment scheme that receive investments shall be deemed the primary foreign investment scheme and the investing foreign investment scheme shall be deemed the secondary foreign investment scheme. |
| (5) | In applying paragraph (1) or (3), any of the followings shall be deemed a real beneficiary: |
| 2. | A fund established overseas as a non-profit organization established under the laws of the counterpart country of the tax treaty which does not distribute the yields to its members; |
| 3. | Deleted. <Feb. 12, 2019> |
| (6) | A request for the application of restrictive tax rates, report on a foreign investment scheme subject to special cases of a real beneficiary, or report on a foreign investment scheme submitted under paragraph (1) or (3) need not be resubmitted within three years from the date of its submission: Provided, That, if there is any change in the contents thereof, a report on the change shall be presented in accordance with paragraph (1) or (3) before income is initially paid after the change occurs. <Amended by Presidential Decree No. 25194, Feb. 21, 2014> |
| (7) | "The grounds prescribed by Presidential Decree" in Article 98-6 (3) of the Act mean the following cases. In such cases, subparagraph 2 or 3 shall apply only to the portion relating to which such an event occurs, and subparagraph 3 shall not apply to a foreign public-offering collective investment scheme: <Amended by Presidential Decree No. 25194, Feb. 21, 2014; Feb. 11, 2020> |
| 1. | Where a request for application of restrictive tax rates, report on a foreign investment scheme subject to special cases of a real beneficiary, or report on the foreign investment scheme is not submitted; |
| 2. | Failure to comply with the request to supplement the details stated on the submitted request for application of restrictive tax rates, report on a foreign investment scheme subject to special cases of a real beneficiary, or report on the foreign investment scheme; |
| 3. | Where it is impossible to identify who the real beneficiary is with the request for application of restrictive tax rates, report on a foreign investment scheme subject to special cases of a real beneficiary, or the report on the foreign investment scheme, already submitted. |
| (8) | Every person liable for withholding and foreign investment scheme shall keep the relevant data, such as requests for application of restrictive tax rates, reports on a foreign investment scheme subject to special cases of a real beneficiary, or reports on the foreign investment scheme for five years from the day following the payment deadline of withholding tax under Article 98 (1) of the Act and where the head of the tax office having jurisdiction over the place of tax payment of the relevant person liable for withholding requests the submission thereof, they shall submit them. <Amended on Feb. 11, 2020> |
[This Article Newly Inserted by Presidential Decree No. 23589, Feb. 2, 2012]
| Article 138-8 (Procedures for Requesting Correction to Apply Restrictive Tax Rates under Tax Treaty to Foreign Corporations) |
| (1) | Anyone who intends to request a correction under Article 98-6 (4) of the Act shall file a request for correction to apply restrictive tax rates in the form stipulated by Ordinance of the Ministry of Economy and Finance, accompanied by the following documents verifying that he/she is the real beneficiary of the domestic source income with the head of the tax office having jurisdiction over the place of the tax payment of the person liable for withholding. In such cases, evidentiary documents shall be submitted along with Korean translations, however, English documents only may be submitted in cases acknowledged by the Commissioner of the National Tax Service: <Amended on Feb. 12, 2019; Feb. 11, 2020> |
| 1. | A request for application of restrictive tax rates referred to in Article 138-7 (1); |
| 2. | A resident certificate issued by the authorities of the country of residence of the relevant real beneficiary; |
| 3. | A report of a foreign investment scheme subject to special cases of a real beneficiary (limited to where a report of a foreign investment scheme subject to special cases of a real beneficiary is to be submitted under the latter part of Article 138-7 (1)) or a report on the foreign investment scheme (limited to where a report on the foreign investment scheme is to be submitted under paragraph (3) of the same Article); |
| (2) | Articles 138-6 (2) through (4) shall apply mutatis mutandis to procedures for requesting a correction under paragraph (1). |
[This Article Newly Inserted by Presidential Decree No. 23589, Feb. 2, 2012]
| Article 139 (Special Cases concerning Reports on and Payment of Corporate Tax on Income of Foreign Corporation from Personal Services) |
A foreign corporation that intends to file a report on and pay corporate tax on the income accrued by rendering personal services in the Republic of Korea referred to in subparagraph 6 of Article 93 of the Act pursuant to Article 99 of the Act shall submit a report on income from human services by foreign corporations in the form stipulated by Ordinance of the Ministry of Economy and Finance, along with documents proving expenses related to such income. <Amended on Feb. 12, 2019> [This Article Newly Inserted by Presidential Decree No. 21302, Feb. 4, 2009]
CHAPTER V (Articles 140 through 151) Deleted.
CHAPTER VI SUPPLEMENTARY PROVISIONS
| Article 152 (Reports on Incorporation or Establishment of Corporation) |
| (1) | Pursuant to Article 109 (1) of the Act, the representative of a corporation shall file a report on incorporation 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, accompanied by the following documents: <Amended by Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 23589, Feb. 2, 2012; Presidential Decree No. 24357, Feb. 15, 2013; Presidential Decree No. 24638, Jun. 28, 2013> |
| 1. | Detailed statements on stockholders, etc. pursuant to paragraph (2); |
| (2) | "Detailed statement on stockholders, etc. prescribed by Presidential Decree" in the former of Article 109 (1) of the Act, with the exception of its subparagraphs, means the detailed statement on stockholders, etc. in the form stipulated by Ordinance of the Ministry of Economy and Finance, stating the following matters based on the actual holders of stocks, etc.: <Amended by Presidential Decree No. 23589, Feb. 2, 2012> |
| 1. | The names and resident registration numbers of stockholders, etc. or the name, business registration number or identification number of the corporation; |
| 2. | The holding status of the stocks, etc. by each stockholder, etc. |
| (3) | A person responsible for management of a foreign corporation referred to in Article 109 (2) of the Act shall file a report on establishment, accompanied by the documents referred to in the subparagraphs of paragraph (4), with the head of the tax office having jurisdiction over the place of tax payment. |
| (4) | "Documents prescribed by Presidential Decree" in the former part of Article 109 (2) of the Act, with the exception of its subparagraph, means the following documents: <Amended by Presidential Decree No. 22951, Jun. 3, 2011> |
| 1. | Documents concerning the registration of the headquarters, etc.; |
| 2. | The articles of incorporation; |
| 3. | Deleted. <by Presidential Decree No. 22467, Nov. 2, 2010> |
| (5) | Upon receipt of a report filed under paragraph (3), the head of the tax office having jurisdiction over the place of tax payment shall verify the corporation registration certificate of the branch by sharing administrative information under Article 36 (1) of the Electronic Government Act: Provided, That the same shall not apply where the reporter submits other documents proving the details of the business operations of the domestic place of business. <Newly Inserted by Presidential Decree No. 22467, Nov. 2, 2010> |
| Article 153 (Reports on Person Responsible for Management) |
| (1) | Where a foreign corporation changes a person responsible for management, it shall, without delay, report the name and the address or residence of the new person responsible for management to the head of the tax office having jurisdiction over the place of tax payment. |
| (2) | The person responsible for management referred to in paragraph (1) shall be a person who has an address or residence in the jurisdiction of the tax office having jurisdiction over the place of tax payment of the relevant foreign corporation for at least six months. |
| (3) | Where the person responsible for management referred to in paragraph (1) changes his/her address or residence, he/she shall, without delay, report thereon to the head of the tax office having jurisdiction over the place of tax payment. |
| Article 154 (Business Registration) |
| (1) | A corporation which intends to file for registration under Article 111 (1) of the Act shall file an application for business registration for each place of business within 20 days from the start date of the relevant business year with the head of the tax office having jurisdiction over the place of tax payment. |
| (3) | Where the Commissioner of the National Tax Service does not assign a business registration number to a corporation, he/she shall assign an identification number to the corporation. |
| Article 155 (Making Entry in Books by Double Entry Bookkeeping System) |
Making an entry in the books by the double entry bookkeeping system referred to in Article 112 of the Act means making an entry into books according to the standard fixed format of making duplicate records and calculations of each and every change in the assets and capital of a corporation.
| Article 155-2 (Obligation to Prepare and Keep Detailed Statements of Donation Receipts Issued) |
| (1) | “Electronic method prescribed by Presidential Decree” in Article 75-4 (2) of the Act means using the electronic donation receipt issuance system established by the Commissioner of the National Tax Service. <Newly Inserted on Feb. 17, 2021> |
| (2) | The Commissioner of the National Tax Service may prescribe detailed matters necessary for applying for issuance of electronic donation receipts, methods of issuance, etc. to the extent necessary for tax payment management. <Newly Inserted on Feb. 17, 2021> |
| (3) | "A detailed statement of donation receipts issued to each donor in the form prescribed by Presidential Decree" in Article 112-2 (1) of the Act means a statement in which all the following matters are fully described: <Amended by Presidential Decree No. 20619, Feb. 22, 2008; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 25194, Feb. 21, 2014; Feb. 17, 2021> |
| 1. | The name, resident registration number, and address of each donor (the trade name, business registration number, and principal place of business of the corporation, if the donor is a corporation); |
| 2. | The amount of donations; |
| 3. | The dates on which donations are made; |
| 4. | The dates on which the donation receipts are issued; |
| 5. | Other matters prescribed by Ordinance of the Ministry of Economy and Finance. |
[This Article Wholly Amended by Presidential Decree No. 19329, Feb. 9, 2006]
| Article 156 (Separate Accounting) |
| (1) | Any corporation provided for in Article 113 (1) through (5) of the Act shall keep separate accounting with independent titles of account for assets, liabilities, gross income, and deductible expenses which must be separated by type of business or asset in the account books of the corporation, as prescribed by Ordinance of the Ministry of Economy and Finance. <Amended by Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 21302, Feb. 4, 2009> |
| (2) | A determination as to whether an enterprise falls within the category of small and medium enterprises under the proviso, with the exception of the subparagraphs, of Article 113 (3) or the proviso, with the exception of the subparagraphs, of paragraph (4) of the same Article of the Act shall be based on the status before a merger or division and merger, while a determination as to whether a corporation engages in the same business (limited to the business to which a corporation has succeeded in cases of a divided corporation) shall be based on the class of the Korean Standard Industrial Classification, except as otherwise provided for in Ordinance of the Ministry of Economy and Finance. In such cases, if the surviving corporation, merged corporation, divided corporation (limited to the business to which the corporation has succeeded) or counterpart corporation to a division and merger engages in a business that falls within at least two classes, it shall be deemed to engage in the same business, only if the value of assets for business use for the same business exceeds 70/100 of the value of assets for business use, respectively. <Newly Inserted by Presidential Decree No. 21302, Feb. 4, 2009; Presidential Decree No. 26068, Feb. 3, 2015; Feb. 12, 2019> |
| Article 157 Deleted. <by Presidential Decree No. 21302, Feb. 4, 2009> |
| Article 158 (Receipt and Keeping of Evidentiary Documents of Expenditures) |
| (1) | “Business operator prescribed by Presidential Decree" in the main sentence of Article 116 (2) of the Act, with the exception of its subparagraphs, means any of the following business operators: <Amended by Presidential Decree No. 17033, Dec. 29, 2000; Presidential Decree No. 17457, Dec. 31, 2001; Presidential Decree No. 18706, Feb. 19, 2005; Presidential Decree No. 19328, Feb. 9, 2006; Presidential Decree No. 19891, Feb. 28, 2007; Presidential Decree No. 22951, Jun. 3, 2011; Presidential Decree No. 24357, Feb. 15, 2013; Presidential Decree No. 24638, Jun. 28, 2013; Feb. 12, 2019> |
| 1. | A corporation: Provided, That the following corporations shall be excluded herefrom: |
| (a) | A non-profit corporation (excluding the portion related to the profit-making business provided for in Article 3 (1)); |
| (b) | The State or a local government; |
| (d) | A foreign corporation with no domestic place of business; |
| (2) | "Cases prescribed by Presidential Decree" in the proviso to Article 116 (2) of the Act, with the exception of its subpragraphs, means the following cases: <Amended by Presidential Decree No. 18174, Dec. 30, 2003; Presidential Decree No. 18706, Feb. 19, 2005; Presidential Decree No. 19328, Feb. 9, 2006; Presidential Decree No. 19891, Feb. 28, 2007; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 21302, Feb. 4, 2009; Presidential Decree No. 22951, Jun. 3, 2011; Presidential Decree No. 27828, Feb. 3, 2017> |
| 1. | Where the transaction amount (including value-added tax) of commodities or services provided for in each transaction does not exceed 30,000 won: |
| (a) | through (c) Deleted; <by Presidential Decree No. 21302, Feb. 4, 2009> |
| 2. | Where commodities or services are provided directly by farmers or fishermen (referring to persons engaging in the crop growing industry, the livestock industry, the combined farming industry, the forestry industry, or the fisheries industry, as listed under the farming industry in the Korean Standard Industrial Classification, and excluding corporations); |
| 4. | Where services referred to in Article 164 (8) 1 are provided; |
| 5. | Other cases prescribed by Ordinance of the Ministry of Economy and Finance. |
| (3) | "Things prescribed by Presidential Decree" in Article 116 (2) 1 of the Act means any of the following (hereafter in this Article referred to as “debit card, etc.”): <Amended on Feb. 12, 2019> |
| 2. | Credit cards issued overseas; |
| (4) | Where the following documented evidence is kept, the credit card sales slips referred to in Article 116 (2) 1 of the Act shall be deemed received and kept: <Newly Inserted by Presidential Decree No. 17826, Dec. 30, 2002; Presidential Decree No. 18174, Dec. 30, 2003; Presidential Decree No. 18706, Feb. 19, 2005> |
| (5) | If a corporation receives any of the following documents certifying expenditure, the corporation shall be deemed to keep a document certifying expenditure in accordance with Article 116 (1) of the Act and thus shall not be obliged to keep such document additionally: <Newly Inserted by Presidential Decree No. 24357, Feb. 15, 2013; Presidential Decree No. 24638, Jun. 28, 2013; Feb. 11, 2020> |
| 2. | A credit card sales slip specified in Article 116 (2) 1 of the Act; |
| 4. | An electronic tax invoice transmitted to the Commissioner of the National Tax Service in accordance with Article 163 (8) of the the Income Tax Act. |
| (6) | Where a corporation whose revenue for the immediately preceding business year is not less than three billion won (or the amount computed by multiplying three billion by the number of months in the relevant business year and then dividing it by 12 in the case of a corporation whose business year is less than one year) receives and keeps documents certifying expenditure in accordance with Article 116 of the Act, the corporation shall prepare and keep a list of documents certifying expenditure in the form prescribed by Ordinance of the Ministry of Economy and Finance. <Newly Inserted by Presidential Decree No. 26981, Feb. 12, 2016; Feb. 17, 2021> |
[Title Amended on Feb. 12, 2019]
| Article 159 (Becoming Credit Card Merchants) |
| (4) | Where a credit card merchant refuses a transaction by credit card or issues a false credit card sales slip, the relevant consumer shall, when intending to file a report under Article 117 (3) of the Act, submit a report stating the following matters, along with the documents or materials verifying the relevant facts, to the Commissioner of the National Tax Service, the commissioner of a regional tax office or the head of the competent tax office, within one month from the date on which the transaction was refused or the false sales slip was issued: Provided, That the evidentiary documents or materials shall be submitted only to the extent that it is possible: <Newly Inserted by Presidential Decree No. 19891, Feb. 28, 2007; Presidential Decree No. 21302, Feb. 4, 2009; Presidential Decree No. 22035, Feb. 18, 2010; Feb. 12, 2019> |
| 1. | The name of the person who files a report; |
| 2. | The name of the relevant credit card merchant; |
| 3. | The date on which the transaction by credit card was refused or the false sales slip was issued, details and amount of the transaction. |
| (5) | The head of the tax office having jurisdiction over the place of tax payment notifies the relevant credit card merchant of the amount reported for the relevant business year under the latter part of Article 117 (4) of the Act within two months from the end date of such business year. <Newly Inserted by Presidential Decree No. 19891, Feb. 28, 2007> |
| (6) | The Commissioner of the National Tax Service may prescribe detailed matters necessary for procedures for designating corporations eligible for becoming credit card merchants, procedures for reporting and giving notice on the refusal of transactions by credit card to the extent necessary for tax management. <Amended by Presidential Decree No. 18706, Feb. 19, 2005; Presidential Decree No. 19891, Feb. 28, 2007; Presidential Decree No. 20619, Feb. 22, 2008; Presidential Decree No. 21302, Feb. 4, 2009> |
| Article 159-2 (Becoming Cash Receipt Merchants) |
| (1) | "Corporation that meets the requirements prescribed by Presidential Decree" in Article 117-2 (1) of the Act means a corporation under Article 159 (1): Provided, That the State, a local government or a corporation prescribed by Ordinance of the Ministry of Economy and Finance which have difficulty becoming a Cash Receipt merchant shall be excluded herefrom. <Amended by Presidential Decree No. 20619, Feb. 22, 2008; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 21302, Feb. 4, 2009> |
| (2) | "Circumstances prescribed by Presidential Decree" in the proviso to Article 117-2 (3) of the Act means the circumstances in which a corporation which operates air transportation business sells goods in the aircraft. <Newly Inserted by Presidential Decree No. 21302, Feb. 4, 2009; Presidential Decree No. 23589, Feb. 2, 2012> |
| (3) | "Business operator prescribed by Presidential Decree" in the proviso to Article 117-2 (3) of the Act means a business operator under Article 159 (2). <Newly Inserted by Presidential Decree No. 23589, Feb. 2, 2012> |
| (4) | "Method prescribed by Presidential Decree" in the proviso to Article 117-2 (3) of the Act means the method under Article 159 (3). <Newly Inserted by Presidential Decree No. 23589, Feb. 2, 2012> |
| (6) | An amount subject to issuance of a Cash Receipt shall be at least one won in each transaction. <Amended by Presidential Decree No. 20619, Feb. 22, 2008> |
| (7) | Where a Cash Receipt merchant refuses to issue a Cash Receipt or issues a false Cash Receipt, the relevant consumer shall, when intending to file a report on such transaction pursuant to Article 117-2 (5) of the Act, submit a report stating the following matters, along with the documents or materials verifying the relevant facts, to the Commissioner of the National Tax Service, the commissioner of a regional tax office or the head of a tax office, within five years from the date on which the issuance of a Cash Receipt was refused or false Cash Receipt was issued: <Amended by Presidential Decree No. 23589, Feb. 2, 2012> |
| 1. | The name of the person who file a report; |
| 2. | The name of the relevant Cash Receipt merchant; |
| 3. | The date on which the issuance of a Cash Receipt was refused or the false Cash Receipt was issued, and the details and amount of the relevant transaction. |
| (8) | Where a Cash Receipt is issued pursuant to the main sentence of Article 117-2 (4) of the Act or Article 117-2 (7), the Cash Receipt may be issued anonymously within five days from the date on which the price is paid in cash after the goods or services are supplied. <Amended by Presidential Decree No. 23589, Feb. 2, 2012> |
| (9) | The head of the tax office having jurisdiction over the place of tax payment shall notify the relevant Cash Receipt merchant of the amount reported for the relevant business year pursuant to the latter part of Article 117-2 (6) of the Act by the following applicable deadlines: <Newly Inserted by Presidential Decree No. 23589, Feb. 2, 2012> |
| 1. | Where he/she receives a report during the relevant business year: Within two months from the end date of the business year; |
| 2. | Where he/she receives a report after the lapse of the relevant business year: Within two months from the filling date of the report. |
| (10) | The Commissioner of the National Tax Service may prescribe detailed matters necessary for corporations eligible for Cash Receipt merchants to become or withdraw from such merchants, procedures for reporting and giving notice on a refusal to issue a Cash Receipt, and the method of anonymously issuing Cash Receipts where a consumer does not want the issuance of a Cash Receipt, and other matters to the extent necessary for tax management. <Amended by Presidential Decree No. 22035, Feb. 18, 2010> |
[This Article Newly Inserted by Presidential Decree No. 19891, Feb. 28, 2007]
| Article 160 (Preparation and Keeping of Stockholder Register) |
"Stockholder register or register of partners stating the matters prescribed by Presidential Decree" in Article 118 of the Act means a stockholder register provided for in Article 352 of the Commercial Act or a register of partners provided for in Article 566 of the same Act on which the personal details of stockholders or partners are stated according to the following classifications: <Amended by Presidential Decree No. 18706, Feb. 19, 2005; Presidential Decree No. 22951, Jun. 3, 2011> | 2. | For a corporation (including an organization deemed a corporation), its name, the location of the headquarters, and the business registration number (including an identification number referred to in Article 154 (3)); |
| 3. | For an organization, other than a corporation, the name, address, and resident registration number of the representative of the organization: Provided, That for an organization assigned an identification number under the Value-Added Tax Act, it shall be its name, location, and the identification number; |
| 4. | For a foreigner or foreign organization, the name, organization name, temporary place of residence, and registration number stated on the foreigner registration card or the foreign organization register under the Immigration Act: Provided, That for a person who is not issued a foreign registration card, it shall be his/her name and number stated on the passport or identification card. |
| Article 161 (Submission of Detailed Statement of Changes in Stocks) |
| (1) | "Partnership corporation, etc., prescribed by Presidential Decree" in Article 119 (1) of the Act means any of the following corporations: <Amended by Presidential Decree No. 18706, Feb. 19, 2005; Presidential Decree No. 20619, Feb. 22, 2008; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 21302, Feb. 4, 2009; Presidential Decree No. 22951, Jun. 3, 2011; Presidential Decree No. 23589, Feb. 2, 2012; Presidential Decree No. 26600, Oct. 23, 2015; Feb. 12, 2019; Feb. 17, 2021; Feb. 15, 2022> |
| 1. | A corporation (excluding the national association and federation thereof) provided for in the subparagraphs Article 2 (1); |
| 4. | A corporation whose stockholders, etc., are comprised of public institutions or institutional investors prescribed by Ordinance of the Ministry of Economy and Finance, and minority stockholders of any listed corporations; |
| 6. | Other corporations prescribed by Ordinance of the Ministry of Economy and Finance. |
| (2) | "Corporation prescribed by Presidential Decree" in Article 119 (2) 1 of the Act means a corporation that prepares the stockholder register on at least one occasion in the relevant business year through a person who deals with transfer of or changes in the ownership of stocks. <Amended by Presidential Decree No. 20619, Feb. 22, 2008> |
| (3) | "Controlling stockholder (including any related party thereof)" in Article 119 (2) 1 of the Act means controlling stockholders, etc. <Amended by Presidential Decree No. 20619, Feb. 22, 2008; Presidential Decree No. 23589, Feb. 2, 2012> |
| (4) | "Minority stockholder" in paragraph (1) 4 and Article 119 (2) 2 of the Act means any of the following minority stockholders, etc.: <Amended by Presidential Decree No. 20619, Feb. 22, 2008; Presidential Decree No. 21302, Feb. 4, 2009> |
| 1. | In cases of a corporation listed on the securities market, the stockholder who holds stocks, the total par value of which is less than 300 million won and the total market value of which (refers to the market value prescribed by Ordinance of the Ministry of Economy and Finance) is less than 10 billion won; |
| 2. | In cases of a corporation listed on the KOSDAQ market, the stockholder who holds stocks, the total par value of which is less than 300 million won and the total market value of which (refers to the market value prescribed by Ordinance of the Ministry of Economy and Finance) is less than 10 billion: Provided, That such stocks were acquired before they have been listed on the KOSDAQ market, the stockholder who holds stocks, the total par value of which does not exceed five million and the stockholder who has transferred stocks of a small and medium enterprise through the KOSDAQ market; |
| 3. | In cases of a corporation other than those referred to in subparagraphs 1 and 2, the stockholder, etc. who holds stocks, the total par value of which or whose total investments is less than five million won. |
| (5) | The controlling stockholder, etc., minority stockholder, etc., par value, market value, or total investments referred to in paragraphs (3) and (4) shall be based on the current status as at the start date and the end date of a business year of the relevant corporation. In such cases, if a person becomes a controlling stockholder, etc., even for one day, he/she shall be deemed a controlling stockholder, etc., referred to in paragraph (3); if a person ceases to be a minority stockholder, etc., even for one day, he/she shall not be deemed a minority stockholder, etc., referred to in paragraph (4). <Newly Inserted by Presidential Decree No. 20619, Feb. 22, 2008> |
| (6) | The form of the detailed statement of changes in stocks, etc., referred to in Article 119 of the Act shall be stipulated by Ordinance of the Ministry of Economy and Finance, and the following matters shall be entered on the detailed statement based on the real holders of stocks, etc.: <Amended by Presidential Decree No. 17457, Dec. 31, 2001; Presidential Decree No. 18174, Dec. 30, 2003; Presidential Decree No. 20619, Feb. 22, 2008; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 23589, Feb. 2, 2012> |
| 1. | The names of stockholders, etc. or the corporation, and the resident registration numbers, the business registration numbers, or identification numbers; |
| 2. | The holding status of the stocks, etc., by stockholders, etc.; |
| 3. | Changes in stocks, etc., during the relevant business year; |
| 4. | Deleted. <by Presidential Decree No. 18706, Feb. 19, 2005> |
| (7) | Changes in stocks, etc., referred to in paragraph (6) 3 mean any change in the stockholders, etc., the ratio of share, the total par value of stocks held, and the total investments due to sale, capital increases, capital reductions, succession, donations, and investment. <Amended by Presidential Decree No. 20619, Feb. 22, 2008> |
| Article 162 (Filing of Payment Statements) |
Any person who pays the income provided for in Article 127 (1) 1 or 2 of the Income Tax Act to a domestic corporation shall file a payment statement to the head of the tax office having jurisdiction over the place of tax payment by applying mutatis mutandis Article 164 of the Income Tax Act and Articles 213 and 214 of the Enforcement Decree of the same Act, except as otherwise provided for in this Decree: Provided, That a person shall not be obliged to submit a payment statement with respect to the income specified in the following subparagraphs: <Amended by Presidential Decree No. 16658, Dec. 31, 1999; Presidential Decree No. 18706, Feb. 19, 2005; Presidential Decree No. 20619, Feb. 22, 2008; Presidential Decree No. 23589, Feb. 2, 2012; Presidential Decree No. 24357, Feb. 15, 2013; Feb. 12, 2019; Jul. 1, 2019> | 1. | Interest income paid to a financial company specified in any subparagraph of Article 111 (1) (excluding interest income subject to withholding pursuant to the same paragraph); |
| Article 162-2 (Special Cases concerning Obligation to File Payment Statements on Domestic Source Income of Foreign Corporations) |
| (1) | Any person who pays the domestic source income provided in Article 93 of the Act to a foreign corporation shall file a payment statement in the form stipulated by Ordinance of the Ministry of Economy and Finance (hereafter referred to as "payment statement" in this Article) with the head of the tax office having jurisdiction over the place of tax payment pursuant to Article 120-2 (1) of the Act: Provided, That the same shall not apply to any of the following incomes: <Amended by Presidential Decree No. 17457, Dec. 31, 2001; Presidential Decree No. 18706, Feb. 19, 2005; Presidential Decree No. 19328, Feb. 9, 2006; Presidential Decree No. 20619, Feb. 22, 2008; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 21302, Feb. 4, 2009; Presidential Decree No. 22035, Feb. 18, 2010; Presidential Decree No. 22577, Dec. 30, 2010; Presidential Decree No. 24357, Feb. 15, 2013; Presidential Decree No. 25194, Feb. 21, 2014; Feb. 12, 2019> |
| 1. | Domestic source income on which corporate tax is not imposed or exempted under the Act or the Restriction of Special Taxation Act: Provided, That domestic source income in any of the following cases shall be excluded herefrom: |
| 2. | Domestic source income provided in subparagraph 1, 2, 4, 8, 9 or 10 (excluding the income provided in item (g) of the same subparagraph) of Article 93 of the Act that is substantially related to the domestic place of business or reverts to the domestic place of business (excluding any income withheld at source under Article 73, 73-2 or 98-3 of the Act); |
| 3. | Domestically sourced real estate income provided for in subparagraph 3 of Article 93 of the Act; |
| 4. | Domestically sourced business income provided for in subparagraph 5 of Article 93 of the Act and domestic source income accruing from rendering personal services provided for in subparagraph 6 of the same Article (excluding any income withheld at source under Article 98 of the Act); |
| 5. | Other domestic source income provided for in subparagraph 10 (g) of Article 93 of the Act; |
| 6. | Domestic source income for which an application for non-taxation or tax exemption is filed under Article 98-4 of the Act; |
| 7. | Income (excluding domestic source capital gains on real estate prescribed in subparagraph 7 of Article 93 of the Act and domestic source income accruing from transferring securities prescribed in subparagraph 9 of the same Article), the withholding tax on which is less than one thousand won; |
| 8. | Other income that is deemed to lack the effectiveness to file the payment statement and prescribed by Ordinance of the Ministry of Economy and Finance. |
| (2) | Deleted. <by Presidential Decree No. 17826, Dec. 30, 2002> |
| (3) | Where the corporate tax is withheld at source under Article 138-3 of this Decree or Article 98 (7) and (16) of the Act, the relevant person liable for withholding shall file a payment statement on the amount paid. <Newly Inserted by Presidential Decree No. 17457, Dec. 31, 2001; Presidential Decree No. 20619, Feb. 22, 2008; Presidential Decree No. 22577, Dec. 30, 2010; Feb. 17, 2021; Feb. 15, 2022; Mar. 8, 2022> |
| (4) | The form of the payment statement to be submitted with respect to the income provided in subparagraph 1, 2 or 9 of Article 93 of the Act may be stipulated by Ordinance of the Ministry of Economy and Finance. <Newly Inserted by Presidential Decree No. 17457, Dec. 31, 2001; Presidential Decree No. 20619, Feb. 22, 2008; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 22577, Dec. 30, 2010> |
| (5) | Articles 215 and 216 of the Enforcement Decree of the Income Tax Act shall apply mutatis mutandis to filing of the payment statement on the domestic source income, etc. by any foreign corporation. <Newly Inserted by Presidential Decree No. 17457, Dec. 31, 2001; Presidential Decree No. 18706, Feb. 19, 2005; Presidential Decree No. 20619, Feb. 22, 2008> |
[This Article Newly Inserted by Presidential Decree No. 17033, Dec. 29, 2000]
| Article 163 (Special Cases concerning Filing of Payment Statements) |
| (1) | Deleted. <by Presidential Decree No. 17457, Dec. 31, 2001> |
| (2) | If any natural disaster, etc. occurs, the obligation to submit the detailed statements on changes in stocks and payment statements referred to in Articles 119 and 120 of the Act may be waived or the filing deadline may be extended under each of the following subparagraphs: <Amended by Presidential Decree No. 20619, Feb. 22, 2008; Feb. 12, 2019> |
| 1. | Where the account books or other evidentiary documents are destroyed due to any natural disaster, etc., the obligation to submit the statements shall be waived from the month prior to the month in which such cause occurred until the month prior to the month in which the relevant business is completely reinstated; |
| 2. | Where the account books or other evidentiary documents are confiscated or kept in custody by an agency having due authority, the filing deadline of the statements for the month in which such cause occurred and the immediately preceding month shall be extended to the end of the month following the month in which it becomes possible to submit such statements. |
| (3) | A corporation which intends to obtain exemption or an extension under paragraph (2) shall apply for approval to the head of the tax office having jurisdiction over the place of tax payment within the submission deadline specified under Article 121 of the Act. |
| Article 163-2 (Submission of Aggregate Tax Invoices for Individual Suppliers) |
| (1) | "Deadline prescribed by Presidential Decree" in the main sentence of Article 120-3 (1) of the Act means February 10 of each year. <Amended by residential Decree No. 22951, Jun. 3, 2011; Presidential Decree No. 23589, Feb. 2, 2012> |
[This Article Newly Inserted by Presidential Decree No. 19891, Feb. 28, 2007]
| Article 163-3 (Submission of Data by Virtual Asset Service Providers after Acceptance of Reports) |
[This Article Newly Inserted on Feb. 28, 2023]
| Article 164 (Preparation and Issuance of Invoices) |
| (2) | "Electronic format prescribed by Presidential Decree" in the latter part of Article 121 (1) of the Act means the issuance of an invoice by the method prescribed in Article 68 (5) of the Enforcement Decree of the Value-Added Tax Act, and "where such invoice, etc. is issued, as prescribed by Presidential Decree" in the proviso to Article 121 (2) of the Act means where an invoice is issued in the name of the consignor or principal under Article 212 (2) of the Enforcement Decree of the Income Tax Act. <Amended by Presidential Decree No. 18706, Feb. 19, 2005; Presidential Decree No. 22951, Jun. 3, 2011; Presidential Decree No. 26068, Feb. 3, 2015; Presidential Decree No. 28640, Feb. 13, 2018> |
| (3) | "Circumstances prescribed by Presidential Decree" in Article 121 (4) of the Act means circumstances in which land and a building, and their respective purchase rights are supplied. <Newly Inserted by Presidential Decree No. 17457, Dec. 31, 2001; Presidential Decree No. 22951, Jun. 3, 2011; Feb. 28, 2023> |
| (4) | "Deadline prescribed by Presidential Decree" in the main sentence of Article 121 (5) of the Act means by February 10 of each year. <Amended by Presidential Decree No. 17457, Dec. 31, 2001; Presidential Decree No. 22951, Jun. 3, 2011; Presidential Decree No. 23589, Feb. 2, 2012> |
| (5) | “Deadline specified by Presidential Decree" in Article 121 (7) of the Act means the day immediately after the issue date of an electronic invoice, and "detailed statement of such electronic invoices in the form prescribed by Presidential Decree" in the same paragraph means a statement of the matters specified in Article 211 (1) of the Enforcement Decree of the Income Tax Act. <Newly Inserted by Presidential Decree No. 26068, Feb. 3, 2015> |
| (6) | Every corporation shall submit the aggregate invoices for individual suppliers or purchasers 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 the deadline (February 19 of each year in cases of a foreign corporation) specified under paragraph (4). <Amended by Presidential Decree No. 17457, Dec. 31, 2001; Presidential Decree No. 19328, Feb. 9, 2006; Presidential Decree No. 20720, Feb. 29, 2008> |
| (7) | Article 212 of the Enforcement Decree of the Income Tax Act shall apply mutatis mutandis to the submission of the aggregate invoices for individual suppliers or purchasers referred to in paragraph (5), except as otherwise expressly provided for in this Decree. <Amended by Presidential Decree No. 17457, Dec. 31, 2001; Presidential Decree No. 18706, Feb. 19, 2005> |
| 2. | Other goods or services prescribed by Ordinance of the Ministry of Economy and Finance in consideration of the amount and number of transactions. |
| (9) | Where a person who lends assets as a facility pursuant to Article 3 (2) of the Specialized Credit Finance Business Act (hereafter in this paragraph referred to as the "lessor") concludes a lease agreement with the lessee, and the lessor receives a guarantee of the residual value from a third party not related to the lessee, the supply value of the invoice shall be prepared according to the lease agreement between the lessor and the lessee. <Newly Inserted on Feb. 17, 2021> |
| Article 164-2 (Cases and Methods of Issuing Purchaser-Issued Invoice) |
[This Article Newly Inserted on Feb. 28, 2023]
| Article 164-3 Deleted. <Feb. 12, 2019> |
| Article 164-4 Deleted. <Feb. 12, 2019> |
| Article 164-5 Deleted. <Feb. 17, 2021> |
| Article 164-6 (Request for Computerized Registration Data) |
“Controlling stockholder, etc. prescribed by Presidential Decree” in the former part of Article 122-2 of the Act means controlling stockholder, etc. referred to in Article 43 (7). [This Article Newly Inserted on Feb. 12, 2019]
| Article 165 (Inquiries and Investigations) |
| (1) | Where a public official who performs corporate tax-related affairs investigates the account books, documents, and other items to conduct an investigation on corporate tax under Article 122 of the Act, he/she shall present his/her identification as an investigator in the form prescribed by Ordinance of the Ministry of Economy and Finance. <Amended by Presidential Decree No. 20720, Feb. 29, 2008> |
| (2) | Where it is necessary for a public official who performs corporate tax-related affairs to perform his/her duties under Article 122 of the Act, he/she may demand the submission of the data necessary for investigating and determining the revenue amount from transactions exempt from value-added tax. |
CHAPTER VII PENTALTY PROVISIONS
| Article 166 Deleted. <Feb. 17, 2021> |
| Article 167 (Standards for Imposition of Administrative Fines) |
| (1) | The standards for imposing administrative fines under Article 124 of the Act shall be as prescribed in attached Table 2. <Amended on Feb. 17, 2021> |
| (2) | The head of the tax office having jurisdiction over the place of tax payment may increase or reduce the amount of administrative fines stipulated in attached Table 2 to the extent of 1/2, taking into account the degree, frequencies, motive, results of the relevant violation, and other factors: Provided, That if the amount of an administrative fine is increased, it shall not exceed the upper limit of the amount pursuant to Article 124 of the Act. <Amended on Feb. 17, 2021> |
[This Article Newly Inserted on Feb. 12, 2019]
ADDENDA <Presidential Decree No. 15970, Dec. 31, 1998>
Article 1 (Enforcement Date)
This Decree shall enter into force on January 1, 1999: Provided, That the amended provisions of Articles 5, 9, 12 through 15, 72, 82 through 85, 88, 96, 97, 116, 120, 123, and 124 (limited to the portion concerning a division) and the amended provisions of Articles 36 (2), 56 (1), 62 (1) 5 and 14, and Article 13 (1) of the Addenda shall enter into force on the date of its promulgation, and the amended provisions of Articles 54 and 120 (2) through (4) shall enter into force on January 1, 2000.
Article 2 (General Applicability)
This Decree shall apply from the first business year which begins after this Decree enters into force: Provided, That the amended provisions on the corporate tax on liquidation income shall apply from the first dissolution or merger after this Decree enters into force or the division in the business year in which this Decree enters into force, and the amended provisions on the special super tax shall apply from the first transfer after this Decree enters into force.
Article 3 (Applicability to Special Cases concerning Mergers and Divisions)
The amended provisions of Articles 5, 9 (3), 15 (2) and (3), 24 (4), 72 (1) 3 and 4, 80 through 85, 88 (1) 8 (a), 96 (2) through (4), 97 (6), 116 (2) and 120 (7) shall apply from the first merger after this Decree enters into force or the first division in the business year in which this Decree enters into force.
Article 4 (Applicability to Repudiation of Wrongful Calculations)
| (1) | The amended provisions of subparagraph 9 of Article 11, and Articles 87 through 89 and 106 (1) 3 (i) shall apply from the first transaction to be made after this Decree enters into force. |
| (2) | The amended provisions of Article 90 shall apply from the transactions in the first business year which begins after this Decree enters into force. |
| (3) | The amended provisions of Article 131 shall apply from the first transfer after this Decree enters into force. |
Article 5 (Applicability to Constructive Dividends)
The amended provisions of Articles 12 through 14 shall apply from the first retirement of stocks or transfer to capital or dissolution after this Decree enters into force: Provided, That the amended portion concerning mergers or divisions shall apply from the first merger after this Decree enters into force or from the divisions in the business year in which this Decree enters into force.
Article 6 (Applicability to Inclusion of Depreciation Costs in Deductible Expenses)
| (1) | The amended provisions of Articles 24 through 34 shall apply from the depreciation in the first business year which begins after this Decree enters into force. |
| (2) | The amended provisions of Article 24 (5) shall apply from the lease of facilities in the first business year which begins after this Decree enters into force. |
Article 7 (Applicability to Calculation of Deductible Expenses)
| (1) | The amended provisions of Articles 36 (2) and 56 (1) shall apply to the expenditures or the inclusion in deductible expenses in the business year in which this Decree enters into force. |
| (2) | The amended provisions of Article 44 (2) 2 and 4 shall apply from the first payment to be made after this Decree enters into force. |
| (3) | The amended provisions of Article 54 shall apply from the first business year which begins after January 1, 2000. |
| (4) | The amended provisions of Articles 56 (excluding paragraph (1)) through 67 (excluding Articles 58 and 62 (1) 5 and 14) shall apply from inclusion in deductible expenses in the first business year which begins after this Decree enters into force. |
| (5) | The amended provisions of Articles 58 and 62 (1) 5 and 14 shall apply from inclusion in deductible expenses in the first business year in which this Decree enters into force. |
Article 8 (Applicability to Business Year, etc. to which Deductible Expenses Belong)
| (1) | The amended provisions of Articles 68, 69, and 71 shall apply from the sale, transfer, or lease of property or the provision of services in the first business year which begins after this Decree enters into force. |
| (2) | The amended provisions of Article 70 shall apply from the revenue and payments in the first business year which begins after this Decree enters into force. |
| (3) | The amended provisions of Article 72 shall apply from the first acquisition after this Decree enters into force. |
| (4) | The amended provisions of Articles 73 through 76 and 78 shall apply to evaluation in the first business year after this Decree enters into force. |
| (5) | The amended provisions of Article 77 shall apply from the expenditure, accrual or contributions in the first business year which begins after this Decree enters into force. |
Article 9 (Applicability to Determination)
| (1) | The amended provisions of Article 105 shall apply from the first determination or correction made after this Decree enters into force. |
| (2) | The amended provisions of Article 110 (5) shall apply from the first collection of refunded tax first deducted after this Decree enters into force. |
Article 10 (Applicability to Withholding)
| (1) | The amended provisions of Article 111 (1) 7 and paragraph (2) 1 of the same Article (limited to the portion to which Article 61 (2) 18 and 22 apply) and the amended provisions of Article 115 shall apply from the first payment made after this Decree enters into force. |
| (2) | The amended provisions of Article 116 (1) shall apply from the first dissolution after this Decree enters into force. |
Article 11 (Applicability to Additional Tax)
| (1) | The amended provisions of Articles 118 and 119 (1) shall apply from the collection of corporate tax in the first business year which begins after this Decree enters into force. |
| (2) | The amended provisions of Articles 120 (1) and 157 shall apply from the submission concerning the first business year which begins after this Decree enters into force. |
| (3) | The amended provisions of Article 120 (2) (excluding the portion concerning invoices) through (4) shall apply from the commodities or services to be first provided after January 1, 2000, and the amended provisions of Article 158 shall apply from the commodities or services to be first provided after this Decree enters into force. |
| (4) | Of the amended provisions of Article 18 (1) of the Addenda, the amended provisions of Article 41 of the Enforcement Decree of the Adjustment of International Taxes Act shall apply from the first mutual consultation after this Decree enters into force in the first business year which begins after this Decree enters into force. |
Article 12 (Applicability to Inclusion of Depreciation Costs in Deductible Expenses)
| (1) | A corporation which holds depreciable assets as at the start date of the first business year which begins after this Decree enters into force shall report, under the amended provisions of Article 26 (1) and (3), the depreciation method to be applied to the assets under the amended provisions of paragraph (1) of the same Article to the head of the tax office having jurisdiction over the place of tax payment by the filing deadline of the corporate tax base for the relevant business year. |
| (2) | Where a corporation obligated to report the depreciation method under paragraph (1) fails to report it, the depreciation method of the depreciable assets shall be the depreciation method under each subparagraph of the amended provisions of Article 26 (4). |
| (3) | A corporation which holds depreciable assets as at the start date of the first business year which begins after this Decree enters into force shall report, under the amended provisions of Articles 28 (1) and (3) and 29 (1) and (2), the service life to be applied to the assets falling under the amended provisions of Article 28 (1) 2 to the head of the tax office having jurisdiction over the place of tax payment by the filing deadline of the corporate tax base for the relevant business year, and where it intends to obtain approval under the amended provisions of Article 29 (1), it shall apply to the commissioner of the regional tax office having jurisdiction over the place of tax payment by no later than three months prior to the end date of the relevant business year. In such cases, assets falling under the amended provisions of Article 28 (1) 1 shall be in accordance with the service life under the same amended provisions. |
| (4) | Where a corporation obligated to report the service life under paragraph (3) fails to report it, the service life of the depreciable assets shall be the standard number of years under the amended provisions of Article 28 (1) 2. |
| (5) | In applying the amended provisions of Articles 24 through 34 to depreciable assets in possession as at the start date of the first business year which begins after this Decree enters into force, the acquisition value of the relevant assets shall be the acquisition value as at the start date of the business year. |
| (6) | In applying the amended provisions of Articles 24 through 34 to depreciable assets in possession as at the start date of the first business year which begins after this Decree enters into force, the cumulative total of depreciation of the individual assets as at the start date of the business year shall be in accordance with each of the following subparagraphs: |
| 1. | For assets acquired on or before December 31, 1994, the reserve funds for the individual assets appropriated as at the start date of the business year; |
| 2. | For assets acquired on or after January 1, 1995, the cumulative total of depreciation of individual assets calculated by applying mutatis mutandis the former provisions of Article 63, where the individual assets are deemed transferred as at the start date of the business year: Provided, That where detailed statements on the settlement of depreciation costs of individual assets are prepared and kept, it may be the cumulative total of depreciation of the relevant individual assets. |
| (7) | In applying the amended provisions of Articles 24 through 34 to depreciable assets in possession as at the start date of the first business year which begins after this Decree enters into force, the disallowed amount of depreciation (the amount not verified as losses) of the individual assets as at the start date of the business year shall be in accordance with each of the following subparagraphs: |
| 1. | For assets acquired on or before December 31, 1994, the amount computed by multiplying the disallowed amount of depreciation under each subparagraph of Article 54 (in cases falling under subparagraph 3 of the same Article, by each item of asset) of the Enforcement Decree of the Corporate Tax Act prior to the entry into force of the amended Enforcement Decree of the Corporate Tax Act (Presidential Decree No. 14468) by the ratio of the disallowed amount of depreciation of the individual assets to the total disallowed amount of depreciation of all individual assets; |
| 2. | For assets acquired on or after January 1, 1995, the disallowed amount of depreciation of the individual assets calculated by applying mutatis mutandis the former provisions of Article 63, where the individual assets are deemed transferred as at the start date of the business year: Provided, That where a detailed statement on the settlement of depreciation costs are prepared and kept for individual assets, it may be the amount computed by multiplying the disallowed amount of depreciation of the same service life by the ratio of the disallowed amount of depreciation of the relevant individual assets of the same service life to the disallowed amount of depreciation of the total of the individual assets of the same service life. |
| (8) | In applying the amended provisions of Articles 24 through 34 to depreciable assets in possession as at the start date of the first business year which begins after this Decree enters into force, assets to which the former provisions of Article 55-2 applies shall be deemed assets to which the amended provisions of Article 30 applies as at the start date of the business year. |
| (9) | Assets to which the former provisions of Article 48 (3) applies as at the start date of the first business year which begins after this Decree enters into force shall remain under the former provisions until the last day of the lease period of the relevant assets. |
| (10) | Assets to which Article 51 of the Enforcement Decree of the Corporate Tax Act applies prior to the entry into force of the amended Enforcement Decree of the Corporate Tax Act (Presidential Decree No. 14468) as at the start date of the first business year which begins after this Decree enters into force shall remain under the former provisions until the completion of the depreciation of the concerned assets. |
| (11) | The disposition of the amount of special depreciation costs included in the calculation of deductible expenses for each business year under the former provisions of Article 84 not included in gross income as at the start date of the first business year which begins after this Decree enters into force shall be in accordance with the former provisions. |
| (12) | For assets to which Article 11 of the Addenda to the amended Regulation of Tax Reduction and Exemption Act (Act No. 4806) applies, as at the start date of the first business year which begins after this Decree enters into force, the inclusion of special depreciation costs in the calculation of deductible expenses shall be in accordance with the former provisions of Article 84 and the amended provisions of Article 30. |
Article 13 (Special Cases concerning Inclusion of Bad Debts in Deductible Expenses)
| (1) | For debentures of a corporation declared bankrupt on or before December 31, 1998 which are held by a corporation entrusted to operate a government business, the amount of the calculated dividend deducted from the debentures may be included as bad debts in the calculation of deductible expenses for the business year which includes the date of declaration of bankruptcy, notwithstanding the amended provisions of Article 62. |
| (2) | In applying the amended provisions of Article 47 (1), for the business year which includes December 31, 1999, "10%" referred to in the amended provisions of Article 47 (1) shall read "20%". |
| (3) | In applying the amended provisions of Article 88 (1) 6, where there are loans under the former provisions of the proviso to Article 46 (2) 7 as at the time this Decree enters into force, the relevant funds shall not be deemed to be loans of cash under the amended provisions of Article 88 (1) 6 until December 31, 2000. |
| (4) | As at the time this Decree enters into force, where a corporation obtains approval of the principal creditor bank and acquires the stocks of a corporation with no special relationship under the amended provisions of Article 87 (1) for the purpose of merger and merges on or before December 31, 1999, it shall be deemed to be a merger between corporations with no special relationship and Article 45 (1) 1 of the Act shall apply, notwithstanding the amended provisions of the proviso to Article 88 (2). |
Article 14 (Special Case concerning Penalty Tax for Non-Issuance of Invoices)
In applying a penalty tax under Article 76 (9) of the Act, an auction wholesaler, defined in Article 2 of the Act on Distribution and Price Stabilization of Agricultural and Fishery Products, shall be deemed a corporation under Article 120 (2) until the business year that ends on or before December 31, 2001, but an auction wholesaler shall be deemed a corporation, defined in Article 120 (2), for any of the business years that end during the period from the business year beginning on January 1, 2002 and ending on December 31, 2002 until the business year beginning on January 1, 2019 and ending on December 31, 2019, if the ratio of the amount for which the auction wholesaler issued invoices each business year and submitted aggregate invoices for each purchaser to the head of the competent tax office is not lower than the ratio specified in the following table for each business year (hereafter referred to as "ratio of issued invoices"). If the ratio of invoices issued by an auction wholesaler each business year is lower than any of the following ratios, a penalty tax shall be imposed on the auction wholesaler by deeming the difference between the amount computed by applying any of the following ratios to gross sales for each business year and the amount stated in the submitted aggregate invoices for each purchaser as a supply price:
| 1. | Auction wholesalers in central wholesale markets located in Seoul under the Act on Distribution and Price Stabilization of Agricultural and Fishery Products; |
| Business Year | Ratio | | The business year that ends during the period between January 1, 2002 and December 31, 2002 | 10/100 | | The business year that ends during the period between January 1, 2003 and December 31, 2003 | 20/100 | | The business year that ends during the period between January 1, 2004 and December 31, 2004 | 40/100 | | The business year that ends during the period between January 1, 2005 and December 31, 2005 | 40/100 | | The business year that ends during the period between January 1, 2006 and December 31, 2006 | 40/100 | | The business year that ends during the period between January 1, 2007 and December 31, 2007 | 45/100 | | The business year that ends during the period between January 1, 2008 and December 31, 2008 | 50/100 | | The business year that ends during the period between January 1, 2009 and December 31, 2009 | 55/100 | | The business year that ends during the period between January 1, 2010 and December 31, 2010 | 60/100 | | The business year that ends during the period between January 1, 2011 and December 31, 2011 | 65/100 | | The business year that ends during the period between January 1, 2012 and December 31, 2012 | 70/100 | | The business year that ends during the period between January 1, 2013 and December 31, 2016 | 75/100 | | The business year that ends during the period between January 1, 2017 and December 31, 2018 | 80/100 | | The business year that ends during the period between January 1, 2019 and December 31, 2019 | 85/100 |
|
| 2. | Auction wholesalers other than those referred to in subparagraph 1; |
| Business Year | Ratio | | The business year that ends during the period between January 1, 2002 and December 31, 2002 | 10/100 | | The business year that ends during the period between January 1, 2003 and December 31, 2003 | 20/100 | | The business year that ends during the period between January 1, 2004 and December 31, 2004 | 40/100 | | The business year that ends during the period between January 1, 2005 and December 31, 2005 | 20/100 | | The business year that ends during the period between January 1, 2006 and December 31, 2006 | 20/100 | | The business year that ends during the period between January 1, 2007 and December 31, 2007 | 25/100 | | The business year that ends during the period between January 1, 2008 and December 31, 2008 | 30/100 | | The business year that ends during the period between January 1, 2009 and December 31, 2009 | 35/100 | | The business year that ends during the period between January 1, 2010 and December 31, 2010 | 40/100 | | The business year that ends during the period between January 1, 2011 and December 31, 2011 | 45/100 | | The business year that ends during the period between January 1, 2012 and December 31, 2012 | 50/100 | | The business year that ends during the period between January 1, 2013 and December 31, 2016 | 55/100 | | The business year that ends during the period between January 1, 2017 and December 31, 2018 | 60/100 | | The business year that ends during the period between January 1, 2019 and December 31, 2019 | 65/100 |
|
[This Article Wholly Amended by Presidential Decree No. 28640, Feb. 13, 2018]
Article 15 (General Transitional Measures)
Corporate tax imposed or to be imposed under the former provisions before this Decree enters into force shall be in accordance with the former provisions.
Article 16 (Transitional Measures concerning Inclusion of Public Charges in Deductible Expenses)
| (1) | In applying the amended provisions of Article 23, public charges under each subparagraph of Article 25 (1) of the Enforcement Decree of the Corporate Tax Act (excluding subparagraph 2) prior to the entry into force of the amended Enforcement Decree of the Corporate Tax Act (Presidential Decree No. 15564) falling under the amended provisions of Article 23 shall not be deemed public charges falling under the amended provisions of Article 23 until after the business year ending before December 31, 2001. |
| (2) | In applying the amended provisions of Article 42 (3), the expenses paid by a financial institution under the former provisions of Article 44 (3) until the business year which includes December 31, 1999 shall be in accordance with the former provisions. |
Article 17 (Transitional Measures concerning Business Year, etc. of Accrual of Profits and Losses)
| (1) | The business year of accrual of profits and losses for the sale, transfer, or lease of property or the provision of services which began before the start date of the first business year after this Decree enters into force shall be in accordance with the former provisions of Articles 36 and 37-2. |
| (2) | The amount offset the disposition of the balance of the exchange rate settlement account and the revaluation reserve fund under the former provisions of Article 38-2 (1) and (7) as at the time this Decree enters into force shall be in accordance with the former provisions. |
| (3) | The undepreciated balance of deferred assets under the former provisions of Article 38 as at the time this Decree enters into force shall be in accordance with the former provisions. |
| (4) | The former provisions shall apply to stocks which are subject to the application of the former provisions of Article 43-2 (9) 8 and 14 as at the time this Decree enters into force. <Newly Inserted by Presidential Decree No. 16658, Dec. 31, 1999> |
Article 18 Omitted.
Article 19 (Relationship with other Acts and Subordinate Statutes)
Where other Acts and subordinate statutes cite the former Enforcement Decree of the Corporate Tax Act as at the time this Decree enters into force, the corresponding provisions of this Decree shall be deemed cited if such provisions exist herein.
ADDENDA <Presidential Decree No. 16658, Dec. 31, 1999>
Article 1 (Enforcement Date)
This Decree shall enter into force on January 1, 2000: Provided, That the amended provisions of Articles 49, 62 (1), and 77, and the amended provisions of Article 17 of the Addenda to the Enforcement Decree of the Corporate Tax Act, Presidential Decree No. 15970, shall enter into force on the date of its promulgation, the amended provisions of subparagraphs 2 and 6 of Article 1 and the amended provisions of Articles 57 (1) 1, 58 (1), 61 (2) 8, and 111 (2) 9 and 11 on July 1, 2000, the amended provisions of Articles 2 (1) 2, and 41 on January 1, 2001, and the amended provisions of Article 162 on January 1, 2002. <Amended by Presidential Decree No. 17033, Dec. 29, 2000>
Article 2 (General Applicability)
This Decree shall apply from the first business year that starts after the this Decree enters into force: Provided, That the amended provisions of Articles 49, 62 (1), and 77, and the amended provisions of Article 17 of the Addenda to the Enforcement Decree of the Corporate Tax Act, Presidential Decree No. 15970, shall apply from the business year in which the date of the promulgation of this Decree falls.
Article 3 (Applicability to Calculation, etc. of Amount not Included in Gross Income)
| (1) | The amended provisions of Article 20 shall apply from the first dividend bonus to be paid after this Decree enters into force. |
| (2) | The amended provisions of Articles 81 and 89 shall apply from the first merger made after this Decree enters into force. |
| (3) | The amended provisions of Article 108 shall apply from the first portion to be occasionally imposed after this Decree enters into force. |
| (4) | The amended provisions of Articles 122 and 123 shall apply from the first tax base on corporate tax on liquidation income to be filed after this Decree enters into force. |
| (5) | The amended provisions of Article 132 (7) shall apply from the first transfer to be made after this Decree enters into force and the amended provisions of paragraph (8) of the same Article shall apply from first income earned after this Decree enters into force. |
| (6) | The amended provisions of Article 61 shall apply from the first submission first after this Decree enters into force. |
Article 4 (Applicability to Income Accruing from Technical Services Business, etc. of Non-Profit Foreign Corporations)
| (1) | The amended provisions of Article 2 (1) 2 shall apply from the first income accrued on and after January 1, 2001. |
| (2) | The amended provisions of Article 162 shall apply from the first income accrued on and after January 1, 2002. |
[This Article Wholly Amended by Presidential Decree No. 17033, Dec. 29, 2000]
Article 5 (Applicability to Non-Inclusion of Entertainment Expenses into Deductible Expenses)
The amended provisions of Article 41 (6) shall apply from the entertainment expenses first spent in the business year that starts after January 1, 2001.
ADDENDA <Presidential Decree No. 16703, Feb. 7, 2000>
| (1) | (Enforcement Date) This Decree shall enter into force on the date of its promulgation. |
| (2) | (Applicability) The amended provisions of Article 45 (1) 4 (c) shall apply from the first report filed after this Decree enters into force. |
ADDENDA <Presidential Decree No. 16762, Mar. 28, 2000>
Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation.
Article 2 Omitted.
ADDENDA <Presidential Decree No. 16810, May 16, 2000>
| (1) | (Enforcement Date) This Decree shall enter into force on the date of its promulgation. |
| (2) | (Applicability) The amended provisions of Article 113 (2) 2 (a) shall apply from the interest income from State bonds first issued on the open market after this Decree enters into force. |
ADDENDA <Presidential Decree No. 17033, Dec. 29, 2000>
Article 1 (Enforcement Date)
This Decree shall enter into force on January 1, 2001: Provided, That the amended provisions of Articles 29-2, 53 (4), 61 (2), 62 (1), 63 (1) and (3) 2, 82 (3) 2, 85 (1) 3 and (2) 3, 86 (4), and 138-2 shall enter into force on the date of its promulgation, the amended provisions of Articles 112(1), 113, 114, 131-2, 136-2, and 138-3 on July 1, 2001, the amended provisions of Articles 54 (3) and (4) on January 1, 2002, and the amended provisions of Article 162-2 on July 1, 2002, respectively. <Amended by Presidential Decree No. 17457, Dec. 31, 2001>
Article 2 (General Applicability)
This Decree shall apply from the first business year that starts after this Decree enters into force.
Article 3 (Applicability to Evaluation, etc. of Asset Value)
The amended provisions of Article 14 (1) 1 shall apply from the first merger or division after this Decree enters into force.
Article 4 (Applicability to Losses Carried Forwarded)
The amended provisions of Article 18 (1) 1 shall apply from the losses first confirmed by a law court after this Decree enters into force.
Article 5 (Applicability to Service Life of Used Assets, etc.)
The amended provisions of Article 29-2 shall apply from the acquisition of used assets, merger or division that is first effected in the business year in which this Decree enters into force, and with the portion revaluated in the business year that first starts after January 1, 1999: Provided, That the same shall apply to revaluated assets only when the report of changed service life is submitted at the time of reporting the corporate tax base for the business year in which this Decree enters into force.
Article 6 (Applicability to Exclusion of Interest Paid on Assets Not Related to Business from Deductible Expenses)
The amended provisions of Article 53 (4) shall apply from the borrowings in the business year in which this Decree enters into force.
Article 7 (Applicability to Inclusion of Appropriation for Bad Debts in Deductible Income)
The amended provisions of Articles 61 (2), 62 (1), and 63 (1) and (3) 2 shall apply from the portion included in deductible losses in the business year in which this Decree enters into force.
Article 8 (Applicability to Inclusion in Deductible Income of Transfer Marginal Profits upon Division)
The amended provisions of Articles 82 (3) 2 (proviso) and 85 (1) 3 (proviso) and (2) 3 (proviso) shall apply from the merger or division in the business year in which this Decree enters into forces.
Article 9 (Applicability to Inclusion in Deductible Expenses of Amount Equivalent to Transfer Marginal Profits upon Transfer of Assets by Exchange)
The amended provisions of Article 86 (4) shall apply from the assets exchanged in the business year in which this Decree enters into forces.
Article 10 (Applicability to Disposal of Income)
The amended provisions of Article 106 (4) shall apply from the revised reports in the first business year that starts after this Decree enters into force.
Article 11 (Applicability to Tax Credits of Fictitious Withholding Tax, etc.)
The amended provisions of Articles 112 (1), 113, 114, 136-2, and 138-3 shall apply from the bonds, etc. sold or interest, etc. received after July 1, 2001: Provided, That the former provisions of Articles 112 (1), 113, and 114 shall apply until the first payment date of interest, etc. on the corresponding bonds, etc. arriving after July 1, 2001 where the period for interest, etc. on bonds, etc. issued before July 1, 2001 spans over the period before July 1, 2001 and on or after July 1, 2001.
Article 12 (Applicability to Domestic Source Income of Foreign Corporations)
| (1) | The amended provisions of Articles 129 (3), 131-2, and 132 (7) and (10) shall apply from the first transfer after this Decree enters into force. |
| (2) | The amended provisions of Article 132 (1) and (9) shall apply from the income first accrued after this Decree enters into force. |
Article 13 (Applicability to Special Cases concerning Reporting on Capital Gains from Transfer of Securities by Foreign Corporations)
The amended provisions of Article 138-2 shall apply from the first portion that satisfies the taxation standards in the relevant tax treaty after the promulgation date of this Decree.
Article 14 (Applicability to Submission of Payment Statements on Domestic Source Income of Foreign Corporations)
The amended provisions of Article 162-2 shall apply from the first payment made after July 1, 2002. <Amended by Presidential Decree No. 17457, Dec. 31, 2001>
Article 15 (Transitional Measures concerning Group Retirement Insurance Premium, etc. to be Included in Gross Income)
The former provisions shall apply to inclusion of group retirement insurance premium, etc. that was included in deductible expenses under the former provisions of Article 45 (3) in gross income before this Decree enters into force.
ADDENDA <Presidential Decree No. 17338, Aug. 14, 2001>
Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation.
Article 2 (Applicability to Deduction, etc. of Fictitious Withholding Tax)
| (1) | The amended provisions of Article 112 (3) shall apply from the first issuance of the bonds, etc. after July 1, 2001, and the portion of commencing the period for interest calculation. |
| (2) | The amended provisions of Article 113 (4) shall apply from the first deduction under Article 73 (8) of the Act after this Decree enters into force. |
| (3) | The amended provisions of Article 113 (10) shall apply from first selling after this Decree enters into force among the first issuance of the bonds, etc. after July 1, 2001, or the portion of commencing the period for interest calculation for the bonds, etc. |
Article 3 (Applicability to Electronic Over-the-Counter Transaction of Foreign Corporation)
The amended provisions of Article 132 (7) 2 (proviso) shall apply from the first transfer after this Decree enters into force.
Article 4 (Applicability to Special Cases concerning Tax Withholding on Interests, etc. of Foreign Corporation's Bonds, etc.)
The amended provisions of Article 138-3 (5) shall apply from the first application for refund after this Decree enters into force.
Article 5 (Applicability to Special Additional Tax)
The amended provisions of Article 144-2 shall apply from the first determination or correction (limited to the transferred portion after January 1, 2001) made after this Decree enters into force.
ADDENDA <Presidential Decree No. 17457, Dec. 31, 2001>
Article 1 (Enforcement Date)
This Decree shall enter into force on January 1, 2002: Provided, That the amended provisions of Articles 14 (1) 1, 56 (6) 4, 57 (2), 61 (2), 62 (5), 70 (4), 72 (1) 3, subparagraph 2 and 5 of 73, 75 (1), 76, 85, 86-2, and the amended provisions of Article 14 of the Addenda to the Enforcement Decree of the Corporate Tax Act (No. 15970) shall enter into force on the date of promulgation of this Decree and the amended provisions of Articles 138-4 and 162-2 shall enter into force on July 1, 2002.
Article 2 (General Applicability)
This Decree shall apply from the first business year that starts after this Decree enters into force.
Article 3 (Applicability to Report on Change of Place of Tax Payment)
The amended provisions of Article 9 (3) shall apply from the first merger or division made after this Decree enters into force.
Article 4 (Applicability to Evaluation, etc. of Property Value)
The amended provisions of Article 14 (1) shall apply from the stocks, etc. acquired in the business year in which the date of promulgation of this Decree falls.
Article 5 (Applicability to Non-Inclusion of Amount of Dividend Income in Gross Income)
The amended provisions of the proviso to Article 17-2 (3) shall apply from the first dividend paid after this Decree enters into force.
Article 6 (Applicability to Inclusion of Reserves for Proper Purpose Business in Deductible Expenses)
The amended provisions of Article 56 (6) 4 shall apply from the lease made in business year to which the date of promulgation of this Decree belongs.
Article 7 (Applicability to Inclusion of Liability Reserves, etc. in Deductible Expenses)
The amended provisions of Article 57 (2) shall apply from the portion included in deductible expenses in the business year to which the date of promulgation of this Decree belongs.
Article 8 (Applicability to Inclusion of Appropriation for Bad Debts in Deductible Expenses)
The amended provisions of Article 61 (2) shall apply from the portion of included in deductible expenses in the business year to which the date of promulgation of this Decree belongs.
Article 9 (Applicability to Scope of Bad Debts)
The amended provisions of Article 62 (5) shall apply from the claims readjusted in the business year to which the date of promulgation of this Decree belongs.
Article 10 (Applicability to Reversion Business Year of Insurance Premiums, etc.)
| (1) | The amended provisions of Article 70 (3) shall apply from the first securities traded after this Decree enters into force. |
| (2) | The amended provisions of Article 70 (4) shall apply from the portion included in earnings in the business year to which the date of promulgation of this Decree belongs. |
Article 11 (Applicability to Acquisition Value of Assets)
The amended provisions of Article 72 (1) 3 shall apply from the merger or division made in the business year to which the date of promulgation of this Decree belongs.
Article 12 (Applicability to Evaluation, etc. of Securities, etc.)
The amended provisions of subparagraphs 2 and 5 of Article 73, Article 75 (1) and Article 76 shall apply from the evaluation conducted in the business year to which the date of promulgation of this Decree belongs.
Article 13 (Applicability to Inclusion of Amount Equivalent to Transfer Marginal Profits due to Spin-off in Deductible Expenses)
The amended provisions of Article 83 shall apply from the first division or merger made after this Decree enters into force.
Article 14 (Applicability to Succession, etc. of Assets and Liabilities in Case of Division or Merger)
The amended provisions of Article 85 shall apply from the merger or division made in the business year to which the date of promulgation of this Decree belongs.
Article 15 (Applicability to Income Deduction for Company Specializing in Asset-Backed Securitization)
The amended provisions of Article 86-2 shall apply from the business year to which the date of promulgation of this Decree belongs.
Article 16 (Applicability to Special Cases, etc. concerning Taxation on Capital Gains on Transfer of Land, etc.)
The amended provisions of Articles 92-2, 97 (1), 99-2, 102 (4) and 110 (1) shall apply from the first transfer made after this Decree enters into force.
Article 17 (Applicability to Disposal of Income)
The amended provisions of Article 106 (4) shall apply from the first revised report filed after this Decree enters into force.
Article 18 (Applicability to Scope of Income Subject to Withholding)
| (1) | The amended provisions of Article 111 (2) shall apply from the first interest income paid after this Decree enters into force. |
| (2) | The amended provisions of Article 111 (6) shall apply from the interest income paid on bonds first issued after this Decree enters into force. |
Article 19 (Applicability to Tax Credits of Fictitious Withholding Tax)
| (1) | The amended provisions of Article 113 (2) shall apply from the securities first issued after this Decree enters into force. |
| (2) | The amended provisions of Article 113 (11) shall apply from bonds that are first traded at halfway after this Decree enters into force. |
Article 20 (Applicability to Calculation of Liquidation Income Accruing from Merger)
The amended provisions of Article 122 (1) shall apply from the first merger after this Decree enters into force.
Article 21 (Applicability to Calculation of Amount of Capital Gains on Transfer of Land by Foreign Corporation, etc. with No Domestic Place of Business)
The amended provisions of Article 129-2 shall apply from the first transfer after this Decree enters into force.
Article 22 (Applicability to Scope of Domestic Source Income)
The amended provisions of Article 132 (10) shall apply from the stocks, etc. to be first transferred after this Decree enters into force.
Article 23 (Applicability to Withholding Tax on Bonds, etc. Held by Foreign Corporation)
The amended provisions of 138-3(3) shall apply from the interest that is first paid or from the bonds, etc. that are first sold after this Decree enters into force.
Article 24 (Applicability to Submission, etc. of Detailed Statements of Changes in Stocks, etc.)
| (1) | The amended provisions of Article 161 (5) shall apply from the detailed statement of changes in stocks that is first submitted after this Decree enters into force. |
| (2) | The amended provisions of Article 164 shall apply from the goods or services that are first supplied or imported after this Decree enters into force. |
Article 25 (Applicability to Submission of Payment Statements on Domestic Source Income by Foreign Corporations)
The amended provisions of Article 162-2 shall apply from the first payment made after July 1, 2002.
Article 26 (Applicability to Additional Tax on Non-Issuance, etc. of Calculation Statements)
The amended provisions of Article 14 of the Addenda to the Enforcement Decree of the Corporate Tax Act (No. 15970) shall apply from the business year to which the date of promulgation of this Decree belongs.
Article 27 (Special Case concerning Standard for Calculating Revenue Amount of Entertainment Expenses)
In applying the amended provisions of Article 40 (1) 1, for the business year that commences on or before December 31, 2003, notwithstanding the amended provisions of the same subparagraph, the sales shall be calculated according to the following calculation methods:
| 1. | The business year that commences on or after January 1, 2002 and on or before December 31, 2002: Sales amount ＋ an amount equivalent to 19 times the commission related to the business provided in Article 2 (8) 2 through 7 of the Securities and Exchange Act; |
| 2. | The business year that commences on or after January 1, 2003 and on or before December 31, 2003: Sales amount ＋ an amount equivalent to 14 times the commission related to the business provided in Article 2 (8) 2 through 7 of the Securities and Exchange Act. |
Article 28 (Transitional Measure concerning Inclusion of Value of Deferred Assets in Deductible Expenses)
Start-up expenses, expenses incurred in opening a business, research and development costs, expenses incurred in issuing bonds and the inclusion of the value of earnings accruing from use of contributed assets in deductible expenses, notwithstanding the amended provisions of Articles 24 and 26, shall be governed by the former provisions of Article 77.
Article 29 (Transitional Measure concerning Inclusion of Amount Equivalent to Marginal Profits on Transfer of Assets through Exchange)
In the calculation of an amount equivalent to the marginal profits on transfer of fixed business assets acquired by exchange, to be included in deductible expenses, if the relevant assets are land for which an amount equivalent to the re-evaluated amount thereof is included in deductible expenses under Article 67 (1), this case shall be governed by the former provisions, notwithstanding the amended provisions of Article 86 (4).
Article 30 Omitted.
ADDENDA <Presidential Decree No. 17791, Dec. 5, 2002>
Article 1 (Enforcement Date)
This Decree shall enter into force on the date of promulgation.
Articles 2 and 3 Omitted
ADDENDA <Presidential Decree No. 17826, Dec. 30, 2002>
Article 1 (Enforcement Date)
This Decree shall enter into force on January 1, 2003: Provided, That the amended provisions of subparagraph 5-2 of Article 19, Articles 24 (1) 2 (f) and (h), 26 (excluding the amended provisions of paragraph (1) 5), 28, 63, 89 (3) and 158 (4) shall enter into force on the date of promulgation.
Article 2 (General Applicability)
This Decree shall apply from the first business year that starts after this Decree enters into force.
Article 3 (Applicability to Scope of Losses)
The amended provision of subparagraph 5-2 of Article 19 shall apply from the amount equivalent to depreciation costs incurred in the business year in which the date of promulgation of this Decree falls in deductible expenses.
Article 4 (Applicability to Depreciation of Development Costs)
The amended provisions of Articles 24 (1) 2 (f), 26 (1) 6 and (4) 4, and 28(1) 2 shall apply from the development cost incurred in the business year in which this Decree enters into force.
Article 5 (Applicability to Depreciation of Right to Utilize Frequencies, etc.)
The amended provisions of Articles 24 (1) 2 (h), 26 (1) 8 and (4) 5, and 28 (1) 2 shall apply from the depreciation incurred in the business year in which this Decree enters into force.
Article 6 (Applicability to Additional Tax Rates when Including Balance of Reserve Funds for Proper Purpose Business in Gross Income)
The amended provision of Article 56 (7) 2 shall apply from the statutory filing deadline first arriving after this Decree enters into force.
Article 7 (Applicability to Inclusion of Appropriation for Redemption of Claims for Indemnity in Deductible Expenses)
The amended provision of Article 63 shall apply from the business year in which this Decree enters into force.
Article 8 (Applicability to Inclusion of National Subsidies, etc. in Deductible Expenses)
The amended provision of Article 64 (6) 3 shall apply from the national subsidy first provided after this Decree enters into force.
Article 9 (Applicability to Acquisition Value of Assets)
The amended provision of Article 72 (3) 3 shall apply from the first acquisition after this Decree enters into force.
Article 10 (Applicability to Scope, etc. of Market Value)
The amended provision of Article 89 (3) shall apply from the loan in the business year in which this Decree enters into force.
Article 11 (Applicability to Disposal of Income)
The amended provision of Article 106 (1) 3 shall apply from the first report, determination or correction filed or made after this Decree enters into force.
Article 12 (Applicability to Additional Tax Rates on Tax Refunds Following Adjustment of Losses)
The amended provision of Article 110 (5) 2 shall apply from the statutory filing deadline first arriving after this Decree enters into force.
Article 13 (Applicability to Scope of Income Subject to Withholding)
The amended provision of Article 111 (2) shall apply from the first payment to a domestic corporation after this Decree enters into force.
Article 14 (Applicability to Tax Rate on Unpaid Additional Tax)
The amended provision of Article 119 (1) shall apply from the statutory filing deadline first arriving after this Decree enters into force.
Article 15 (Applicability to Evidence of Expenditures, etc.)
The amended provision of Article 158 (4) shall apply from the business year in which this Decree enters into force.
Article 16 (Transitional Measures for Inclusion of Start-Up Expenses in Deductible Expenses)
The former provisions shall govern any inclusion in deductible expenses of the start-up expenses incurred before the start date of the first business year that starts after this Decree enters into force, notwithstanding the amended provisions of Articles 24 (1) 2 (e), 26 (1) 5 and 26 (4) 4.
Article 17 (Transitional Measures for Unpaid Additional Taxes, etc.)
The amount equivalent to interest under Articles 56 (7) 2 or 110 (5) 2, or the unpaid additional tax under Article 119 (1), for which the statutory filing deadline has elapsed prior to this Decree entering into force, shall be calculated pursuant to the former provisions.
ADDENDA <Presidential Decree No. 18146, Nov. 29, 2003>
Article 1 (Enforcement Date)
This Decree shall enter into force on November 30, 2003. (Proviso Omitted.)
Articles 2 through 15 Omitted.
ADDENDA <Presidential Decree No. 18174, Dec. 30, 2003>
Article 1 (Enforcement Date)
This Decree shall enter into force on January 1, 2004: Provided, That the amended provisions of Articles 2 (1) 8, 56 (6), 86-2 (1), 97 (4) and (9) shall enter into force on the date of its promulgation, and the portions regarding the Indirect Investment Asset Management Business Act among the amended provisions of Articles 14, 17, 40, 70, 73, 75, 86-2, 111, 112 and 113 shall enter into force on January 5, 2004, and the amended provisions of Article 36 (4) shall enter into force on January 1, 2005.
Article 2 (General Applicability)
This Decree shall apply from the first business year that starts after this Decree enters into force.
Article 3 (Applicability to Exclusion of Profit-Making Business in Deposit Insurance System Management Business through Credit Union Depositor Protection Fund)
The amended provisions of Article 2 (1) 8 shall apply from the business year in which this Decree enters into forces.
Article 4 (Applicability to Scope of Amount in Excess of Par Value of Issued Stocks in case Liabilities are Converted into Investments)
The amended provisions of Article 15 (1) shall apply from the conversion of liabilities into investments after this Decree enters into force.
Article 5 (Applicability to Scope of Subsidiaries whose Holding Companies' Dividend Income is not Included in Gross Income)
The amended provisions of Article 17-2 (2) 1 shall apply from the dividend first paid after this Decree enters into force.
Article 6 (Applicability to Composition Approval and Management Normalization Plan with Respect to which Losses Carried Forward is Approved)
The amended provisions of Article 18 (1) 2 shall apply from the losses confirmed by the court, or resolved by the council of creditor financial organizations.
Article 7 (Applicability to Keeping of Donation Receipts)
The amended provisions of Article 36 (4) shall apply from the expenditure on or after January 1, 2005.
Article 8 (Applicability to Scope of Reserve Funds for Proper Purpose Business Acknowledged to be Included in Deductible Expenses)
The amended provisions of Article 81 (4) 1 shall apply from the business year in which this Decree enters into force.
Article 9 (Applicability to Conditions on which Succession of Carried Forward Loss is Excluded in case of Merger)
The amended provisions of Article 81 (4) 1 shall apply from the merger made after this Decree enters into force.
Article 10 (Applicability to Scope of Distributable Profit of Securitization Companies, etc. where Income Deduction is Acknowledged)
The amended provisions of Article 86-2 (1) shall apply from the portion of business year in which this Decree enters into force.
Article 11 (Applicability to Capital Gains on Transfer of Land, etc.)
The amended provisions of Article 92-2 shall apply from the transfer after this Decree enters into force.
Article 12 (Applicability to Methods, etc. of Tax Credits Based on Correction due to Wrongful Accounting)
The amended provisions of Articles 95-3 and 110-2 shall apply from the disposition of warning, attention, etc. taken under the amended provisions of Article 103-2 due to wrongful accounting.
Article 13 (Applicability to Submission of Cash Flow Chart at Time of Filing Report on Tax Base)
The amended provisions of Article 97 (4) and (9) shall apply from the business year in which this Decree enters into forces.
Article 14 (Applicability to Method of Determination by Estimation)
The amended provisions of Article 104 (2) shall apply from the determination for correction by estimation made after this Decree enters into force.
Article 15 (Applicability to Scope of Domestic Source Income of Foreign Corporations)
The amended provisions of Article 132 (1) shall apply from the lease after this Decree enters into force.
ADDENDUM <Presidential Decree No. 18312, Mar. 17, 2004>
This Decree shall enter into force on the date of its promulgation.
ADDENDA <Presidential Decree No. 18324, Mar. 22, 2004>
| (1) | (Enforcement Date) This Decree shall enter into force on the date of its promulgation: Provided, That the amended provisions of Article 56 (4) shall enter into force on January 1, 2005. |
| (2) | (General Applicability) This Decree shall apply from the business year in which this Decree enters into force. |
| (3) | (Applicability to Inclusion of Deductible Expenses in Reserve Funds for Proper Purpose Business) The amended provisions of Article 56 (4) shall apply from the business year that commences after this Decree enters into force. |
| (4) | (Applicability to Income Deduction for Specialized Liquidity Company) The amended provisions of Article 86-2 shall apply from the business year that commences after this Decree enters into force. |
| (5) | (Applicability to Scope of Bonds Subtracting Certain Income Tax Accruing from Interest from Withholding Tax) The amended provisions of Article 111 (6) 3 shall apply from the portion that occurs in the business year in which this Decree enters into forces. |
ADDENDA <Presidential Decree No. 18706, Feb. 19, 2005>
Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation: Provided, That the amended provisions of Articles 111 through 114, 114-2, 136-2, and 138-3 shall enter into force on July 1, 2005.
Article 2 (General Applicability)
This Decree shall apply from the portion of the business year that commences on or after January 1, 2005.
Article 3 (Applicability to Scope of Profit-Making Business)
The amended provisions of Article 2 (1) 9 shall apply from the tax base and the amount of tax that are reported, determined, or corrected after this Decree enters into force.
Article 4 (Applicability to Scope of Losses)
The amended provisions of Article 19 shall apply from the acquisition made after this Decree enters into force.
Article 5 (Applicability to Inclusion of National Subsidies, etc. in Deductible Expenses)
The amended provisions of Article 64 (6) 4 shall apply from the first payment made after this Decree enters into force.
Article 6 (Applicability to Scope, etc. of Market Price)
The amended provisions of Article 89 shall apply from the portion traded after this Decree enters into force.
Article 7 (Applicability to Disposal of Income)
The amended provisions of Article 106 (4) shall apply from the revised report filed after this Decree enters into force.
Article 8 (Applicability to Withholding)
The amended provisions of Articles 111 through 114, 136-2 and 138-3 shall apply from the first withholding made on after July 1, 2005.
Article 9 (Applicability to Withholding, Refund, etc. concerning Bond Transactions with Repurchase Agreement)
The amended provisions of Article 114-2 shall apply from the first sale through bond transactions with repurchase agreement, etc. on after July 1, 2005.
Article 10 (Applicability to Tax Rates, etc. on Unpaid Additional Tax)
The amended provisions of Article 119 (1) shall apply from the interest income and the dividend from the gains of the investment trust is first paid on after January 1, 2005.
Article 11 (Applicability to Amount Equivalent to Compensation in Loaning and Borrowing Transactions of Securities)
The amended provisions of Article 132 (14) shall apply from the amount equivalent to the compensation paid after this Decree enters into force.
Article 12 (Applicability to Receipt and Keeping of Evidentiary Document of Expenditures and Preparation and Issuance of Invoices)
The amended provisions of Articles 158 (2) 4 and 164 (7) shall apply from the trade conducted in the transaction period stated on the aggregate invoices for individual suppliers or purchasers that is submitted in the business year that commences after January 1, 2005.
Article 13 (Applicability to Submission of Statement of Changes in Stocks, etc.)
The amended provisions of Article 161 shall apply from the statement of changes stocks to be submitted after this Decree enters into force.
Article 14 (Special Case concerning Additional Tax on Failure to Issue Invoices)
In applying the additional tax provided for in Article 76 (9) of the Act to any market wholesaler, as defined in Article 2 of the Act on Distribution and Price Stabilization of Agricultural and Fishery Products, if the ratio of the amount (hereafter referred to as “ratio of the amount of the invoices issued” in this Article) for which the market wholesaler issues invoices and submits an aggregate invoices for each purchaser to the head of the relevant tax office from the business year ending during the period from January 1, 2004 to December 31, 2004 to the business year during the period from January 1, 2019 to December 31, 2019 to gross sales is not less than any of the following ratios, the market wholesaler shall be deemed a corporation referred to in Article 120 (2) for the relevant business year, but penalty tax shall be imposed upon the market wholesaler, deeming that the difference between the amount calculated by applying any of the following ratios to total sales for each business year and the amount stated on aggregate invoices for each purchaser as the supply price, if the ratio of the amount of the invoices issued for each business year to total sales is less than any of the following ratios: <Amended by Presidential Decree No. 19891, Feb. 28, 2007; Presidential Decree No. 22812, Mar. 31, 2011; Presidential Decree No. 24357, Feb. 15, 2013; Presidential Decree No. 27828, Feb. 3, 2017>
| Business Year | Ratio | | The business year ending during the period from January 1, 2004 to December 31, 2005 | 40/100 | | The business year ending during the period from January 1, 2006 to December 31, 2006 | 40/100 | | The business year ending during the period from January 1, 2007 to December 31, 2007 | 45/100 | | The business year ending during the period from January 1, 2008 to December 31, 2008 | 50/100 | | The business year ending during the period from January 1, 2009 to December 31, 2009 | 55/100 | | The business year ending during the period from January 1, 2010 to December 31, 2010 | 60/100 | | The business year ending during the period from January 1, 2011 to December 31, 2010 | 65/100 | | The business year ending during the period from January 1, 2012 to December 31, 2010 | 70/100 | | The business year ending during the period from January 1, 2013 to December 31, 2016 | 75/100 | | The business year ending during the period from January 1, 2017 to December 31, 2018 | 80/100 | | The business year ending during the period from January 1, 2019 to December 31, 2019 | 85/100 |
|
Article 15 (Transitional Measures concerning Calculation of Amount Equivalent to Interest Accruing during Holding Period of Bonds, etc.)
| (1) | Where the interest income accruing from the relevant bonds, etc. is first paid to any corporation (including the corporation that falls under any subparagraph of Article 111 (2)) that acquires the bonds, etc. on or before June 1, 2005 on or after July 1, 2005 after the bonds, etc. are first sold, notwithstanding Article 113 (2) 1, an amount equivalent to the interest shall be calculated for the period ranging from the date on which the relevant bonds. etc. are issued or the day following the end date of the immediately preceding interest calculation period ends to the end date of the interest calculation period or the date on which the bonds, etc. are sold halfway. In such cases, when the period calculation method (excluding the method of applying mutatis mutandis Article 74 (1) 1 (a) through (c) shall be excluded) provided in Article 113 (7) is applied, the period calculation method shall apply separately to the bonds, etc. that are acquired on or before June 30, 2005 and those acquired on or after July 1, 2005 and it shall be deemed that the bonds, etc. that are acquired on or before June 30, 2005 shall be deemed first sold. |
| (2) | Where paragraph (1) apply to the bonds, etc. that are held by any corporation that falls any of the subparagraphs of Article 111 (2), the bonds, etc. shall be governed by the former provisions, notwithstanding the amended provisions of Article 111 (2). |
| (3) | The calculation and handling of the deductions, etc. among the amount of the withholding tax referred to in paragraph (1) shall be governed by the former provisions. |
Article 16 Omitted.
ADDENDA <Presidential Decree No. 18736, Mar. 8, 2005>
Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation.
Articles 2 through 5 Omitted.
ADDENDA <Presidential Decree No. 18903, Jun. 30, 2005>
Article 1 (Enforcement Date)
This Decree shall enter into force on July 1, 2005.
Article 2 Omitted.
ADDENDA <Presidential Decree No. 18945, Jul. 15, 2005>
| (1) | (Enforcement Date) This Decree shall enter into force on the date of its promulgation. |
| (2) | (Applicability to Requirement for Income Deduction for Investment Companies) The amended provisions of Article 86-2 (2) and (3) 1 shall apply from the dividend amount paid after this Decree enters into force. |
ADDENDA <Presidential Decree No. 19010, Aug. 19, 2005>
Article 1 (Enforcement Date)
This Decree shall enter into force on December 1, 2005.
Articles 2 and 3 Omitted.
ADDENDA <Presidential Decree No. 19214, Dec. 30, 2005>
| (1) | (Enforcement Date) This Decree shall enter into force on January 1, 2006. |
| (2) | (Applicability to Scope, etc. of Income Subject to Withholding) The amended provisions of Articles 111 through 113 and 114-2 shall apply to the interest, etc. on bonds, etc. to be first paid and the bonds, etc. to be first traded after this Decree enters into force. |
| (3) | (Special Cases concerning Business Year of Accrual of Interest Income, etc.) In applying the proviso to Article 70 (1) 1, where any corporation that operates the financial and insurance business, from among the claims, etc. held by the corporation as at December 31, 2005, in relation to the interest, etc. the tax withheld from January 1, 2006, appropriate the interest, etc. corresponding to the period already passed when the settlement of accounts of the business year that ends on December 31, 2005 is confirmed as the revenue of the relevant business year, the relevant income, etc. may be deemed the income, etc., the tax withheld at source pursuant to Article 73 of the Act. <Newly Inserted by Presidential Decree No. 19328, Feb. 9, 2006> |
ADDENDA <Presidential Decree No. 19255, Dec. 31, 2005>
| (1) | (Enforcement Date) This Decree shall enter into force on January 1, 2006: Provided, That the amended provisions of Articles 92-3 through 92-11 shall enter into force on January 1, 2007. |
| (2) | (General Applicability) This Decree shall apply from the first transfer made after this Decree enters into force. |
| (3) | (Applicability to Scope of Long-Term Rental Housing) The amended provisions of Article 92-2 (2) 1-2 shall apply from the first housing, the use of which is approved and which is inspected this Decree enters into force. |
ADDENDA <Presidential Decree No. 19328, Feb. 9, 2006>
Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation: Provided, That the amended provisions of Articles 138-5 and 138-6 shall enter into force on July 1, 2006 and the amended provisions of Article 92-11 shall enter into force on January 1, 2007.
Article 2 (General Applicability)
This Decree shall apply from the first business year that starts on or after January 1, 2006.
Article 3 (Applicability to Place of Tax Payment of Persons Liable for Withholding)
The amended provisions of Article 7 (1) 3 shall apply from the first payment made after this Decree enters into force.
Article 4 (Applicability to Non-Inclusion of Dividends Earned by Holding Companies, etc. in Gross Income)
The amended provisions of Article 17-2 (9) and the latter part of Article 17-3 (1) shall apply from for first dividend to be paid after this Decree enters into force.
Article 5 (Applicability to Scope of Losses)
The amended provisions of subparagraph 15 of Article 19 shall apply from first disbursement after this Decree enters into force.
Article 6 (Special Cases concerning Service Life and Applicability to Change)
The amended provisions of Article 29 (2) and (3) shall apply from the first application filed after this Decree enters into force.
Article 7 (Applicability to Value, etc. of Donations)
The amended provisions of Article 37 (1) shall apply from the first disbursement after this Decree enters into force.
Article 8 (Applicability to and Special Cases concerning Scope of Inclusion of Donations in Amount of Deductible Expenses)
| (1) | The amended provisions of Article 38 (3) and (4) shall apply from the disbursement in the first business year that starts after January 1, 2006. |
| (2) | In applying the amended provisions of Article 38 (3), where any corporation disburses its donations provided in Article 73 of the Restriction of Special Taxation Act or Article 24 of the Act, such corporation shall sequentially include the relevant donations in the amount of deductible expenses within the scope of the amount falling under each of the following subparagraphs from the business year that starts on or after January 1, 2006 to the business year that ends within three years after the start date of the former business year, notwithstanding the amended provisions of the same paragraph of the same Article: |
| 1. | In the case of the donation provided in each subparagraph of Article 24 (2) of the Act (hereafter referred to as "statutory donation" in this paragraph), the amount that is calculated by the following formula; |
[The income amount (referring to the income amount before the donation is included in the amount of deductible expenses; hereafter the same shall apply in this paragraph) of the relevant business year - the amount of losses carried forward (referring to the total of the amount of losses provided in subparagraph 1 of Article 13; hereafter the same shall apply in this paragraph)] × 75/100
| 2. | In the case of the donation provided in Article 73 of the Restriction of Special Taxation Act, the amount calculated by the following formula; |
(The income amount of the relevant business year - the amount of losses carried forward - the amount of statutory donation) × 50/100;
| 3. | In the case of the designated donation provided in Article 24 (1) of the Act, the amount calculated by the following formula; |
(The income amount of the relevant business year - the amount of losses carried forward - the amount of statutory donation - the donation provided in Article 73 of the Restriction of Special Taxation Act) × 5/100.
| (3) | In applying paragraph (2), any donation to which Article 18 (2) of the Addenda to the Restriction of Special Taxation Act (partial amendment by Act No. 7839) applies shall be deemed the statutory donation on or by December 31, 2006, notwithstanding paragraph (2) 1 and 2. |
Article 9 (Applicability to Entertainment Expenses Paid in Use of Credit Cards)
The amended provisions of Article 41 (1) shall apply from the first disbursement after this Decree enters into force.
Article 10 (Applicability to Exclusion of Severance Insurance Premiums, etc. in Amount of Deductible Expenses)
The amended provisions of Article 44-2 shall apply from the business year during which a tax report is first filed after this Decree enters into force.
Article 11 (Applicability to Inclusion of Reserve Funds for Proper Purpose Business in Amount of Deductible Expenses)
The amended provisions of Article 56 shall apply from the portion included in the amount of deductible expenses in the business year that first starts after January 1, 2006.
Article 12 (Applicability to Inclusion of Contingency Reserves in Amount of Deductible Expenses)
The amended provisions of Article 57 (2) and (3) shall apply from the portion included in the amount of deductible expenses in the business year in which this Decree enters into forces.
Article 13 (Applicability to Inclusion of Retirement Benefit Appropriation Funds in Amount of Deductible Expenses and Special Cases concerning Applicability)
| (1) | The amended provisions of Article 60 (1) and (2) shall apply from the portion included in the amount of deductible expenses in the business year that first starts after this Decree enters into force. |
| (2) | In applying the amended provisions of Article 60 (2), with respect to the portion included in the amount of deductible expenses from the business year that first starts after this Decree enters into force to the business year that ends within two years after the start date of the business year, "30/100" provided in the same paragraph of the same Article shall be construed as "35/100," notwithstanding the amended provisions of the same paragraph of the same Article. |
Article 14 (Applicability to Scope of Bad Debts)
| (1) | The amended provisions of Article 62 (1) 5 shall apply from the first portion for which it is determined to authorize the rehabilitation program or its responsibility is immunized by the court after this Decree enters into force pursuant to the Debtor Rehabilitation and Bankruptcy Act. |
| (2) | The amended provisions of Article 62 (1) 7 shall apply from the business year to be first reported after this Decree enters into force. |
Article 15 (Applicability to Inclusion of National Subsidies, etc in Deductible Expenses)
The amended provisions of Article 64 shall apply from the portion first acquired and improved after this Decree enters into force.
Article 16 (Applicability to Business Year of Accrual of Dividend Income, etc.)
The amended provisions of Article 70 shall apply from the business year during which a tax report is first filed after this Decree enters into force.
Article 17 (Applicability to Acquisition Value, etc. of Assets)
| (1) | The amended provisions of Article 72 (1) shall apply from the portion first converted into investments after this Decree enters into force. |
| (2) | The amended provisions of Article 72 (2) shall apply from the first acquisition after this Decree enters into force. |
Article 18 (Applicability to Evaluation of Monetary Assets or Liabilities Denominated in Foreign Currencies)
The amended provisions of Articles 73 and 76 shall apply from the currency swap contract to be first concluded after this Decree enters into force.
Article 19 (Applicability to Marginal Losses from Evaluation of Stocks, etc.)
The amended provisions of Article 78 (2) and (3) shall apply from the first evaluation conducted after this Decree enters into force.
Article 20 (Applicability to Inclusion of Amount Equivalent to Marginal Profits from Merger Evaluation in Amount of Deductible Expenses)
The amended provisions of Article 80 (1), (2) and (4) shall apply from the first merger made after this Decree enters into force.
Article 21 (Applicability to Succession to Losses Carried Forward Following Merger)
The amended provisions of Article 81 (5) (referring to the former paragraph (4)) shall apply from the first merger after this Decree enters into force.
Article 22 (Applicability to Inclusion of Amount Equivalent to Marginal Profits From Division Evaluation in Amount of Deductible Expenses)
The amended provisions of Article 82 (1) and (2) shall apply from the first division after this Decree enters into force.
Article 23 (Applicability to Income Deduction of Specialized Liquidity Companies, etc.)
| (1) | The amended provisions of Article 86-2 (3) (former paragraph (2)) 1 (a) shall apply from the first establishment after this Decree enters into force. |
| (2) | The amended provisions of Article 86-2 (9) shall apply from the profits first distributed (including the retained earnings carried forward) of the business year that starts after January 1, 2006, |
Article 24 (Applicability to Types, etc. of Wrongful Calculations)
The amended provisions of Article 88 (1) 8 and Article 89 (6) shall apply from the first merger or capital increase after this Decree enters into force.
Article 25 (Applicability to Special Case concerning Taxation on Capital Gains on Transfer of Lands, etc.)
The amended provisions of Article 92-2 (2) 3 and (4) 4 shall apply from the first transfer after this Decree enters into force.
Article 26 (Applicability to Standards, etc. for Determining Land Not Deemed Non-Business Land on Inevitable Grounds)
The amended provisions of Article 92-11 (3) 3 shall apply from the first transfer after this Decree enters into force.
Article 27 (Applicability to Special Case concerning Foreign Tax Credits for Indirect Investment Companies, etc.)
The amended provisions of Article 94-2 shall apply from the portion of income that first accrues after this Decree enters into force.
Article 28 (Applicability to Calculation of Tax Refunds following Correction due to False Accounting)
The amended provisions of Article 110-2 shall apply from the first merger or division after this Decree enters into force.
Article 29 (Applicability to Special Cases concerning Withholding from Interest, etc. on Bonds, etc.)
The amended provisions of Article 113 (2) and Article 138-3 shall apply from the first withholding after this Decree enters into force.
Article 30 (Applicability to Calculation, etc. of Understated Tax)
The amended provisions of Article 118 (4) shall apply from the portion included in the gross income after this Decree enters into force.
Article 31 (Applicability to Calculation of Amount of Liquidation Income Following Dissolution)
The amended provisions of the proviso to Article 121 (3) shall apply from the first dissolution after this Decree enters into force.
Article 32 (Scope, etc. of Arm's Length Prices)
The amended provisions of Article 131 (2) and (4) shall apply from the first trade conducted after this Decree enters into force.
Article 33 (Applicability to Scope of Domestic Source Income)
The amended provisions of Article 137 (7) shall apply from the portion of income that first occurs on or after January 1, 2006.
Article 34 (Applicability to Special Cases concerning Withholding Procedures for Foreign Corporations)
The amended provisions of Articles 138-5 and 138-6 shall apply from the portion first withheld on or after July 1, 2006.
Article 35 (Applicability to Receipts and Keeping of Evidentiary Documents of Disbursement)
The amended provisions of Article 158 (1) 3 shall apply from the first trade conducted after this Decree enters into force.
Article 36 (Applicability to Special Cases concerning Foreign Corporations' Obligation to Payment Statements on Domestic Source Income, etc.)
The amended provisions of Article 162 (1) shall apply from the payment statement on capital gains that first accrues after this Decree enters into force.
Article 37 (Applicability to Preparation, Issuance, etc. of Invoices)
The amended provisions of Article 164 (5) shall apply from the submission deadline first arriving after this Decree enters into force.
Article 38 (Applicability to Special Cases concerning Additional Taxes on Failure to Issue Invoices)
The amended provisions of Article 14 of the Addenda to the Enforcement Decree of the Corporate Tax amended by Presidential Decree No. 15970 shall apply from the business year in which tax report is first filed after this Decree enters into force.
Article 39 (Transitional Measures concerning Determination, etc. to Authorize Rehabilitation Program)
| (1) | The determination to authorize the reorganization program provided in the Company Reorganization Act, which is made on or before March 31, 2006, the determination to authorize the composition provided in the Composition Act and the determination to authorize the forced composition provided in the Bankruptcy Act shall be deemed the determination to authorize the rehabilitation program provided in the Debtor Rehabilitation and Bankruptcy Act pursuant to the amended provisions of Articles 15 (4), 18 (1) and 62 (1) 5. |
| (2) | The immunity determination made by the court pursuant to the Individual Debtor Rehabilitation Act made on or before March 31, 2006 shall be deemed the immunity determination made by the court pursuant to the Debtor Rehabilitation and Bankruptcy Act provided in the amended provisions of Article 62 (1) 5. |
ADDENDA <Presidential Decree No. 19422, Mar. 29, 2006>
Article 1 (Enforcement Date)
This Decree shall enter into force on April 4, 2006.
Article 2 Omitted.
ADDENDA <Presidential Decree No. 19494, May 30, 2006>
Article 1 (Enforcement Date)
This Decree shall enter into force on June 4, 2006.
Articles 2 through 6 Omitted.
ADDENDA <Presidential Decree No. 19815, Dec. 30, 2006>
Article 1 (Enforcement Date)
This Decree shall enter into force on January 1, 2007.
Articles 2 through 5 Omitted.
ADDENDA <Presidential Decree No. 19891, Feb. 28, 2007>
Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation.
Article 2 (General Applicability)
This Decree shall apply from the business year that starts on or after January 1, 2007.
Article 3 (Applicability to Place of Tax Payment of Persons Liable for Withholding)
The amended provisions of Article 7 (1) 3 shall apply from the portion withheld after this Decree enters into force.
Article 4 (Applicability to Scope of Earnings)
| (1) | The amended provisions of subparagraph 10 of Article 11 shall apply from the first business year that starts after this Decree enters into force. |
| (2) | The indemnity gains appropriated according to corporate accounting standards before this Decree enters into force shall not be included in the earnings of the relevant business year, notwithstanding the amended provisions of subparagraph 10 of Article 11. |
Article 5 (Applicability to Non-Inclusion of Holding Company's Received Dividend Income in Gross Income)
The amended provisions of Article 17-2 (4) and (5) 4 (proviso) shall apply from the first dividend paid after this Decree enters into force.
Article 6 (Applicability, etc. to Scope of Losses)
| (1) | The amended provisions of subparagraph 18 of Article 19 shall apply from the first business year that starts after this Decree enters into force. |
| (2) | The indemnity losses appropriated according to corporate accounting standards before this Decree enters into force shall not be included in the losses of the relevant business year, notwithstanding the amended provisions of subparagraph 18 of Article 19. |
Article 7 (Applicability to Scope of Depreciable Assets)
The amended provisions of Article 24 (5) shall apply from the lease assets first lent after this Decree enters into force.
Article 8 (Applicability to Scope, etc. of Designated Donations)
| (1) | The amended provisions of Article 36 (1) 1 (g) shall apply from the portion first designated after this Decree enters into force. |
| (2) | The amended provisions of Article 36 (6) shall apply from the portion for which the relevant grounds first arise after this Decree enters into force. |
Article 9 (Applicability to Scope of Entertainment Expenses)
The amended provisions of Article 42 (4) and (5) shall apply from the first disbursed portion after this Decree enters into force.
Article 10 (Applicability to Non-Inclusion of Joint Expenses in Deductible Expenses)
The amended provisions of Article 48 (1) 2 and 3 shall apply from the first disbursed portion after this Decree enters into force.
Article 11 (Applicability to Inclusion of Appropriation for Bad Debts in Deductible Expenses)
The amended provisions of the proviso to Article 61 (2) shall apply from the portion that is first appropriated after this Decree enters into force.
Article 12 (Applicability to Scope of Bad Debts)
| (1) | The amended provisions of Article 62 (1) 15 shall apply from the receivable claims that are first renounced after this Decree enters into force. |
| (2) | The amended provisions of Article 62 (4) shall apply from the first merger or division made after this Decree enters into force. |
Article 13 (Applicability to Business Year of Accrual of Gains or Losses from Sale of Assets)
The amended provisions of the main sentence of Article 68 (1) 3 shall apply from the foreign currency price that is first sold after this Decree enters into force.
Article 14 (Applicability to Scope of Assets and Liabilities Subject to Evaluation)
The amended provisions of subparagraphs 4 and 5 of Article 73 shall apply from the first evaluation conducted after this Decree enters into force.
Article 15 (Applicability to Evaluation of Foreign Assets and Liabilities)
The amended provisions of the proviso to Article 76 (3) shall apply from the foreign currency amount that is first sold after this Decree enters into force.
Article 16 (Applicability to Income Deduction for Companies Specialized in Securitization, etc.)
The amended provisions of Article 86-2 (3) shall apply from the first dividend paid after this Decree enters into force.
Article 17 (Applicability to Types, etc. of Repudiation of Wrongful Calculations)
The amended provisions of Article 88 (1) 7-2, (3) and (4) shall apply from the first trade conducted after this Decree enters into force.
Article 18 (Applicability to Scope, etc. of Market Price)
| (1) | The amended provisions of Article 89 (1) shall apply from the first transaction made after this Decree enters into force. |
| (2) | The amended provisions of Article 89 (3) shall apply from the first lease or borrowing after this Decree enters into force. |
Article 19 (Applicability to Disposal of Income)
The amended provisions of Article 106 (1) 3 (i) shall apply from the portion that is first disposed of after this Decree enters into force.
Article 20 (Applicability to Application of Additional Taxes)
The amended provisions of the main sentence other than the subparagraphs of Article 120 (6) shall apply from the first submission after this Decree enters into force.
Article 21 (Applicability to Scope of Domestic Source Income)
The amended provisions of Article 132 (16) shall apply from the first transfer after this Decree enters into force.
Article 22 (Applicability to Withholding for Foreign Corporations)
The amended provisions of Article 137 (2) shall apply from the first disposal of profits or surpluses after this Decree enters into force.
Article 23 (Special Applicability to Inclusion of Liability Reserves, etc. in Deductible Expenses)
In applying the amended provisions of the proviso to Article 57 (1) 2, with respect to the estimated amount of the insurance money which must be paid for an accident regarding personal insurance that already occurred but has yet to be reported to a domestic corporation operating the insurance business (hereafter referred to as "damage incurred but not reported" in this Article) as at the end date of a business year, an amount equivalent to 30/100 of the damage incurred but not reported in the relevant business year for the portion of a business year appropriated after this Decree enters into force, and an amount equivalent to 60/100 of the damage incurred but not reported in the relevant business year for the portion of the subsequent business year, respectively, shall be deemed the insurance money amount estimated pursuant to Article 57 (1) 2, notwithstanding the amended provisions of the proviso to Article 57 (1) 2.
Article 24 (Special Applicability to Additional Tax on Failure to Issue Invoices)
The amended provisions of Article 14 of the Addenda to the amended Enforcement Decree of the Corporate Tax Act, Presidential Decree No. 18706, shall apply from the business year that is first reported after this Decree enters into force.
Article 25 (Transitional Measures concerning Designation Organizations, etc. Receiving Donations)
Among the non-profit corporations established with permission of the competent authorities pursuant to Article 32 of the Civil Act as at the time this Decree enters into force, the corporations designated and publicly announced by the Minister of Finance and Economy as designated organizations donations shall be deemed those designated as designated organizations, etc. receiving donations pursuant to the amended provisions of Article 36 (1) 1 (g).
ADDENDA <Presidential Decree No. 20619, Feb. 22, 2008>
Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation: Provided, That the amended provisions of Articles 111 (2) and (3), 112 (2) and (5), 113(10) and 114-2 (3) shall enter into force on June 1, 2008 and the amended provision of Article 159-2 (6) shall enter into force on July 1, 2008.
Article 2 (General Applicability)
This Decree shall apply from the business year that starts after the partial amendment to the Corporate Tax Act, Act No. 8831 enters into force.
Article 3 (Applicability to Place of Tax Payment of Persons Liable for Withholding)
The amended provision of Article 7 (1) 3 shall apply from the portion first withheld after this Decree enters into force.
Article 4 (Applicability to Scope of Gains)
The amended provision of subparagraph 10 of Article 11 shall apply from the portion first appropriated for indemnity gains after this Decree enters into force.
Article 5 (Applicability to Exclusion of Holding Company's Dividend Income from Gross Income)
The amended provision of Article 17-2 (2) 1 shall apply from the first dividend distributed after this Decree enters into force.
Article 6 (Applicability to Scope of Loss)
The amended provision of subparagraph 18 of Article 19 shall apply from the portion first appropriated for indemnity loss after this Decree enters into force.
Article 7 (Applicability to Designation, etc. of Designated Organizations Receiving Donations)
The amended provisions of Article 36 (1) 1 (g) (i), (iii) and (iv) shall apply from the organization designated as a designated organization receiving donations after this Decree enters into force.
Article 8 (Applicability to Scope of Assets and Liabilities Subject to Evaluation)
The amended provisions of subparagraphs 3 through 5 of Article 73 shall apply from the first evaluation conducted after this Decree enters into force.
Article 9 (Applicability to Evaluation of Foreign Assets and Liabilities)
The amended provisions of Article 76 shall apply from the currency forward and currency swap, the evaluation method of which is first reported after this Decree enters into force.
Article 10 (Applicability to Evaluation of Stocks, etc.)
The amended provisions of Article 78 (2) shall apply from the first evaluation conducted after this Decree enters into force.
Article 11 (Applicability to Income Deduction for Companies, etc. Specialized in Securitization)
The amended provision of Article 86-2 (1) shall apply from the dividend first distributed after this Decree enters into force.
Article 12 (Applicability to Deduction of Foreign Tax Credits)
The amended provisions of Article 94 shall apply from the first dividend earned by a domestic corporation after this Decree enters into force.
Article 13 (Applicability to Withholding)
The amended provisions of Articles 111 (2) and (3), 112 (2) and (5), 113 (10) and 114-2 (3) shall apply from the first payment of interest, etc. on bond or the first sale of bonds, etc. on or after June 1, 2008.
Article 14 (Applicability to Tax Rates on Unpaid Additional Tax)
The amended provisions of Article 119 shall apply from the first payment of the unpaid additional tax after this Decree enters into force.
Article 15 (Applicability to Procedures for Requesting Corrections to Apply Non-Taxation, Tax Exemption or Restrictive Tax Rates under Tax Treaties)
The amended provisions of Article 138-6 shall apply from the first request correction to be made after this Decree enters into force.
Article 16 (Applicability to Becoming, etc. in Credit Card Merchants)
The amended provisions of Article 159 shall apply from the guidance to become a credit card merchant that is first given after this Decree enters into force.
Article 17 (Applicability to Becoming, etc. in Cash Receipt Merchants)
| (1) | The amended provisions of Article 159-2 (1) through (5) shall apply from becoming the first Cash Receipt merchant after this Decree enters into force. |
| (2) | The amended provisions of Article 159-2 (6) shall apply from the first Cash Receipt issued after July 1, 2008. |
Article 18 (Applicability to Submission of Detailed Statement on Changes in Stocks)
The amended provisions of Article 161 shall apply from the portion on which the first report is made after this Decree enters into force.
Article 19 (Special Cases concerning Inclusion of Appropriation for Redemption of Claims for Indemnity in Deductible Expenses)
Notwithstanding Article 63 (2), the incidence of claims for indemnity from the business year that starts between January 1, 2008 and December 31, 2008 until the business year that starts between January 1, 2011 and December 31, 2011 shall be pursuant to the following incidence of claims for indemnity:
| Business year beginning between January 1, 2008 and December 31, 2008 | 8/1000 or the incidence of claims for compensation, whichever is bigger | | Business year beginning between January 1, 2009 and December 31, 2009 | 6/1000 or the incidence of claims for compensation, whichever is bigger | | Business year beginning between January 1, 2010 and December 31, 2010 | 4/1000 or the incidence of claims for compensation, whichever is bigger | | Business year beginning between January 1, 2011 and December 31, 2011 | 2/1000 or the incidence of claims for compensation, whichever is bigger |
|
Article 20 (Special Cases concerning Business Year of Accrual of Interest Income, etc.)
| (1) | Where the proviso to Article 70 (1) 1 applies, the interest, etc. appropriated as the earnings of the business year, which corresponds to the period already passed when a corporation falling under any of the subparagraphs of Article 111 (2) settles accounts for the business year that expires on or before June 1, 2008 shall become the profit of the business year to which the day corresponding to the receipt date pursuant to Article 45 of the Enforcement Decree of the Income Tax Act belongs, notwithstanding the amended provision of Article 111 (2). |
| (2) | Where a corporation falling under any of the subparagraphs of Article 111 (2) appropriates the interest, etc. of bonds, etc. corresponding to the period already passed as the earnings of the relevant business year in cases where the settlement of accounts becomes definite in the business year that expires on or after June 1, 2008, it may regard 50/100 of the appropriated amount as profit of the relevant business year and the rest as profit of the next business year. |
Article 21 (Special Cases concerning Evaluation of Foreign Assets and Liabilities)
When the method of evaluation pursuant to Article 76 (2) 1 applies to the currency forward and currency swap contracted before the start date of the business year (hereafter in this Article "immediately preceding business year") immediately preceding the business year in which the first report pursuant to Article 76 (2) is made, the registered amount which is denominated in Korean won pursuant to paragraph (4) of the same Article means the amount computed according to the standard exchange rate or arbitrated exchange rate of the day before the start date of the immediately preceding business year.
Article 22 (Transitional Measures concerning Exclusion of Holding Company's Dividend Income from Gross Income)
| (1) | Notwithstanding the amended provisions of Article 17-2 (5) 1 and 2, the dividend income received between January 1, 2008 and December 31, 2008 shall be governed by the former provisions, however, "60/100" referred to in the former provisions of Article 17-2 (5) 3 shall be construed as "80/100." |
| (2) | Notwithstanding the amended provisions of Article 17-2 (6) 1, the dividend income received between January 1, 2008 and December 31, 2008 shall be governed by the former provisions, however, "60/100" referred to in the former provisions of Article 17-2 (6) 1 shall be construed as "80/100." |
Article 23 (Transitional Measures concerning Withholding by Financial Institutions)
Where a corporation falling under any subparagraph of Article 111 (2) sells bonds, etc. acquired on or before June 30, 2005 or receives interest, etc. (limited to where interest has not been received between July 1, 2005 and May 31, 2008) after June 1, 2008, Article 15 of Addenda to a partial amendment to the Enforcement Decree of the Corporate Tax Act, Presidential Decree No. 18706 shall govern, notwithstanding the amended provisions of Articles 111 (2) and (3), 112 (2) and (5), 113 (10) and 114-2 (3).
Article 24 (Transitional Measures concerning Becoming, etc. in Cash Receipt Merchants)
The corporation that meets the eligibility requirements for cash receipt merchants pursuant to the amended provisions of Article 159-2 (1) shall become a Cash Receipt merchant within three months after this Decree enters into force.
ADDENDA <Presidential Decree No. 20720, Feb. 29, 2008>
Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation. (Proviso Omitted.)
Articles 2 through 8 Omitted.
ADDENDA <Presidential Decree No. 20763, Apr. 3, 2008>
Article 1 (Enforcement Date)
This Decree shall enter into force on April 7, 2008.
Articles 2 through 4 Omitted.
ADDENDA <Presidential Decree No. 20799, Jun. 5, 2008>
Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation.
Article 2 Omitted.
ADDENDA <Presidential Decree No. 20849, Jun. 20, 2008>
Article 1 (Enforcement Date)
This Decree shall enter into force on June 22, 2008.
Articles 2 through 11 Omitted.
ADDENDA <Presidential Decree No. 20930, Jul. 24, 2008>
Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation.
Article 2 (Applicability to Special Taxation on Capital Gains from Land, etc.)
The amended provisions of Article 92-2 shall apply from the first transfer after this Decree enters into force.
ADDENDA <Presidential Decree No. 21025, Sep. 22, 2008>
Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation.
Articles 2 through 4 Omitted.
ADDENDA <Presidential Decree No. 21063, Oct. 7, 2008>
Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation.
Article 2 (Applicability)
This Decree shall apply from the first transfer after this Decree enters into force.
ADDENDA <Presidential Decree No. 21302, Feb. 4, 2009>
Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation: Provided, That the amended provisions of the former part of Article 7 (1) 3 and Chapter II-3 (Articles 120-12 through 120-25) shall enter into force on January 1, 2010.
Article 2 (General Applicability)
This Decree shall apply from the business year that starts after the partial amendment to the Corporate Tax Act, Act No. 9267 entered into force.
Article 3 (Applicability to Profit-Making Business)
The amended provision of Article 2 (1) 13 shall apply from the tax base first reported, determined or corrected after this Decree enters into force.
Article 4 (Applicability to Deduction of Losses)
The amended provision of Article 10 (4) shall apply from the fist distributed losses after this Decree enters into force.
Article 5 (Applicability to Disbursement of Small-Sum Advertising Expenses, etc.)
The amended provisions of subparagraphs 1-2 and 18 of Article 19 shall apply from the first disbursement made after the partial amendment to the Corporate Tax Act, Act No. 9267 entered into force.
Article 6 (Applicability to Inclusion in Deductible Expenses of Compensating Expenses following Exercise of Stock Options)
The amended provisions of subparagraph 19 of Article 19 and Article 129 (1) 7 shall apply from the first compensation for exercising expenses after this Decree enters into force.
Article 7 (Applicability to Scope of Debt Guarantees Acknowledged as Bad Debts)
The amended provision of Article 19-2 (6) 5 shall apply from the first guarantee or the first extension of a guarantee contract after this Decree enters into force.
Article 8 (Applicability to Stock Options)
The amended provisions of Article 20 (1) 3 and Article 88 (1) 3, 6 (a) and 8-2 shall apply from the stock option first granted after the partial amendment to the Corporate Tax Act, Act No. 9267 entered into force, and with regard to the stock options granted before the same Act entered into force, Article 15 of the former Restriction of Special Taxation Act (referring to the one before amended by Act No. 9272) shall apply. <Amended by Presidential Decree No. 21431, Apr. 21, 2009>
Article 9 (Applicability to Evidence of Expenditure of Entertaining Expenses)
The amended provisions of Article 41 (1) 1 and (5) shall apply from the expenditure that is disbursed after the partial amendment to the Corporate Tax Act, Act No. 9267 entered into force.
Article 10 (Applicability to Non-Inclusion in Deductible Expenses of Severance Benefits)
The amended provisions of Article 44 (3) and (4) shall apply from the first payment after this Decree enters into force.
Article 11 (Applicability to Receiving Time of Income Generated from Specified Money in Trust and Withholding thereof)
| (1) | The amended provisions of Article 70 (5) and Article 111 (5) and (6) shall apply from the income that accrues after the partial amendment to the Corporate Tax Act, Act No. 9267 entered into force. |
| (2) | The amended provisions of Article 113 (1) and (10) shall apply from the first transfer of bonds, etc. after the partial amendment to the Corporate Tax Act, Act No. 9267 entered into force. |
Article 12 (Applicability to Evaluation of Collective Investment Property of Investment Companies, etc.)
The amended provisions of subparagraph 2 (c) of Article 73, Article 75 (3) and 86-2(1) shall apply from the evaluation conducted after this Decree enters into force.
Article 13 (Applicability to Profits and Losses from Evaluation of Asset in Special Account of Insurance Company)
The amended provisions of subparagraph 2 (d) of Article 73 and Article 75 (4) shall apply from the portion evaluated in the business year in which this Decree enters into force.
Article 14 (Applicability to Scope of Marginal Profits from Evaluation of Merger Included in Deductible Expenses)
The amended provision of Article 80 shall apply from the first merger after this Decree enters into force.
Article 15 (Applicability to Scope of Marginal Profits from Evaluation of Division Included in Deductible Expenses)
The amended provision of Article 82 shall apply from the first division after this Decree enters into force.
Article 16 (Applicability to Scope of Market Price)
The amended provision of Article 89 (3) shall apply from the business year in which the first report is filed after this Decree enters into force.
Article 17 (Applicability to Standard, etc. for Determining Land not Deemed Non-Business Purpose Land on Inevitable Grounds)
The amended provision of Article 92-11 (3) 2 shall apply from the first report filed after this Decree enters into force.
Article 18 (Applicability to Foreign Tax Credits)
The amended provisions of Article 94 (8) and (11) shall apply from the first dividend allotted after this Decree enters into force.
Article 19 (Applicability to Disposal of Income)
| (1) | The amended provision of Article 106 (1) 3 (i) shall apply from the first act or calculation after this Decree enters into force. |
| (2) | The amended provision of Article 106 (1) 3 (j) shall apply from the first determination or correction after this Decree enters into force. |
Article 20 (Applicability to Application Method of Tax Credits for Increase in Revenue)
The amended provision of subparagraph 3 of Article 120-10 shall apply from the first report to be filed after this Decree enters into force.
Article 21 (Applicability to Return of Corporate Tax by Conscientious Tax Payment Method)
The amended provision of Article 120-11 shall apply from the first report to be filed after this Decree enters into force.
Article 22 (Applicability to Calculation of Profits and Losses of Interest following Money Transactions between Headquarters and Branches of Foreign Corporation)
The amended provision of Article 129-3 shall apply from the first report to be filed after this Decree enters into force.
Article 23 (Applicability to Scope of Domestic Source Income)
The amended provision of Article 132 (14) shall apply from the income accruing generated from the distribution of profits after this Decree enters into force.
Article 24 (Applicability to Application for Approval of Extension of Filing Deadline of Corporate Tax of Foreign Corporation)
The amended provision of Article 136 (1) shall apply from the first application for extension to be filed after this Decree enters into force.
Article 25 (Applicability to Payment of Withholding Tax on Foreign Corporation)
| (1) | The amended provision of Article 137 (1) shall apply from the distribution after this Decree enters into force. |
| (2) | The amended provision of Article 137 (8) shall apply from the transfer after this Decree enters into force. |
Article 26 (Applicability to Procedures for Prior Approval to Apply Non-Taxation, Tax Exemption or Restrictive Tax Rates under Tax Treaties)
The amended provisions of Article 138-5 (1) and (8) shall apply from the first application for prior approval to be filed after this Decree enters into force.
Article 27 (Applicability to Special Cases concerning Reporting and Payment of Personal Service Income by Foreign Corporation)
The amended provision of Article 139 shall apply from the income that generated after the partial amendment to the Corporate Tax Act, Act No. 9267 entered into force.
Article 28 (Applicability to Obligation to Keep Evidence of Expenditure)
The amended provision of Article 158 (2) shall apply from the disbursement after the partial amendment to the Corporate Tax Act, Act No. 9267 entered into force.
Article 29 (Special Cases concerning Profit-Making Business)
When Article 2 (1) 13 is applied, the foundational corporation Kukkiwon under Article 3 (1) of Addenda to Act No. 8746, the Promotion of Taekwondo and Creation of Taekwondo Park Act shall be deemed as the Kukkiwon under the same Act until it is authorized by the Minister of Culture, Sports and Tourism.
Article 30 (Special Cases concerning Reporting on Evaluation Method of Special Accounts of Insurance Companies)
When the amended provision of Article 75 (4) is applied, the insurance company that has special accounts under Article 108 (1) 3 of the Insurance Business Act before this Decree enters into force shall report the evaluation method of asset reverting to the relevant special account, along with the report of tax base of corporate tax for the business year in which this Decree enters into force. If no report is filed, the market price method shall be deemed reported.
Article 31 (Special Cases concerning Application of Consolidated Tax Payment System)
| (1) | When the amended provision of Article 120-13 is applied, the corporation, etc. that intends to apply the consolidation tax payment system from the business year that starts between January 1, 2010 and March 31, 2010 may apply for the consolidated tax return system within one month after the relevant business year begins. |
| (2) | When the Commissioner of the National Tax Service receives an application filed under paragraph (1), he/she shall notify whether to approve it within three months from the receipt, and if he/she fails to notify it, he/she shall be deemed to have approved it. |
Article 32 (Transitional Measures concerning Disposal of Income when Repudiation of Wrongful Calculation against Profit-Making Transaction)
Where a disposition is first taken in relation to an act or calculation done before this Decree enters into force after this Decree enters into force when the amended provision of Article 106 (1) 3 (i) is applied, the provision concerning disposal of income at the time of such act or calculation shall govern.
ADDENDA <Presidential Decree No. 21431, Apr. 21, 2009>
Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation.
Article 2 (Applicability)
This Decree shall apply from the first transfer after this Decree enters into force.
ADDENDA <Presidential Decree No. 21526, Jun. 8, 2009>
Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation.
Article 2 (Applicability)
The amended provisions of Article 112 (2) 16 shall apply from the interest first paid after this Decree enters into force.
ADDENDA <Presidential Decree No. 21528, Jun. 9, 2009>
Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation.
Articles 2 and 3 Omitted.
ADDENDA <Presidential Decree No. 21566, Jun. 26, 2009>
Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation.
Articles 2 and 3 Omitted.
ADDENDA <Presidential Decree No. 21698, Aug. 21, 2009>
Article 1 (Enforcement Date)
This Decree shall enter into force on August 23, 2009.
Articles 2 through 4 Omitted.
ADDENDA <Presidential Decree No. 21744, Sep. 21, 2009>
Article 1 (Enforcement Date)
This Decree shall enter into force on October 1, 2009.
Articles 2 through 5 Omitted.
ADDENDA <Presidential Decree No. 21748, Sep. 29, 2009>
Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation.
Article 2 (General Applicability)
This Decree shall apply to the first transfer after this Decree enters into force.
Article 3 (Applicability to Acquisition of Unsold Housing Units by Corporate Restructuring Real Estate Investment Companies, etc.)
The amended provision of Article 92-2 (2) 1-5 (a) shall apply to the unsold housing units acquired by the corporate restructuring real estate investment company or the real estate fund that obtain approval and are registered after this Decree enters into force.
ADDENDA <Presidential Decree No. 21881, Dec. 14, 2009>
Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation. (Proviso Omitted.)
Articles 2 through 7 Omitted.
ADDENDUM <Presidential Decree No. 21935, Dec. 31, 2009>
This Decree shall enter into force on the date of its promulgation.
ADDENDA <Presidential Decree No. 21972, Dec. 31, 2009>
Article 1 (Enforcement Date)
This Decree shall enter into force on January 1, 2010.
Article 2 (General Applicability)
This Decree shall apply to the first income accrued after this Decree enters into force.
Article 3 (Transitional Measures concerning Withholding by Financial Companies)
Where a corporation under any subparagraph of Article 111 (2) sells the bonds, etc. acquired on or before June 30, 2005 or receives the interest, etc. (limited to where the interest, etc. has not been received between July 1, 2005 and December 31, 2009) after January 1, 2010, Article 15 of the Addenda to the partially amended Enforcement Decree of the Corporate Tax Act, Presidential Decree No. 18706 shall apply, notwithstanding the amended provision of Article 111.
ADDENDA <Presidential Decree No. 22035, Feb. 18, 2010>
Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation: Provided, That the amended provisions of Article 159-2 (3) and (8) shall enter into force on April 1, 2010 and the amended provision of Article 162-2 (1) 1 shall enter into force on July 1, 2010.
Article 2 (General Applicability)
This Decree shall apply from the first business year that starts after the amended Corporate Tax Act, Act No. 9898 enters into force.
Article 3 (Applicability to Scope of Profit-Making Business of Corporate Restructuring Fund)
The amended provision of Article 2 (1) 8 (d) shall apply from the business year to be first reported after this Decree enters into force.
Article 4 (Applicability to Inclusion, etc. of Share-Based Payment in Deductible Expenses)
Of the amended provisions of subparagraph 19 of Article 19, Article 20 (1) 3, the proviso to Article 88 (1) 3, Article 88 (1) 6 (a), the proviso to Article 88 (1) 8-2 and Article 120-12 (4) 3 and 129 (1) 7, the part of the share-based payment shall apply from the business year to be first reported after this Decree enters into force.
Article 5 (Applicability to Designated Organizations Receiving Donations)
The amended provisions of Article 36 (1) 1 (g), (5) and (6) shall apply from the organization first designated as a designated organization receiving donations after this Act enters into force.
Article 6 (Applicability to Donations to Social Welfare Facilities)
The amended provision of Article 36 (1) 4 shall apply from the donations made in the business year in which this Decree enters into force.
Article 7 (Applicability to Non-Inclusion of Allowances for Severance Benefits in Deductible Expenses)
| (1) | The amended provision of Article 44 (2) 5 shall apply from the severance benefits paid by first settling accounts ad interim after this Decree enters into force. |
| (2) | The amended provision of Article 44 (6) shall apply from the severance benefits first paid after this Decree enters into force. |
Article 8 (Non-Inclusion of Severance Insurance Premium, etc. in Deductible Expenses)
| (1) | The amended provisions of Article 44-2 (3) (excluding the part concerning the Korea Scientists and Engineers Mutual-Aid Association) and (4) shall apply from the first retirement after this Decree enters into force. |
| (2) | The amended provision of Article 44-2 (3) (excluding the part concerning the Korea Scientists and Engineers Mutual-Aid Association) shall apply from the business year to be first reported after this Decree enters into force. |
Article 9 (Applicability to Non-Inclusion of Joint Expenses in Deductible Expenses)
The amended provision of Article 48 (1) 2 (a) shall apply from the business year that includes the enforcement date of this Decree.
Article 10 (Applicability to Inclusion of Appropriation for Bad Debts in Deductible Expenses)
The amended provisions of Article 61 (2) and (4) shall apply from the business year to be first reported after this Decree enters into force.
Article 11 (Applicability to Inclusion of Appropriation for Redemption of Claims for Indemnity of the Fire Guarantee in Deductible Expenses)
The amended provision of Article 63 (1) 12 shall apply from the business year to be first reported after this Decree enters into force.
Article 12 (Applicability to Marginal Losses from Evaluation of Stocks, etc. Issued by Non-Listed Corporations)
The amended provision of Article 78 (4) shall apply from the first evaluation conducted after this Decree enters into force.
Article 13 (Applicability to Income Deduction for Companies Specialized in Securitization, etc.)
| (1) | The amended provision of Article 86-2 (4) 1 (a) shall apply from the first relevant investment company that is established after this Decree enters into force. |
| (2) | The amended provision of Article 86-2 (9) shall apply from the business year to be first reported after this Decree enters into force. |
Article 14 (Applicability to Foreign Tax Credits)
The amended provisions of Article 94 (8) and (10) shall apply from the dividend or distribution that is first received on or after this Decree enters into force.
Article 15 (Applicability to Filing Reports on Tax Bases)
The amended provisions of Article 97 (4), (5) and (10) shall apply from the business year in which the first report is filed after this Decree enters into force.
Article 16 (Applicability to Amount that Has been Flowed Out of Company in Deductible Expenses)
The amended provision of the proviso to Article 106 (4) shall apply from the portion included in gross income in the business year that includes the enforcement date of this Decree.
Article 17 (Applicability to Withholding)
| (1) | The amended provision of Article 111 (2) 1 shall apply from the first income generated after this Decree enters into force. |
| (2) | The amended provision of Article 111 (3) 1 shall apply from the first interest received after this Decree enters into force. |
Article 18 (Applicability to Withholding, etc. on Amount Equivalent to Interest during Holding Period of Bonds, etc.)
The amended provisions of Article 113 (2) 1 and (8) shall apply from the first interest paid after this Decree enters into force.
Article 19 (Applicability to Requirements, etc. for Public-Offering Collective Investment Schemes)
The amended provisions of Article 132-3 shall apply from the income first withheld after this Decree enters into force.
Article 20 (Applicability to Special Cases concerning Withholding from Interest, etc. on Bonds, etc. by Foreign Corporations)
The amended provisions of Article 138-3 (4) and (5) shall apply from the first sale of bonds, etc. to a third party after this Decree enters into force.
Article 21 (Applicability to Becoming, etc. in Credit Card Merchants)
The amended provision of Article 159 (4) shall apply from the goods or services supplied after this Decree enters into force.
Article 22 (Applicability to Obligation to Issue Cash Receipts)
The amended provisions of Article 159-2 (3) and (8) shall apply from the goods or services first supplied after the amended provisions of Article 159-2 (3) and (8) enter into force under the proviso to Article 1 of the Addenda.
Article 23 (Applicability to Special Cases concerning Obligation to Submit Payment Statements on Foreign Corporation's Domestic Source Income, etc.)
The amended provision of Article 162-2 (1) 1 shall apply from the domestic source income first paid after the amended provision of Article 162-2 (1) 1 enters into force under the proviso to Article 1 of the Addenda.
Article 24 (Special Cases concerning Previous Designated Organizations Receiving Donations)
Where the corporations designated as the designated organizations receiving donations under the former provisions as at the time this Decree enters into force first apply for the re-designation after the termination of the period of designation, they shall submit the results of performance of the requirements referred to in Article 36 (1) 1 (g) to the competent authorities for the period from the following day when this Decree enters into force to the day when the period of designation expires and the competent authorities shall examine the results of performance and notify the Minister of Strategy and Finance of the result of examination.
ADDENDA <Presidential Decree No. 22073, Mar. 9, 2010>
Article 1 (Enforcement Date)
This Decree shall enter into force on March 10, 2010.
Articles 2 and 3 Omitted.
ADDENDA <Presidential Decree No. 22075, Mar. 15, 2010>
Article 1 (Enforcement Date)
This Decree shall enter into force on March 19, 2010. (Proviso Omitted.)
Article 2 Omitted.
ADDENDA <Presidential Decree No. 22184, Jun. 8, 2010>
Article 1 (Enforcement Date)
This Decree shall enter into force on July 1, 2010: Provided, That the amended provisions of Articles 92-2 (2) 1-6, 1-8, 1-9, 114-2 and 138-3 shall enter into force on the date of its promulgation.
Article 2 (General Applicability)
This Decree shall apply from the first merger, division, investment in kind or transfer after this Decree enters into force.
Article 3 (Applicability to Regional Unsold Housing Units)
The amended provisions of Article 92-2 (2) 1-6, 1-8 and 1-9 shall apply from the first transferred unsold housing unit after the same amended provisions enter into force under the proviso to Article 1 of the Addenda.
Article 4 (Applicability to Bond Lending and Borrowing Transactions)
The amended provisions of Articles 114-2 and 138-3 shall apply from the first sold or lent bonds, etc. after the same amended provisions enter into force under the proviso to Article 1 of the Addenda.
Article 5 (Transitional Measures following Enforcement of the Local Tax Act)
Of the amended provisions of Articles 80 (1) 2 (b), 82 (1) 2 (b) and 83-2 (1) 2 (b), "pro rata corporate tax under subparagraph 4 of Article 85 of the Local Tax Act" shall be construed as "pro rata corporate tax under subparagraph 4 of Article 176-8 of the Local Tax Act" by December 31, 2010.
Article 6 (Special Cases concerning Stocks, etc. of Merged Corporation, etc. acquired prior to Merger or Division upon Determination of Distribution Ratio of Stocks)
Notwithstanding the amended provisions of Article 80-2 (2) or 82-2 (3), with respect to the stocks, etc. acquired by the surviving corporation, etc., etc. before this Decree enters into force, it shall not be deemed that the relevant stocks have been granted with money in calculation of the full amount of the total cost of merger or division.
ADDENDA <Presidential Decree No. 22220, Jun. 28, 2010>
Article 1 (Enforcement Date)
This Decree shall enter into force on July 6, 2010.
Articles 2 and 3 Omitted.
ADDENDA <Presidential Decree No. 22282, Jul. 21, 2010>
Article 1 (Enforcement Date)
This Decree shall enter into force three months after the date of its promulgation. (Proviso Omitted.)
Articles 2 through 9 Omitted.
ADDENDA <Presidential Decree No. 22356, Aug. 25. 2010>
Article 1 (Enforcement Date)
This Decree shall enter into force on September 1, 2010.
Articles 2 through 4 Omitted.
ADDENDA <Presidential Decree No. 22390, Sep. 20, 2010>
Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation.
Article 2 (Applicability)
The amended provision of Article 92-2 (2) 1 shall apply from the housing unit to be first transferred after this Decree enters into force.
ADDENDA <Presidential Decree No. 22395, Sep. 20, 2010>
Article 1 (Enforcement Date)
This Decree shall enter into force on January 1, 2011.
Articles 2 through 9 Omitted.
ADDENDUM <Presidential Decree No. 22467, Nov. 2, 2010>
This Decree shall enter into force on the date of its promulgation.
ADDENDA <Presidential Decree No. 22493, Nov. 15, 2010>
Article 1 (Enforcement Date)
This Decree shall enter into force on November 18, 2010.
Articles 2 through 5 Omitted.
ADDENDA <Presidential Decree No. 22516, Dec. 7, 2010>
Article 1 (Enforcement Date)
This Decree shall enter into force on December 9, 2010.
Articles 2 through 8 Omitted.
ADDENDA <Presidential Decree No. 22577, Dec. 30, 2010>
Article 1 (Enforcement Date)
This Decree shall enter into force on January 1, 2011: Provided, That the amended provisions of Articles 17-2 (5) 3, 17-3 (3) 4, 24 (excluding paragraph (1) 2 (g) and paragraph (5)), 25 (1), 26 (2) 2, 26-2, 26-3, 27 (1) 5, 28 (2) 2, 29 (1), 30, 31 (excluding paragraph (6)), 33, 52, 68, 69, 71, 72, 74, 76 (only applicable to the deletion of the former paragraph (7)), 79, 91-2 through 91-5, 94 (9) and 97 shall enter into force on the date of its promulgation; the amended provisions of Articles 111 (3) and 138-3 (1) shall enter into force on April 1, 2011; the amended provisions of Article 24 (1) 2 (g), 36-2, 37 (1), 38 (3) and (5), 56 (3) and 120-20 shall enter into force on July 1, 2011.
Article 2 (General Applicability)
This Decree shall apply from the first business year that starts after Decree enters into force: Provided, That the amended provisions that enter into force on the date of its promulgation pursuant to the proviso to Article 1 of the Addenda shall apply from the business year in which the promulgation date of this Decree falls.
Article 3 (Applicability to Scope of Profit-Making Business)
The amended provisions of Article 2 (1) 4 (e) and subparagraph 14 of the same paragraph shall apply from the first tax base and amount of tax reported, determined or corrected after this Decree enters into force.
Article 4 (Applicability to Scope of Depreciable Assets)
The amended provisions of Article 24 (5) shall apply from the asset lent or borrowed in the first business year that starts after this Decree enters into force.
Article 5 (Applicability to Designated Foreign Organizations, etc. Receiving Donations)
The amended provisions of Article 36 (1) 5, (9), (10) and (11) shall apply from the first donation made after this Decree enters into force.
Article 6 (Applicability to Non-Inclusion of Severance Insurance Premiums and Trust Installments in Deductible Expenses)
The amended provisions of Article 44-2 (excluding paragraph (4) 1-2) shall apply from the first premium or installment paid after this Decree enters into force.
Article 7 (Applicability to Non-Inclusion of Illegal Benefits Paid to Full-Time Officers of Trade Unions in Deductible Expenses)
The amended provisions of Article 50 (1) 5 shall apply from the first benefits paid after this Decree enters into force.
Article 8 (Applicability to Inclusion of Appropriation for Redemption of Claims for Indemnity by Information and Communications Financial Cooperatives in Deductible Expenses)
The amended provisions of Article 63 (1) 13 shall apply from the business year to be first reported after this Decree enters into force.
Article 9 (Applicability to Evaluation of Foreign Assets and Liabilities)
The amended provisions of Article 76 (only applicable to the deletion of the former paragraph (7)) shall apply from the business year in which the promulgation of this Decree falls in the case of a corporation that adopts the international accounting standards as at the time this Decree enters into force while the same Article shall apply from the first business year that starts on or after January 1, 2011 in the case of a corporation other than aforesaid ones.
Article 10 (Applicability to Stock Allocation Rates to Controlling Stockholders, etc. of Merged Corporation, etc. due to Merger or Division)
The amended provisions of Article 80-2 (4) and 82-2 (4) shall apply from the first merger or division that takes place after this Decree enters into force.
Article 11 (Applicability to Standards of Market Prices Applicable in Lending or Borrowing Money to/from Related Parties)
The amended provisions of Article 89 (3) shall apply from the business year to be first reported after this Decree enters into force.
Article 12 (Special Cases concerning Change of Depreciation Method)
Where a corporation intends to change the depreciation method from the business year in which the promulgation date of this Decree falls pursuant to the amended provisions of Article 27 (1) 5 may submit an application for change of depreciation method to the head of the tax office having jurisdiction over the place of tax payment by no later than one month from the end date of the business year in which the promulgation date of this Decree falls, notwithstanding Article 27 (2). In such cases, the head of the tax office having jurisdiction over the place of tax payment, upon receipt of an application, shall determine whether to approve the application and notify the applicant of the determination made within one month after receipt of the application, notwithstanding Article 27 (3).
Article 13 (Special Cases concerning Special Cases and Change of Service Life)
Where a corporation intends to apply the service life different from the scope of the service life or change the applied service life from the business year in which the promulgation date of this Decree falls pursuant to the amended provisions of Article 29 (1) may submit an application for approval of service life or approval for change of service life under Article 29 (2) to the head of the tax office having jurisdiction over the place of tax payment by no later than one month from the end date of the business year in which the promulgation date of this Decree falls, notwithstanding paragraph (2) of the same Article. In such cases, the head of the tax office having jurisdiction over the place of tax payment, upon receipt of an application, shall determine whether to approve the application and notify the applicant of the determination made within one month after receipt of the application.
Article 14 (Special Cases concerning Designation of Organizations Receiving Statutory Donations)
| (1) | Where a school, corporation or organization referred to in Article 36-2 (2) through (4) is first designated as an organization receiving statutory donations by Ordinance of the Ministry of Strategy and Finance pursuant to Article 24 (2) 4 (i), paragraph (2) 6 and 7 of the same paragraph after the amended provisions of Article 36-2 enters into force pursuant to the proviso to Article 1 of the Addenda, notwithstanding the amended provisions of Article 36-2 (5), the competent authorities shall recommend a school, corporation or organization referred to in Article 36-2 (2) through (4) upon receiving its application to the Minister of Strategy and Finance by the date specified by the Minister of Strategy and Finance, and the said Minister shall designated it as an organization receiving statutory donations by Ordinance of the Ministry of Strategy and Finance by no later than July 31, 2011. |
| (2) | Donations made to the school, corporation or organization first designated by Ordinance of the Ministry of Strategy and Finance under paragraph (1) after the date on which Article 36-2 (6) enters into force shall be included in the deductible expenses as the statutory donations in the business year in which the date specified by Ordinance of the Ministry of Strategy and Finance falls under paragraph (1) and for the subsequent five business years, notwithstanding Article 36-2 (6). |
Article 15 (Special Cases concerning Inclusion of Liability Reserve Funds, etc. in Deductible Expenses)
With regard to a contingency reserve fund included in deductible expenses before this Decree enters into force, if an amount (hereafter referred to as "existing reserve for the contingency reserve fund" in this Article) included in gross income after being recaptured pursuant to the international accounting standards in the business year in which the international accounting standards are first applied after this Decree enters into force is accumulated as a reserve for the contingency reserve fund under Article 30 (2) of the Act, the full amount shall be included in the deductible expenses, notwithstanding Article 57 (3). In such cases, the amended provisions of Article 57 (3) shall apply from the additionally reserved amount under Article 30 (2) of the Act, other than the existing reserve for the contingency reserve fund, in the relevant business year.
Article 16 (Special Cases concerning Evaluation of Foreign Assets and Liabilities)
| (1) | Where the evaluation method under the former Article 76 (2) 1 (referring to the Article prior to amendment by this Decree) is reported in applying the amended provisions of the proviso to Article 76 (1) 2 and paragraph (2) of the same Article (hereafter referred to as "amended provisions" in this Article), the evaluation method under the amended provisions of Article 76 (1) 2 (b) shall apply until the business year prior to the business year in which the method of evaluation under Article 76 (1) 2 (a) is first reported and applied, notwithstanding the amended provisions. Where anyone intends to apply the methods of evaluation under the amended provisions of Article 76 (1) 2 (a), he/she shall file a report thereon pursuant to the amended provisions of Article 76 (6). |
| (2) | When the evaluation method referred to in Article 76 (1) 2 (b) and paragraph (2) 2 of the same Article is first applied to the monetary assets and liabilities denominated in a foreign currency, currency forward and currency swap acquired (or a contract is entered into with respect to the currency forward and currency swap) prior to the start date of the immediately preceding business year (hereafter referred to as "immediately preceding business year" in this Article) to the business year in which the evaluation method under the amended provisions of Article 76 (1) 2 (b) and paragraph (2) 2 of the same Article is first reported falls, the amount of the Korean won account referred to in paragraph (4) of the same Article shall be the amount evaluated at the basic rate of exchange, etc. under Article 76 (1)1. |
Article 17 (Transitional Measures concerning Abolition of Donations subject to Special Taxation)
Donations subject to special taxation under Article 73 of the Restriction of Special Taxation Act that are made before the amended provisions of Articles 24 (1) 2 (g), 37 (1), 38 (3) and (5), 56 (3) and 120 (20) enters into force pursuant to the proviso to Article 1 of the Addenda shall be governed by the former provisions, notwithstanding the aforesaid amended provisions.
Article 18 (Transitional Measures concerning Existing Non-Profit Foreign Corporations or International Organizations Designated as Organizations, etc. Receiving Donations)
A non-profit foreign corporation (including an organization) or international organization designated as a designated organization, etc. receiving donations pursuant to Article 36 (1) 1 (g) and (h) as at the time this Decree enters into force shall be deemed a designated organization, etc. receiving donations until December 31, 2011, notwithstanding the amended provisions of Article 36 (1) 5, (9), (10) and (11), and shall be recognized as a designated foreign organization, etc. receiving donations in the business year in which the date of designation falls and for the subsequent five business years from January 1, 2012 only when such corporation or organization is so designated under the amended provisions of Article 36 (1) 5, (9), (10) and (11).
Article 19 (Transitional Measures, etc. concerning Non-Inclusion of Severance Insurance Premiums and Trust Installments in Deductible Expenses)
| (1) | Notwithstanding the amended provisions of Article 44-2, severance insurance premiums and trust installments included in the deductible expenses under the former provisions shall not be transferred in the gross income. |
| (2) | Notwithstanding the amended provisions of Article 44-2, any profit accrued from operating the saved money for severance insurance premiums or insurance trust installments included in the deductible expenses under the former provisions may be included in the deductible expenses. |
Article 20 (Transitional Measures concerning Exclusion from Application of Consolidated Tax Return System to Conscientious Small and Medium Enterprises)
A corporation approved as a conscientious small and medium enterprise under the former Article 76-2 (2) of the Act before this Decree enters into force shall not be subject to application of the consolidated tax return system until the business year in which December 31, 2013 falls, notwithstanding the amended provisions of Article 120-12 (1) 5.
Article 21 Omitted.
ADDENDA <Presidential Decree No. 22626, Jan. 17, 2011>
Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation.
Articles 2 through 6 Omitted.
ADDENDA <Presidential Decree No. 22687, Mar. 2, 2011>
Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation.
Articles 2 through 4 Omitted.
ADDENDA <Presidential Decree No. 22812, Mar. 31, 2011>
Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation: Provided, That the amended provisions of Article 36-2 (2) through (12) shall enter into force on July 1, 2011.
Article 2 (Applicability to Allowable Depreciation of Used Assets, etc.)
The amended provisions of Article 29-2 (2) 1 and 2 shall apply from the allowable depreciation of used assets, etc. in the first commencing business year since January 1, 2011.
Article 3 (Applicability to Scope, etc. of Designated Donations)
| (1) | The amended provisions of Article 36 (1) 1 and 5 shall apply from a donation made to the designated organization, etc. receiving donations or designated foreign organization, etc. receiving donations first designated after this Decree enters into force. |
| (2) | The amended provisions of Article 36 (1) 4 (j) shall apply from a donation made in the business year in which this Decree enters into force. |
Article 4 (Applicability to Requirements, etc. for Organizations Receiving Statutory Donations)
The amended provisions of Article 36-2 (2) through (4) and (7) through (12) shall apply from the first determined organization receiving statutory donations after the said paragraphs enter into force pursuant to the proviso to Article 1 of the Addenda.
Article 5 (Applicability to Value, etc. of Donations)
The amended provisions of the proviso to Article 37 (1) and Article 72 (2) 5-3 shall apply from the first provided or donated asset after this Decree enters into force.
Article 6 (Applicability to Inclusion of Reserve Funds for Proper Purpose Business in Deductible Expenses)
The amended provisions of Article 56 (6) 10 shall apply from the first reported amount in the business year in which this Decree enters into force.
Article 7 (Applicability to Evaluation of Securities, etc.)
The amended provisions of the proviso to Article 75 (3) shall apply from the portion for the business year in which this Decree enters into force.
Article 8 (Applicability to Requirements, etc. for Qualified Merger)
The amended provisions of Article 80-2 (1) 1 (f) shall apply from a merger, division, investment in kind, transfer or comprehensive exchange or transfer that takes places in the business year in which this Decree enters into force.
Article 9 (Applicability to Income Deduction for Companies, etc. Specialized in Securitization)
The amended provisions of the latter part of Article 86-2 (1) shall apply from the portion for the business year in which this Decree enters into force.
Article 10 (Applicability to Special Taxation on Capital Gains on Transfer of Land, etc.)
The amended provisions of Article 92-2 (2) 1 shall apply from the first transferred housing unit after this Decree enters into force.
Article 11 (Applicability to Calculation of Taxable Income of Domestic Places of Business)
The amended provisions of Article 134 (1) shall apply from the first reported amount in the business year in which this Decree enters into force.
Article 12 (Applicability to Special Cases concerning Additioinal Tax on Failure to Issue Invoices)
The amended provisions of Article 14 of the Addenda to the Enforcement Decree of the Corporate Tax Act No. 18706 shall apply from the first reported portion in the business year after this Decree enters into force.
Article 13 (Special Cases concerning Requirements, etc. of Organizations Receiving Statutory Donations)
| Classification | Deadline for recommendations by competent authorities | Deadline specified by Ordinance of the Ministry of Strategy and Finance | | First deadline | March 31, 2011 | July 31, 2011 | | Second deadline | July 31, 2011 | September 30, 2011 |
|
| (2) | A donation made to the schools, etc. determined by Ordinance of the Ministry of Strategy and Finance pursuant to the amended provisions of Article 36-2 (5) shall be included in the deductible expenses as the statutory donations in the year in which the date specified by Ordinance of the Ministry of Strategy and Finance falls and for the subsequent five years, notwithstanding the amended provisions of Article 36-2 (6), if only such donation is made after the said paragraph enters into force pursuant to the proviso to Article 1 of the Addenda. |
Article 14 (Transitional Measures Following Amendments of Provisions to be Implemented)
Until June 30, 2011, "statutory donations provided in each subparagraph of Article 24 (2)" referred to in the proviso to Article 37 (1) shall be deemed the "statutory donations provided in each subparagraph of Article 24 (2) and donations provided in each subparagraph of Article 73 (1) of the Restriction of Special Taxation Act.
[This Article Newly Inserted by Presidential Decree No. 22951, Jun. 3, 2011]
Article 15 (Transitional Measures concerning Rental Period of Rental Housing Units Subject to Special Taxation on Capital Gains on Transfer of Land, etc.)
| (1) | A housing unit meeting all requirements, other than a rental period requirement (hereinafter referred to as "requirements other than rental period requirement") pursuant to the former Article 92-2 (2) 1 (hereinafter referred to as "former provisions") before this Decree enters into force, notwithstanding the amended provisions of Article 92-2 (2) 1 (hereinafter referred to as "amended provisions"), shall be deemed to have met the rental period requirement on the date whichever comes first; the date on which the rental period requirement under the former provisions is met or the date on which the rental period requirement under the amended provisions (counting from the day on which the housing unit is rented out after this Decree enters into force) is met. |
| (2) | The rental period of a housing unit that fails to meet the requirements other than rental period requirement under the former provisions before this Decree enters into force shall be counted from the date on which the housing unit is first rented out after having met the requirements other than rental period requirement under the amended provisions after this Decree enters into force. |
ADDENDA <Presidential Decree No. 22951, Jun. 3, 2011>
Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation.
Article 2 (Applicability to Special Taxation for Capital Gains on Transfer of Unsold Housing Units)
The amended provisions of Article 92-2 (2) 1-6, 1-10 and 1-11 shall apply from the housing unit first acquired and transferred after this Decree enters into force.
ADDENDA <Presidential Decree No. 23220, Oct. 14, 2011>
Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation.
Article 2 (Applicability to Special Taxation for Capital Gains on Transfer of Land, etc.)
| (1) | The amended portion on the number of the rental housing units referred to in the amended provisions of Article 92-2 (2) 1 shall apply from the housing unit to be first transferred after this Decree enters into force. |
| (2) | The amended provisions of Article 92-2 (2) 1 (limited to the amended portion of (c) of the same subparagraph) and Article 92-2 (2) 1-2 (c) shall apply from the housing unit registered as the rental housing under Article 6 of the Rental Housing Act after this Decree enters into force. |
ADDENDA <Presidential Decree No. 23356, Dec. 8, 2011>
Article 1 (Enforcement Date)
This Decree shall enter into force on December 8, 2011. (Proviso Omitted.)
Article 2 Omitted.
ADDENDA <Presidential Decree No. 23527, Jan. 25, 2012>
Article 1 (Enforcement Date)
This Decree shall enter into force on January 26, 2012. (Proviso Omitted.)
Articles 2 through 4 Omitted.
ADDENDA <Presidential Decree No. 23589, Feb. 2, 2012>
Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation: Provided, That the amended provisions of Articles 57 (1) 1 and 3 and 61 (2) 6 shall enter into force on March 2, 2012, the amended provisions of Article 20 (2) and 80 (1) 2 (a) (applicable to the portion on the parent company of a merging company) and 80-2 (applicable to the portion on the parent company of a merging company) shall enter into force on April 15, 2012, and the amended provisions of Articles 138-5 (2) 7, 138-7 and 138-8 shall enter into force on July 1, 2012.
Article 2 (General Applicability)
This Decree shall apply from the first commencing business year on or after January 1, 2012.
Article 3 (Applicability to Scope of Profit-Making Business)
The amended provisions of Article 2 (1) 3 shall apply from the first tax base and amount of tax that are reported, determined or corrected after this Decree enters into force.
Article 4 (Applicability to Scope, etc. of Surpluses Untaxed upon Capitalization)
The amended provisions of Article 12 shall apply from the first capitalization of surpluses succeeded due to a merger or division after this Decree enters into force.
Article 5 (Applicability to Exclusion of Holding Company's Dividend Income from Gross Income)
The amended provisions of Article 17-2 (6) shall apply from the first spin-off on or after January 1, 2012.
Article 6 (Applicability to Disbursement of Small-Sum Advertisement and Publicity Expenses)
The amended provisions of subparagraph 18 of Article 19 shall apply from the first disbursement after January 1, 2012.
Article 7 (Applicability to Scope, etc. of Depreciable Assets)
The amended provisions of Articles 24 (1) 2 (i), 24 (2) and 26 (1) 8 shall apply from the portion to be first reported after this Decree enters into force.
Article 8 (Applicability to Scope, etc. of Designated Organizations, etc. Receiving Donations)
| (1) | The amended provisions of Articles 36 (1) 1 (b), (1) 2 (a) and 4 shall apply from the portion spent after January 1, 2012. |
| (2) | The amended provisions of Article 36 (1) 1 (g), (iv) and (vi) shall apply from the portion designated or re-designated after this Decree enters into force. |
| (3) | The amended provisions of Article 36 (7) 4 shall apply from the violation of the Act on Collection and Use of Donations. |
Article 9 (Applicability to Designation, etc. of Organizations Receiving Statutory Donations)
| (1) | The amended provisions of Article 36-2 (8) 3 shall apply from the first designation or re-designation after this Decree enters into force. |
| (2) | The amended provisions of Article 36-2 (11) 4 shall apply from the first violation of the Act on Collection and Use of Donations. |
Article 10 (Applicability to Scope of Person with Special Relationship)
The amended provisions of Article 43 (8) 1 (a), (d) and (e) shall apply from the first payment made after this Decree enters into force.
Article 11 (Applicability to Inclusion of Liability Reserve Funds in Deductible Expenses)
The amended provisions of Article 57 (1) 2 shall apply from the portion to be first reported after this Decree enters into force.
Article 12 (Applicability to Inclusion of Retirement Benefit Appropriation Funds in Deductible Expenses)
The amended provisions of Article 60 (2) shall apply from the portion to be first reported after this Decree enters into force.
Article 13 (Applicability to Inclusion of Appropriation for Redemption of Claims for Indemnity in Deductible Expenses)
The amended provisions of Article 63 (1) and (3) shall apply from the portion to be first reported after this Decree enters into force.
Article 14 (Applicability to Time of Accrual of Profits and Losses)
| (1) | The amended provisions of Articles 69 (1), 71 (4) and (5) shall apply from the portion to be first reported after this Decree enters into force. |
| (2) | The amended provisions of Article 71 (6) shall apply from the first contract to be entered into after this Decree enters into force. |
Article 15 (Applicability to Acquisition Value of Assets)
The amended provisions of Article 72 (2) 3, 3-2 and 4 shall apply from the portion to be first reported after January 1, 2012.
Article 16 (Applicability to Requirements, etc. for Qualified Merger)
| (1) | The amended provisions of Article 80-2 (1) shall apply from the portion to be first reported after this Decree enters into force. |
| (2) | The amended provisions of Article 80-2 (3) and (4) shall apply from the first merger after this Decree enters into force. |
Article 17 (Applicability to Follow-Up Management of Special Cases concerning Taxation upon Qualified Merger or Division)
The amended provisions of Articles 80-4 (3), 82-4 (3), 84 (6) and 84-2 (6) shall apply from the first merger, division, spin-off or investment in kind on or after January 1, 2012.
Article 18 (Applicability to Requirements for Qualified Division)
The amended provisions of Articles 82-2 (3) and (4) shall apply from the first division after this Decree enters into force.
Article 19 (Applicability to Inclusion of Amount Equivalent to Marginal Profits on Transfer of Assets from Spin-off in Deductible Expenses)
| (1) | In applying the amended provisions of Article 84 (excluding paragraph (6)) pursuant to Article 11 (2) of the Addenda to the partially amended Corporate Income Tax Act No. 11128, in filing a first report on tax base under Article 60 (1) of the Act after this Decree enters into force, a corporation established through division shall be deemed to have succeeded to the assets and liabilities from the divided corporation on the start date of the relevant business year at market price and it shall add or subtract the asset adjustment account as at the start date of the relevant business year to or from the amount of the relevant assets and liabilities. |
| (2) | When a divided corporation and a corporation established through division which apply paragraph (1) file a report under Article 60 (1) of the Act, they shall prepare the report on special cases for taxation due to spin-off on which the transfer marginal profits are calculated based on the asset adjustment account as at the start date of the relevant business year and the detailed statement on assets transfer marginal profits and submit them to the head of the tax office having jurisdiction over the place of tax payment. |
Article 20 (Applicability to Inclusion of Amount Equivalent to Marginal Profits on Transfer of Assets from Investment in Kind in Deductible Expenses)
| (1) | In applying the amended provisions of Article 84-2 (excluding paragraph (6)) pursuant to Article 12 (2) of the Addenda to the partially amended Corporate Income Tax Act No. 11128, in filing a first report on tax base under Article 60 of the Act after this Decree enters into force, an invested corporation shall be deemed to have succeeded to the assets and liabilities from the investing corporation on the start date of the relevant business year at market price and it shall add or subtract the asset adjustment account as at the start date of the relevant business year to or from the amount of the relevant assets and liabilities. |
| (2) | When an investing corporation and an invested corporation which apply paragraph (1) file a report under Article 60 of the Act, they shall prepare the report on special cases for taxation due to investment in kind on which the transfer marginal profits are calculated based on the asset adjustment account as at the start date of the relevant business year and the detailed statement on assets transfer marginal profits and submit them to the head of the tax office having jurisdiction over the place of tax payment. |
Article 21 (Applicability to Scope of Related Parties)
The amended provisions of Article 87 (1) 4, 5, 6, and 8 shall apply from the first transaction after this Decree enters into force.
Article 22 (Applicability to Scope of Market Price)
The amended provisions of Article 89 (3) 1-2 shall apply from the portion to be first reported after this Decree enters into force.
Article 23 (Applicability to Calculation of Tax Refunds by Retroactive Deduction of Losses)
The amended provisions of Article 110 (5) 2 shall apply from the amount equivalent to the interest to be collected after this Decree enters into force.
Article 24 (Applicability to Application of Additional Tax)
The amended provisions of Article 120 (6) shall apply from the portion on which the payment statement is first submitted after this Decree enters into force.
Article 25 (Applicability to Corporation, etc. Excluded from Application of Consolidated Tax Return System)
The amended provisions of Article 120-12 (1) 4 shall apply from the first application for the consolidated tax return system after this Decree enters into force.
Article 26 (Applicability to Deferment, etc. of Gains or Losses from Transfer of Assets between Consolidated Corporations)
The amended provisions of Article 120-18 shall apply from the portion to be first reported after this Decree enters into force.
Article 27 (Applicability to Non-Inclusion of Donation in Gross Income of Consolidated Corporation)
The amended provisions of Article 120-20 (2) shall apply from the portion to be first reported after this Decree enters into force.
Article 28 (Applicability to Procedures for Prior Approval to Apply Non-Taxation, Tax Exemption and Restrictive Tax Rates under Tax Treaties)
The amended provisions of Article 138-5 (2) 7 shall apply from the application filed after July 1, 2012.
Article 29 (Applicability to Obligation to Issue Cash Receipts)
The amended provisions of Article 159-2 shall apply from the transaction that takes place after this Decree enters into force.
Article 30 (Applicability to Submission of Invoices, etc.)
The amended provisions of Articles 163-2 (1) and 164 (4) shall apply from the submission of an aggregate tax invoice for individual suppliers or an aggregate invoice for individual suppliers or purchasers after this Decree enters into force.
Article 31 (Special Cases concerning Submission of Reports on Change of Evaluation Method of Inventory Assets for Domestic Corporation Adopting International Accounting Standards)
Where a domestic corporation that intends to be applicable under Article 42-2 (1) of the Act upon first adopting the international accounting standards in the business year in which the partially amended Corporate Income Act No. 11128 enters into force submits a report on change of evaluation method of inventory assets under Article 74 (3) by the filing deadline for reports on tax base for the business year in which the report is first filed after this Decree enters into force, notwithstanding Article 74 (3) 2, it shall be deemed that the evaluation method of inventory assets for the relevant business year has been reported after change.
ADDENDUM <Presidential Decree No. 23724, Apr. 13, 2012>
This Decree shall enter into force on April 15, 2012: Provided, That the main sentence of Article 44-2 (3) and Article 44-2 (4) 1-2 and the part other than the subparagraphs of Article 60 (2) shall enter into force on July 26, 2012.
ADDENDA <Presidential Decree No. 24017, Aug. 3, 2012>
Article 1 (Enforcement Date)
This Decree shall enter into force on August 5, 2012.
Articles 2 through 6 Omitted.
ADDENDA <Presidential Decree No. 24018, Aug. 3, 2012>
Article 1 (Enforcement Date)
This Decree shall enter into force on August 5, 2012.
Articles 2 through 7 Omitted.
ADDENDA <Presidential Decree No. 24357, Feb. 15, 2013>
Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation: Provided, That the amended provisions of Article 130 shall enter into force on January 1, 2014, and the amended provisions of Article 158 (5) 4 shall enter into force on April 1, 2013.
Articles 2 (General Applicability)
This Decree shall apply to business years that commence on or after January 1, 2013.
Articles 3 (Applicability to Scope of Profit-Making Business)
The amended provisions of Article 2 (1) shall apply to cases for which the tax base and tax amount are determined after this Decree enters into force.
Articles 4 (Applicability to Place of Tax Payment of Person Liable for Withholding)
The amended provisions of Article 7 (1) shall apply where the payment of withheld tax amounts in a lump sum is reported after this Decree enters into force.
Articles 5 (Applicability to Scope of Designated Donations, etc.)
| (1) | The amended provisions of Article 36 (1) 1 (g) shall apply to organizations designated as eligible for receiving donations after this Decree enters into force. |
| (2) | The amended provisions of Article 36 (1) 4 shall apply to donations made after this Decree enters into force. |
| (3) | The amended provisions of Article 36 (1) 6 shall apply to donations made to international organizations designated as organizations eligible for receiving donations after this Decree enters into force. |
Articles 6 (Applicability to Non-Inclusion of Expenses for Fringe Benefits in Deductible Expenses)
The amended provisions of Article 45 (1) shall apply to business years for which the tax base and tax amount are reported after this Decree enters into force.
Articles 7 (Applicability to Inclusion of Liability Reserve Funds, etc. in Deductible Expenses)
The amended provisions of Article 57 (1) shall apply to business years for which the tax base and tax amount are reported after this Decree enters into force.
Articles 8 (Applicability to Inclusion of Amount Equivalent to Marginal Profits from Transfer of Assets upon Spin-off in Deductible Expenses)
The amended provisions of Article 84 shall apply where a corporation established through division is qualifiedly merged with another corporation established through division or qualifiedly divided after this Decree enters into force.
Articles 9 (Applicability to Inclusion of Amount Equivalent to Marginal Profits from Transfer of Assets upon Investment in Kind in Deductible Expenses)
The amended provisions of Article 84-2 shall apply where an invested corporation is qualifiedly divided after this Decree enters into force.
Articles 10 (Applicability to Range of Market Price, etc.)
The amended provisions of Article 89 (2) shall apply to stocks traded after this Decree enters into force.
Articles 11 (Applicability of Special Provisions concerning Taxation on Capital Gains on Transfer of Land, etc.)
The amended provisions of Article 92-2 (2) 1 (a) shall apply to transfers made after this Decree enters into force.
Articles 12 (Applicability to Deduction of Foreign Tax Credits)
The amended provisions of Article 94 (8) shall apply to dividends paid after this Decree enters into force.
Articles 13 (Applicability to Reports on Tax Bases)
The amended provisions of Article 97 (1) shall apply to reports filed on a tax base after this Decree enters into force.
Articles 14 (Applicability to Scope of Bonds, etc. subject to Withholding)
The amended provisions of Article 111 (3) shall apply to short-term electronic bonds issued after this Decree enters into force.
Articles 15 (Applicability to Application of Additional Tax)
The amended provisions of Article 120 (6) shall apply to income accruing on or after January 1, 2013.
Articles 16 (Applicability to Application of Consolidated Tax Return System)
| (1) | The amended provisions of Article 120-12 shall apply to a merger, division, or comprehensive exchange or transfer of stocks on or after January 1, 2013. |
| (2) | The amended provisions of Article 120-12 shall apply to applications filed for the application of the consolidated tax return system on or after January 1, 2013. |
Articles 17 (Applicability to Computation of Domestic Source Income)
The amended provisions of Article 130 shall apply to business years that commence on or after January 1, 2014.
Articles 18 (Applicability to Reports on Incorporation or Establishment of Corporation)
The amended provisions of Article 152 (1) shall apply to reports filed on the incorporation or establishment of a corporation after this Decree enters into force.
Articles 19 (Applicability to Receipt and Keeping of Evidentiary Documents of Expenditure)
The amended provisions of Article 158 (5) shall apply to evidentiary documents of expenditure received after this Decree enters into force.
Articles 20 (Applicability to Filing of Payment Statements)
The amended provisions of subparagraph 2 of Article 162 shall apply to the statements filed after this Decree enters into force.
Articles 21 (Applicability of Special Provisions regarding Additional Tax on Undelivered Account Statements)
| (1) | The amended provisions of Article 14 of the Addenda to the Amendment (Presidential Decree No. 15970) to the Enforcement Decree of the Corporate Tax Act (including provisions amended pursuant to the Amendment (Presidential Decree No. 17457) to the Enforcement Decree of the Corporate Tax Act, the Partial Amendment (Presidential Decree No. 19328) to the Enforcement Decree of the Corporate Tax Act, and the Partial Amendment (Presidential Decree No. 22577) to the Enforcement Decree of the Corporate Tax Act) shall apply to business years that commence on or after January 1, 2013. |
| (2) | The amended provisions of Article 14 of the Addenda to the Partial Amendment (Presidential Decree No. 18706) to the Enforcement Decree of the Corporate Tax Act (including provisions amended pursuant to the Partial Amendment (Presidential Decree No. 19891) to the Enforcement Decree of the Corporate Tax Act and the Partial Amendment (Presidential Decree No. 22812) to the Enforcement Decree of the Corporate Tax Act) shall apply to business years that commence on or after January 1, 2013. |
Articles 22 (Transitional Measures concerning Criteria for Determination of Foreign Corporations)
| (1) | If a foreign organization that has completed a report on the establishment of the domestic place of business of a foreign corporation pursuant to the former provisions of Article 109 of the Corporate Tax Act and the business registration pursuant to Article 111 of the same Act ceases to be qualified as a foreign corporation under the amended provisions of Article 1 (2) after this Decree enters into force, such foreign organization shall file for business registration again pursuant to the Income Tax Act. |
| (2) | If a foreign organization that has completed business registration pursuant to the Income Tax Act before this Decree enters into force is qualified as a foreign corporation under the amended provisions of Article 1 (2) after this Decree enters into force, such foreign organization shall file a report on the establishment of the domestic place of business of a foreign corporation pursuant to the previous provisions of Article 109 of the Corporate Tax Act and shall file for business registration pursuant to Article 111 of the same Act again. |
ADDENDA <Presidential Decree No. 24441, Mar. 23, 2013>
Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation.
Articles 2 through 5 Omitted.
ADDENDA <Presidential Decree No. 24575, Jun. 11, 2013>
Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation.
Article 2 (Applicability to Increase of Limits on Inclusion of Acquisition Value of Artworks in Deductible Expenses)
The amended provisions of subparagraph 17 of Article 19 shall apply to artworks acquired after this Decree enters into force.
ADDENDA <Presidential Decree No. 24638, Jun. 28, 2013>
Article 1 (Enforcement Date)
This Decree shall enter into force on July 1, 21013. (Proviso Omitted.)
Articles 2 through 17 Omitted.
ADDENDA <Presidential Decree No. 24824, Nov. 5, 2013>
Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation.
Article 2 (Applicability to Special Exception to Service Life of Assets Invested in Plants by Small and Medium Enterprises)
The amended provisions of Articles 27 (6) and 28 (3) through (7) shall apply to the assets acquired during the business year in which this Decree enters into force and subsequent years.
ADDENDA <Presidential Decree No. 25194, Feb. 21, 2014>
Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation: Provided, That the amended provisions of subparagraph 20 of Article 19 shall enter into force on July 22, 2014.
Article 2 (General Applicability)
This Decree shall apply to the business year that begins on or after January 1, 2014 and the subsequent business years.
Article 3 (Applicability to Value of Non-Par-Value Stocks)
The amended provisions of Article 14 (4) shall apply to non-par-value stocks issued on or after this Decree enters into force.
Article 4 (Applicability to Calculation of Standard Depreciation Cost)
The amended provisions of Article 26-2 (1) and (2) 1 (a) and Article 26-3 shall apply to the depreciable assets acquired on or after January 1, 2014.
Article 5 (Applicability to Application for Change of Service Life)
The amended provisions of Article 29 (1) 1 shall apply to the applications filed for approval for the change of service life on or after this Decree enters into force.
Article 6 (Applicability to Scope, etc. of Designated Donations)
| (1) | The amended provisions of Article 36 (excluding the amended provisions of paragraph (5) 3) shall apply to organizations designated or re-designated as those receiving donations on or after this Decree enters into force: Provided, That the amended provisions of Article 36 (7) (limited to matters concerning the procedure that the competent authorities shall notify the Commissioner of the National Tax Service of the results of an inspection), Article 36 (8) (limited to matters concerning the procedure that the Commissioner of the National Tax Service shall request the revocation of designation or the denial of re-designation), and Article (11) and (12) shall apply the designated organizations receiving donations that are subject to an inspection on or after January 1, 2014 (including the organizations subject to an inspection pursuant to Article 24 of the Addenda to the partially amended Enforcement Decree of the Corporate Tax Act (Presidential Decree No. 22035). |
| (2) | The amended provisions of Article 36 (5) 3 shall apply to donations collected or used on or after January 1, 2014. |
Article 7 (Applicability to Requirements for Organizations Receiving Statutory Donations)
| (1) | The amended provisions of Article 36-2 (3) through (5) shall apply to the organizations designated or re-designated as those eligible for receiving statutory donations on or after this Decree enters into force. |
| (2) | The amended provisions of Article 36-2 (6) shall apply to the entities designated or re-designated on or after this Decree enters into force. |
| (3) | The amended provisions of Article 36-2 (8) shall apply to the donations collected or used on or after January 1, 2014. |
| (4) | The amended provisions of Article 36-2 (10) through (15) shall apply to organizations receiving statutory donations, which are subject to an inspection on or after January 1, 2014. |
Article 8 (Applicability to Inclusion of Reserve Funds for Proper Purpose Business of Medical Corporations in Deductible Expenses)
The amended provisions of Article 56 (6) 3 shall apply to the reserve funds expended for proper purpose business on or after this Decree enters into force.
Article 9 (Applicability to Scope of Controlling Stockholders, etc.)
The amended provisions of Articles 80-2 (5) 1 and 82-2 (8) 1 shall apply to the corporations merged or divided on or after this Decree enters into force.
Article 10 (Applicability to Criteria for Judgment on Independence of Business Divisions as Requirement for Qualified Division)
The amended provisions of Article 82-2 (2) through (5) shall apply to corporations divided on or after this Decree enters into force: Provided, That the divisions to which former provisions shall apply under Article 22 of the Addenda even after this Decree enters into force shall be excluded herefrom.
Article 11 (Applicability to Requirements for Follow-Up Management in Relation to Disposal of Stocks of Qualifiedly Divided Corporations by Spin-Off)
The amended provisions of Article 84 (8) 2 shall apply to the cases where the total number of issued stocks or the total investment amount of the re-incorporated corporation, held by the divided corporation, is reduced from at least 50/100 of such stocks, etc. as at the time this Decree enters into force to less than 50/100 of such stocks, etc. on or after this Decree enters into force.
Article 12 (Applicability to Succession to Tax Settlement Matters in Spin-Off)
The amended provisions of Article 85 shall apply to the corporations divided by spin-off on or after this Decree enters into force.
Article 13 (Applicability to Evaluation of Market Value of Assets, etc. upon Repudiation of Wrongful Calculations)
The amended provisions of Article 89 (2) 2 shall apply to the assets, etc. evaluated on or after this Decree enters into force.
Article 14 (Applicability to Application of Interest Rate as Criterion for Repudiation of Wrongful Calculations)
The amended provisions of Article 89 (3) 1 shall apply to money lent or borrowed on or after this Decree enters into force.
Article 15 (Applicability to Scope, etc. of Land Excluded from Land for Non-Business Purposes)
The amended provisions of Articles 92-2 (2) 1-10 and 92-11 (3) 2 shall apply to the assets transferred on or after this Decree enters into force.
Article 16 (Applicability to Methods for Determination by Estimation and Correction for Small Enterprises Going Out of Business)
The amended provisions of Article 104 (2) 3 (c) shall apply to the determinations or corrections made on or after this Decree enters into force.
Article 17 (Applicability to Application for Application of Consolidated Tax Return System)
The amended provisions of Article 120-13 (1) and (3) shall apply to the applications filed on or after this Decree enters into force.
Article 18 (Applicability to Scope of Restructuring of Corporations)
The amended provisions of Article 120-26 shall apply to the corporations restructured on or after January 31, 2014.
Article 19 (Applicability to Preparation of Statements on Issuance of Donation Receipts)
The amended provisions of Article 155-2 shall apply to the donations received on or after this Decree enters into force.
Article 20 (Special Exception to Application, etc. for Approval for Adoption of Consolidated Tax Return System)
If the business year for which a corporation eligible for consolidation intends to apply for approval for the adoption of the consolidated tax return system under Article 76-8 of the Act has already begun before this Decree enters into force but the deadline for the reporting under Article 60 of the Act has not come yet, such corporation may apply for the approval for the adoption of the consolidated tax return system within 15 days after this Decree enters into force, notwithstanding the amended provisions of Article 120-13 (1). In such cases, the commissioner of the competent regional tax office shall notify the applicant of whether to approve by no later than one month after this Decree enters into force, notwithstanding the amended provisions of Article 120-13 (3).
Article 21 (Transitional Measures concerning Notification of Results of Inspection of Organizations Receiving Donations)
If the competent authorities notify the Minister of Strategy and Finance of the results of inspections of organizations receiving donations in accordance with former provisions between January 1, 2014 and February 28, 2014, such notification shall be deemed made in accordance with the amended provisions of Article 36 (7) or 36-2 (10).
Article 22 (Transitional Measures concerning Criterion for Judgment on Independence of Business Divisions as Requirement for Qualified Division)
Where a corporation that obtained approval for division at the general meeting of stockholders in accordance with Article 530-3 (1) of the Commercial Act (referring to the approval from the board of directors, if the approval at the general meeting of stockholders of the company is substituted by the approval at the board of directors under Article 527-2 (1) of the aforesaid Act, where the aforesaid provisions shall apply mutatis mutandis pursuant to Article 530-11 (2) of the aforesaid Act) is divided by no later than two months from the date of approval after this Decree enters into force, such division shall be governed by former provisions, notwithstanding the amended provisions of Article 82-2 (2) through (5).
Article 23 (Transitional Measures concerning Requirements for Follow-Up Management in Relation to Disposal of Stocks of Qualifiedly Divided Corporation by Spin-Off)
If the stocks, etc. of a re-incorporated corporation, held by the divided corporation as at the time this Decree enters into force, are less than 50/100 of the total number of issued stocks or the total investment amount of the re-incorporated corporation, former provisions of Article 84 (8) 2 shall apply, notwithstanding the amended provisions of Article 84 (8) 2.
ADDENDA <Presidential Decree No. 25279, Mar. 24, 2014>
Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation.
Articles 2 and 3 Omitted.
ADDENDA <Presidential Decree No. 25640, Sep. 26, 2014>
Article 1 (Enforcement Date)
This Decree shall enter into force on October 1, 2014.
Article 2 (Applicability to Scope of Bonuses, etc. Included in Losses)
The amended provision of Article 20 (1) 3 (b) shall apply beginning with bonuses for which stocks are issued after this Decree enters into force.
Article 3 (Applicability to Period of Duration of Depreciation of Assets Invested in Plants of Small and Medium Enterprises and Special Provisions on Depreciation Rate)
| (1) | The amended provision of Article 28 (6) shall apply beginning with assets invested in plants acquired by a small and medium enterprise under Article 2 of the Enforcement Decree of the Restriction of Special Taxation Act after this Decree enters into force. |
| (2) | Notwithstanding the amended provision of Article 28 (6), the previous provision shall apply to assets invested in plants acquired by a small and medium enterprise under Article 2 of the Enforcement Decree of the Restriction of Special Taxation Act during the period from September 1, 2013 to March 31, 2014. |
Article 4 (Applicability to Requirements, etc. for Qualified Merger)
The amended provision of Article 80-2 (1) 1 (f) shall apply beginning with cases where stocks, etc. are disposed of after this Decree enters into force.
ADDENDA <Presidential Decree No. 25751, Nov. 19, 2014>
Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation. <Proviso Omitted>
Articles 2 through 5 Omitted.
ADDENDA <Presidential Decree No. 25945, Dec. 30, 2014>
Article 1 (Enforcement Date)
This Decree shall enter into force on the date of registration of the merger under Article 4 (6) of the Addenda to the whole amendment (Act No. 12663) of the Korea Development Bank Act.
Articles 2 through 5 Omitted.
ADDENDA <Presidential Decree No. 26068, Feb. 3, 2015>
Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation: Provided, That the amended provisions of Article 164 shall enter into force on July 1, 2015; the amended provisions of Article 44 (2) 4 on January 1, 2016, respectively.
Article 2 (General Applicability)
This Decree shall apply to business years that begin on or after January 1, 2015.
Article 3 (Applicability to Scope of Deductible Expenses, such as School Expenses,)
The amended provisions of subparagraph 21 of Article 19 shall apply to the expenses incurred in the business year in which this Decree enters into force and subsequent years.
Article 4 (Applicability to Calculation, etc. of Allowable Depreciation of Waste Landfill Facilities)
The amended provisions of Article 26 (1) 3 and (2) 3 and Article 27 (6) shall apply to the waste landfill facilities acquired after this Decree enters into force.
Article 5 (Applicability to Non-Inclusion of Severance Benefits for Executives' Change to Annual Salary System)
The amended provisions of Article 44 (2) 4 shall apply to where severance benefits are settled and paid on or after January 1, 2016.
Article 6 (Applicability to Acquisition Value, etc., of Assets for Emission Permits)
The amended provisions of Article 72 (2) 6 shall also apply emission permits allocated gratuitously under Article 12 of the Act on the Allocation and Trading of Greenhouse-Gas Emission Permits before this Decree enters into force.
Article 7 (Applicability to Inclusion of Amount Equivalent to Marginal Profits from Transfer of Assets upon Investment in Kind in Deductible Expenses)
The amended provisions of Article 84-2 shall apply to mergers that take place after this Decree enters into force.
Article 8 (Applicability to Insertion of New Requirements for Exchange of Land Excluded from Taxation on Capital Gains on Transfer of Land, etc.)
The amended provisions of Article 92-2 (4) 1-2 shall apply to the land, etc., exchanged on or after January 1, 2015.
Article 9 (Applicability to Scope, etc., of Land Excluded from Idle Land)
The amended provisions of subparagraphs 1 (c), 2 (c), and 3 (b) of Article 92-3, Article 92-5 (5), the proviso to Article 92-6 (3), Article 92-7 (6), and subparagraph 2 of Article 92-10 shall apply to the land transferred after this Decree enters into force.
Article 10 (Applicability to Deduction of Foreign Tax Credits)
| (1) | The amended provisions of Article 94 (4) shall apply to statements submitted on or after January 1, 2015, but shall also apply to where a corporation receives a notice of determination from the relevant foreign government on or before December 31, 2014, but where 45 days have not passed since the day it receives the notice of determination as on December 31, 2014. |
| (2) | The amended provisions of Article 94 (8), (11), and (12) shall apply to the dividend income paid to a domestic corporation after this Decree enters into force. |
Article 11 (Applicability to Reporting of Tax Base)
The amended provisions of Article 97 (13) shall apply to the reports for the business year in which this Decree enters into force and subsequent business years.
Article 12 (Applicability to Special Case concerning Semi-Annual Payment of Withholding Tax)
The amended provisions of Article 115 (2) shall apply to applications filed on or after this Decree enters into force.
Article 13 (Applicability to Scope of Restructuring into Cooperative)
The amended provisions of subparagraph 4 of Article 120-26 shall apply to cases determined or rectified on or after this Decree enters into force.
Article 14 (Applicability to Determination of Identical Business for Application of Separate Accounting)
The amended provisions of Article 156 (2) shall apply to the cases for which a tax base report is filed after this Decree enters into force.
Article 15 (Special Case concerning Deduction of Foreign Tax Credits)
| (1) | With respect to the remaining amount not deducted under Article 57 (2) of the Act until the business year immediately before the business year that begins on or after January 1, 2015, because foreign corporate tax paid or payable to a foreign government exceeds the limit of deduction by applying the method of calculating the amount of tax in a lump sum under former provisions before this Decree enters into force without allocating the amount of tax for each country, either of the following ratios shall be chosen for calculating the tax base and the amount of tax for the business years that begins on or after January 1, 2015 and allocating the amounts to each country according to either of the following ratios by applying the amended provisions of Article 94 (7) thereto: |
| 1. | The ratio of the overseas source income from each country to the total sum of overseas source income from the country for the relevant business year that begins on or after January 1, 2015. In such cases, if the overseas source income from a certain country is nil or negative, the overseas source income from the country shall be deemed nil; |
| 2. | The ratio of the amount of foreign corporate tax for each country to the total sum of foreign corporate tax for the country for the relevant business year that begins on or after January 1, 2015. In such cases, if the foreign corporate tax for a certain country is nil or negative, the foreign corporate tax for the country shall be deemed nil. |
| (2) | In applying paragraph (1), if both the overseas source income and the amount of foreign corporate tax are nil or negative and if it is impracticable to proportionally allocate them to each country under the latter part of paragraph (1) 1 or the latter part of paragraph (1) 2, the remaining amount not deducted under Article 57 (2) of the Act shall be proportionally allocated to each country according to the relevant ratio specified in either subparagraph of paragraph (1) for the business year in which the relevant ratio accrues and shall be applicable by the amended provisions of Article 94 (7). |
ADDENDA <Presidential Decree No. 26302, Jun. 1, 2015>
Article 1 (Enforcement Date)
This Decree shall enter into force on June 4, 2015.
Articles 2 and 3 Omitted.
ADDENDA <Presidential Decree No. 26369, Jun. 30, 2015>
Article 1 (Enforcement Date)
This Decree shall enter into force on July 1, 2015.
Articles 2 through 4 Omitted.
ADDENDA <Presidential Decree No. 26416, Jul. 20, 2015>
Article 1 (Enforcement Date)
This Decree shall enter into force on July 21, 2015.
Articles 2 and 3 Omitted.
ADDENDA <Presidential Decree No. 26600, Oct. 23, 2015>
Article 1 (Enforcement Date)
This Decree shall enter into force on October 25, 2015. (Proviso Omitted.)
Articles 2 through 9 Omitted.
ADDENDA <Presidential Decree No. 26763, Dec. 28, 2015>
Article 1 (Enforcement Date)
This Decree shall enter into force on December 29, 2015.
Articles 2 through 10 Omitted.
ADDENDA <Presidential Decree No. 26922, Jan. 22, 2016>
Article 1 (Enforcement Date)
This Decree shall enter into force on January 25, 2016.
Articles 2 through 6 Omitted.
ADDENDA <Presidential Decree No. 26981, Feb. 12, 2016>
Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation: Provided, That the amended provisions of Article 50-2 (6) shall enter into force on April 1, 2016, and the amended provisions of Article 158 (6) shall enter into force on January 1, 2017.
Article 2 (General Applicability)
This Decree shall apply to the business years that begin on or after January 1, 2016.
Article 3 (Applicability to Valuation, etc. of Value of Assets)
The amended provisions of Article 14 shall apply to mergers between foreign corporations under a full control relationship on or after the date this Decree enters into force.
Article 4 (Applicability to Calculation of Standard Depreciation Costs)
The amended provisions of Article 26-3 (2) 3 (b) hall apply to cases where a return on tax base is filed after this Decree enters into force.
Article 5 (Applicability to Special Cases concerning Service Life)
The amended provisions of Article 28 (6) shall apply where a small or medium enterprise, as defined in Article 2 of the Enforcement Decree of the Restriction of Special Taxation Act, acquires an asset invested in plants on or after January 1, 2016.
Article 6 (Applicability to Non-Inclusion of Retirement Insurance Premiums, etc., in Deductible Expenses)
The amended provisions of Article 44-2 (4) 1 and 1-2 shall apply to the returns filed on tax base after this Decree enters into force.
Article 7 (Applicability to Inclusion of Allowances for Bad Debts in Deductible Expenses)
The amended provisions of Article 61 (2) 17-2 shall apply to the returns filed on tax base after this Decree enters into force.
Article 8 (Applicability to Inclusion of Amount Equivalent to Capital Gains from Transfer of Assets upon Spin-off in Deductible Expenses)
The amended provisions of Article 84 shall apply to spin-offs that take place after this Decree enters into force.
Article 9 (Applicability to Income Deduction for Special Purpose Companies, etc.)
The amended provisions of Article 86-2 (1) shall apply to corrections and determinations made after this Decree enters into force.
Article 10 (Applicability to Special Provisions concerning Taxation on Capital Gains on Transfer of Land, etc.)
The amended provisions of Article 92-2 (4) 5 shall apply to the transfers that take place after this Decree enters into force.
Article 11 (Applicability to Method of Calculating Unappropriated Earnings of Enterprises)
The amended provisions of Article 93 (9) shall apply where a return on tax base is filed after this Decree enters into force.
Article 12 (Applicability to Tax Withheld at Source and Refund, etc. in Bond Transactions with Repurchase Agreement, etc. and Special Cases concerning Withholding from Interest, etc. on Bonds, etc. of Foreign Corporations)
The amended provisions of Articles 114-2 (1) and (2) and 138-3 (2) and (3) shall apply where the tax is withheld from interest income accruing from bonds, etc. after this Decree enters into force.
Article 13 (Applicability to Lists of Documents Certifying Expenditure)
The amended provisions of Article 158 (6) shall apply to business years that begin on or after January 1, 2017.
Article 14 (Special Cases concerning Insurance of Passenger Vehicles for Business Use)
Where a passenger vehicle for business use is insured by an auto insurance policy only for business use under Article 50-2 (4) 1 on or after April 1, 2016 upon the expiration of the existing auto insurance policy, or where a passenger vehicle for business use is disposed of or the contract for leasing a passenger vehicle for business use expires before the expiration of an auto insurance policy purchased on or before April 1, 2016, the relevant passenger vehicle for business use shall be deemed to have been insured from January 1, 2016.
Article 15 (Special Cases concerning Business Use Ratio of Passenger Vehicles for Business Use)
| (1) | For the purpose of calculating the business use ratio referred to in Article 50-2 (4) 1, the business use ratio for the period from January 1, 2016 to March 31, 2016 shall be deemed the same as the business use ratio calculated for the period from April 1, 2016 to the end of the relevant business year: Provided, That, if a corporation proves another business use ratio through separate records, the business use ratio may be calculated by adding such business use ratio. |
| (2) | Notwithstanding paragraph (1), where a passenger vehicle for business use is disposed of or the contract for leasing a passenger vehicle for business use expires on or before March 31, 2016, the business use ratio from January 1, 2016 shall be deemed 100/100. |
Article 16 (Transitional Measure concerning Non-Inclusion of Retirement Insurance Premiums, etc., in Deductible Expenses)
Notwithstanding the amended provisions of Article 44-2 (4) 1 and 1-2, former provisions shall apply to retirement insurance premiums, etc. reported in accordance with former Article 44-2 (4) 1 and 1-2 at the time this Decree enters into force.
Article 17 (Transitional Measure concerning Inclusion of Amount Equivalent to Marginal Profits from Transfer of Assets upon Spin-off in Deductible Expenses)
Notwithstanding the amended provisions of Article 84, former provisions shall apply where a corporation divided by a spin-off before this Decree enters into force. is qualifiedly divided.
Article 18 (Transitional Measure concerning Special Provisions concerning Taxation on Capital Gains on Transfer of Land, etc.)
Notwithstanding the amended provisions of Article 92-2 (4) 5, former provisions shall apply to income accruing from a transfer of land to a commercial rental business operator before this Decree enters into force.
Article 19 (Transitional Measure concerning Tax Withheld at Source and Refund, etc. in Bond Transactions with Repurchase Agreement, etc. and Special Cases concerning Withholding from Interest, etc. on Bonds, etc. of Foreign Corporations)
Notwithstanding the amended provisions of Articles 114-2 (1) and (2) and 138-3 (2) and (3), former provisions shall apply to interest income accruing from bonds, etc. before this Decree enters into force.
ADDENDA <Presidential Decree No. 27037, Mar. 11, 2016>
Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation.
Article 2 Omitted.
ADDENDA <Presidential Decree No. 27115, Apr. 29, 2016>
Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation.
Articles 2 through 5 Omitted.
ADDENDA <Presidential Decree No. 27205, May 31, 2016>
Article 1 (Enforcement Date)
This Decree shall enter into force on September 30, 2016. (Proviso Omitted.)
Articles 2 and 3 Omitted.
ADDENDA <Presidential Decree No. 27245, Jun. 21, 2016>
Article 1 (Enforcement Date)
This Decree shall enter into force on June 23, 2016.
Articles 2 through 4 Omitted.
ADDENDA <Presidential Decree No. 27322, Jul. 6, 2016>
Article 1 (Enforcement Date)
This Decree shall enter into force on July 25, 2016.
Articles 2 through 4 Omitted.
ADDENDA <Presidential Decree No. 27444, Aug. 11, 2016>
Article 1 (Enforcement Date)
This Decree shall enter into force on August 12, 2016.
Articles 2 through 8 Omitted.
ADDENDA <Presidential Decree No. 27445, Aug. 11, 2016>
Article 1 (Enforcement Date)
This Decree shall enter into force on August 12, 2016.
Articles 2 through 22 Omitted.
ADDENDA <Presidential Decree No. 27472, Aug. 31, 2016>
Article 1 (Enforcement Date)
This Decree shall enter into force on September 1, 2016.
Articles 2 through 7 Omitted.
ADDENDA <Presidential Decree No. 27619, Nov. 29, 2016>
Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation. (Proviso Omitted.)
Articles 2 through 4 Omitted.
ADDENDA <Presidential Decree No. 27828, Feb. 3, 2017>
Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation: Provided, That the amended provisions of subparagraph 13-2 of Article 19 shall enter into force on February 4, 2017.
Article 2 (General Applicability)
This Decree shall apply to the business years that begin on or after January 1, 2017.
Article 3 (Applicability to Scope of Profit-Making Business)
The amended provisions of Article 2 (2) shall apply where a return on tax base is filed after this Decree enters into force.
Article 4 (Applicability to Deduction of Losses)
The amended provisions of Article 10 (1) 5 shall apply where a return on tax base is filed after this Decree enters into force.
Article 5 (Applicability to Evaluation, etc. of Asset Value)
The amended provisions of Article 14 (1) 1-2 (a) shall apply mergers that take place after this Decree enters into force.
Article 6 (Applicability to Excess of Par Value of Issued Stocks, etc.)
The amended provisions of Article 15 (4) 4 shall apply where a return on tax base is filed after this Decree enters into force.
Article 7 (Applicability to Scope of Deductible Expenses)
The amended provisions of subparagraph 13-2 of Article 19 shall apply to donations made on or after February 4, 2017.
Article 8 (Applicability to Non-Inclusion of Bad Debts in Deductible Expenses)
The amended provisions of Article 19-2 (6) 5 shall apply where bad debts are included in deductible expenses after this Decree enters into force.
Article 9 (Applicability to Calculation of Amount of Business Use of Passenger Vehicles for Business Use)
The amended provisions of Article 50-2 (8) and (9) shall apply where a return on tax base is filed after this Decree enters into force.
Article 10 (Applicability to Inclusion of Reserve Funds for Proper Purpose Business in Deductible Expenses)
The amended provisions of Article 56 (6) 3 shall apply where an amount is expended from the reserve funds for proper purpose business.
Article 11 (Applicability to Upward Adjustment of Ceiling on Contingency Reserve Funds for Guarantee Insurance in Deductible Expenses)
The amended provisions of Article 57 (8) shall apply where a return on tax base is filed after this Decree enters into force.
Article 12 (Applicability to Inclusion of Allowances for Bad Debts in Deductible Expenses)
The amended provisions of Article 61 (2) 7 shall apply where a return on tax base is filed after this Decree enters into force.
Article 13 (Applicability to Inclusion of Allowances to Redeem Claims for Indemnity in Deductible Expenses)
The amended provisions of Article 63 (1) 4-2 shall apply where a return on tax base is filed after this Decree enters into force.
Article 14 (Applicability to Requirements, etc. for Qualified Merger)
The amended provisions of Article 80-2 (1) 1 (d) shall apply where a return on tax base is filed after this Decree enters into force.
Article 15 (Applicability to Inclusion of Amount Equivalent to Marginal Profits from Transfer of Assets upon Spin-off or Investment in Kind in Deductible Expenses)
The amended provisions of Article 84 and 84-2 shall apply where qualified restructuring provided for in the amended provisions of Article 84 (5) or 84-2 (5) takes place after this Decree enters into force.
Article 16 (Applicability to Corporate Tax on Unappropriated Earnings of Enterprises)
| (1) | The amended provisions of Article 93 (4) 2 (f), (g), (i), and (j) shall apply where a return on tax base is filed after this Decree enters into force. |
| (2) | The amended provisions of the main sentence and subparagraph 3 of Article 93 (6) and Article 93 (19) shall apply to the business year in which this Decree enters into force and subsequent business years. |
| (3) | The amended provisions of Article 93 (15) 2 shall also apply where a return is fined by the method chosen in accordance with Article 56 (2) 2 of the Act before the beginning of the business year in which this Decree enters into force. |
Article 17 (Applicability to Submission of Tax Statement on Foreign Tax Credits)
The amended provisions of Article 94 (4) shall apply to the tax statements submitted on or after January 1, 2017 and shall also apply where a domestic corporation received the notice of determination from a foreign government on or before December 31, 2016 and two months have not received from the date when it received the notice of determination as at December 31, 2016.
Article 18 (Applicability to Addition of Ground of Restructuring for Non-Taxation on Liquidation Income)
The amended provisions of subparagraph 5 of Article 120-26 shall apply where a firm or corporation is restructured after this Decree enters into force.
Article 19 (Applicability to Separate Accounting)
The amended provisions of Article 156 (2) shall also apply to the corporations merged or divided before this Decree enters into force.
ADDENDA <Presidential Decree No. 27972, Mar. 29, 2017>
Article 1 (Enforcement Date)
This Decree shall enter into force on March 30, 2017.
Articles 2 through 10 Omitted.
ADDENDA <Presidential Decree No. 28074, May 29, 2017>
Article 1 (Enforcement Date)
This Decree shall enter into force on May 30, 2017.
Articles 2 through 4 Omitted.
ADDENDA <Presidential Decree No. 28211, Jul. 26, 2017>
Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation: Provided, That the amended part of an Act which was promulgated before the enforcement of this Decree, but the date on which it enters into force has not yet arrived, among the Decrees amended by Article 8 of the Addenda, shall enter into force on the enforcement date of the relevant Decree, respectively.
Articles 2 through 8 Omitted.
ADDENDA <Presidential Decree No. 28640, Feb. 13, 2018>
Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation: Provided, That the amended provisions specified in the following subparagraphs shall enter into force on the date specified in the relevant subparagraph:
| 1. | The amended provisions of Article 92-2 (2) 1-12 and 1-13: April 1, 2018; |
| 2. | The amended provisions of Article 23 (1) 1 (h): April 19, 2018; |
| 3. | The amended provisions of Article 23 (1) 1 (c): May 1, 2018; |
| 4. | The amended provisions of Article 36 (5) 6 through 8, (6) and (8) 1 and Article 36-2 (11) 1: January 1, 2019. |
Article 2 (General Applicability)
This Decree shall apply to the business years that begin on or after January 1, 2018.
Article 3 (Applicability to Scope of Profit-Making Business)
| (1) | The amended provisions of Article 2 (1) 4 (f) shall apply to the tax base returns filed after this Decree enters into force. |
| (2) | The amended provisions of Article 2 (2) shall apply to the fixed assets transferred to the proper purpose business after this Decree enters into force. |
Article 4 (Applicability to Evaluation, etc. of Values of Assets)
The amended provisions of Article 14 (1) 1-2 (a) shall begin to apply from the mergers that take place on or after this Decree enters into force.
Article 5 (Applicability to Non-Inclusion of Bad Debts in Deductible Expenses)
The amended provisions of Article 19-2 (6) 5 shall begin to apply from the bad debts to be included in deductible expenses on or after this Decree enters into force.
Article 6 (Applicability to Constructive Depreciation)
The amended provisions of Article 30 (2) shall begin to apply from the estimations or corrections made for the business year in which this Decree enters into force.
Article 7 (Applicability to Scope, etc. of Designated Donations)
| (1) | The amended provisions of Article 36 (1) 1 (f), 2 (c) and 6 shall begin to apply where organizations, etc., receiving donations are designated or re-designated after this Decree enters into force. |
| (2) | Notwithstanding the amended provisions of Article 36 (1) 3, former provisions shall apply to member ships paid under the former Article 36 (1) 3 before this Decree enters into force. |
| (3) | The amended provisions of Article 36 (5) 6 through 8, (6) and (8) 1 shall begin to apply from the business years that begin on or after January 1, 2019. |
Article 8 (Applicability to Requirements, etc. for Organizations Receiving Statutory Donations)
| (1) | The amended provisions of Article 36-2 (4) 3 and (8) 1 shall begin to apply from the documents to be published on or after this Decree enters into force. |
| (2) | The amended provisions of Article 36-2 (11) 1 shall begin to apply from the business years that begin on or after January 1, 2019. |
Article 9 (Applicability to Computation, etc. of Maximum Amount of Expenses Incurred in Relation to Passenger Vehicles for Business Use as Deductible Expenses)
The amended provisions of Article 50-2 (4), (7) 1, (9) and (10) shall begin to apply from the tax base returns filed on or after this Decree enters into force.
Article 10 (Applicability to Inclusion of Reserve Funds for Proper Purpose Business in Deductible Expenses)
| (1) | The amended provisions of Article 56 (1) 4 shall begin to apply from the tax base returns filed on or after this Decree enters into force. |
| (2) | The amended provisions of Article 56 (6) shall begin to apply from fixed assets acquired on or after this Decree enters into force. |
Article 11 (Applicability to Requirements, etc. for Qualified Merger)
The amended provisions of Article 80-2 (1) 2 (c) shall begin to apply from the assets disposed of under an agreement, etc. for implementing a workout program on or after this Decree enters into force.
Article 12 (Applicability to Expansion of Scope of Appraisal Firms)
The amended provisions of Article 89 (2) 1 shall begin to apply from the appraisals conducted on or after this Decree enters into force.
Article 13 (Applicability to Special Provisions concerning Taxation on Capital Gains on Transfer of Land, etc.)
The amended provisions of the proviso to Article 92-2 (2) 1, the proviso to Article 92-2 (2) 1-2 and Article 92-2 (2) 1-12 and 1-13 shall begin to apply to transfers that take place on or after April 1, 2018.
Article 14 (Applicability to Criteria for Domestic Corporation subject to Confirmation of Compliant Filing)
The amended provisions of Article 97-4 (3) shall begin to apply from the entities transformed to a corporation on or after this Decree enters into force.
Article 15 (Applicability to Special Case concerning Penalty Tax for Non-Issuance of Invoices)
The amended provisions of Article 14 of the Addenda to the amendment (Presidential Decree No. 15970) to the Enforcement Decree of the Corporate Tax Act [including the provisions amended by the amendment (Presidential Decree No. 17457) to the Enforcement Decree of the Corporate Tax Act, the partial amendment (Presidential Decree No. 19328) to the Enforcement Decree of the Corporate Tax Act, the partial amendment (Presidential Decree No. 22577) to the Enforcement Decree of the Corporate Tax Act and the partial amendment (Presidential Decree No. 24357) to the Enforcement Decree of the Corporate Tax Act] shall begin to apply from the business years that begin on or after January 1, 2017.
Article 16 (Transitional Measures concerning Scope, etc. of Designated Donations)
| (1) | Notwithstanding the amended provisions of Article 36 (1), donations paid before this Decree enters into force to academic research organizations, scholarship organizations, technical promotion organizations, cultural or arts organizations and environmental protection organizations (including specialized arts corporations and specialized arts organizations designated under the Culture and Arts Promotion Act), which have been operated with permission or approval from the Government under the former Article 36 (1) 1 (c) or (d), shall be deemed designated donations until December 31, 2020. |
| (2) | Notwithstanding the amended provisions of Article 36 (1), donations paid before this Decree enters into force to designated organization receiving donations under the former Article 36 (1) 1 (h) shall be deemed designated donations until December 31, 2020. |
ADDENDA <Presidential Decree No. 29045, Jul. 16, 2018>
Article 1 (Enforcement Date)
This Decree shall enter into force on July 17, 2018.
Article 2 Omitted.
ADDENDA <Presidential Decree No. 29067, Jul. 31, 2018>
Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation.
Article 2 (Applicability to Non-Inclusion of Holding Companies' Dividend Income in Gross Income)
The amended provisions of Article 17-2 (2) 2 shall begin to apply to the portion received the dividend income in gross income on or after July 1, 2017.
ADDENDA <Presidential Decree No. 29269, Oct. 30, 2018>
Article 1 (Enforcement Date)
This Decree shall enter into force on November 1, 2018.
Articles 2 through 11 Omitted.
ADDENDA <Presidential Decree No. 29529, Feb. 12, 2019>
Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation: Provided, That the amended provisions of Articles 2 (2) 3, 138-4, 138-7, 138-8 (1) 3, 164-3 (only applicable to the part pertaining to Article 121-3 (2) of the Act), 164-4 (1) and (2) (only applicable to the part pertaining to Article 121-3 (1) of the Act), 166 (1) and (2) (only applicable to the part pertaining to Article 123 (2) of the Act), 167 (1) and (2) (only applicable to the part pertaining to Article 123 (2) of the Act), attached Table 2 shall enter into force on January 1, 2020.
Article 2 (General Applicability)
This Decree shall apply to business years beginning after January 1, 2019.
Article 3 (Applicability to Scope of Profit-Making Businesses)
The amended provisions of Article 3 (1) 3 (d) shall apply to reports on a tax base filed after this Decree enters into force.
Article 4 (Applicability to Scope of Surpluses Untaxed upon Capitalization)
| (1) | The amended provisions of Article 12 (1) and (2) shall apply when surpluses succeeded pursuant to a merger or division are capitalized after this Decree enters into force. |
| (2) | With respect to the surpluses succeeded pursuant to a merger or division, notwithstanding the amended provisions of Article 12 (1) and (2) and paragraph (1) of this Article, the previous provisions shall apply to surpluses remaining as at the time this Decree enters into force after the capitalization thereof before this Decree enters into force. |
Article 5 (Applicability to Non-Inclusion of Dividend Income in Gross Income)
The amended provisions of Articles 17-2 (3) and 17-3 (5) shall apply to dividends received after this Decree enters into force.
Article 6 (Applicability to Scope of Deductible Expenses)
| (1) | The amended provisions of subparagraphs 17 of Article 19 shall apply to artworks acquired after this Decree enters into force. |
| (2) | The amended provisions of subparagraphs 20 of Article 19 shall apply to endowments made after this Decree enters into force. |
Article 7 (Applicability to Non-inclusion of Bad Debts in Deductible Expenses)
The amended provisions of Article 19-2 (1) 10 shall apply to judicial settlements, etc. determined after this Decree enters into force.
Article 8 (Applicability to Allowable Depreciation of Used Assets, etc.)
| (1) | The amended provisions of Article 29-2 shall apply to spin-offs or investments in kind made after this Decree enters into force. |
| (2) | With respect to depreciation pursuant to the previous provisions of Articles 24 through 26, 26-2, 26-3, and 27 through 29 as at the time this Decree enters into force following a spin-off or investment in kind made before this Decree enters into force, notwithstanding the amended provisions of Article 29-2, the previous provisions shall apply. |
Article 9 (Applicability to Using Credit Cards, etc. for Entertainment Expenses)
The amended provisions of Article 41 (3) 3 shall apply to entertainment expenses spent after this Decree enters into force.
Article 10 (Applicability to Requirements for Qualified Merger)
The amended provisions of Article 80-2 (1) 1 and (8) shall apply to disposing of stocks, etc. after this Decree enters into force.
Article 11 (Applicability to Requirements for Appraisers’ Value Appraised)
The amended provisions of Article 89 (2) 1 shall apply to appraisal conducted after this Decree enters into force.
Article 12 (Applicability to Evidentiary Documents of Expenditures)
The amended provisions of Article 158 (3) shall apply to goods or services received after this Decree enters into force.
Article 13 (Special Cases of Standards for Imposing Administrative Fines)
Notwithstanding attached Table 2, attached Table 2-2 shall apply until December 31, 2019.
Article 14 (Transitional Measures concerning Criteria for Determining Foreign Corporation)
Where a foreign entity that has filed a report on establishing a domestic place of business of a foreign corporation under Article 109 of the Act and been registered as a business operator under Article 111 of the Act before the enforcement date prescribed in the proviso to Article 1 of the Addenda does not constitute a foreign corporation under the amended provisions of Article 2 (2) 3 after the enforcement date prescribed in the proviso to Article 1 of the Addenda, such foreign entity shall file for registration as a business operator again under Article 168 of the Income Tax Act.
Article 15 (Transitional Measures concerning Non-Inclusion of Bad Debts in Deductible Expenses)
Notwithstanding the amended provisions of Article 19-2 (1) 7, the previous provisions shall apply to claims that are exempted from the obligation to collect by the Governor of the Bank of Korea or the head of a foreign exchange bank pursuant to Acts and statutes pertaining to foreign exchange transactions before this Decree enters into force.
Article 16 (Transitional Measures concerning Accelerated Depreciation of Capital Assets of SMEs)
Notwithstanding the amended provisions of Article 28 (6) and (7), the previous provisions shall apply to capital assets acquired by small and medium-sized enterprises from October 1, 2014 to June 30, 2016.
Article 17 (Transitional Measures concerning Reduction of Interest Rates on Interest Equivalent of Balance of Reserve Funds for Proper Purpose Business of Non-profit Korean Corporation, Included in Gross Income)
Where a payment is due or refunded before this Decree enters into force and the payment or imposition is made after this Decree enters into force, notwithstanding the amended provisions of Articles 56 (7) 2, 110 (4) 2, and 136 (4), the previous provisions shall apply to the rate of interest for the period from the day following the date on which the payment was due or refunded to the day before the date this Decree enters into force.
Article 18 Omitted.
ADDENDA <Presidential Decree No. 29892, Jun. 25, 2019>
Article 1 (Enforcement Date)
This Decree shall enter into force on September 16, 2019. <Proviso Omitted.>
Articles 2 through 10 Omitted.
ADDENDA <Presidential Decree No. 29933, Jul. 1, 2019>
Article 1 (Enforcement Date)
This Act shall enter into force on the date of its promulgation.
Article 2 (Applicability to Bad Debts Includible in Deductible Expenses)
The amended provisions of Article 19-2 (1) 5-2 and (3) 1 shall apply to claims determined to be exempted from liability after this Decree enters into force.
Article 3 (Applicability to Withholding Taxes, etc. on Interest Income, etc. of Domestic Corporations)
The amended provisions of Article 111 (1) shall apply to business years beginning after January 1, 2019.
Article 4 (Applicability to Submission of Payment Statements)
The amended provisions of subparagraph 1 of Article 162 shall apply to business years beginning after January 1, 2019.
Article 5 (Special Cases of Withholding Taxes, etc. on Interest Income, etc. of Domestic Corporations)
“Short-term bonds, etc. falling under subparagraph 1 (b) of Article 2 of the Act on Electronic Registration of Stocks and Bonds with a maturity of up to one month, among those prescribed in Article 59 of the same Act” in the amended provisions of Article 111 (1) shall be deemed to be "short-term electronic bonds with a maturity of up to one month issued pursuant to the Act on Issuance and Distribution of Short-Term Electronic Bonds" until the Act on Electronic Registration of Stocks and Bonds, as amended by Act No. 14096, enters into force.
ADDENDA <Presidential Decree No. 30396, Feb. 11, 2020>
Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation: Provided, That the amended provisions of Article 39 (1), (5) 5-2, (6), (7), and (9) through (14) and the latter part of paragraph (2), with the exception of the subparagraphs, of Article 94 (limited to the amended provisions pertaining to research and development expenses) shall enter into force on January 1, 2021.
Article 2 (General Applicability)
This Decree shall begin to apply to the business year beginning after January 1, 2020.
Article 3 (Applicability to Scope, etc. of Designated Donations)
| (1) | The amended provisions of Article 39 (1) shall apply where a designated organization, etc. receiving donations is designated after January 1, 2021. |
| (2) | The amended provisions of Article 39 (5) 5-2, (6), (7), and (9) through (12) shall begin to apply to the business year beginning after January 1, 2021. |
| (3) | The amended provisions of Article 39 (13) shall apply to the designation or revocation as a designated organization, etc. receiving donations, or when a designated organization, etc. receiving donations is found to fall under any of subparagraph of Article 39 (8), after January 1, 2021. |
Article 4 (Applicability to Special Cases of Non-inclusion in Deductible Expenses of Expenses Relating to Passenger Vehicles for Business Use, etc.)
| (1) | The amended provisions of Article 50-2 (11) 1 and the main clause of subparagraph 2 of the same paragraph shall apply to reports on a tax base filed after this Decree enters into force. |
| (2) | The amended provisions of the proviso to Article 50-2 (11) 2 and paragraph (13) of the same Article shall apply from the date on which passenger vehicles for business use are disposed of or their rental contracts are terminated and 10 years have elapsed since the date this Decree enters into force. |
Article 5 (Applicability to Inclusion in Deductible Expenses of Reserve Funds for Proper Purpose Business)
The amended provisions of Article 56 (2) 1 shall apply to reports on a tax base filed after this Decree enters into force.
Article 6 (Applicability to Inclusion of National Subsidies in Deductible Expenses)
The amended provisions of Article 64 (6) shall apply to business assets acquired or improved after January 1, 2020.
Article 7 (Applicability to Types, etc. of Wrongful Calculations)
The amended provisions of Article 88 (1) 6 (b) shall apply to reports on a tax base filed after this Decree enters into force.
Article 8 (Applicability to Foreign Tax Credits)
The amended provisions of the latter part (limited to the amended matters pertaining to research and development expenses), with the exception of the subparagraphs, of Article 94 (2) shall apply to business years beginning after January 1, 2021.
Article 9 (Applicability to Submission of Certificate of Confirmation on Compliant Filing, etc.)
The amended provisions of Article 97-4 (2) shall apply to reports on a tax base filed after this Decree enters into force.
Article 10 (Applicability to Non-inclusion in Deductible Expenses of Donations of Consolidated Corporation)
The amended provisions of Article 120-20 (2) shall apply to reports on a tax base filed after this Decree enters into force.
Article 11 (Applicability to Domestic Source Income Accruing from Personal Services of Foreign Corporation)
The amended provisions of Article 132 (7) shall apply to income paid after this Decree enters into force.
Article 12 (Transitional Measures concerning Constructive Instant Depreciation)
Notwithstanding the amended provisions of Article 31 (6) 2, the previous provisions shall apply to portions for business years beginning before January 1, 2020.
Article 13 (Transitional Measures concerning Scope, etc. of Designated Donations)
| (1) | Notwithstanding the amended provisions of subparagraph 1, with the exception of the items, of Article 39 (1), the previous provisions shall apply to designated organizations, etc. receiving donations designated before January 1, 2021. In such cases, designated organizations, etc. receiving donations shall be deemed to meet the requirements for designation prescribed in the amended provisions of item (f) (iii) of Article 39 (1) until the designation period under the previous provisions expires. |
| (2) | Notwithstanding the amended provisions of Article 39 (1) 1 (f) (v), the previous provisions shall apply to designated organizations, etc. receiving donations which fail to obtain redesignation under the previous provisions of Article 39 (13) before January 1, 2021. |
Article 14 (Transitional Measures concerning Additional Interest Rates following Extension of Deadline for Corporate Tax Return by Foreign Corporation)
Notwithstanding the amended provisions of Article 136 (4), the previous provisions shall apply when the extension of the deadline for return is approved before this Decree enters into force.
ADDENDA <Presidential Decree No. 30586, Mar. 31, 2020>
Article 1 (Enforcement Date)
This Decree shall enter into force on April 1, 2020. <Proviso Omitted.>
Articles 2 through 10 Omitted.
ADDENDA <Presidential Decree No. 30876, Jul, 28, 2020>
Article 1 (Enforcement Date)
This Decree shall enter into force on July 30, 2020.
Articles 2 through 15 Omitted.
ADDENDA <Presidential Decree No. 30892, Aug. 4, 2020>
Article 1 (Enforcement Date)
This Decree shall enter into force on August 5, 2020. <Proviso Omitted.>
Articles 2 through 7 Omitted.
ADDENDA <Presidential Decree No. 30920, Aug. 7, 2020>
Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation.
Article 2 (Applicability to Special Cases of Taxation on Capital Gains on Transfer of Land)
The amended provisions of Article 92-2 (2) 1-12 shall apply to transfers of land made after this Decree enters into force.
ADDENDA <Presidential Decree No. 30934, Aug. 11, 2020>
Article 1 (Enforcement Date)
This Decree shall enter into force on August 12, 2020.
Articles 2 through 5 Omitted.
ADDENDA <Presidential Decree No. 30954, Aug. 19, 2020>
Article 1 (Enforcement Date)
This Decree shall enter into force on August 19, 2020.
Article 2 Omitted.
ADDENDA <Presidential Decree No. 30977, Aug. 26, 2020>
Article 1 (Enforcement Date)
This Decree shall enter into force on August 28, 2020.
Article 2 through 5 Omitted.
ADDENDA <Presidential Decree No. 31084, Oct. 7, 2020>
Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation.
Article 2 (General Applicability)
This Decree shall apply to transfers made after this Decree enters into force.
Article 3 (Applicability to Special Cases of Taxation on Capital Gains on Transfer of Land)
| (1) | The amended provisions of the proviso, with the exception of the subparagraphs, of Article 92-2 (2) and subparagraph 1-14 of the same paragraph shall also apply to the houses transferred after their registration is revoked from August 18, 2020 to the day before date this Decree enters into force. |
| (2) | The amended provisions of Article 92-2 (2) 1-12 (a) and subparagraph 1-13 (b) of the same paragraph shall also apply to private rental houses for which an application for registration (including a report on changes in registered matters filed to add a house to be rent) is filed under Article 5 of the Special Act on Private Rental Housing from August 18, 2020 to the day before the date this Decree enters into force. |
Article 4 (Transitional Measures concerning Special Cases of Taxation on Capital Gains on Transfer of Land)
Notwithstanding the amended provisions of Article 92-2 (2) 1-12 (a) and subparagraph 1-13 (b) of the same paragraph, the previous provisions shall apply to private rental houses for which an application for registration (including a report on changes in registered matters filed to add a house to be rent) is filed under Article 5 of the Special Act on Private Rental Housing before August 18, 2020.
ADDENDA <Presidential Decree No. 31220, Dec. 8, 2020>
Article 1 (Enforcement Date)
This Decree shall enter into force on December 10, 2020.
Articles 2 through 6 Omitted.
ADDENDA <Presidential Decree No. 31221, Dec. 8, 2020>
Article 1 (Enforcement Date)
This Decree shall enter into force on December 10, 2020.
Articles 2 through 9 Omitted.
ADDENDUM <Presidential Decree No. 31380, Jan. 5, 2021>
This Decree shall enter into force on the date of its promulgation. <Proviso Omitted.>
ADDENDA <Presidential Decree No. 31443, Feb. 17, 2021>
Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation: Provided, That the amended provisions of each of the following subparagraphs shall enter into force on the date specified in the relevant subparagraph: <Amended on Dec. 31, 2022>
| 1. | The amended provisions of Article 155-2: July 1, 2021; |
| 2. | The amended provisions of subparagraph 6 of Article 73, Article 77, the proviso to Article 89 (2) 1, Article 129 (3) through (5), Article 132 (17), Article 137 (3) and (10) through (14), and Article 162-2 (3): January 1, 2022; |
| 3. | The amended provisions of Article 131-3: January 1, 2025. |
Article 2 (General Applicability)
This Decree shall apply to business years beginning after January 1, 2021.
Article 3 (Applicability to Scope of Profit-making Business)
The amended provisions of paragraph (1) 4 (o) and subparagraph 15 of the same paragraph shall apply to profits accruing after January 1, 2021.
Article 4 (Applicability to Deduction of Losses)
The amended provisions of Article 10 (1) 3 shall apply to reports on a tax base filed after this Decree enters into force.
Article 5 (Applicability to Scope of Deductible Expenses)
The amended provisions of subparagraphs 18 and 22 of Article 19 shall apply to expenses spent after January 1, 2021.
Article 6 (Applicability to Non-inclusion of Bad Debts in Deductible Expenses)
The amended provisions of Article 19-2 (1) 7 shall apply to claims determined to be irrecoverable by the Korea Trade Insurance Corporation after this Decree enters into force.
Article 7 (Applicability to Requirements for Korean Schools, etc.)
| (1) | The amended provisions of the main clause of Article 38 (8) 1 shall also apply to schools, etc. for which three months have not elapsed from the end of the business year as of January 1, 2021. |
| (2) | The amended provisions of the proviso to Article 38 (8) 1 shall apply to disclosures made after January 1, 2021. |
| (3) | The amended provisions of Article 38 (11) 1 and 2 shall apply to violations of the requirements prescribed in Article 38 (4) 2 through 4, committed after January 1, 2021. |
Article 8 (Applicability to Scope etc. of Donations Determined in Consideration of Public Interest)
| (1) | The amended provisions of the proviso to Article 39 (1) 1 (f) (i) a and the proviso to paragraph (5) 2 (a) of the same Article shall apply to corporations designated and publicly notified after January 1, 2021. |
| (2) | The amended provisions of Article 39 (1) 4 (l) shall apply to donations made after January 1, 2021. |
| (3) | The amended provisions of the proviso to subparagraph 3, with the exception of the items, of Article 39 (5) shall apply to public notifications made January 1, 2021. |
| (4) | The amended provisions of the main clause, with the exception of the items, of Article 39 (5) 3 shall begin to apply to public service corporations, etc. for which three months have not elapsed from the end of the business year as of January 1, 2021. |
| (5) | The amended provisions of the main clause of Article 39 (5) 7 shall begin to apply to public service corporations, etc. for which four months have not elapsed from the end of the business year as of January 1, 2021. |
| (6) | The amended provisions of Article 39 (8) 1 and 2 shall apply to violations of the requirements prescribed in Article 39 (5) 6 through 8 after January 1, 2021. |
Article 9 (Applicability to Using Credit Cards, etc. for Entertainment Expenses)
The amended provisions of Article 41 (1) 2 shall apply to entertainment expenses spent after January 1, 2021.
Article 10 (Applicability to Appraisal, etc. of Virtual Assets)
The amended provisions of subparagraph 6 of Article 73, Article 77, and the proviso to Article 89 (2) 1 shall apply to transactions made after January 1, 2022.
Article 11 (Applicability to Mergers and Divisions, etc.)
| (1) | The amended provisions of Articles 81 (4); 82-2 (3) 2; 83 (5) and (6); 84 (5) and (7) (excluding subparagraph 2), (8), (10) and (11); 84-2 (5) and (7) (excluding subparagraph 2), (8), (10) and (11) shall apply to corporations that merge, divide, spin-off, or make an investment in-kind after January 1, 2021. |
| (2) | The amended provisions of the latter part of Article 84 (7) 2 and the latter part of Article 84-2 (7) 2 shall apply to disposal of assets after January 1, 2021. |
Article 12 (Applicability to Types, etc. of Wrongful Calculations)
The amended provisions of Article 88 (1) 6 (c) and the proviso to the same paragraph, and paragraph (4) of the same Article shall apply to transactions made after this Decree enters into force.
Article 13 (Applicability to Scope, etc. of Marke Prices)
The amended provisions of Article 89 (1) shall apply to transactions made after this Decree enters into force.
Article 14 (Applicability to Special Cases of Taxation on Capital Gains on Transfer of Land)
The amended provisions of Article 92-2 (4) 6 shall apply to transfers made after this Decree enters into force.
Article 15 (Applicability to Preparation and Issuance, etc. of Invoices)
The amended provisions of Article 164 (9) shall apply to contracts concluded after this Decree enters into force.
Article 16 (Transitional Measures concerning Scope of Deductible Expenses)
Notwithstanding the amended provisions of subparagraph 18 of Article 19, the previous provisions shall apply to expenses spent before January 1, 2021.
Article 17 (Transitional Measures concerning Requirements for Korean Schools, etc.)
Notwithstanding the amended provisions of the main clause of Article 38 (8) 1, the previous provisions shall apply to schools, etc. for which three months have elapsed from the end of the business year as of January 1, 2021.
Article 18 (Transitional Measures concerning Scope, etc. of Donations Determined in Consideration of Public Interest)
Notwithstanding the amended provisions of the main clause, with the exception of the items, of Article 39 (5) 3, the previous provisions shall apply to public service corporations, etc. for which three months have elapsed from the end of the business year as of January 1, 2021.
Article 19 (Transitional Measures concerning Using Credit Cards, etc. for Entertainment Expenses)
Notwithstanding the amended provisions of Article 41 (1) 2, the previous provisions shall apply to entertainment expenses spent before January 1, 2021.
Article 20 (Transitional Measures concerning Income Deductions for Special Purpose Companies)
Notwithstanding the amended provisions of Article 86-2 (3) through (7), the previous provisions shall apply to business years beginning before January 1, 2021.
Article 21 (Transitional Measures concerning Receipt and Keeping of Evidentiary Documents of Expenditures)
Notwithstanding the amended provisions of Article 158 (6), the previous provisions shall apply to business years beginning before January 1, 2021.
ADDENDA <Presidential Decree No. 31660, May 4, 2021>
Article 1 (Enforcement Date)
This Decree shall enter into force on July 1, 2021: Provided, That the amended provisions of Article 92-11 (3) shall enter into force on the date of its promulgation.
Article 2 (Applicability to Criteria, etc. for Determining Land Not Deemed Idle Lands on Grounds of Inevitability)
The amended provisions of Article 92-11 (3) 2 (b) shall apply to land purchased by means of consultation or expropriated pursuant to a business of which authorization is publicly notified after the enforcement date prescribed in the proviso to Article 1 of the Addenda.
Article 3 (Applicability to Penalty Tax on Negligence in Submitting Payment Statement)
The amended provisions of Article 120 (9) 2 shall apply when a payment statement or simple payment statement is submitted for income paid after this Decree enters into force.
ADDENDA <Presidential Decree No. 31883, Jul. 13, 2021>
Article 1 (Enforcement Date)
This Decree shall enter into force on July 13, 2021.
Articles 2 through 5 Omitted.
ADDENDA <Presidential Decree No. 31961, Aug. 31, 2021>
Article 1 (Enforcement Date)
This Decree shall enter into force on September 10, 2021.
Articles 2 through 5 Omitted.
ADDENDA <Presidential Decree No. 32274, December, 28, 2021>
Article 1 (Enforcement Date)
This Decree shall enter into force on December 30, 2021.
Articles 2 through 14 Omitted.
ADDENDA <Presidential Decree No. 32418, Feb. 15, 2022>
Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation: Provided, That the amended provisions of the following subparagraphs shall enter into force on the date specified in the relevant subparagraph: <Amended on Dec. 31, 2022>
| 1. | The amended provisions of Article 3 (1) 5 (c), the main clause of Article 44-2 (3), and Article 111 (1) 17: April, 14, 2022; |
| 2. | The amended provisions of Articles 94-2 and 99-2 (1): January 1, 2025. |
Article 2 (General Applicability)
This Decree shall apply to business years beginning after January 1, 2022.
Article 3 (Applicability to Recognition as Deductible Expenses of Employee Stock Options)
The amended provisions of subparagraph 19-2 of Article 19 shall also apply to exercising employee stock options, granted before this Decree enters into force, after this Decree enters into force.
Article 4 (Applicability to Requirements for Qualified Merger)
The amended provisions of Article 80-2 (5) 4 shall apply to mergers conducted after January 1, 2022.
Article 5 (Applicability to Tax Credits for Losses from Disasters)
The amended provisions of Article 95 (5) shall also apply to a natural disaster that occurs before this Decree enters into force, if three months have not elapsed from the date of its occurrence as at the time this Decree enters into force.
Article 6 (Applicability to Deadline for Submitting Internal Transaction Statements of Domestic Place of Business of Foreign Corporation)
The amended provisions of Article 130 (4) shall also apply where the obligation to submit data arises for a business year beginning before this Decree enters into force and the deadline for submission under the previous provisions has not passed as at the time this Decree enters into force.
Article 7 (Applicability to Collective Investment Scheme for Institutions)
The amended provisions of Article 161 (1) 2 shall begin to apply to reports on a tax base for the business year in which December 31, 2021 falls, filed after this Decree enters into force.
Article 8 (Transitional Measures concerning Reduction of Interest Rates, etc. on Interest Equivalent in Cases of Inclusion in Gross Income of Balance of Reserve Fund for Proper Purpose Business of Non-Profit Korean Corporation)
| (1) | Where an amount equivalent to the interest on corporate tax is paid pursuant to Article 29 (7) of the Act after this Decree enters into force due to the inclusion in gross income of reserve funds for proper purpose business which were included in deductible expenses before this Decree enters into force, notwithstanding the amended provisions of Article 56 (7) 2, the previous provisions shall apply to the rate applicable in calculating an interest equivalent for the period until the day before the date this Decree enters into force; the amended provisions of Article 56 (7) 2 shall apply to the rate applicable in calculating an interest equivalent for the period after this Decree enters into force. |
| (2) | Where an amount of corporate tax refunded before this Decree enters into force is collected after this Decree enters into force by adding an amount equivalent to interest pursuant to Article 72 (5) of the Act, notwithstanding the amended provisions of the main clause of Article 110 (4) 2, the previous provisions shall apply to the rate applicable in calculating an interest equivalent for the period until the day before the date this Decree enters into force; the amended provisions of the main clause of Article 110 (4) 2 shall apply to the rate applicable in calculating an interest equivalent for the period after this Decree enters into force. |
Article 9 (Transitional Measures concerning Reporting Appointment of Person to Confirm Compliant Filing)
Notwithstanding the amended provisions of Article 97-4 (5), the previous provisions shall apply when the appointment of a person to confirm compliant filing is reported for the business year in which December 31, 200 falls.
ADDENDA <Presidential Decree No. 32447, Feb. 17, 2022>
Article 1 (Enforcement Date)
This Decree shall enter into force on February 18, 2022.
Articles 2 and 3 Omitted.
ADDENDA <Presidential Decree No. 32449, Feb. 17, 2022>
Article 1 (Enforcement Date)
This Decree shall enter into force on February 18, 2022.
Articles 2 and 3 Omitted.
ADDENDA <Presidential Decree No. 32829, Aug. 2, 2022>
Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation.
Article 2 (Applicability to Requirements for Special Cases of Taxation on Capital Gains on Transfer of Long-term Private Rental Housing, etc.)
The amended provisions of Article 92-2 (2) 1-13 (d) and (e) shall apply where a lease agreement is concluded or renewed after this Decree enters into force.
Article 3 (Transitional Measures concerning Change in Standard Market Price of Long-Term Private Rental Housing, etc. to Which Special Taxation on Capital Gains Applies)
Notwithstanding the amended provisions of Article 92-2 (2) 1-13 (c), the previous provisions shall apply to the standard market price which is the requirement for special taxation where long-term private rental housing unit, etc. is transferred before this Decree enters into force.
ADDENDA <Presidential Decree No. 32881, Aug. 23, 2022>
Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation.
Articles 2 through 4 Omitted.
ADDENDA <Presidential Decree No. 32965, Oct. 27, 2022>
Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation.
Article 2 (Applicability to Flexible Interest Rates on Interest and Capital Gains on State Bonds and Currency Stabilization Securities of Foreign Corporations)
The amended provisions of Article 137-2 shall apply where interest is paid, or State bonds or currency stabilization securities are transferred, from October 17, 2022 to December 31, 2022.
ADDENDUM <Presidential Decree No. 33210, Dec. 31, 2022>
This Decree shall enter into force on January 1, 2023.
ADDENDA <Presidential Decree No. 33225, Jan. 10, 2023>
Article 1 (Enforcement Date)
This Decree shall enter into force on January 12, 2023.
Articles 2 through 11 Omitted.
ADDENDA <Presidential Decree No. 33265, February 28, 2023>
Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation: Provided, That the amended provisions of the following subparagraphs shall enter into force on the date specified in the relevant subparagraph:
| 1. | The amended provisions of Article 2 (5) through (8), Article 3-2 (1) 1, subparagraph 9 of Article 11, subparagraph 16 of Article 19, Articles 40 through 42, Article 43 (8), Article 44 (6), Article 48 (1) 2 (a), Article 78 (2) 1 (c), Article 91-3 (3) 2, Article 91-5 (4), Article 120 (11), Article 120-12, Article 120-13 (1), Article 120-17 (4), and Article 120-21: January 1, 2024; |
| 2. | The amended provisions of Articles 80-2 (5) 1 and 82-2 (8) 1: March 1, 2023; |
| 3. | The amended provisions of Article 94-2 of the Enforcement Decree of the Corporate Tax Act amended by Presidential Decree No. 32418; the amended provisions of Articles 111 (2) through (4), 113 (4) and (9), and 115 (2) and (6); and the amended provisions of Article 131-3 (1) of the Enforcement Decree of the Corporate Tax Act, amended by Presidential Decree No. 31443: January 1, 2025; |
| 4. | The amended provisions of Article 164-2: July 1, 2023. |
Article 2 (Applicability to Scope of Profit-Making Business)
The amended provisions of Article 3 (1) 9 shall apply to business years beginning after January 1, 2023.
Article 3 (Applicability to Calculation of Transfer Amount of Treasury Stocks)
The amended provisions of the latter part of subparagraph 2-2 of Article 11 shall apply to transferring stocks after this Decree enters into force.
Article 4 (Applicability to Taxation on Insurance Companies, Including Scope of Earnings)
The amended provisions of subparagraph 10 of Article 11, subparagraph 23 of Article 19, and Articles 70 (6) and 76 (2) shall apply to business years beginning after January 1, 2023: Provided, That in cases of insurance companies that apply the International Financial Reporting Standards for Insurance Contracts pursuant to Article 42-3 (1) of the Act for the business year in which December 31, 2022 falls, and accumulates the surrender value reserves pursuant to Article 32 of the Act, the foregoing shall apply when a tax base is reported after January 1, 2023.
Article 5 (Applicability to Inclusion in Deductible Expenses of Bad Debts of Indemnification Claims Arising from Debt Guarantees)
The amended provisions of Article 19-2 (6) 6 and 7 shall also apply to indemnification claims arising from debt guarantees before this Decree enters into force that become uncollectible after this Decree enters into force.
Article 6 (Applicability to Reporting Fulfillment of Obligation by Public Service Corporation)
The amended provisions of Article 39 (6) shall also apply where the obligation to report arises before this Decree enters into force.
Article 7 (Applicability to Business Year to Which Profits and Losses Are Attributed)
The amended provisions of Article 69 (2) shall apply to business years beginning after January 1, 2023.
Article 8 (Applicability to Attachments When Applying for Income Deduction for Special Purpose Company for Asset Securitization)
The amended provisions of the main clause of Article 86-3 (9) shall apply where an application for income deduction is filed after this Decree enters into force.
Article 9 (Applicability to Changes to Requirements for Foreign Subsidiaries, etc.)
| (1) | The amended provisions of Article 94 (9) (limited to the part pertaining to ex-dividend dates) and (10) shall apply where dividends are received after January 1, 2023. |
| (2) | Notwithstanding the amended provisions of Article 94 (9) and (10), the previous provisions shall apply to the requirements for foreign subsidiaries (limited to the part relating to the ex-dividend dates) and foreign second-tier subsidiaries in respect of dividends received before January 1, 2023. |
Article 10 (Applicability to Inclusion in Deductible Expenses of Foreign Corporate Taxes)
| (1) | The amended provisions of Article 94 (15) shall apply to foreign corporate taxes on domestic source income accruing after January 1, 2023. |
| (2) | Notwithstanding the amended provisions of Article 94 (15), the previous provisions shall apply to inclusion in deductible expenses of foreign corporate taxes on domestic source income accruing before January 1, 2023. |
Article 11 (Applicability to Calculation of Individually Allotted Amount of Consolidated Income)
The amended provisions of Article 120-17 (4) shall enter into force to business years beginning after January 1, 2024.
Article 12 (Applicability to Requirements for Foreign Investment Scheme Equivalent to Foreign Public Investment Scheme)
The amended provisions of Article 132-5 (1) shall apply where interest is paid or State bonds are transferred after January 1, 2023.
Article 13 (Transitional Measures concerning Corporate Taxes on Trust Income)
Notwithstanding the amended provisions of Article 3-2 (2), the previous provisions shall apply to income that reverts to trust property before this Decree enters into force.
ADDENDA <Presidential Decree No. 33621, Jul. 7, 2023>
Article 1 (Enforcement Date)
This Decree shall enter into force on July 10, 2023.
Articles 2 through 14 Omitted.