| (1) | Where any foreign source income is included in global income or retirement income of a resident, if he/she has paid or is to pay the amount of foreign income tax (hereafter referred to as “amount of foreign income tax” in this Article) on such foreign source income in a foreign country, the tax amount for such foreign source income may be deducted from the amount of the calculated tax on global income or on retirement income for the relevant taxable period, up to the amount calculated according to the following calculation formula (hereafter referred to as “credit limit amount” in this Article): <Amended on Dec. 29, 2020> |
Credit limit amount = A × B/C
A: Amount of the calculated tax on global income or on retirement income for the relevant taxable period, which is calculated pursuant to Article 55
B: Foreign source income (excluding the amount calculated by multiplying foreign source income subject to tax reduction or exemption by the rate of tax reduction or exemption where the foreign source income is subject to tax reduction or exemption pursuant to the Restriction of Special Taxation Act or other Act) C: Global income amount or retirement income amount for the relevant taxable period
| (2) | Where the foreign income tax paid or payable to a foreign government, when applying paragraph (1) (applicable only where the amount of foreign income is deducted from the calculated tax on global income), exceeds the credit limit amount for the relevant taxable period, such excess may be carried forward to the taxable period ending within 10 years from the starting date of the next taxable period of the relevant taxable period (hereafter referred to as “carryforward deduction period” in this Article) and deducted up to the credit limit amount of the carryforward deduction period: Provided, That if the amount of foreign income tax paid or payable to a foreign government is not deducted within the carryforward deduction period, the amount of foreign income tax not so deducted may be included in necessary expenses for the relevant taxable period on which the day following the end of the carryforward deduction period falls, notwithstanding Article 33 (1) 1. <Amended by Act No. 11611, Jan. 1, 2013; Act No. 16104, Dec. 31, 2018; Dec. 29, 2020; Dec. 31, 2022> |
| (3) | The amount equivalent to the tax on the foreign source income of a resident which is exempted or reduced by the other country to a tax treaty shall be deemed the amount of foreign income tax subject to tax credit pursuant to paragraph (1), within the limit prescribed by such tax treaty. <Amended on Dec. 29, 2020> |
| (4) | Where dividend of profits or a distribution of a portion of corporate earnings from a foreign corporation (hereafter referred to as "amount of dividend revenue" in this paragraph) is included in a resident's global income or retirement income, and conditions prescribed by Presidential Decree are satisfied, for example, the tax liability on income of a relevant foreign corporation is borne by a resident investor, not by the relevant foreign corporation, the amount, computed as prescribed by Presidential Decree corresponding to the amount of dividend revenue, among foreign income tax imposed on a resident investor in relation to income of the relevant foreign corporation, shall be deemed a foreign income tax subject to tax credit under paragraph (1). <Newly Inserted by Act No. 10408, Dec. 27, 2010; Dec. 29, 2020> |
| (5) | Necessary matters concerning the method of calculating foreign source income, tax credit or inclusion in necessary expenses pursuant to paragraphs (1) through (4) shall be prescribed by Presidential Decree. <Amended by Act No. 10408, Dec. 27, 2010; Act No. 11611, Jan. 1, 2013> |
[This Article Wholly Amended by Act No. 9897, Dec. 31, 2009]