The domestic source income of a nonresident shall be classified as follows: <Amended by Act No. 5031, Dec. 29, 1995; Act No. 5191, Dec. 30, 1996; Act No. 5580, Dec. 28, 1998; Act No. 6292, Dec. 29, 2000; Act No. 6557, Dec. 31, 2001>
| 1. | The interest as prescribed in Article 16 (1) (excluding the income as prescribed in subparagraph 8 of the same paragraph), interest of other loans and the profits accruing from the trust as provided for in the following Items: Provided, That any interest of a loan borrowed directly by an overseas business place of a resident or domestic corporation, on behalf of such overseas business place, shall be excluded: |
| (a) | Income received from the State, local government, resident, domestic corporation, the domestic business place of a foreign corporation as prescribed in Article 94 of the Corporate Tax Act, or from the domestic business place of the nonresident as prescribed in Article 120; and |
| (b) | Income received from a foreign corporation or nonresident, which is counted in the loss or necessary expenses in calculation of the income amount of its domestic business place, in substantial connection with such domestic business place of the foreign corporation or nonresident; |
| 3. | Incomes accruing from a transfer, lease or other operation of any real estate in Korea or the right to such real estate, the right to mining, mining concession, exploitation and use of groundwater, or the right to take the earth, sand and stones, which is acquired in Korea, or incomes as prescribed in Article 20-2 (1) 1: Provided, That the transfer income as prescribed in subparagraph 9 shall be excluded; |
| 4. | Incomes accruing from a lease of any vessel, aircraft or registered motor vehicles or construction machines, to a resident, domestic corporation, or domestic business place of a foreign corporation as prescribed in Article 94 of the Corporate Tax Act, or a domestic business place of a nonresident as prescribed in Article 120; |
| 5. | Incomes accruing from any business conducted by nonresidents (including incomes taxable as business incomes accruing from domestic sources according to the tax treaty), and as prescribed by the Presidential Decree: Provided, That the incomes falling under subparagraph 6 shall be excluded; |
| 6. | Incomes accruing from providing in Korea such personal services as prescribed by the Presidential Decree, or making another person use those services; |
| 7. | Wages received in consideration of any service furnished in Korea and such other service as prescribed by the Presidential Decree; |
| 8. | Retirement allowances received in consideration of any service furnished in Korea, and as prescribed by the Presidential Decree; |
| 9. | Transfer income as prescribed in Article 94 (excluding the income prescribed in paragraph (1) 3 of the same Article): Provided, That it shall be limited to the cases where the assets yielding such income are located in Korea; |
| 10. | Forest incomes as prescribed in Article 23 (1): Provided, That it shall be limited to the case where the assets earning such incomes are located in Korea; |
| 11. | In case where the assets, information or right falling under any of the following items, is used in Korea, or the consideration thereof is paid in Korea, such consideration and incomes accruing from a transfer of such assets, information or right: Provided, That in case where a tax treaty prescribes whether the income concerned is an income from domestic sources or not should be decided based upon the place of its use, regardless of whether being paid in Korea or not, the consideration of the assets, information or right used overseas shall not be considered as an income as an income from domestic source: |
| (a) | Copyright, patent right, trademark right, design, model or drawings of any scientific or artistic works (including films of motion pictures), or secret formula or process, films and tapes for radio and television broadcast, and similar assets or rights; |
| (b) | Information or know-how on industrial, commercial or scientific knowledge and experience; and |
| (c) | Industrial, commercial or scientific machines, equipment and apparatuses, and other tools and instruments as prescribed by the Presidential Decree; |
| 12. | Income as provided under the Presidential Decree accruing from the transfer of stocks, equity investment share, or other securities falling under the following items (excluding other assets under Article 94 (1) 4): |
| (a) | The stocks, equity investment shares, or other securities issued by a domestic corporation; and |
| (b) | The stock or equity investment shares issued by a foreign corporation (limited to those that are listed or registered in Korea Securities Exchange, or in the Association brokerage market under the Securities and Exchange Act) and other securities issued by a domestic business place of a foreign corporation; and |
| 13. | Income falling under any of the following items among income other than those referred to in subparagraphs 1 through 12: |
| (a) | Insurance money, indemnity, or compensation for damages received in connection with real property or other assets located in Korea and with trade or business operated in Korea; |
| (b) | Penalty or indemnity paid in Korea as prescribed in the Presidential Decree; |
| (c) | Prize money, prize contest or reward, or other similar income paid in Korea; |
| (d) | Income from buried or underground deposits discovered in Korea; |
| (e) | Income from transfer of a license, permit, or other rights set up by similar administrative dispositions or income accruing from the transfer of assets located in Korea other than real properties; |
| (f) | Money and other valuables obtained by winning in a lottery, gift coupon or other drawing tickets issued in Korea, or refund received by the purchasers of tickets of winning horse and winner voting tickets issued in Korea; |
| (g) | Prize money or valuables received by participating in acts using slot machines, etc.; |
| (i) | Other than those falling under items (a) through (h), income received from a trade or business operated in Korea or income received for furnishing personal services in Korea, or for economic benefits provided in connection with assets located in Korea (excluding the excess amount where the redeemed amount of foreign currency denominated bonds issued by the State or financial institutions established under special Acts exceeds their issued prices), or such other similar income as prescribed in the Presidential Decree. |