2-column view
CORPORATE TAX ACT
| CORPORATE TAX ACT | No.21217 | 20260101 |
| CORPORATE TAX ACT | No.21065 | 20251001 |
| CORPORATE TAX ACT | No.20775 | 20250314 |
| CORPORATE TAX ACT | No.20613 | 20250101 |
| CORPORATE TAX ACT | No.19930 | 20240101 |
| CORPORATE TAX ACT | No.19193 | 20230701 |
| CORPORATE TAX ACT | No.17924 | 20210316 |
| CORPORATE TAX ACT | No.17799 | 20211230 |
| CORPORATE TAX ACT | No.17758 | 20210101 |
| CORPORATE TAX ACT | No.17652 | 20210101 |
| CORPORATE TAX ACT | No.17476 | 20200101 |
| CORPORATE TAX ACT | No.16833 | 20200101 |
| CORPORATE TAX ACT | No.16096 | 20190101 |
| CORPORATE TAX ACT | No.16008 | 20190101 |
| CORPORATE TAX ACT | No.15222 | 20180101 |
| CORPORATE TAX ACT | No.15022 | 20181101 |
| CORPORATE TAX ACT | No.14386 | 20170101 |
| CORPORATE TAX ACT | No.13555 | 20160101 |
| CORPORATE TAX ACT | No.13550 | 20151231 |
| CORPORATE TAX ACT | No.13499 | 20151229 |
| CORPORATE TAX ACT | No.13448 | 20151025 |
| CORPORATE TAX ACT | No.13426 | 20160125 |
| CORPORATE TAX ACT | No.13230 | 20150928 |
| CORPORATE TAX ACT | No.12850 | 20150101 |
| CORPORATE TAX ACT | No.12420 | 20150319 |
| CORPORATE TAX ACT | No.12166 | 20140101 |
| CORPORATE TAX ACT | No.12153 | 20140101 |
| CORPORATE TAX ACT | No.11873 | 20130701 |
| CORPORATE TAX ACT | No.11607 | 20130101 |
| CORPORATE TAX ACT | No.11603 | 20130101 |
| CORPORATE TAX ACT | No.11128 | 20120701 |
| CORPORATE TAX ACT | No.10907 | 20120126 |
| CORPORATE TAX ACT | No.10898 | 20111026 |
| CORPORATE TAX ACT | No.10423 | 20110101 |
| CORPORATE TAX ACT | No.10361 | 20101209 |
| CORPORATE TAX ACT | No.10337 | 20100901 |
| CORPORATE TAX ACT | No.10221 | 20110101 |
| CORPORATE TAX ACT | No.9924 | 20100101 |
| CORPORATE TAX ACT | No.9898 | 20100101 |
| CORPORATE TAX ACT | No.9763 | 20100310 |
| CORPORATE TAX ACT | No.9673 | 20090521 |
| CORPORATE TAX ACT | No.9401 | 20090731 |
| CORPORATE TAX ACT | No.9346 | 20190101 |
| CORPORATE TAX ACT | No.9267 | 20090101 |
| CORPORATE TAX ACT | No.8852 | 20080229 |
| CORPORATE TAX ACT | No.8141 | 20070101 |
| CORPORATE TAX ACT | No.7908 | 20060925 |
| CORPORATE TAX ACT | No.7838 | 20060101 |
| CORPORATE TAX ACT | No.7317 | 20050101 |
| CORPORATE TAX ACT | No.7289 | 20050701 |
| CORPORATE TAX ACT | No.7117 | 20040129 |
| CORPORATE TAX ACT | No.7005 | 20040101 |
| CORPORATE TAX ACT | No.6852 | 20030701 |
| CORPORATE TAX ACT | No.6558 | 20020101 |
| CORPORATE TAX ACT | No.6293 | 20010101 |
| CORPORATE TAX ACT | No.6259 | 20000203 |
| CORPORATE TAX ACT | No.6047 | 20000101 |
| CORPORATE TAX ACT | No.5581 | 19990101 |
| CORPORATE TAX ACT | No.5553 | 19981001 |
| CORPORATE TAX ACT | No.5533 | 19980410 |
| CORPORATE TAX ACT | No.5525 | 19980224 |
| CORPORATE TAX ACT | No.5503 | 19980401 |
| CORPORATE TAX ACT | No.5418 | 19980101 |
| CORPORATE TAX ACT | No.5374 | 19980101 |
| CORPORATE TAX ACT | No.5193 | 19970101 |
| CORPORATE TAX ACT | No.5192 | 19970101 |
| CORPORATE TAX ACT | No.5109 | 19960101 |
| CORPORATE TAX ACT | No.5108 | 19960630 |
| CORPORATE TAX ACT | No.5033 | 19960101 |
| CORPORATE TAX ACT | No.4804 | 19950101 |
| CORPORATE TAX ACT | No.4803 | 19960101 |
| CORPORATE TAX ACT | No.4743 | 19940701 |
| CORPORATE TAX ACT | No.4664 | 19940101 |
| CORPORATE TAX ACT | No.4561 | 19940101 |
| CORPORATE TAX ACT | No.4282 | 19910101 |
| CORPORATE TAX ACT | No.4165 | 19900101 |
| CORPORATE TAX ACT | No.4120 | 19890701 |
| CORPORATE TAX ACT | No.4020 | 19890101 |
| CORPORATE TAX ACT | No.3794 | 19860101 |
| CORPORATE TAX ACT | No.3577 | 19830101 |
| CORPORATE TAX ACT | No.3473 | 19820101 |
| CORPORATE TAX ACT | No.3270 | 19810101 |
| CORPORATE TAX ACT | No.3200 | 19800101 |
| CORPORATE TAX ACT | No.3141 | 19781205 |
| CORPORATE TAX ACT | No.3099 | 19781205 |
| CORPORATE TAX ACT | No.2932 | 19770701 |
| CORPORATE TAX ACT | No.2931 | 19770101 |
| CORPORATE TAX ACT | No.2792 | 19760101 |
| CORPORATE TAX ACT | No.2686 | 19750101 |
| CORPORATE TAX ACT | No.2566 | 19730303 |
| CORPORATE TAX ACT | No.2521 | 19730216 |
| CORPORATE TAX ACT | No.2316 | 19720101 |
| CORPORATE TAX ACT | No.2154 | 19700101 |
| CORPORATE TAX ACT | No.2130 | 19680804 |
| CORPORATE TAX ACT | No.2125 | 19690731 |
| CORPORATE TAX ACT | No.2050 | 19690101 |
| CORPORATE TAX ACT | No.2047 | 19681122 |
| CORPORATE TAX ACT | No.1982 | 19680101 |
| CORPORATE TAX ACT | No.1964 | 19680101 |
| CORPORATE TAX ACT | No.1720 | 19660101 |
| CORPORATE TAX ACT | No.1673 | 19650101 |
| CORPORATE TAX ACT | No.1489 | 19640101 |
| CORPORATE TAX ACT | No.1186 | 19630101 |
| CORPORATE TAX ACT | No.823 | 19620101 |
| CORPORATE TAX ACT | No.695 | 19610824 |
| CORPORATE TAX ACT | No.571 | 19610101 |
| CORPORATE TAX ACT | No.505 | 19590101 |
| CORPORATE TAX ACT | No.414 | 19570101 |
| CORPORATE TAX ACT | No.320 | 19540331 |
| CORPORATE TAX ACT | No.263 | 19521214 |
| CORPORATE TAX ACT | No.257 | 19521105 |
| CORPORATE TAX ACT | No.200 | 19510607 |
| CORPORATE TAX ACT | No.199 | 19510607 |
| CORPORATE TAX ACT | No.161 | 19501201 |
| CORPORATE TAX ACT | No.62 | 19491107 |
CHAPTER I GENERAL PROVISIONS
| Article 1 (Purpose) |
The purpose of this Act is to impose taxes fairly, ensure the proper fulfillment of tax liability and contribute to facilitating collection of fiscal revenue, by prescribing the requisition and procedures for imposing corporate tax.
[This Article Added on Dec. 24, 2018]
[Previous Article 1 moved to Article 2 <Dec. 24, 2018>]
| Article 2 (Definition) |
The terms used in this Act are defined as follows: <Amended on Jan. 1, 2013; Dec. 24, 2018; Dec. 31, 2022>
| 1. | The term "domestic corporation" means a corporation with its headquarters, main office or actual business management place located in the Republic of Korea; |
| 2. | The term "non-profit Korean corporation" means any of the following corporations among Korean corporations: |
| (a) | A corporation incorporated pursuant to Article 32 of the Civil Act; |
| (b) | A corporation whose purpose is similar to that provided for in Article 32 of the Civil Act (excluding a corporation that may distribute profits to its stockholders, members, or investors, other than a cooperative corporation, etc. prescribed by Presidential Decree), which is incorporated pursuant to the Private School Act or other special Acts; |
| (c) | An organization deemed a corporation under Article 13 (4) of the Framework Act on National Taxes (hereinafter referred to as "organization deemed a corporation"); |
| 3. | The term "foreign corporation" means an organization that has its headquarters or main office in a foreign country in the form of a corporation that meets the standards prescribed by Presidential Decree (limited to such a corporation that does not have a place for actual management of its business in the Republic of Korea); |
| 4. | The term "non-profit foreign corporation" means a foreign government, foreign local government or non-profit foreign corporation (including an organization deemed a corporation) among foreign corporations; |
| 5. | The term "business year" means one fiscal period for the calculation of income of a corporation; |
| 6. | The term "consolidated tax return system" means a system by which two or more domestic corporations file a corporate tax return and pay corporate tax as a single unit that calculates the amount of tax based on a single tax base, as prescribed in Chapter II-3; |
| 7. | The term "consolidated corporation" means a corporation to which the consolidated tax return system applies; |
| 8. | The term "consolidated group" means all consolidated corporations; |
| 9. | The term "consolidated parent corporation" means a consolidated corporation that consolidates and controls another consolidated corporation of a consolidated group; |
| 10. | The term "consolidated subsidiary corporation" means a corporation consolidated and controlled by a consolidated parent corporation; |
| 10-2. | The term "consolidated control" means cases where a domestic corporation holds at least 90/100 of the total number of issued shares or the total amount of investment of another domestic corporation. In such cases, the holding ratio shall be calculated as follows: |
| (a) | Non-voting shares or investment shares shall be included; |
| (b) | Treasury stocks held under the Commercial Act or the Financial Investment Services and Capital Markets Act shall be excluded; |
| (c) | Up to 5/100 of the total number of issued stocks, as stocks acquired by workers through an employee stock ownership association referred to in the Framework Act on Labor Welfare and other stocks prescribed by Presidential Decree, shall be deemed to be held by the relevant corporation; |
| (d) | In cases prescribed by Presidential Decree, in which shares or investment shares of a domestic corporation are indirectly held through another domestic corporation, such shares or investment shares shall be aggregated, as prescribed by Presidential Decree;11. The term "consolidated business year" means one fiscal period for the calculation of income of a consolidated group; |
| 11. | The term "consolidated business year" means one fiscal period for which the income of a consolidated group is calculated; |
| 12. | The term "specially related person" means a person who has an economic relationship with a corporation or a relationship prescribed by Presidential Decree, such as a management control relationship. In such cases, the person himself or herself is also regarded as a specially related person of that person; |
| 13. | The term "merging corporation" means a corporation incorporated following a merger or existing after a merger; |
| 14. | "Merged corporation" means a corporation which ceases to exist following a merger; |
| 15. | The term "divided corporation" means a corporation that is divided according to division (including divisional mergers; hereinafter the same shall apply); |
| 16. | The term "corporation established through division" means a corporation incorporated following division. |
[This Article Wholly Amended on Dec. 30, 2010]
[Moved from Article 1; previous Article 2 moved to Article 3 <Dec. 24, 2018>]
| Article 3 (Taxpayer) |
| (1) | Any of the following corporations are liable to pay corporate tax on any income pursuant to this Act: <Amended on Dec. 30, 2010> |
| 1. | A domestic corporation; |
| 2. | A foreign corporation which has income from a domestic source. |
| (2) | The State and local governments (including local government associations; hereinafter the same shall apply) among domestic corporations are not liable to pay corporate tax on any income. <Amended on Dec. 24, 2018> |
| (3) | Consolidated corporations are jointly liable to pay corporate tax (including corporate tax on capital gains from the transfer of land, etc. referred to in Article 55-2 by each consolidated corporation and corporate tax computed by applying special tax provisions for promoting investment and collaborative cooperation under Article 100-32 of the Act on Restriction on Special Cases concerning Taxation) on income for each consolidated business year under Article 76-14 (1). <Amended on Dec. 30, 2010; Dec. 23, 2014; Dec. 19, 2017; Dec. 24, 2018> |
| (4) | Any person who withholds corporate tax under this Act is liable to pay the relevant corporate tax. <Amended on Dec. 24, 2018> |
[Title Amended on Dec. 24, 2018]
[Moved from Article 2; previous Article 3 moved to Article 4 <Dec. 24, 2018>]
| Article 4 (Scope of taxable income) |
| (1) | Corporate tax shall be imposed on the following income of a domestic corporation; provided, it shall be limited to the income specified in subparagraphs 1 and 3 in cases of non-profit domestic corporations: |
| 1. | Income for each business year; |
| 2. | Liquidation income; |
| 3. | Capital gains from the transfer of land, etc. referred to in Article 55-2. |
| (2) | In applying paragraph (1) 1, the income of a consolidated corporation for each business year means the income for each consolidated business year referred to in Article 76-14 (1). |
| (3) | In applying paragraph (1) 1, the income of a non-profit domestic corporation for each business year shall be limited to the income accruing from any of the following business or revenues (hereinafter referred to as "profit-making business"): |
| 1. | Business specified by Presidential Decree among business engaging in manufacturing, construction, wholesale, retail sales, repair of consumer products, real estate, rental, or business services; |
| 2. | Interest income as prescribed in Article 16 (1) of the Income Tax Act; |
| 3. | Dividend income as prescribed in Article 17 (1) of the Income Tax Act; |
| 4. | Revenues accruing from the transfer of stocks, preemptive right to new stocks, or investment shares; |
| 5. | Revenues accruing from the disposal of tangible and intangible assets; provided, the revenues specified by Presidential Decree, among revenues accruing from the disposal of assets directly used for essential business activities, shall be excluded; |
| 6. | Revenues accruing from the transfer of assets prescribed in Article 94 (1) 2 and 4 of the Income Tax Act; |
| 7. | Revenues prescribed by Presidential Decree, which accrues from continuing activities be paid, other than those referred to in subparagraphs 1 through 6. |
| (4) | Corporate tax shall be imposed on the following income of a foreign corporation: |
| 1. | Income accrued from domestic sources for each business year; |
| 2. | Capital gains from the transfer of land, etc. referred to in Article 95-2. |
| (5) | In applying paragraph (4) 1, income accrued from domestic sources of a non-profit foreign corporation for each business year shall be limited to the income accruing from profit-making business. |
[This Article Wholly Amended on Dec. 24, 2018]
[Moved from Article 3, Previous Article 4 is Deleted. <Dec. 24, 2018>]
| Article 5 (Trust income) |
| (1) | With regard to income that reverts to trust property, the beneficiary to receive the profits of the trust shall be deemed the owner of the trust property for the purposes of this Act. <Amended on Jan. 22, 2020> |
| (2) | Notwithstanding paragraph (1), in the case of any of the following trusts that meets the requirements prescribed by Presidential Decree (excluding an investment trust referred to in Article 9 (18) 1 of the Financial Investment Services and Capital Markets Act and a trust for which beneficiary certificates are issued under Article 17 (1) 5-3 of the Income Tax Act), the corporate tax on the income that reverts to the trust property shall be paid by the trustee of such trust (limited to a domestic corporation or a resident defined in the Income Tax Act (hereinafter referred to as "resident")). In such cases, each trust property shall be deemed a domestic corporation: <Newly Inserted on Dec. 22, 2020; Dec. 31, 2023; Dec. 31, 2024> |
| 1. | A purpose trust referred to in the proviso, with the exception of the subparagraphs, of Article 3 (1) of the Trust Act; |
| 2. | A trust issuing beneficiary certificates referred to in Article 78 (2) of the Trust Act; |
| 3. | A limited liability trust referred to in Article 114 (1) of the Trust Act; |
| 4. | Other trusts similar to those prescribed in subparagraphs 1 through 3, which are prescribed by Presidential Decree. |
| (3) | Notwithstanding paragraphs (1) and (2), in the case of a trust that meets the requirements prescribed by the Presidential Decree, such as the trustor having substantial control over the trust property, the trustor of the trust shall be liable to pay corporate income tax on the income attributable to the trust property. <Added on Dec. 22, 2020; Dec. 31, 2023> |
| (4) | No revenues and expenditures from trust property of a corporation regulated by the Financial Investment Services and Capital Markets Act (excluding special accounts of an insurance company referred to in Article 251 (1) of the same Act; hereinafter the same shall apply) shall be deemed the revenues and expenditures that revert to the corporation. <Amended on Dec. 22, 2020> |
[This Article Wholly Amended on Dec. 30, 2010]
| Article 6 (Business year) |
| (1) | A business year shall be one fiscal period prescribed by statutes or a corporation's articles of incorporation; provided, this period shall not exceed one year. |
| (2) | A domestic corporation, the business year of which is not prescribed by statutes or its articles of incorporation shall separately determine its business year and report it to the head of the tax office having jurisdiction over the place of tax payment (the head of the tax office as prescribed in Article 12; hereinafter the same shall apply), along with a report on incorporation referred to in Article 109 (1) or the registration of business referred to in Article 111. |
| (3) | A foreign corporation with a place of business in the Republic of Korea as prescribed in Article 94 (hereinafter referred to as "domestic place of business"), the business year of which is not prescribed by the Acts and subordinate statutes or its articles of incorporation shall separately determine its business year and report it to the head of the tax office having jurisdiction over the place of tax payment, along with a report on the establishment of a domestic place of business referred to in Article 109 (2) or the registration of business referred to in Article 111. |
| (4) | A foreign corporation with no domestic place of business which earns income referred to in subparagraph 3 or 7 of Article 93 shall separately determine its business year and report it to the head of the tax office having jurisdiction over the place of tax payment within one month from the date such income is first earned. |
| (5) | Where a corporation liable to file a report under paragraphs (2) through (4) fails to do so, the business year of such corporation shall be from January 1 to December 31 of each year. |
| (6) | In applying paragraphs (1) through (5), matters necessary for determining the start date of a corporation's first business year shall be prescribed by Presidential Decree. |
[This Article Wholly Amended on Dec. 30, 2010]
| Article 7 (Change of business year) |
| (1) | A corporation which intends to change its business year shall report thereon to the head of the tax office having jurisdiction over the place of tax payment within three months from the end date of the immediately preceding business year, as prescribed by Presidential Decree. |
| (2) | Where a corporation fails to file a report by the deadline specified in paragraph (1), the corporation's business year shall be deemed unchanged; provided, for a corporation, the business year of which is determined by statutes, its business year shall be deemed changed at the time the amended provisions concerning the change of the business year in such statutes have effected, although no report is filed under paragraph (1). |
| (3) | Where a business year is changed pursuant to paragraph (1) or the proviso to paragraph (2), the period from the start date of the previous business year to the date preceding the start date of the changed business year shall be deemed one business year; provided, where such period does not exceed one month, it shall be included in the changed business year. |
[This Article Wholly Amended on Dec. 30, 2010]
| Article 8 (Constructive business years) |
| (1) | Where a domestic corporation is dissolved during a business year (excluding a dissolution due to a merger or division, and restructuring of corporation prescribed in Article 78), any of the following periods shall be deemed one business year: <Amended on Dec. 24, 2018> |
| 1. | The period from the start date of the business year until the registration date of dissolution (referring to the registration date of bankruptcy where a corporation is dissolved on the grounds of bankruptcy and the date of dissolution for any organization deemed a corporation; hereinafter the same shall apply); |
| 2. | The period from the day following the registration date of dissolution until the end date of the relevant business year. |
| (2) | Where a domestic corporation is dissolved during a business year due to a merger or division, the period from the start date of the business year until the registration date of the merger or division shall be deemed one business year of that dissolved domestic corporation. <Amended on Dec. 24, 2018> |
| (3) | Where a domestic corporation undergoes restructuring pursuant to any subparagraph of Article 78 during a business year, it shall be deemed that the business year before the restructuring of corporation continues. <Added on Dec. 24, 2018> |
| (4) | The business year of a domestic corporation in the course of liquidation shall be deemed one business year by the following classifications: <Amended on Dec. 24, 2018> |
| 1. | Where the value of residual assets is determined during the business year: The period from the start date of the business year until the date the value of residual assets is determined; |
| 2. | Where the domestic corporation continues its business pursuant to Article 229, 285, 287-40, 519, or 610 of the Commercial Act: The following periods: |
| (a) | The period from the start date of the business year until the registration date of continuation (referring to the date of actual continuation of business where continuation is not registered; hereinafter the same shall apply); |
| (b) | The period from the day following the registration date of continuation until the end date of the business year. |
| (5) | Where a domestic corporation is subject to a consolidated tax return system during a business year, the period from the start date of the business year to the date preceding the start date of the consolidated business year shall be deemed one business year. <Amended on Dec. 24, 2018> |
| (6) | Where a foreign corporation with a domestic place of business ceases to have the domestic place of business during a business year, the period from the start date of the business year until the date it ceases to have the place of business shall be deemed one business year; provided, the same shall not apply where it continues to have another place of business in the Republic of Korea. <Amended on Dec. 24, 2018> |
| (7) | Where a foreign corporation with no domestic place of business reports to the head of the tax office having jurisdiction over the place of tax payment the fact that it no longer has the domestic source income accrued from the real estate referred to in subparagraph 3 of Article 93 or the domestic source income accrued from transfer of real estate, etc. referred to in subparagraph 7 of the same Article, the period from the start date of the business year to the filing date of such report shall be deemed one business year. <Amended on Dec. 24, 2018> |
[This Article Wholly Amended on Dec. 30, 2010]
| Article 9 (Place of tax payment) |
| (1) | The place where a domestic corporation shall pay its corporate tax shall be the place where its registered headquarters or main office is located (the location of the actual business management place where no headquarters or main office is located in the Republic of Korea); provided, for an organization deemed a corporation, it shall be the place prescribed by Presidential Decree. |
| (2) | The place where a foreign corporation shall pay its corporate tax shall be the place where its domestic place of business is located; provided, for a foreign corporation with no domestic place of business which earns income referred to in subparagraph 3 or 7 of Article 93, it shall be the location of each of its assets. |
| (3) | Where a foreign corporation falling under paragraph (2) has at least two domestic places of business, the location of the main place of business prescribed by Presidential Decree shall be the place of tax payment, and where a corporation has at least two assets, the place prescribed by Presidential Decree shall be the place of its tax payment. |
| (4) | The place of tax payment where corporate tax is withheld under Article 73, 73-2, 98, 98-3, 98-5, 98-6, or 98-8 shall be the location of the relevant person liable for withholding prescribed by Presidential Decree; provided, where a person liable for withholding referred to in Article 98 or 98-3 has no domestic place of business, it shall be the place prescribed by Presidential Decree. <Amended on Dec. 31, 2011; Dec. 24, 2018; Dec. 31, 2023> |
[This Article Wholly Amended on Dec. 30, 2010]
| Article 10 (Designation of place for tax payment) |
| (1) | Where the commissioner of the competent regional tax office (referring to the commissioner of a regional tax office prescribed in Article 12; hereinafter the same shall apply) or the Commissioner of the National Tax Service deems that the place of tax payment determined under Article 9 is inappropriate for a corporation in circumstances prescribed by Presidential Decree, he or she may designate a place of tax payment, notwithstanding Article 9. |
| (2) | Where the commissioner of the competent regional tax office or the Commissioner of the National Tax Service designates a place of tax payment under paragraph (1), he or she shall give a notice to the relevant corporation, as prescribed by Presidential Decree. |
[This Article Wholly Amended on Dec. 30, 2010]
| Article 11 (Alteration of place of tax payment) |
| (1) | Where a corporation's place of tax payment is altered, the corporation shall report such fact to the head of the tax office having jurisdiction over the new place of tax payment within 15 days from the date of the alteration, as prescribed by Presidential Decree. In such cases, where a corporation of which the place of tax payment has been altered has reported the alteration under Article 8 of the Value-Added Tax Act, the alteration of the place of tax payment shall be deemed reported. <Amended on Jun. 7, 2013> |
| (2) | Where no report is filed under paragraph (1), the former place of tax payment shall be a corporation's place of tax payment. |
| (3) | Where a foreign corporation ceases to have a domestic place of tax payment falling under Article 9 (2), it shall report such fact to the head of the tax office having jurisdiction over the place of tax payment. |
[This Article Wholly Amended on Dec. 30, 2010]
| Article 12 (Jurisdiction of taxation) |
Corporate tax shall be imposed by the head of the tax office having jurisdiction over the place of tax payment prescribed in Articles 9 through 11 or the commissioner of a regional tax office.
[This Article Wholly Amended on Dec. 30, 2010]
CHAPTER II CORPORATE TAX ON INCOME OF DOMESTIC CORPORATION FOR EACH BUSINESS YEAR
SECTION 1 Tax Base and Calculation Thereof
Sub-Section 1 Common Provisions
| Article 13 (Tax base) |
| (1) | The corporate tax base on the income of a domestic corporation for each business year shall be calculated by deducting the following amounts and income in the following order from the income earned for each business year; provided, the maximum deductible amount under subparagraph 1 shall be 80/100 of the income for each business year (but 100/100 for a corporation prescribed by Presidential Decree, including a small and medium enterprises referred to in Article 6 (1) of the Act on Restriction on Special Cases concerning Taxation (hereinafter referred to as "small and medium enterprises") and enterprises performing a rehabilitation plan: <Amended on Dec. 22, 2020; Dec. 31, 2022> |
| 1. | The amount that satisfied each of the following requirements among the carried forward losses pursuant to Article 14 (3): |
| (a) | Losses incurred during each business year starting within 15 years before the start date of the current business year; |
| (b) | Losses included in the tax base reported under Article 60 or determined or corrected under Article 66 or reported for revision under Article 45 of the Framework Act on National Taxes; |
| 2. | Non-taxable income provided for in this Act and other statutes; |
| 3. | Income deductions prescribed in this Act and other statutes. |
| (2) | In calculating the tax base in paragraph (1), the following amount shall not be carried over for deduction to the subsequent business years following the relevant business year: |
| 1. | Non-taxable income and income deductions that are not deducted when calculating the tax base of the relevant business year; |
| 2. | Income deductions that are not deducted by applying the minimum tax pursuant to Article 132 of the Act on Restriction on Special Cases concerning Taxation. |
[This Article Wholly Amended on Dec. 24, 2018]
| Article 14 (Income for each business year) |
| (1) | The income of a domestic corporation for each business year shall be the amount calculated by subtracting the total amount of deductible expenses incurred during the relevant business year from the total amount of gross income accrued during the relevant business year. <Amended on Dec. 24, 2018> |
| (2) | Where the total amount of deductible expenses incurred during a business year exceeds the total amount of gross income accrued during the business year, such excess shall be the losses of a domestic corporation for each business year. |
| (3) | Losses carried forward of a domestic corporation are the losses of each business year incurred before the start date of each business year and those that are not deducted when calculating the tax base of the subsequent business years. <Added on Dec. 24, 2018> |
[This Article Wholly Amended on Dec. 30, 2010]
Sub-Section 2 Calculation of Gross Income
| Article 15 (Scope of gross income) |
| (1) | The gross income shall be the amount of profits or income (hereinafter referred to as "earnings") generated by transactions which increase the net assets of a corporation, except for capital input or financing and what is provided in this Act. <Amended on Dec. 24, 2018> |
| (2) | The following amounts shall be deemed gross income: <Amended on Dec. 31, 2011; Dec. 24, 2018; Dec. 22, 2020> |
| 1. | Where securities are purchased from an individual who is a related party at the prices lower than the market prices referred to in Article 52 (2), the amount of the difference between such market prices and the relevant purchase prices; |
| 2. | The amount of foreign corporate tax referred to in Article 57 (4), calculated as prescribed by Presidential Decree and eligible for a tax credit pursuant to paragraph (1) of the same Article; |
| 3. | The amount of income distributed under Article 100-18 (1) of the Act on Restriction on Special Cases concerning Taxation. |
| (3) | Matters necessary for the scope and classification, etc. of earnings shall be prescribed by Presidential Decree. <Amended on Dec. 24, 2018> |
[This Article Wholly Amended on Dec. 30, 2010]
| Article 16 (Constructive dividends or distributions) |
| (1) | Any of the following amounts shall be deemed the amount of profit dividends or surpluses distributed from a corporation when calculating the amount of income for the business year of a domestic corporation which is a stockholder or investor (hereinafter referred to as "stockholder, etc.") of other corporation: <Amended on Dec. 31, 2011; Dec. 20, 2016; Dec. 24, 2018> |
| 1. | The sum of money acquired by a domestic corporation which is a stockholder, etc. through the retirement of stocks, reduction of capital, retirement or withdrawal of an employee, or reduction of investment and the value of other assets in excess of the amount necessary to acquire the relevant stocks or investment shares (hereinafter referred to as "stocks, etc."); |
| 2. | The value of stocks, etc., that a domestic corporation which is a stockholder, etc. acquires by transferring all or some of corporation's surplus to capital or financing; provided, the same shall not apply where any of the following amounts is transferred to capital: |
| (a) | An amount prescribed by Presidential Decree as the capital reserve referred to in Article 459 (1) of the Commercial Act; |
| (b) | The revaluation reserve prescribed in the Assets Revaluation Act (excluding an amount equivalent to any difference in the revaluation of land under Article 13 (1) 1 of the same Act); |
| 3. | Where the equity ratio of any domestic corporation which is a stockholder, etc. of a corporation, other than the corporation, increases because such corporation transfers its capital, as prescribed in the items of subparagraph 2 while holding treasury stocks and equity shares, the value of stocks, etc., equivalent to the equity ratio so increased; |
| 4. | The amount of money and the value of other assets acquired by a domestic corporation which is a stockholder, etc. of a dissolved corporation (including members of an organization deemed a corporation) through distribution of residual assets of the corporation in excess of the amount necessary for the acquisition of the relevant stocks, etc.; |
| 5. | The cost of a merger acquired by a domestic corporation which is a stockholder, etc. of a merged corporation, in excess of the amount necessary for the acquisition of the stocks, etc., of the merged corporation; |
| 6. | The costs of a division acquired by a domestic corporation which is a stockholder, etc. of a corporation established through division or the disappearing counterpart corporation to a division and merger, in excess of the amount necessary for the acquisition of the stocks of the divided corporation or disappearing counterpart corporation to a division and merger (limited to stocks reduced by retirement or other means where the divided corporation survives the division). |
| (2) | The cost of a merger and division in paragraph (1) 5, 6, Articles 44 and 46 shall be the following amounts: <Added on Dec. 24, 2018> |
| 1. | The cost of a merger: The sum of values of stocks, etc., of a merging corporation acquired through merger from the merging corporation (including a domestic corporation holding the total number of outstanding stocks or total investment amount of a merging corporation as at the registration date of the merger) and the values of money or other assets; |
| 2. | The cost of a division: The sum of values of stocks of a corporation newly established through division or the counterpart corporation to the division (including the domestic corporation that holds the total number of outstanding stocks of the counterpart corporation to the division and merger or the total amount of investment) acquired through division from a corporation newly established through division or the counterpart corporation to the division and the values of money or other assets. |
| (3) | In applying paragraph (1), matters necessary for the timing for the distribution of profit dividends or surpluses, the evaluation of the value of stocks, etc., and other matters, shall be prescribed by Presidential Decree. <Amended on Dec. 24, 2018> |
[This Article Wholly Amended on Dec. 30, 2010]
| Article 17 (Non-inclusion of gains from capital transactions in gross income) |
| (1) | None of the following amounts shall be included in the gross income for the purpose of calculating the amount of income of a domestic corporation for each business year: <Amended on Dec. 31, 2011; Jan. 1, 2013; Dec. 15, 2015; Dec. 24, 2018> |
| 1. | An amount exceeding the par value of stocks issued: Where stocks are issued in excess of the par value, the amount exceeding the par value of stocks issued (referring to the amount exceeding the amount counted as capital, out of the issue price, in cases of non-par value stocks); provided, where stocks, etc. are issued by converting debts into equity, the amount of such stocks issued in excess of the market price referred to in Article 52 (2) shall be excluded herefrom; |
| 2. | Marginal profits from an all-inclusive share swap: The amount exceeding the increased capital of a wholly-owning parent corporation, where the maximum limit of capital increase referred to in Article 360-7 of the Commercial Act exceeds the increased capital of the wholly-owning parent corporation as a result of an all-inclusive share swap referred to in Article 360-2 of the same Act; |
| 3. | Marginal profits from an all-inclusive share transfer: The amount exceeding the equity capital of a wholly-owning parent corporation newly incorporated, where the maximum limit of the equity increase referred to in Article 360-18 of the Commercial Act exceeds the equity capital of the wholly-owning parent corporation as a result of an all-inclusive share transfer referred to in Article 360-15 of the same Act; |
| 4. | Marginal profits from capital reduction: The amount exceeding the amount paid for the cancellation of stocks and the return of stock prices and the amount appropriated for compensation for losses exceeding the amount reduced; |
| 5. | Marginal profits from a merger: The amount exceeding the amount of debts to which the surviving corporation succeeds from the disappearing corporation and the increased amount of the equity capital of the surviving corporation or the equity capital of the corporation newly incorporated as a consequence of the merger, where the value of the assets to which the corporation surviving a merger pursuant to Article 174 of the Commercial Act succeeds from the disappearing corporation exceeds the amount of debts to which the surviving corporation succeeds from the disappearing corporation and the increased amount of the equity capital of the surviving corporation or the equity capital of the corporation newly incorporated as a consequence of the merger; provided, the amount identified as gross income under this Act shall be excluded, where the value of assets to which the surviving corporation succeeds from the disappearing corporation exceeds the amount of debts to which the surviving corporation succeeds from the disappearing corporation, the amount paid to stockholders of the disappearing corporation, and the value of stocks; |
| 6. | Marginal profits from a division: The amount exceeding the amount of debts to which a corporation succeeds from the investing corporation, the amount paid to stockholders of the investing corporation, and the equity capital of the corporation newly incorporated or the increased amount of the equity capital of the surviving corporation, where the value of the assets invested in a corporation newly incorporated as a consequence of a division or a division and merger referred to in Article 530-2 of the Commercial Act or in a corporation surviving such division or such division and merger exceeds the amount of debts to which such corporation succeeds from the investing corporation, the amount paid to stockholders of the investing corporation, and the equity capital of the corporation newly incorporated or the increased amount of the equity capital of the surviving corporation. |
| (2) | Amounts prescribed by Presidential Decree which are not subject to subparagraph 6 of Article 18 among the amounts in excess referred to in the proviso to paragraph (1) 1 shall not be included in the gross income of the relevant business year and may be appropriated for covering losses incurred in each business year thereafter. |
[This Article Wholly Amended on Dec. 30, 2010]
| Article 18 (Non-inclusion of evaluation profits in gross income) |
None of the following amounts shall be included in the gross income for the purpose of calculating the amount of income of a domestic corporation for each business year: <Amended on Dec. 31, 2011; Jan. 1, 2014; Dec. 24, 2018; Dec. 31, 2019; Dec. 31, 2022; Dec. 31, 2023>
| 1. | Profits from the evaluation of assets; provided, profits from the evaluation referred to in each subparagraph of Article 42 (1) shall be excluded herefrom; |
| 2. | The income on which tax is already imposed for each business year (including non-taxable or exempted income under this Act or other statutes); |
| 3. | An amount refunded or refundable, out of the corporate tax or local corporate income tax not included in deductible expenses under subparagraph 1 of Article 21, but set off against other taxes; |
| 4. | Interest on the refund of overpaid or erroneously-paid national or local taxes; |
| 5. | Output tax of value-added tax; |
| 6. | An amount appropriated for covering carried forward losses prescribed by Presidential Decree among the value of assets gratuitously acquired (excluding national subsidies under Article 36), and the amount of reduced debt due to exemption from or expiration of debts; |
| 7. | An amount paid or payable by a consolidated subsidiary corporation or consolidated parent corporation under Article 76-19 (2) or (3); |
| 8. | Dividends (limited to the book value of stocks held by a domestic corporation) received by deducting the capital reserve under Article 461-2 of the Commercial Act; provided, the dividends received by reducing the capital reserves specified in any of the following items shall be excluded. |
| (a) | Capital reserve funds not specified in Article 16 (1) 2 (a); |
| (b) | The amount (limited to the amount prescribed by Presidential Decree) equivalent to the revaluation reserve fund under Article 16 (1) 2 (b) of the merged corporation among the gains on merger under Article 17 (1) 5 following a qualified merger under Article 44 (2) or (3). |
| (c) | The amount (limited to the amount prescribed by Presidential Decree) equivalent to the revaluation reserve fund under Article 16 (1) 2 (b) of the divided corporation among the gains on division under Article 17 (1) 6 following an eligible division under Article 46 (2). |
[This Article Wholly Amended on Dec. 30, 2010]
| Article 18-2 (Non-inclusion of domestic corporations' dividend income in gross income) |
| (1) | The amount calculated by subtracting the amount in subparagraph 2 from the amount in subparagraph 1, among profit dividends or surplus distributions or constructive dividends or distributions provided in Article 16 (hereafter in this Article and Article 76-14, referred to as "dividend income") that a domestic corporation (excluding a non-profit domestic corporation that appropriates reserve funds for proper purpose business as deductible expenses pursuant to Article 29) receives from other corporation invested by the relevant domestic corporation (hereafter in this Article, referred to as "invested corporation") shall not be included in gross income for the purpose of calculating the amount of income for each business year. In such cases, where the amount is less than zero, it shall be deemed nil: <Amended on Dec. 31, 2019; Dec. 31, 2022> |
| 1. | The sum of the amount calculated by multiplying the dividend income of each invested corporation by the ratio of non-inclusion in gross income by the classification in the following table |
┌──────────────┬──────┐
│The ratio of investment in invested corporation│The ratio of non-inclusion in gross income│
├──────────────┼──────┤
│At least 50 percent│100 percent│
├──────────────┼──────┤
│At least 20 percent but less than 50 percent│80 percent │
├──────────────┼──────┤
│Less than 20 percent│30 percent│
└──────────────┴──────┘
| 2. | The amount calculated as prescribed by Presidential Decree, considering the ratio of non-inclusion in gross income and the amount of investment in invested corporation referred to in subparagraph 1 among the interest on borrowings to the total assets of a domestic corporation, where interest on borrowings has been paid by the domestic corporation in each business year. |
| (2) | Paragraph (1) shall not apply to any of the following dividend incomes: <Amended on Dec. 22, 2020; Dec. 31, 2023> |
| 1. | The dividend income accruing upon holding stocks, etc. acquired within three months prior to the base date of dividend distribution; |
| 2. | Deleted. <Dec. 31, 2022> |
| 3. | The dividend income paid by any corporation which is entitled to income deductions on the dividend payable under Article 51-2 or Article 104-31 of the Act on Restriction on Special Cases concerning Taxation; |
| 4. | The dividend income paid by any corporation (limited to corporation prescribed by Presidential Decree), which is entitled to the non-taxation, exemption, or reduction of corporate tax under this Act and the Act on Restriction on Special Cases concerning Taxation; |
| 5. | The amount of dividend income received from corporate taxable trust property entitled to income deduction with respect to the dividends paid pursuant to Article 75-14. |
| 6. | The dividend income paid by reducing the revaluation reserve under of Article 16 (1) 2 of this Act, in violation of Article 28 (2) of the Assets Revaluation Act. |
| 7. | The dividend income received by reducing the capital reserve falling under subparagraph 8 (b) and (c) of Article 18; |
| 8. | The dividend income prescribed by Presidential Decree, for which corporate tax is not imposed on the income of the invested corporation, such as the amount of property acquired by a domestic corporation who is a stockholder, etc. that exceeds the original acquisition value of stocks, etc. due to a decrease in capital. |
| (3) | In applying paragraphs (1) and (2), matters necessary for the method for computing the ratio of equity investment by a domestic corporation in an invested corporation, amounts excluded from gross income, the scope of borrowings and interest on borrowings, submission of a detailed dividend income statement, etc. shall be prescribed by Presidential Decree. |
[This Article Wholly Amended on Dec. 24, 2018]
[Moved from Article 18-3; previous Article 18-2 moved to Article 18-3 <Dec. 24, 2018>]
| Article 18-3 Deleted. <Dec. 31, 2022> |
| Article 18-4 (Non-inclusion of dividend income of foreign subsidiaries in gross income) |
| (1) | Where a domestic corporation (excluding indirect investment companies, etc. referred to in Article 57-2 (1)) has a foreign subsidiary [referring to a foreign corporation in which the domestic corporation has invested by holding at least 10/100 of the total number of its outstanding voting stocks or the total amount of investment (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), and which meets the requirements prescribed by Presidential Decree; hereafter in this Article and Article 41 the same shall apply], an amount equivalent to 95/100 of the dividend or distribution of surplus received from such foreign subsidiary or an amount deemed to be dividend or distribution pursuant to Article 16 (hereafter in this Article referred to as "dividend income") shall not be included in gross income for the purpose of calculating the amount of income for each business year. |
| (2) | Where a domestic corporation receives dividend income from a foreign corporation (excluding foreign subsidiaries) in which the relevant domestic corporation has invested after reducing its capital reserve, which is of a nature equivalent to the dividend not included in gross income under subparagraph 8 of Article 18, the amount equivalent to 95/100 of such amount shall not be included in gross income for the purpose of calculating the amount of income for each business year. |
| (3) | Paragraph (1) shall not apply to the amount deemed to have been distributed to a domestic corporation with respect to retained earnings of a specific foreign corporation under Articles 27 (1) and 29 (1) and (2) of the Adjustment of International Taxes Act and to the amount of dividend income when such retained earnings are actually distributed. |
| (4) | Notwithstanding paragraph (1), the amount falling under any of the following shall be included in gross income for the purpose of calculating the amount of income for each business year: |
| 1. | Dividend income received from a specific foreign corporation that meets all the requirements prescribed in the subparagraphs of Article 27 (1) of the Adjustment of International Taxes Act, as dividend income prescribed by Presidential Decree; |
| 2. | Dividend income paid to a domestic corporation following the transaction of hybrid financial instruments (referring to financial instruments that have the characteristics of both equity and liabilities, as prescribed by Presidential Decree); |
| 3. | Dividend income, similar to those provided for in subparagraphs 1 and 2, prescribed by Presidential Decree. |
| (5) | A domestic corporation that intends to be governed by paragraph (1) shall submit a detailed statement of dividend income received from its foreign subsidiary to the head of the tax office having jurisdiction over the place of tax payment. |
| (6) | In applying paragraphs (1) through (5), matters necessary for the method for calculating the ratio of investment made by a domestic corporation in a foreign subsidiary, the method for calculating the amount excluded from gross income, the submission of a detailed statement of dividend income from a foreign subsidiary, etc. shall be prescribed by Presidential Decree. |
[This Article Added on Dec. 31, 2022]
Sub-Section 3 Calculation of Deductible Expenses
| Article 19 (Scope of deductible expenses) |
| (1) | Deductible expenses shall be losses or expenses (hereinafter referred to as "deductible expenses") incurred by transactions which reduce the net assets of a corporation, excluding return of capital or financing, disposition of surplus funds, and what is provided for in this Act. <Amended on Dec. 24, 2018> |
| (2) | The deductible expenses shall be losses or expenses incurred in connection with the business of a corporation which are generally accepted as ordinary or directly related to profits, except those otherwise prescribed by this Act and other statutes. <Amended on Dec. 24, 2018> |
| (3) | Losses distributed under Article 100-18 (1) of the Act on Restriction on Special Cases concerning Taxation shall be deemed deductible expenses. <Amended on Dec. 24, 2018> |
| (4) | Matters necessary for the scope and types of the deductible expenses and other matters shall be prescribed by Presidential Decree. <Amended on Dec. 24, 2018> |
[This Article Wholly Amended on Dec. 30, 2010]
| Article 19-2 (Non-inclusion of bad debts in deductible expenses) |
| (1) | The amount of irrecoverable claims (hereinafter referred to as "bad debt expenses") due to grounds prescribed by Presidential Decree, such as bankruptcy of the debtor, among the claims held by a domestic corporation, shall be included in deductible expenses for the purpose of calculating the amount of income of the business year prescribed by Presidential Decree. <Amended on Dec. 24, 2018> |
| (2) | Paragraph (1) shall not apply to any of the following claims: <Amended on Dec. 24, 2018; Dec. 22, 2020; Dec. 29, 2020> |
| 1. | Claims for indemnity arising from debt guarantees (excluding 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); |
| 2. | Provisional payments, etc. in Article 28 (1) 4 (b). In such cases, determining a specially related person shall be based on the time point of lending. |
| (3) | The amount recovered among bad debt expenses included in deductible expenses under paragraph (1) shall be included in gross income for the purpose of calculating the amount of income for the business year in which the date of recovery falls. |
| (4) | A domestic corporation that intends to apply paragraph (1) shall submit a detailed statement of bad debt expenses to the head of the tax office having jurisdiction over the place of tax payment, as prescribed by Presidential Decree. <Amended on Dec. 24, 2018> |
| (5) | Matters necessary for the scope and disposal of bad debt expenses and other matters shall be prescribed by Presidential Decree. <Amended on Dec. 24, 2018> |
[This Article Wholly Amended on Dec. 30, 2010]
| Article 20 (Non-inclusion of losses from capital transactions in deductible expenses) |
None of the following amounts shall be included in deductible expenses for the purpose of calculating the amount of income of a domestic corporation for each business year: <Amended on Dec. 19, 2017; Dec. 24, 2018>
| 1. | The amount computed by counting the appropriation of surpluses as losses when settlement of accounts is fixed; |
| 2. | Margins from the issuance of stocks at below par value: Where shares are issued at a price below the par value pursuant to Article 417 of the Commercial Act, the sum of the price below the par value and the issuance price of new shares. |
[This Article Wholly Amended on Dec. 30, 2010]
| Article 21 (Non-inclusion of taxes and public charges in deductible expenses) |
None of the following taxes and public charges shall be included in deductible expenses for the purpose of calculating the amount of income of a domestic corporation for each business year: <Amended on Dec. 29, 2000; Dec. 31, 2001; Dec. 30, 2006; Dec. 31, 2007; Dec. 26, 2008; Jan. 30, 2009; Jan. 1, 2010; Dec. 30, 2010; Jan. 1, 2014; Dec. 22, 2020; Dec. 29, 2020; Dec. 21, 2021; Dec. 31, 2022; Dec. 31, 2024>
| 1. | Corporate tax (including the amount of tax paid abroad on the income dividend not included in gross income under Article 18-4 and the amount of foreign corporate tax eligible for a tax credit under Article 57) or pro rata local income tax paid or payable for each business year, the amount of tax paid or payable (including penalty tax) due to non-performance of duties prescribed by tax-related Acts, and the input tax of value-added tax (excluding the amount of tax exempt from value-added tax or in circumstances prescribed by Presidential Decree); |
| 2. | An amount in arrears of the individual consumption tax or liquor tax on the products carried out, but unsold; provided, this shall not apply where an amount equivalent to such amount of tax is added to the value of such products; |
| 3. | Fines, penalties (including an amount equivalent to fines or penalties stated on a dispositions notice), administrative fines (including penalties and fines), surcharges, and forced collection charge; |
| 4. | Public charges that are not mandatory under statutes and regulations; |
| 5. | Public charges imposed on the grounds of non-performance of duties, or any violations of prohibitions or restrictions under the statutes and regulations; |
| 6. | Amount paid or payable to a consolidated parent corporation or consolidated subsidiary pursuant to Article 76-19 (2) or (3). |
[Title Amended on Dec. 30, 2010]
| Article 21-2 (Non-inclusion of punitive damages in deductible expenses) |
The amount specified by Presidential Decree that a domestic corporation paid in excess of actually incurred losses as part of damages shall not be included in deductible expenses, in calculating the amount of income for each business year of the domestic corporation.
[This Article Added on Dec. 19, 2017]
| Article 22 (Non-inclusion of losses from evaluation of assets in deductible expenses) |
Losses from the evaluation of assets held by a domestic corporation shall not be included in deductible expenses for the purpose of calculating the amount of income of the domestic corporation for each business year; provided, the losses from evaluation incurred by evaluating assets under Article 42 (2) and (3) shall be included in deductible expenses. <Amended on Dec. 24, 2018>
[This Article Wholly Amended on Dec. 30, 2010]
| Article 23 (Non-inclusion of depreciation costs in deductible expenses) |
| (1) | Where a domestic corporation counts as losses the depreciation costs of tangible and intangible assets prescribed by Presidential Decree, such as buildings, machinery, equipment and patent rights, except land (hereafter in this Article, referred to as "depreciable assets") when settlement of accounts is fixed for the relevant business year, the depreciation costs appropriated, within the limit of the amount computed as prescribed by Presidential Decree (hereafter in this Article, referred to as "allowable depreciation"), shall be included in deductible expenses for the purpose of calculating the amount of income of a domestic corporation for the relevant business year, and the amount appropriated in excess of the allowable depreciation shall not be included in such deductible expenses. <Amended on Dec. 24, 2018> |
| (2) | Notwithstanding paragraph (1), the depreciation costs of tangible assets and intangible assets prescribed by Presidential Decree, among depreciable assets owned by a domestic corporation that applies the accounting standards (hereinafter referred to as "Korean International Financial Reporting Standards (K-IFRS)") under Article 5 (1) 1 of the Act on External Audit of Stock Companies may be additionally included in the deductible expenses within the difference where any of the following amounts for each item of asset exceeds the amount included in the deductible expenses under paragraph (1): <Amended on Oct. 31, 2017; Dec. 24, 2018> |
| 1. | Assets acquired on or before December 31, 2013: Where the depreciation costs are appropriated according to the previous method without applying the K-IFRS, the amount equivalent to the depreciation costs to be included in the deductible expenses under paragraph (1) (hereafter in this Article, referred to as "previous depreciation costs"); |
| 2. | Assets acquired on or after January 1, 2014: The amount equivalent to the depreciation costs computed by applying the standard service life prescribed by Decree of the Ministry of Economy and Finance (hereafter in this Article, referred to as "standard depreciation costs"). |
| (3) | Notwithstanding paragraph (1), where the relevant domestic corporation is entitled to exemption from or reduction of corporate tax under this Act and other statutes, the depreciation costs shall be included in the deductible expenses, as prescribed by Presidential Decree, for the purpose of calculating the amount of income of such domestic corporation for the relevant business year. <Amended on Dec. 24, 2018> |
| (4) | In applying paragraph (1), where a domestic corporation counts any of the following amounts as losses, the allowable depreciation shall be calculated, deeming that the amount is counted as depreciation costs, for the purpose of calculating the amount of income of the domestic corporation for each business year: <Added on Dec. 24, 2018> |
| 1. | The amount spent to acquire depreciable assets; |
| 2. | Capital expenditure prescribed by Presidential Decree concerning depreciable assets. |
| (5) | The amount in excess of the allowable depreciation that is not included in deductible expenses pursuant to paragraph (1) shall be included in deductible expenses for the subsequent business years by the method prescribed by Presidential Decree. <Added on Dec. 24, 2018> |
| (6) | Any domestic corporation which includes depreciation costs in deductible expenses pursuant to paragraphs (1) through (5) shall submit a detailed statement of depreciation costs to the head of the tax office having jurisdiction over the place of tax payment, as prescribed by Presidential Decree. <Amended on Dec. 24, 2018> |
| (7) | In applying paragraphs (1) through (5), matters necessary for the method of appropriating depreciation costs as deductible expenses, deciding the timing for application of the K-IFRS, calculating previous depreciation costs and standard depreciation costs, changing the depreciation method, the special cases concerning and changes of service life, the special cases concerning the calculation of allowable depreciation of secondhand assets, and the scope of immediately depreciable assets, etc. shall be prescribed by Presidential Decree. <Amended on Dec. 24, 2018> |
[This Article Wholly Amended on Dec. 30, 2010]
| Article 24 (Non-inclusion of donations in deductible expenses) |
| (1) | "Donation" in this Article means the expenses (including the amount deemed substantially donated through a transfer prescribed by Presidential Decree) that a domestic company gratuitously spends directly irrelevant to its business. <Amended on Dec. 24, 2018> |
| (2) | Special donations referred to in subparagraph 1 among the donations spent by a domestic corporation for each business year and donations carried forward under paragraph (5) shall be sequentially included in deductible expenses within the ceiling on inclusion in deductible expenses calculated pursuant to subparagraph 2 , for the purpose of calculating the amount of income for each business year; and the amount in excess of the ceiling on inclusion in deductible expenses shall not be included in deductible expenses: <Amended on Dec. 22, 2020; Aug. 17, 2021; Dec. 21, 2021; Dec. 31, 2022; Dec. 31, 2024> |
| 1. | Special donation: Donation falling under any of the following: |
| (a) | The value of money and valuables gratuitously donated to the State or a local government; provided, this shall be limited to money and valuables received under Article 5 (2) of the Act on Collection and Use of Donations, where such money and valuables are subject to said Act; |
| (b) | The value of contributions for national defense and money and valuables contributed for the consolation and comfort of soldiers of the national armed forces; |
| (c) | The value of money and valuables contributed for victims of natural disasters; |
| (d) | Donations given to the following institutions (excluding hospitals) for facility expenses, educational expenses, scholarships, or research funds: |
| (i) | Private schools established under the Private School Act; |
| (ii) | Non-profit educational foundations (limited to non-profit incorporated foundations established for the purpose of paying facility expenses, educational expenses, scholarships, or research funds for national, public or private schools); |
| (iii) | Polytechnic colleges defined in the Act on the National Lifelong Vocational Skills Development Act; |
| (iv) | Lifelong educational facilities that may use the name of major college under the Lifelong Education Act and lifelong educational facilities in the form of a distance college; |
| (v) | Foreign educational institutions founded under the Special Act on Establishment and Management of Foreign Educational Institutions in Free Economic Zones and |
| (vi) | Industry-academic cooperation groups defined in the Industrial Education Enhancement and Industry-Academia-Research Cooperation Promotion Act; |
| (vii) | The Korea Advanced Institute of Science and Technology established under the Korea Advanced Institute of Science and Technology Act, the |
| (viii) | Seoul National University established under the Act on Establishing and Administrating Seoul National University, |
| (ix) | Korean schools prescribed in the Act on the Educational Support for Korean Nationals Residing Abroad (limited to schools that meet requirements prescribed by Presidential Decree); |
| (x) | Korea Student Aid Foundation established under the Act on the Establishment of Korea Student Aid Foundation |
| (e) | Donations given to the following hospitals and others for facility expenses, educational expenses, or research funds: |
| (i) | National university-affiliated hospitals established under the Act on the Establishment of National University-Affiliated Hospitals; |
| (ii) | National university-affiliated dental hospitals established under the Act on the Establishment of National University-Affiliated Dental Hospitals; |
| (iii) | Seoul National University Hospital established under the Establishment of Seoul National University Hospital Act; |
| (iv) | Seoul National Dental Hospital established under the Establishment of Seoul National Dental Hospital Act; |
| (v) | Hospitals operated by private schools as defined in the Private School Act; |
| (vi) | National Cancer Center established under the Cancer Control Act; |
| (vii) | Local medical centers established under the Act on the Establishment and Management of Local Medical Centers; |
| (viii) | National Medical Center established under the Act on Establishing and Administrating the National Medical Center; |
| (ix) | Hospitals operated by the Korean National Red Cross established under the Organization of the Korean National Red Cross Act; |
| (x) | Hospitals operated by the Korea Veterans Welfare and Healthcare Corporation established under the Korea Veterans Health Service Act; |
| (xi) | Korea Institute of Radiological and Medical Sciences established under the Radiation and Radioisotope Use Promotion Act; |
| (xii) | Hospitals operated by the National Health Insurance established under the National Health Insurance Act; |
| (xiii) | Medical institutions referred to in Article 43 (1) 1 of the Industrial Accident Compensation Insurance Act; |
| (xiv) | The Medical Technology Cooperation Foundation established under Article 28-2 (1) of the Health and Medical Service Technology Promotion Act, which is established by hospitals referred to in subitems (i) through (xiii); |
| (f) | Donations given to corporations that meet requirements prescribed by Presidential Decree, as non-profit organizations that mainly aim to raise and distribute funds necessary for supporting social welfare services and other social welfare activities; |
| 2. | Ceiling on amount includible in deductible expenses: the amount calculated according to the following formula:
|
| (3) | Out of donations made by a domestic corporation in each business year and donations carried forward under paragraph (5), general donations referred to in subparagraph 1 shall be included in deductible expenses when calculating the amount of income for the relevant business year within the maximum amount includible in deductible expenses calculated under subparagraph 2; however, the amount exceeding the maximum amount includible in deductible expenses shall not be included in deductible expenses: <Amended on Dec. 22, 2020; Dec. 31, 2022> |
| 1. | General donations: Donations prescribed by Presidential Decree in consideration of public interest, such as social welfare, culture, arts, education, religion, charity, science, etc. (excluding donations referred to in paragraph (2) 1); hereafter in this Article the same shall apply) |
| 2. | Ceiling on amount includible in deductible expenses: the amount calculated according to the following formula:
|
| (4) | Donations, other than those prescribed in paragraphs (2) 1 and (3) 1, shall not be included in deductible expenses for the purpose of calculating the amount of income for the relevant business year. <Amended on Dec. 22, 2020> |
| (5) | The amount of contributions that a domestic corporation spends in each business year that has not been included in deductibles in excess of the deduction limit for donations pursuant to paragraphs (2) and (3) shall be carried forward and included in deductible expenses for each business year which ends within 10 years from the start date of the business year following the relevant business year, for the purpose of calculating the amount of income for the business year carried forward, it shall be included in the deductible amount within the range of the deductible limit for each donation referred to in paragraphs (2) 2 and (3) 2. <Amended on Dec. 24, 2018; Dec. 31, 2019; Dec. 22, 2022 |
| (6) | Where an amount carried forward pursuant to paragraphs (2) and (3) is included in deductible expenses, the amount carried forward pursuant to paragraph (5) shall be included in deductible expenses before the amount of donations paid in the relevant business year. In such cases, the amount carried forward shall be included in deductible expenses from the amount carried forward first. <Added on Dec. 31, 2019; Dec. 22, 2020> |
[This Article Wholly Amended on Dec. 30, 2010]
| Article 25 (Non-inclusion of business promotion expenses in deductible expenses) |
| (1) | "Business promotion expense" in this Article means entertainment expense, social expense, honorarium, or other expenses of a similar nature, however named, spent by a domestic corporation for smoothly conducting business with those directly or indirectly related to its business. <Amended on Dec. 24, 2018; Dec. 31, 2022> |
| (2) | Business promotion expenses paid by a domestic corporation in excess of the amount prescribed by Presidential Decree on one occasion, which do not fall under any of the following, shall not be included in deductible expenses for the purpose of calculating the amount of income for each business year; provided, the same shall not apply to any business promotion expenses prescribed by Presidential Decree, such as those paid in any foreign country for farmers or fishermen, which make it impractical to obtain documents evidencing that such business promotion expenses fall under any of the followings, but the expenditure of such business promotion expenses is objectively unquestionable: <Amended on Dec. 30, 2010; Dec. 31, 2011; Jun. 7, 2013; Dec. 24, 2018; Dec. 31, 2022> |
| 1. | Business promotion expenses paid upon using any of the following (hereinafter referred to as "credit card, etc."): |
| (a) | Credit cards defined in the Specialized Credit Finance Business Act (including items prescribed by Presidential Decree and similar to credit cards; hereafter in Article 117, the same shall apply); |
| (b) | Cash Receipts prescribed in Article 126-2 (1) 2 of the Act on Restriction on Special Cases concerning Taxation (hereinafter referred to as "Cash Receipts"); |
| 2. | Business promotion expenses paid upon receiving an invoice referred to in Article 121 of this Act or Article 163 of the Income Tax Act or a tax invoice referred to in Articles 32 and 35 of the Value-Added Tax Act; |
| 3. | Business promotion expenses paid upon issuing a purchaser-issued invoice referred to in Article 121-2 or purchaser-issued tax invoice referred to in Article 34-2 (2) of the Value-Added Tax Act; |
| 4. | Business promotion expenses paid upon issuing cash receipts prescribed by Presidential Decree. |
| (3) | Where a sales slip, etc., is issued in the name of other credit card merchant, etc., which is not the one that actually supplies the relevant goods or services, the relevant amount of spending shall not be deemed the business promotion expenses referred to in paragraph (2) 1 for the purposes of paragraph (2) 1. <Amended on Dec. 30, 2010; Dec. 24, 2018; Dec. 31, 2022> |
| (4) | Business promotion expenses (excluding the amount which is not included in deductible expenses pursuant to paragraph (2)) paid by a domestic corporation for each business year in excess of the sum of the following amounts shall not be included in deductible expenses in calculating the amount of income for the relevant business year: <Amended on Dec. 24, 2018; Dec. 31, 2019; Dec. 31, 2022> |
| 1. | Standard ceiling: The amount calculated by the following formula:
|
| 2. | The ceiling by the amount of income: The amount computed by multiplying the amount of income for the relevant business year (limited to the amount of income prescribed by Presidential Decree) by the rates specified in the following table; provided, with respect to the amount of income accrued from transactions with a related party, it means an amount equivalent to 10/100 of the amount computed by multiplying such amount of income by the rates specified in the following table:
|
| (5) | In applying paragraph (4), where the domestic corporation mainly engages in real estate leasing business or meets the criteria prescribed by Presidential Decree, the amount in excess of 50/100 of the sum of the amounts in all subparagraphs of the same paragraph shall not be included in deductible expenses in calculating the amount of income for the relevant business year. <Added on Dec. 24, 2018> |
| (6) | Matter necessary for the scope and calculation of business promotion expenses, keeping documents evidencing disbursement, etc. shall be prescribed by Presidential Decree. <Amended on Dec. 30, 2010; Dec. 24, 2018; Dec. 31, 2022> |
[Title of This Article Amended on Dec. 31, 2022]
| Article 26 (Non-inclusion of excessive expenses in deductible expenses) |
Among the following deductible expenses, the amount deemed excessive or inappropriate, as prescribed by Presidential Decree, shall not be included in deductible expenses for the purpose of calculating the amount of income of a domestic corporation for each business year:
| 1. | Labor costs; |
| 2. | Expenses for fringe benefits; |
| 3. | Travel expenses and educational and training expenses; |
| 4. | Losses incurred or paid by a corporation in the course of jointly operating or managing an identical organization or business with a person, other than the corporation; |
| 5. | Expenses prescribed by Presidential Decree, other than those referred to in subparagraphs 1 through 4, deemed to have little direct connection to the business of a corporation. |
[This Article Wholly Amended on Dec. 30, 2010]
| Article 27 (Non-inclusion of non-business expenses in deductible expenses) |
Among expenses incurred by a domestic corporation, none of the following amounts shall be included in deductible expenses for purposes of calculating the amount of income of each business year: <Amended on Dec. 24, 2018>
| 1. | An amount prescribed by Presidential Decree, such as expenses incurred in acquiring and managing the assets prescribed by Presidential Decree, which are deemed to have no direct connection to the business of the corporation; |
| 2. | Expenditures prescribed by Presidential Decree, other than the amount prescribed in subparagraph 1, which are deemed to have no direct connection to the business of the relevant corporation. |
[This Article Wholly Amended on Dec. 30, 2010]
| Article 27-2 (Special cases, including exclusion of expenses incurred in relation to passenger vehicles for business use from deductible expenses) |
| (1) | Depreciation costs of the passenger vehicles provided for in Article 1 (2) 3 of the Individual Consumption Tax Act (excluding passenger vehicles specified by Presidential Decree and directly used for such business as transportation business or motor vehicle sales business and passenger cars used for the purpose of research and development, as prescribed by Presidential Decree; hereafter in this Article and Article 74-2, referred to as "passenger vehicles for business use") shall be included in deductible expenses for the purpose of computing the amount of income for each business year, as prescribed by Presidential Decree. <Amended on Dec. 24, 2018; Dec. 31, 2019; Dec. 21, 2021> |
| (2) | The amount that does not fall in the scope of expenses prescribed by Presidential Decree incurred for business use (hereafter in this Article, referred to as "expenses incurred for business use"), among expenses specified by Presidential Decree, such as depreciation costs, rental charges, and fuel expenses generated during the relevant business year for passenger vehicles that a domestic corporation has acquired or rented for business use (hereafter in this Article and Article 74-2, referred to as "expenses incurred in relation to passenger vehicles for business use") shall not be included in deductible expenses for the purpose of computing the amount of income for the relevant business year. <Amended on Dec. 24, 2018; Dec. 31, 2019; Dec. 21, 2021> |
| (3) | In applying paragraph (2), where either of the following cost or amount, out of expenses incurred for business use, exceeds eight million won during a business year (referring to the amount calculated by multiplying eight million won by the number of months during the relevant business year and then dividing the amount therefrom by 12, where the relevant business year is less than one year, or the amount calculated by multiplying eight million won by the number of months during the period of owning or renting the relevant vehicle and then dividing the amount therefrom by the number of months during the relevant business year, where the vehicle was owned or rented for a certain period during the business year), the excess amount (hereafter in this Article, referred to as "excess of the ceiling on depreciation costs") shall not be included in deductible expenses for the relevant business year but shall be carried over to the following term and shall be included in deductible expenses by the method prescribed by Presidential Decree: <Amended on Dec. 19, 2017> |
| 1. | The depreciation cost of each passenger vehicle for business use; |
| 2. | The amount specified by Presidential Decree as equivalent to depreciation costs, among rental charges for each passenger vehicle for business use. |
| (4) | Where the loss incurred in disposing of passenger vehicles for business use exceeds eight million won for each passenger vehicle for business use (referring to the amount calculated by multiplying eight million won by the number of months during the relevant business year and then dividing the amount therefrom by 12, where the relevant business year is less than one year), the excess amount shall be included in deductible expenses by the method prescribed by Presidential Decree, which is carrying over the amount to the following term. <Amended on Dec. 24, 2018> |
| (5) | For the purpose of applying paragraphs (3) and (4) to a domestic corporation, "eight million won" shall be construed as "four million won" respectively, where the domestic corporation engages mainly in real estate leasing business or meets the criteria prescribed by Presidential Decree. <Added on Dec. 20, 2016> |
| (6) | Each corporation that includes expenses incurred in relation to passenger vehicles for business use pursuant to paragraphs (1) through (5) shall submit a statement on the expenses incurred in relation to passenger vehicles for business use to the head of the tax office having jurisdiction over the place of tax payment, as prescribed by Presidential Decree. <Amended on Dec. 20, 2016> |
| (7) | The method for calculating expenses incurred for business use, the methods for calculating and carrying over the excess of the ceiling on depreciation costs, and other necessary matters, shall be prescribed by Presidential Decree. <Amended on Dec. 20, 2016> |
[This Article Added on Dec. 15, 2015]
| Article 28 (Non-inclusion of interest expenses in deductible expenses) |
| (1) | Interest on the following loans shall not be included in deductible expenses for the purpose of calculating the amount of income of a domestic corporation for each business year: <Amended on Dec. 30, 2010; Dec. 31, 2011; Dec. 24, 2018> |
| 1. | Interest on debentures for which the creditor prescribed by Presidential Decree is unknown; |
| 2. | Interest on, a discount of, or gains from bonds and securities referred to in Article 16 (1) 1, 2, 5, and 8 of the Income Tax Act, which are prescribed by Presidential Decree and for which the recipient is unknown; |
| 3. | Interest on loans appropriated for construction capital prescribed by Presidential Decree; |
| 4. | Among interest on loans paid during each business year by a domestic corporation which acquires or owns any of the following assets, the amount calculated, as prescribed by Presidential Decree (the ceiling thereon shall be the interest on loans equivalent to the value of the relevant assets): |
| (a) | Assets referred to in subparagraph 1 of Article 27; |
| (b) | Provisional payments, etc. prescribed by Presidential Decree to a related party with no connection to the business of the relevant corporation. |
| (2) | An amount prescribed by Presidential Decree and calculated by subtracting the interest referred to in paragraph (1) 3 from the interest on loans appropriated for construction capital, need not be included in the deductible expenses for the purpose of calculating the amount of income of a domestic corporation for each business year. <Added on Dec. 30, 2010; Dec. 24, 2018> |
| (3) | Where the provisions governing the non-inclusion of interest expenses in deductible expenses stipulated in each subparagraph of paragraph (1) apply concurrently, such provisions shall apply in the order prescribed by Presidential Decree. <Amended on Dec. 30, 2010; Dec. 24, 2018> |
| (4) | Matters necessary for the scope and calculation of loans and interest expenses under paragraph (1) and other matters shall be prescribed by Presidential Decree. <Amended on Dec. 30, 2010; Dec. 24, 2018> |
[Title Amended on Dec. 30, 2010]
Sub-Section 4 Inclusion of Reserve Funds and Appropriation Funds in Deductible Expenses
| Article 29 (Inclusion of reserve funds for proper purpose business in deductible expenses for non-profit domestic corporation) |
| (1) | Where a non-profit domestic corporation (limited to organizations prescribed by Presidential Decree in cases of an organization deemed a corporation; hereafter in this Article, the same shall apply) appropriates reserve funds for proper purpose business as the deductible expenses to expend them for its proper purpose business or general donations referred to in Article 24 (3) 1 (hereafter in this Article, referred to as "proper purpose business, etc.") when settlement of accounts is fixed for the relevant business year, such reserve funds for proper purpose business shall be included in deductible expenses for the purpose of calculating the amount of income for the relevant business year, which shall not exceed the sum of the amounts by any of the following classifications (referring to the amount computed by subtracting a loss from the sum of income referred to in each item of subparagraph 1, where a loss has been incurred from the profit-making business referred to in subparagraph 4): <Amended on Dec. 24, 2018; Dec. 22, 2020; Dec. 31, 2022> |
| 1. | The following amounts: |
| (a) | The amount of interest income referred to in each subparagraph of Article 16 (1) of the Income Tax Act (excluding profits from non-business loans referred to in Article 16 (1) 11 of the Income Tax Act); |
| (b) | The amount of dividend income referred to in each subparagraph of Article 17 (1) of the Income Tax Act; provided, excluded herefrom is the amount of dividend income accruing from stocks, etc., which is included in the taxable value of the inheritance tax or gift tax or is subject to gift tax pursuant to Article 16 or 48 of the Inheritance Tax and Gift Tax Act; |
| (c) | The amount of interest incurred from loans to members or associates for welfare projects of a non-profit domestic corporation established under any special Act. |
| 2. | The amount computed by multiplying the income from other profit-making business by 50/100 (80/100 for a corporation established under the Act on the Establishment and Operation of Public Interest Corporations, which expends at least 50/100 of the expenditures for its proper purpose business, for scholarships). |
| (2) | In applying paragraph (1), a non-profit domestic corporation subject to audit by an auditor under subparagraph 7 of Article 2 and Article 9 of the Act on External Audit of Stock Companies appropriates a reserve fund for proper purpose business in the tax settlement invoice in Article 60 (2) 2, and the relevant reserve fund is accumulated as reserve funds for proper purpose business in disposing of the profits accruing during the relevant business year, such amount shall be deemed included in deductible expenses when the settlement of account is fixed. <Added on Dec. 24, 2018> |
| (3) | Where a non-profit domestic corporation that has appropriated the reserve funds for proper purpose business as deductible expenses pursuant to paragraph (1) has the amount expended for proper purpose business, it shall offset the amount in sequential order beginning with the reserve funds for proper purpose business appropriated for the business year. In such cases, where the amount expended for proper purpose business, etc. in the relevant business year exceeds the balance in the reserve funds for proper purpose business as at the end date of the immediately preceding business year, such excess shall be deemed expended from the reserve funds for proper purpose business to be appropriated for the relevant business year. <Amended on Dec. 24, 2018> |
| (4) | Where a non-profit domestic corporation that has appropriated the reserve funds for proper purpose business as deductible expenses pursuant to paragraph (1) is dissolved after it comprehensively transfers all rights and duties concerning its business to other non-profit domestic corporation, the balance in the reserve funds for proper purpose business as at the registration date of the dissolution may be succeeded to by the other non-profit domestic corporation. <Amended on Dec. 24, 2018> |
| (5) | Where any of the following events occurs in relation to a non-profit domestic corporation with a balance in the reserve funds for proper purpose business, which has been included in deductible expenses pursuant to paragraph (1), the balance (referring to an amount used for purposes other than its proper purpose business, etc. in cases of subparagraph 5; hereafter in this Article the same shall apply) shall be included in gross income for the purpose of calculating the amount of income for the business year in which the relevant event occurs: <Amended on Jan. 1, 2014; Dec. 24, 2018; Dec. 31, 2022> |
| 1. | Where the non-profit domestic corporation is dissolved (excluding where the balance in the reserve funds for proper purpose business is succeeded under paragraph (4)); |
| 2. | Where the non-profit domestic corporation wholly discontinues its proper purpose business; |
| 3. | Where the approval of an organization deemed a corporation is revoked or it is changed to a resident under Article 13 (3) of the Framework Act on National Taxes; |
| 4. | Where the non-profit domestic corporation fails to use the reserve funds for proper purpose business appropriated as deductible expenses for proper purpose business, etc., by the fifth anniversary of the end date of the relevant business year (limited to a balance unused within such five years). |
| 5. | Where the reserve funds for proper purpose business are used for a purpose other than the proper purpose business, etc.; |
| (6) | A non-profit domestic corporation with a balance in the reserve funds for proper purpose business, which has been included in deductible expenses pursuant to paragraph (1), may partially reduce the balance and include it in deductible expenses within five years from the end date of the business year in which the reserve funds for proper purpose business was appropriated as deductible expenses. In such cases, the balance first included in deductible expenses for a certain business year shall be deemed first reduced and then the remainder shall be deemed reduced successively. <Added on Dec. 24, 2018> |
| (7) | Where the balance of reserve funds for proper purpose business is included in gross income pursuant to paragraphs (5) 4 and 5 and (6), an amount equivalent to the interest calculated as prescribed by Presidential Decree shall be added to corporate tax to be paid in the relevant business year. <Amended on Jan. 1, 2014; Dec. 24, 2018; Dec. 31, 2022> |
| (8) | Paragraph (1) shall not apply to circumstances prescribed by Presidential Decree, where reductions, exemptions, etc. are granted under this Act or other statutes. <Amended on Dec. 24, 2018> |
| (9) | A non-profit domestic corporation which intends to apply paragraph (1) shall keep and maintain a statement on the appropriation and expenditure of the relevant reserve funds and submit it to the head of the tax office having jurisdiction over the place of tax payment, as prescribed by Presidential Decree. <Amended on Dec. 24, 2018> |
| (10) | The scope and succession of proper purpose business and the calculation of income accrued from profit-making business pursuant to paragraphs (1) through (5), and other necessary matters, shall be prescribed by Presidential Decree. <Amended on Dec. 24, 2018> |
[This Article Wholly Amended on Dec. 30, 2010]
[Title Amended on Dec. 24, 2018]
| Article 30 (Inclusion of liability reserve funds in deductible expenses) |
| (1) | Where a domestic corporation (excluding insurance companies defined in the Insurance Business Act) operating an insurance business has appropriated the liability reserve funds (hereinafter referred to as "liability reserve funds") as deductible expenses under the Fisheries Cooperatives Act and other Acts related to the insurance business when the settlement of account is fixed, such liability reserve funds appropriated shall be included in deductible expenses for the purpose of calculating the amount of income for the relevant business year up to the amount calculated, as prescribed by Presidential Decree. <Amended on Dec. 24, 2018; Dec. 31, 2022> |
| (2) | The liability reserve funds included in deductible expenses under paragraph (1) shall be included in gross income when the amount of income for the following business year or for the business year, to which the date three years (where grounds prescribed by Presidential Decree, such as a dissolution, occur before three years pass, the date the relevant grounds arise) from the end date of the business year in which the liability reserve funds were included in deductible expenses falls, is calculated, as prescribed by Presidential Decree. <Amended on Dec. 24, 2018> |
| (3) | Where the liability reserve funds are included in gross income for the business year, to which the date three years from the end date of the business year in which the date the liability reserve funds were included in deductible expenses falls, as prescribed in paragraph (2), an amount equivalent to interest calculated, as prescribed by Presidential Decree, shall be added to corporate tax to be paid in the relevant business year. <Amended on Dec. 24, 2018> |
| (4) | A domestic corporation which intends to apply paragraph (1) shall submit a detailed statement on the relevant reserve funds to the head of the tax office having jurisdiction over the place of tax payment, as prescribed by Presidential Decree. <Amended on Dec. 24, 2018> |
[This Article Wholly Amended on Dec. 30, 2010]
[Title Amended on Dec. 24, 2018]
| Article 31 (Inclusion of contingency reserve funds in deductible expenses) |
| (1) | Where a domestic corporation operating an insurance business has appropriated the contingency reserve funds (hereinafter referred to as "contingency reserve funds") as deductible expenses under the Insurance Business Act and other statutes when the settlement of account is fixed, such contingency reserve funds appropriated shall be included in deductible expenses for the purpose of calculating the amount of income for the relevant business year up to the amount calculated, as prescribed by Presidential Decree. |
| (2) | In applying paragraph (1), where a domestic corporation applying the K-IFRS has appropriated contingency reserve funds in the tax settlement invoice referred to in Article 60 (2) 2 and has accumulated an amount equivalent to such contingency reserve funds as reserves of contingency reserve funds in disposing of the profits during the relevant business year, it shall be deemed to have appropriated them in deductible expenses, when the settlement of account is fixed, up to the amount calculated, as prescribed by Presidential Decree. |
| (3) | A domestic corporation which intends to apply paragraph (1) shall submit a detailed statement on the relevant contingency funds to the head of the tax office having jurisdiction over the place of tax payment, as prescribed by Presidential Decree. |
| (4) | Matters necessary for disposing of the contingency reserve funds in paragraphs (1) and (2) shall be prescribed by Presidential Decree. |
[This Article Added on Dec. 24, 2018]
| Article 32 (Inclusion of surrender value reserve fund in deductible expenses) |
| (1) | Where an insurance company defined in the Insurance Business Act (hereinafter referred to as "insurance company") accumulates the reserves for surrender value (referring to the amount accumulated by an insurance company as prescribed by Presidential Decree in preparation for the cancellation, etc. of insurance contracts; hereafter the same shall apply in this Article) when disposing of profits for the relevant business year, and appropriates such amount in a tax adjustment statement referred to in Article 60 (2) 2, it shall be deemed that such amount is appropriated as deductible expenses when finalizing the settlement of accounts, and such amount shall be included in deductible expenses in calculating the income for the relevant business year. <Amended on Dec. 31, 2024> |
| (2) | Any insurance company that intends to be governed by paragraph (1) shall submit a detailed statement on surrender value reserves to the head of a tax office having jurisdiction over the place of tax payment, as prescribed by Presidential Decree. |
| (3) | Matters necessary for including surrender value reserves in deductible expenses under paragraph (1) and treating the relevant amount shall be prescribed by Presidential Decree. |
[This Article Added on Dec. 31, 2022]
| Article 33 (Inclusion of retirement benefit appropriation funds in deductible expenses) |
| (1) | Where a domestic corporation appropriates funds for retirement benefits as deductible expenses when the settlement of account is fixed for each business year in order to pay retirement benefits to its executives or employees, such retirement benefit appropriation funds appropriated shall be included in deductible expenses for the purpose of calculating the amount of income for the relevant business year up to the amount calculated, as prescribed by Presidential Decree. <Amended on Dec. 24, 2018> |
| (2) | Where a domestic corporation which has included retirement benefit appropriation funds in deductible expenses under paragraph (1) pays retirement benefits to any executive or employee, it shall be deemed paid from the retirement benefit appropriation funds appropriated. <Amended on Dec. 24, 2018> |
| (3) | Where a domestic corporation which has included retirement benefit appropriation funds in deductible expenses under paragraph (1) is merged or divided, the retirement benefit appropriation funds of the corporation as at the registration date of the merger or division which is succeeded to the surviving corporation, corporation established through division, or counterpart corporation to the division and merger (hereinafter referred to as "surviving corporation, etc.") shall be deemed retirement benefit appropriation funds held by the surviving corporation as at the registration date of the merger or division. <Amended on Dec. 24, 2018> |
| (4) | Paragraph (3) shall apply |
| (5) | A domestic corporation which intends to apply paragraph (1) shall submit a detailed statement on retirement benefit appropriation funds to the head of the tax office having jurisdiction over the place of tax payment, as prescribed by Presidential Decree. <Amended on Dec. 24, 2018> |
| (6) | Matters necessary for disposition of retirement benefit appropriation funds under paragraphs (1) through (4) shall be prescribed by Presidential Decree. |
[This Article Wholly Amended on Dec. 30, 2010]
| Article 34 (Inclusion of allowances for bad debts in deductible expenses) |
| (1) | Where a domestic corporation appropriates funds for bad debts to cover bad debts from credit sales accounts, loans, and other claims equivalent thereto as deductible expenses when the settlement of account is fixed for each business year, such bad debts appropriated shall be included in deductible expenses for the purpose of calculating the amount of income for the relevant business year up to the amount calculated, as prescribed by Presidential Decree. <Amended on Dec. 30, 2010; Dec. 24, 2018> |
| (2) | Paragraph (1) shall not apply to a claim referred to in the subparagraphs of Article 19-2 (2). <Amended on Dec. 30, 2010; Dec. 24, 2018> |
| (3) | Where a domestic corporation that has included the appropriation for bad debts in deductible expenses under paragraph (1) has any bad debts incurred, such bad debts shall be first offset by its appropriation for bad debts and the balance of the appropriation for bad debts after offsetting such bad debts shall be subsequently included in gross income when calculating the amount of income for the following business year. <Amended on Dec. 30, 2010; Dec. 24, 2018> |
| (4) | Where a domestic corporation which has included appropriation for bad debts in the deductible expenses under paragraph (1) is merged or divided, the appropriation for bad debts of the corporation as at the registration date of the merger or division which is succeeded to the surviving corporation, etc. (only applicable to where the claims equivalent to the relevant appropriation for bad debts are succeeded together) shall be deemed the appropriation for bad debts held by the surviving corporation, etc. as at the registration date of the merger or division. <Amended on Dec. 30, 2010; Dec. 24, 2018> |
| (5) | A domestic corporation which intends to apply paragraph (1) shall submit a detailed statement on the appropriation for bad debts to the head of the tax office having jurisdiction over the place of tax payment, as prescribed by Presidential Decree. <Amended on Dec. 30, 2010; Dec. 24, 2018> |
| (6) | Matters necessary for the scope of credit accounts, loans, and other claims equivalent thereto and the disposal of appropriation of bad debts under paragraph (1) and other matters shall be prescribed by Presidential Decree. <Amended on Dec. 30, 2010; Dec. 24, 2018> |
[Title Amended on Dec. 30, 2010]
| Article 35 (Inclusion of allowances to redeem claims for indemnity in deductible expenses) |
| (1) | Where a corporation prescribed by Presidential Decree among domestic corporations operating a credit guarantee business under Acts appropriates funds for redemption of claims for indemnity as deductible expenses when the settlement of account is fixed for each business year, such funds for redemption of claims for indemnity appropriated shall be included in deductible expenses for the purpose of calculating the amount of income for the relevant business year up to the amount calculated, as prescribed by Presidential Decree. <Amended on Dec. 24, 2018> |
| (2) | In applying paragraph (1), where a corporation prescribed by Presidential Decree among corporations applying the K-IFRS appropriates funds for redemption of claims for indemnity in the tax settlement invoice referred to in Article 60 (2) 2 and accumulates such appropriation as reserves for appropriation for redemption of claims for indemnity in disposing of the profits during the relevant business year, it shall be deemed to have been appropriated in deductible expenses when the settlement of account is fixed up to the amount calculated, as prescribed by Presidential Decree. <Amended on Dec. 24, 2018> |
| (3) | Where bad debts prescribed by Presidential Decree have incurred in relation to the claims for indemnity due to credit guarantee business, a domestic corporation that has included appropriation for redemption claims for indemnity under paragraph (1) in deductible expenses shall first offset the bad debts with the appropriation for redemption of claims for indemnity and the remainder of the appropriation for redemption of claims for indemnity after the offset shall be included in gross income when calculating the amount of income for the following business year. |
| (4) | A domestic corporation which intends to apply paragraph (1) shall submit a detailed statement on the appropriation for redemption of claims for indemnity to the head of the tax office having jurisdiction over the place of tax payment, as prescribed by Presidential Decree. <Amended on Dec. 24, 2018> |
| (5) | Matters necessary for disposing of the appropriation for redemption of claims for indemnity under paragraph (1) shall be prescribed by Presidential Decree. |
[This Article Wholly Amended on Dec. 30, 2010]
| Article 36 (Inclusion of value of business assets acquired with national subsidies in deductible expenses) |
| (1) | Where a domestic corporation receives subsidies, etc. under the Subsidy Management Act, the Local Finance Act and other statutes prescribed by Presidential Decree (hereafter in this Article, referred to as "National subsidies, etc.") and uses them to acquire or improve business assets prescribed by Presidential Decree (hereafter in this Article, referred to as "business assets"), by no later than the end date of the business year which includes the date of the receipt of the subsidies, or first acquires or improves business assets and receives the National subsidies, etc. afterwards, the amount, including the value of the National subsidies, etc. used for the acquisition or improvement of the business assets among the value of such business assets, may be included in deductible expenses for the purpose of calculating the amount of income for the relevant business year, as prescribed by Presidential Decree. <Amended on Jul. 25, 2011; Dec. 24, 2018> |
| (2) | Where a domestic corporation which has failed to acquire or improve the business assets by the end date of the business year, during which it receives the National subsidies, etc., intends to acquire or improve any business assets within one year from the start date of the following business year, the amount of the National subsidies, etc. to be used for acquisition or improvement may be included in deductible expenses by applying |
| (3) | Where a domestic corporation which has included an amount equivalent to the National subsidies, etc. in the deductible expenses under paragraph (2) fails to use such amount for the acquisition or improvement of business assets by the deadline, or discontinues its business or is dissolved before using it, the amount unused shall be included in gross income for the purpose of calculating the amount of income for the business year during which such grounds arise; provided, the same shall not apply where such domestic corporation is merged or divided and the surviving corporation, etc. succeeds to the amount. In such cases, the amount shall be deemed to have been included in deductible expenses by such surviving corporation, etc. under paragraph (2). |
| (4) | In applying paragraph (1), where any domestic corporation receives the National subsidies, etc. in any form of assets, other than money, and uses them for its business, they shall be deemed to have been used for the acquisition or improvement of business assets. |
| (5) | A domestic corporation which intends to apply paragraphs (1) and (2) shall submit a detailed statement on the National subsidies, etc., and on the business assets acquired by the National subsidies, etc. (a plan to use the National subsidies, etc. in cases falling under paragraph (2)) to the head of the tax office having jurisdiction over the place of tax payment, as prescribed by Presidential Decree. <Amended on Dec. 24, 2018> |
| (6) | For purposes of paragraphs (1) through (3), matters necessary for calculating the amount included in deductible expenses and the amount included in the gross income, the method of calculation, and other matters shall be prescribed by Presidential Decree. |
[This Article Wholly Amended on Dec. 30, 2010]
| Article 37 (Inclusion of value of business assets acquired with construction charges in deductible expenses) |
| (1) | Where a domestic corporation engaging in any of the following types of business is provided with tangible and intangible assets (hereinafter referred to as "business assets") for facilities required for the business, such as land and other assets provided by consumers or beneficiaries of such facilities or where such domestic corporation receives money, etc. (hereafter in this Article, referred to as "construction charges") and uses it to acquire business assets by the end of the business year in which it receives the money or acquires business assets and then receives construction charges therefor later, the value of the relevant business assets (the amount equivalent to the construction charges used to acquire such business assets, where the domestic corporation receives construction charges) may be included in deductible expenses for the purpose of calculating the amount of income for the relevant business year, as prescribed by Presidential Decree: <Amended on Jan. 1, 2014; Dec. 24, 2018> |
| 1. | Electricity service business as prescribed in the Electric Utility Act; |
| 2. | Urban gas business as prescribed in the Urban Gas Business Act; |
| 3. | Liquefied petroleum gas-filling business, liquefied petroleum gas collective supply business, and liquefied petroleum gas sales business as prescribed in the Safety Control and Business of Liquefied Petroleum Gas Act; |
| 4. | Integrated energy supply business as defined in subparagraph 2 of Article 2 of the Integrated Energy Supply Act; |
| 5. | Business similar to those referred to in subparagraphs 1 through 4 and prescribed by Presidential Decree. |
| (2) | Article 36 (2) and (3) shall apply |
| (3) | A domestic corporation which intends to apply paragraphs (1) and (2) shall submit a detailed statement on the business assets and construction charges received and the business assets acquired with construction charges (a plan to use construction charges in cases falling under paragraph (2)) to the head of the tax office having jurisdiction over the place of tax payment, as prescribed by Presidential Decree. <Amended on Dec. 24, 2018> |
| (4) | For purposes of paragraphs (1) and (2), matters necessary for calculating the amount included in deductible expenses and the amount included in the gross income, the method of calculation, and other matters shall be prescribed by Presidential Decree. |
[This Article Wholly Amended on Dec. 30, 2010]
[Title Amended on Dec. 24, 2018]
| Article 38 (Inclusion of value of assets acquired with insurance marginal profits in deductible expenses) |
| (1) | Where a domestic corporation is paid insurance money due to the destruction or damage of its tangible assets (hereinafter referred to as "assets subject to insurance") and acquire the same type of assets in place of the destroyed assets subject to insurance or to improve the damaged assets subject to insurance (including the improvement of the acquired assets) by the end date of the business year which includes the date of the payment, an amount equivalent to the insurance marginal profits used for the acquisition or improvement of the relevant assets, among the value of such assets, may be included in deductible expenses for the purpose of calculating the amount of income for the relevant business year, as prescribed by Presidential Decree. <Amended on Dec. 24, 2018> |
| (2) | Article 36 (2) and (3) shall apply |
| (3) | A domestic corporation which intends to apply paragraphs (1) and (2) shall submit a detailed statement on the insurance money paid and the assets acquired or improved with the insurance money (a plan to use insurance marginal profits in cases falling under paragraph (2)) to the head of the tax office having jurisdiction over the place of tax payment, as prescribed by Presidential Decree. <Amended on Dec. 24, 2018> |
| (4) | For purposes of paragraphs (1) and (2), matters necessary for calculating the amount included in deductible expenses and the amount included in the gross income, the method of calculation, and other matters shall be prescribed by Presidential Decree. |
[This Article Wholly Amended on Dec. 30, 2010]
[Title Amended on Dec. 24, 2018]
| Article 39 Deleted. <Dec. 31, 2001> |
Sub-Section 5 Periods during Which Gross Income and Deductible Expenses Accrue
| Article 40 (Business year in which gross income and deductible expenses accrue) |
| (1) | The business year in which gross income and deductible expenses of a domestic corporation accrue shall be the business year which includes the date the relevant gross income and deductible expenses are settled. |
| (2) | Matters necessary for the scope of the business year in which gross income and deductible expenses accrue under paragraph (1) and other matters shall be prescribed by Presidential Decree. |
[This Article Wholly Amended on Dec. 30, 2010]
| Article 41 (Acquisition value of assets) |
| (1) | The acquisition value of assets acquired by a domestic corporation through purchase, manufacture, exchange, and donation, or by other means shall be any of the following amounts: <Amended on Dec. 24, 2018; Dec. 31, 2022> |
| 1. | For assets purchased from another person (excluding financial assets prescribed by Presidential Decree): The amount of the purchase price plus any incidental costs; |
| 1-2. | Stocks, etc. prescribed by Presidential Decree, as stocks, etc. acquired by a domestic corporation by taking over a foreign subsidiary: An amount determined by Presidential Decree in consideration of the amount of dividend income not included in gross income pursuant to Article 18-4, retained earnings of the foreign subsidiary at the time of acquisition; |
| 2. | For assets acquired through the corporation's own manufacture, production, construction, or by other means corresponding thereto: The amount of the product cost plus any incidental costs; |
| 3. | For assets, other than those referred to in subparagraphs 1 and 2, the amount prescribed by Presidential Decree as at the time of acquisition. |
| (2) | Matters necessary for calculating the acquisition value of assets, such as the scope of purchase price and incidental costs under paragraph (1), shall be prescribed by Presidential Decree. |
[This Article Wholly Amended on Dec. 30, 2010]
| Article 42 (Evaluation of assets and liabilities) |
| (1) | Where the book value of assets and liabilities held by a domestic corporation increases or decreases (excluding depreciation; hereafter in this Article, referred to as "evaluation"), the book value of such assets and liabilities when calculating the amount of income for the business year which includes the date of evaluation and each subsequent business year shall be the value before evaluation; provided, the same shall not apply to any of the following cases: <Amended on Dec. 24, 2018> |
| 1. | Evaluation of tangible and intangible assets, etc. under the Insurance Business Act and other statutes (limited to where the book value increases); |
| 2. | Evaluation of inventory assets and other assets and liabilities prescribed by Presidential Decree. |
| (2) | Assets and liabilities referred to in paragraph (1) 2 shall be separately evaluated by the method prescribed by Presidential Decree. |
| (3) | Notwithstanding paragraphs (1) and (2), the book value of any of the following assets may be reduced by the method prescribed by Presidential Decree: <Amended on Dec. 24, 2018> |
| 1. | Inventory assets which cannot be sold at the arm's length price due to damage, decomposition, or on other grounds; |
| 2. | Tangible assets damaged or destroyed due to grounds prescribed by Presidential Decree, such as a natural disaster or fire; |
| 3. | Stocks, etc. prescribed by Presidential Decree where the issuing corporation of the relevant stocks, etc. falls any of the following cases: |
| (a) | Where the stocks, etc. goes dishonored; |
| (b) | Where the issuing corporation receives authorization for its rehabilitation plan under the Debtor Rehabilitation and Bankruptcy Act; |
| (c) | Where it reveals signs of insolvency under the Corporate Restructuring Promotion Act; |
| (d) | Where it goes bankrupt. |
| 4. | Deleted. <Dec. 24, 2018> |
| (4) | A domestic corporation which evaluates its assets and liabilities under paragraphs (2) and (3) shall submit a detailed statement on the evaluation of such assets and liabilities to the head of the tax office having jurisdiction over the place of tax payment, as prescribed by Presidential Decree. <Amended on Dec. 24, 2018> |
| (5) | Matters necessary for disposing of marginal profits or marginal losses arising from the evaluation of assets and liabilities under paragraphs (2) and (3), and other matters shall be prescribed by Presidential Decree. <Amended on Dec. 24, 2018> |
[This Article Wholly Amended on Dec. 30, 2010]
| Article 42-2 (Non-inclusion in gross income of evaluation marginal profits of inventory assets of domestic corporation that applies K-IFRS) |
| (1) | Where a domestic corporation reports to the head of the tax office having jurisdiction over the place of tax payment the change of the evaluation method of inventory assets from the last-in first-out method prescribed by Presidential Decree to other evaluation methods of inventory assets prescribed by Presidential Decree for the business year in which it first applies the K-IFRS, the amount deducting the amount referred to in subparagraph 2 from the amount referred to in subparagraph 1 (hereafter in this Article, referred to as "evaluation marginal profits of inventory assets") need not be included in the gross income for the purpose of calculating the amount of income for the relevant business year. In such cases, the evaluation marginal profits of inventory assets shall be equally divided and be included in the gross income for five years from the start date of the business year following the business year during which the K-IFRS are first applied: <Amended on Dec. 24, 2018> |
| 1. | Evaluated value of the inventory assets as at the beginning of the business year in which the K-IFRS are first applied; |
| 2. | Evaluated value of the inventory assets as at the end of the immediately preceding business year in which the K-IFRS are first applied. |
| (2) | Where a domestic corporation that fails to include the evaluation marginal profits in the gross income pursuant to the former part of paragraph (1) excluding its subparagraphs is dissolved (excluding a dissolution due to a qualified merger in Article 44 (2) and (3) or a qualified division in Article 46 (2)), any remainder after being included in the gross income under the latter part of paragraph (1) excluding its subparagraphs shall be included in gross income when calculating the amount of income for the business year in which the registration date of the dissolution falls. <Amended on Dec. 24, 2018> |
| (3) | Matters necessary for procedures for reporting the change of the evaluation method for inventory assets, the application for non-inclusion in gross income, the method of inclusion in gross income and the non-inclusion of the evaluation marginal profits of inventory assets in the gross income shall be prescribed by Presidential Decree. <Amended on Dec. 24, 2018> |
[This Article Added on Dec. 31, 2011]
[Title Amended on Dec. 24, 2018]
| Article 42-3 (Special cases concerning calculation of income for insurance company applying Korean International Financial Reporting Standards) |
| (1) | Where an insurance company first applies such accounting standards prescribed by Presidential Decree as the Korean International Financial Reporting Standards for the insurance business (hereafter in this Article referred to as international financial reporting standards for insurance contracts"), the amount calculated by applying the formula prescribed by Presidential Decree to 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") shall be included in gross income for the purpose of calculating the amount of income for the business year of first application. |
| (2) | An insurance company shall include an amount, which is calculated by applying the formula prescribed by Presidential Decree to liability reserves appropriated according to the accounting standards referred to in Article 120 (3) of the Insurance Business Act as of the start date of the business year of first application, in deductible expenses for the purpose of calculating the amount of income for the relevant business year. |
| (3) | Notwithstanding paragraph (1), an insurance company may choose not to include in gross income an amount (limited to where the amount is a positive number; hereafter in this Article referred to as "converted profit") calculated by applying the formula prescribed by Presidential Decree to the amount obtained by subtracting the amount prescribed in paragraph (2) from the amount prescribed in paragraph (1) for the purpose of calculating the amount of income for the business year of first application and the subsequent three business years. In such cases, the converted profits shall be equally divided over the three years from the start date of the fourth business year following the business year of first application and shall be included in gross income. |
| (4) | Where an insurance company is dissolved (excluding dissolution due to a qualified merger prescribed in Article 44 (2) and (3) or a qualified division prescribed in Article 46 (2)) during the period prescribed in paragraph (3), any converted profit not included in gross income shall be included in gross income for the purpose of calculating the amount of income for the business year in which the registration date of dissolution falls. |
| (5) | Article 32 shall not apply to an insurance company to which paragraph (3) applies, irrespective of the period referred to in the same paragraph. |
| (6) | The application for non-inclusion of converted profits in gross income and the inclusion of such profits in gross income in equal division, and other necessary matters shall be prescribed by Presidential Decree. |
[This Article Added on Dec. 31, 2022]
| Article 43 (Application of corporate accounting standards and practices) |
In calculating the amount of income of a domestic corporation for each business year, where the corporation applies corporate accounting standards which are generally acknowledged as fair and proper, or continuously applies the relevant practices with respect to the business year during which gross income and deductible expenses accrue, and to the acquisition and evaluation of assets and liabilities, such corporate accounting standards or practices shall be followed, except as otherwise provided in this Act and the Act on Restriction on Special Cases concerning Taxation. <Amended on Dec. 24, 2018>
[This Article Wholly Amended on Dec. 30, 2010]
Sub-Section 6 Special Cases concerning Mergers and Divisions
| Article 44 (Taxation on merged corporation upon merger) |
| (1) | Where a merged corporation is dissolved in the course of a merger, the assets of the merged corporation shall be deemed transferred to a surviving corporation. In such cases, capital gains or losses accruing from the transfer (referring to the amount calculated by deducting the value referred to in subparagraph 2 from the value referred to in subparagraph 1; hereafter in this Article and Article 44-3, the same shall apply) shall be included in the gross income or deductible expenses when the merged corporation calculates the amount of income for the business year in which the registration date of the merger falls: |
| 1. | Transfer value that the merged corporation has received from the surviving corporation; |
| 2. | Value calculated by deducting the total book value of liabilities from the total book value of assets (hereafter in this Sub-section, referred to as "net book value of assets") as of the registration date of the merger of the merged corporation. |
| (2) | In applying paragraph (1), for a merger that meets each of the following requirements (hereinafter referred to as "qualified merger"), capital gains or losses on a transfer may be deemed nil, considering the value referred to in paragraph (1) 1 as the net book value of assets as of the registration date of the merger of the merged corporation; provided, capital gains or losses on a transfer may be nil, as prescribed by Presidential Decree, deeming it as a qualified merger, although the requirements prescribed in subparagraph 2, 3 or 4 are not met, in inevitable circumstances prescribed by Presidential Decree: <Amended on Dec. 31, 2011; Dec. 19, 2017; Dec. 24, 2018; Dec. 21, 2021> |
| 1. | A merger should be conducted between domestic corporations which have continued to operate their business for at least one year as on the registration date of the merger; provided, a corporation prescribed by Presidential Decree, the sole purpose of which is to merge with other corporations shall be deemed to meet the requirements prescribed in the main clause; |
| 2. | Where the value of the stocks, etc., of a surviving corporation or the parent corporation (referring to a domestic corporation holding the total number of outstanding stocks or total investment amount of a surviving corporation as at the registration date of the merger) of the surviving corporation is at least 80/100 of the total costs of the merger received by the stockholders, etc., of a merged corporation in return for such merger; the stocks, etc., shall be distributed, as prescribed by Presidential Decree; and the stockholders, etc., of the merged corporation prescribed by Presidential Decree hold such stocks, etc., until the last day of the business year in which the registration date of the merger falls; |
| 3. | The merging corporation shall continue the business succeeded from the merged corporation until the end of the business year in which the merger is registered; provided, a merged corporation prescribed by Presidential Decree, the sole purpose of which is to merge with another corporation, shall be deemed to meet the requirements prescribed in the main clause; |
| 4. | Where the ratio of employees transferred to the surviving corporation to the employees specified by Presidential Decree, among employees of the merged corporation as at one month before the date of registration of the merger, is at least 80/100 and the ratio remains unchanged until the end of the business year in which the merger is registered. |
| (3) | In either of the following cases, capital gains or losses on a transfer may be nil, deeming it as a qualified merger, notwithstanding paragraph (2): <Amended on Dec. 31, 2011; Dec. 20, 2016; Dec. 24, 2018> |
| 1. | Where a domestic corporation merges with or is merged into another corporation which holds the total number of outstanding stocks or the total amount of investment; |
| 2. | Where corporations whose total number of outstanding stocks or total amount of investment is held by the same domestic corporation are merged with each other. |
| (4) | Matters necessary for calculating the transfer value, the net book value of assets, and the total costs of a merger; and criteria for determining the continuance or discontinuance of the business succeeded under paragraphs 1 through 3 shall be prescribed by Presidential Decree. |
[This Article Wholly Amended on Dec. 30, 2010]
| Article 44-2 (Taxation on surviving corporation upon merger) |
| (1) | Where a surviving corporation succeeds to the assets of a merged corporation due to a merger, it shall be deemed to have succeeded to the assets from the merged corporation at a market price as at the registration date of the merger (referring to the market price provided in Article 52 (2); hereafter in this Sub-section, the same shall apply). In such cases, a surviving corporation may only succeed to the amount included in or excluded from the gross income or deductible expenses when calculating the amount of income and the tax base for each business year of the merged corporation, and other assets, liabilities, etc., prescribed by Presidential Decree. |
| (2) | Where a surviving corporation is deemed to have succeeded to the assets of a merged corporation at a market price under paragraph (1) and the transfer value paid by the surviving corporation to the merged corporation is less than the amount calculated by deducting the total liabilities from the total assets as at the registration date of the merger of the merged corporation (hereafter in this Sub-section, referred to as "net market price of assets"), the surviving corporation shall appropriate such difference in the tax settlement invoice referred to in Article 60 (2) 2 and include it in gross income in equal installments for five years from the registration date of the merger. |
| (3) | Where a surviving corporation is deemed to have succeeded to the assets of a merged corporation at a market price under paragraph (1) and the transfer value paid by the surviving corporation to the merged corporation exceeds the net market price of assets as at the registration date of the merger in circumstances prescribed by Presidential Decree, the surviving corporation shall appropriate the difference in the tax settlement invoice referred to in Article 60 (2) 2 and include it in deductible expenses in equal installments for five years from the registration date of the merger. |
| (4) | Matters necessary for calculating the amounts included in gross income or deductible expenses and the method of calculation under paragraphs (1) through (3) and other matters shall be prescribed by Presidential Decree. |
[This Article Wholly Amended on Dec. 30, 2010]
[Title Amended on Dec. 24, 2018]
| Article 44-3 (Special provisions concerning taxation on surviving corporation upon qualified merger) |
| (1) | A surviving corporation that qualifiedly merges shall be deemed to have succeeded to the assets of a merged corporation at the book value, notwithstanding Article 44-2. In such cases, the surviving corporation shall appropriate the difference between the book value and the market price referred to in Article 44-2 (1) per asset, as prescribed by Presidential Decree. <Amended on Dec. 24, 2018> |
| (2) | A surviving corporation that qualifiedly merges shall succeed to the losses referred to in Article 13 (1) 1 as at the registration date of the merger of the merged corporation and the amount included in or excluded from the gross income or deductible expenses when the merged corporation calculates the amount of income and the tax base for each business year, other assets, liabilities, reductions, tax credits, etc. referred to in Article 59, as prescribed by Presidential Decree. <Amended on Dec. 24, 2018> |
| (3) | Where any of the following occurs during the period prescribed by Presidential Decree not exceeding three years, a surviving corporation that qualifiedly merges (excluding the cases deemed as a qualified merger pursuant to Article 44 (3)) shall include, as prescribed by Presidential Decree, in gross income the difference between the book value of the succeeded assets and the market price referred to in Article 44-2 (1) (limited to only where the market price exceeds the book value; hereafter the same shall apply in paragraph (4)), the amount deducted from the succeeded losses when calculating the amount of income for the business year which includes the date the grounds arise, etc. and shall not apply reductions or tax credits starting from the relevant business year after paying the amount of reductions, tax credits, etc. deducted upon succession from the merged corporation under paragraph (2) in addition to the corporate tax for the relevant business year, as prescribed by Presidential Decree; provided, the same shall not apply where inevitable circumstances prescribed by Presidential Decree exist: <Amended on Dec. 19, 2017; Dec. 24, 2018> |
| 1. | Where a surviving corporation discontinues the business succeeded to from a merged corporation; |
| 2. | Where stockholders, etc. of a merged corporation prescribed by Presidential Decree dispose of the stocks, etc. received from a surviving corporation; |
| 3. | Where the number of the employees specified by Presidential Decree (hereafter in this subparagraph, referred to as "employees") as employees of the surviving corporation as at the end of each business falls below 80/100 of the sum of employees of the merged corporation and the surviving corporation as at one month before the date of registration of the merger. |
| (4) | A surviving corporation which includes in gross income the difference, etc. between the book value of the transferred assets pursuant to paragraph (3) and the market price referred to in Article 44-2 (1), it shall include, as prescribed by Presidential Decree, in gross income or deductible expenses the difference between the transfer value paid by the surviving corporation to the merged corporation and the net market price of assets as at the registration date of the merger of the merged corporation until the date five years pass after the registration date of the merger from the date any of the grounds referred to in paragraph (3) arises. <Amended on Dec. 24, 2018> |
| (5) | A surviving corporation, to which paragraph (1) applies, shall file a detailed statement on the succeeded assets due to division to the head of the tax office having jurisdiction over the place of tax payment, as prescribed by Presidential Decree. <Amended on Dec. 24, 2018> |
| (6) | Matters necessary for criteria for determining the continuance or discontinuance of the succeeded business, for calculating the amounts included in gross income and deductible expenses, the method for inclusion referred to in paragraphs (1) through (5), and other matters shall be prescribed by Presidential Decree. <Amended on Dec. 24, 2018> |
[This Article Wholly Amended on Dec. 30, 2010]
[Title Amended on Dec. 24, 2018]
| Article 45 (Restriction on deduction of losses carried forward upon merger) |
| (1) | Losses referred to in Article 13 (1) 1 as on the registration date of the merger of a surviving corporation, excluding the amount of losses that a surviving corporation succeeds to pursuant to Article 44-3 (2), shall not be deducted to the extent of income (referring to an amount calculated by proportionally dividing the amount of income by the rate of value of asset prescribed by Presidential Decree where no separate accounting has been kept as the corporation fell under the proviso to Article 113 (3); hereafter in this Article, the same shall apply) accruing from the business that has been succeeded to from the merged corporation when calculating the tax base for each business year of the surviving corporation. <Amended on Dec. 24, 2018; Dec. 22, 2020> |
| (2) | Losses of a merged corporation succeeded to by a surviving corporation under Article 44-3 (2) shall be deducted to the extent of income accruing from the business succeeded to from the merged corporation when calculating the tax base for each business year of the surviving corporation. |
| (3) | A surviving corporation that qualifiedly merges shall include, in deductible expenses, losses on disposition of the assets (limited to the difference only where the market value of the relevant assets under Article 52 (2) as of the registration date of the merger is lower than book value and to the losses incurred during the business years ending within five years after the registration date of the merger) held by the surviving corporation and the merged corporation prior to the merger to the extent of income (referring to the amount of income before the relevant losses on disposition are deducted) accruing from business of the relevant corporation prior to the merger in calculating the amount of income of the relevant business year. In such cases, paragraphs (1) and (2) shall apply accordingly, deeming that losses on disposition excluded from deductible expenses were incurred from the business of the relevant corporation prior to the merger at the time of disposition of the assets. <Amended on Dec. 31, 2011; Dec. 20, 2016> |
| (4) | Reductions or tax credits of a merged corporation that a surviving corporation has succeeded to under Article 44-3 (2) shall apply to the extent of income accruing from the business that has been succeeded to from the merged corporation or the amount of corporate tax equivalent thereto, as prescribed by Presidential Decree. |
| (5) | Notwithstanding the clues other than each subparagraph of Article 13 (1), deductions for losses as of the merger registration date of the merged corporation pursuant to paragraphs (1) and (2) and the losses of the merged corporation succeeded by the merged corporation shall be 80/100 of the income amount under each of the following subparagraphs (100/100 in the case of a corporation prescribed by Presidential Decree, such as a small and medium-sized enterprise and a company implementing a rehabilitation plan): <Added on Dec. 31, 2019; Dec. 31, 2022> |
| 1. | In cases of losses as of the registration date of the merger of the merged corporation: Amount calculated by subtracting the amount of income accruing from the business succeeded to from the merged corporation from the amount of income of the merging corporation; |
| 2. | Where losses of a merged corporation succeeded to by a surviving corporation: The amount of income accruing from the business succeeded to from the merged corporation. |
| (6) | As of the merger registration date of a surviving corporation, out of an amount not included in deductible expenses when calculating the amount of income for each subsequent business year (hereafter in this Article referred (6) As of the merger registration date of a surviving corporation, out of an amount not included in deductible expenses when calculating the amount of income for each subsequent business year (hereafter in this Article referred to as "amount exceeding the ceiling on donations") as an amount carried forward under Article 24 (5) out of the donations referred to in paragraph (2) 1 and (3) 1 of the same Article, the amount excluding an amount exceeding the ceiling on donations that a surviving corporation succeeds to under Article 44-3 (2) 2 shall be included in deductible expenses to the extent of the respective ceilings on donations includible in deductible expenses prescribed in Article 24 (2) 2 and (3) 2 on the basis of the amount of income accruing from the merging corporation's business before the merger for the purpose of calculating the income amount for each business year of the surviving corporation. <Added on Dec. 22, 2020> |
| (7) | An amount that a surviving corporation succeeds to under Article 44-3 (2), as an amount exceeding the ceilings on donations as of the merger registration date of the merged corporation, shall be included in deductible expenses to the extent of the respective ceilings on donations includible in deductible expenses referred to in Article 24 (2) 2 and (3) 2 on the basis of the amount of income accruing from the business succeeded from the merged corporation, for the purpose of calculating the amount of income for each business year of the surviving corporation. <Added on Dec. 22, 2020> |
| (8) | Matters necessary for the calculation of losses to be deducted when calculating the tax base for each fiscal year, the inclusion of the losses on disposition of the succeeded assets in deductible expenses, the inclusion of the amount exceeding a ceiling on donations succeeded, the calculation of the amount of corporate tax constituting the amount of income accruing from the business that has been succeeded under paragraphs (1) through (7), and other matters, shall be prescribed by Presidential Decree. <Amended on Dec. 31, 2019; Dec. 22, 2020> |
[This Article Wholly Amended on Dec. 30, 2010]
| Article 46 (Taxation on divided corporations upon division) |
| (1) | Where a domestic corporation is dissolved in the course of a division (excluding a split-off: hereafter in this Article and Articles 46-2 through 46-4, the same shall apply), the assets of the domestic corporation shall be deemed transferred to a corporation established through division or a counterpart corporation to a division and merger (hereinafter referred to as "corporation established through division, etc."). In such cases, capital gains or losses on a transfer (referring to the amount calculated by subtracting the value referred to in subparagraph 2 from the value referred to in subparagraph 1; hereafter in this Article and Article 46-3, the same shall apply) shall be included in the gross income or deductible expenses when a divided corporation or a disappearing counterpart corporation to the merger and division (hereinafter referred to as "divided corporation, etc.") calculates the amount of income for the business year in which the registration date of the division falls: <Amended on Dec. 31, 2011> |
| 1. | Transfer value received by the divided corporation, etc., from a corporation established through division, etc.; |
| 2. | Net book value of assets as on the registration date of the division of a divided corporation, etc. |
| (2) | In applying paragraph (1), with respect to a division which meets each of the following requirements (hereinafter referred to as "qualified division), capital gains or losses on a transfer may be deemed nil, deeming the value referred to in paragraph (1) 1 to be the net book value of assets as of the registration date of the division of a divided corporation, etc.; provided, capital gains or losses on a transfer may be deemed nil, as prescribed by Presidential Decree, although the requirements prescribed in subparagraph 2, 3 or 4 are not met, deeming it as a qualified division, in inevitable circumstances prescribed by Presidential Decree: <Amended on Dec. 31, 2011; Dec. 20, 2016; Dec. 19, 2017; Dec. 24, 2018; Dec. 31, 2024> |
| 1. | Where a domestic corporation which has continuously operated business for at least five years as on the registration date of the division is divided upon meeting the following requirements (in cases of a division and merger, a disappearing counterpart corporation to a division and merger or a counterpart corporation to a division and merger shall be a domestic corporation which has continuously operated business for at least one year as on the registration date of the division): |
| (a) | That it divides an independent business division which can be operated after division; |
| (b) | That the assets and liabilities of a divided business division shall be comprehensively succeeded; provided, 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, shall be excluded; |
| (c) | That it shall be divided upon investment only by a divided corporation, etc.; |
| 2. | Where the total costs of a division received from a corporation established through division, etc., by the stockholders of a divided corporation, etc. (in cases of a division and merger, referring to where at least 80/100 of the costs of the division is in stocks of the corporation established through division, etc. or where at least 80/100 of the costs of the division is in stocks of the domestic corporation that holds the total number of outstanding stocks or the total amount of investment of the counterpart corporation to the division and merger) are in stocks, and such stocks are allocated in consideration of the ratio of stocks, etc. held by each stockholder of the divided corporation, etc. and the stockholders of the divided corporation, etc., prescribed by Presidential Decree hold such stocks until the last day of the business year in which the division is registered; |
| 3. | Where a corporation established through division, etc., continues to operate the business succeeded to from the divided corporation, etc., until the last day of the business year in which the registration date of the division falls; |
| 4. | Where the ratio of the employees transferred to the corporation established through division, etc. to the employees specified by Presidential Decree as employees of the divided business division as at one month before the date of registration of the division is at least 80/100 and the ratio remains unchanged until the last day of the business year in which the division is registered. |
| (3) | Notwithstanding paragraph (2), where a business division prescribed by Presidential Decree, such as a business division mainly engaged in the real estate rental business, is divided, it shall not be deemed a qualified division. <Added on Dec. 22, 2020> |
| (4) | Matters necessary for the calculation of the transfer value and the net book value of assets, the criteria for determining whether a business division is independent and able to operate its business separately, the calculation of the cost of a division, and the criteria for determining whether the business acquired by succession continues under paragraphs (1) or (2), and other matters, shall be prescribed by Presidential Decree. <Amended on Jan. 1, 2014; Dec. 22, 2020> |
[This Article Wholly Amended on Dec. 30, 2010]
| Article 46-2 (Taxation on corporations established through division upon unqualified division) |
| (1) | Where a corporation established through division, etc. has succeeded to the assets from a divided corporation, etc. due to the division, it shall be deemed succeeded to the assets of the divided corporation, etc. at the market price as at the registration date of the division. In such cases, the corporation established through division, etc. may succeed to only the amount included in or excluded from gross income or deductible expenses when it calculates the amount of income and the tax base for each business year of the divided corporation, etc. and other assets, liabilities, etc. prescribed by Presidential Decree. |
| (2) | A corporation and the transfer value paid by the corporation established through division, etc. to the divided corporation, etc. is less than the net market price of assets as at the registration date of the division of the divided corporation, etc., the corporation established through division, etc. shall appropriate such difference in the tax settlement invoice referred to in Article 60 (2) 2 and include it in gross income in equal installments for five years from the registration date of the division. |
| (3) | Where a corporation established through division, etc. is deemed to succeed to the assets of a divided corporation, etc. at the market price pursuant to paragraph (1) and the transfer value paid by the corporation established through division, etc. to the divided corporation, etc. exceeds the net market price of assets as at the registration date of the division in circumstances prescribed by Presidential Decree, the corporation, etc. established through division shall appropriate such difference in the tax settlement invoice referred to in Article 60 (2) 2 and include it in deductible expenses in equal installments for five years from the registration date of the division. |
| (4) | Matters necessary for calculating the amounts included in gross income or deductible expenses and the method of calculation under paragraphs (1) through (3) and other matters shall be prescribed by Presidential Decree. |
[This Article Wholly Amended on Dec. 30, 2010]
[Title Amended on Dec. 24, 2018]
| Article 46-3 (Special provisions concerning Taxation on corporation established through division upon qualified division) |
| (1) | A corporation established through division, etc. that qualifiedly divides shall be deemed to have succeeded to the assets of a divided corporation, etc. at the book value, notwithstanding Article 46-2. In such cases, the corporation, etc. established through division shall appropriate the difference between the book value and the market price referred to in Article 46-2 (1) per asset, as prescribed by Presidential Decree. <Amended on Dec. 24, 2018> |
| (2) | A corporation established through division, etc. that qualifiedly divides has succeeded to the assets of a divided corporation, etc. at the book value pursuant to paragraph (1), it shall succeed to the losses referred to in Article 13 (1) 1 as on the registration date of the division of the divided corporation, etc. and the amount included in or excluded from gross income or deductible expenses when the divided corporation, etc. calculates the amount of income and the tax base for each business year, other assets, liabilities, reductions, tax credits, etc. under Article 59, as prescribed by Presidential Decree. <Amended on Dec. 24, 2018> |
| (3) | Where any of the following occurs during the period prescribed by Presidential Decree not exceeding three years, a corporation established through division, etc. that qualifiedly divides shall include, as prescribed by Presidential Decree, in the gross income the difference between the book value of the succeeded assets and the market price referred to in Article 46-2 (1) (limited to where the market price exceeds the book value; hereafter the same shall apply in paragraph (4)) and the amount deducted from the succeeded losses when calculating the amount of income for the business year which includes the date the relevant grounds arise, and shall not apply reductions or tax credits starting from the relevant business year after paying the amount of reductions, tax credits, etc. deducted by succession from the divided corporation, etc. under paragraph (2) in addition to the corporate tax for the relevant business year, as prescribed by Presidential Decree; provided, the same shall not apply where inevitable circumstances prescribed by Presidential Decree exist: <Amended on Dec. 19, 2017; Dec. 24, 2018> |
| 1. | Where a corporation established through division, etc. discontinues the business succeeded to from a divided corporation, etc.; |
| 2. | Where stockholders, etc. of a divided corporation, etc. prescribed by Presidential Decree dispose of the stocks, etc. received from a corporation established through division, etc.; |
| 3. | Where the number of the employees specified by Presidential Decree (hereafter in this subparagraph, referred to as "employees") as employees of the corporation established through division as on the last day of each business falls below 80/100 of the number of employees of the divided business division as at one month before the date of registration of the merger; provided, in cases of a division and merger, it means either of the following cases: |
| (a) | Where the number of employees of the counterpart corporation to the division and merger as at the end of each business year falls below 80/100 of the sum of employees of the divided business division and the counterpart corporation to the division and merger as at one month before the date of registration of the division; |
| (b) | Where the number of employees of the corporation established through division as at the end of each business year falls below 80/100 of the sum of employees of the divided business division and the disappearing counterpart corporation to the division and merger as at one month before the date of registration of the division. |
| (4) | Where a corporation established through division, etc. includes in gross income the difference between the book value of the succeeded assets under paragraph (3) and the market price referred to in Article 46-2 (1), etc., it shall include, as prescribed in Presidential Decree, in gross income or deductible expenses, the difference between the transfer value paid by the corporation established through division, etc. to the divided corporation, etc. and the net market price of assets as on the registration date of the division of the divided corporation, etc. until the date five years pass after the registration date of the division from the date any of the grounds referred to in paragraph (3) arises. |
| (5) | A corporation established through division, etc. to which paragraph (1) applies shall file a detailed statement on the succeeded assets due to division to the head of the tax office having jurisdiction over the place of tax payment, as prescribed by Presidential Decree. |
| (6) | Matters necessary for criteria for determining the continuance or discontinuance of the succeeded businesses, calculation of the amounts included in gross income or deductible expenses, the method of the calculation under paragraphs (1) through (4), and other matters shall be prescribed by Presidential Decree. |
[This Article Wholly Amended on Dec. 30, 2010]
[Title Amended on Dec. 24, 2018]
| Article 46-4 (Restriction on deduction of losses carried forward upon division) |
| (1) | Losses referred to in Article 13 (1) 1 as on the registration date of the division of a counterpart corporation in a division and merger, excluding the amount of losses that a corporation established through division, etc. succeeds to pursuant to Article 46-3 (2), shall not be deducted to the extent of income (referring to an amount calculated by proportionally dividing the amount of income by the rate of value of asset prescribed by Presidential Decree where no separate accounting has not been kept as the corporation fell under the proviso to Article 113 (4); hereafter in this Article, the same shall apply) accruing from the business that has been succeeded to from a divided corporation when calculating the tax base for each business year of the counterpart corporation in the division and merger. <Amended on Dec. 24, 2018; Dec. 22, 2020> |
| (2) | Losses of a divided corporation, etc., succeeded to by a corporation established through division, etc., under Article 46-3 (2), shall be deducted to the extent of income accruing from the business succeeded to from a divided corporation, etc., when calculating the tax base of the corporation established through division, etc., for each business year. |
| (3) | A corporation established through division, etc., that merges and divides with no capital gain on the transfer deemed under Article 46 (2) (hereinafter referred to as "qualified merger and division") shall include, in deductible expenses, losses on disposition of the assets (limited to the difference only where the market value of the relevant assets under Article 52 (2) as on the registration date of the merger is lower than book value and to the losses incurred during the business years ending within five years after the registration date of the merger) held by the divided corporation and the counterpart corporation to a merger and division prior to the merger and division to the extent of income (referring to the amount of income before the relevant losses on disposition are deducted) accruing from the business of the relevant corporation prior to the division and merger in calculating the amount of income of the relevant business year. In such cases, paragraphs (1) and (2) shall apply accordingly, deeming that losses on disposition excluded in deductible expenses were incurred from the business of the relevant corporation prior to the division and merger. <Amended on Dec. 31, 2011; Dec. 20, 2016> |
| (4) | Reductions or tax credits of the divided corporation, etc., that a corporation established through division, etc., has succeeded to under Article 46-3 (2) shall apply to the extent of income accruing from the business that has been succeeded to from the divided corporation, etc., or the amount of corporate tax equivalent to such income, as prescribed by Presidential Decree. |
| (5) | Notwithstanding the proviso to Article 13 (1), as of the registration date of division of the other corporation of the divisional merger pursuant to paragraphs (1) and (2), deductions for deficits of divisional corporations, etc. succeeded by divisional corporations, etc., shall be 80/100 of the income amount under each of the following subparagraphs (100/100 in the case of a corporation prescribed by Presidential Decree, such as a small and medium enterprise and a company implementing a rehabilitation plan): <Added on Dec. 31, 2019; Dec. 31, 2022> |
| 1. | In cases of losses as of the registration date of the division of the counterpart corporation to a division and merger: An amount calculated by subtracting the amount of income accruing from the business succeeded to from the divided corporation from the amount of income of the counterpart corporation to a division and merger; |
| 2. | In cases of losses of a divided corporation, etc., succeeded to by a corporation established through division, etc.: The amount of income accruing from the business succeeded to from a divided corporation, etc. |
| (6) | As of the division registration date of a counterpart corporation in a division and merger, out of an amount not included in deductible expenses when calculating the amount of income for each subsequent business year (hereafter in this Article referred to as "amount exceeding the ceiling on donations") as an amount carried forward under Article 24 (5) out of the donations referred to in paragraphs (2) 1 and (3) 1 of the same Article, the amount excluding an amount excluding the ceiling on donations that a corporation established through division, etc. succeeds to under Article 46-3 (2) be included in deductible expenses to the extent of the respective ceilings on donations includible in deductible expenses prescribed in Article 24 (2) 2 and (3) 2 on the basis of the amount of income accruing from the business of a counterpart corporation in a division and merger before the division and merger for the purpose of calculating the income amount for each business year of the a corporation established through division, etc. <Added on Dec. 22, 2020> |
| (7) | An amount that a corporation established through division, etc. succeeds to under Article 46-3 (2), as an amount exceeding a ceiling on donations as of the division registration date of a divided corporation, etc., shall be included in deductible expenses to the extent of the respective ceilings on donations includible in deductible expenses referred to in Article 24 (2) 2 and (3) 2 on the basis of the amount of income accruing from the business succeeded from the divided corporation, etc. for the purpose of calculating the amount of income for each business year of the corporation established through division, etc. <Added on Dec. 22, 2020> |
| (8) | Matters necessary for the calculation of losses to be deducted when calculating the tax base for each fiscal year, the inclusion of the losses on disposition of the succeeded assets in deductible expenses, the inclusion of the amount exceeding a ceiling on donations succeeded, the calculation of the amount of corporate tax constituting the amount of income accruing from the business that has been succeeded under paragraphs (1) through (7), and other matters, shall be prescribed by Presidential Decree. <Amended on Dec. 31, 2019; Dec. 22, 2020> |
[This Article Wholly Amended on Dec. 30, 2010]
| Article 46-5 (Special provisions concerning taxation on divided corporations surviving division) |
| (1) | Where a domestic corporation survives a division (excluding a split-off), gains or losses accruing from the transfer of the assets of the divided business category to a corporation established through division, etc. (referring to the amount calculated by deducting the value under subparagraph 2 from the value under subparagraph 1; hereafter the same shall apply in this Article) shall be included in gross income or deductible expenses when the divided corporation calculates the amount of income for the business year which includes the registration date of the division: |
| 1. | Transfer value received by a divided corporation from a corporation established through division, etc.; |
| 2. | Net book value of assets as at the registration date of the division of the business category divided by a divided corporation. |
| (2) | Article 46 (2) through (4) shall apply |
| (3) | Articles 46-2, 46-3 and 46-4 shall apply |
[This Article Wholly Amended on Dec. 30, 2010]
| Article 47 (Special provisions concerning taxation on divided corporation upon split-off) |
| (1) | Where a divided corporation acquires stocks, etc., of a corporation established through division through a split-off and meets the requirements for a qualified division provided for in Article 46 (2) and (3) (in cases falling under sparagraph (2) 2 of the same Article, limited to where the full consideration of a division is in stocks, etc.), an amount equivalent to capital gains on the transfer of assets generated by the split-off among the value of such stocks, etc., may be included in deductible expenses when calculating the amount of income for the business year which includes the registration date of the split-off, as prescribed by Presidential Decree; provided, an amount equivalent to capital gains on the transfer of assets may be included in deductible expenses, as prescribed by Presidential Decree, although the requirements prescribed in Article 46 (2) 2, 3 or 4 are not met, in extenuating circumstances prescribed by Presidential Decree. <Amended on Dec. 31, 2011; Dec. 19, 2017; Dec. 31, 2022> |
| (2) | An amount equivalent to capital gains on a transfer that a divided corporation has included in deductible expenses under paragraph (1), shall be included in the gross income as much as the amount prescribed by Presidential Decree in consideration of the ratio of disposition of the relevant stocks, etc., and assets in the business year in which any of the following grounds arises; provided, the foregoing shall not apply where a corporation established through division becomes subject to a qualified merger or qualified division or where such corporation is in other extenuating circumstances prescribed by Presidential Decree: <Amended on Dec. 31, 2011; Jan. 1, 2013> |
| 1. | Where a divided corporation disposes of the stocks, etc., received from the corporation established through division; |
| 2. | Where the corporation established through division disposes of the assets prescribed by Presidential Decree and succeeded to from a divided corporation. In such cases, the corporation established through division shall inform the divided corporation of the disposition of such assets within one month from the date of the disposition. |
| (3) | Where either of the following events occurs during the period prescribed by Presidential Decree, which shall not exceed three years from the registration date of a division, the divided corporation that has included an amount equivalent to capital gains on a transfer in deductible expenses under paragraph (1) shall include, in gross income, any remainder after including an amount in gross income under paragraph (2), among the amount included in deductible losses under paragraph (1), when calculating the amount of income for the business year in which the relevant event occurs; provided, the same shall not apply in extenuating circumstances prescribed by Presidential Decree: <Amended on Dec. 31, 2011; Jan. 1, 2014; Dec. 20, 2016; Dec. 19, 2017> |
| 1. | Where a corporation established through division discontinues the business succeeded to from the divided corporation; |
| 2. | Where the divided corporation holds less than 50/100 of the total number of outstanding stocks or the total investment amount of a corporation established through division; |
| 3. | Where the number of the employees specified by Presidential Decree (hereafter in this subparagraph, referred to as "employees") as employees of the corporation established through division as at the end of each business falls below 80/100 of the sum of employees of the divided business division as at one month before the date of registration of the merger. |
| (4) | Where a divided corporation includes an amount equivalent to capital gains on a transfer in deductible expenses under paragraph (1), the corporation established through division shall succeed to any amount included in or excluded from gross income or deductible expenses by the divided corporation in calculating the amount of income and the tax base for each business year, other assets and liabilities and tax exemptions, tax reductions and tax credits under Article 59, etc., as prescribed by Presidential Decree. <Added on Dec. 31, 2011; Dec. 19, 2017> |
| (5) | Tax exemptions, tax reductions and tax credits to which a corporation established through division succeeds from the divided corporation shall apply within the amount of income accruing from the business transferred from the divided corporation or within the amount of corporate tax on such income, as prescribed by Presidential Decree. <Added on Dec. 19, 2017> |
| (6) | A divided corporation that intends to apply paragraph (1) shall submit a statement on capital gains on a transfer of assets generated by the division to the head of the tax office having jurisdiction over the place of tax payment, as prescribed by Presidential Decree. <Amended on Dec. 31, 2011; Dec. 19, 2017> |
| (7) | Matters necessary for calculating capital gains on a transfer, criteria for determining the continuation or discontinuation of the succeeded business, calculation of the amounts included in gross income or deductible expenses, the method of inclusion under paragraphs (1) and (5), and other matters, shall be prescribed by Presidential Decree. <Amended on Dec. 31, 2011; Dec. 19, 2017> |
[This Article Wholly Amended on Dec. 30, 2010]
| Article 47-2 (Special provisions concerning taxation upon investment in kind) |
| (1) | Where a domestic corporation (hereafter in this Article, referred to as "investing corporation") invests in kind, satisfying the following requirements, an amount equivalent to capital gains on the transfer of asset accruing from the investment in kind among the value of stocks of the domestic corporation acquired through investment in kind (hereafter in this Article, referred to as "invested corporation") may be included in deductible expenses for the purpose of calculating the amount of income for the business year in which the date of investment in kind falls, as prescribed by Presidential Decree; provided, the domestic corporation may include an amount equivalent to capital gains on the transfer of asset in deductible expenses, as prescribed by Presidential Decree, in extenuating circumstances prescribed by Presidential Decree, although it fails to satisfy the requirements prescribed in subparagraph 2 or 4: <Amended on Dec. 31, 2011; Dec. 15, 2015; Dec. 19, 2017; Dec. 24, 2018> |
| 1. | The investing corporation that has operated business for at least five consecutive years as on the date of investment in kind; |
| 2. | The invested corporation shall continuously operate the business that the investing corporation operated with assets invested in kind, until the end of the business year in which such investment in kind is made; |
| 3. | Where a person makes a joint investment with another Korean or foreigner, the person shall not be a related party to the investing corporation; |
| 4. | The investing corporation and a person who makes a joint investment with the investing corporation as prescribed in subparagraph 3 (hereafter in this Article, referred to as "investing corporation, etc.") holds at least 80/100 of the total number of issued stocks or the total investment amount of the invested corporation as on the date following the date of investment in kind and hold such stocks, etc., until the end of the business year in which the date of investment in kind falls; |
| 5. | Deleted. <Dec. 19, 2017> |
| (2) | An amount equivalent to capital gains on a transfer that an investing corporation has included in deductible expenses pursuant to paragraph (1) shall be included in gross income as much as the amount prescribed by Presidential Decree, in consideration of the ratio of disposition of the relevant stocks, etc., and assets for the business year in which any of the following events occurs; provided, the foregoing shall not apply 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: <Amended on Dec. 31, 2011; Jan. 1, 2013> |
| 1. | Where an investing corporation disposes of stocks, etc., received from an invested corporation; |
| 2. | Where an invested corporation disposes of assets prescribed by Presidential Decree and succeeded to from an investing corporation, etc. In such cases, the invested corporation shall inform the investing corporation of the disposition of such assets within one month from the date of the disposition. |
| (3) | Where either of the following events occurs, the investing corporation that has included an amount equivalent to capital gains on a transfer in deductible expenses pursuant to paragraph (1) shall include any remainder after including an amount in gross income pursuant to paragraph (2), among the amount included in deductible expenses pursuant to paragraph (1), in gross income within the period prescribed by Presidential Decree, which shall not exceed three years, when calculating the amount of income for the business year in which the relevant event occurs; provided, the same shall not apply in extenuating circumstances prescribed by Presidential Decree: <Amended on Dec. 31, 2011; Dec. 20, 2016; Dec. 19, 2017> |
| 1. | Where an invested corporation discontinues the business that the investing corporation has operated with assets invested in kind; |
| 2. | Where an investing corporation, etc., holds less than 50/100 of the total number of outstanding stocks or the total investment amount of an invested corporation. |
| (4) | The calculation of capital gains on a transfer to be included in deductible expenses, the criteria for determining the continuation or discontinuation of the business that an investing corporation has operated with assets invested in kind, the method for calculating the amount to be included in gross income and the method for including such amount and the submission of statements of investment in kind under paragraphs (1) through (3), and other necessary matters shall be prescribed by Presidential Decree. <Amended on Dec. 15, 2015; Dec. 19, 2017> |
[This Article Wholly Amended on Dec. 30, 2010]
| Article 48 Deleted. <Dec. 31, 2009> |
| Article 48-2 Deleted. <Dec. 31, 2009> |
| Article 49 Deleted. <Dec. 31, 2009> |
| Article 50 (Inclusion of amount equivalent to transfer marginal profits of assets due to exchange in deductible expenses) |
| (1) | Where a domestic corporation which engages in business prescribed by Presidential Decree exchanges assets prescribed by Presidential Decree (hereafter in this Article, referred to as "business assets") used directly for such business for at least two years for the same type of business assets (hereafter in this Article, referred to as "assets acquired by exchange") directly used for the relevant business for at least two years by another domestic corporation, other than a related party provided in Article 52 (1) (including an exchange among several corporations prescribed by Presidential Decree), an amount equivalent to transfer marginal profits of the business assets accrued by the exchange from the value of assets acquired by the exchange may be included in deductible expenses for the purpose of calculating the amount of income for the relevant business year, as prescribed by Presidential Decree. <Amended on Dec. 31, 2011; Dec. 24, 2018> |
| (2) | Paragraph (1) shall only apply where a domestic corporation uses assets acquired by exchange for its business until the end date of the business year in which the date of the exchange falls. |
| (3) | A domestic corporation which intends to apply paragraph (1) shall submit a detailed statement on the exchange of assets to the head of the tax office having jurisdiction over the place of tax payment, as prescribed by Presidential Decree. |
| (4) | In applying paragraph (1), matters necessary for the amount included in deductible expenses and the method of inclusion of such amount in gross income shall be prescribed by Presidential Decree. |
[This Article Wholly Amended on Dec. 30, 2010]
| Article 50-2 (Restriction on deduction of losses carried over in case of business acquisition) |
Where a domestic corporation acquires a business of another domestic corporation, as prescribed by Presidential Decree, the amount of losses referred to in Article 13 (1) 1 as of the date of acquisition of the business shall not be deducted to the extent of the amount of income accruing from the acquired business sector (where the accounting is not recorded separately under the proviso of Article 113 (7), it shall be the amount gained by dividing the amount of income by the percentage of the value of assets prescribed by Presidential Decree) for the purpose of calculating the tax base for each business year of the domestic corporation that has acquired the business.
[This Article Added on Dec. 21, 2021]
Sub-Section 7 Tax Exemptions and Income Deductions
| Article 51 (Non-taxable income) |
No corporate tax shall be imposed on income accruing from any trust property of a public trust under the Public Trust Act among the income of a domestic corporation for each business year. <Amended on Mar. 18, 2014>
[This Article Wholly Amended on Dec. 30, 2010]
| Article 51-2 (Income deductions for special purpose companies) |
| (1) | Any of the following domestic corporations that distributes at least 90/100 of distributable profits (hereafter in this Article referred to as "distributable profits") prescribed by Presidential Decree, shall deduct the amount equivalent to such distribution (hereafter in this Article referred to as "distribution amount") from the amount of income for the business year subject to disposal of surplus from which distribution is resolved: |
| 1. | A special-purpose company established under the Asset-Backed Securitization Act; |
| 2. | An investment company, special purpose company, investment limited liability company, investment association (excluding an institutional private equity fund, as defined in Article 9 (19) 1 of the Financial Investment Services and Capital Markets Act), or investment limited liability company established under the aforesaid Act; |
| 3. | A corporate restructuring investment company established under the Corporate Restructuring Investment Companies Act; |
| 4. | A real estate investment company for corporate restructuring or real estate investment company for entrusted management, established under the Real Estate Investment Company Act; |
| 5. | A ship investment company established under the Ship Investment Company Act; |
| 6. | A special purpose corporation, etc., prescribed by Presidential Decree and established under the Special Act on Private Rental Housing or the Special Act on Public Housing; |
| 7. | A company specializing in cultural industries established under the Framework Act on the Promotion of Cultural Industries; |
| 8. | An overseas resources development company established under the Overseas Resources Development Business Act; |
| 9. | Deleted. <Dec. 22, 2020> |
| (2) | Paragraph (1) shall not apply in any of the following cases: <Amended on Dec. 31, 2023> |
| 1. | Where no income tax or corporate tax is imposed on dividends paid to stockholders, etc., under this Act and the Act on Restriction on Special Cases concerning Taxation; provided, the same shall not apply where stockholders, etc., who received dividends are partnership firms subject to special taxation for partnership firms pursuant to Article 100-15 of the Act on Restriction on Special Cases concerning Taxation, in which cases such partners (if all or some of partners are higher partnership firms under paragraph (3) of that Article, referring to partners who have invested in the higher partnership firms) are fully imposed income tax or corporate tax on incomes corresponding to dividends allocated pursuant to Article 100-18 of that Act; |
| 2. | Where any domestic corporation that pays dividends is a corporation meeting the standards prescribed by Presidential Decree, giving due consideration to the number of its stockholders, etc. |
| (3) | Each person who intends to seek the benefit of paragraph (1), shall file an application for income deductions, as prescribed by Presidential Decree. |
| (4) | In applying paragraph (1), if the dividends exceed the amount calculated by subtracting the losses carried forward under Article 13 (1) 1 (hereafter referred to as "carried-forward losses" in this Article) from the incomes for the relevant business year for the first time, such excess amount may be carried forward to each business year ending within 5 years from the commencement date of the business year following the relevant business year, and deducted from the income amount of the business year to which it is carried forward; provided, in cases where a domestic corporation fails to distribute 90/100 or more of distributable profits in the business year carried forward, the amount carried forward shall not be deducted. <Added on Dec. 31, 2022; Dec. 31, 2024> |
| (5) | If the amount of dividends for a business year following the business year to which the excess is first carried forward under the main clause of paragraph (4) exceeds the amount calculated by subtracting the carried-forward losses and the amount carried forward to the relevant business year (if the relevant amount is less than zero, referring to zero) in order from the income of the relevant business year, such excess amount may be carried forward to each business year ending within 5 years from the commencement date of the business year following the relevant business year and deducted from the amount of income for the business year carried forward: provided, if a domestic corporation fails to distribute at least 90/100 of distributable profits in the business year to which it is carried forward, the carried forward amount shall not be deducted. <Added on Dec. 31, 2024> |
| (6) | If the amount carried forward pursuant to the main clauses of paragraphs (4) and (5) (hereafter referred to as "carried-forward deductible dividends" in this Article) is deducted from the income amount for the relevant business year, it shall be deducted by the methods specified as follows: <Added on Dec. 31, 2022; Dec. 31, 2024> |
| 1. | The carried-forward deductible dividends shall be deducted prior to the amount of dividends in the relevant business year; |
| 2. | If there are two or more carried-forward deductible dividends, the deduction shall be made starting from the carried-forward deductible dividends that accrues first. |
[This Article Wholly Amended on Dec. 30, 2010]
Sub-Section 8 Special Cases concerning Calculation of Amounts of Income
| Article 52 (Disaffirmation of calculation by wrongful acts) |
| (1) | Where the head of the tax office having jurisdiction over the place of tax payment or the commissioner of the competent regional tax office deems that the tax burden of a domestic corporation has been unjustly reduced through the wrongful calculation of the amount of income of the domestic corporation in transactions with a related party, he or she shall calculate the amount of income for each business year of the domestic corporation regardless of the wrongful calculation of the amount of income of such domestic corporation (hereinafter referred to as "wrongful calculation"). <Amended on Dec. 31, 2011; Dec. 24, 2018> |
| (2) | In applying paragraph (1), the standards for determination shall be sound social norms, generally-accepted trade practices, and the prices applied or acknowledged to be applied to arm's length transactions between persons, other than related parties (including premium rates, interest rates, rents, exchange rates, and other corresponding rates; hereinafter referred to as "market price"). <Amended on Dec. 31, 2011; Dec. 24, 2018> |
| (3) | A domestic corporation shall submit a detailed statement on the particulars of transactions with each related party for each business year to the head of the tax office having jurisdiction over the place of tax payment, as prescribed by Presidential Decree. <Amended on Dec. 31, 2011; Dec. 24, 2018> |
| (4) | In applying paragraphs (1) through (3), matters necessary for the types of wrongful calculation, the assessment of market prices, and other matters shall be prescribed by Presidential Decree. <Amended on Dec. 24, 2018> |
[This Article Wholly Amended on Dec. 30, 2010]
| Article 53 (Special cases concerning calculation of amount of income from transactions with foreign corporations) |
| (1) | Where the competent authorities of the Republic of Korea and the other country agree on the amount of transactions between a domestic corporation and its overseas branch, a non-resident, or any other foreign corporation, in accordance with the relevant mutual agreement under the tax treaties concluded between the Republic of Korea and the other contracting party to prevent double taxation (hereinafter referred to as "tax treaty"), the head of the tax office having jurisdiction over the place of tax payment or the commissioner of the competent regional tax office may adjust the corporation's amount of income for each business year according to such mutual agreement. |
| (2) | In applying paragraph (1), matters necessary for filing an application for adjustment of the amount of income of a domestic corporation, the procedures therefor, and other matters shall be prescribed by Presidential Decree. |
[This Article Wholly Amended on Dec. 30, 2010]
| Article 53-2 (Special cases concerning calculation of tax bases for corporations adopting functional currencies) |
| (1) | The tax base for a domestic corporation that prepares the financial statements by adopting a currency, other than Korean Won, as a functional currency according to the corporate accounting standards shall be calculated in the method reported to the head of the tax office having jurisdiction over the place of tax payment, among the following methods (hereafter in this Article, referred to as "calculation method of tax bases"); provided, the tax base of income for the business year before the calculation method of tax bases prescribed in subparagraph 2 or 3 is first reported and applied shall be calculated upon applying the calculation method of tax bases prescribed in subparagraph 1, and consolidated corporations that belong to the same consolidated group shall report and apply the same calculation method of tax bases: |
| 1. | Method of calculating tax bases based on the financial statements to be otherwise prepared, when no currency, other than Korean Won, is adopted as a functional currency; |
| 2. | Method of calculating tax bases based on the financial statements denominated in a functional currency and subsequently converting it into Korean Won; |
| 3. | Method of calculating tax bases based on the financial statements converted into Korean Won by applying the exchange rates as at the end date of the business year in the case of the items on the statement of financial position, and the exchange rates as at the relevant trading day (referring to the average exchange rate for the relevant business year in the case of the items prescribed by Presidential Decree) in the case of the items on the consolidated income statement (referring to a profit and loss statement where no consolidated income statement is available; hereinafter the same shall apply). |
| (2) | A corporation that has reported and applies the calculation method of tax bases prescribed in paragraph (1) 2 or 3 may not change the calculation method of tax bases unless there arise circumstances prescribed by Presidential Decree, such as change of the reported functional currency and a merger between corporations using a different calculation method of tax bases. |
| (3) | Where a corporation that applies the calculation method of tax bases prescribed in paragraph (1) 2 or 3 changes its functional currency, it shall include, in gross income, the amount calculated by subtracting the amount under subparagraph 2 from the amount under subparagraph 1 per asset or liability when calculating the amount of income for the business year during which it changes its functional currency and includes an amount equivalent thereto in deductible expenses by appropriating it as lump-sum depreciation reserve funds or compressed accounts reserve funds, as prescribed by Presidential Decree: |
| 1. | The book value of the relevant asset or liability as at the commencement date of the relevant business year denominated in the functional currency after change; |
| 2. | The amount denominated in the functional currency after changing the currency by applying the exchange rate as at the date on which the relevant asset is acquired or liability arises to the book value of the asset or liability as at the end date of the immediately preceding the business year in which the amount is denominated in the functional currency before change. |
| (4) | Paragraph (3) shall apply |
| (5) | For purposes of paragraphs (1) through (4), matters necessary for the application of exchange rates, the report and change of the calculation method of tax bases, the disposition of amounts included in deductible expenses, the report of tax bases of a corporation that selects each calculation method of tax bases, the application of calculation method of tax bases, and other matters shall be prescribed by Presidential Decree. |
[This Article Added on Dec. 30, 2010]
| Article 53-3 (Special cases concerning calculation of tax dases for overseas place of business) |
| (1) | The tax base for an overseas place of business of a domestic corporation shall be calculated in accordance with the method reported to the head of the tax office having jurisdiction over the place of tax payment, among the following methods (hereafter referred to as "calculation method of tax bases" in this Article); provided, the tax base of the income for the business year before the calculation method of tax bases prescribed in subparagraph 2 or 3 is first reported and applied shall be calculated by applying the calculation method of tax bases prescribed in subparagraph 1: |
| 1. | Method of re-preparing the financial statements where the financial statements of an overseas place of business are not prepared in any functional currency, other than Korean Won, combining them with the financial statements of the headquarters and calculating the tax base based on such combined financial statements; |
| 2. | Method of calculating the tax base based on the financial statements of an overseas place of business denominated in the functional currency of the overseas place of business, converting such tax base into Korean Won and aggregating it with the tax base of the headquarters; |
| 3. | Method of converting, into Korean Won, the items on the statement of financial position at the exchange rate as at the end date of the business year and the items on the consolidated income statement at the exchange rate prescribed by Presidential Decree in the case of the financial statements of an overseas place of business, combining them with the financial statements of the headquarters and calculating the tax base based on the combined financial statements. |
| (2) | A corporation that has reported and applies the calculation method of tax bases prescribed in paragraph (1) 2 or 3 shall not change the calculation method of tax bases unless there arise circumstances prescribed by Presidential Decree, such as a merger between corporations using a different calculation method of tax bases. |
| (3) | For purposes of paragraphs (1) and (2), matters necessary for the application of exchange rates, the report and change of the calculation method of tax bases, the report of tax bases of a corporation that selects each calculation method of tax bases, the application of calculation method of tax bases, and other matters shall be prescribed by Presidential Decree. |
[This Article Added on Dec. 30, 2010]
| Article 54 (Detailed regulations for calculation of amount of income) |
Except as provided in this Act, matters necessary for the calculation of the amount of income for each business year of a domestic corporation shall be prescribed by Presidential Decree.
[This Article Wholly Amended on Dec. 30, 2010]
SECTION 2 Calculation of Tax
| Article 55 (Tax rate) |
| (1) | The amount of corporate tax on the income of a domestic corporation for each business year shall be determined with the amount calculated by applying the relevant tax rate classified in each of the following subparagraphs to the tax base referred to in Article 13 (where there is an amount of corporate tax on capital gains on the transfer of land, etc., under Article 55-2 and an amount of corporate tax computed by applying special tax provisions for promoting investment and collaborative cooperation under Article 100-32 of the Act on Restriction on Special Cases concerning Taxation, such amounts shall be aggregated; hereinafter referred to as "calculated tax amount"): <Amended on Dec. 31, 2024> |
| 1. | In case of a domestic corporation (excluding a domestic corporation specified in Article 60-2 (1) 1); |
┌───────┬───────────────────────────┐
│ Tax Base │ Tax Rate │
├───────┼───────────────────────────┤
│Not exceeding 200 million won│9/100 of tax base│
├───────┼───────────────────────────┤
│Exceeding 200 million won │18 million won ＋ (19/100 of the amount exceeding 200 million won)│
│but not exceeding 20 billion won│ │
├───────┼───────────────────────────┤
│Exceeding 20 billion won│3.78 billion won ＋ (21/100 of the amount exceeding 20 billion won)│
│but not exceeding 300 billion won│ │
├───────┼───────────────────────────┤
│Exceeding 300 billion won│62.58 billion won ＋ (24/100 of the amount exceeding 300 billion won)│
└───────┴───────────────────────────┘
| 2. | In case of a domestic corporation falling under Article 60-2 (1) 1; |
┌───────┬────────────────────────┐
│ Tax Base │ Tax Rate │
├───────┼────────────────────────┤
│ 20 billion won or less │ 19/100 of tax base │
├───────┼────────────────────────┤
│ More than 20 billion won │ 3.8 billion won ＋ (21/100 of the amount exceeding 20 billion won) │
│ but not exceeding 300 billion won │ │
├───────┼────────────────────────┤
│ More than 300 billion won │ 62.6 billion won ＋ (24/100 of the amount exceeding 300 billion won) │
└───────┴────────────────────────┘
| (2) | With regard to corporate tax on income for each business year of a domestic corporation with a business year of less than 12 months, an amount computed by dividing the amount computed for the business year by applying Article 13 by the number of months of the business year and multiplying the resulting amount by 12 shall be the tax base for the business year, and the amount of tax computed by multiplying the amount of tax computed under paragraph (1) by the number of months of the business year divided by 12 shall be the amount of tax. In such cases, the number of months shall be calculated by the method prescribed by Presidential Decree. |
[This Article Wholly Amended on Dec. 30, 2010]
| Article 55-2 (Special provisions concerning taxation on capital gains on transfer of land) |
| (1) | Where a domestic corporation transfers any of the following parcels of land or buildings (including facilities and structures appurtenant to such buildings), association members' right to residency under subparagraph 9 of Article 88 of the Income Tax Act, and purchase rights under subparagraph 10 of the same Article as a right to acquire houses (hereafter in this Article and Article 95-2 referred to as "land, etc."), it shall pay the amount of tax calculated pursuant to the relevant subparagraph as corporate tax on capital gains on the transfer of land, etc., in addition to the corporate tax calculated by applying the tax rate prescribed in Article 55 to the tax base prescribed in Article 13. In such cases, the greatest tax amount shall apply to an asset where at least two of the following subparagraphs are applicable to that asset: <Amended on Jan. 1, 2014; Dec. 23, 2014; Aug. 18, 2020> |
| 1. | Where the domestic corporation transfers any of the following real estate by no later than December 31, 2012, the amount of tax calculated by multiplying the capital gains by 10/100: |
| (a) | A house referred to in subparagraph 2 (including the land appurtenant thereto; hereafter in this paragraph, the same shall apply), which is real estate located within any designated area under Article 104-2 (2) of the Income Tax Act; |
| (b) | Idle land referred to in subparagraph 3, which is real estate located within the designated area under Article 104-2 (2) of the Income Tax Act; |
| (c) | Other real estate prescribed by Presidential Decree as necessary for stabilizing the prices of real estate, because the prices of such real estate has risen or are likely to rise sharply; |
| 2. | Where a residential house specified by Presidential Decree (including the land appurtenant thereto) or a residential building, which is not used at ordinary times for residence but used only for recreation, summer vacations, entertainment, or any similar purpose (hereafter in this Article, referred to as "vacation house") is transferred, the amount of tax calculated by multiplying capital gains on the transfer of land, etc., by 20/100 (or 40/100 in cases of capital gains on the transfer of unregistered land, etc.); provided, the foregoing shall not apply to any residential house (including the land appurtenant thereto) at a rural village in an |
| 3. | Where any idle land is transferred, the amount of tax calculated by multiplying capital gains on transfer of land, etc., by 10/100 (40/100 for gains from the transfer of unregistered land, etc.). |
| 4. | Where association members' right to residency under subparagraph 9 of Article 88 of the Income Tax Act, and purchase rights under subparagraph 10 of the same Article as a right to acquire houses is transferred, the amount of tax calculated by multiplying capital gains on land, etc. by 20/100. |
| (2) | "Idle land" referred to in paragraph (1) 3 means the land used for any of the following purposes during the period specified by Presidential Decree while a person owns the land: <Amended on Jan. 1, 2013; Dec. 23, 2014; Jul. 24, 2015> |
| 1. | A dry field, paddy field, or an orchard (hereafter in this Article, referred to as "farmland"), which is either of: |
| (a) | Land owned by a corporation that does not run farming as its main business; provided, excluded herefrom is any farmland prescribed by Presidential Decree permitted to be owned by a corporation under the Farmland Act and other statutes; |
| (b) | Farmland in an urban area (excluding an area designated by Presidential Decree; hereafter in this item, the same shall apply) as defined in subparagraph 1 of Article 6 of the National Land Planning and Utilization Act, among areas in the Special Metropolitan City, a Metropolitan City (excluding a |
| 2. | Forest land; provided, excluded herefrom are: |
| (a) | A seed-gathering forest or an experimental forest designated under the Creation and Management of Forest Resources Act, a forest protection zone designated under Article 7 of the Forest Protection Act, and other forest land prescribed by Presidential Decree as necessary for protecting and nurturing forests or for the public interest; |
| (b) | A forest land prescribed by Presidential Decree, which is owned by any corporation that runs the forestry as its main business or by a corporate forest manager as provided for in the Creation and Management of Forest Resources Act; |
| (c) | A forest land prescribed by Presidential Decree, which has reasonable grounds to believe that such forest land is directly related to the business of any corporation, in consideration of its owner, location, utilization status, holding period, area, and other factors; |
| 3. | Any of the following ranch areas; provided, excluded herefrom is a ranch area prescribed by Presidential Decree, which has reasonable grounds to believe that such ranch area is directly related to the business of any corporation, in consideration of its owner, location, utilization status, holding period, area and other factors: |
| (a) | A ranch area owned by any corporation that runs the livestock business as its main business, the scale of which exceeds the standard size of the livestock area prescribed by Presidential Decree, or which is located in an urban area (excluding any urban area prescribed by Presidential Decree; the same shall apply hereafter in this item) of the Special Metropolitan City, a Metropolitan City, a Metropolitan Autonomous City, a Special Self-Governing Province, or a |
| (b) | A ranch area owned by any corporation that does not run the livestock business as its main business; |
| 4. | Land, other than farmland, forest land, or ranch areas, except for any of the following land: |
| (a) | Land exempt from property tax under the Local Tax Act or any relevant Act; |
| (b) | Land subject to the aggregate taxation of property tax or the separate taxation under Article 106 (1) 2 and 3 of the Local Tax Act; |
| (c) | Land prescribed by Presidential Decree which has reasonable grounds to believe that such land is directly related to the business of a corporation, in consideration of its utilization status, fulfillment of duties imposed by any relevant Act, the revenue amount, and other factors; |
| 5. | Land, the area of which exceeds an area computed by multiplying the multiple rate set by Presidential Decree by the area of land on which a house is built, among land appurtenant to such house as referred to in Article 106 (2) of the Local Tax Act; |
| 6. | Land appurtenant to a vacation house; provided, where the boundary of the land appurtenant to a vacation house are not definite, the area of land equivalent to 10 times the floor area of the building shall be deemed the land appurtenant thereto; |
| 7. | Land similar to the land provided for in subparagraphs 1 through 6, prescribed by Presidential Decree, which has reasonable grounds to believe that such land is not directly related to the business of a corporation. |
| (3) | In applying paragraph (1) 3, where any parcel of land becomes idle as its use is prohibited under any statute or due to exceptional circumstances prescribed by Presidential Decree after its acquisition, such land may not be deemed idle, as prescribed by Presidential Decree. |
| (4) | Paragraph (1) shall not apply to any capital gains on transfer of any of the following land, etc.; provided, the same shall not apply to any capital gains on transfer of unregistered land, etc.: |
| 1. | Income accruing from the disposal of land, etc. made by the adjudication of bankruptcy; |
| 2. | Income accruing from the exchange, sub-division, or consolidation of farmland directly cultivated by a corporation in circumstances prescribed by Presidential Decree; |
| 3. | Income accruing on the grounds prescribed by Presidential Decree, including a disposition of replotting under the Act on the Improvement of Urban Areas and Residential Environments or other statutes. |
| (5) | "Unregistered land, etc." referred to in paragraphs (1) and (4) means the land, etc., transferred by a corporation without registering the acquisition thereof; provided, excluded herefrom is any parcel of land, etc., acquired on a long-term installment plan, the contract terms of which make it impossible to register its acquisition as at the time it is acquired, and other land, etc., prescribed by Presidential Decree. |
| (6) | Capital gains on the transfer of land, etc., shall be an amount computed by subtracting the book value thereof as at the time of transfer from the transfer value of land, etc.; provided, the capital gain on the transfer of land, etc., that a nonprofit domestic corporation acquired on or before December 31, 1990 may be determined by subtracting the greatest amount, among the book value and the values appraised under Articles 60 and 61 (1) of the Inheritance Tax and Gift Tax Act as at January 1, 1991 from the transfer amount. <Amended on Dec. 23, 2014> |
| (7) | In applying paragraphs (1) through (6), the scope of farmland, forest land, or ranch areas, the criteria for determining the main business, the method for calculating capital gains on transfer of land, etc., where any loss incurred from the transfer of such land, etc., during the relevant business year, the business year in which any profit or loss generated from the transfer of land, etc., falls, and other necessary matters shall be prescribed by Presidential Decree. |
| (8) | Paragraph (1) 2 and 3 shall not apply to any gain accruing from the transfer of land, etc., by no later than December 31, 2012. |
[This Article Wholly Amended on Dec. 30, 2010]
| Article 56 Deleted. <Dec. 24, 2018> |
| Article 57 (Foreign tax credits) |
| (1) | Where the tax base on the income of a domestic corporation for each business year includes any foreign source income, and the amount of foreign corporate tax prescribed by Presidential Decree on such foreign source income (hereafter in this Article and Article 73, referred to as "amount of foreign corporate tax") has been paid or is payable, the amount of foreign corporate tax may be deducted by up to the amount (hereafter in this Article, referred to as "deduction limit amount") computed by the following formula from the amount of corporate tax for the relevant business year: <Amended on Dec. 22, 2020; Dec. 21, 2021; Dec. 31, 2022>
|
| 1. | Deleted; <Dec. 31, 2022> |
| 2. | Deleted; <Dec. 31, 2022> |
| 3. | Deleted. <Dec. 31, 2022> |
| (2) | In applying paragraph (1), where the amount of foreign corporate tax exceeds the deduction limit paid or payable to a foreign government for the relevant business year, such excess may be carried forward to each business year ending within 10 years from the start date of the business year following the relevant business year (hereafter in this Article referred to as "carry-over deduction period"), and may be deducted up to the deduction limit amount for each business year in which it is carried forward; provided, where a foreign corporate tax paid or payable to a foreign government is not deducted within a carry-over deduction period, the amount of the foreign corporate tax that has not been deducted may be included in deductible expenses for the purpose of calculating the amount of income for the business year in which the day following the end of the carry-over deduction period of falls, notwithstanding subparagraph 1 of Article 21. <Amended on Dec. 24, 2018; Dec. 31, 2019; Dec. 22, 2020> |
| (3) | An amount equivalent to the amount of the corporate tax reduction or exemption granted to a domestic corporation having foreign source income in a country which is a party to a tax treaty shall be deemed the amount of foreign corporate tax for which the domestic corporation is entitled to a tax credit under paragraph (1), within the limits stipulated by the relevant tax treaty. <Amended on Dec. 22, 2020> |
| (4) | Where the amount of income of a domestic corporation for each business year includes dividends or distribution of surpluses from a foreign subsidiary (hereafter in this Article, referred to as "dividend income"), the amount of foreign corporate tax imposed on the amount, computed as prescribed by Presidential Decree, that is equivalent to the dividend income, among the amount of foreign corporate tax on the foreign subsidiary's income, shall be deemed the amount of foreign corporate tax for which the domestic corporation is entitled to a tax credit under paragraph (1). <Amended on Dec. 31, 2011; Dec. 22, 2020> |
| (5) | "Foreign subsidiary" referred to in paragraph (4) means a foreign corporation that meets the requirements prescribed by Presidential Decree, in which a domestic corporation invests at least 10/100 (or 5/100 in cases of a foreign corporation that engages in the business of developing overseas resources under Article 22 of the Act on Restriction on Special Cases concerning Taxation) of its total number of outstanding voting stocks or total amount of investment. <Amended on Dec. 23, 2014; Dec. 31, 2022> |
| (6) | Where the amount of income of a domestic corporation for each business year includes the dividend income from a foreign corporation and the investor domestic corporation, not the relevant foreign corporation, has a direct tax liability for the income of the foreign corporation or otherwise meets the requirements prescribed by Presidential Decree, the amount computed, as prescribed by Presidential Decree, which is equivalent to the dividend income out of the amount of foreign corporate tax imposed on the investor domestic corporation shall be deemed the amount of foreign corporate tax for which the domestic corporation is entitled to a tax credit under paragraph (1). <Amended on Dec. 22, 2020> |
| (7) | Paragraphs (1) through (6) shall not apply to income dividend subject to exclusion from gross income pursuant to Article 18-4. <Added on Dec. 22, 2022> |
| (8) | The method for calculating foreign source income, tax credits, or inclusion of foreign source income in deductible expenses under paragraphs (1) through (6) and other necessary matters shall be prescribed by Presidential Decree. <Amended on Jan. 1, 2013; Dec. 31, 2022> |
[This Article Wholly Amended on Dec. 30, 2010]
| Article 57-2 (Special cases concerning refund of foreign tax credits for income received from indirect investment companies) |
| (1) | Where income meeting the following requirements is added to the tax base of a domestic corporation for each business year, the amount prescribed in paragraph (2) 2 may be deducted from the tax amount calculated for the relevant business year: |
| 1. | Income received from any of the following items (hereafter in this Article referred to as "indirect investment company, etc."): |
| (a) | Any investment company, special purpose company, investment limited liability company, investment association (excluding an institutional private equity fund, as defined in Article 9 (19) 1 of the Financial Investment Services and Capital Markets Act), investment limited liability company, investment trust, investment limited partnership, and undisclosed investment association defined in the aforesaid Act; |
| (b) | Any corporate restructuring real estate investment company and real estate investment company for entrusted management as defined in the Real Estate Investment Company Act; |
| (c) | Any trust property deemed a domestic corporation under Article 5 (2); |
| 2. | An amount to be deducted from the tax amount calculated: The amount of a foreign corporate tax payable by an indirect investment company calculated as prescribed by Presidential Decree, taking into account the after-tax base price. |
| (2) | For the purposes of paragraph (1), the income received by a domestic corporation from an indirect investment company, etc. and the amount to be deducted from the tax amount calculated for the relevant business year shall be as follows: |
| 1. | Income received from an indirect investment company, etc.: An amount calculated on the basis of the base price referred to in Article 238 (6) of the Financial Investment Services and Capital Markets Act (referring to the price after the foreign corporate tax payable by an indirect investment company is deducted; hereafter in this Article and Article 73 referred to as "after-tax base price"); provided, in the case of the income paid by an indirect investment company, etc. by reason of the sale of securities of an indirect investment company, etc. listed on the securities market, it shall be the amount calculated as prescribed by Presidential Decree; |
| 2. | An amount to be deducted from the tax amount calculated: The amount of a foreign corporate tax payable by an indirect investment company calculated as prescribed by Presidential Decree, taking into account the after-tax base price. |
| (3) | An amount deductible from the calculated tax amount pursuant to paragraph (1) shall be limited to an amount calculated according to the following formula (hereafter referred to as "credit limit" in this paragraph). In such cases, if an amount referred to in paragraph (2) 2 exceeds the credit limit for the relevant business year, such excess may be carried forward to each business year ending within ten years from the start date of the business year following the relevant business year, and deducted to the extent of the credit limit for the business year to which such excess is carried forward.
|
| (4) | The method for calculating income received from an indirect investment company, etc. under paragraphs (1) through (3), and other matters necessary for tax credits shall be prescribed by Presidential Decree. |
[This Article Added on Dec. 31, 2022]
| Article 58 (Tax credits for losses from disasters) |
| (1) | Where a domestic corporation loses at least 20/100 of the total amount of its assets prescribed by Presidential Decree for each business year (hereafter referred to as "total amount of assets" in this Article) due to any natural disaster or other accident (hereinafter referred to as "disaster") and it is deemed impractical for the domestic corporation to pay tax, the amount calculated by multiplying any of the following amounts of corporate tax by the ratio of the value of the lost assets to the total amount of assets prior to the loss (limited to the value of lost assets) shall be deducted from the amount of tax; in such cases, the value of land shall not be included in the value of the assets: <Amended on Dec. 22, 2020> |
| 1. | Corporate tax which is not imposed, or unpaid after imposition as at the date of the occurrence of the disaster; |
| 2. | Corporate tax on income for the business year which includes the date of the occurrence of the disaster. |
| (2) | A domestic corporation that intends to obtain a tax credit under paragraph (1) shall file an application with the head of the tax office having jurisdiction over the place of tax payment, as prescribed by Presidential Decree. |
| (3) | Upon receipt of an application for a corporate tax credit referred to in paragraph (1) 1 (excluding corporate tax, the filing deadline of which has not passed) filed pursuant to paragraph (2), the head of the tax office having jurisdiction over the place of tax payment shall determine the amount of the tax credit and notify the relevant corporation thereof. |
| (4) | In applying paragraphs (1) through (3), the calculation of the percentage of assets lost, granting tax credits for disasters, and other necessary matters, shall be prescribed by Presidential Decree. |
[This Article Wholly Amended on Dec. 30, 2010]
| Article 58-2 Deleted. <Jan. 1, 2010> |
| Article 58-3 (Tax credits upon correction of wrongful accounting) |
| (1) | Where a domestic corporation has its tax base or tax amount corrected upon filing an application pursuant to Article 45-2 of the Framework Act on National Taxes on the ground that the tax base and tax amount were overstated because of its wrongful accounting, which meet each of the following criteria, the overpaid tax shall not be refunded but shall be deducted from the corporate tax for the business year in which the tax amount is corrected and subsequent business years. In such cases, the deductible amount for each business year shall not exceed 20/100 of the overpaid tax, and the overpaid tax that remains after deduction shall be carried over to subsequent business years for deduction: <Amended on Dec. 20, 2016; Oct. 31, 2017> |
| 1. | Profits or assets were overstated or deductible expenses or liabilities were understated on a business report submitted pursuant to Article 159 of the Financial Investment Services and Capital Markets Act or an audit report submitted pursuant to Article 23 of the Act on External Audit of Stock Companies; |
| 2. | The domestic corporation, its auditor or certified public accountant has been subject to any of the sanctions prescribed by Presidential Decree, such as a warning or caution. |
| (2) | In applying paragraph (1), where a domestic corporation has any tax payable according to a revised return filed pursuant to Article 45 of the Framework Act on National Taxes during any business year before the business year in which a correction is made, in connection with wrongful accounting, the overpaid tax under paragraph (1) shall be first deducted from the tax payable by up to 20/100 of the overpaid tax. <Amended on Dec. 20, 2016> |
| (3) | Where a domestic corporation that has an overpaid tax deducted under paragraphs (1) and (2) has any remainder of the overpaid tax, such remainder shall be disposed of as follows: <Added on Dec. 20, 2016> |
| 1. | Where the domestic corporation is dissolved after a merger or division: The surviving corporation or the corporation established through the division (including the counterpart corporation to a division and merger) shall succeed to the remainder of the overpaid tax and shall have the tax deducted in accordance with paragraph (1); |
| 2. | Where the domestic corporation is dissolved by any method other than those referred to in subparagraph 1: The head of the tax office having jurisdiction over its place of tax payment or the commissioner of the competent regional tax office shall immediately refund the remainder after deducting the corporate tax payable on liquidation income under Article 77 from the overpaid tax to such domestic corporation. |
| (4) | Detailed methods and procedures relating to tax credits under paragraphs (1) and (3), methods for carryover and deduction of any remainder of an overpaid tax after deduction, and other related matters, shall be prescribed by Presidential Decree. <Amended on Dec. 20, 2016> |
[This Article Wholly Amended on Dec. 30, 2010]
| Article 59 (Calculation of amount of tax reductions/exemptions or tax credits) |
| (1) | Where provisions regarding corporate tax reductions or exemptions and provisions regarding tax credits are concurrently applicable where this Act or any other statute applies, the priority of applicability is as follows, except as otherwise provided for in this Act. In such cases, where the aggregate of the amounts referred to in subparagraphs 1 and 2 exceeds the amount of corporate tax payable by a corporation (excluding corporate tax on capital gains on the transfer of land, etc. under Article 55-2, corporate tax computed by applying special tax provisions for promoting investment and collaborative cooperation under Article 100-32 of the Act on Restriction on Special Cases concerning Taxation, and penalty tax), the excess shall be deemed nil: <Amended on Dec. 23, 2014; Dec. 19, 2017; Dec. 24, 2018> |
| 1. | Tax reductions and exemptions (including exemptions) of the amount of tax on income for each business year; |
| 2. | Tax credits which are not entitled to be carried forward; |
| 3. | Tax credits which are entitled to be carried forward. In such cases, where both a tax credit granted during the relevant business year and a tax credit carried forward exist, the tax credit carried forward shall be deducted first; |
| 4. | Tax credits referred to in Article 58-3. In such cases, when both a tax credit and a tax credit carried forward exist, the tax credit carried forward shall be deducted first. |
| (2) | The amount of a tax reduction or exemption referred to in paragraph (1) 1 shall be the amount computed by multiplying the calculated amount (in cases of a tax reduction, the amount computed by multiplying the calculated amount by the relevant reduction rate) of tax (excluding the amount of corporate tax on capital gains on the transfer of land, etc., under Article 55-2, the amount of corporate tax on unappropriated earnings under Article 56 and the amount of corporate tax computed by applying special tax provisions for promoting investment and collaborative cooperation under Article 100-32 of the Act on Restriction on Special Cases concerning Taxation) by the ratio (100/100, where the ratio exceeds 100/100) of the amount of income partially or fully exempted to the tax base, except as otherwise provided in this Act. <Amended on Dec. 23, 2014; Dec. 19, 2017; Dec. 24, 2018> |
[This Article Wholly Amended on Dec. 30, 2010]
SECTION 3 Reports and Payment
| Article 60 (Filing reports on tax bases) |
| (1) | A domestic corporation liable to pay tax shall file a report on the corporate tax base and the tax payable on income for the relevant business year within three months (four months where a domestic corporation submits a certificate of confirmation of compliant filing pursuant to the main clause of Article 60-2 (1)) from the end date of the month in which the end date of each business year falls, to the head of the tax office having jurisdiction over the place of tax payment, as prescribed by Presidential Decree. <Amended on Dec. 24, 2018> |
| (2) | A report filed under paragraph (1) shall be accompanied by the following documents: |
| 1. | A statement of financial position, statement of comprehensive income, statement of appropriation of retained earnings (or statement of disposition of deficit) of an individual Korean corporation prepared by applying financial accounting standards |
| 2. | A tax settlement invoice prepared, as prescribed by Presidential Decree (hereinafter referred to as "tax settlement invoice"); |
| 3. | Other documents specified by Presidential Decree. |
| (3) | Paragraph (1) shall also apply to a domestic corporation with no income or with losses incurred for each business year. |
| (4) | Where a domestic corporation is dissolved due to a merger or division and files a report pursuant to paragraph (1), the report shall be accompanied by the following documents: |
| 1. | A statement of financial position of a merged corporation, divided corporation, or a disappearing counterpart corporation to a merger and division as at the registration date of the merger or the registration date of the division, and a detailed statement on the assets and liabilities succeeded to by a surviving corporation, etc., due to the merger or division; |
| 2. | Other documents specified by Presidential Decree. |
| (5) | Where the documents referred to in paragraph (2) 1 and 2 are not submitted along with a report filed under paragraph (1), the report shall not be construed as a report filed under this Act; provided, the same shall not apply to a non-profit domestic corporation which does not run profit-making business referred to in Article 4 (3) 1 or 7. <Amended on Dec. 24, 2018> |
| (6) | Where any error or omission is found in the report and other documents filed under paragraph (1) or (2), the head of the tax office having jurisdiction over the place of tax payment and the commissioner of the competent regional tax office may request the correction of such error or omission. |
| (7) | Notwithstanding paragraph (1), where a domestic corporation subject to audit by an auditor pursuant to Article 4 of the Act on External Audit of Stock Companies applies for an extension of the filing deadline, as prescribed by Presidential Decree, on the grounds that the settlement of accounts is not finalized because the audit of the relevant business year is not complete, the filing deadline may be extended by up to one month. <Amended on Oct. 31, 2017> |
| (8) | Each domestic corporation granted an extension of its filing deadline under paragraph (7) must pay the tax and the amount calculated by applying the interest rate prescribed by Presidential Decree, in consideration of the interest rates charged by a financial company, etc., to the number of days of the extension. In such cases, the number of days of the extension means the number of days from the following day of the filing deadline prescribed in paragraph (1) to the day a report is filed and payment is made (limited to where such report is filed and payment is made by the extended deadline) or to the extended day. |
| (9) | In cases of a domestic corporation specified by Presidential Decree as deemed necessary to ensure correct settlement between corporate accounting and tax accounting or honest tax payment, a tax settlement invoice shall be prepared by any of the following persons who belong to the settlement team prescribed by Presidential Decree: <Added on Dec. 15, 2015; Nov. 23, 2021> |
| 1. | A certified tax accountant registered in the register of certified tax accountants under the Certified Tax Accountant Act; |
| 2. | A certified public accountant registered in the register of certified tax accountants or the register of tax agent services for certified public accountants under the Certified Tax Accountant Act; |
| 3. | An attorney-at-law registered in the register of certified tax accountants or the register of tax agent services for attorney-at-laws under the Certified Tax Accountant Act. |
[This Article Wholly Amended on Dec. 30, 2010]
[Amending paragraph (9) 3 of this Article determined to be inconsistent with the Constitution by the Constitutional Court on April 26, 2018 by Act No. 18521; Nov. 23, 2021]
| Article 60-2 (Submission of certificate of confirmation of compliant filing) |
| (1) | When either of the following domestic corporations files a return on the tax base and amount of corporate tax in accordance with Article 60 for compliant tax payment, such corporation shall submit a certificate of confirmation issued by any of the persons specified by Presidential Decree, such as a certified public tax accountant, to the effect that the person confirms the reasonableness of the tax base amount computed according to the books of accounts and evidentiary documents kept and recorded in accordance with Articles 112 and 116 (hereinafter referred to as "certificate of confirmation of compliant filing"), as prescribed by Presidential Decree, in addition to the documents specified in Article 60 (2); provided, a domestic corporation audited by an auditor in accordance with Article 4 of the Act on External Audit of Stock Companies need not submit such certificate of confirmation: <Amended on Dec. 24, 2018; Dec. 21, 2021> |
| 1. | A domestic corporation whose main business is real estate lease business and who meets the criteria prescribed by Presidential Decree; |
| 2. | A domestic corporation, where a business operator subject to confirmation of compliant filing under Article 70-2 (1) of the Income Tax Act has converted his or her business into a domestic corporation by any of the methods prescribed by Presidential Decree, such as in-kind investment of business assets (limited to a domestic corporation in which case three years have not passed yet since it was converted into a corporation as at the end of the pertinent business year); |
| 3. | A domestic corporation that has acquired the business operated by another domestic corporation converted pursuant to subparagraph 2 in the manner prescribed in the same subparagraph (limited to cases where it is within three years from the date of conversion prescribed in the same subparagraph, and the domestic corporation is still operating the acquired business as of the end of its business year). |
| (2) | Where the head of the tax office having jurisdiction over the place of tax payment finds any defect or error in a certificate of confirmation of compliant filing submitted in accordance with paragraph (1), he or she may request to amend such certificate. <Amended on Dec. 24, 2018> |
| (3) | Except as otherwise provided in paragraphs (1) and (2), matters necessary for the submission of a certificate of confirmation of compliant filing, etc. shall be prescribed by Presidential Decree. <Amended on Dec. 24, 2018> |
[This Article Added on Dec. 19, 2017]
| Article 61 (Special cases concerning inclusion of reserve funds in deductible expenses) |
| (1) | Where a domestic corporation appropriates a reserve fund referred to in the Act on Restriction on Special Cases concerning Taxation in the tax settlement invoice and disposes of the amount as the profits accruing during the relevant business year, such amount shall be included in deductible expenses for the relevant business year, deeming that the amount is appropriated as deductible expenses when the settlement of account is fixed. <Amended on Dec. 24, 2018> |
| (2) | Matters necessary for including a reserve fund in deductible expenses and disposing of the amount of the reserve fund under paragraph (1) shall be prescribed by Presidential Decree. <Amended on Dec. 24, 2018> |
[This Article Wholly Amended on Dec. 30, 2010]
[Title Amended on Dec. 24, 2018]
| Article 62 (Special cases concerning filing interest income of non-profit domestic corporations) |
| (1) | A non-profit domestic corporation may elect not to file a report on the tax base on interest income in Article 4 (3) 2 (excluding profits from non-business loans referred to in Article 16 (1) 11 of the Income Tax Act, and including investment trust proceeds; hereafter in this Article, referred to as "interest income"), which is withheld under Articles 73 and 73-2, notwithstanding Article 60 (1). In such cases, the interest income, the tax base of which is not reported shall be disregarded for the purpose of calculating the amount of income for each business year. <Amended on Dec. 24, 2018> |
| (2) | Matters necessary for filing a corporate tax base on the interest income of a non-profit domestic corporation and the collection thereof under paragraph (1) shall be prescribed by Presidential Decree. |
[This Article Wholly Amended on Dec. 30, 2010]
[Title Amended on Dec. 24, 2018]
| Article 62-2 (Special provisions concerning filing capital gains on transfer of assets by non-profit domestic corporations) |
| (1) | Where a non-profit domestic corporation (excluding any non-profit domestic corporation that runs profit-making business referred to in Article 4 (3) 1; hereafter in this Article, the same shall apply) earns income accruing from the transfer of any of the following assets (hereafter in this Article, referred to as "capital gains on transfer of assets"), being the revenue provided for in Article 4 (3) 4 through 6, it may choose not to file a tax base, notwithstanding Article 60 (1); in such cases, capital gains on transfer of assets, the tax base of which is not filed, shall be disregarded for the purpose of calculating the amount of income for each business year: <Amended on Dec. 24, 2018; Dec. 21, 2021; Dec. 31, 2024> |
| 1. | Stocks, etc. under Article 94 (1) 3 of the Income Tax Act and stocks, etc. prescribed by Presidential Decree; |
| 2. | Land or buildings (including facilities or structures appurtenant to such buildings); |
| 3. | Assets referred to in Article 94 (1) 2 or 4 of the Income Tax Act. |
| (2) | An amount calculated by applying rates prescribed in each subparagraph of Article 104 (1) of the Income Tax Act to the tax base calculated by applying |
| (3) | In applying paragraph (2), the tax base calculated by applying |
| (4) | Articles 96 through 98 and 100 of the Income Tax Act shall apply |
| (5) | Articles 101 and 102 of the Income Tax Act shall apply |
| (6) | The provisions governing the filing of a tax base, payment, determination, correction, and collection of corporate tax on income for each business year, in which the date of transfer of assets falls, shall apply |
| (7) | Corporate tax calculated under paragraph (2) shall be voluntarily paid upon filing a preliminary return on the tax base of capital gains by applying |
| (8) | Where any non-profit domestic corporation files a preliminary return on the tax base of capital gains under paragraph (7), it shall be deemed to have filed a tax base pursuant to paragraph (6); provided, where any non-profit domestic corporation falls under the proviso to Article 110 (4) of the Income Tax Act, it shall file a tax base pursuant to paragraph (6). |
| (9) | The methods for applying special cases concerning capital gains on transfer of assets pursuant to paragraphs (1) through (8), and other necessary matters, shall be prescribed by Presidential Decree. |
[This Article Wholly Amended on Dec. 30, 2010]
[Title Amended on Dec. 24, 2018]
| Article 63 (Obligation of interim prepayment) |
| (1) | A domestic corporation whose business years exceed six months is liable to pay corporate tax (hereinafter referred to as "interim tax") on an interim prepayment period among each business year (excluding the first business year after the incorporation of a corporation, where newly incorporated without a merger or division); provided, any of the following corporations are not liable to pay interim tax: <Amended on Dec. 22, 2020; Dec. 31, 2022> |
| 1. | Any of the following corporations: |
| (a) | An educational foundation that operates a private school defined in Article 3 of the Higher Education Act; |
| (b) | Seoul National University established under the Act on Establishing and Administrating Seoul National University; |
| (c) | |
| (d) | An industry-academia cooperation group under the Industrial Education Enhancement and Industry-Academia-Research Cooperation Promotion Act; |
| (e) | School foundations operating private schools referred to in subparagraph 3 of Article 3 of the Elementary and Secondary Education Act; |
| 2. | A domestic corporation, which is a small and medium enterprise in the business year immediately preceding the relevant business year, with the amount calculated by formula in Article 63-2 (1) 1 is less than 500,000 won. |
| (2) | The interim prepayment period in paragraph (1) shall be the period from the beginning of the relevant business year to the day six months pass. |
| (3) | A domestic corporation shall pay interim tax, within two months after the expiration of the interim prepayment period, to the tax office having jurisdiction over the place of tax payment, the Bank of Korea (including any of its agents), or a post office (hereinafter referred to as "tax office, etc. having jurisdiction over the place of tax payment") as prescribed by Presidential Decree. |
| (4) | Where the amount of tax payable by a domestic corporation exceeds ten million won, it may be paid in installments by applying |
[This Article Wholly Amended on Dec. 24, 2018]
| Article 63-2 (Calculation of interim tax) |
| (1) | The interim tax shall be calculated by any of the following methods; provided, a domestic corporation (excluding a corporation prescribed by Presidential Decree in consideration of the sales, etc. by business type) belonging to the business group subject to disclosure under Article 31 (1) of the Monopoly Regulation and Fair Trade Act as of the end date of the immediately preceding business year shall calculate the interim tax by the method specified in subparagraph 2: <Amended on Dec. 31, 2019; Dec. 31, 2024> |
| 1. | Method based on the calculated tax amount of the immediately preceding business year;
|
| 2. | Method based on the corporate tax amount for the relevant interim prepayment period.
|
| (2) | Notwithstanding the main clause of paragraph (1), the amount of interim tax shall be calculated by the methods classified in the relevant following subparagtraphs, in any of the following cases: <Amended on Dec. 31, 2019; Dec. 22, 2020; Dec. 31, 2024> |
| 1. | Where the amount of interim tax is not paid by the deadline for interim prepayment under Article 63 (3) (excluding cases specified in the proviso, with the exception of the subparagraphs, of paragraph (1), or any item of subparagraph 2 of this paragraph): The method in paragraph (1) 1; |
| 2. | In any of the following cases: The method in paragraph (1) 2: |
| (a) | Where a corporation has no calculated amount of tax finally assessed as corporate tax for the immediately preceding business year (excluding a corporation in any subparagraph of Article 51-2 (1) or Article 104-31 (1) of the Act on Restriction on Special Cases concerning Taxation); |
| (b) | Where the amount of corporate tax for the immediately preceding business year has not been finally assessed by the end of the relevant interim prepayment period; |
| (c) | Where the relevant business year is the first business year after the relevant corporation is newly incorporated through a division or its counter-party corporation to a division is merged through a division; |
| (d) | Where a merging corporation or a merged corporation qualifies as a domestic corporation under the proviso, with the exception of the subparagraphs, of paragraph (1) at the time of merger, and it is the first business year following the merger of the relevant merging corporation. |
| (3) | Where a corporation surviving a merger pays interim tax computed under paragraph (1) for the first business year after the merger, any of the following business years shall be all construed as the immediately preceding business year in paragraph (1) 1: |
| 1. | The immediately preceding business year of a corporation surviving a merger; |
| 2. | The business year immediately preceding the business year which includes the registration date of the merger of each merged corporation. |
| (4) | Where a corporation which becomes ineligible for the consolidated tax return system under Articles 76-9, 76-10 and 76-12 pays interim tax computed under paragraph (1) in the first business year in which it becomes ineligible for the consolidated tax return system, the computed tax for the immediately preceding consolidated business year by consolidated corporation as prescribed in Article 76-15 (4) shall be construed as the computed amount of tax which has been determined as corporate tax for the immediately preceding business year referred to in paragraph (1). |
| (5) | The head of the tax office having jurisdiction over the place of tax payment shall not collect corporate tax on the relevant interim prepayment period from a corporation which does not have any amount of income due to the suspension of its business during the interim prepayment period, where such fact is verified. |
[This Article Added on Dec. 24, 2018]
| Article 64 (Payment) |
| (1) | A domestic corporation shall deduct the following amounts of corporate tax (excluding penalty tax) from the calculated amount of corporate tax on income for each business year and pay it as corporate tax on income for each business year by the filing deadline prescribed in Article 60 to the tax office, etc. having jurisdiction over the place of tax payment: <Amended on Dec. 24, 2018> |
| 1. | The amount of tax reduced or exempted and tax credits for the relevant business year; |
| 2. | The interim tax for the relevant business year under Article 63-2; |
| 3. | The amount of occasionally imposed tax for the relevant business year under Article 69; |
| 4. | The amount of withheld tax for the relevant business year under Articles 73 and 73-2. |
| (2) | Where the amount of tax payable by a domestic corporation under paragraph (1) exceeds 10,000,000 won, some of the tax payable may be paid in installments within one month (two months for small and medium enterprises) after expiration of the payment deadline, as prescribed by Presidential Decree. <Amended on Dec. 24, 2018> |
[This Article Wholly Amended on Dec. 30, 2010]
| Article 65 Deleted. <Dec. 15, 2015> |
SECTION 4 Determination, Correction, and Collection
Sub-Section 1 Determination and Correction of Tax Bases
| Article 66 (Determination and correction) |
| (1) | Where a domestic corporation fails to file a report under Article 60, the head of the tax office having jurisdiction over the place of tax payment or the commissioner of the competent regional tax office shall determine the tax base and amount of corporate tax on the income of the domestic corporation for each business year. |
| (2) | Where a domestic corporation that has filed a report under Article 60 falls under any of the following cases, the head of the tax office having jurisdiction over the place of tax payment or the commissioner of the competent regional tax office shall correct the tax base and amount of corporate tax on the income of the relevant corporation for each business year: <Amended on Jun. 7, 2013> |
| 1. | Where it makes any error or omission in the details of the report; |
| 2. | Where it fails to submit all or some payment statements referred to in Article 120 or 120-2, or aggregate invoices for each supplier or purchaser referred to in Article 121; |
| 3. | Where it is determined that the details of the report are unconscientious, taking into account the scope of facilities or the business conditions in any of the followings cases: |
| (a) | Where a corporation meeting the membership eligibility for a credit card merchant referred to in Article 117 (1) fails to become a credit card merchant defined in the Specialized Credit Finance Business Act (limited to a corporation; hereinafter referred to as "credit card merchant"), without good cause; |
| (b) | Where a credit card merchant refuses a transaction by credit card or issues a false credit card sales slip without good cause, in violation of Article 117 (2); |
| (c) | Where a corporation obligated to become a Cash Receipt merchant under Article 117-2 (1) or a corporation designated to become a Cash Receipt merchant under Article 46 (4) of the Value-Added Tax Act fails to become a Cash Receipt merchant under Article 126-3 of the Act on Restriction on Special Cases concerning Taxation (hereinafter referred to as "Cash Receipt merchant"), without good cause; |
| (d) | Where a Cash Receipt merchant refuses to issue a Cash Receipt without good cause or issues a false Cash Receipt; |
| 4. | Deleted. <Dec. 20, 2016> |
| (3) | The head of the tax office having jurisdiction over the place of tax payment or the commissioner of the competent regional tax office shall determine or correct the tax base and amount of corporate tax under paragraphs (1) and (2) based on the account books or other evidentiary documents; provided, he or she may estimate such base and amount of corporate tax, as prescribed by Presidential Decree, where the amount of income cannot be calculated based on the account books or other evidentiary documents on the grounds prescribed by Presidential Decree. |
| (4) | Where any error or omission is found after the head of the tax office having jurisdiction over the place of tax payment or the commissioner of the competent regional tax office has determined or corrected the tax base and amount of corporate tax, he or she shall re-correct them immediately. |
[This Article Wholly Amended on Dec. 30, 2010]
| Article 67 (Disposal of income) |
In filing a report on determining or correcting the following corporate tax bases, the amount included in the calculation of gross income or not included in deductible expenses shall be disposed of as a bonus, dividends, or other outflows from or reserves held by the relevant company to the persons to whom it reverts, as prescribed by Presidential Decree:
| 1. | Reporting under Article 60; |
| 2. | Determining or correcting in Article 66 or 69; |
| 3. | A revised return filed pursuant to Article 45 of the Framework Act on National Taxes. |
[This Article Wholly Amended on Dec. 24, 2018]
| Article 68 (Special cases concerning calculation of tax bases and amount by estimation) |
Articles 13 (1) 1, 18-4, and 57 shall not apply where the tax base and amount of corporate tax is estimated under the proviso to Article 66 (3); provided, this shall not apply where such tax base and amount are estimated, as prescribed by Presidential Decree, since the account books or other evidentiary documents are destroyed by a natural disaster or on other grounds. <Amended on Dec. 24, 2018; Dec. 31, 2023>
[This Article Wholly Amended on Dec. 30, 2010]
| Article 69 (Determination of occasional imposition) |
| (1) | Where the head of the tax office having jurisdiction over the place of tax payment or the commissioner of the competent regional tax office deems that a domestic corporation is likely to evade corporate tax in the business year due to the grounds prescribed by Presidential Decree (hereafter in this Article, referred to as "grounds for occasional imposition"), he or she may occasionally impose corporate tax on the domestic corporation (hereinafter referred to as "occasional imposition"). In such cases, the corporation shall also file a report on income for each business year under Article 60. |
| (2) | For purposes of paragraph (1), the period from the start date of the business year to the date on which the grounds for occasional imposition arise, shall be the period for occasional imposition; provided, the grounds for occasional imposition have arisen before the deadline for filing a report on the tax base, etc. under Article 60 for the immediately previous business year (excluding where a report on the tax base for the immediately previous year is filed), the period for occasional imposition shall be the period from the start date of the immediately previous business year until the day the grounds for occasional imposition have arisen. |
| (3) | Matters necessary for occasional imposition under paragraph (1) shall be prescribed by Presidential Decree. |
[This Article Wholly Amended on Dec. 30, 2010]
| Article 70 (Notification of tax base and tax amount) |
Where the head of the tax office having jurisdiction over the place of tax payment or the commissioner of the competent regional tax office determines or corrects the tax base and amount of corporate tax on income for each business year of a domestic corporation under Article 53 or 66, he or she shall notify the relevant domestic corporation thereof, as prescribed by Presidential Decree.
[This Article Wholly Amended on Dec. 30, 2010]
Sub-Section 2 Collection and Refund of Tax
| Article 71 (Collection and refund) |
| (1) | Where a domestic corporation fails to pay all or part of tax payable as corporate tax on income for each business year under Article 64, the head of the tax office having jurisdiction over the place of tax payment shall collect the unpaid corporate tax in accordance with the National Tax Collection Act. <Amended on Jan. 1, 2013> |
| (2) | Where a domestic corporation fails to pay all or part of interim tax payable under Articles 63 and 63-2, the head of the tax office having jurisdiction over the place of tax payment shall collect the unpaid interim tax in accordance with the National Tax Collection Act; provided, where the corporation which fails to pay interim tax falls under Article 63-2 (2) 2, the head of the tax office shall determine and collect the interim tax in accordance with the National Tax Collection Act. <Amended on Jan. 1, 2013; Dec. 24, 2018> |
| (3) | Where a person liable for withholding referred to in Articles 73 and 73-2 fails to withhold tax or to pay withheld tax by the payment deadline, the head of the tax office having jurisdiction over the place of tax payment shall, without delay, collect the sum of the amount of tax to be withheld and paid by a person liable for withholding and additional tax added under Article 47-5 (1) of the Framework Act on National Taxes from the person liable for withholding as corporate tax; provided, where the person liable for withholding has failed to withhold tax and the relevant tax obligor has paid corporate tax, the head of such tax office shall only collect additional tax from the person liable for withholding. <Amended on Dec. 31, 2011; Dec. 24, 2018> |
| (4) | Where the amount of corporate tax collected as interim payment, occasionally imposed, or withheld under Article 63, 63-2, 69, 73, or 73-2 exceeds the amount of corporate tax on income for each business year (including additional tax), the head of the tax office having jurisdiction over the place of tax payment shall refund the excess or appropriate it for national taxes and forced collection charge under Article 51 of the Framework Act on National Taxes. <Amended on Dec. 24, 2018; Dec. 22, 2020> |
[This Article Wholly Amended on Dec. 30, 2010]
| Article 72 (Refund by retroactive deduction of losses for small and medium enterprises) |
| (1) | Where a small and medium enterprise under Article 25 (1) 1 has losses incurred for each business year as prescribed in Article 14 (2), it may apply for a refund of the amount calculated, as prescribed by Presidential Decree, up to the limit of corporate tax (referring to the amount of corporate tax prescribed by Presidential Decree) imposed on income during the business year immediately preceding the business year in which such losses incurred. In such cases, such losses shall be construed as the deducted amount in applying subparagraph 1 of Article 13: <Amended on Dec. 24, 2018> |
| 1. | The computed amount of corporate tax for the immediately preceding business year (excluding corporate tax on capital gains on the transfer of land, etc. under Article 55-2); |
| 2. | The amount calculated by applying the relevant tax rate in Article 55 (1) for the immediately preceding business year to the amount computed by subtracting a loss for the relevant business year that intends to be deducted retroactively from the tax base for the immediately preceding business year. |
| (2) | A domestic corporation which intends to obtain a refund of corporate tax under paragraph (1) shall file an application to the head of the tax office having jurisdiction over the place of tax payment until the filing deadline specified in Article 60, as prescribed by Presidential Decree. |
| (3) | Upon receipt of an application under paragraph (2), the head of the tax office having jurisdiction over the place of tax payment shall determine the amount of tax to be refunded and refund it under Articles 51 and 52 of the Framework Act on National Taxes, without delay. |
| (4) | Paragraphs (1) through (3) shall apply only when a domestic corporation files a report on the tax base and amount of the corporate tax on income for the business year in which the losses incur and for the immediately preceding business year by the filing deadline specified in Article 60. |
| (5) | In any of the following cases, the head of the tax office having jurisdiction over the place of tax payment shall collect an amount computed by adding an amount equivalent to the interest calculated, as prescribed by Presidential Decree, to the amount of tax to be refunded (the amount equivalent to the tax amount over-refunded in cases of subparagraphs 1 and 2) as corporate tax for the business year in which the relevant losses have been incurred: <Amended on Jan. 1, 2013; Dec. 24, 2018> |
| 1. | Where losses have decreased after correcting the tax base and the amount of corporate tax pursuant to Article 66 for the business year in which the losses incurred after corporate tax was refunded, as prescribed in paragraph (3); |
| 2. | Where the amount of tax to be refunded has decreased as a result of the rectification of the tax base and tax amount for corporate tax pursuant to Article 66 for the business year immediately before the business year in which the losses were incurred; |
| 3. | Where a domestic corporation, other than small and medium enterprises has received a refund of corporate tax. |
| (6) | Where there is any change to the amount of corporate tax or tax base for the immediately preceding business year which becomes a basis for calculating the original amount of tax to be refunded (hereafter in this paragraph, referred to as "original amount of tax to be refunded"), after the head of the tax office having jurisdiction over the place of tax payment determines the amount of tax to be refunded pursuant to paragraph (3), he or she shall immediately correct the original amount of tax to be refunded and then refund it additionally or collect the amount equivalent to the tax amount over-refunded. <Added on Dec. 24, 2018> |
| (7) | In applying paragraphs (1) through (6), matters concerning the calculation of the amount of tax to be refunded by retroactive deduction of losses shall be prescribed by Presidential Decree. <Amended on Dec. 24, 2018> |
[This Article Wholly Amended on Dec. 30, 2010]
[Title Amended on Dec. 24, 2018]
| Article 72-2 Deleted. <Dec. 20, 2016> |
| Article 73 (Withholding on the amount of interest income of domestic corporations) |
| (1) | When a person (hereafter in this Article, referred to as "person liable for withholding") who pays any of the following amounts to a domestic corporation (excluding income prescribed by Presidential Decree, such as a financial company prescribed by Presidential Decree), he or she shall withhold corporate tax (only applicable to the amount exceeding 1,000 won) equivalent to the amount calculated by applying the tax rate of 14/100 to the amount payable and shall pay it at the tax office having jurisdiction over the place of tax payment, etc. by no later than the tenth day of the month following the month in which the date of collection falls; provided, the tax rate of 25/100 shall apply to the profits made from non-business loans referred to in Article 16 (1) 11 of the Income Tax Act; and the tax rate of 14/100 shall apply to the interest income paid through an online investment-linked financial business entity registered with the Financial Services Commission pursuant to the Act on Online Investment-Linked Financial Business and Protection of Users: <Amended on Dec. 24, 2018; Dec. 31, 2019; Dec. 21, 2021; Dec. 31, 2022> |
| 1. | The amount of interest income referred to in Article 16 (1) of the Income Tax Act (including revenues of a corporation that operates the financial insurance business); |
| 2. | The amount of investment trust proceeds (hereinafter referred to as "investment trust proceeds") of the Financial Investment Services and Capital Markets Act among the profits from collective investment schemes referred to in Article 17 (1) 5 of the Income Tax Act. |
| (2) | For the purpose of paragraph (1), where a foreign corporate tax payable by an indirect investment company is paid on investment trust profits, the amount calculated by subtracting the amount prescribed in subparagraph 2 from the amount prescribed in subparagraph 1 shall be withheld to the extent of the amount prescribed in subparagraph 1: <Added on Dec. 31, 2022> |
| 1. | Withholding tax on profits of an investment trust (referring to the amount calculated on the basis of an after-tax base price); |
| 2. | An amount calculated as prescribed by Presidential Decree, taking into account the after-tax base price of the foreign corporate tax payable by an indirect investment company. |
| (3) | For the purpose of paragraph (2), where an amount prescribed in paragraph (2) 2 exceeds an amount prescribed in subparagraph 1 of the same paragraph, a deduction may be allowed to the extent of the withholding tax on profits of an investment trust when the investment trust profits are received during the period from the date on which the relevant foreign corporate tax of the indirect investment company is paid to December 31 of the year in which the date that is ten years after such tax payment date falls. <Added on Dec. 31, 2022> |
| (4) | Notwithstanding paragraph (1) or (2), corporate tax on the income prescribed by Presidential Decree, such as the income on which corporate tax is not imposed or exempt, shall not be withheld. <Added on Dec. 24, 2018; Dec. 31, 2022> |
| (5) | The amount of income referred to in the subparagraphs of paragraph (1) shall not be withheld, deeming that the relevant amount of income is not paid at the time such amount of income reverts to any piece of investment trust property under the Financial Investment Services and Capital Markets Act in applying paragraph (1) or (2). <Amended on Dec. 30, 2010; Dec. 24, 2018; Dec. 31, 2022> |
| (6) | In applying paragraph (1) or (2), any acts done by a person representing, or commissioned by, a person liable for withholding shall be deemed the acts done by the principal or a commissioning person within the scope of the delegation or commission. <Amended on Dec. 30, 2010; Dec. 24, 2018; Dec. 31, 2022> |
| (7) | In applying paragraph (1) or (2), where a financial company, etc. prescribed by Presidential Decree assumes or trades bills or debt certificates issued by a domestic corporation (including a resident; hereafter in this paragraph, the same shall apply) or brokers or makes such transactions on behalf of the corporation pursuant to paragraph (1), the financial company, etc. shall be deemed to have the agency or commission relationship with the domestic corporation. <Amended on Dec. 30, 2010; Dec. 24, 2018; Dec. 31, 2022> |
| (8) | In applying paragraph (1) or (2), where a foreign corporation pays a domestic corporation income specified in each subparagraph of paragraph (1) from bonds or securities issued by the foreign corporation, a person who acts as an agent of the foreign corporation for such payment or a person to whom the authority for such payment is delegated or entrusted in the Republic of Korea shall withhold the corporate tax on the income. <Added on Jan. 1, 2013; Dec. 24, 2018; Dec. 31, 2022> |
| (9) | Any person liable for withholding prescribed by Presidential Decree, in consideration of the number of regular employees and categories of business, may pay the withheld corporate tax by the tenth day of the month following the last month of the semiannual period which includes the withholding date, as prescribed by Presidential Decree, notwithstanding paragraphs (1) and (2). <Amended on Dec. 30, 2010; Dec. 31, 2022> |
| (10) | In applying paragraphs (1) through (9), the timing for payment of interest income, scope and calculation of the amount of income subject to withholding corporate tax, calculation and payment of withholding tax, scope of persons liable for withholding, etc. shall be prescribed by Presidential Decree. <Amended on Dec. 30, 2010; Jan. 1, 2013; Dec. 24, 2018; Dec. 31, 2022> |
[Title Amended on Dec. 24, 2018]
| Article 73-2 (Withholding on the amount of interest on interest accruing during the holding period of the bonds) |
| (1) | Where a domestic corporation sells (including brokering, arranging, or other cases prescribed by Presidential Decree, but excluding trading of repurchase bonds, etc. or other cases prescribed by Presidential Decree; hereafter in this Article and Articles 74 and 75-18, the same shall apply) bonds, etc. under Article 46 (1) of the Income Tax Act or beneficiary certificates of an investment trust (hereinafter referred to as "bonds, etc. subject to withholding tax") to a third party, the domestic corporation shall withhold corporate tax (only applicable to the amount exceeding 1,000 won) equivalent to the amount calculated by applying the tax rate of 14/100 to the amount of interest and discounts accrued or generated from such bonds, etc. and the investment trust proceeds (hereafter in this Article and Article 98-3, referred to as "interest, etc.") accruing during the period holding the bonds, etc. subject to withholding tax, as prescribed by Presidential Decree, and shall pay it to the tax office having jurisdiction over the place of tax payment, etc. by no later than the tenth day of the month following the month in which the date of collection falls. In such cases, this Act shall apply to such domestic corporation, deeming it a person liable for withholding. <Amended on Dec 22, 2020; Dec. 21, 2021> |
| (2) | Notwithstanding paragraph (1), corporate tax shall not be collected from the income prescribed by Presidential Decree, such as the income on which corporate tax is not imposed or exempt. |
| (3) | In applying paragraph (1), where a domestic corporation sells bonds, etc. subject to withholding tax to any of the following corporations, any acts done by a person representing, or commissioned by, a person liable for withholding shall be deemed the acts done by the principal or a commissioning person within the scope of the delegation or commission, where there is an agreement between the relevant parties: |
| 1. | Financial companies, etc. prescribed by Presidential Decree; |
| 2. | Collective investment business entities under the Financial Investment Services and Capital Markets Act. |
| (4) | In applying paragraph (1), where a domestic corporation sells bonds, etc. subject to withholding tax belonging to the investment trust property under the Financial Investment Services and Capital Markets Act, it shall be deemed to have the agency or commission relationship between a trust company under the same Act and a person according to the following classification: <Amended on Dec. 22, 2020> |
| 1. | Trust property referred to in Article 5 (1): Beneficiary of the relevant trust property; |
| 2. | Trust property referred to in Article 5 (3): Trustor of the relevant trust property. |
| (5) | Article 73 (4) through (7) shall apply |
| (6) | In applying paragraphs (1) through (4), matters necessary for calculating the period holding bonds, etc., subject to withholding tax shall be prescribed by Presidential Decree. |
[This Article Added on Dec. 24, 2018]
| Article 74 (Issuance of withholding receipts) |
| (1) | Where a person liable for withholding withholds corporate tax from a tax obligor under Articles 73 and 73-2, the person liable for withholding shall issue a withholding receipt to the tax obligor, as prescribed by Presidential Decree. <Amended on Dec. 24, 2018> |
| (2) | In applying paragraph (1), the relevant corporation shall be deemed a tax obligor when a person liable for withholding has paid the corporate tax on the amount equivalent to the interest accruing from the sale of bonds, etc. subject to withholding tax pursuant to Article 73-2 in the capacity of the tax obligor. <Amended on Dec. 24, 2018> |
| (3) | Matters necessary for issuing withholding receipts under paragraph (1) shall be prescribed by Presidential Decree. |
[This Article Wholly Amended on Dec. 30, 2010]
| Article 74-2 (Penalty tax on begligence in submitting detailed statement of expenses related to passenger vehicles for business use) |
| (1) | Where a domestic corporation that has included expenses, etc. related to passenger vehicles for business use in deductible expenses pursuant to Article 27-2 (1) through (5) fails to submit a detailed statement of expenses, etc. related to passenger vehicles for business use referred to in paragraph (6) of the same Article (hereafter referred to as "detailed statement" in this paragraph) or submits a false detailed statement, a penalty tax calculated according to the following classification shall be paid in addition to the corporate tax for the relevant business year: |
| 1. | Where it fails to submit a detailed statement: 1/100 of the amount included in deductible expenses for expenses, etc. related to passenger vehicles for business use when the relevant domestic corporation files a report pursuant to Article 60; |
| 2. | Where it submits a false detailed statement: 1/100 of the amount stated differently from the actual facts in the relevant detailed statement out of the amount included in deductible expenses for expenses, etc. related to passenger vehicles for business use when the relevant domestic corporation files a report pursuant to Article 60. |
| (2) | The penalty tax in paragraph (1) shall be collected although the calculated amount of tax is nil. |
[This Article Added on Dec. 21, 2021]
| Article 75 (Penalty tax on negligence in submitting certificate of confirmation on compliant filing) |
| (1) | Where a domestic corporation subject to confirmation of compliant filing under Article 60-2 (1) fails to submit a certificate of confirmation of compliant filing to the head of the tax office having jurisdiction over the place of tax payment, within four months from the end of the month in which the pertinent business year ends, the greater of the following amounts shall be paid as a penalty tax in addition to the amount of corporate tax for the relevant business year: <Amended on Dec. 21, 2021> |
| 1. | 5/100 of the calculated amount of corporate tax (excluding corporate tax on capital gains on the transfer of land, etc. under Article 55-2 and corporate tax computed by applying special tax provisions for promoting investment and collaborative cooperation under Article 100-32 of the Act on Restriction on Special Cases concerning Taxation: hereafter in this Article and Article 75-2 through 75-9, the same shall apply); |
| 2. | 2/10,000 of the amount of income. |
| (2) | In applying paragraph (1), where the calculated amount of corporate tax corrected under Article 66 become greater than zero, a penalty tax shall be computed according to the calculated amount of corporate tax corrected. |
| (3) | The penalty tax prescribed in paragraph (1) shall be collected even if the calculated amount of tax is nil. <Added on Dec. 21, 2021> |
[This Article Wholly Amended on Dec. 24, 2018]
| Article 75-2 (Penalty tax on negligence in submitting detailed statement of shareholders) |
| (1) | In any of the following circumstances, a domestic corporation obliged to submit a detailed statement on shareholders, etc., (hereafter in this paragraph, referred to as "detailed statement") pursuant to Article 109 (1) or the latter part of Article 111 (1) shall pay an amount equivalent to 5/1,000 of the par value of the stocks, etc., (referring to an amount calculated by dividing the capital of a corporation that issues non-par value stocks by the total number of issued stocks in cases of the non-par value stocks: hereafter in this Article, the same shall apply) held by the relevant shareholders, etc., or the investment value, in addition to the corporate tax for the business year in which the date of establishment falls: |
| 1. | Where it fails to submit the detailed statement; |
| 2. | Where it submits the detailed statement which fully or partially omits the details of the shareholders, etc.; |
| 3. | Where the detailed statement submitted is found unclear with regard to the descriptions prescribed by Presidential Decree. |
| (2) | Where a domestic corporation obliged to submit a detailed statement of changes in stocks, etc., pursuant to Article 119 (hereafter in this paragraph, referred to as "detailed statement") falls under any of the following cases, it shall pay an amount equivalent to 1/100 of the par value or investment value of the stocks, etc, in addition to the corporate tax: |
| 1. | Where it fails to submit the detailed statement; |
| 2. | Where it submits a statement which omits the status of changes in stocks, etc.; |
| 3. | Where the detailed statement submitted is found unclear with regard to the descriptions prescribed by Presidential Decree. |
| (3) | The penalty tax in paragraphs (1) and (2) shall be collected although the calculated amount of tax is nil. |
[This Article Added on Dec. 24, 2018]
| Article 75-3 (Penalty tax on negligence in recording and keeping account books) |
| (1) | Where a domestic corporation (excluding a non-profit domestic corporation and a corporation with the income on which corporate tax is not imposed or fully exempt under this Act or other statutes) fails to fulfill the obligation to keep books of accounts and to make entries in the books pursuant to Article 112, it shall pay any of the following penalty taxes, whichever is larger, in addition to the corporate tax for the relevant business year: |
| 1. | 20/100 of the calculated amount of tax; |
| 2. | 7/10,000 of the amount of income. |
| (2) | The penalty tax in paragraph (1) shall be collected although the calculated amount of tax is nil. |
[This Article Added on Dec. 24, 2018]
| Article 75-4 (Penalty tax on negligence in issuing, preparing and keeping donation receipts) |
| (1) | Where a domestic corporation that issues a donation receipt falls under any of the following circumstances, it shall pay any of the following penalty taxes, in addition to the corporate tax for the relevant business year: <Amended on Dec. 31, 2019> |
| 1. | Where the donated amount stated on a receipt is false (including where a receipt is issued without any essential description, such as the donated amount or the donor’s personal information): |
| (a) | Where the donated amount stated on a receipt is false: 5/100 of the difference [referring to the difference between the amount actually stated on the receipt (the amount of donation that the person to whom such donation receipt was issued includes as a deductible expense or a necessary expense or receives a tax credit on the donation, where the receipt has no amount) and the amount that should have been stated on the receipt]; |
| (b) | In cases other than those falling under item (a), such as where personal information, etc. of the donor is stated falsely on receipt: 5/100 of the amount stated in the receipt; |
| 2. | Where a detailed statement of donation receipts by donator is not prepared and kept in Article 112-2 (1): 2/1,000 of the amount not prepared and kept in a statement. |
| (2) | A "donation receipt" in paragraph (1) and Article 112-2 means any of the following receipts, including donation receipts issued electronically as prescribed by Presidential Decree (hereinafter referred to as "electronic donation receipts"): <Amended on Dec. 22, 2020> |
| 1. | A receipt necessary for including a donation in deductible expenses pursuant to Article 24; |
| 2. | A receipt necessary for including a donation in an incurred expense or receiving a tax credit on the donation pursuant to Articles 34 and 59-4 (4) of the Income Tax Act. |
| (3) | A penalty tax in subparagraph 2 of paragraph (1) shall not apply where the penalty tax is imposed on the ground that a person fails to fulfill its obligation to submit a report under Article 78 (3) of the Inheritance Tax and Gift Tax Act or fails to fulfill its obligation to prepare and keep the books of accounting about donated assets under paragraph (5) of the same Article. |
| (4) | The penalty tax in paragraph (1) shall be collected although the calculated amount of tax is nil. |
[This Article Added on Dec. 24, 2018]
| Article 75-5 (Penalty tax on negligence in receiving evidentiary documents) |
| (1) | Where a domestic corporation (excluding any corporation prescribed by Presidential Decree) is provided with goods or services in connection with its business from a business operator prescribed by Presidential Decree and fails to receive an evidentiary document referred to in any subparagraph of Article 116 (2) or receives a false evidentiary document, it shall pay a penalty tax equivalent to 2/100 of the amount for which it fails to receive an evidentiary documents or the amount received differently from the facts recognized as being included in deductible expenses (referring to the difference between the issued amount and the actually transacted amount), in addition to the corporate tax. <Amended on Dec. 31, 2019> |
| (2) | In any of the following cases, a penalty tax prescribed in paragraph (1) shall not be imposed: <Amended on Dec. 31, 2022> |
| 1. | Where business promotion expenses are not included in deductible expenses pursuant to Article 25 (2); |
| 2. | Where it falls under the proviso, with the exception of the subparagraphs, of Article 116 (2). |
| (3) | The penalty tax in paragraph (1) shall be collected although the calculated amount of tax is nil. |
[This Article Added on Dec. 24, 2018]
| Article 75-6 (Penalty tax on negligence in issuing credit cards and cash receipts) |
| (1) | Where a domestic corporation which has become a credit card merchant pursuant to Article 117 refuses a transaction by credit card or issues a false credit card sales slip, and then notified by the head of the competent tax office pursuant to Article 117 (4), it shall pay a penalty tax equivalent to 5/100 of the amount (it shall be five thousands won where the amount is less than five thousand won), the payment of which by credit card is refused for each transaction, or of the amount (referring to the difference between the issued amount and the actually transacted amount) with relation to which a false credit card sales slip is issued, in addition to the corporate tax. |
| (2) | Where a domestic corporation falls under any of the following cases, it shall pay a penalty tax equivalent to any of the following amounts, in addition to the corporate tax: <Amended on Dec. 21, 2021> |
| 1. | Where it fails to become a cash receipt merchant, in violation of Article 117-2 (1) or becomes a cash receipt merchant after the period for filing to become a cash receipt merchant passes: An amount calculated by multiplying an amount equivalent to 1/100 of the revenue generated in the business year, for which it has failed to become such merchant (only limited to the revenue generated from the type of business prescribed by Presidential Decree where the corporation runs at least two types of business, and excluding the revenue prescribed by Presidential Decree such as the amount on which tax invoice is issued) by the ratio calculated, as prescribed by Presidential Decree, in consideration of the period in which it was not such a merchant; |
| 2. | Where it is notified by the head of the competent tax office pursuant to the latter part of Article 117-2 (6) as it refuses to issue a cash receipt or issues a false cash receipt, in violation of Article 117-2 (3) (only applicable to cases where the amount subject to issuance of a cash receipt exceeds 5,000 won per case and excluding the cases falling under subparagraph 3): 5/100 (it shall be five thousand won where the amount is less than five thousand won) of each amount for which the issuance of the cash receipt is refused, or of each amount for which a false cash receipt is issued (referring to the difference between the issued amount and the actually transacted amount); |
| 3. | Where it fails to issue a cash receipt, in violation of Article 117-2 (4) (excluding cases prescribed by Presidential Decree, such as those subject to insurance benefits under the National Health Insurance Act): 20/100 of the amount for which a cash receipt is not issued (10/100 where it voluntarily reports to the tax office having jurisdiction over the place of tax payment or voluntarily issues a cash receipt within 10 days from the date it receives the transaction costs by mistake or due to omission). |
| (3) | The penalty tax in paragraphs (1) and (2) shall be collected although the calculated amount of tax is nil. |
[This Article Added on Dec. 24, 2018]
| Article 75-7 (Penalty tax on negligence in submitting payment statements) |
| (1) | Where a person obliged to submit a payment statement referred to in Article 120, 120-2 of this Act and Article 164, 164-2 of the Income Tax Act (hereafter in this Article referred to as "payment statement"), or a simple payment statement (hereafter in this Article referred to as "simple payment statement") referred to in Article 164-3 of the same Act falls under any of the following cases, it shall pay a penalty tax equivalent to any of the following amounts, in addition to corporate tax: <Amended on Dec. 22, 2020; Mar. 16, 2021; Dec. 31, 2022> |
| 1. | Where it fails to submit a payment statement or simple payment statement (hereafter in this Article referred to as "payment statement, etc.") by deadline: An amount according to the following classification: |
| (a) | In cases of payment statements: 1/100 of the payment for which the statement has not been submitted (or 5/1,000 of the payment, where the statement is submitted within three month after the deadline); provided, in cases of a payment statement on wage and salary income of a daily employed worker referred to in the proviso, with the exception of the subparagraphs, of Article 164 (1) of the Income Tax Act (hereafter in this Article referred to as "daily wage or salary income"), 25/10,000 of the payment for which the statement has not been submitted (or 125/100,000 of the payment, where the statement is submitted within one month after the deadline); |
| (b) | In cases of simple payment statements: 25/10,000 of the payment for which the statement has not been submitted (125/100,000 of the payment where the statement is submitted within one month after the deadline); |
| 2. | Where the payment statement, etc. submitted is found unclear with regard to the descriptions prescribed by Presidential Decree or where the amount stated on the payment statement, etc. submitted is untrue: An amount according to the following classification: |
| (a) | In cases of payment statements: 1/100 of the payment stated on the unclear or untrue statement; provided, in cases of a payment statement on daily wage or salary income, it shall be 25/10,000 of the payment stated on the unclear or false statement; |
| (b) | In cases of simple payment statements: 25/10,000 of the payment stated on the unclear or false statement. |
| (2) | Notwithstanding paragraph (1) 1, where a withholding agent who pays withholding taxes semiannually pursuant to Article 128 (2) of the Income Tax Act falls under any of the following as the agent pays daily wage or salary income or income referred to in Article 164-3 (1) 2 of the same Act between July 1, 2021 and June 30, 2022, a penalty tax prescribed in paragraph (1) 1 shall not be imposed: <Added on Mar. 16, 2021> |
| 1. | Where the withholding agent submits a payment statement on daily wage or salary income by the end of the month following the last month of the quarter in which the payment date (in cases of income governed by Article 135 of the Income Tax Act, referring to the end of the taxable period for the relevant income) falls (when a business is suspended, closed, or dissolved, referring to the end of the month following the last month of the quarter in which the date of the suspension, closure or dissolution of the business falls); |
| 2. | Where the withholding agent submits a simple payment statement on income referred to in Article 164-3 (1) 2 of the Income Tax Act by the end of the month following the last month of the half year in which the payment date of such income (in cases of income governed by Article 144-5 of the Income Tax Act, referring to the end of the taxable period for the relevant income) falls (when a business is suspended, closed, or dissolved, referring to the end of the month following the last month of the quarter in which the date of the suspension, closure or dissolution of the business falls). |
| (3) | Notwithstanding paragraph (1) 1 (b), a penalty tax prescribed in paragraph (1) 1 (b) shall not be imposed in any of the following cases: <Added on Dec. 31, 2022; Dec. 31, 2023> |
| 1. | In cases of a withholding agent who pays income referred to in Article 164-3 (1) 1 of the Income Tax Act between January 1, 2026 and December 31, 2026 (it shall be by December 31 2027 in cases of a withholding agent who pays withholding taxes semi-annually pursuant to Article 128 (2) of the Income Tax Act), where the agent submits a simple payment statement on such income by the end of the month following the last month of the half year in which the payment date of such income (in cases of income governed by Article 135 of the Income Tax Act, referring to the end of the taxable period for the relevant income) falls (when a business is suspended, closed, or dissolved, referring to the end of the month following the last month of the half year in which the date of the suspension, closure or dissolution of the business falls); |
| 2. | In cases of a withholding agent who pays income referred to in Article 164-3 (1) 3 of the Income Tax Act between January 1, 2024 and December 31, 2024, where the withholding agent submits a payment statement on such income by the end of February of the year following the tax year in which the payment date of such income falls (when a business is suspended, closed, or dissolved, referring to the end of the month that is two months after the month in which the date of the suspension, closure or dissolution of the business falls). |
| (4) | Notwithstanding paragraph (1) 2, where a payment statement, etc. submitted for daily wage or salary income or income prescribed in any subparagraph of Article 164-3 (1) of the Income Tax Act falls under the part other than the items of paragraph (1) 2, if the ratio of the payment amount under the part other than the items of paragraph (1) 2 to the respective total amount of payment stated in the payment statement, etc. does not exceed the ratio prescribed by Presidential Decree, the penalty tax prescribed in paragraph (1) 2 shall not be imposed. <Added on Mar. 16, 2021; Dec. 31, 2022> |
| (5) | For the purpose of paragraph (1), with respect to a person obligated to submit a payment statement, etc. for income prescribed in Article 164-3 (1) 2 of the Income Tax Act (excluding business income prescribed by Presidential Decree pursuant to Article 73 (1) 4 of the same Act) or income prescribed in subparagraph 3 of the same paragraph, the penalty tax prescribed in paragraph (1) 1 (b) shall not be imposed on the amount subject to the penalty tax under item (a) of the same subparagraph; the penalty tax prescribed in paragraph (1) 2 (b) shall not be imposed on the amount subject to the penalty tax under item (a) of the same subparagraph. <Added on Dec. 31, 2022> |
| (6) | The penalty tax prescribed in paragraph (1) shall be collected even when the calculated amount of tax is nil. <Amended on Mar. 16, 2021; Dec. 31, 2022> |
| (7) | In applying paragraph (1), where a corporation is merged, divided, or dissolved, matters necessary for the amount of payment shall be prescribed by Presidential decree. <Amended on Mar. 16, 2021; Dec. 31, 2022> |
[This Article Added on Dec. 24, 2018]
[Title Amended on Mar. 16, 2021]
[Enforcement Date: Jan. 1, 2025]
[Enforcement Date: Jan. 1, 2025]
| Article 75-8 (Penalty tax on negligence in submitting invoice) |
| (1) | Where a domestic corporation (excluding a corporation prescribed by Presidential Decree) falls under any of the following cases, it shall pay a penalty tax equivalent to any of the following amounts, in addition to corporate tax: <Amended on Dec. 31, 2019> |
| 1. | Where it fails to submit aggregate invoices for each supplier or purchaser in Article 120-3 (1) by the deadline in the same Article or all or some matters to be stated, as prescribed by Presidential Decree, on the aggregate invoices for each supplier or purchaser issued under Article 121 (1) or (2) are not stated thereon, or are falsely stated (excluding the portions to which subparagraph 4 shall apply): 5/1,000 of the supply value; |
| 2. | Where all or some matters to be stated, as prescribed by Presidential Decree, on the invoice issued under Article 121 (1) or (2) are not stated thereon, or are falsely stated (excluding the portions to which subparagraph 3 shall apply): 1/100 of the supply value; |
| 3. | Where an aggregate tax invoice for each supplier referred to in Article 121 (5) is not submitted by the deadline specified by the same Article or where all or some matters to be stated, as prescribed by Presidential Decree, are not stated or are falsely stated on such aggregate tax invoice for each supplier (excluding the purchase price for the portion to which subparagraph 4 shall apply): 5/1,000 of the supply value; |
| 4. | In any of the following cases: 2/100 of the supply value (applicable rate shall be 1/100, where any invoice other than an electronic invoice has been issued, although no electronic invoice was issued pursuant to the latter part of Article 121 (1), and where an invoice has been issued pursuant to Article 121 (1) or (2) by the 25th day of the month immediately following the end of the business year in which the relevant goods or services were supplied, after the deadline for issuing an invoice under Article 121 (8)): |
| (a) | Where a person who has supplied goods or services fails to issue an invoice under 121 (1) or (2) by the deadline for issuing the invoice under Article 121 (8); |
| (b) | Where a person who has supplied goods or services fails to issue a credit card sales slip in Article 116 (2) 1, cash receipt in Article 116 (2) 2 and invoice in 121 (1) or (2) (hereafter in this subparagraph, referred to as "invoice, etc."); |
| (c) | Where a person receives an invoice or other similar document issued for goods or services that have not been supplied; |
| (d) | Where a corporation that has actually provided goods or services issues an invoice, etc., under the name of a corporation that has not provided goods or services; |
| (e) | Where an invoice or other similar document is issued for goods or services received in the name of a person, other than the supplier of goods or services; |
| 5. | Where a detailed statement of electronic invoices issued is transmitted to the Commissioner of the National Tax Service by the 25 day of the month immediately after the end of the business year in which goods or services were supplied after the deadline specified in Article 121 (7) (excluding the portion to which subparagraph 4 shall apply): 3/1000 of the supply value (1/1000 shall apply to the goods or services supplied on or before December 31, 2016); |
| 6. | Where a detailed statement of electronic invoices issued is not transmitted to the Commissioner of the National Tax Service by the 25th day of the month immediately after the end of the business year in which goods or services were supplied after the lapse of the deadline specified in Article 121 (7) (excluding the portion to which subparagraph 4 shall apply): 5/100 of the supply value (Provided, 3/1000 shall apply to the goods or services supplied on or before December 31, 2016). |
| (2) | The penalty tax in any subparagraph of paragraph (1) shall not apply to the portion to which a penalty tax in Article 75-5 or Article 60 (2), (3), and (5) through (7) of the Value-Added Tax Act applies. |
| (3) | The penalty tax in paragraph (1) shall be collected although the calculated amount of tax is nil. |
[This Article Added on Dec. 24, 2018]
| Article 75-9 (Penalty tax on negligence in submitting statement of retained earnings of specific foreign corporation) |
| (1) | Where a domestic corporation obliged to submit a statement of retained earnings of a specific foreign corporation under subparagraph 3 of Article 34 of the Adjustment of International Taxes Act (hereafter in this paragraph, referred to as "statement") falls under any of the following cases, it shall submit a penalty tax equivalent to 5/1,000 of the retained earnings, distributable by the specific foreign corporation, in addition to corporate tax: <Amended on Dec. 22, 2020> |
| 1. | Where it fails to submit the statement by the deadline for submission; |
| 2. | Where the descriptions of a statement submitted are wholly or partially omitted or a statement submitted is found unclear with regard to the descriptions specified by Presidential Decree. |
| (2) | The penalty tax in paragraph (1) shall be collected although the calculated amount of tax is nil. |
[This Article Added on Dec. 24, 2018]
CHAPTER II-2 SPECIAL CASES CONCERNING CORPORATE TAXATION ON INCOME FOR EACH BUSINESS YEAR OF CORPORATE TAXABLE TRUST PROPERTY
SECTION 1 Common Provisions
| Article 75-10 (Application relationship) |
With respect to the trustee of a trust (hereinafter referred to as "trustee subject to corporate tax") who pays a corporate tax on trust property deemed to be a domestic corporation pursuant to Article 5 (2) (hereinafter referred to as "corporate taxable trust property") and the income attributable thereto, the provisions of this Chapter shall prevail over the provisions of Chapters 1 and 2.
[This Article Added on Dec. 22, 2020]
| Article 75-11 (Application of corporate taxation method to trust property) |
| (1) | A trustee subject to corporate tax shall pay a corporate tax on income that reverts to corporate taxable trust property, separately from other income. |
| (2) | Where a trustee subject to corporate tax, due to the disposition of property, etc., is unable to pay a corporate tax or forced collection charge imposed on or payable by the corporate taxable trust property in full with the property of the corporate taxable trust property, the beneficiary of such trust (Including persons to whom trust property reverts when the trust is terminated pursuant to Article 101 of the Trust Act) shall have the secondary payment obligation with respect to such deficiency to the extent of the value of property and profits distributed to him or her. |
| (3) | Where corporate taxable trust property distributes its profits to beneficiaries, such profits shall be deemed dividends. |
| (4) | Where corporate taxable trust property does not constitute a trust prescribed in Article 5 (2) any more due to an amendment to its trust contract, etc., Article 5 (2) shall not apply starting from the business year in which the date on which the cause therefor occurs falls. |
| (5) | Matters necessary for applying the corporate taxation method to trust property, etc. pursuant to paragraphs (1) through (4) shall be prescribed by Presidential Decree. |
[This Article Added on Dec. 22, 2020]
| Article 75-12 (Establishment, dissolution of corporate taxable trust property) |
| (1) | A corporate taxable trust property shall be deemed to have been established on the date of its establishment under Article 3 of the Trust Act. |
| (2) | A corporate taxable trust property shall be deemed to have been dissolved on the date of its termination under Articles 98 through 100 of the Trust Act (where the date of its termination is unclear, referring to the date of its business closure pursuant to Article 5 (3) of the Value-Added Tax Act). |
| (3) | A trustee subject to corporate taxation shall separately determine the business year for the corporate taxable trust property and report the business year to the head of the tax office having jurisdiction over the place of tax payment, along with a report on the establishment of a corporation under Article 109 or the registration of a business operator under Article 111. In such cases, the period of a business year shall not exceed one year. |
| (4) | The place of tax payment of any corporate taxable trust property shall be the place of tax payment of the relevant trustee subject to corporate tax. |
| (5) | For the purpose of paragraphs (1) through (4), the start date of the first business year of corporate taxable trust property, designation of tax payment place, and other necessary matters shall be prescribed by Presidential Decree. |
[This Article Added on Dec. 22, 2020]
| Article 75-13 (Application to corporate taxable trust property with co-trustees) |
| (1) | Where there are two or more trustees under Article 50 of the Trust Act in one corporate taxable trust property, a person reported as a trustee who mainly handles trust affairs (hereinafter referred to as "representative trustee") among the trustees under Article 109 or 109-2 shall pay corporate tax on the income that reverts to the corporate taxable trust property. |
| (2) | Trustees other than the representative trustee prescribed in paragraph (1) shall jointly pay corporate taxes related to the corporate taxable trust property. |
[This Article Added on Dec. 22, 2020]
SECTION 2 Tax Base and Computation Thereof
| Article 75-14 (Income deduction for corporate taxable trust property) |
| (1) | Where dividends are paid to beneficiaries of any corporate taxable trust property, the amount of such dividends shall be deducted from the amount of income for the business year in which the distribution is subject to the surplus disposal. |
| (2) | Where no income tax or corporate tax is imposed on dividends paid to stockholders, etc., under this Act and the Act on Restriction on Special Cases concerning Taxation: 1. Where no income tax or corporate tax is imposed on dividends paid to stockholders, etc., under this Act and the Act on Restriction on Special Cases concerning Taxation; provided, paragraph (1) shall apply where stockholders, etc., who received dividends are partnership firms subject to special taxation for partnership firms pursuant to Article 100-15 of the Act on Restriction on Special Cases concerning Taxation, in which cases the partners (if all or some of the partners are higher partnership firms under paragraph (3) of that Article, referring to partners who have invested in the higher partnership firms) are fully imposed income tax or corporate tax on the incomes corresponding to dividends allocated pursuant to Article 100-18 of that Act. <Amended on Dec. 31, 2023> |
| (3) | The trustee of any corporate taxable trust property who wishes to be governed by paragraph (1) shall apply for income deduction as prescribed by Presidential Decree. |
[This Article Added on Dec. 22, 2020]
| Article 75-15 (Merger and division of trusts) |
| (1) | A merger of trusts under Article 90 of the Trust Act with respect to any corporate taxable trust property shall be deemed a merger of corporations, and shall be governed by this Act. In such cases, the corporate taxable trust property before the merger of trusts shall be deemed a merged corporation; the corporate taxable trust property after the merger of trusts shall be deemed a merging corporation. |
| (2) | The division of a trust (including a division and merger) under Article 94 of the Trust Act with respect to any corporate taxable trust property shall be deemed the division of a corporation, and be governed by this Act. In such cases, the corporate taxable trust property transferred to a new trust following the division of the trust shall be deemed a divided corporation, etc.; the corporate taxable trust property to which the relevant corporate taxable trust property is transferred following the division shall be deemed a corporation established through division, etc. |
| (3) | Necessary matters for the merger or division of trusts provided for in paragraphs (1) and (2) shall be prescribed by Presidential Decree. |
[This Article Added on Dec. 22, 2020]
| Article 75-16 (Calculation of income of corporate taxable trust property) |
| (1) | Where the trustee of any corporate taxable trust property transfers the assets and liabilities of the corporate taxable trust property to a new trustee following a change of trustee, the transfer value of the assets and liabilities shall be deemed the book value as of the date of the change of trustee, and no profit or loss shall be deemed to exist as a result of such transfer. |
| (2) | Where there is a change of trustee pursuant to paragraph (1), matters necessary for calculating the amount of income of a new trustee for each business year shall be prescribed by Presidential Decree. |
[This Article Added on Dec. 22, 2020]
SECTION 3 Report, Payment and Collection
| Article 75-17 (Reporting and payment of corporate taxable trust property) |
Articles 60-2 and 63 shall not apply to corporate taxable trust property.
[This Article Added on Dec. 22, 2020]
| Article 75-18 (Withholding taxes on corporate taxable trust property) |
| (1) | Notwithstanding Article 73 (1), where corporate taxable trust property receives income prescribed by Presidential Decree, and the trustee of the corporate taxable trust property is a financial company, etc. prescribed by the Presidential Decree, withholding taxes shall not be imposed. |
| (2) | For the purpose of Article 73-2 (1), where bonds subject to withholding tax, etc. belonging to corporate tax trust property are sold, the trustee subject to corporate tax shall be deemed to be a withholding agent. |
[This Article Added on Dec. 22, 2020]
| Article 76 Deleted. <Dec. 24, 2018> |
| Article 76-2 Deleted. <Dec. 30, 2010> |
| Article 76-3 Deleted. <Dec. 30, 2010> |
| Article 76-4 Deleted. <Dec. 30, 2010> |
| Article 76-5 Deleted. <Dec. 30, 2010> |
| Article 76-6 Deleted. <Dec. 30, 2010> |
| Article 76-7 Deleted. <Dec. 30, 2010> |
CHAPTER II-3 CORPORATE TAX ON INCOME OF EACH CONSOLIDATED BUSINESS YEAR
SECTION 1 Common Provisions
| Article 76-8 (Application of consolidated tax return system) |
| (1) | A domestic corporation that consolidates and controls another domestic corporation (excluding a corporation prescribed by Presidential Decree, such as a non-profit corporation; hereafter in this paragraph, referred to as "wholly-owning parent corporation") and the other domestic corporation (excluding a corporation prescribed by Presidential Decree, such as a corporation in the process of liquidation; hereafter in this Chapter, referred to as "wholly controlled subsidiary") may apply the consolidated tax return system with approval of the commissioner of the competent regional tax office having jurisdiction over the place of tax payment of the wholly-owning parent corporation, as prescribed by Presidential Decree. In such cases, where wholly-controlled subsidiaries are two or more, all relevant corporations shall apply the consolidated tax return system. <Amended on Jan. 1, 2013; Dec. 31, 2022> |
| (2) | The business year of each consolidated corporation to which the consolidated tax return system applies under paragraph (1) shall coincide with the consolidated business year. In such cases, the period of a consolidated business year shall not exceed one year, and Article 7 shall apply |
| (3) | In applying paragraph (2), where a domestic corporation that meets the requirements prescribed by Presidential Decree as a wholly controlled subsidiary that cannot make its business year coincide with the consolidated business year because the business year (hereafter referred to as "original business year" in Articles 76-9 and 76-10) is prescribed in statutes, etc, it may apply the consolidated tax return system, deeming the consolidated business year to be the business year of such domestic corporation. <Amended on Dec. 31, 2022> |
| (4) | Notwithstanding Article 9 (1), the place of tax payment of a consolidated corporation shall be the place of tax payment of the consolidated parent corporation. |
| (5) | Deleted. <Dec. 31, 2022> |
| (6) | Where any of the following mergers, divisions, or comprehensive exchanges or transfers of stocks occurs, the consolidated tax payment system may be applied only to the consolidated business year in which the date of merger, division, or exchange or transfer falls, notwithstanding paragraph (2), Articles 76-11 (1) and 76-12 (1): <Amended on Dec. 31, 2011> |
| 1. | A qualified merger between consolidated parent corporations to which the consolidated tax payment system applies under paragraph (1); |
| 2. | Comprehensive exchange or transfer of stocks between consolidated parent corporations to which the consolidated tax payment system applies under paragraph (1) (limited to where the tax deferment is granted under Article 38 of the Act on Restriction on Special Cases concerning Taxation); |
| 3. | A qualified division of a consolidated parent corporation to which the consolidated tax payment system applies under paragraph (1). |
[This Article Wholly Amended on Dec. 30, 2010]
| Article 76-9 (Revocation of approval for applying consolidated tax return system) |
| (1) | In any of the following cases, the commissioner of the competent regional tax office having jurisdiction over the place of tax payment of a consolidated parent corporation may revoke approval for applying the consolidated tax return system, as prescribed by Presidential Decree: <Amended on Jan. 1, 2013; Dec. 15, 2015; Dec. 31, 2022> |
| 1. | Where the business year of a consolidated corporation does not coincide with the consolidated business year; |
| 2. | Where the consolidated parent corporation applies the consolidated tax return system to a domestic corporation which it does not consolidate and control; |
| 3. | Where the consolidated tax return system is not applied to a wholly controlled subsidiary of the consolidated parent corporation; |
| 4. | Where it is impracticable to calculate the amount of income of a consolidated corporation based on accounting records or other evidentiary documents on the grounds referred to in the proviso to Article 66 (3); |
| 5. | Where there are grounds to occasionally impose corporate tax on a consolidated corporation as prescribed in Article 69 (1); |
| 6. | Where the consolidated parent corporation is consolidated and controlled by another domestic corporation (excluding nonprofit domestic corporations). |
| (2) | Where approval for applying the consolidated tax return system is revoked under paragraph (1) during the period between the consolidated business year for which the application of the consolidated tax return system was approved and the consolidated business year that ends within four years from the start date of the following consolidated business year, each consolidated corporation for which the application of the consolidated tax return system was approved shall include the amount of income or losses in the gross income or deductible expenses for the business year in which the approval for applying the consolidated tax return system is revoked as follows; provided, the foregoing shall not apply in extenuating circumstances specified by Presidential Decree: <Added on Dec. 15, 2015> |
| 1. | The amount of income of the relevant corporation, which has been aggregated with losses of other consolidated corporations during the consolidated business years pursuant to Article 76-14 (1): To be included in gross income; |
| 2. | The amount of losses of the relevant corporation, which has been aggregated with income of other consolidated corporations during the consolidated business years under pursuant to Article 76-14 (1): To be included in deductible expenses. |
| (3) | The consolidated tax return system shall not apply to any consolidated corporation for which approval for applying the consolidated tax return system is revoked under paragraph (1) in the business year in which the date of revocation falls and to the business year that ends within four years from the start date of the following business year, deeming the same corporation as at the time of application of the consolidated tax return system to be the consolidated parent corporation. <Amended on Dec. 15, 2015> |
| (4) | Where approval for applying the consolidated tax return system is revoked under paragraph (1), an amount prescribed by Presidential Decree that reverts to each consolidated corporation among the amounts referred to in Article 76-13 (1) 1 shall be deemed losses in Article 13 (1) 1 of the relevant consolidated corporation. <Amended on Dec. 15, 2015; Dec. 24, 2018> |
| (5) | Where approval for applying the consolidated tax return system is revoked under paragraph (1), the interim tax for each consolidated corporation referred to in Article 76-18 (4) among the consolidated interim tax paid under the same Article shall be deemed the interim tax referred to in Article 64 (1) 2 for purposes of Article 61 (1). <Amended on Dec. 15, 2015> |
| (6) | Where approval for a consolidated corporation to which consolidated tax return system applies under Article 76-8 (3) to apply the consolidated tax return system is revoked under paragraph (1), the period from the start date of the consolidated business year in which the date of revocation falls to the end date of the consolidated business year, and the period from the day following the end date of the consolidated business year in which the date of revocation falls, to date preceding the start date of the original business year shall be deemed one business year, respectively. <Amended on Dec. 15, 2015> |
[This Article Wholly Amended on Dec. 30, 2010]
| Article 76-10 (Abandonment of consolidated tax return system) |
| (1) | Each consolidated corporation which intends to abandon the application of the consolidated tax return system shall file a report to the commissioner of the competent regional tax office having jurisdiction over the place of tax payment of the consolidated parent corporation three months prior to the beginning of the business year to which it intends to stop applying the consolidated tax return system, as prescribed by Presidential Decree; provided, a consolidated corporation shall not abandon the application of the consolidated tax return system during a period from the consolidated business year to which the consolidated tax return system is first applied and to the consolidated business year that ends within four years from the first date of the consolidated business year immediately following the first consolidated business year. <Amended on Jan. 1, 2013> |
| (2) | Article 76-9 (3) and (4) shall apply |
| (3) | Where a consolidated corporation to which the consolidated tax return system applies under Article 76-8 (3) abandons the application of the consolidated tax return system under paragraph (1), the period from the day following the end date of a consolidated business year in which the filing date of report to the commissioner of the competent regional tax office having jurisdiction over the place of tax payment of the consolidated parent corporation under paragraph (1) falls to the date preceding the start date of the original business year shall be deemed one business year. <Amended on Jan. 1, 2013> |
[This Article Wholly Amended on Dec. 30, 2010]
| Article 76-11 (Addition of consolidated subsidiary corporations) |
| (1) | Where a consolidated parent corporation starts to consolidate and control another domestic corporation, the domestic corporation shall apply the consolidated tax return system from the consolidated business year following the consolidated business year in which the consolidated parent corporation starts to consolidate and control the domestic corporation. <Amended on Dec. 31, 2022> |
| (2) | Notwithstanding paragraph (1), a domestic corporation consolidated and controlled by a consolidated parent corporation from the registration date of its establishment shall apply the consolidated tax return system from the business year in which the registration date of establishment falls. <Amended on Dec. 31, 2022> |
| (3) | Where any change occurs to a consolidated subsidiary corporation as referred to in paragraphs (1) and (2), the consolidated parent corporation shall file a report thereon with the commissioner of the competent regional tax office having jurisdiction over the place of tax payment within one month from the end date of the period for interim prepayment or the end date of the relevant business year, whichever comes earlier, after the date of change, as prescribed by Presidential Decree. <Amended on Jan. 1, 2013; Jan. 1, 2014> |
[This Article Wholly Amended on Dec. 30, 2010]
| Article 76-12 (Exclusion of consolidated subsidiary corporations) |
| (1) | A consolidated subsidiary corporation which ceases to be consolidated and controlled by a consolidated parent corporation or is dissolved shall not apply the consolidated tax return system from the start date of the consolidated business year in which the relevant cause occurs; provided, where a consolidated subsidiary corporation is dissolved upon being merged by absorption into another consolidated corporation, it may apply the consolidated tax return system for the business year in which the registration date of the dissolution falls. <Amended on Dec. 31, 2011; Dec. 31, 2022> |
| (2) | Where the application of the consolidated tax return system ceases to be applied under the main clause of paragraph (1) during the period between the consolidated business year for which the application of the consolidated tax return system was approved and the consolidated business year that ends within four years from the start date of the following consolidated business year, the amount of income or loss shall be included in gross income or deductible expenses for the business year in which the relevant cause occurs as follows; provided, the foregoing shall not apply in extenuating circumstances specified by Presidential Decree: <Amended on Dec. 15, 2015> |
| 1. | The amount of income of a corporation excluded from consolidation (referring to an individual corporation that ceases to apply the consolidated tax return system under the main clause of paragraph (1); the same shall apply hereafter in this Article), which has been aggregated with the losses of other consolidated corporations under Article 76-14 (1) during consolidated business years: To be included in gross income of the corporation excluded from consolidation; |
| 2. | The amount of losses of a corporation excluded from consolidation, which has been aggregated with the income of other consolidated corporations under Article 76-14 (1) during consolidated business years: To be included in deductible expenses of the corporation excluded from consolidation; |
| 3. | The amount of income of a corporation, which has been aggregated with the losses of a corporation excluded from consolidation under Article 76-14 (1) during consolidated business years: To be included in gross income of the relevant corporation; |
| 4. | The amount of losses of a corporation, which has been aggregated with the income of a corporation excluded from consolidation under Article 76-14 (1) during consolidated business years: To be included in deductible expenses of the relevant corporation. |
| (3) | Articles 76-9 (3) through (6) shall apply |
| (4) | Where a consolidated subsidiary corporation is changed pursuant to paragraph (1), it shall file a report thereon with the commissioner of the competent regional tax office having jurisdiction over the place for tax payment, as prescribed by Presidential Decree, within one month from the date on which the grounds for such change occur. <Added on Dec. 31, 2011; Dec. 15, 2015; Dec. 31, 2023> |
[This Article Wholly Amended on Dec. 30, 2010]
SECTION 2 Tax Base and Computation Thereof
| Article 76-13 (Consolidated tax base) |
| (1) | The tax base of income for each consolidated business year shall be an amount computed by subtracting the following amounts in sequential order from the income for each consolidated business year; provided, the amount deductible from the amount referred to in subparagraph 1 shall not exceed 80/100 (100/100 in cases of small and medium enterprises and consolidated corporations specified by Presidential Decree, such as corporations that implement a rehabilitation plan) of the individually reverted amount of consolidated income under paragraph (3) 1: <Amended on Dec. 30, 2010; Dec. 15, 2015; Dec. 24, 2018; Dec. 22, 2020; Dec. 31, 2022> |
| 1. | Losses (including losses incurred before the application of the consolidated tax return system by a consolidated corporation) incurred in a consolidated business year that began within 15 years prior to the start date of each consolidated business year, which was not deducted when the tax base for each consolidated business year (including a business year) was calculated thereafter; |
| 2. | The sum of all non-taxable income of each consolidated corporation under this Act and the Act on Restriction on Special Cases concerning Taxation; |
| 3. | The sum of income deductions of each consolidated corporation under this Act and the Act on Restriction on Special Cases concerning Taxation. |
| (2) | "Losses incurred in a consolidated business year" referred to in paragraph (1) 1 means the relevant amount where the income for each consolidated business year under Article 76-14 (1) is less than zero, which are losses included in the tax base reported under Article 60, determined and corrected under Article 66 or reported for revision under Article 45 of the Framework Act on National Taxes, and losses on disposition excluded in deductible expenses when calculating the amount of income of the relevant consolidated business year under the latter part of Article 76-14 (2). <Amended on Dec. 30, 2010> |
| (3) | Where losses are deducted under paragraph (1) 1, the following losses shall be deducted up to the amount specified in the relevant subparagraph: <Amended on Dec. 30, 2010; Dec. 31, 2011; Dec. 24, 2018> |
| 1. | Losses incurred before the application of the consolidated tax return system by a consolidated corporation: The amount of income prescribed by Presidential Decree (hereafter in this Article, referred to as "individually reverted amount of consolidated income") that reverts to the consolidated corporation among income for each consolidated business year; |
| 2. | Where a consolidated parent corporation acquires assets of a merged corporation following a qualified merger, losses referred to in Article 13 (1) 1 of the merged corporation (limited to a corporation, other than a consolidated corporation as at the registration date of the merger) as at the registration date of the merger: Income accruing from the business succeeded to from the merged corporation among the individually reverted amount of consolidated income of the consolidated parent corporation; |
| 3. | Where a consolidated parent corporation acquires assets of a disappearing divided corporation following a qualified division and merger, the amount that reverts to the business succeeded to by the consolidated parent corporation among the losses referred to in Article 13 (1) 1 of the disappearing divided corporation as at the registration date of the division: Income accruing from the business succeeded to from the disappearing divided corporation among the individually reverted amount of consolidated income of the consolidated parent corporation. |
| (4) | Matters necessary in relation to losses, non-taxable income, and deduction of income deductions referred to in paragraph (1), and other matters, shall be prescribed by Presidential Decree. <Amended on Dec. 30, 2010; Dec. 24, 2018> |
[This Article Added on Dec. 26, 2008]
[Title Amended on Dec. 24, 2018]
| Article 76-14 (Income for each consolidated business year) |
| (1) | The income of each consolidated corporation for each consolidated business year shall be the aggregate of income or losses calculated in the following order: <Amended on Dec. 31, 2011; Dec. 24, 2018; Dec. 13, 2022> |
| 1. | Calculation of income for each business year by consolidated corporation: Calculation of income or losses for each business year of each consolidated corporation pursuant to Article 14; |
| 2. | Exclusion of consolidation adjustment items by any of the following consolidated corporations: |
| (a) | Adjustment of non-inclusion of received dividends in gross income: An amount equivalent to the dividend income of each consolidated corporation that has been excluded from gross income pursuant to Article 18-2 shall be included in gross income; |
| (b) | Adjustment of non-inclusion of donations and business promotion expenses in deductible expenses: An amount equivalent to the donations and business promotion expenses that have been excluded from deductible expenses pursuant to Articles 24 and 25 shall be included in deductible expenses; |
| 3. | Adjustment of profits and losses from transactions between any of the following consolidated corporations: |
| (a) | Adjustment of received dividends in gross income: An amount equivalent to the dividend amount received from another consolidated corporation shall not be included in gross income; |
| (b) | Adjustment of business promotion expenses: An amount equivalent to business promotion expenses paid to another consolidated corporation shall not be included in deductible expenses; |
| (c) | Adjustment of appropriation for bad debts: An amount equivalent to appropriation for bad debts pursuant to Article 34 established in relation to claims to another consolidated corporation shall not be included in deductible expenses; |
| (d) | Adjustment of transfer marginal profits or losses of assets: Profits or losses from the transfer of assets prescribed by Presidential Decree, such as tangible or intangible assets, shall be excluded from gross income or deductible expenses, as prescribed by Presidential Decree; |
| 4. | Allocation of consolidation adjustment items to each consolidated corporation: An amount excluded from gross income or deductible expenses shall be first calculated by applying |
| (2) | Any of the following losses on the disposal of assets shall be included in deductible expenses up to the amounts in the relevant subparagraphs when the amount of income of the relevant consolidated business year is calculated. In such cases, losses on disposal excluded from deductible expenses, exceeding the limit, shall be construed as losses referred to in Article 76-13 (1) 1 and shall be deducted from the tax base for the following consolidated business year up to the amounts in the relevant subparagraphs: <Amended on Dec. 31, 2011; Dec. 15, 2015; Dec. 24, 2018; Dec. 31, 2022> |
| 1. | Where the consolidated tax return system is applied to a domestic corporation after it has become a wholly controlled subsidiary of another domestic corporation (excluding where it became a wholly controlled subsidiary on the registration date of establishment), the loss from the disposal of the assets (limited to assets acquired before the consolidated tax return system is applied) accrued during the period between the business year in which the consolidated tax return system is applied and the consolidated business year that ends within four years from the start date of the business year following the business year in which the consolidated tax return system is applied: The amount specified in either of the following items (referring to the individually reverted amount prior to the deduction of the relevant loss from disposal, but the foregoing shall not apply to the cases to which the latter part of paragraph (2) applies): |
| (a) | The individually reverted amount of consolidated income of the consolidated parent corporation, in cases of the loss of the consolidated parent corporation from the disposal of assets; |
| (b) | The individually reverted amount of consolidated income of the consolidated subsidiary, in cases of the loss of the consolidated subsidiary from the disposal of assets; |
| 2. | Where a consolidated parent corporation qualifiedly merges (including a qualified division and merger of a consolidated parent corporation as a counterpart corporation to the division and merger) with another domestic corporation (limited to a corporation, other than a consolidated corporation as at the registration date of the merger), losses (limited to the difference only where the market value of the relevant assets as of the registration date of the merger is lower than book value) incurred in the consolidated business year that ends within five years from the registration date of the merger from the disposal of the assets owned by the consolidated parent corporation, the consolidated subsidiary (hereafter in this paragraph, referred to as "existing consolidated corporation"), and the merged corporation (including the divided corporation; hereafter in this Article, the same shall apply) before the merger: The amount specified in either of the following items (referring to the amount of income prior to the deduction of the relevant loss on disposal, but the foregoing shall not apply to cases to which the latter part of paragraph (2) applies): |
| (a) | The amount of income of the existing consolidated corporation, in cases of the loss of the existing consolidated corporation from the disposal of assets (referring to the amount of income accrued from the business of the consolidated parent corporation and the individually reverted amount of consolidated income of the consolidated subsidiary before the merger among the individually reverted amount of consolidated income of a consolidated parent corporation); |
| (b) | The amount of income accrued from business transferred by the merged corporation, among the individually reverted amount of consolidated income of the consolidated parent corporation, in cases of the loss incurred from the disposal of assets owned by the merged corporation before the merger. |
| (3) | Matters necessary for calculating the amount allocated to each consolidated corporation among losses for each consolidated business year pursuant to paragraph (1), the amount excluded from gross income or deductible expenses by applying |
[This Article Wholly Amended on Dec. 30, 2010]
SECTION 3 Computation of Amount of Tax
| Article 76-15 (Calculated consolidation tax amount) |
| (1) | Corporate tax on income for each consolidated business year shall be computed by applying tax rates prescribed in Article 55 (1) to the tax base prescribed in Article 76-13 (hereafter in this Chapter, referred to as "amount of calculated consolidation tax"). |
| (2) | Where a consolidated corporation transfers land, etc., pursuant to Article 55-2 (including where Article 76-14 (1) 3 applies where another consolidated corporation acquires such land, etc. transferred) or where unappropriated earnings referred to in Article 100-32 of the Act on Restriction on Special Cases concerning Taxation (referring to the amount specified by Presidential Decree as the earnings calculated without adjusting profits and losses on transactions between consolidated corporations pursuant to Article 76-14), the amount of calculated consolidated tax shall be determined by adding the amount of corporate tax on capital gains on the transfer of land, etc. under Article 55-2 and the amount of corporate tax computed by applying special tax provisions for promoting investment and collaborative cooperation under Article 100-32 of the Act on Restriction on Special Cases concerning Taxation to the amount computed under paragraph (1). <Amended on Dec. 23, 2014; Dec. 19, 2017; Dec. 24, 2018> |
| (3) | Article 55 (2) shall apply |
| (4) | Methods for calculating an amount that reverts to each consolidated corporation among the amounts of calculated consolidation tax (hereafter in this Chapter, referred to as "calculated amount of tax of each consolidated corporation") shall be prescribed by Presidential Decree. |
[This Article Wholly Amended on Dec. 30, 2010]
| Article 76-16 (Tax reductions or exemptions and tax credits of consolidated corporations) |
| (1) | The amount of tax reductions or exemptions and tax credits for consolidated corporations deducted from the amount of calculated consolidation tax shall be the sum of the amount of tax reductions calculated by each consolidated corporation and the amount of tax credits. <Amended on Dec. 24, 2018> |
| (2) | In applying paragraph (1), the amount of tax reductions or exemptions and the amount of tax credits for each consolidated corporation shall be calculated by applying tax reductions or exemptions and tax credits under this Act and the Act on Restriction on Special Cases concerning Taxation, deeming the calculated amount of tax of each consolidated corporation to be the calculated amount of tax under Article 55, and Article 132 (1) of the Act on Restriction on Special Cases concerning Taxation shall apply to each consolidated corporation, deeming the consolidated group to be one domestic corporation. <Amended on Dec. 15, 2015; Dec. 24, 2018> |
| (3) | Article 59 (1) shall apply |
| (4) | Where tax is reduced or exempted when calculating tax reductions or exemptions for each consolidated corporation, matters necessary for calculating the amount of tax to be reduced or exempted, etc. shall be prescribed by Presidential Decree. <Amended on Dec. 24, 2018> |
[This Article Wholly Amended on Dec. 30, 2010]
[Title Amended on Dec. 24, 2018]
SECTION 4 Tax Return and Payment
| Article 76-17 (Filing reports on consolidated tax base) |
| (1) | A consolidated parent corporation shall report the tax base and amount of corporate tax on the income for the relevant consolidated business year to the head of the tax office having jurisdiction over the place of tax payment, as prescribed by Presidential Decree, within four months from the last day of the month in which the end date of each consolidated business year falls; provided, where a consolidated parent corporation or consolidated subsidiary corporation subject to audit by an auditor pursuant to Article 4 of the Act on External Audit of Stock Companies applies for an extension of the filing deadline, as prescribed by Presidential Decree, on the grounds that the settlement of accounts are not finalized because the audit of the relevant business year has not been completed, the filing deadline may be extended by up to one month. <Amended on Oct. 31, 2017> |
| (2) | A report filed under paragraph (1) shall be accompanied by the following documents: |
| 1. | An adjustment statement on the amount of consolidated income prepared, as prescribed by Presidential Decree; |
| 2. | Documents referred to in Article 60 (2) 1 through 3 of each consolidated corporation; |
| 3. | Documents prescribed by Presidential Decree, such as the investment and details of transactions between consolidated corporations. |
| (3) | No report filed under paragraph (1) without the accompanying documents referred to in paragraph (2) 1 and 2 shall be deemed a report filed under this Act. |
| (4) | Article 60 (3), (6), (8), and (9) shall apply |
| (5) | Notwithstanding Article 119 (1), a consolidated parent corporation may submit the detailed statement of changes in stocks, etc., (including changes in stocks, etc., of a consolidated subsidiary corporation) referred to in Article 119 (1) by the filing deadline specified in paragraph (1). |
[This Article Wholly Amended on Dec. 30, 2010]
| Article 76-18 (Consolidated interim prepayment) |
| (1) | A consolidated parent corporation whose consolidated fiscal year exceeds 6 months shall pay the amount calculated by selecting one of the following methods (hereinafter referred to as "consolidated interim tax amount" in this Chapter) from the start date of each consolidated fiscal year to the day 6 months elapse after the start date of each consolidated fiscal year to the tax office, etc. having jurisdiction over the place of tax payment, within 2 months from the date of the interim tax payment period: |
| 1. | By the standard of the calculated tax for the immediately preceding consolidated business year:
|
| 2. | Method based on the corporate tax amount for the relevant interim prepayment period.
|
| (2) | Notwithstanding the main clause of paragraph (1), the consolidated interim tax amount shall be calculated by the methods classified in the relevant subparagraphs, in any of the following cases: <Amended on Dec. 31, 2024> |
| 1. | Where the consolidated interim tax amount is not paid by the deadline for interim tax payment under the main clause, with the exception of the subparagraphs, of paragraph (1) (excluding cases falling under the proviso, with the exception of the subparagraphs, of paragraph (1) or under any item of subparagraph 2 of this paragraph): The method provided in paragraph (1) 1; |
| 2. | In any of the following cases: The method in paragraph (1) 2: |
| (a) | Where there is no consolidated calculated tax amount (excluding penalty tax) fixed as corporate tax for the immediately preceding consolidated business year; |
| (b) | Where the calculated consolidated tax amount for the immediately preceding consolidated business year is not finalized by the expiration date of the relevant interim prepayment period. |
| (3) | In applying paragraphs (1) and (2), where the consolidated tax return system is first applied, the total amount of interim tax calculated under Article 63-2 of each consolidated corporation shall be the consolidated interim tax, and where a consolidated corporation is added under Article 76-11 (1), the total amount of the consolidated interim tax calculated under paragraphs (1) and (2) and the interim tax calculated under Article 63-2 of the added consolidated corporation shall be the consolidated interim tax. <Amended on Dec. 24, 2018> |
| (4) | In applying paragraphs (1) and (2), where a consolidated corporation ceases to be a wholly controlled subsidiary or is dissolved (excluding where the consolidated tax payment system is applied under the proviso to Article 76-12 (1)) before the interim prepayment period expires, the relevant consolidated parent corporation may pay tax after subtracting an amount prescribed by Presidential Decree (hereafter in this Chapter, referred to as "interim tax by consolidated corporation"), which reverts to the interim tax of the consolidated corporation. <Amended on Dec. 31, 2011; Dec. 24, 2018 Dec. 31, 2022> |
| (5) | Articles 63-2 (5) and 64 (2) shall apply |
[This Article Wholly Amended on Dec. 30, 2010]
| Article 76-19 (Payment and settlement of consolidated corporate Tax) |
| (1) | A consolidated parent corporation shall pay an amount computed by subtracting the following amounts of corporate tax (excluding penalty tax) from the amount of calculated consolidation tax, as corporate tax on income for each consolidated business year, to the tax office having jurisdiction over the place of tax payment, etc., by the filing deadline specified in Article 76-17 (1): <Amended on Dec. 24, 2018> |
| 1. | The amount of tax reductions or exemptions and the amount of tax credits granted for the relevant consolidated business year; |
| 2. | The consolidated interim tax for the relevant consolidated business year computed under Article 76-18; |
| 3. | The total amount of tax withheld from each consolidated corporation for the relevant consolidated business year pursuant to Articles 73 and 73-2. |
| (2) | A consolidated subsidiary corporation shall pay to its consolidated parent corporation an amount computed by adding an amount computed by applying |
| 1. | The amount of tax reductions or exemptions granted to the relevant corporation for the relevant consolidated business year; |
| 2. | The interim tax by consolidated corporation for the relevant consolidated business year; |
| 3. | The amount of tax withheld from the relevant corporation for the relevant consolidated business year pursuant to Articles 73 and 73-2. |
| (3) | Where the amount calculated pursuant to paragraph (2) is a negative figure, the consolidated parent corporation shall pay the amount without a negative sign to its consolidated subsidiary corporation by the deadline prescribed in paragraph (1). <Added on Dec. 31, 2022> |
| (4) | Article 64 (2) shall apply |
| (5) | In the case where there is no calculated consolidation tax and which falls under any of the following subparagraphs, the amount of the settlement of the profit or loss resulting from the transfer of deficits (hereinafter referred to as the "settlement amount" in this paragraph) shall be distributed to each consolidated corporation as prescribed in the relevant subparagraph: <Added on Dec. 31, 2023> |
| 1. | If there is a consolidated subsidiary corporation that falls under any of the following items: the relevant consolidated subsidiary corporation pays the settlement amount calculated as prescribed by Presidential Decree to the consolidated parent corporation by the deadline specified in paragraph (1): |
| (a) | The deficit amount of another consolidated corporation is added to the income of a consolidated subsidiary corporation for the relevant consolidated business year pursuant to Article 76-14 (1); |
| (b) | Where the deficits under Article 76-13 (1) 1 of another consolidated corporation is deducted from the individual attributable amount of consolidated income of the consolidated corporation; |
| 2. | if there is a consolidated subsidiary corporation that falls under any of the following items: the consolidated parent corporation pays the settlement amount calculated as prescribed by Presidential Decree to the consolidated subsidiary corporation by the deadline specified in paragraph (1): |
| (a) | Where the deficits of a consolidated subsidiary corporation for the relevant consolidated business year are added to the income of another consolidated corporation pursuant to Article 76-14 (1); |
| (b) | Where the deficits referred to in Article 76-13 (1) 1 of a consolidated subsidiary corporation are deducted from the individual attributable amount of consolidated income of another consolidated corporation. |
[This Article Wholly Amended on Dec. 30, 2010]
[Title Amended on Dec. 31, 2023]
SECTION 5 Determination, Correction, and Collection
| Article 76-20 (Determination, correction, and collection of consolidated corporate Tax) |
Articles 66 (excluding the proviso to paragraph (3)), 67, 70, 71, 73, 73-2 and 74 shall apply mutatis mutandis to determination, correction, collection, and refund of corporate tax on income for each consolidated business year. <Amended on Dec. 20, 2016; Dec. 24, 2018>
[This Article Wholly Amended on Dec. 30, 2010]
[Title Amended on Dec. 24, 2018]
| Article 76-21 (Additional tax of consolidated corporations) |
A consolidated parent corporation shall pay an amount computed by adding the total amounts calculated by applying mutatis mutandis Articles 75, 75-2 through 75-9 to each consolidated corporation, in addition to the amount of corporate tax on income for each consolidated business year. <Amended on Dec. 24, 2018>
[This Article Wholly Amended on Dec. 30, 2010]
[Title Amended on Dec. 24, 2018]
| Article 76-22 (Application of regulations related to small and medium enterprises to consolidated corporations) |
| (1) | In calculating the corporate tax on income for each consolidated business year, if a consolidated group is regarded as a domestic corporation and the consolidated group constitutes a small or medium enterprise or a middle-standing enterprise under this Act or the Act on Restriction on Special Cases concerning Taxation, the provisions regarding small and medium enterprises or medium-sized enterprises under this Act or the Act on Restriction on Special Cases concerning Taxation shall apply, in accordance with the classification of the following subparagraphs: |
| 1. | Where a consolidated group constitutes a small or medium enterprise: The following provisions shall apply: |
| (a) | A consolidated corporation that constitutes a small and medium enterprise: The regulations on small and medium enterprises shall apply; |
| (b) | A consolidated corporation that constitutes a middle-standing enterprise: The provisions on middle-standing enterprises shall apply; |
| 2. | Where a consolidated group constitutes a middle-standing enterprise: The provisions on middle-standing enterprises shall apply to a consolidated corporation that constitutes a small and medium enterprise and a consolidated corporation that constitutes a middle-standing enterprise, respectively. |
| (2) | Where a corporation corresponding to a small and medium enterprise as at the time of the business year immediately preceding the first consolidated business year in which the consolidated tax return system is applied becomes no longer subject to the application of the provisions concerning small and medium enterprises due to the application of the consolidated tax return system, the provisions on small and medium enterprises shall apply until the consolidated business year that ends within 5 years from the commencement date of the first consolidated business year in which the consolidated tax return system is applied and the following consolidated business year, notwithstanding paragraph (1). |
[This Article Wholly Amended on Dec. 31, 2024]
CHAPTER III CORPORATE TAX ON LIQUIDATION INCOME OF DOMESTIC CORPORATIONS
SECTION 1 Tax Base and Calculation Thereof
| Article 77 (Tax base) |
The tax base of corporate tax on liquidation income of a domestic corporation shall be the amount of liquidation income calculated under Article 79.
[This Article Wholly Amended on Dec. 30, 2010]
| Article 78 (Special provisions on taxation on liquidation income accruing from restructuring of corporation) |
Where a domestic corporation falls under any of the following cases, no corporate tax shall be imposed on its liquidation income:
| 1. | Where a domestic corporation restructures as prescribed in the Commercial Act; |
| 2. | Where a corporation established under any special Act restructures to a company as defined in the Commercial Act upon the amendment or repeal of the special Act; |
| 3. | Cases prescribed by Presidential Decree where a domestic corporation restructures under any other statute. |
[This Article Wholly Amended on Dec. 30, 2010]
| Article 79 (Calculation of liquidation income accruing from dissolution) |
| (1) | Where a domestic corporation is dissolved (excluding a dissolution by a merger or division), the liquidation income (hereinafter referred to as "liquidation income from dissolution") shall be calculated by deducting the sum of the paid-in capital or investment funds and the surplus funds (hereinafter referred to as "total amount of equity capital") as at the registration date of the dissolution from the value of the residual assets upon dissolution of the corporation. |
| (2) | Where a domestic corporation in the process of liquidation due to a dissolution continues to conduct its business pursuant to Article 229, 285, 287-40, 519, or 610 of the Commercial Act after having distributed some residual assets upon dissolution to stockholders, etc., the liquidation income from dissolution of the domestic corporation shall be calculated by deducting the total amount of its equity capital as at the registration date of the dissolution from the total amount of the residual assets distributed during the period between the registration date of the dissolution and the registration date of the continuation. <Amended on Dec. 15, 2015> |
| (3) | In calculating liquidation income from dissolution of a domestic corporation, the amount of corporate tax to be refunded under the Framework Act on National Taxes during the period of liquidation shall be added to the total amount of equity capital of the domestic corporation as at the registration date of the dissolution. |
| (4) | Where a domestic corporation has losses carried forward prescribed by Presidential Decree as at the registration date of the dissolution for purposes of calculating the liquidation income from dissolution of the domestic corporation, an amount equivalent to the losses carried forward shall be offset from the total amount of its equity capital as at the registration date of the dissolution; provided, the amount of losses carried forward to be offset shall not exceed the amount of surplus funds among the total amount of equity capital, and where the losses carried forward exceed the surplus funds, such excess losses may be deemed nil. |
| (5) | Where any surplus funds have been transferred into the paid-in capital or investment funds within two years prior to the registration date of the dissolution in calculating the liquidation income pursuant to paragraph (4), the relevant amount shall be deemed not have been transferred into the paid-in capital or investment funds for purposes of the same paragraph. <Added on Dec. 31, 2011> |
| (6) | In calculating the liquidation income from dissolution of a domestic corporation, the income for each business year accrued during the period of liquidation shall be included in the amount of income for each relevant business year of the corporation. |
| (7) | Articles 14 through 18, 18-2, 18-3, 19, 19-2, 20 through 31, 33 through 38, 40 through 42, 42-2, 43, 44, 44-2, 44-3, 45, 46, 46-2 through 46-5, 47, 47-2, 50, 51, 51-2, 52, 53, 53-2, 53-3, 54, and Article 104-31 of the Act on Restriction on Special Cases concerning Taxation shall apply |
| (8) | The calculation of the value of residual assets for the purposes of paragraphs (1) through (7) and other necessary matters shall be prescribed by Presidential Decree. <Amended on Dec. 31, 2011> |
[This Article Wholly Amended on Dec. 30, 2010]
| Article 80 Deleted. <Dec. 31, 2009> |
| Article 81 Deleted. <Dec. 31, 2009> |
| Article 82 (Detailed rules for calculation of amount of liquidation income) |
Except as provided in this Act, matters necessary for the calculation of the amount of liquidation income of a domestic corporation shall be prescribed by Presidential Decree.
[This Article Wholly Amended on Dec. 30, 2010]
SECTION 2 Calculation of Tax
| Article 83 (Tax rate) |
Corporate tax on liquidation income of a domestic corporation shall be the amount of tax calculated by applying the tax rate stipulated in Article 55 (1) to the tax base stipulated in Article 77.
[This Article Wholly Amended on Dec. 30, 2010]
SECTION 3 Reports and Payment
| Article 84 (Final reports) |
| (1) | A domestic corporation liable to pay corporate tax on liquidation income shall file a report on the corporate tax base and tax amount on liquidation income with the head of the tax office having jurisdiction over the place of tax payment by the following applicable deadlines, as prescribed by Presidential Decree: |
| 1. | In cases falling under Article 79 (1): Within three months from the last day of the month in which the date the value of the residual assets prescribed by Presidential Decree is determined falls; |
| 2. | In cases falling under Article 79 (2): Within three months from the last day of the month in which the registration date of continuation falls. |
| (2) | A report filed under paragraph (1) shall be accompanied by the following documents: |
| 1. | In cases falling under paragraph (1) 1 and 2, a statement of financial position of a dissolved corporation as at the determination date of the value of the residual assets or the registration date of continuation; |
| 2. | Other documents specified by Presidential Decree. |
| (3) | Paragraphs (1) and (2) shall apply although the amount of liquidation amount is nil. |
[This Article Wholly Amended on Dec. 30, 2010]
| Article 85 (Interim reports) |
| (1) | Where a domestic corporation (excluding a corporation referred to in each subparagraph of Article 51-2 (1) or Article 104-31 (1) of the Act on Restriction on Special Cases concerning Taxation) falls under any of the following cases, it shall file a report thereon with the head of the tax office having jurisdiction over the place of tax payment, as prescribed by Presidential Decree, within one month from the last day of the month in which the date prescribed in the applicable subparagraph falls; provided, subparagraph 2 shall not apply where a corporation liquidates according to the liquidation process prescribed in Article 80 of the State Property Act: <Amended on Dec. 31, 2011; Dec. 22, 2020> |
| 1. | Where some residual assets are distributed to stockholders, etc. prior to the determination of the value of the residual assets from dissolution: The date of the distribution; |
| 2. | Where the value of the residual assets is not determined by the first anniversary of the registration of the dissolution: The first anniversary. |
| (2) | A reported filed under paragraph (1) shall be accompanied by the statement of financial position as at the registration date of the dissolution and the date of distribution or as at the first anniversary of the registration date of the dissolution, and other documents prescribed by Presidential Decree. |
[This Article Wholly Amended on Dec. 30, 2010]
| Article 86 (Payment) |
| (1) | A domestic corporation referred to in Article 79 (1) or (2) which has filed a final report under Article 84 shall pay the amount of tax computed by applying Article 83 to the amount of liquidation income from dissolution, minus the total amount of tax paid under paragraph (3) or (4), as corporate tax at the tax office having jurisdiction over the place of tax payment, etc. by the filing deadline. <Amended on Dec. 30, 2010> |
| (2) | Deleted. <Dec. 31, 2009> |
| (3) | For a domestic corporation liable to file a report under Article 85 (1) 1, where the value of the distributed residual assets (the total amount where residual assets have been distributed previously) exceeds the total equity capital as at the registration date of the dissolution, the domestic corporation shall pay the amount of tax computed by applying Article 83 to the excess (where corporate tax has previously been paid on some residual assets previously distributed, the amount of tax after deducting the previously paid amount from the total amount of tax) at the tax office having jurisdiction over the place of tax payment, etc. by the filing deadline. <Amended on Dec. 30, 2010> |
| (4) | For a domestic corporation liable to file a report under Article 85 (1) 2, where the estimated value of the residual assets prescribed by Presidential Decree as at the first anniversary of the registration date of the dissolution exceeds the total equity capital as at the registration date of the dissolution, the corporation shall pay the amount of tax calculated by applying Article 83 to the excess at the tax office having jurisdiction over the place of tax payment, etc. by the filing deadline. <Amended on Dec. 30, 2010> |
[Title Amended on Dec. 30, 2010]
SECTION 4 Determination, Correction, and Collection
| Article 87 (Determination and correction) |
| (1) | Where a domestic corporation fails to file a tax report under Articles 84 and 85, the head of the tax office having jurisdiction over the place of tax payment or the commissioner of the competent regional tax office shall determine the tax base and amount of corporate tax on liquidation income for the relevant corporation. |
| (2) | Where any error or omission is found in a report filed by a domestic corporation under Articles 84 and 85, the head of the tax office having jurisdiction over the place of tax payment or the commissioner of the competent regional tax office shall correct the tax base and amount of corporate tax on liquidation income for the relevant corporation. |
| (3) | Where any error or omission is found in the determination or correction after the head of the district of tax office having jurisdiction over the place of tax payment or the commissioner of the competent regional tax office has determined or corrected the tax base and amount of corporate tax on liquidation income, he or she shall immediately re-correct such error or omission. |
| (4) | Article 66 (3) shall apply |
[This Article Wholly Amended on Dec. 30, 2010]
| Article 88 (Notification of tax base and tax amount) |
Where the head of the tax office having jurisdiction over the place of tax payment or the commissioner of the competent regional tax office determines or corrects the tax base and amount of corporate tax on liquidation income of a domestic corporation under Article 87, he or she shall notify the relevant corporation or liquidator thereof; provided, he or she may give a public notice instead where it is not possible to notify the relevant corporation or liquidator thereof.
[This Article Wholly Amended on Dec. 30, 2010]
| Article 89 (Collection) |
| (1) | Where a domestic corporation fails to fully or partially pay the amount of tax payable as corporate tax on liquidation income under Article 86, the head of the tax office having jurisdiction over the place of tax payment shall collect the unpaid corporate tax in accordance with the National Tax Collection Act. <Amended on Jan. 1, 2013> |
| (2) | Where the amount of corporate tax paid under Article 86 or collected under paragraph (1) is less than the amount of corporate tax determined or corrected by the head of the tax office having jurisdiction over the place of tax payment or the commissioner of the competent regional tax office under Article 87, the head of the tax office having jurisdiction over the place of tax payment shall collect the corporate tax equivalent to the deficiency. |
[This Article Wholly Amended on Dec. 30, 2010]
| Article 90 (Exclusion from application of additional taxes for delayed payment? to liquidation income) |
Article 47-4 (1) 1 (limited to the amount imposed from the day following the payment deadline indicated on the payment notice) and 3 and (7) of the Framework Act on National Taxes shall not apply to the collection of corporate tax on liquidation income. <Amended on Dec. 31, 2011; Dec. 22, 2020>
[This Article Wholly Amended on Dec. 30, 2010]
[Title Amended on Dec. 22, 2020]
CHAPTER IV CORPORATE TAX ON INCOME OF FOREIGN CORPORATIONS FOR EACH BUSINESS YEAR
SECTION 1 Common Provisions on Taxation of Foreign Corporations
| Article 91 (Tax base) |
| (1) | The corporate tax base on the income of a foreign corporation with a domestic place of business or a foreign corporation that has domestic source income accrued from transfer of real estate referred to in subparagraph 3 of Article 93 for each business year shall be calculated by deducting, in sequential order, the following amount from the total amount of domestic source income (excluding the amount of domestic source income withheld under Article 98 (1), 98-3, 98-5, or 98-6); provided, the deduction from the amount referred to in subparagraph 1 shall be 80/100 of the income for each business year: <Amended on Dec. 31, 2011; Dec. 20, 2016; Dec. 24, 2018; Dec. 31, 2019; Dec. 31, 2022> |
| 1. | Losses (limited to losses incurred in the Republic of Korea) in Article 13 (1) 1; |
| 2. | Non-taxable income provided for in this Act and other statutes; |
| 3. | Income accrued from the international services of ships or aircraft; provided, this shall only apply where the country in which the headquarters or main office of the foreign corporation is located accords the same exemption to ships and aircraft of Korean corporations. |
| (2) | For a foreign corporation which does not fall under paragraph (1), the tax base of corporate tax on its income for each business year shall be the amount of domestic source income classified under each subparagraph of Article 93. |
| (3) | The tax base of corporate tax on domestic source income of a foreign corporation falling under paragraph (1), which is withheld under Article 98 (1), 98-3, 98-5, or 98-6, shall be the amount of domestic source income classified under each subparagraph of Article 93. <Amended on Dec. 31, 2011> |
| (4) | Paragraph (1) 3 shall also apply to any foreign corporation which has no domestic place of business. |
| (5) | In calculating the tax base in paragraph (1), losses carried forward in paragraph (1) 1 shall be deducted in sequential order of business years, and non-taxable income that is not deducted in the relevant business year shall not be carried over for deduction to business years subsequent the relevant business year. <Added on Dec. 24, 2018> |
[This Article Wholly Amended on Dec. 30, 2010]
| Article 92 (Calculation of amount of domestic source income) |
| (1) | The total amount of domestic source income of a foreign corporation under Article 91 (1) for each business year shall be the amount calculated by subtracting the total amount of deductible expenses during the relevant business year from the total amount of gross income during the relevant business year, and with regards to the calculation of the amount of income for each business year shall apply |
| (2) | The amount of domestic source income (excluding domestic source income accrued from transfer of real estate, etc. in subparagraph 7 of Article 93) of a foreign corporation falling under Article 91 (2) and (3) for each business year shall be the amount under the following subparagraphs: <Amended on Dec. 31, 2011; Dec. 24, 2018; Dec. 22, 2020> |
| 1. | Domestic source income provided in subparagraphs 1 through 6 and 8 through 10 of Article 93 shall be the revenue amount by income provided in each subparagraph (excluding subparagraph 7) of the same Article; provided, the domestic source income according to the following classification may be calculated pursuant to the following: |
| (a) | Income from transfer of domestic source securities prescribed in subparagraph 9 of Article 93: An amount computed by deducting the acquisition value and transfer expenses of the relevant securities verified, as prescribed by Presidential Decree, from the revenue; |
| (b) | Virtual asset income referred to in subparagraph 10 (k) of Article 93: An amount calculated by deducting the acquisition price, etc. prescribed by Presidential Decree from the amount of income (where a foreign corporation withdraws virtual assets defined in subparagraph 3 of Article 2 of the Act on Reporting and Using Specified Financial Transaction Information (hereinafter referred to as "virtual assets") kept and managed by a virtual asset service provider or similar service provider prescribed in subparagraph 1 of Article 2 of the same Act (hereinafter referred to as "virtual asset service provider, etc."), referring to the amount prescribed by Presidential Decree as the market price of the virtual assets at the time of withdrawal); |
| 2. | Where the domestic source income accrued from transfer of securities referred to in subparagraph 9 of Article 93 of a foreign corporation with no domestic place of business meets each of the following conditions, the arm's length price prescribed by Presidential Decree (hereafter in this subparagraph, referred to as "arm's length price") shall be the revenue of the foreign corporation, notwithstanding subparagraph 1 (a): |
| (a) | Income accruing from transactions between a foreign corporation with no domestic place of business and a foreign corporation (including non-residents) having a special relationship prescribed by Presidential Decree with the former foreign corporation; |
| (b) | Prices of transactions provided in item (a) fall short of the arm's length price in circumstances prescribed by Presidential Decree. |
| (3) | The amount of domestic source income accrued from transfer of real estate, etc. referred to in subparagraph 7 of Article 93 that are the domestic source income of a foreign corporation falling under Article 91 (2) for each business year shall be the amount calculated by subtracting the following amounts from the transfer value of income-generating assets (hereafter in this Article, referred to as "land, etc."): <Amended on Dec. 24, 2018> |
| 1. | The acquisition value; provided, where a foreign corporation, to which assets not included in the taxable value of the inheritance tax or gift tax under the Inheritance Tax and Gift Tax Act are contributed, transfers the land, etc. prescribed by Presidential Decree, the acquisition value of such land, etc. by the donator shall be deemed the acquisition value of the foreign corporation; |
| 2. | Expenses directly expended to transfer the land, etc. |
| (4) | In applying paragraph (3), the acquisition value and the transfer value shall be based on the actual transaction value, and where the actual transaction value is unclear, such value shall be computed by applying |
| (5) | In applying paragraph (3), Article 98 of the Income Tax Act shall apply |
| (6) | Article 101 of the Income Tax Act shall apply |
| (7) | In calculating the income of amount related to the domestic place of business of a foreign corporation for each business year, matter necessary for distributing deductible expenses to the headquarters or other branch offices in foreign countries shall be prescribed by Presidential Decree. <Added on Dec. 24, 2018> |
[This Article Wholly Amended on Dec. 30, 2010]
| Article 93 (Domestic source income of foreign corporations) |
Domestic source income of a nonresident shall be classified as follows: <Amended on Dec. 31, 2011; Dec. 15, 2015; Dec. 20, 2016; Dec. 24, 2018; Dec. 31, 2019; Dec. 22, 2020; Dec. 31, 2022; Dec. 31, 2024>
| 1. | Domestic source interest income: Income falling under any of the following items, which includes interest income referred to in Article 16 (1) of the Income Tax Act (excluding income provided for in subparagraph 7 of that paragraph), and other interest on loans and profits from trusts; provided, the same shall not apply to interest on any loan directly obtained by an overseas place of business for the overseas place of business of a resident or domestic corporation: |
| (a) | Income received as a payment from the State, a local government, a domestic place of business of a resident, domestic corporation or foreign corporation, or a domestic place of business of a non-resident referred to in Article 120 of the Income Tax Act; |
| (b) | Income received as a payment from a foreign corporation or non-resident, which is substantially related to the domestic place of business of the foreign corporation or non-resident and is included in deductible expenses or incurred expenses for the purpose of calculating the amount of income of such domestic place of business; |
| 2. | Domestic source dividend income: Income prescribed in each of the following paid by a domestic corporation, an organization deemed a corporation, or any other person located in the Republic of Korea: |
| (a) | Deleted; <Dec. 31, 2024> |
| (b) | Dividend income provided for in Article 17 (1) of the Income Tax Act (excluding the income provided for in subparagraph 6 of the same paragraph); |
| (c) | Deleted; <Dec. 31, 2024> |
| (d) | Deleted; <Dec. 31, 2024> |
| (e) | The amount disposed of as a dividend under Articles 13 or 22 of the Adjustment of International Taxes Act; |
| 3. | Income accrued from real estate in the Republic of Korea or real estate rights and mining rights, mining concessions or rights to quarry earth, sand, and rocks, each of which is acquired in the Republic of Korea, or the transfer or lease of rights to use or develop underground water or other management of underground water; provided, excluded herefrom shall be capital gains referred to in subparagraph 7; |
| 4. | Income accrued from the rental of a ship, aircraft, registered motor vehicles, construction machinery, industrial, commercial or scientific machinery, facilities and equipment, and other tools prescribed by Presidential Decree to a domestic place of business of a resident, domestic corporation or foreign corporation, or a domestic place of business of a non-resident referred to in Article 120 of the Income Tax Act; |
| 5. | Income prescribed by Presidential Decree and accrued from any business operated by a foreign corporation (including income taxable as domestic source business income under any tax treaty); provided, excluded herefrom shall be income referred to in subparagraph 6; |
| 6. | Income accrued by rendering personal services prescribed by Presidential Decree in the Republic of Korea (including the income deemed to have accrued in the Republic of Korea according to a tax treaty by rendering personal services prescribed by Presidential Decree, among personal services rendered abroad). In such cases, where the person provided with the personal services bears expenses prescribed by Presidential Decree, including airfares, in connection with the provision of such personal services, such income means an amount excluding such expenses; |
| 7. | Domestic source capital gains on real estate, etc.: Income generated by transferring any assets or rights falling under any of the following subparagraphs, which are located in the Republic of Korea; provided, this shall only apply where assets or rights that generate such income are located in the Republic of Korea: |
| (a) | Assets or rights referred to in Article 94 (1) 1, 2, and 4 (a) and (b) of the Income Tax Act; |
| (b) | Stocks, etc. (hereafter in this Article, referred to as "real estate, stocks, etc.") of a domestic corporation, where the aggregate of the following values is at least 50/100 of total assets of that domestic corporation as at the start date of the business year in which the relevant assets are transferred, among stocks, etc. (including depository receipts or preemptive rights issued on the basis of stocks, etc.; hereafter in this Chapter, the same shall apply) of such domestic corporation, which have not been listed on any securities market under the Financial Investment Services and Capital Markets Act; In such cases, real estate stocks, etc. that are recognized as having taxation rights in Korea according to mutual agreement with the counterpart of the tax treaty in relation to the interpretation and application of the tax treaty shall also be included in the real estate stocks, etc. in the preceding section: |
| (i) | The value of assets referred to in Article 94 (1) 1 and 2 of the Income Tax Act; |
| (ii) | The value computed by multiplying the value of stocks owned by another corporation excessively owning real estate which is held by the domestic corporation, by the ratio of real estate owned by the other corporation. In such cases, the methods for determining whether the other corporation excessively owns real estate and for computing the ratio of real estate owned shall be prescribed by Presidential Decree; |
| 8. | Domestic source royalty income: Income generated from the transfer of the price and relevant rights, etc. where any of the following rights, assets or information (hereafter referred to as "rights, etc." in this subparagraph) is used in the Republic of Korea or the price thereof is paid in the Republic of Korea. In such cases, where income accruing from leasing industrial, commercial, or scientific machinery, facilities, or equipment, etc. prescribed in subparagraph 4 is classified as royalty income under a tax treaty, the usage fee shall be included: |
| (a) | Copyrights, patent rights, trademark rights, designs, forms, and sketches of academic or artistic works (including movie films) or secret formulae or processes, film and tapes for radio and television broadcasts, and other similar assets or rights; |
| (b) | Information or know-how related to industrial, commercial, or scientific knowledge and experience; |
| (c) | Other similar property or rights included in the definition of royalties in a tax treaty that stipulates whether domestic source income is applicable based on the place of use (hereinafter referred to as the "tax treaty based on the place of use" in this Article) [Patent rights, utility model rights, trademark rights, design rights, etc. that require registration for the exercise (hereinafter referred to as "patent rights" in this Article) have not been registered in Korea, but the manufacturing method, technology, information, etc. included therein It refers to what is actually implemented or used in Korea, such as related to the manufacture and production of the product]; |
| 9. | Income prescribed by Presidential Decree and accrued from the transfer of any of the following stocks, etc. (including real estate stocks, etc., listed on any securities market under the Financial Investment Services and Capital Markets Act), or other securities (including securities defined in Article 4 of the Financial Investment Services and Capital Markets Act; hereinafter the same shall apply): |
| (a) | Stocks, etc., and other securities issued by a domestic corporation; |
| (b) | Stocks, etc., issued by a foreign corporation (limited to stocks, etc., listed on any securities market under the Financial Investment Services and Capital Markets Act), and other securities issued by a domestic place of business of a foreign corporation; |
| (c) | Other securities issued by a domestic place of business of a foreign corporation; |
| 10. | Other domestic source income: Any of the following, other than those provided for in subparagraphs 1 through 9: |
| (a) | Insurance money, indemnification, or compensation paid in connection with any real property or other assets situated in the Republic of Korea, or business run in the Republic of Korea; |
| (b) | Income prescribed by Presidential Decree as penalties for breach of any contract or compensation for damage paid in the Republic of Korea; |
| (c) | Income accrued from the inheritance of domestic assets; |
| (d) | Prize money, monetary rewards, compensation, and other similar income paid in the Republic of Korea; |
| (e) | Income accrued from buried property discovered in the Republic of Korea; |
| (f) | Income accrued from the transfer of licenses, approval, or rights established by other similar administrative dispositions under laws of the Republic of Korea, and from the transfer of domestic assets, other than real estate; |
| (g) | Prize received based on lottery, gift tickets, or other drawing tickets, and refunds paid to the purchasers of horse-race tickets, winner-betting tickets, bullfighting tickets, or sports promotion tickets, all issued in the Republic of Korea; |
| (h) | Amounts disposed of as other income pursuant to Article 67; |
| (i) | Income accruing from an increase in the value of the stocks, etc., of a domestic corporation that are held by any related party prescribed by Presidential Decree (referred to as "foreign related party" hereafter in Article 98) that arises from capital transactions prescribed by Presidential Decree; |
| (j) | Compensation for damage, compensation, settlement money, daily gains, or other similar income paid in the Republic of Korea for damage accrued by infringement of patent rights, etc. registered in the Republic of Korea without being registered in the Republic of Korea and registered in a foreign country, which are owned by a corporation of a member country of a prearranged tax treaty on the site. In such cases, the income paid in connection with the methods of manufacturing, technologies, information, etc. included in the relevant patent rights, etc., virtually conducted or used in the Republic of Korea, including those related to manufacture or production in the Republic of Korea, shall be limited to the income paid; |
| (k) | Virtual asset income referred to in Article 21 (1) 27 of the Income Tax Act (where a foreign corporation withdraws virtual assets kept and managed by a virtual asset service provider, etc., including an amount calculated as prescribed by Presidential Decree, considering the time of withdrawal to be the time of transfer); |
| (l) | Income from any business operated in the Republic of Korea, from personal services rendered in the Republic of Korea, or from economic benefits received in relation to assets located in the Republic of Korea (excluding the difference, if any, between the amount received for redemption of foreign currency-denominated bonds issued by the State or financial companies, etc., established under any special Act and the issue prices of such bonds) or other similar income prescribed by Presidential Decree, other than those referred to in any of items (a) through (k). |
[This Article Wholly Amended on Dec. 30, 2010]
[Title Amended on Dec. 15, 2015]
| Article 93-2 (Special case concerning real beneficiary for foreign investment scheme) |
| 1. | Where the foreign investment vehicle meets all of the following requirements: |
| (a) | It shall be liable for tax payment in the country in which it was established under a tax treaty; |
| (b) | With respect to domestic source income, it shall be eligible for non-taxation, tax exemption or restrictive tax rates prescribed by a tax treaty (referring to the highest tax rate that can be applied to residents or corporations of a contracting party pursuant to a tax treaty; hereinafter the same shall apply); |
| 2. | Where a foreign investment scheme not falling under subparagraph 1 is treated under a tax treaty as the beneficial owner of domestic source income and meets the requirements for non-taxation, tax exemption, or restrictive tax rates prescribed in a tax treaty with respect to domestic income source; |
| 3. | Where the foreign investment scheme not falling under paragraphs (1) and (2) fails to verify an investor who has invested in the foreign investment scheme (where there are at least two investors, where it verifies a part of the investors, it shall be limited to the part unverified). |
| (2) | Where a foreign investment scheme is deemed as a real beneficiary of the domestic source income as it falls under paragraph (1) 3, the non-taxation, tax exemption, and restrictive tax rates under the applicable tax treaty shall not apply to the foreign investment scheme. <Amended on Dec. 22, 2020; Dec. 21, 2021> |
[This Article Added on Dec. 24, 2018]
| Article 93-3 (Special cases concerning taxation on interest and capital gains on state bonds of foreign corporations) |
| (1) | Notwithstanding Article 3 (1) 2, no corporate tax shall be imposed on the income falling under any of the following, out of the income of a foreign corporation subject to withholding tax under Article 98 (1): |
| 1. | Income accruing from State bonds issued pursuant to Article 5 (1) of the State Bond Act, monetary stabilization bonds referred to in the Bank of Korea Monetary Stabilization Bond Act, or bonds prescribed by Presidential Decree (hereafter in this Article referred to as "State bonds, etc."), out of interest income accruing from domestic sources prescribed in subparagraph 1 of Article 93; |
| 2. | Income accruing from the transfer of State bonds, etc. out of capital gains from the transfer of domestic source securities referred to in subparagraphs 9 of Article 93. |
| (2) | State bonds, etc. not subject to corporate tax under paragraph (1) include State bonds, etc. acquired, held, or transferred through a foreign financial company, etc. (hereinafter referred to as "qualified foreign financial company, etc.") approved by the Commissioner of the National Tax Service by meeting the requirements prescribed by Presidential Decree. In such cases, necessary matters for compliance matters applicable to qualified foreign financial companies, etc., and the standards, procedures, etc. for approval and revocation of approval shall be prescribed by Presidential Decree. |
| (3) | Where a foreign corporation receives income under any subparagraph of paragraph (1) through an overseas investment scheme, the relevant overseas investment scheme shall be deemed to be the real beneficiary of the income referred to in each subparagraph of paragraph (1), notwithstanding Article 93-2 (1). <Added on Dec. 31, 2024> |
| (4) | A foreign corporation (including a foreign investment scheme deemed a real beneficiary under paragraph (3); hereafter the same shall apply in this Article) or qualified foreign financial company, etc. that intend to be subject to non-taxation under paragraph (1) shall file an application for non-taxation with the head of the competent tax office having jurisdiction over the place of tax payment, as prescribed by Presidential Decree. <Amended on Dec. 31, 2024> |
| (5) | Articles 73 and 73-2 shall not apply to the income referred to in the subparagraphs of paragraph (1), which a domestic corporation receives through an overseas investment scheme, and the relevant domestic corporation shall report and pay the income directly, as prescribed by Presidential Decree: <Amended on Dec. 31, 2024> |
| 1. | Deleted; <Dec. 31, 2024> |
| 2. | Deleted. <Dec. 31, 2024> |
| (6) | If a foreign corporation or a qualified foreign financial company, etc. which is not subject to non-taxation under paragraph (1) intends to be applied non-taxation, the foreign corporation, qualified foreign financial company, etc. or the person who pays income under the subparagraphs of paragraph (1) may file a request for rectification with the head of the competent tax office having jurisdiction over the place of tax payment. <Added on Dec. 31, 2024> |
| (7) | Article 98-4 (5) through (7) shall apply |
[This Article Added on Dec. 31, 2022]
| Article 94 (Domestic place of business of foreign corporation) |
| (1) | Where a foreign corporation has a fixed place for the operation of all or part of its domestic business, the foreign corporation shall be deemed to have a domestic place of business. |
| (2) | A domestic place of business referred to in paragraph (1) includes any of the following places: |
| 1. | Branches, offices, or business offices; |
| 2. | Shops and other fixed sales places; |
| 3. | Workshops, factories, or storages; |
| 4. | Places used for building, sites for construction, assembly or installation works, or places used for performing supervisory activities related thereto, for more than six months; |
| 5. | Any of the following places where employees provide services: |
| (a) | A place where services are provided for at least six months in total during a 12-month period in which such services continue to be provided; |
| (b) | A place where services are provided for not more than six months in total during a 12-month period in which such services continue to be provided, and similar services are continuously and repeatedly provided for at least two years; |
| 6. | Mines, quarries, or places for exploiting and gathering marine natural resources and other natural resources (including what are in the sea floor or under soil on the tidelands adjacent to the coast of the Republic of Korea outside its territorial waters where the Republic of Korea exercises sovereignty under international laws). |
| (3) | Where a foreign corporation without any fixed places referred to in paragraph (1) operates the business in the Republic of Korea through any of the following persons or an equivalent person prescribed by Presidential Decree, the location of the person's place of business (where he or she does not have any place of business, it shall be his or her address, and where he or she does not have any address, it shall be the location of his or her residence) shall be deemed the domestic place of business of the foreign corporation: <Amended on Dec. 24, 2018> |
| 1. | A person who is authorized to conclude any of the following contracts on behalf of the relevant foreign corporation and repeatedly exercises such authority in the Republic of Korea: |
| (a) | A contract concluded under the name of a foreign corporation; |
| (b) | A contract to transfer ownership of assets owned by a foreign corporation to grant permission to use the assets that the foreign corporation has ownership or right to use; |
| (c) | A contract to give service of the foreign corporation; |
| 2. | A person who repeatedly plays an important role (limited to cases where the foreign corporation concludes a contract without changing any important matters of the contract) in the process of concluding a contract, although the person has not the right to conclude a contract, etc. under the name of the foreign corporation for such foreign corporation in the Republic of Korea. |
| (4) | Where any of the following places (hereafter in this Article, referred to as "specific place of activities") is used for performing preparatory and supporting business activities of the foreign corporation, it shall not be included in the domestic place of business in paragraph (1): <Amended on Dec. 24, 2018> |
| 1. | Fixed places used by a foreign corporation only for purchasing assets; |
| 2. | Fixed places used by a foreign corporation only for storing or keeping assets not for sale; |
| 3. | Fixed places used by a foreign corporation for advertisement, publicity, gathering and providing information, market research, or similar activities; |
| 4. | Fixed places used by other persons only for processing a foreign corporation's own assets. |
| (5) | Notwithstanding paragraph (4), where a place for specific activities falls under any of the following, such place shall be included in the domestic places of business under paragraph (1): <Added on Dec. 31, 2018; Dec. 31, 2019> |
| 1. | Where a foreign corporation or a foreign corporation (including non-residents; hereafter in this paragraph, referred to as "person having a special relationship") having a special relationship prescribed by Presidential Decree does business in a place same as the specific place of activities or other domestic place and satisfies each of the following items: |
| (a) | The foreign corporation or a person having a special relationship shall have its domestic place of business in a place same as the specific place of activities or other domestic place; |
| (b) | The activities conducted in the place for specific activities and those conducted at the domestic place of business under item (a) shall be mutually complementary; |
| 2. | Where a foreign corporation or a person having a special relationship conducts complementary activities in a place same as the specific place of activities or other domestic place and the comprehensive activities comprised of all activities are not preparatory and supporting business activities in light of the business activities of the foreign corporation or the person having a special relationship. |
[This Article Wholly Amended on Dec. 30, 2010]
| Article 94-2 (Submission of data on liaison offices of foreign corporations) |
| (1) | Where a foreign corporation has a domestic office which performs only non-business functions prescribed by Presidential Decree, such as business liaison, market research, etc., without engaging in business activities that generate domestic profits (referring to an office that does not constitute a domestic place of business referred to in Article 94; hereafter referred to as "foreign corporation’s liaison office"), such foreign corporation shall submit data on its current status prescribed by Presidential Decree to the head of the tax office having jurisdiction over the place of its liaison office by February 10 of the following year, as prescribed by Presidential Decree. <Amended on Dec. 31, 2022> |
| (2) | The liaison office of a foreign corporation shall submit an aggregate invoice for each supplier issued under the main clause of Article 121 (5) to the head of the tax office having jurisdiction over the place of the liaison office of the foreign corporation. <Added on Dec. 31, 2022> |
| (3) | Article 121 (5), (6) and (8) shall apply |
[This Article Added on Dec. 21, 2021]
[Title of This Article Amended on Dec. 31, 2022]
SECTION 2 Calculation of Tax
| Article 95 (Tax rate) |
Corporate tax on income for each business year of a foreign corporation provided in Article 91 (1) and a foreign corporation provided in paragraph (2) or (3) of the same Article which have domestic source income accrued from transfer of real estate, etc. in subparagraph 7 of Article 93 shall be the amount calculated by applying Article 55 to the tax base prescribed in Article 91 (where there exist corporate tax on capital gains on transfer of land, etc. under Article 95-2, such corporate tax shall be added to the aforementioned corporate tax). <Amended on Dec. 24, 2018>
[This Article Wholly Amended on Dec. 30, 2010]
| Article 95-2 (Special cases concerning taxation on capital gains on transfer of land, etc. by foreign corporation) |
Article 55-2 shall apply mutatis mutandis to the payment of corporate tax on capital gains on transfer of land, etc. of a foreign corporation referred to in Article 91 (1) and a foreign corporation referred to in (2) of the same Article. In such cases, capital gains on transfer of land, etc. of a foreign corporation under Article 91 (2) shall be the amount calculated by applying mutatis mutandis Article 92 (3).
[This Article Wholly Amended on Dec. 30, 2010]
| Article 96 (Special provisions on taxation on domestic place of business of foreign corporation) |
| (1) | Any domestic place of business of a foreign corporation (excluding non-profit foreign corporations) shall add the amount calculated by applying the tax rate provided in paragraph (3) to the taxable income provided in paragraph (2) (where a remittance of profits are taxable under the tax treaty concluded between the Republic of Korea and the foreign country where the foreign corporation is located, the taxable income shall be the amount of remittance prescribed by Presidential Decree) to the corporate tax calculated under Article 95 and pay it under the tax treaty concluded between the Republic of Korea and the country where the headquarters or main office of such foreign business corporation is located (hereafter in this Article, referred to as "country of residence"); provided, the same shall not apply where the country of residence of such foreign corporation does not impose the tax on the overseas place of business of a corporation of the Republic of Korea located in such country of residence. |
| (2) | The amount of taxable income referred to in paragraph (1) shall be the amount computed by subtracting each of the following amounts from the amount of income from the relevant domestic place of business for each business year: <Amended on Dec. 31, 2011; Jan. 1, 2014; Dec. 24, 2018; Dec. 22, 2020> |
| 1. | The amount of corporate tax calculated under Article 95 less the amount referred to in item (a) but plus the amount referred to in item (b): |
| (a) | Tax credits on tax paid overseas under Article 57 (1), tax credits for losses from disasters granted under Article 58 that are applied |
| (b) | Additional tax provided in Articles 75, 75-2 through 75-9 and Articles 47-2 through 47-5 of the Framework Act on National Taxes or tax paid additionally under this Act or the Act on Restriction on Special Cases concerning Taxation; |
| 2. | Local corporate income tax; |
| 3. | The amount prescribed by Presidential Decree, such as an amount deemed reinvested in business by the relevant domestic place of business; |
| 4. | The amount not included in deductible expenses under Article 22 of the Adjustment of International Taxes Act. |
| (3) | The tax rate applied under paragraph (1) shall be the tax rate provided in Article 98 (1) 2, and where tax rates are separately stipulated by the tax treaty concluded between the Republic of Korea and the country of residence of the relevant foreign corporation, the treaty shall be complied with. <Amended on Dec. 24, 2018> |
[This Article Wholly Amended on Dec. 30, 2010]
SECTION 3 Reports, Payments, Settlements, Corrections, and Collection
| Article 97 (Report, payment, determination, correction, and collection) |
| (1) | Except as otherwise provided in this SECTION, any of the following provisions shall apply |
| 1. | In cases of tax reductions or exemptions: Articles 57 (1) and (2), 58, 58-3, and 59; |
| 2. | In cases of report and payment: Articles 60 (excluding any earned surplus settlement statement or deficits settlement statement referred to in paragraph (2) 1 of the same Article), 62, and 64; |
| 3. | In cases of interim prepayment: Articles 63 and 63-2; |
| 4. | In cases of determination or correction of tax base: Articles 66 through 70; |
| 5. | In cases of collection and refund of tax: Article 71; |
| 6. | In cases of withholding: Articles 73, 73-2 and 74; |
| 7. | In cases of penalty tax: Articles 75 and 75-2 through 75-9. |
| (2) | Where a foreign corporation obligated to file a report on the tax base of corporate tax on the income for each business year under paragraph (1) cannot file the report by the filing deadline on the grounds prescribed by Presidential Decree, it may extend the filing deadline after obtaining approval from the head of the tax office having jurisdiction over the place of tax payment or the commissioner of the competent regional tax office, as prescribed by Presidential Decree, notwithstanding paragraph (1). |
| (3) | Where a foreign corporation that has obtained approval for extending a deadline for filing a tax return pursuant to paragraph (2) pays the tax amount it has reported, it shall pay the tax amount including the amount calculated by applying an interest rate prescribed by Presidential Decree considering the interest rates of financial companies, etc. to the number of days so extended. |
| (4) | In calculating the amount to be added under paragraph (3), the number of extended days shall be the number of days from the day following the filing deadline specified under Article 60 until the approval day of extension; provided, where a report is filed and payment is made by the extended deadline, it shall be from the day following the filing deadline specified under Article 60 until the day of such report and payment. |
| (5) | Where the amount of the tax withheld under Article 98, 98-3, 98-5, or 98-6 is less than 1,000 won, such tax shall not be collected. <Added on Jan. 1, 2013> |
[This Article Wholly Amended on Dec. 30, 2010]
| Article 98 (Special cases concerning withholding or collection from foreign corporations) |
| (1) | Where any person pays a foreign corporation the amount of domestic source income provided for in subparagraphs 1, 2, and 4 through 10 of Article 93 (excluding any resident or non-resident who pays the amount of domestic source income accrued from transfer of real estate, etc. provided for in subparagraph 7 of Article 93) which is not substantially related to the domestic place of business of the foreign corporation or does not revert to the domestic place of business of the foreign corporation (including an amount paid to a foreign corporation with no domestic place of business), he or she shall withhold, as the corporate tax, the following amounts from the income of the relevant foreign corporation for each business year, and pay it at the tax office having jurisdiction over the place of tax payment, etc., as prescribed by Presidential Decree, by the tenth day of the month following the month in which the date of withholding falls, notwithstanding Article 97; provided, the same shall not apply to income provided for in subparagraph 5 of Article 93, which is taxable as domestic source business income under the applicable tax treaty: <Amended on Jan. 1, 2013; Dec. 20, 2016; Dec. 24, 2018; Dec. 31, 2019; Dec. 22, 2020> |
| 1. | Domestic source interest income in subparagraph 1 of Article 93: Any of the following amounts: |
| (a) | Interest income accrued from the bonds issued by the State, a local government, or a domestic corporation: 14/100 of the amount paid; |
| (b) | Interest income other than those in item (a): 20/100 of the amount paid; |
| 2. | Domestic source dividend income in subparagraph 2 of Article 93: 20/100 of the amount paid; |
| 3. | Domestic source income accrued from the rental of ships, etc. in subparagraph 4 of Article 93 and domestic source business income in subparagraph 5 of Article 93 (excluding income taxable as domestic source business income under any tax treaty): 2/100 of the amount paid; |
| 4. | Domestic source income accrued by rendering personal services in subparagraph 6 of Article 93: 20/100 of the amount paid; provided, 3/100 of the amount paid for the income deemed to have accrued in the Republic of Korea according to a tax treaty by rendering personal services prescribed by Presidential Decree, among personal services rendered abroad; |
| 5. | Domestic source income accrued from transfer of real estate, etc. in subparagraph 7 of Article 93: 10/100 of the amount paid; provided, where the acquisition value and transfer expenses of the amount paid are verified, an amount equivalent to 10/100 of the amount paid or an amount equivalent to 20/100 of capital gains on a transfer of such assets, whichever is smaller; |
| 6. | Domestic source income accrued from usage in subparagraph 8 of Article 93: 20/100 of the amount paid; |
| 7. | Domestic source income accrued from transfer of securities in subparagraph 9 of Article 93: 10/100 of the amount paid (where it falls under Article 92 (2) 2, referring to "arm's length price" in the same subparagraph; hereinafter the same shall apply); provided, where the acquisition value and transfer expenses of the relevant securities are verified under Article 92 (2) 1 (a), an amount equivalent to 10/100 of the amount paid, etc., or an amount equivalent to 20/100 of the amount calculated under the proviso to the same subparagraph, whichever is smaller; |
| 8. | Other domestic source income in subparagraph 10 of Article 93: An amount according to the following classification: |
| (a) | Income prescribed in subparagraph 10 (j) of Article 93: 15/100 of the amount paid; |
| (b) | Income prescribed in subparagraph 10 (k) of Article 93: Amount according to the following classification; provided, when exchanging or withdrawing virtual assets, it shall be an amount prescribed by Presidential Decree and expressed in units of virtual assets, equivalent to the following: |
| (i) | Where the acquisition value, etc. of virtual assets is verified under Article 92 (2) 1 (b): the lesser of the amount equivalent to 10/100 of the paid amount and the amount equivalent to 20/100 of the amount calculated under the same item; |
| (ii) | Where the acquisition value, etc. of virtual assets is not verified under Article 92 (2) 1 (b): 10/100 of the paid amount; |
| (c) | Income other than the income prescribed in items (a) and (b): 20/100 of the paid amount (the amount prescribed by Presidential Decree, in the case of income prescribed in subparagraph 10 (c) of Article 93). |
| (2) | Deleted <Dec. 31, 2022> |
| (3) | Deleted. <Dec. 31, 2011> |
| (4) | Where a person liable for withholding fails to withhold corporate tax from the income of a foreign corporation for each business year under paragraphs (1) and (5) through (12) or fails to pay the withheld corporate tax by the payment deadline specified under paragraph (1), the head of the tax office having jurisdiction over the place of tax payment shall additionally collect, as corporate tax, the amount referred to in Article 47-5 (1) of the Framework Act on National Taxes from the person liable for withholding in the same manner as national taxes are collected. <Amended on Dec. 31, 2011> |
| (5) | Any person who pays domestic source income referred to in subparagraph 1, 5, 6, or 8 of Article 93 with foreign loan funds to a foreign corporation with no domestic place of business shall withhold tax from the relevant income pursuant to paragraph (1) each time he or she pays the relevant income to the foreign corporation in accordance with the terms of payment stipulated in the contract, although he or she does not directly pay the income in accordance with the terms of payment stipulated in such contract. |
| (6) | The local agency of a foreign corporation operating a ship or aircraft providing international service which does not fall under Article 94 (3) shall withhold tax from the amount of domestic source income of the foreign corporation under paragraph (1) when it pays the foreign corporation the income accruing from the ship or aircraft providing international service. |
| (7) | Where securities referred to in subparagraph 9 of Article 93 are transferred through an investment trader or investment broker registered under the Financial Investment Services and Capital Markets Act, the investment trader or investment broker shall withhold tax, as prescribed in paragraph (1); provided, where outstanding stocks are transferred when stocks are listed as prescribed in the Financial Investment Services and Capital Markets Act, the corporation which has issued such stocks shall withhold the tax. |
| (8) | Any person who pays a foreign corporation an amount of domestic source income accruing from architectural works, construction, the installation or assembly of machines, etc., other works, or the provision of any service for supervision, control, etc. of such works, or any amount of domestic source income earned by providing personal services as referred to in subparagraph 6 of Article 93 (including where such income is classified as business income under a tax treaty) shall withhold the tax, as prescribed in paragraph (1), although the relevant income reverts to the domestic place of business; provided, the same shall not apply where the relevant domestic place of business has registered as a business operator under Article 111. <Amended on Jan. 1, 2014> |
| (9) | Where domestic source income referred to in paragraph (1) is paid in a foreign country and a person who pays the income has an address, residence, headquarters, main office, or place of business (including the domestic place of business referred to in Article 120 of the Income Tax Act) in the Republic of Korea, paragraph (1) shall apply, deeming that the income payer has paid the relevant domestic source income in the Republic of Korea. |
| (10) | Where domestic source income referred to in Article 93 is paid to a foreign corporation as a result of an auction under the Civil Execution Act or a public sale under the National Tax Collection Act, the person who distributes proceeds from such auction or public sale shall withhold the tax in accordance with paragraph (1) from the amount actually paid to the foreign corporation. <Amended on Jan. 1, 2014> |
| (11) | The acts of a person representing or commissioned by a person liable for withholding provided in paragraphs (1) and (5) through (10) shall be deemed the acts of the principal or his or her delegate within the scope of the delegation or commission, to which paragraphs (1) and (5) through (10) shall apply. |
| (12) | Where a financial company, etc., acquires, trades or brokers bills or debt certificates issued by a domestic corporation or makes such transactions on behalf of the financial company, etc., paragraph (11) shall apply, deeming that the financial company, etc., has the agency or commission relationship with the relevant resident. |
| (13) | When any person liable for withholding withholds corporate tax under paragraphs (1), (5) through (12) and (16), he or she shall issue a withholding receipt stating the amount of payment and other necessary matters to the person who receives the income, as prescribed by Presidential Decree. <Amended on Dec. 22, 2020> |
| (14) | A domestic corporation which has issued stocks, etc., shall collect the withholding tax on the domestic source income referred to in subparagraph 10 (i) of Article 93 from the foreign-related party who holds such stocks, etc., at the time prescribed by Presidential Decree. <Amended on Dec. 31, 2011> |
| (15) | Detailed methods for withholding under paragraph (14) shall be prescribed by Presidential Decree. |
| (16) | Notwithstanding paragraph (1), domestically sourced other income of a foreign corporation referred to in subparagraph 10 (k) of Article 93 that is generated through a virtual asset service provider, etc. shall be withheld by the virtual asset service provider, etc. in the amount pursuant to paragraph (1) 8 (b), and the payment shall be made to the tax office having jurisdiction over the place of tax payment, as prescribed by Presidential Decree, by the 10th of the month following the month in which virtual assets or cash is withdrawn (if not withdrawn from January 1 to December 31 of each year, it shall be by January 10 of the following year). <Added on Dec. 22, 2020> |
| (17) | In applying paragraph (16), the method by which a virtual asset service provider, etc. verifies whether a person who transfers, lends, or withdraws virtual assets is subject to withholding tax under paragraph (1) 8 (b) shall be prescribed by Presidential Decree. <Added on Dec. 22, 2020> |
[This Article Wholly Amended on Dec. 30, 2010]
| Article 98-2 (Special cases concerning reports on, payment of capital gains on transfer of securities by foreign corporation) |
| (1) | Where a foreign corporation with no domestic place of business satisfies the taxation standards stipulated in the relevant tax treaty by transferring stocks or investment certificates of the same domestic corporation on at least two occasions within the same business year (referring to the business year of the domestic corporation which issues the stocks or investment certificates; hereafter in this Article, the same shall apply), such foreign corporation shall report and pay an amount equivalent to the withholding tax on gains accruing from the transfer (hereafter in this Article, referred to as "gains") that was not withheld at the time of such transfers, to the head of the tax office having jurisdiction over the place of tax payment, as prescribed by Presidential Decree, within three months from the end date of the business year in which such transfers are made. |
| (2) | Paragraph (1) shall apply |
| (3) | Where a foreign corporation with no domestic place of business transfers stocks, investment certificates, or other securities (hereafter in this Article, referred to as "stocks, etc.") to a non-resident or foreign corporation with no domestic place of business in circumstances prescribed by Presidential Decree, it shall report and pay an amount computed by multiplying gains accrued from the transfer by the rate provided in Article 98 (1) 7 to the head of the tax office having jurisdiction over the place of tax payment by no later than the tenth day of the month that is two months after the month in which such gains are paid, as prescribed by Presidential Decree; provided, the foregoing shall not apply where the person who pays the amount of gains accrued from the transfer of stocks, etc. withholds and pays the corporate tax on the domestic source income from the transfer of the relevant stocks, etc. under Article 98. <Amended on Dec. 24, 2018> |
| (4) | Where a foreign corporation with no domestic place of business earns any income referred to in subparagraph 10 (c) of Article 93 upon being donated with domestic assets from a non-resident or foreign corporation with no domestic place of business, it shall report and pay the amount computed under Article 98 (1) 8 to the head of the tax office having jurisdiction over the place of tax payment within three months from the last day of the month in which the date it has been donated with the amount referred to in Article 98 (1) 8 falls; provided, the foregoing shall not apply where the person who has donated domestic assets withholds and pays the corporate tax on the amount of domestic source income under Article 98. <Added on Dec. 31, 2011; Dec. 24, 2018> |
| (5) | Where a foreign corporation fails to report and pay, as prescribed in paragraphs (1) through (4), or underreports the tax base, or underpays tax, the head of the tax office having jurisdiction over the place of tax payment shall collect the payable amount by applying |
[This Article Wholly Amended on Dec. 30, 2010]
[Title Amended on Dec. 31, 2011]
| Article 98-3 (Special cases concerning withholding from bonds, etc. subject to withholding tax of foreign corporations) |
| (1) | Any person who pays interest, etc. on bonds, etc. subject to withholding tax to a foreign corporation (referring to a foreign corporation subject to Article 98 (1); hereafter the same shall apply in this Article), or purchases (including brokering, arranging, or other cases prescribed by Presidential Decree, but excluding trading of repurchase bonds, etc. or other cases prescribed by Presidential Decree; hereafter the same shall apply in this Article) bonds, etc. from a foreign corporation before receiving the interest, etc. on such bonds, etc. shall withhold the tax in consideration of the holding period of such bonds, etc., as prescribed by Presidential Decree. <Amended on Dec. 30, 2010> |
| (2) | Deleted. <Dec. 31, 2004> |
| (3) | Any act of the person who acts for a person liable for withholding under paragraph (1) or is commissioned to act for the person liable for withholding shall be deemed an act of the principal or his or her delegate within the scope of the delegation or commission, and is subject to paragraph (1). <Amended on Dec. 30, 2010> |
| (4) | Where a financial company, etc. assumes charge of, trades or brokers bonds, etc. subject to withholding tax issued by a resident or foreign corporation or makes such transactions as an agent, the financial company, etc. shall be deemed to have the agency or commission relationship with the person liable for withholding provided in paragraph (1) and a foreign corporation that sells bonds, etc., subject to withholding tax for purposes of paragraph (3). <Amended on Dec. 30, 2010> |
| (5) | In applying paragraphs (1) through (4), Article 98 (1) through (3) shall apply |
| (6) | In applying paragraph (1), matters necessary for the timing for payment of interest income, calculation of the holding period of bonds, etc., subject to withholding tax, calculation and payment of withholding tax, scope of persons liable for withholding, issuance of withholding receipts, and other matters shall be prescribed by Presidential Decree. <Amended on Dec. 30, 2010> |
[This Article Added on Dec. 29, 2000]
[Title Amended on Dec. 30, 2010]
| Article 98-4 (Applying for non-taxation or tax exemption for foreign corporations under tax treaties) |
| (1) | Where a foreign corporation who is a real beneficiary of the domestic source income referred to in Article 93 (excluding the domestic source business income in subparagraph 5 of the same Article) intends to have such income untaxed or exempted from taxes in accordance with the applicable tax treaty, it shall present an application for non-taxation or tax exemption and a document proving to be a real beneficiary of the domestic source income (hereafter in this Article referred to as "application, etc.") to the person who pays the domestic source income (hereafter in this Article, referred to as "income payer"), and the income payer shall file the application, etc. with the head of the tax office having jurisdiction over the place of tax payment, as prescribed by Presidential Decree. In such cases, where a foreign investment scheme deemed a real beneficiary of the domestic source income as it falls under Article 93-2 (1) 1, it shall submit a report on the foreign investment scheme, including the status of investors by country which have invested in the foreign investment scheme. <Amended on Dec. 24, 2018; Dec. 31, 2022; Dec. 31, 2024> |
| (2) | Where the domestic source income is paid through a foreign investment scheme for purposes of paragraph (1), the foreign investment scheme shall receive an application, etc. from the real beneficiary and present to the income payer the report prepared by the foreign investment scheme, including a statement thereof, and the application, etc., and income payer shall file the report and application, etc. with the head of the tax office having jurisdiction over the place of tax payment, as prescribed by Presidential Decree. <Amended on Dec. 24, 2018; Dec. 31, 2022> |
| (3) | An income payer who has received an application, etc. from a real beneficiary or foreign investment scheme pursuant to paragraph (1) or (2) may request supplementation if there are omissions or deficiencies in the submitted application, etc.; if the income payer fails to receive an application, etc. from a real beneficiary or foreign investment scheme or a report on a foreign investment scheme or is unable to identify a real beneficiary with the documents received, or where an income payer has any other ground specified by Presidential Decree, the income payer shall withhold the amount specified in any subparagraph of Article 98 (1) without applying for non-taxation or tax exemption. <Amended on Dec. 31, 2022> |
| (4) | The head of the tax office having jurisdiction over the place of tax payment in receipt of an application, etc. pursuant to paragraph (1) or (2) shall examine whether the requirements for non- taxation or tax exemption are met, and as a result of such examination, if it is found that the requirements for non-taxation or tax exemption are not satisfied or details of the application are different from the facts, he or she shall collect the amount of tax according to the same paragraph from the person paying the income pursuant to Article 98 (4). In such cases, where it is not possible to determine whether the requirements for non-taxation or tax exemption are met based solely on the contents stated on the application, etc., the income payer may be requested to supplement the relevant documents within a reasonable time limit. <Added on Dec. 31, 2022> |
| (5) | Where a real beneficiary to whom non-taxation or tax exemption has not been applied under paragraph (3) intends to be eligible for non-taxation or tax exemption, the real beneficiary or income payer may request the head of the tax office having jurisdiction over the place of tax payment of the income payer to make a correction within five years from the 11th of the month immediately following the month during which the tax is withheld under paragraph (3); provided, if any ground falling under any subparagraph of Article 45-2 (2) of the Framework Act on National Taxes arises, a request for rectification may be filed within three months from the date on which the relevant ground occurs, notwithstanding the main clause. <Amended on Dec. 20, 2016; Dec. 31, 2019; Dec. 31, 2022; Dec. 31, 2023> |
| (6) | Upon receipt of an application for correction under paragraph (5), the head of a tax office shall correct the tax base and the tax amount or shall notify the applicant that no ground exists for such correction, within six months from the filing date of the application. <Amended on Dec. 31, 2022> |
| (7) | Except as otherwise provided in paragraphs (1) through (6), the methods and procedures for the submission of relevant documents, such as an application, etc. and a report by a foreign investment scheme, the duty to preserve the documents presented, the methods and procedures for filing a request for correction, and other matters necessary for non-taxation or tax exemption shall be prescribed by Presidential Decree. <Amended on Dec. 31, 2022> |
[This Article Wholly Amended on Jan. 1, 2014]
| Article 98-5 (Special case concerning withholding procedures for foreign corporations in specific places) |
| (1) | Where a person liable for withholding referred to in Articles 98, 98-2 through 98-4, and 98-6 withholds corporate tax from income referred to in subparagraph 1, 2, 7 (b), 8, or 9 of Article 93 for each business year among the domestic source income of a foreign corporation located in any country and region publicly announced by the Minister of Strategy and Finance, the person liable for withholding shall withhold corporate tax from income by preferentially applying the tax rate referred to in each subparagraph of Article 98 (1), notwithstanding the provisions on non-taxation, tax exemption and restrictive tax rates stipulated in Article 98-4 and the applicable tax treaty; provided, the same shall not apply where the Commissioner of the National Tax Service grants prior approval to apply non-taxation, tax exemption and restrictive tax rates under the applicable tax treaty, as prescribed by Presidential Decree. <Amended on Dec. 31, 2011> |
| (2) | Where a corporation (including its agent or a tax manager pursuant to Article 82 of the Framework Act on National Taxes) that is substantially attributable to domestic source income pursuant to paragraph (1) intends to receive the non-taxation, exemption or limited tax rate pursuant to a tax treaty on its income, it may apply a request for rectification to the head of the tax office having jurisdiction over the place of tax payment of the withholding agent within five years from the 11th of the month immediately following the month in which the tax withheld under paragraph (1) belongs, as prescribed by Presidential Decree; provided, if any ground falling under any subparagraph of Article 45-2 (2) of the Framework Act on National Taxes arises, a request for rectification may be filed within three months from the date on which the relevant ground occurs, notwithstanding the main clause. <Amended on Dec. 20, 2016; Dec. 31, 2019; Dec. 31, 2023> |
| (3) | Upon receipt of a request for correction under paragraph (2), the head of the tax office shall correct the tax base and amount, or notify the relevant requester of the purport that no reasonable grounds exist to correct the tax base and amount, within six months of the receipt of the request. |
[This Article Wholly Amended on Dec. 30, 2010]
[Title Amended on Dec. 24, 2018]
| Article 98-6 (Special cases concerning withholding procedures to apply restrictive tax rates under tax treaties to foreign corporations) |
| (1) | Where a foreign corporation who is a real beneficiary of the domestic source income referred to in Article 93 intends to apply for the restrictive tax rates stipulated under the tax treaties, it shall submit an application of restrictive tax rates and a document proving to be a real beneficiary of domestic source income (hereafter in this Article referred to as "application, etc.") to a person liable for withholding referred to in Article 98 (1) (hereafter in this Article, referred to as "person liable for withholding"), as prescribed by Presidential Decree. In such cases, where a foreign investment scheme deemed a real beneficiary of the domestic source income as it falls under Article 93-2 (1) 1, it shall submit a report on the foreign investment scheme, including the status of investors by country which have invested in the foreign investment scheme. <Amended on Dec. 24, 2018; Dec. 22, 2020; Dec. 31, 2022> |
| (2) | Upon applying paragraph (1), where the relevant domestic source income is paid through an foreign investment vehicles, the relevant foreign investment vehicle shall, as prescribed by Presidential Decree, receive an application, etc. from the substantive owner and submit it to the withholding agent along with a report on the foreign investment vehicle including details of the application for reduced tax rate. <Amended on Dec. 24, 2018; Dec. 31, 2022> |
| (3) | A withholding agent who has received an application, etc. from a real beneficiary or foreign investment scheme pursuant to paragraph (1) or (2) may request supplementation if there are omissions or deficiencies in the submitted application, etc.; if the withholding agent fails to receive an application, etc. from a real beneficiary or foreign investment scheme or a report on a foreign investment scheme or is unable to identify a real beneficiary with the document received, or in cases of any other ground specified by Presidential Decree, the withholding agent shall withhold the amount referred to in the subparagraphs of Article 98 (1) without applying the restrictive tax rates. <Amended on Dec. 31, 2022> |
| (4) | Where there is an error in the limited tax rate applied pursuant to paragraphs (1) and (2), or a real beneficiary who has not been applied with the limited tax rate pursuant to paragraph (3) intends to apply the limited tax rate, within five years from the 11th of the month immediately following the month in which the date on which the tax amount was withheld falls under paragraph (3), the real beneficiary or the person liable for withholding tax may request correction from the head of the tax office having jurisdiction over the place of tax payment of the withholding person, as prescribed by Presidential Decree; provided, if any ground falling under any subparagraph of Article 45-2 (2) of the Framework Act on National Taxes arises, a request for rectification may be filed within three months from the date on which the relevant ground occurs, notwithstanding the main clause. <Amended on Jan. 1, 2014; Dec. 20, 2016; Dec. 31, 2019; Dec. 31, 2023> |
| (5) | Upon receipt of an application for correction under paragraph (4), the head of a tax office shall correct the tax base and the tax amount or shall notify the applicant that no ground exists for such correction, within six months from the filing date of the application. |
| (6) | Except as otherwise provided in paragraphs (1) through (5), the methods and procedures for the submission of relevant documents, such as an application, etc. and a report on foreign investment schemes, the duty to preserve the documents presented, the methods and procedures for filing a request for correction, and other matters necessary for application of restrictive tax rates shall be prescribed by Presidential Decree. <Amended on Dec. 31, 2022> |
[This Article Added on Dec. 31, 2011]
| Article 98-7 (Special cases concerning application of tax rates to interest, dividends and royalties) |
| (1) | With respect to interest, dividend, or royalty income out of the domestic source income of a foreign corporation under a tax treaty, the lower of a restrictive tax rate and any of the following tax rates shall apply: |
| 1. | Where a local income tax is not included in the taxes subject to a tax treaty: The tax rates prescribed in Article 98 (1) 1, 2, and 6; |
| 2. | Where a local income tax is included in the taxes subject to a tax treaty: A tax rate calculated by reflecting 10/100 of the corporate tax withheld under Article 103-52 (1) of the Local Tax Act at the tax rates prescribed in Article 98 (1) 1, 2 and 6. |
| (2) | Notwithstanding paragraph (1), in cases falling under Article 98-5 (1), withholding tax shall be collected pursuant to the same paragraph. In such cases, where the tax base and tax amount are corrected pursuant to paragraph (3) of the same Article, the lower of a restrictive tax rate and the tax rate prescribed in any subparagraph of paragraph (1) shall apply. |
[This Article Added on Dec. 22, 2020]
| Article 98-8 (Special cases concerning withholding tax on domestic source income received through foreigner consolidated account) |
| (1) | If a foreign corporation or foreign investment vehicle receives domestic source income pursuant to Article 93 through a foreigner consolidated account (referring to an account opened by a foreign financial investment entity, in its own name, provided in Article 12 (2) 1 (b) of Financial Investment Services and Capital Markets Act to collectively order and settle stock purchase and sale transactions of other foreign investors; hereinafter the same shall apply), the person who pays such domestic source income through the foreigner consolidated account shall withhold corporate tax at the amount specified in each subparagraph of Article 98 (1) when paying the income to the holder of the foreigner integrated account. |
| (2) | A foreign corporation or foreign investment vehicle that receives income under paragraph (1) may file a claim for rectification with the head of the tax office having jurisdiction over the place of tax payment to be applied non-taxation, tax exemption, or limited tax rates under a tax treaty. |
| (3) | Article 98-4 (5) through (7) and Article 98-6 (4) through (6) shall apply |
[This Article Added on Dec. 31, 2023]
| Article 99 (Special cases concerning reports on and payment of corporate tax on domestic source income of foreign corporation from personal services) |
| (1) | A foreign corporation whose domestic source income accrued by rendering personal services in subparagraph 6 of Article 93 is withheld at the tax rate prescribed in Article 98 (1) 4 may file a report on and pay an amount (hereafter in this Article, referred to as "tax base") computed by subtracting expenses proved to be in relation to the domestic source income accrued by rendering personal services in subparagraph 6 of Article 93 accrued during the supply period of services in the Republic of Korea (referring to the period from the date of arrival in the Republic of Korea to the date of departure therefrom, where such period is unclear) from such income to the head of the tax office having jurisdiction over the place of tax payment of the person liable for withholding within three months from the last day of the supply period of services, as prescribed by Presidential Decree. <Amended on Dec. 24, 2018> |
| (2) | Where any income withheld under Article 98 (1) 4 is included in the tax base in applying paragraph (1), the amount of the withheld tax shall be deducted as the amount of tax paid. <Amended on Dec. 24, 2018> |
| (3) | Where a report is filed and payment is made under paragraph (1), Articles 95 and 97 shall apply |
[This Article Wholly Amended on Dec. 30, 2010]
[Title Amended on Dec. 24, 2018]
CHAPTER V Deleted.
SECTION 1 Deleted.
| Article 100 Deleted. <Dec. 31, 2001> |
SECTION 2 Deleted.
| Article 101 Deleted. <Dec. 31, 2001> |
SECTION 3 Deleted.
| Article 102 Deleted. <Dec. 31, 2001> |
| Article 103 Deleted. <Dec. 31, 2001> |
| Article 104 Deleted. <Dec. 31, 2001> |
SECTION 4 Deleted
| Article 105 Deleted. <Dec. 31, 2001> |
| Article 106 Deleted. <Dec. 31, 2001> |
| Article 107 Deleted. <Dec. 31, 2001> |
| Article 108 Deleted. <Dec. 31, 2001> |
CHAPTER VI SUPPLEMENTARY PROVISIONS
| Article 109 (Reports on incorporation or establishment of corporation) |
| (1) | A domestic corporation shall submit a report on incorporation stating the following matters, along with the detailed statement on shareholders, etc. and documents regarding business registration, etc. prescribed by Presidential Decree, to the head of the tax office having jurisdiction over the place of tax payment within two months from the date of registration for incorporation (where the actual business management place is established, the date of establishment; and in the case of corporate taxable trust property, the date of its establishment). In such cases, when the domestic corporation has registered its business under Article 111, it shall be deemed to have completed the registration for incorporation: <Amended on Dec. 31, 2011; Jan. 1, 2013; Dec. 22, 2020> |
| 1. | The name of the corporation and its representative [in the case of corporate taxable trust property, referring to the name of the trustee subject to corporate tax (where there are two or more trustees, referring to the representative trustee and all other trustees) and its representative]; |
| 2. | The location of the head office, main office or the actual management place of the business (in the case of corporate taxable trust property, referring to the location of the head office or main office of the trustee subject to corporate tax or the actual management place of the business); |
| 3. | The purpose of business; |
| 4. | The date of incorporation. |
| (2) | When a foreign corporation has established a domestic place of business, it shall submit a report on establishment of a domestic place of business, stating the following matters within two months from the date of establishment, along with the statement of financial position as at the date of establishment of the domestic place and other documents prescribed by Presidential Decree, to the head of the tax office having jurisdiction over the place of tax payment. In such cases, a foreign corporation which has established a place of business referred to in Article 94 (3), it may elect to submit a report on establishment of a domestic place of business: |
| 1. | The name of the corporation and its representative; |
| 2. | The location of its headquarters or main office; |
| 3. | The name of a person responsible for operation or management of business run in the Republic of Korea or domestic assets; |
| 4. | The purpose and type of domestic business, and types and locations of domestic assets; |
| 5. | The start date of domestic business or acquisition date of domestic assets. |
| (3) | Where any details of a report and other documents submitted by a domestic corporation or foreign corporation under paragraphs (1) and (2) are revised, the domestic corporation or foreign corporation shall report such revision to the head of the tax office having jurisdiction over the place of tax payment within 15 days from the date of such revision. |
| (4) | Paragraph (2) shall apply |
[This Article Wholly Amended on Dec. 30, 2010]
| Article 109-2 (Report on change of trustee of corporate taxable trust property) |
| (1) | Where a new trustee is appointed to any corporate taxable trust property (hereinafter referred to as "new trustee"), the new trustee shall file a report stating each of the following matters with the head of the tax office having jurisdiction over the place of tax payment, along with a document, etc. evidencing his or her appointment as a new trustee, within two months after the date of appointment: |
| 1. | The name of the new trustee and the name of the representative; |
| 2. | The name of the corporate taxable trust property; |
| 3. | The location of the head office or main office of the new trustee or the actual management place of the business; |
| 4. | The name of the trustee (hereinafter referred to as "former trustee") before the appointment of the new trustee who succeeds to trust affairs; |
| 5. | The date of appointing the new trustee; |
| 6. | The reasons for appointing the new trustee. |
| (2) | Where the duties of the former trustee with respect to corporate taxable trust property are terminated, the new trustee who has succeeded to trust affairs upon the termination of such duties shall file a report stating each of the following matters with the head of the tax office having jurisdiction over the place of tax payment, along with a document, etc. evidencing the termination of the duties of the former trustee, within two months after the date of succession: |
| 1. | The name of the former trustee and the name of the representative; |
| 2. | The name of the corporate taxable trust property; |
| 3. | The location of the head office or main office of the former trustee or the actual management place of the business; |
| 4. | The name of the new trustee who has succeeded to trust affairs; |
| 5. | The date of succeeding to trust affairs; |
| 6. | The reasons for termination of the duties of the former trustee. |
| (3) | Where the representative trustee of any corporate taxable trust property with at least two trustees is changed, the representative trustee before the change and the representative trustee after the change shall each file a report stating each of the following matters, accompanied by a document, etc. evidencing such change, with the head of the tax office having jurisdiction over the place of tax payment within two months after such change: |
| 1. | The name of the representative trustee before or after the change, and the name of the representative; |
| 2. | The name of the corporate taxable trust property; |
| 3. | The location of the head office or main office of the representative trustee before or after the change, or the actual management place of the business; |
| 4. | The date of changing the representative trustee; |
| 5. | The reasons for changing the representative trustee. |
[This Article Added on Dec. 22, 2020]
| Article 110 (Reports on start of profit-making business by non-profit corporation) |
Where a non-profit domestic corporation or non-profit foreign corporation (limited to a foreign corporation with a domestic place of business) starts new profit-making business (limited to the profit-making business provided in Article 4 (3) 1 and 7), it shall submit a report stating the following matters, along with the statement of financial position of the profit-making business as at the start date of such business and other documents prescribed by Presidential Decree, to the head of the tax office having jurisdiction over the place of tax payment within two months from the start date of the business: <Amended on Dec. 24, 2018>
| 1. | Title of the corporation; |
| 2. | The location of its headquarters, main office, or actual business management place; |
| 3. | The names of the representative and the person responsible for management; |
| 4. | The proper purpose business; |
| 5. | The type of the profit-making business; |
| 6. | The start date of the profit-making business; |
| 7. | The place of business for the profit-making business. |
[This Article Wholly Amended on Dec. 30, 2010]
| Article 111 (Business registrations) |
| (1) | A corporation starting new business shall file for registration of such new business with the head of the tax office having jurisdiction over the place of tax payment, as prescribed by Presidential Decree. In such cases, when a domestic corporation files for registration before it files a report on incorporation pursuant to Article 109 (1), it shall submit the detailed statement on shareholders, etc. under the same paragraph. <Amended on Jan. 1, 2013> |
| (2) | A business operator who has registered his or her business under the Value-Added Tax Act shall be deemed registered the relevant business under paragraph (1). |
| (3) | Where a business operator is registered as corporate taxable trust property pursuant to the Value-Added Tax Act, the corporate taxable trust property shall be deemed to have been registered pursuant to paragraph (1). <Added on Dec. 22, 2020> |
| (4) | Article 8 of the Value-Added Tax Act shall apply |
| (5) | Where a report on incorporation under Article 109 has been filed, an application for business registration shall be deemed filed. <Amended on Dec. 22, 2020> |
[This Article Wholly Amended on Dec. 30, 2010]
| Article 112 (Keeping account books and making an entry in books) |
A corporation with tax liability shall make an entry in its account books by the double entry bookkeeping system, and keep and preserve important evidentiary documents related to the account books; provided, the foregoing shall apply to a non-profit corporation only where the non-profit corporation engages in any profit-making business specified in Article 4 (3) 1 and 7 (the foregoing shall apply to a foreign non-profit corporation only where it earns domestic source income from such profit-making business). <Amended on Jan. 1, 2013; Dec. 24, 2018>
[This Article Wholly Amended on Dec. 30, 2010]
| Article 112-2 (Obligation to prepare and keep detailed statements of donation receipts issued) |
| (1) | A corporation that issues donation receipts shall prepare a detailed statement of donation receipts issued to each donor in the form prescribed by Presidential Decree and shall keep it for five years from the date on which each donation receipt is issued; provided, this shall not apply where an electronic donation receipt is issued. <Amended on Jan. 1, 2014; Dec. 22, 2020> |
| (2) | A corporation that issues donation receipts shall submit a detailed statement of donation receipts for each donor, which it keeps in accordance with paragraph (1), to the Commissioner of the National Tax Service, the commissioner of a regional tax office, or the head of the tax office having jurisdiction over the place of tax payment, upon receipt of a request therefor; provided, this shall not apply where an electronic donation receipt is issued. <Amended on Jan. 1, 2014; Dec. 22, 2020> |
| (3) | A corporation that issues donation receipts shall submit an aggregate table of donation receipts, which states the total number of donation receipts issued, the amount of each donation, etc. during the pertinent business year, in the form stipulated by Decree of the Ministry of Economy and Finance to the head of the relevant tax office within six months from the end of the month in which the relevant business year ends; provided, this shall not apply where an electronic donation receipt is issued. <Amended on Jan. 1, 2014; Dec. 22, 2020; Dec. 21, 2021> |
| (4) | If the total sum of the amounts on the donation receipts issued for donations received in the business year immediately preceding the relevant business year exceeds the amount prescribed by Presidential Decree, which shall be at least 300 million won, a corporation that issues the donation receipts shall issue electronic donation receipts for the donations received in the relevant business year, by January 10 of the year following the year in which the date of receipt of such donations falls. <Added on Dec. 31, 2024> |
[This Article Wholly Amended on Dec. 30, 2010]
| Article 113 (Separate accounting) |
| (1) | A non-profit corporation that operates any profit-making business shall keep separate accounting of assets, liabilities, and profits and losses related to such profit-making business from the accounting of those related to business, other than such profit-making business. |
| (2) | A corporation subject to the application of the Financial Investment Services and Capital Markets Act shall keep separate accounting of the income accruing from the trust estates and other income for the purpose of calculating the amount of income for each business year. |
| (3) | A corporation which merges with another domestic corporation shall keep separate accounting of the assets, liabilities, and profits and losses related to the business succeeded to from a merged corporation from those related to other business for any of the following periods; provided, as for a merger made between small and medium enterprises or between corporations engaged in the same business, separate accounting need not be kept: <Amended on Dec. 31, 2011; Jan. 1, 2013; Dec. 24, 2018> |
| 1. | Where a corporation has losses in Article 13 (1) 1 as at the registration date of merger, or a corporation intends to deduct losses carried forward of the merged corporation under Article 45 (2): The period during which such losses or losses carried forward are deducted; |
| 2. | In other cases: Five years after the merger. |
| (4) | In the case of a division and merger of a domestic corporation, a corporation established through the division, etc. shall keep separate accounting of the assets, liabilities, and profits and losses related to the business succeeded to from the divided corporation, etc. and those related to other business for any of the following periods; provided, as for a division and merger made between small and medium enterprises or between corporations engaged in the same business, separate accounting need not be kept: <Amended on Dec. 31, 2011; Jan. 1, 2013; Dec. 24, 2018> |
| 1. | Where a corporation intends to deduct losses carried forward of a divided corporation, etc. under Article 46-4 (2): The period during which such losses carried forward are deducted; |
| 2. | In other cases: Five years after division. |
| (5) | Where a consolidated parent corporation merges (including a division and merger in which the consolidated parent corporation is a counterpart corporation to the division and merger) with another domestic corporation (limited to a domestic corporation that is not a consolidated corporation as at the registration date of a merger), it shall keep the accounting of the assets, liabilities, and profits and losses related to the business succeeded to from the merged corporation (including the divided corporation) separately from those related to other business for either of the following periods; provided, in the case of a merger between small and medium-sized enterprises or between corporations engaged in the same business, accounting may not be separate:. <Amended on Dec. 31, 2011; Jan. 1, 2013; Dec. 31, 2023> |
| 1. | Where a corporation has losses referred to in Article 76-13 (1) 1 as at the registration date of the merger, or intends to deduct losses carried forward of a merged corporation under Article 76-13 (3) 2: The period eligible for the deduction of such losses or carried-forward losses; |
| 2. | In other cases: Five years after the merger. |
| (6) | The trustee subject to corporate tax shall record the income that reverts to trust property in separate accounting for each corporate taxable trust property. <Added on Dec. 22, 2020> |
| (7) | A domestic corporation that acquires a business of another domestic corporation falling under Article 50-2 shall, if it has losses prescribed in Article 13 (1) 1 as at the date of acquisition of the business, record the assets, liabilities, and profits and losses that belong to the business acquired from the transferor corporation and those that belong to other businesses in separate accounting during the period for which such losses are deducted; provided, where the acquisition of a business is made between small and medium enterprises or between corporations engaged in the same business, separate accounting may not be required. <Added on Dec. 21, 2021> |
| (8) | Matters necessary for the method of keeping separate accounting, and for determining as to whether corporations are engaged in the same business under paragraphs (1) through (7), and other matters shall be prescribed by Presidential Decree. <Amended on Dec. 22, 2020; Dec. 21, 2021> |
[This Article Wholly Amended on Dec. 30, 2010]
| Article 114 Deleted. <Dec. 31, 2001> |
| Article 115 Deleted. <Dec. 26, 2008> |
| Article 116 (Receipt and keeping of evidentiary documents of expenditures) |
| (1) | A corporation shall prepare or receive evidentiary documents for all business-related transactions for each business year and keep them for five years from the filing deadline specified under Article 60 expires; provided, a corporation that intends to deduct losses incurred in the business year that began before the fifth anniversary of the commencement date of each business year from the income for each business year as prescribed in Article 13 (1) 1 shall keep the evidentiary documents for the business year in which the relevant losses incurred until one year lapses from the filing deadline specified under Article 60 for the business year to which the deducted income reverts. <Amended on Dec. 24, 2018> |
| (2) | In cases falling under paragraph (1), where a corporation is supplied with goods or services by a business operator prescribed by Presidential Decree and pays for them, it shall receive and keep any of the following evidentiary documents; provided, the same shall not apply to cases prescribed by Presidential Decree: <Amended on Jun. 7, 2013> |
| 1. | Credit card sales slips issued under the Specialized Credit Finance Business Act (in the case of transactions using things prescribed by Presidential Decree similar to a credit card, it shall include the relevant evidentiary documents; hereafter the same shall apply in Article 117); |
| 2. | Cash Receipts; |
| 3. | Tax invoices issued under Article 32 of the Value-Added Tax Act; |
| 4. | Invoices issued under Article 121 of this Act and Article 163 of the Income Tax Act. |
| (3) | In applying paragraph (2), where a corporation falls under any of the following, the corporation shall be deemed to fulfill its obligation to receive and keep evidentiary documents under paragraph (2): <Amended on Dec. 31, 2022> |
| 1. | Where a corporation issues and keeps a purchaser-issued tax invoice under Article 34-2 (2) of the Value-Added Tax Act as it has failed to have a tax invoice of paragraph (2) 3 issued; |
| 2. | Where a corporation issues and keeps a purchaser-issued invoice under Article 121-2 as it has failed to have a tax invoice of paragraph (2) 3 issued; |
| (4) | In applying paragraphs (1) through (3), matters necessary for the receipt and keeping of evidentiary documents shall be prescribed by Presidential Decree. |
[This Article Wholly Amended on Dec. 30, 2010]
| Article 117 (Obligation to become credit card merchants and to issue credit card sales slips) |
| (1) | Where the Commissioner of the National Tax Service deems it necessary for tax management of a corporation that meets the requirements prescribed by Presidential Decree in consideration of business types, etc., which supplies goods or services mainly to consumers, other than business operators, he or she may guide it to become a credit card merchant. |
| (2) | No credit card merchant (referring to a merchant who has become such merchant upon meeting the requirements referred to in paragraph (1); hereafter in this Article, Articles 66 (2) 3 and 76-6, the same shall apply) shall issue any false credit card sales slip after supplying goods and services in relation to the business, on grounds that transactions are made by credit card; provided, a business operator prescribed by Presidential Decree, such as a superstore, issues a credit card sales slip after aggregating the sales of other business operators by the method prescribed by Presidential Decree, such as installing and operating the point-of-sale information system, it shall not be deemed to have issued false credit card sales slips. <Amended on Dec. 24, 2018> |
| (3) | Where a credit card merchant refuses a transaction by credit card or issues a false credit card sales slip, the relevant consumer may report the details of the relevant transaction to the Commissioner of the National Tax Service, the Commissioner of the competent Regional Tax Office or the head of the competent tax office. |
| (4) | Any entity in receipt of a report filed under paragraph (3) shall give a notice thereon to the head of the tax office having jurisdiction over the credit card merchant's place of tax payment. In such cases, the head of the tax office having jurisdiction over the place of tax payment shall notify the relevant credit card merchant of the amount reported for the relevant business year. |
| (5) | The Commissioner of the National Tax Service may order to any credit card merchant who has refused a transaction by credit card or has issued a false credit card sales slip with respect to matters necessary to correct it. <Amended on Dec. 24, 2018> |
| (6) | The administrative guidance for becoming credit card merchants, the method of reporting and giving notices on a refusal of transactions by credit card and issuance of a false credit card sales slip, and other necessary matters shall be prescribed by Presidential Decree. |
[This Article Wholly Amended on Dec. 30, 2010]
| Article 117-2 (Obligation to become cash receipt merchants and to issue cash receipts) |
| (1) | Every corporation that meets the requirements prescribed by Presidential Decree giving due consideration to the type of business, etc., among corporations that supply goods or services mainly to consumers, not to business operators, shall become a Cash Receipt merchant within three months from the end of the month in which the corporation meets the requirements. <Amended on Dec. 15, 2015> |
| (2) | Every corporation which has become a Cash Receipt merchant pursuant to paragraph (1) shall display a mark indicating that it is a Cash Receipt merchant, as prescribed by the Commissioner of the National Tax Service. |
| (3) | No Cash Receipt merchant shall refuse to issue a Cash Receipt or issue a false Cash Receipt upon receipt of a request by a consumer to issue a Cash Receipt for payment in cash after supplying any goods or services; provided, it need not to issue a Cash Receipt where it is impractical to issue it in circumstances prescribed by Presidential Decree, and where a business operator prescribed by Presidential Decree, such as a superstore, issues a Cash Receipt after aggregating the sales of other business operators by the method prescribed by Presidential Decree, such as installing and operating the point-of-sale information system, it shall not be deemed to have issued a false Cash Receipt. <Amended on Dec. 31, 2011> |
| (4) | Where a domestic corporation that engages in the type of business prescribed by Presidential Decree supplies goods or services for the amount of at least 100,000 won for each transaction (including the value-added tax thereon) and is paid in cash, notwithstanding paragraph (3), it shall issue the cash receipt, as prescribed by Presidential Decree, although a consumer does not request the issuance of a cash receipt; provided, the domestic corporation may choose not to issue a cash receipt where it issues an invoice or tax invoice under Article 121 of this Act, Article 163 of the Income Tax Act, or Article 32 of the Value-Added Tax Act after having supplied goods or services to a person who has registered his or her business pursuant to Article 111 of this Act, Article 168 of the Income Tax Act, or Article 8 of the Value-Added Tax Act. <Amended on Jun. 7, 2013; Jan. 1, 2014> |
| (5) | Where a cash receipt merchant or a domestic corporation obliged to issue a cash receipt fails to issue a cash receipt, in violation of paragraph (3) or (4), or issue a false cash receipt, the other party may report the details of the relevant cash transaction to the Commissioner of the National Tax Service, the commissioner of a regional tax office, or the head of a tax office. <Amended on Dec. 24, 2018> |
| (6) | Any person in receipt of a report filed under paragraph (5) shall give a notice thereof to the head of the tax office having jurisdiction over the place of tax payment of the relevant Cash Receipt merchant. In such cases, 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. |
| (7) | A corporation that has become a Cash Receipt merchant may issue a Cash Receipt, as prescribed by Presidential Decree, although a consumer supplied with goods or services from it does not request the issuance of a Cash receipt. <Added on Dec. 31, 2011> |
| (8) | The Commissioner of the National Tax Service may issue a necessary order to a corporation that has become a Cash Receipt merchant, in relation to matters to be observed by such corporation, such as how to issue Cash Receipts and display a mark indicating that it is a Cash Receipt merchant. <Amended on Dec. 31, 2011> |
| (9) | Becoming and withdrawing from a Cash Receipt merchant, the amount subject to issuance of a Cash Receipt, the methods of reporting or giving notice of refusal to issue a Cash Receipt or issuance of a false Cash Receipt, and other necessary matters, shall be prescribed by Presidential Decree. <Amended on Dec. 31, 2011> |
[This Article Wholly Amended on Dec. 30, 2010]
| Article 118 (Preparation and keeping of stockholder register) |
A domestic corporation (excluding a non-profit domestic corporation) shall prepare and keep a stockholder register or employee register stating the matters prescribed by Presidential Decree, such as names, addresses, and resident registration numbers (referring to the names, locations of the headquarters of corporations, and the business registration numbers if such stockholders or employees are corporations) of the stockholders or employees (referring to employees of a limited liability company; hereafter the same shall apply in this Article).
[This Article Wholly Amended on Dec. 30, 2010]
| Article 119 (Submission of detailed statement of changes in stocks) |
| (1) | A corporation (excluding a partnership corporation, etc. prescribed by Presidential Decree) whose stocks, etc. changes during a business year shall submit a detailed statement of changes in stocks, etc. to the head of the tax office having jurisdiction over the place of tax payment by the filing deadline specified in Article 60, as prescribed by Presidential Decree. |
| (2) | Paragraph (1) shall not apply to any of the following stocks, etc.: <Amended on Dec. 31, 2011> |
| 1. | A corporation prescribed by Presidential Decree among listed-stock corporations: Stocks, etc. held by the stockholders, etc., other than a controlling stockholder (including any related party thereof); |
| 2. | A corporation, other than those referred to in subparagraph 1: Stocks, etc. held by a minority stockholder of the relevant corporation. |
| (3) | The scope of a controlling stockholder and a minority stockholder referred to in paragraph (2) and other necessary matters shall be prescribed by Presidential Decree. |
[This Article Wholly Amended on Dec. 30, 2010]
| Article 120 (Obligation to file payment statements) |
| (1) | Any person who pays a domestic corporation the income provided in Article 127 (1) 1 or 2 of the Income Tax Act (including a person obliged to withhold tax pursuant to any provision of Articles 73 (4) through (6) and 73-2) shall file payment statements to the head of the tax office having jurisdiction over the place of tax payment, as prescribed by Presidential Decree. In such cases, with regard to income accruing from each piece of trust property of a corporation subject to the Financial Investment Services and Capital Markets Act, as the income shall be deemed paid to such corporation, any person who pays such income shall submit such payment statements, notwithstanding Article 5 (4). <Amended on Dec. 31, 2011; Jan. 1, 2013; Dec. 24, 2018; Dec. 22, 2020> |
| (2) | Article 164 of the Income Tax Act shall apply |
[This Article Wholly Amended on Dec. 30, 2010]
| Article 120-2 (Special cases concerning obligation to file payment statements on domestic source income of foreign corporations) |
| (1) | Any person who pays domestic source income to any foreign corporation under Article 93 (where stocks are listed pursuant to the Financial Investment Services and Capital Markets Act, and if stocks issued before the listing are transferred, referring to the corporation that has issued such stocks) shall file a payment statement with the head of the tax office having jurisdiction over the place of tax payment by the end of February of the year following the year (in the case of suspension or closure of business, by the end of the second month from the month in which such business is suspended or closed) in which such payment is made; provided, the same shall not apply where income prescribed by Presidential Decree is paid, including non-taxable or tax-exempted income that is verified under Article 98-4. <Amended on Dec. 22, 2020> |
| (2) | Article 164 of the Income Tax Act shall apply |
[This Article Wholly Amended on Dec. 30, 2010]
| Article 120-3 (Submission of aggregate tax invoices for individual suppliers) |
| (1) | Upon receipt of a tax invoice issued under Article 32 (1) or (7) or Article 35 (1) of the Value-Added Tax Act after being supplied with goods or services, any corporation which operates a business exempt from the value-added tax under the Value-Added Tax Act and the Act on Restriction on Special Cases concerning Taxation shall submit an aggregate tax invoice for individual suppliers (referring to an aggregate tax invoice for individual suppliers provided in Article 54 of the Value-Added Tax Act; hereinafter the same shall apply) to the head of the tax office having jurisdiction over the place of tax payment by the deadline prescribed by Presidential Decree; provided, the same shall not apply where such invoice is submitted under Article 54 (5) of the Value-Added Tax Act. <Amended on Jun. 7, 2013> |
| (2) | Matters necessary to submit an aggregate table of tax invoices by seller shall be prescribed by Presidential Decree. |
[This Article Wholly Amended on Dec. 30, 2010]
| Article 120-4 (Submission of virtual asset transaction details) |
| (1) | A virtual asset business entity under the Act on the Protection of Virtual Asset Users shall collect data necessary for the imposition of corporate tax, such as virtual asset transaction records, to the head of the competent tax office having jurisdiction over the place of tax payment, the commissioner of competent regional tax office, or the commissioner of the National Tax Service, by the end of the second month following the end of the quarter or year in which the transactions are made, as prescribed by Presidential Decree. <Amended on Dec. 31, 2023; Dec. 31, 2024> |
| (2) | The Commissioner of the National Tax Service may issue an order necessary for rectification if a virtual asset business entity referred to in paragraph (1) fails to submit data required for the imposition of corporate tax, such as virtual asset transaction records. <Added on Dec. 31, 2024> |
[This Article Added on Dec. 31, 2022]
| Article 121 (Preparation and issuance of invoices) |
| (1) | Every corporation that supplies goods or services, shall issue an invoice or receipt (hereinafter referred to as "invoice, etc."), as prescribed by Presidential Decree, to a person to whom the goods or services are supplied. In such cases, any invoice issued shall be an invoice prepared in an electronic format prescribed by Presidential Decree (hereinafter referred to as "electronic invoice"). <Amended on Dec. 23, 2014> |
| (2) | Where agricultural products, livestock products, fishery products, and forest products exempt from the value-added tax pursuant to Article 26 (1) 1 of the Value-Added Tax Act are sold on consignment or through an agent, the consignee or agent shall be deemed to have supplied goods and shall issue an invoice, etc., to a person supplied with the relevant goods; provided, the same shall not apply where such invoice, etc., is issued, as prescribed by Presidential Decree, pursuant to paragraph (1). <Amended on Jun. 7, 2013> |
| (3) | For imported goods, the head of a customhouse shall issue an invoice to a corporation that imports the relevant goods, as prescribed by Presidential Decree. |
| (4) | Paragraphs (1) through (3) shall not apply to cases prescribed by Presidential Decree where it is deemed inappropriate to issue an invoice, etc., such as sale of real estate, etc. |
| (5) | Every corporation shall submit a statement of invoices issued to, or received from, each purchaser or supplier pursuant to paragraphs (1) through (3) (hereinafter referred to as "an aggregate invoice for each supplier or purchaser") to the head of the tax office having jurisdiction over the place of tax payment by the deadline specified by Presidential Decree; provided, a corporation does not need to submit an aggregate invoice in either of the following cases: <Amended on Dec. 23, 2014> |
| 1. | An aggregate invoice for the invoices that the corporation received from a supplier pursuant to paragraph (3); |
| 2. | Aggregate invoices for each purchaser and each supplier, where the corporation has transmitted aggregate invoices to the Commissioner of the National Tax Service pursuant to paragraph (7) for the electronic invoices issued or received under the latter part of paragraph (1). |
| (6) | Any portion in relation to which tax invoices or receipts are issued under the Value-Added Tax Ac or aggregate tax invoices for individual suppliers or purchasers are submitted shall be deemed a portion in relation to which invoices, etc., issued or aggregate invoices for individual suppliers or purchasers are submitted under paragraphs (1) through (3), and (5). |
| (7) | Every corporation that issues electronic invoices pursuant to the latter part of paragraph (1), shall transmit a detailed statement of such electronic invoices in the form prescribed by Presidential Decree by the deadline specified by Presidential Decree. <Added on Dec. 23, 2014> |
| (8) | Matters necessary for preparing and issuing invoices, etc., and submitting aggregate invoices for each supplier or purchaser shall be prescribed by Presidential Decree. |
[This Article Wholly Amended on Dec. 30, 2010]
| Article 121-2 (Purchaser-issued invoice) |
| (1) | Notwithstanding Article 121 or Article 163 of the Income Tax Act, where a corporation supplied with goods or services from any other corporation or a business operator registered under Article 168 of the Income Tax Act (hereafter referred to as a "business operator" in this paragraph) in connection with its business fails to receive an invoice due to the bankruptcy or closure of the corporation or business operator that has supplied the goods or services, cancellation or modification of the supply contract, or any other reasons prescribed by Presidential Decree, such corporation may issue an invoice (hereinafter referred to as "purchaser-issued invoice) with approval of the head of the tax office having jurisdiction over the place of tax payment. |
| (2) | The cases and methods of issuing purchaser-issued invoices and other necessary matters shall be prescribed by Presidential Decree. |
[This Article Added on Dec. 31, 2022]
| Article 121-3 Deleted. <Dec. 24, 2018> |
| Article 121-4 Deleted. <Dec. 22, 2020> |
| Article 122 (Inquiry and inspection) |
Where it is necessary for a public official to perform corporate tax-related affairs, the public official may question any of the following persons, or investigate the relevant account books, documents, and other items or order the submission thereof. In such cases, the authority shall not be abused for purpose other than those necessary for performing duty: <Amended on Dec. 24, 2018>
| 1. | Any person liable to pay tax or any person deemed liable to pay tax; |
| 2. | A withholding agent; |
| 3. | A person obligated to submit a payment statement and a person obligated to submit an aggregate invoice for individual suppliers or purchasers; |
| 4. | A person responsible for operation and management under Article 109 (2) 3; |
| 5. | A person deemed to have engaged in a transaction with a person falling under subparagraph 1; |
| 6. | A trade association organized by persons liable to pay tax and an organization corresponding thereto; |
| 7. | A corporation which has issued donation receipts. |
[This Article Wholly Amended on Dec. 30, 2010]
| Article 122-2 (Request for computerized registration data) |
Where necessary for determining a related party and controlling stockholder, etc. prescribed by Presidential Decree, the Commissioner of the National Tax Service may request the Minister of the National Court Administration to provide computerized registration data in Article 11 (4) of the Act on the Registration, etc. of Family Relationships. In such cases, the Minister of the National Court Administration, upon receipt of such request, shall comply therewith, except in extenuating circumstances.
[This Article Added on Dec. 24, 2018]
CHAPTER VII PENTALTY PROVISIONS
| Article 123 Deleted. <Dec. 22, 2020> |
| Article 124 (Administrative fines for non-compliance with order) |
The head of the tax office having jurisdiction over the place of tax payment shall impose an administrative fine not exceeding 20 million won on a corporation that fails to comply with any of the following orders: <Amended on Dec. 31, 2024>
| 1. | Orders for credit card merchants in Article 117 (5); |
| 2. | Orders for cash receipt merchants in Article 117-2 (8). |
| 3. | Orders issued to a virtual asset business entity under Article 120-4 (2). |
[This Article Added on Dec. 24, 2018]
ADDENDA <Act No. 5581, Dec. 28, 1998>
Article 1 (Enforcement date)
This Act shall enter into force on January 1, 1999; provided, the amended provisions of Articles 8, 16, 17, 33, 34, 36, 46 through 49, 59, 63, 79, 81, 84, 86 and 99 (11) (limited to portions governing divisions) and the amended provisions of Article 29 (1) shall enter into force on the date of its promulgation, the amended provisions of Articles 28 (2) through (4) and 76 (5) shall enter into force on January 1, 2000, and the amended provisions of Articles 76 (9) 1 and 121 (2) shall enter into force on July 1, 1999.
Article 2 (General applicability)
This Act shall apply from the first business year that begins after this Act enters into force; provided, the amended provisions governing the corporate tax on liquidation income shall apply from the first dissolution or merger which occurs after this Act enters into force or from a division occurring in the business year during which this Act enters into force, and the amended provisions governing special penalty tax shall apply from the first transfer that occurs after this Act enters into force.
Article 3 (Applicability to special cases concerning mergers and divisions)
The amended provisions of Article 8, subparagraphs 3 and 4 of Article 17, and Articles 44 through 49, 59 (3), 99 (11) (limited to portions governing divisions) and 113 (3) shall apply from the first merger after this Act enters into force or from the division occurring in the business year in which this Act enters into force.
Article 4 (Applicability to report and payment)
| (1) | The amended provisions of Articles 6, 7, 62, and 109 through 111 shall apply from the first arriving deadline for filing or registration after this Act enters into force. |
| (2) | The amended provisions of Articles 60 and 63 through 65 shall apply from the first report or payment of corporate tax for the business year which first starts after this Act enters into force; provided, the amended provisions of Article 63 (1) shall apply to the first interim prepaid portion after this Act enters into force. |
| (3) | The amended provisions of Articles 66 through 70 shall apply from the first report, determination, or correction after this Act enters into force. |
| (4) | The amended provisions of Articles 71 and 89 shall apply from the first arriving deadline for payment of corporate tax after this Act enters into force. |
| (5) | The amended provisions of Articles 73 through 75 shall apply from the first payment made after this Act enters into force. |
Article 5 (Applicability to constructive dividends or distributions)
The amended provisions of Article 16 shall apply from the first retirement, etc. of stocks, transfer into capital or dissolution after this Act enters into force; provided, the amended provisions of Article 16 (1) 2 (a) (limited to merger evaluation marginal profits and marginal profits upon merger evaluation) shall apply from the first merger after this Act enters into force or transfer into capital, etc. generated by a division during the business year in which this Act enters into force, and the amended provisions of subparagraph 6 of the same paragraph shall apply from a division occurring in the business year in which this Act enters into force.
Article 6 (Applicability to calculation of deductible expenses)
| (1) | The amended provisions of Article 28 (2) through (4) shall apply from the first business year that starts on or after January 1, 2000. |
| (2) | The amended provisions of Articles 29 (excluding paragraph (1)) through 34 (excluding paragraph (3)), 36 through 38, and 61 shall apply from inclusion in deductible expenses in the first business year beginning after this Act enters into force; provided, the amended provisions of Article 29 (1) shall apply from inclusion in deductible expenses in the business year in which this Act enters into force, the amended provisions of Articles 31 (4), 32 (4), 33 (3), 34 (6), and 36 (3) (including where the amended provisions of Articles 37 (2) and 38 (2) shall apply mutatis mutandis) shall apply from the first dissolution after this Act enters into force or from a division occurring in the business year in which this Act enters into force. |
| (3) | The amended provisions of Article 34 (3) shall apply from the first guarantee of debts (including guarantee of debts made before this Act enters into force for time limit which the has been extended) or payment after this Act enters into force; provided, for a corporation subject to the previous provisions of Article 14 (1), the amended provisions of Article 34 (3) 1 shall apply from the first guarantee of debts on or after January 1, 1998 (including guarantee of debts made prior to December 31, 1997 for which the time limit has been extended). |
| (4) | The amended provisions of Article 52 shall apply to the first transaction after this Act enters into force. |
| (5) | The amended provisions of Articles 92 (2) 3 and 98 (1) 4 shall apply to the first transfer after this Act enters into force. |
Article 7 (Applicability to penalty tax)
| (1) | The amended provisions of Article 76 (1) shall apply from the collection of corporate tax in the first business year that starts after this Act enters into force. |
| (2) | The amended provisions of Articles 76 (4) and 115 shall apply from a combined financial statements submitted in the first business year that starts after this Act enters into force. In such cases, the deadline for submission for the business year which starts between the date of the enforcement of this Act and December 31, 1999 shall be seven months from the end of the relevant business year, notwithstanding the amended provisions of Article 115. |
| (3) | The amended provisions of Article 76 (5) shall apply from the first goods or services provided on or after January 1, 2000, and the amended provisions of Article 116 shall apply from the first goods or services provided after this Act enters into force. |
| (4) | The amended provisions of Article 76 (6) shall apply from a detailed statement submitted in the first business year that starts after this Act enters into force, and the amended provisions of Article 119 (1) (excluding the provisions governing the filing deadline) shall apply from the first statement submitted after this Act enters into force. |
| (5) | The amended provisions of Article 76 (8) shall apply from the first arriving deadline for submission after this Act enters into force. |
| (6) | The amended provisions of Articles 76 (9) 1 and 121 (2) shall apply from what is first provided on or after July 1, 1999. |
| (7) | The amended provisions of Article 114 shall apply from the first arriving deadline for public announcement after this Act enters into force. |
Article 8 (Special cases concerning calculation of income from profit-making business)
| (1) | In the application of the amended provisions of Article 3 (2) 4, the acquisition value of stocks or investment shares acquired on or before December 31, 1988 may either of the book value or any of the following amounts, whichever is larger: |
| 1. | For stocks or investment shares listed on a stock exchange, the higher amount of the stock exchange final market value on December 31, 1988 (regardless of the existence of any real transaction) or the average of the officially announced stock exchange final market value for each day of December 1988; |
| 2. | For stocks or investment shares not listed on a stock exchange, the value as at January 1, 1989 as evaluated under Article 60 of the Inheritance Tax and Gift Tax Act and Article 63 (1) 1 (b) and (c) of the same Act. |
| (2) | In the application of the amended provisions of Article 3 (2) 5, the acquisition value of land and buildings acquired on or before December 31, 1990 (including attached facilities and structures) may be the larger amount of the book value or the value as at January 1, 1991 as evaluated under Article 60 of the Inheritance Tax and Gift Tax Act and Article 61 (1) through (3) of the same Act. |
Article 9 (Special cases concerning application of non-inclusion of entertainment expenses in deductible expenses)
| (1) | In the application of the amended provisions of Article 25 (1) 2, for the business year that starts between the date of the enforcement of this Act and December 31, 1999, the rates applied shall be as in the following table, notwithstanding Appendix under the amended provisions of Appendix under the same subparagraph:
|
| (2) | In the application of the amended provisions of Article 25 (2) and (4), for the business year that starts between the date of the enforcement of this Act and December 31, 1999, the amount of secret service funds under the previous provisions of the proviso to Article 18-2 (3) within 10/100 of the sum of the amounts under each subparagraph of Article 25 (1) appropriate amount shall be deemed the business-related entertainment expenses paid, and the amended provisions of Article 25 (2) shall not apply. |
Article 10 (Special cases concerning timing for acquisition of land, etc.)
In the application of the amended provisions of Article 99, the land, etc. acquired on or before December 31, 1984 shall be deemed land, etc. acquired on January 1, 1985.
Article 11 (General transitional measures)
Corporate tax paid or payable under the previous provisions before this Act enters into force shall be governed by the previous provisions.
Article 12 (Transitional measures on non-taxation of interest income)
Corporate Tax shall not be imposed on income accrued from any of the following bonds or savings:
| 1. | National housing bonds issued under the Housing Construction Promotion Act by the Korea Housing and Commercial Bank under the previous Korea Housing and Commercial Bank Act before January 1, 1982; |
| 2. | Any of the following bonds issued before January 1, 1983: |
| (a) | National bonds for industrial reconstruction issued by the State under the previous Industrial Reconstruction Bonds Act; |
| (b) | Bonds issued by the State as compensation for requisition under the Act on Special Measures for Readjustment of Requisitioned Properties; |
| (c) | Bonds issued by the State under the previous Act on Temporary Measures concerning the Settlement of Communication Facilities; |
| (d) | National housing bonds issued by the State under the Housing Construction Promotion Act; |
| (e) | Subway public bonds, roads public bonds, and waterworks public bonds issued by local governments under the Local Finance Act; |
| (f) | Land development bonds issued by the Korea Land Corporation under the Korea Land Corporation Act; |
| 3. | Interest on savings in the National Savings Association generated before December 31, 1990. |
Article 13 (Transitional measures concerning inclusion of reserve funds in gross income, etc.)
| (1) | For the inclusion of reserve funds, etc. in the calculation of deductible expenses under the previous Article 12 (3) before this Act enters into force in the calculation of gross income, the previous provisions shall govern. |
| (2) | The timing for accrual of gross income and deductible expenses for transactions, etc. under the application of the previous Article 17 as at the time this Act enters into force shall be governed by the previous provisions. |
| (3) | The withholding tax rate on interest income from bonds, etc. issued under the previous Article 39 (6) before September 30, 1998 shall be 20%, notwithstanding the amended provisions of Article 73 (1) 1. |
Article 14 Omitted.
Article 15 (Relationship with other Acts and subordinate statutes)
Where other Acts and subordinate statutes cite the previous Corporate Tax Act as at the time this Act enters into force, and the corresponding provisions exist herein, they shall be deemed to have cited the corresponding provisions of this Act in lieu of the previous provisions.
ADDENDA <Act No. 6047, Dec. 28, 1999>
Article 1 (Enforcement date)
This Act shall enter into force on January 1, 2000.
Article 2 (Applicability)
| (1) | The amended provisions of Article 18-2 shall apply from the first dividend to be distributed from a subsidiary after this Act enters into force. |
| (2) | The amended provisions of Article 36 shall apply from the business assets acquired and renovated using the first subsidy to be granted after this Act enters into force. |
| (3) | The amended provisions of Article 73 (1) and (5) shall apply from payment of first accruing interest income after this Act enters into force. |
ADDENDA <Act No. 6259, Feb. 3, 2000>
| (1) | (Enforcement date) This Act shall enter into force on the date of its promulgation. |
| (2) | (General applicability) This Act shall apply from the first report on tax base on the special penalty tax or the first determination or correction thereof after this Act enters into force. |
| (3) | (Applicability to litigation cases on special penalty tax) This Act shall apply to a disposition made under Article 59-2 (1) (limited to appeals, requests for review, requests for adjudication or administrative lawsuits that have already been filed) under the previous Corporate Tax Act (referring to the Act before amendment by Act No. 5581). <Added on Dec. 29, 2000> |
ADDENDA <Act No. 6293, Dec. 29, 2000>
Article 1 (Enforcement date)
This Act shall enter into force on January 1, 2001; provided, the amended provisions of Articles 25 (2) and 98-2 shall enter into force on the date of its promulgation, the amended provisions of Articles 73 (1), (6), (8) and (9), 74 (2) and 98-3 shall enter into force on July 1, 2001, the amended provisions of the main clause of Article 28 (2) shall enter into force on January 1, 2002, and the amended provisions of Articles 66 (2), 76 (7) and (8) and 120-2 shall enter into force on July 1, 2002.
Article 2 (General applicability)
This Act shall apply from the first business year that begins after this Act enters into force.
Article 3 (Applicability to non-inclusion of received dividends in gross income)
The amended provisions of Articles 18-2 (1) and (3) and 18-3 shall apply from the first dividend to be distributed after this Act enters into force.
Article 4 (Applicability to non-inclusion of entertainment expenses in deductible expenses)
The amended provisions of Article 25 (2) shall apply from entertainment expenses included in deductible expenses for the business year in which this Act is promulgated.
Article 5 (Applicability to non-inclusion of paid interest on deductible expenses)
The amended provisions of the main clause of Article 28 (2) shall apply from the first business year starts on or after January 1, 2002.
Article 6 (Applicability to inclusion of reserve funds for policyholder dividends in deductible expenses)
The amended provisions of Article 31 (4) shall apply from the first portion to be included in deductible expenses for the business year in which this Act enters into force.
Article 7 (Applicability to securities trading reserve)
The amended provisions of Article 32 shall apply from the business year in which this Act enters into force.
Article 8 (Applicability to income deduction for mutual funds)
The amended provisions of Article 51-2 (1) 2 and 3 shall apply from the first distributed portion after this Act enters into force.
Article 9 (Applicability to interim prepayment)
The amended provisions of the proviso of Article 63 (1) shall apply from the first interim prepayment to be made after this Act enters into force.
Article 10 (Applicability to withholding)
| (1) | The amended provisions of Article 73 (1) shall apply from interest income first accrued or earnings distributed from securities investment trust fund first paid on or after July 1, 2001. |
| (2) | The amended provisions of Articles 73 (6) and (8), 74 (2), and 98-3 shall apply from first bonds, etc. to be sold or first interest, etc. to be paid on or after July 1, 2001. |
| (3) | The previous provisions of Articles 73 (6) and 74 (2) shall apply to bonds, etc. issued before July 1, 2001 until the first payment date of interest, etc. on bonds, etc. on or after July 1, 2001 where the interest computing period spans over the periods before or on or after July 1, 2001. |
Article 11 (Applicability to domestic source income of foreign corporations)
| (1) | The amended provisions of Article 92 (2) 2 (proviso), subparagraphs 7 and 10 of Article 93, and Article 98 (1) 4 (proviso) shall apply from the first portion to be transferred after this Act enters into force. |
| (2) | The amended provisions of subparagraph 11 of Article 93 shall apply from the first accrued income after this Act enters into force. |
Article 12 (Applicability to special cases concerning reports on capital gains on transfer of securities by foreign corporations)
The amended provisions of Article 98-2 shall apply from the portion that first meets the taxable criteria under the corresponding taxation treaty after the promulgation of this Act.
Article 13 (Applicability to submission of written payment statements by foreign corporations)
The amended provisions of Articles 66 (2) 2, 76 (7) and (8), and 120-2 shall apply from the first payment made on or after July 1, 2002. <Amended on Dec. 31, 2001>
Article 14 (Applicability to special penalty tax)
The amended provisions of Articles 99, 102, and 104 shall apply from the first portion to be transferred after this Act enters into force.
Article 15 (Transitional measures concerning inclusion of securities trading reserves in gross income)
The previous provisions shall apply to inclusion, etc. of securities trading reserves included in calculation of deductible expenses under the previous provisions of Article 32 before the enforcement of this Act in gross income.
ADDENDA <Act No. 6558, Dec. 31, 2001>
Article 1 (Enforcement date)
This Act shall enter into force on January 1, 2002; provided, the amended provisions of Articles 45 (1), 61 (1), 76 (3) and (5), and 114 shall enter into force on the date of its promulgation, and the amended provisions of Articles 98-4 and 120-2 (1) shall enter into force on July 1, 2002.
Article 2 (General applicability)
This Act shall apply from the first business year that begins after this Act enters into force.
Article 3 (Applicability to constructive dividends or distributions)
The amended provisions of Article 16 (1) 2 shall apply from the first equity stocks or investment shares to be retired after this Act enters into force.
Article 4 (Applicability to non-inclusion of received dividends in gross income)
The amended provisions of Articles 18-2 (1) 4 and 18-3 (2) shall apply from the first dividend to be distributed after this Act enters into force.
Article 5 (Applicability to inclusion of value of business assets acquired using national subsidies, etc. in deductible expenses)
The amended provisions of Article 36 (1) and (4) shall apply from the first National subsidy granted after this Act enters into force.
Article 6 (Applicability to succession of losses carried forward at time of merger)
The amended provisions of Article 45 (1) 1 shall apply from a merger that is effected in the business year in which this Act is promulgated.
Article 7 (Applicability to inclusion of amount equivalent to transfer marginal profit of assets generated from split-off in deductible expenses)
The amended provisions of Article 47 shall apply from the first division or merger that is effected after this Act enters into force.
Article 8 (Applicability to income deduction for corporate restructuring real estate investment companies)
The amended provisions of Article 51-2 (1) 4 shall apply from the first dividend to be distributed after this Act enters into force.
Article 9 (Applicability to special cases concerning taxation on capital gains on transfer of land, etc.)
The amended provisions of Articles 2 (2), 55, 55-2, 57, 59, 63 (1), 76 (1) 1, 92 (2) through (6), 95 and 95-2 shall apply from the first portion to be transferred after this Act enters into force.
Article 10 (Applicability to special cases concerning appropriation of reserve funds for deductible expenses)
The amended provisions of Article 61 (1) shall apply from the first portion that is appropriated in the tax settlement invoice of the business year in which this Act is promulgated.
Article 11 (Applicability to special cases concerning taxation of capital gains on transfer of assets by non-profit domestic corporations)
The amended provisions of Article 62-2 shall apply from the first portion to be transferred after this Act enters into force.
Article 12 (Applicability to penalty tax)
| (1) | The amended provisions of Article 76 (1) 3 shall apply from the first arriving payment deadline after this Act enters into force. |
| (2) | The amended provisions of Article 76 (5) will apply from goods and services supplied in the business year in which this Act enters into force. |
Article 13 (Applicability to domestic source income by foreign corporation)
The amended provisions of subparagraphs 2 and 11 of Article 93 shall apply from the disposed portion as a dividend or other income after this Act enters into force.
Article 14 (Applicability to tax withholding of bonds, etc. of foreign corporations)
The amended provisions of Article 98-3 shall apply from the first interest, etc. to be paid or first bonds, etc. to be sold after this Act enters into force.
Article 15 (Applicability to application for non-taxation on domestic source income by foreign corporations)
The amended provisions of Article 98-4 shall apply from the first untaxed or exempt portion on or after July 1, 2002.
Article 16 (Applicability to obligation to publish balance sheets)
The amended provisions of Articles 76 (3) and 114 shall apply from the business year in which this Act is promulgated.
Article 17 (Applicability to submission of written payment statements on domestic source income by foreign corporation)
The amended provisions of Article 120-2 (1) shall apply from the first payment made on or after July 1, 2002.
Article 18 (Applicability to preparation and issuance of invoice)
The amended provisions of Article 121 shall apply from the first goods or services to be supplied or imported after this Act enters into force.
Article 19 (Transitional measures concerning non-inclusion of dividends by corporation belonging to large business group)
Notwithstanding the amended provisions of Article 18-3 (2), the non-inclusion of the amount of dividend that any domestic corporation belonging to a large business group earns from its affiliate in the gross income shall be governed by the previous provisions.
Article 20 (Transitional measures concerning acquisition tax on non-business Land)
The acquisition tax on the non-business land of any corporation under Article 112 (2) of the previous Local Tax Act (referring to the Local Tax Act before amendment by Act No. 6312) (limited to the amount exceeding the amount of tax calculated under paragraph (1) of the same Article of the same previous Act) and the non-inclusion of the refund amount in deductible expenses and gross income shall be governed by the previous provisions of subparagraph 7 of Article 18 and subparagraph 3 of Article 21.
Article 21 (Transitional measures concerning inclusion of amount equivalent to reappraisal difference of land in deductible expenses)
The amount that has been included in deductible expenses under the previous provisions of Article 39 and is later included in gross income, etc. at the time that this Act enters into force shall be governed by the previous provisions.
Article 22 (Transitional measures concerning corporate tax on income exceeding proper reserves)
The disposal of the Corporate Development Reserve Fund raised under the previous provisions of Article 56 and the payment, etc. of the corporate tax that is incurred by the disposal of such fund for other purposes as at the time that this Act enters into force shall be governed by the previous provisions.
Article 23 (Transitional measures concerning repeal of special penalty tax)
Any special penalty tax imposed or to be imposed under the previous provisions as at the time that this Act enters into force shall be governed by the previous provisions.
Article 24 Omitted.
Article 25 (Transitional measures following amendments to other Acts)
Where the special penalty tax is imposed on the income accrued the transfer, etc. of lands or business before this Act enters into force, the amount of such special penalty tax recognized as development costs shall be governed by the previous provisions, notwithstanding the amended provisions of Article 24 of this Addenda.
ADDENDA <Act No. 6852, Dec. 30, 2002>
Article 1 (Enforcement date)
This Act shall enter into force six months after the date of its promulgation.
Articles 2 through 18 Omitted.
ADDENDA <Act No. 7005, Dec. 30, 2003>
Article 1 (Enforcement date)
This Act shall enter into force on January 1, 2004; provided, the amended provisions of Articles 5 (2), 29 (1) 2, 51-2 (1) 2, 62 (1), 73 (1) through (3), 113 (2) shall enter into force on January 5, 2004, and the amended provisions of Article 55 (1) shall enter into force on January 1, 2005.
Article 2 (General applicability)
This Act shall apply from the first business year that begins after this Act enters into force.
Article 3 (Applicability to non-inclusion of holding company's received dividends in gross income)
The amended provisions of Article 18-2 (1) 4 shall apply from the first dividend to be distributed from a subsidiary after this Act enters into force.
Article 4 (Applicability to income deduction of dividends of ship investment companies)
The amended provisions of Article 51-2 (1) 5 shall apply from the first dividend to be distributed after this Act enters into force.
Article 5 (Applicability to special cases concerning taxation on transfer of land)
The amended provisions of Article 55-2 (1) shall apply from the first transfer after this Act enters into force.
Article 6 (Applicability to correction of corporate tax resulting from wrongful accounting)
The amended provisions of Articles 58-3, 59 (1) 4, 66 (2) 4 and 72-2 shall apply from the first disposition, such as warning and attention due to wrongful accounting after this Act enters into force.
Article 7 (Applicability to exemption from collection of withholding tax in case of non-execution of withholding)
The amended provisions of proviso of Article 71 (3) shall apply from the first payment after making a determination or correction after this Act enters into force.
Article 8 (Applicability to scope of domestic source income)
| (1) | The amended provisions of subparagraph 4 of Article 93 shall apply from the first lease after this Act enters into force. |
| (2) | The amended provisions of subparagraph 6 of Article 93 shall apply from the first supply of services after this Act enters into force. |
| (3) | The amended provisions of subparagraph 11 (i) of Article 93, Article 98 (10) and (11) shall apply from the first capital transaction to be made after this Act enters into force. |
Article 9 (Applicability to reports on corporate tax by foreign corporations)
The amended provisions of the former part of Article 97 (1) shall apply from the first report on the tax base and amount after this Act enters into force.
Article 10 (Applicability to withholding of capital gains)
The amended provisions of Article 98 (1) shall apply from the first transfer after this Act enters into force.
Article 11 (Applicability to special cases concerning obligation to submit written payment statements on domestic source income by foreign corporation)
The amended provisions of main clause of Article 120-2 (1) shall apply from the first domestic source income to be paid after this Act enters into force.
Article 12 (Special cases concerning interim prepayment)
In calculating the amount of interim tax for the interim prepayment period starting after January 1, 2005, the calculated amount of tax as fixed for corporate tax of the immediately preceding business year from the relevant business year stipulated in Article 63 (1) shall be calculated by applying the amended provisions of Article 55 (1) to the tax base of the immediately preceding business year.
Article 13 (Applicability to investment assets and investment companies)
The provisions governing investment assets, investment companies, etc. to be amended following the enforcement of the Indirect Investment Asset Management Business Act shall apply from the first created or established portion after the date of enforcement of the same Act, and for those created or established before the enforcement of the same Act, the former provisions shall prevail.
Article 14 (Transitional measures concerning capital gains on transfer of house)
Where a corporation that has a house provided in Article 55-2 (1) 2 as at the time this Act enters into force transfers the house on or before December 31, 2004, the amended provisions of Article 55-2 (1) 2 shall not apply; provided, the corporation newly acquires another house on or after January 1, 2004, this shall not apply.
Article 15 (Transitional measures concerning scope of domestic source income in relation to industrial/commercial/scientific machinery, facility, equipment)
Income generated from price and transfer in the case of use in the country of the industrial/commercial/scientific machinery, facility, equipment or the price being paid in the country shall, notwithstanding the amended provisions of subparagraph 4 of Article 93, be deemed income generated from price and transfer pursuant to the former provisions of subparagraph 9 (c) of Article 93.
ADDENDA <Act No. 7117, Jan. 29, 2004>
| (1) | (Enforcement date) This Act shall enter into force on the date of its promulgation; provided, the amended provisions of Article 29 (1) shall take effect on January 1, 2005. |
| (2) | (General applicability) This Act shall apply from the first business year that begins after this Act enters into force. |
ADDENDA <Act No. 7289, Dec. 31, 2004>
Article 1 (Enforcement date)
This Act shall enter into force six months after the date of its promulgation.
Articles 2 through 5 Omitted.
ADDENDA <Act No. 7317, Dec. 31, 2004>
Article 1 (Enforcement date)
This Act shall enter into force on January 1, 2005; provided, the amended provisions of Articles 73 (8), 74 (2), 98-3 (1) through (3) and (6) shall enter into force on July 1, 2005, and the amended provisions of Article 51-2 (1) 4 shall enter into force on April 23, 2005.
Article 2 (Applicability to constructive dividends or distributions)
The amended provisions of Article 16 (1) 2 (a) shall apply from the first loan to be converted into investment after this Act enters into force.
Article 3 (Applicability to non-inclusion of received dividends in gross income)
The amended provisions of Articles 18-2 (1) 3, and the proviso to 18-3 (1) 1 and 18-3 (1) 3 shall apply from the first dividend to be distributed after this Act enters into force.
Article 4 (Applicability to deduction of income for private equity funds participating in management)
The amended provisions of Article 51-2 (1) 2 shall apply from the first dividend to be paid after this Act enters into force.
Article 5 (Applicability to deduction of income concerning real estate investment companies for consigned-management)
The amended provisions of Article 51-2 (1) 4 shall apply from the first dividend to be distributed after April 23, 2005.
Article 6 (Applicability to tax credits on losses from disasters)
The amended provisions of Article 58 (1) shall apply from the first loss of asset after this Act enters into force.
Article 7 (Applicability to determination and correction)
The amended provisions of Article 66 (2) 3 shall apply from the first determination or correction made after this Act enters into force.
Article 8 (Applicability to withholding)
The amended provisions of Article 73 (1) 1 and 2 shall apply from the first interest income and distribution of profits from investment trusts after this Act enters into force, and the amended provisions of Articles 73 (8) and 74 (2) shall apply from the first withheld portion on or after July 1, 2005.
Article 9 (Applicability to penalty tax on negligence in paying withholding tax)
The amended provisions of Article 76 (2) shall apply from the first interest income and distribution of profits from investment trusts to be paid after this Act enters into force.
Article 10 (Applicability to domestic source income)
The amended provisions of subparagraph 10 of Article 93 shall apply from the first portion to be transferred after this Act enters into force.
Article 11 (Applicability to carried-forward deduction of tax paid overseas)
The amended provisions of Article 97 (1) shall apply from the first portion to be reported after this Act enters into force.
Article 12 (Applicability to special cases concerning withholding on bonds, etc., of foreign corporations)
The amended provisions of Article 98-3 (1) through (3) and (6) shall apply from the first portion to be withheld on or after July 1, 2005.
Article 13 (Applicability to reporting on establishment or foundation for corporation)
The amended provisions of Article 109 (3) shall apply from the first revision to the reported matters about establishment or foundation after this Act enters into force.
Article 14 (General applicability)
This Act shall apply from the first business year that begins after this Act enters into force.
ADDENDA <Act No. 7838, Dec. 31, 2005>
Article 1 (Enforcement date)
This Act shall enter into force on January 1, 2006; provided, the amended provisions of Article 26 and Article 8 (2) of the Addenda to the Corporate Tax Act amended by Act No. 5581 shall enter into force on the date of its promulgation, the amended provisions of Article 98-5 shall enter into force on July 1, 2006, and the amended provisions of Article 55-2 shall enter into force on January 1, 2007.
Article 2 (General applicability)
This Act shall apply from the first business year which begins after this Act enters into force.
Article 3 (Applicability to constructive dividends or distributions)
The amended provisions of Articles 16 (1) 2 (a), and the proviso to 17 (1) 1 and 17 (1) 1 (2) shall apply to the first loan to be converted as investment after this Act enters into force.
Article 4 (Applicability to non-inclusion of received dividends of holding companies in gross income)
The amended provisions of Articles 18-2 and 18-3 shall apply from the first dividend to be paid after this Act enters into force.
Article 5 (Applicability and special applicability to non-inclusion of donations in deductible expenses)
| (1) | The amended provisions of Article 24 (2) and (3) shall apply from the portion to be disbursed in the first business year after this Act enters into force. |
| (2) | In the application of the amended provisions of Article 24 (2), with respect to the portion that is disbursed by the business year ending within three years from the business year that first begins after this Act enters into force, "50/100" in the proviso to the part other than each subparagraph of the same paragraph shall be made "75/100", notwithstanding the amended provisions of the proviso to the part other than each subparagraph of the same paragraph of the same Article. |
Article 6 (Applicability to non-inclusion of entertainment expenses in deductible expenses)
The amended provisions of the proviso to the part other than each subparagraph of Article 25 (2) shall apply from the first portion to be disbursed after this Act enters into force.
Article 7 (Applicability to non-inclusion of excess expenses, etc. in deductable expenses)
The amended provisions of Article 26 shall apply from the portion to be disbursed in the business year in which this Act enters into force.
Article 8 (Applicability to inclusion of reserve funds for proper purpose business in deductible expenses)
The amended provisions of Article 29 shall apply from the portion to be included in deductible expenses in the business year that first starts after this Act enters into force.
Article 9 (Applicability to inclusion of value of fixed assets acquired with construction charges in deductible expenses)
The amended provisions of Article 37 (2) shall apply from the first construction charges to be granted after this Act enters into force.
Article 10 (Applicability to appraisal of assets and liabilities)
The amended provisions of Article 42 (3) shall apply from the appraised portion in the first business year after this Act enters into force.
Article 11 (Applicability to succession of losses carried forward at time of merger and division)
The amended provisions of Articles 45 and 48-2 shall apply from the first merge or division after this Act enters into force.
Article 12 (Applicability to inclusion of amount equivalent to asset transfer marginal profits in deductible expenses due to exchange)
The amended provisions of Article 50 shall apply from the first exchange of an asset after this Act enters into force.
Article 13 (Applicability to income deduction for special purpose companies, etc.)
The amended provisions of Article 51-2 shall apply from the first dividend to be distributed after this Act enters into force; provided, in the case of any ship investment company as defined in the Ship Investment Company Act, the amended provisions shall apply from the first dividend to be distributed after January 1, 2009.
Article 14 (Applicability to special cases concerning taxation of capital gains on transfer of lands, etc.)
The amended provisions of Article 55-2 shall apply to the first portion to be transferred after January 1, 2007.
Article 15 (Applicability to special cases concerning tax credits on tax paid overseas by indirect investment companies, etc.)
The amended provisions of Article 57-2 shall apply to the first income to be accrued after this Act enters into force.
Article 16 (Applicability to interim prepayment)
The amended provisions of Article 63 shall apply to the first interim prepayment to be made after this Act enters into force.
Article 17 (Applicability to penalty tax)
| (1) | The amended provisions of Article 76 (1) 3 shall apply from the first corporate tax to be paid or collected after this Act enters into force. |
| (2) | The amended provisions of Article 76 (6), (7) and (9) shall apply from the first arriving deadline for submission after this Act enters into force. |
| (3) | The amended provisions of Article 76 (10) shall apply from the first-received donation after this Act enters into force. |
Article 18 (Applicability to domestic source income of foreign corporations)
| (1) | The amended provisions of subparagraph 2 of Article 93 shall apply from the first portion disposes of as dividends after this Act enters into force. |
| (2) | The amended provisions of subparagraph 6 of Article 93 shall apply from the first income to be accrued after this Act enters into force. |
Article 19 (Applicability to special cases concerning procedures for withholding tax for foreign corporations)
The amended provisions of Article 98-5 shall apply from the first withholding made on or after July 1, 2006.
Article 20 (Applicability to obligation to prepare and keep detailed statement of donation receipts issued)
The amended provisions of Article 112-2 shall apply from the first donation received after this Act enters into force.
Article 21 (Applicability to special cases concerning taxation in calculation of income generated from profit-making business)
The amended provisions of Article 8 (2) of the Addenda to the Corporate Tax Act amended by Act No. 5581 shall apply from the first portion to be transferred in the business year in which this Act enters into force.
Article 22 (Transitional measures concerning determination to grant authorization of rehabilitation plans under Debtor Rehabilitation and Bankruptcy Act of amended provisions of Article 42 (3))
| (1) | A determination to grant authorization of a reorganization plan under the previous Company Reorganization Act, a determination to grant authorization of a composition plan under the previous Composition Act and a determination to grant authorization of compulsory composition under the previous Bankruptcy Act shall be deemed a determination to grant authorization of a rehabilitation plan under the Debtor Rehabilitation and Bankruptcy Act according to the amended provisions of Article 42 (3). |
| (2) | A determination to grant authorization of a rehabilitation plan under the Debtor Rehabilitation and Bankruptcy Act among the amended provisions of Article 42 (3) shall be deemed a determination to grant authorization of a reorganization plan under the Company Reorganization Act, a determination to grant authorization of composition under the Composition Act and a determination to grant authorization of compulsory composition under the Bankruptcy Act, respectively on or before March 31, 2006. |
ADDENDA <Act No. 7908, Mar. 24, 2006>
Article 1 (Enforcement date)
This Act shall enter into force six months after the date of its promulgation.
Articles 2 through 5 Omitted.
ADDENDA <Act No. 8141, Dec. 30, 2006>
Article 1 (Enforcement date)
This Act shall enter into force on January 1, 2007; provided, the amended provisions of Article 18-2 (1) 1 shall enter into force January 1, 2009, and the amended provisions of Article 25 (2) 2, 66 (2) 3, 76 (11) and (12), 116 (3) and (4), 117 and 117-2, on July 1, 2007.
Article 2 (General applicability)
This Act shall apply from the first business year which begins after this Act enters into force.
Article 3 (Applicability to non-inclusion of holding company's received dividends in gross income)
| (1) | The amended provisions of Article 18-2 (1) 1 shall apply from the first dividend to be distributed on or after January 1, 2009. |
| (2) | The amended provisions of Article 18-2 (1) 2 shall apply the first dividend to be distributed after this Act enters into force. |
Article 4 (Applicability to non-inclusion of received dividends in gross income)
The amended provisions of Article 18-3 (2) shall apply from the first dividend to be distributed after this Act enters into force.
Article 5 (Applicability to non-inclusion of entertainment expenses into deductible expenses)
The amended provisions of Article 25 (2) 2 shall apply from what is first issued in return for goods or services provided on or after July 1, 2007.
Article 6 (Applicability to proceeds from investment trusts)
The amended provisions of Articles 29 (1) 1, 57-2 (3), 62 (1) and 73 (1) shall apply from the first investment trust created after this Act enters into force.
Article 7 (Applicability to tax credits for special purpose companies)
The amended provisions of Article 51-2 (1) 5-3, 5-4 and 6 shall apply from the first dividend to be distributed after this Act enters into force.
Article 8 (Applicability to foreign tax credits)
The amended provisions of Article 57 (5) shall apply from the first dividend to be distributed after this Act enters into force.
Article 9 (Applicability to special cases concerning tax credits on tax paid overseas by indirect investment companies)
The amended provisions of Article 57-2 (1) shall apply from the first income to be accrued after this Act enters into force.
Article 10 (Applicability to correction and determination)
The amended provisions of Article 66 (2) 3 shall apply from the first of correction made based on the grounds arise on or after July 1, 2007.
Article 11 (Applicability to additional tax)
| (1) | The amended provisions of Articles 76 (9) 3 and 120-3 shall apply from the first tax invoice to be issued after this Act enters into force. |
| (2) | The amended provisions of Article 76 (11) and (12) shall apply from the first goods or services to be provided, or to a person obligated to become Cash Receipt merchants, who fails to become such merchant, on or after July 1, 2007. |
Article 12 (Applicability to domestic source income)
The amended provisions of subparagraph 11 (g) of Article 93 shall apply from the first income to be accrued after this Act enters into force.
Article 13 (Applicability to special cases concerning withholding or collection for foreign corporations)
| (1) | The amended provisions of the first sentence of Article 98 (1) shall apply from the first portion to be transferred after this Act enters into force. |
| (2) | The amended provisions of the proviso to Article 98 (1) 3 shall apply from the first interest income to be accrued after this Act enters into force. |
Article 14 (Applicability to receipt and keeping of evidentiary documents of expenditures)
The amended provisions of Article 116 (3) and (4) shall apply from what is first issued in return for goods or services provided on or after July 1, 2007.
Article 15 (Applicability to obligation to become credit card merchant and to issue credit card sales slips)
The amended provisions of Article 117 shall apply from the first goods or services to be supplied on or after July 1, 2007.
Article 16 (Applicability to obligation to become cash receipt merchant and to issue cash receipts)
The amended provisions of Article 117-2 shall apply from the first goods or services to be supplied on or after July 1, 2007.
Article 17 (Applicability to becoming cash receipt merchants)
Notwithstanding the amended provisions of Article 117-2 (1), a corporation which meets the eligibility requirements to become a Cash Receipt merchant by no later than March 31, 2007 after this Act enters into force may become a Cash Receipt affiliate member by no later than June 30, 2007 after the enforcement date of this Act.
Article 18 (Transitional measures concerning non-inclusion of evaluation marginal profits in gross income)
Notwithstanding the amended provisions of subparagraph 6 of Article 18, the dividend amount of income received before this Act enters into force shall be governed by the previous provisions.
Article 19 (Transitional measures concerning penalty tax)
Notwithstanding the amended provisions of Articles 76 (1) and 90 (1), the penalty tax imposed or to be imposed under the previous provisions of Articles 76 (1) and 90 (1) before this Act enters into force shall be governed by the previous provisions.
ADDENDA <Act No. 8519, Jul. 19, 2007>
| (1) | (Enforcement date) This Act shall enter into force on January 1, 2008. |
| (2) | (Applicability to corporate tax on income for each business year of conscientious small and medium corporations) The amended provisions of Chapter II-2 shall apply from the business year in which this Act enters into force. |
ADDENDA <Act No. 8631, Aug. 3, 2007>
Article 1 (Enforcement date)
This Act shall enter into force three months after the date of its promulgation. (Proviso Omitted.)
Articles 2 through 7 Omitted.
ADDENDA <Act No. 8831, Dec. 31, 2007>
Article 1 (Enforcement date)
This Act shall enter into force on January 1, 2008; provided, the amended provisions of Article 76 (12) shall enter into force on July 1, 2008.
Article 2 (General applicability)
This Act shall apply from the first business year which begins after this Act enters into force.
Article 3 (Applicability to non-inclusion of received dividends in gross income)
The amended provisions of the portion other than subparagraphs of Article 18-3 (1) and subparagraph 4 of the same paragraph shall apply from the first dividend to be distributed after this Act enters into force.
Article 4 (Applicability to inclusion of value of business assets acquired with national subsidies in deductible expenses)
The amended provisions of Article 36-2 shall apply from the first National subsidy to be granted after this Act enters into force.
Article 5 (Applicability to tax credits on tax paid overseas)
The amended provisions of Article 57 (5) shall apply from the first dividends to be distributed after this Act enters into force.
Article 6 (Applicability to determination and correction)
The amended provisions of Article 66 (2) 3 (a) shall apply from a determination or correction to be made in connection with the first business year that begins after this Act enters into force.
Article 7 (Applicability to determination of occasional imposition)
The amended provisions of Article 69 (2) shall apply from the first grounds for occasional imposition arises after this Act enters into force.
Article 8 (Applicability to penalty tax)
| (1) | The amended provisions of Article 76 (10) shall apply from the first false donation receipt to be issued or the detailed statement of issuance by donating corporation is not prepared and kept after this Act enters into force. |
| (2) | The amended provisions of Article 76 (12) shall apply from the first goods or services to be supplied after July 1, 2008. |
Article 9 (Applicability to domestic source income)
The amended provisions of subparagraph 10 of Article 93 shall apply from the first portion to be transferred after this Act enters into force.
Article 10 (Applicability to special cases concerning report and payment on capital gains on transfer of securities by foreign corporations)
The amended provisions of Article 98-2 (3) and (4) shall apply from the first portion to be transferred after this Act enters into force.
Article 11 (Applicability to obligation to prepare and keep detailed statement of donation receipts issued)
The amended provisions of Article 112-2 (1) shall apply from the first donation received after this Act enters into force.
Article 12 (Applicability to obligation to become credit card merchants and to Issue credit card sales slips)
The amended provisions of Article 117 (2) shall apply from the first goods or services to be supplied after this Act enters into force.
Article 13 (Applicability to submission of detailed statements of changes in stocks, etc.)
The amended provisions of Article 119 (2) shall apply from the first detailed statement to be submitted after this Act enters into force.
ADDENDA <Act No. 8852, Feb. 29, 2008>
Article 1 (Enforcement date)
This Act shall enter into force on the date of its promulgation; provided, ... <omitted> ..., the amended provisions of the Acts promulgated before this Act enters into force but for which the enforcement date has not arrived, among the Acts amended under Article 6 of this Addenda, shall enter into force on the enforcement date of the relevant Act.
Articles 2 through 7 Omitted.
ADDENDA <Act No. 9267, Dec. 26, 2008>
Article 1 (Enforcement date)
This Act shall enter into force on January 1, 2009; provided, the amended provisions of Articles 55 (1), 76 (4) and 115, and the proviso to Article 117 (2) shall enter into force on the date of its promulgation, the amended provisions of Articles 5 (2), 18-2 (1) 1, 18-3 (1) 1, 51-2 (1) 2 (excluding provisions concerning private equity funds participating in management), 57-2 (1) and (5), 66 (2) 4, 73 (1) 2, 98 (6), 113 (2) and 119 (2) shall enter into force on February 4, 2009, and the amended provisions of subparagraphs 6 through 10 of Article 1, Articles 2 (4) and (5), 3 (2), and 8 (4) through (6), subparagraph 9 of Article 18, provisions concerning Article 76-14 in the main body of Article 18-2 (1), subparagraph 7 of Article 21, Article 63 (4), Chapter II-3 (Articles 76-8 through 76-22) and Article 113 (5) shall enter into force on January 1, 2010. <Amended on Jul. 24, 2015>
Article 2 (General applicability)
This Act shall apply from the first business year which begins after this Act enters into force.
Article 3 (Applicability to deduction of losses carried forward)
The amended provisions of subparagraph 1 of Article 13 and Article 91 (1) 1 shall apply from losses to be incurred in the first business year that begins after this Act enters into force.
Article 4 (Applicability to non-inclusion of received dividends in gross income)
The amended provisions of Articles 18-2 (1) and 18-3 (1) shall apply from the first dividend to be distributed after this Act enters into force.
Article 5 (Applicability to succession to losses carried forward following merger)
The amended provisions of Article 45 shall apply from the first merger to be conducted after this Act enters into force.
Article 6 (Applicability to inclusion of amount equivalent to marginal profits on transfer of assets in deductible expenses following investment in kind)
The amended provisions of Article 47-2 shall apply from the first investment in kind to be made after this Act enters into force.
Article 7 (Applicability to tax credits for losses from disasters)
The amended provisions of Article 58 (1) shall apply from the first application for tax credits for losses from disasters to be filed after this Act enters into force.
Article 8 (Applicability to payment in installments)
The amended provisions of Article 64 (2) shall apply from the first payment to be made after this Act enters into force.
Article 9 (Applicability to refund by retroactive deduction of losses)
The amended provisions of Article 72 (5) shall apply from the first refund to be made after this Act enters into force. <Amended on Dec. 23, 2014>
Article 10 (Applicability to obligation to submit combined financial statements)
The amended provisions of Articles 76 (4) and 115 shall apply from the business year in which this Act enters into force.
Article 11 (Applicability to domestic source income of foreign corporations)
| (1) | The amended provisions of subparagraphs 7 and 10 of Article 93 shall apply from the first portion to be transferred after this Act enters into force. |
| (2) | The amended provisions of subparagraph 9 of Article 93 shall apply from the first income to be accrued after this Act enters into force. |
Article 12 (Applicability to withholding of domestic source income of foreign corporations)
The amended provisions of Article 98 (1) shall apply from the first payment to be made after this Act enters into force.
Article 13 (Applicability to special cases concerning reports and payment of income of foreign corporation from personal services)
The amended provisions of Article 99 shall apply from the first personal services to be supplied after this Act enters into force.
Article 14 (Applicability to issuance of credit card sales slips)
The amended provisions of the proviso to Article 117 (2) shall apply from the first goods and services to be supplied in the business year in which this Act enters into force.
Article 15 (Special cases concerning tax rates)
Notwithstanding the amended provisions of Article 55 (1), the tax rates for the business year in which this Act enters into force shall be as stipulated in the following Table:
|
Article 16 (Special cases concerning interim prepayment)
| (1) | The calculated amount of tax determined as corporate tax for the business year immediately preceding the relevant business year prescribed in Article 63 (1) when interim tax is calculated for the interim prepayment period of the business year that begins after January 1, 2009 shall be calculated by applying the amended provisions of Article 55 (1) 1 to the tax base for the immediately preceding business year. |
| (2) | The calculated amount of tax determined as corporate tax for the business year immediately preceding the relevant business year prescribed in Article 63 (1) when interim tax is calculated for the interim prepayment period of the business year that begins after January 1, 2010 shall be calculated by applying the amended provisions of Article 55 (1) 2 to the tax base for the immediately preceding business year. |
Article 17 (Special cases concerning tax base of consolidated tax return system)
Where the amended provisions of Article 76-13 (1) 1 is applied to the losses of a consolidated corporation accrued in the business year that began before January 1, 2009, ten years shall be deemed five years.
Article 18 (Special cases concerning enforcement date of the Financial Investment Services and Capital Markets Act)
| (1) | "Investment trust property under the Financial Investment Services and Capital Markets Act" referred to in the amended provisions of Article 73 (2) shall be construed as "investment trust property under the Indirect Investment Asset Management Business Act" until February 3, 2009. |
| (2) | "Securities market under the Financial Investment Services and Capital Markets Act" referred to in the amended provisions of subparagraph 7 (b) of Article 93, the main body of subparagraph 10 of the same Article, and item (b) of the same subparagraph shall be construed as "securities market or KOSDAQ market under the Securities and Exchange Act" until February 3, 2009. |
Article 19 (General transitional measures)
The former provisions shall apply to the corporate tax (including penalty tax) imposed or to be imposed under the former provisions as at the time this Act enters into force.
Article 20 (Transitional measures concerning income deduction for private equity funds participating in management)
| (1) | Where a private equity fund participating in management or specialized overseas resources development company registered with the Financial Services Commission as prescribed in Article 144-6 of the Indirect Investment Asset Management Business Act before this Act enters into force fails to file a request for the application of special taxation for partnership firms under Article 100-17 of the Act on Restriction on Special Cases concerning Taxation within one month from the beginning of the first business year that begins after this Act enters into force, the former provisions shall apply until the business year in which the registration date of dissolution of the relevant corporation falls, notwithstanding the amended provisions of Article 51-2 (1) 2 and 5-4. In such cases, the relevant corporation is ineligible for the application of SECTION 10-3 of the Act on Restriction on Special Cases concerning Taxation until the business year in which the registration date of dissolution falls. <Amended on 24, 2015> |
| (2) | Where a private equity fund participating in management or specialized overseas resources development company registered at the Financial Services Commission as prescribed in Article 144-6 of the Indirect Investment Management Business Act before this Act enters into force files a request for the application of special taxation for partnership firms under Article 100-17 of the Act on Restriction on Special Cases concerning Taxation within one month from the beginning of the first business year that begins after this Act enters into force, the former provisions shall apply to the dividend for the relevant business year for the purposes of calculating the corporate tax on the income of the business year that begins before this Act enters into force, notwithstanding the amended provisions of Article 51-2. <Amended on Jul. 24, 2015> |
Article 21 (Transitional measures concerning repeal of withholding of income reverting to trust property)
Where trust property sells bonds, etc., acquired by no later than June 30, 2005, or pays interest, etc., thereon (limited to where interest, etc., are not paid between July, 1, 2005 and December 31, 2008) after January 1, 2009, the former provisions shall apply, notwithstanding the amended provisions of Article 73.
ADDENDUM <Act No. 9346, Jan. 30, 2009>
Article 1 (Enforcement date)
This Act shall enter into force on January 1, 2025. <Amended on Dec. 31, 2009; Jan. 1, 2013; Dec. 15, 2015; Dec. 31, 2018; Dec. 21, 2021>
Article 2 Omitted.
Article 3 Omitted.
ADDENDA <Act No. 9401, Jan. 30, 2009>
Article 1 (Enforcement date)
This Act shall enter into force six months after the date of its promulgation. (Proviso Omitted.)
Articles 2 through 11 Omitted.
ADDENDA <Act No. 9673, May 21, 2009>
Article 1 (Enforcement date)
This Act shall enter into force on the date of its promulgation.
Article 2 (Applicability to special taxation for capital gains on transfer of land)
The amended provisions of Article 55-2 shall apply from the first transfer on or after March 16, 2009.
Article 3 (Applicability to special cases concerning taxation on interest or capital gains of foreign corporations on transfer of state bonds, etc.)
The amended provisions of Article 93-2 shall apply from the first payment or transfer after this Act enters into force.
Article 4 (Special cases concerning special cases concerning taxation on capital gains on transfer of land)
Article 55-2 (1) 2 and 3 shall not apply to capital gains generated from the transfer of assets which are acquired from March 16, 2009 to December 31, 2010.
ADDENDA <Act No. 9763, Jun. 9, 2009>
Article 1 (Enforcement date)
This Act shall enter into force nine months after the date of its promulgation. (Proviso Omitted.)
Articles 2 through 8 Omitted.
ADDENDA <Act No. 9898, Dec. 31, 2009>
Article 1 (Enforcement date)
This Act shall enter into force on January 1, 2010; provided, the amended provisions of Article 51-2 (2) shall enter into force on the date of its promulgation, the amended provision of Article 117-2 (4) shall enter into force on April 1, 2010 and the amended provisions of Articles 16 (1), 17 (1), 24 (1), 44, 44-2, 44-3, 45, 46, 46-2 through 46-5, 47, 47-2, 48, 48-2, 49, 60 (4), 77, 80, 81, 84, 86 (2) and 113 (3) and (4) shall enter into force on July 1, 2010.
Article 2 (General applicability)
This Act shall apply from the first business year which begins after this Act enters into force.
Article 3 (Applicability to scope of taxable income)
The amended provisions of Article 3 (3) shall apply from the transfer after this Act enters into force.
Article 4 (Applicability to tax bases)
The amended provisions of Articles 13, 76-13 (2) and 91 (1) shall apply from the first tax base to be reported or corrected or determined after this Act enters into force; provided, the previous provision shall apply where the tax base was reported, corrected or determined prior to December 31, 2009 for deduction of losses not included in the tax base reported, corrected or determined.
Article 5 (Applicability to non-inclusion of donations in deductible expenses)
The amended provisions of Article 24 (3) shall apply from the first donation to be made after this Act enters into force.
Article 6 (Applicability to taxation upon merger and division)
The amended provisions of Articles 16 (1), 17 (1), 24 (1), 44, 44-2, 44-3, 45, 46, 46-2 through 46-5, 47, 48, 48-2, 49, 60 (4), 77, 80, 81, 84, 86 (2) and 113 (3) and (4) shall apply to the first merger, division or investment in kind to be conducted or made after the same provisions enter into force under the proviso to Article 1 of this Addenda.
Article 7 (Applicability to tax bases due to consolidated tax return system)
The amended provisions of Article 76-13 shall apply to a portion to which the consolidated tax return system applies on or after January 1, 2010.
Article 8 (Applicability to special cases concerning taxation upon investment in kind)
The amended provisions of Article 47-2 shall apply to the first investment in kind to be made after the same provisions under the proviso to Article 1 of this Addenda enters into force.
Article 9 (Applicability to Income Deduction for Special Purpose Companies)
The amended provisions of Article 51-2 (2) shall apply from the business year in which such same provisions enters into force under the proviso to Article 1 of this Addenda.
Article 10 (Applicability to deduction for tax credits for amount of tax paid overseas)
The amended provisions of Article 57 (5) shall apply to the first dividends or distributions granted after this Act enters into force.
Article 11 (Applicability to withholding)
The amended provisions of Article 73 (1) shall apply the first income to be accrued after this Act enters into force.
Article 12 (Applicability to penalty tax)
| (1) | The amended provisions of Article 76 (5) shall apply from the first goods or services to be supplied after this Act enters into force. |
| (2) | The amended provisions of Article 76 (10) shall apply from the first donation received after this Act enters into force. |
Article 13 (Applicability to special cases concerning taxation on interest or capital gains of foreign corporations on transfer of state bonds, etc.)
The amended provisions of Article 93-2 (4) shall apply from the first withholding made after this Act enters into force.
Article 14 (Applicability to special cases concerning withholding tax from bonds of foreign corporations)
The amended provisions of Article 98-3 (1) shall apply from the first purchase after this Act enters into force.
Article 15 (Applicability to obligation to issue cash receipts)
The amended provisions of Article 117-2 (4) shall apply from goods or services to be supplied after the same provisions enter into force under the proviso to Article 1 of this Addenda.
ADDENDUM <Act No. 9924, Jan. 1, 2010>
Article 1 (Enforcement date)
This Act shall enter into force on January 1, 2010.
Articles 2 through 7 Omitted.
Addendum <Act No. 10221, Mar. 31, 2010>
Article 1 (Enforcement date)
This Act shall enter into force on January 1, 2011.
Articles 2 through 8 Omitted.
ADDENDA <Act No. 10337, May 31, 2010>
Article 1 (Enforcement date)
This Act shall enter into force three months after the date of its promulgation. (Proviso Omitted.)
Articles 2 through 8 Omitted.
ADDENDA <Act No. 10361, Jun. 8, 2010>
Article 1 (Enforcement date)
This Act shall enter into force six months after the date of its promulgation. (Proviso Omitted.)
Articles 2 through 12 Omitted.
ADDENDA <Act No. 10423, Dec. 30, 2010>
Article 1 (Enforcement date)
This Act shall enter into force on January 1, 2011: Provided , That the amended provisions of Articles 23 (excluding paragraph (1)), 28 (2), 41 (1) 1, 53-2, 53-3, 60 (2) and (4), and the proviso to Article 96 (1) shall enter into force on the date of their promulgation, the amended provision of Articles 73 (1) 2, (8), (9), 74 (2), 98-3 (1), (4) and (6) shall enter into force on April 1, 2011, the amended provisions of Articles 24 (2) and (3) and 112-2 (1) shall enter into force on July 1, 2011, and the amended provision of subparagraph 2 of Article 21 shall enter into force January 1, 2028. <Amended by Jan. 1, 2013; Dec. 15, 2015; Dec. 31, 2018; Dec. 21, 2021; Dec. 31, 2024>
Article 2 (General applicability)
This Act shall apply from the first business year which begins after this Act enters into force.
Article 3 (Applicability to non-inclusion of depreciation costs in deductible expenses)
The amended provisions of Article 23 (excluding paragraph (1)) shall apply from the business year in which the amended provisions of Article 23 (excluding Article 23 (1)) enter into force under the proviso to Article 1 of the Addenda belongs.
Article 4 (Applicability to increase of ceiling on income deduction of designated donations)
The amended provisions of Article 24 (1) shall apply from the first donations to be expended after this Act enters into force.
Article 5 (Applicability to rearrangement of objects of statutory donations)
The amended provisions of Articles 24 (2) and (3) and 112-2 (1) shall apply from the first donations to be expended after the amended provisions of Articles 24 (2) and (3) and 112-2 (1) enter into force under the proviso to Article 1 of the Addenda.
Article 6 (Applicability to non-inclusion of interest paid in deductible expenses)
The amended provisions of Article 28 (2) shall apply from the business year in which the amended provisions of Article 28 (2) enter into force under the proviso to Article 1 of the Addenda.
Article 7 (Applicability to reserve funds for proper purpose business)
The amended provisions of Article 29 (3), (4) and (8) shall apply from the first registration of liquidation after this Act enters into force.
Article 8 (Applicability to national subsidies, etc.)
The amended provision of Article 36 (1) shall apply from the assets to be acquired or improved after this Act enters into force.
Article 9 (Applicability to acquisition value of assets)
The amended provision of Article 41 (1) 1 shall apply from the business year in which the amended provisions of Article 41 (1) 1 enter into force under the proviso to Article 1 of the Addenda in cases of corporations which apply the international accounting standards as at the time this Act enters into force and from the business year that begins on or after January 1, 2011 in cases of other corporations.
Article 10 (Applicability to reduction of requirements for special cases concerning taxation on merger by special purpose acquisition companies)
The amended provision of the proviso to Article 44 (2) 1 shall apply from the first merger after this Act enters into force.
Article 11 (Applicability to special cases concerning calculation of tax base of corporation adopting functional currency)
The amended provisions of Article 53-2 shall apply from the business year in which the amended provisions of Article 53-2 enter into force under the proviso to Article 1 of the Addenda.
Article 12 (Applicability to special cases concerning calculation of tax bases of overseas places of business)
The amended provisions of Article 53-3 shall apply from the business year in which the amended provisions of Article 53-3 enter into force under the proviso to Article 1 of the Addenda in cases of corporations that apply the international accounting standards as at the time this Act enters into force, and from the business year which begins on or after January 1, 2011 in cases of other corporations.
Article 13 (Applicability to special cases concerning taxation on capital gains on transfer of land, etc.)
The amended provisions of Article 55-2 (1) 1 and (8) shall apply from the first transfer to be made after January 1, 2011.
Article 14 (Applicability to reports on tax base)
The amended provisions of Article 60 (2) and (4) shall apply from the business year in which the amended provisions of Article 60 (2) and (4) enter into force under the proviso to Article 1 of the Addenda.
Article 15 (Applicability to withholding upon early sale of bonds, etc.)
The amended provisions of Articles 73 (1) 2, (8) and (9), 74 (2), 98-3 (1), (4) and (6) shall apply from the first sale to be made after the amended provisions of Articles 73 (1) 2, (8) and (9), 74 (2), 98-3 (1), (4) and (6) enters into force under the proviso to Article 1 of the Addenda.
Article 16 (Applicability to other documents to accompany reports on consolidated tax base)
The amended provision of Article 76-17 (2) shall apply from the first report to be filed after this Act enters into force.
Article 17 (Applicability to final report and interim report on liquidation income)
The amended provisions of Articles 84 (1) and 85 (1) shall apply from the first registration of liquidation to be filed after this Act enters into force.
Article 18 (Applicability to domestic place of business of foreign corporation)
The amended provision of Article 96 (1) shall apply from the business year in which the amended provisions of Article 96 (1) enter into force under the proviso to Article 1 of the Addenda.
Article 19 (Applicability to special cases concerning withholding or collection from foreign corporation)
The amended provision of Article 98 (10) shall apply from the first assets to be transferred after this Act enters into force.
Article 20 (Applicability to special cases concerning taxation on interest on state bonds, etc. and capital gains of foreign corporation and transitional measures)
| (1) | The amended provisions of Articles 93-2 and 98 (2) shall apply from the first income to be accrued after this Act enters into force. |
| (2) | Notwithstanding the amended provisions of Article 93-2 and 98 (2), the previous provisions shall apply to income accruing from the State bonds, etc., acquired on or before November 12, 2010. |
Article 21 (Transitional measures concerning corporate tax on income of sincere small and medium corporations for each business year)
Any corporation approved as a conscientious small or medium corporation under the former Article 76-2 (2) before this Act enters into force may calculate, file and pay the tax base of corporate tax on income for each business year and the amount of tax until the business year in which December 31, 2013 falls by a conscientious tax payment method referred to in Articles 76-2 through 76-7.
Addendum <Act No. 10898, Jul. 25, 2011>
Article 1 (Enforcement date)
This Act shall enter into force three months after the date of its promulgation.
Articles 2 through 5 Omitted.
ADDENDA <Act No. 10907, Jul. 25, 2011>
Article 1 (Enforcement date)
This Act shall enter into force six months after the date of its promulgation.
Article 2 Omitted.
Article 3 Omitted.
ADDENDA <Act No. 11128, Dec. 31, 2011>
Article 1 (Enforcement date)
This Act shall enter into force on January 1, 2012; provided, the amended provisions of Articles 42-2, 47 (2) though (4), 47-2 (2) and (3), 57 (4), 76-14 (1) 4 and 96 (2) 1 (b) shall enter into force on the date of its promulgation, the amended provisions of Articles 16 (1) 5, 17 (1) 1, subparagraph 8 of Article 18, subparagraph 2 of Article 20, 44 (2) 2 and the amended part concerning non-par value stocks under the amended provision of Article 76 (3) shall enter into force on April 15, 2012, the amended provisions of Articles 9 (4), 75, the main clause other than each subparagraph of Article 91 (1), Article 91 (3), the main clause of Article 98-5 (1) (limited to the amended parts of Articles 98, 98-2 through 98-4 and 98-6) and Article 98-6 shall enter into force on July 1, 20102.
Article 2 (General applicability)
This Act shall apply from the first business year which begins after this Act enters into force.
Article 3 (Applicability to costs of merger)
The amended provisions of Articles 16 (1) 5 and 44 (2) 2 shall apply from the first merger on or after April 15, 2012.
Article 4 (Applicability to non-inclusion of gains from capital transactions in gross income)
The amended provisions of Article 17 (1) 1 shall apply from the first non-par value stocks to be issued on or after April 15, 2012.
Article 5 (Applicability to non-inclusion of evaluation marginal profits in gross income)
The amended provisions of subparagraph 8 of Article 18 shall apply from the first dividends to be distributed upon reducing the capital reserve funds on or after April 15, 2012.
Article 6 (Applicability to non-inclusion of donations in deductible expenses)
The amended provisions of Articles 24 (2) 4 (b) and (h) and (4) shall apply from the first donations to be given on or after January 1, 2012.
Article 7 (Applicability to non-inclusion of entertainment expenses in deductible expenses)
The amended provisions of the proviso to Article 25 (2) shall apply from the first entertainment expenses to be expended on or after January 1, 2012.
Article 8 (Applicability to non-inclusion of evaluation marginal profits of inventory assets in gross income on domestic corporation adopting international accounting standards)
The amended provisions of Article 42-2 shall apply from the first business year in which this Act is promulgated.
Article 9 (Applicability to special cases concerning taxation upon merger between parent corporation and subsidiary corporation)
The amended provisions of Article 44 (3) shall apply from the first merger on or after January 1, 2012.
Article 10 (Applicability to restriction on deduction of losses on disposition of assets upon merger or division and merger)
The amended provisions of Articles 45 (3) and 46-4 (3) shall apply from the first merger or the division and merger on or after January 1, 2012.
Article 11 (Applicability to special cases concerning taxation upon split-off)
| (1) | The amended provisions of Article 47 (2) through (4) shall apply from the split-off made under Article 47 (1) in the business year in which this Act is promulgated. |
| (2) | Where a corporation established through division files a report on the tax base under Article 60 (1) after acquiring the assets of a divided corporation at the book value pursuant to the previous Article 47 (2) prior to the date of the promulgation of this Act, the divided corporation and the corporation established through division may apply the amended provisions of Article 47 (2) through (4) when filing a report on the tax base under Article 60 (1) after this Act enters into force. |
Article 12 (Applicability to application of special cases concerning taxation upon investment in kind)
| (1) | The amended provisions of Article 47-(2) and (3) shall apply from the investment in kind made under Article 47-2 (1) in the business year in which this Act is promulgated. |
| (2) | Where an invested corporation files a report on the tax base under Article 60 (1) after acquiring the assets of an investing corporation at the book value pursuant to the previous Article 47-2 (2) prior to the date of the promulgation of this Act, the investing corporation and the invested corporation may apply the amended provisions of Article 47-2 (2) and (3) when filing a report on the tax base under Article 60 (1) after this Act enters into force. |
Article 13 (Applicability to foreign tax credits)
The amended provisions of Article 57 (4) shall apply from the business year in which this Act is promulgated.
Article 14 (Applicability to penalty tax)
| (1) | The amended provisions of Article 76 (3) (excluding the amended part concerning non-par value stocks) shall apply the first domestic corporation which files a report on incorporation on or after January 1, 2012. |
| (2) | The amended provisions of Article 76 (9) shall apply the first invoice not issued or issued or to be issued on or after January 1, 2012. |
Article 15 (Applicability to non-inclusion of consolidated subsidiary corporation and consolidated interim prepayment)
The amended provisions of the proviso to Article 76-12 (1) and 76-18 (4) shall apply from the first consolidated subsidiary corporation to be merged by absorption on or after January 1, 2012.
Article 16 (Applicability to calculation of amount of income for each consolidated business year)
| (1) | The amended provisions of Article 76-14 (1) 4 shall apply from a portion of the business year in which this Act is promulgated. |
| (2) | The amended provisions of Article 76-14 (2) 2 shall apply from the first asset to be disposed of on or after January 1, 2012. |
Article 17 (Applicability to calculation of amount of liquidation income due to dissolution)
The amended provisions of Article 79 (5) shall apply from the first corporation to be dissolved on or after January 1, 2012.
Article 18 (Applicability to interim reports)
The amended provisions of the main clause other than each subparagraph of Article 85 (1) shall also apply to a corporation, with relation to which the deadline for interim report has not expired by January 1, 2012.
Article 19 (Applicability to calculation of amount of domestic source income)
The amended provisions of Article 92 (2) 2 (b) shall apply from the first stocks, etc. or other securities to be transferred after January 1, 2012.
Article 20 (Applicability to special cases concerning taxation on domestic place of business of foreign corporation)
The amended provisions of Article 96 (2) (b) shall apply from a portion of the business year in which this Act is promulgated.
Article 21 (Applicability to special cases concerning report and payment on capital gains on transfer of securities by foreign corporations)
The amended provisions of Article 98-2 (4) shall apply from the first asset to be gifted on or after January 1, 2012.
Article 22 (Applicability to special cases concerning withholding procedures for foreign corporations)
The amended provisions of the main clause of Article 98-5 (1) (limited to the amended provisions of subparagraphs 1 and 2 of Article 93 and subparagraphs 7 (b) and 8 of Article 93) shall apply from the first domestic source income to be withheld on or after January 1, 2012.
Article 23 (Applicability to special cases concerning withholding procedures to apply restrictive tax rates under tax treaties to foreign corporations)
The amended provisions of Article 98-6 shall apply from the first domestic source income to be withheld on or after July 1, 2012.
Article 24 (Applicability to submission of detailed statement of shareholders, etc.)
The amended provisions of Article 109 (1) shall apply from the first report on incorporation to be filed on or after January 1, 2012.
Article 25 (Applicability to submission of payment statements)
The amended provisions of Article 120 shall apply from the first income to be paid on or after January 1, 2012.
Article 26 (Special cases concerning interim prepayment due to changes in corporate tax rate)
When interim tax is calculated for the interim prepayment period of the business year which begins on or after January 1, 2012, the calculated amount of tax determined as corporate tax for the immediately preceding business year under Article 63 (1) shall be calculated by applying the amended provisions of Article 55 (1) to the tax base for the immediately preceding business year.
Article 27 (Transitional measures concerning dividends on construction interest)
Notwithstanding the amended provisions of subparagraph 2 of Article 20, the previous provisions shall apply to the dividends on the construction interest to be accrued on or before April 15, 2012.
Article 28 (Transitional measures concerning period of inclusion of carried forwarded statutory donations in deductible expenses)
Notwithstanding the amended provisions of Article 24 (4), the previous provisions shall apply to the statutory donations paid on or before January 1, 2012.
Article 29 (Transitional measures concerning citation of other Statutes)
"Industrial-academia cooperation groups under the Industrial Education and Industry-Academia-Research Cooperation Promotion Act" of the amended provisions of the main clause, other than each subparagraph of Article 63 (1), shall be deemed the industry-academia cooperation groups under the Promotion of Industrial Education and Industry-Academic Cooperation Act" by January 25, 2012.
Article 30 (Transitional measures concerning penalty tax on negligence in paying withheld tax)
Notwithstanding the amended provisions of Articles 71 (3), 76 (2), 98 (3) and the main clause of Article 98 (4), the previous provisions shall apply to obligation to pay the corporate tax that arose on or before January 1, 2012.
Addendum <Act No. 11603, Jan. 1, 2013>
Article 1 (Enforcement date)
This Act shall enter into force on January 1, 2013.
Article 2 Omitted.
Article 3 Omitted.
ADDENDA <Act No. 11607, Jan. 1, 2013>
Article 1 (Enforcement date)
This Act shall enter into force on January 1, 2013.
Article 2 (General applicability)
This Act shall apply to taxation for business years that begin on or after this Act enters into force.
Article 3 (Applicability to non-inclusion of donations in deductible expenses)
The amended provisions of Article 24 (2) 4 (d) shall apply to expenses disbursed on or after this Act enters into force.
Article 4 (Applicability of special provisions regarding taxation on divided corporations upon split-off)
The amended provisions of Article 47 (2) shall apply where a divided corporation disposes stocks, etc. or a corporation established through division disposes of assets on or after this Act enters into force.
Article 5 (Applicability to special cases concerning taxation on investments in kind)
The amended provisions of Article 47-2 (2) shall apply where an investing corporation disposes of stocks, etc. or an invested corporation disposes of assets on or after this Act enters into force.
Article 6 (Applicability of special provisions regarding taxation on Income from transfer of land, etc.)
The amended provisions of Article 55-2 shall apply to the land, etc. transferred on or after this Act enters into force.
Article 7 (Applicability to withholding)
The amended provisions of Article 73 (6) shall apply to income paid on or after this Act enters into force.
Article 8 (Applicability to penalty tax)
| (1) | The amended provisions of Article 76 (3) shall apply where a report on incorporation or an application for business registration is filed on or after this Act enters into force. |
| (2) | The amended provisions of Article 76 (9) shall apply where a tax base or tax amount is reported, determined, or rectified on or after this Act enters into force. |
| (3) | The amended provisions of Article 76 (10) shall apply to donation receipts issued on or after this Act enters into force. |
Article 9 (Applicability to application of consolidated tax return system)
The amended provisions of Articles 76-8 through 76-11 shall apply where the application of the consolidated tax return system is approved, revoked, or abandoned or a change in a consolidated subsidiary is reported on or after this Act enters into force.
Articles 10 (Applicability of special provisions regarding withholding or collection from foreign corporations)
The amended provisions of Article 98 (1) 3 shall apply to income paid on or after this Act enters into force.
Article 11 (Applicability to reporting on incorporation and business registration)
The amended provisions of Articles 109 (1) and 111 (1) shall apply to a report on incorporation or an application for business registration filed on or after this Act enters into force.
Article 12 (Applicability to separate accounting)
The amended provisions of Article 113 (3) through (5) shall apply where corporations are merged or divided and merged on or after this Act enters into force.
Article 13 (Applicability to obligation to file payment statements)
The amended provisions of Article 120 (1) shall apply to income paid on or after this Act enters into force.
Article 14 (Applicability to application of consolidated tax return system)
If the application of the consolidated tax return system has been approved by the Commissioner of the National Tax Service under the previous provisions of Article 76-8 (1) before this Act enters into force, it shall be deemed that the application of the consolidated tax return system is approved by the Commissioner of the competent Regional Tax Office having jurisdiction over the place of tax payment of the wholly-owning parent corporation under the amended provisions of Article 76-8 (1).
ADDENDA <Act No. 11873, Jun. 7, 2013>
Article 1 (Enforcement date)
This Act shall enter into force on July 1, 2013.
Articles 2 through 19 Omitted.
Addendum <Act No. 12153, Jan. 1, 2014>
Article 1 (Enforcement date)
This Act shall enter into force on January 1, 2014. (Proviso Omitted.)
Articles 2 through 19 Omitted.
ADDENDA <Act No. 12166, Jan. 1, 2014>
Article 1 (Enforcement date)
This Act shall enter into force on January 1, 2014; provided, the amended provisions of Article 117-2 shall enter into force on July 1, 2014.
Article 2 (General applicability)
This Act shall apply to taxation for business years that begin on or after this Act enters into force.
Article 3 (Applicability to addition of Incheon National University to organizations eligible for statutory donations)
The amended provisions of Article 24 (2) 4 (h) shall apply to donations reported on or after this Act enters into force.
Article 4 (Applicability to extension of period for carrying forward and deduction of excess of ceilings on inclusion of statutory donations in deductible expenses)
The amended provisions of Article 24 (4) shall apply to donations given during the business years that begin on or after this Act enters into force.
Article 5 (Applicability to inclusion of construction charges received after acquisition of fixed assets in deductible expenses)
The amended provisions of Article 37 (1) shall apply to fixed assets acquired on or after this Act enters into force.
Article 6 (Applicability to criteria for determination as to independence of business divisions)
The amended provisions of Article 46 (3) shall apply to corporations divided on or after this Act enters into force.
Article 7 (Applicability to requirements for follow-up management of disposal of stocks of properly divided corporation upon split-off)
The amended provisions of Article 47 (3) 2 shall apply to divisions after which the stocks, etc. issued by the corporation established through division and held by the divided corporation are reduced from at least 50/100 of the total number of issued stocks of, or the total investment amount in, the corporation established through division to less than 50/100.
Article 8 (Applicability to special provisions concerning taxation on capital gains on transfer of land, etc.)
The amended provisions of Article 55-2 shall apply to the property transferred on or after this Act enters into force; provided, Article 55-2 (1) shall not apply where a small or medium enterprise defined under Article 25 (1) 1 transfers a residential house or a parcel of land for non-business purposes (excluding unregistered land) on or before December 31, 2015. <Amended on Dec. 23, 2014>
Article 9 (Applicability to special provisions regarding deduction of foreign corporate taxes paid by indirect investment companies)
The amended provisions of Article 57-2 (1) shall apply to the income for the business year in which this Act enters into force and afterward.
Article 10 (Applicability to obligation to prepare and keep detailed statements of issuance of donation receipts and penalty tax thereon)
The amended provisions of Articles 76 (10) and 112-2 shall apply to donations given on or after this Act enters into force.
Article 11 (Applicability to adjustment of deadline for reporting on addition of consolidated subsidiary corporations)
The amended provisions of Article 76-11 shall apply to changes that occurs to a consolidated subsidiary corporation on or after this Act enters into force.
Article 12 (Applicability to special provisions concerning withholding or collection from foreign corporations)
| (1) | The amended provisions of Article 98 (8) shall apply to the earnings paid on or after this Act enters into force. |
| (2) | The amended provisions of Article 98 (10) shall apply to the earnings allocated or distributed on or after this Act enters into force. |
Article 13 (Applicability to non-taxation or tax exemption on foreign corporations under tax treaties)
The amended provisions of Article 98-4 shall apply to domestic source income paid on or after this Act enters into force.
Article 14 (Applicability to petition for correction for application of restrictive tax rates under tax treaties to foreign corporations)
The amended provisions of Article 98-6 (4) shall apply to requests filed for corrections on or after this Act enters into force.
Article 15 (Applicability to threshold amount for compulsory issuance of cash receipts)
The amended provisions of the main clause of Article 117-2 (4) shall apply to goods supplied or services provided on or after July 1, 2014.
Article 16 (Transitional measure concerning requirements for follow-up management of disposal of stocks of properly divided corporation upon split-off)
Notwithstanding the amended provisions of Article 47 (3) 2, the former provisions shall apply where the stocks, etc. issued by the corporation established through division and held by the divided corporation are less than 50/100 of the total number of issued stocks of, or the total investment amount in, the corporation established through division as at the time this Act enters into force.
Article 17 (Transitional measure concerning special cases for deduction of foreign corporate tax paid by indirect investment companies)
Notwithstanding the amended provisions of Article 57-2 (1), former provisions shall apply where a privately placed fund participating in management, as defined by Article 9 (19) 1 of the Financial Investment Services and Capital Markets Act, fails to file an application for the special taxation for a partnership firm under Article 100-17 of the Act on Restriction on Special Cases concerning Taxation pursuant to Article 20 (1) of the Addenda to the partial amendment (Act No. 9267) to the Corporate Tax Act, until the business year in which the dissolution of the relevant corporation is registered. <Amended on Jul. 24, 2015>
ADDENDA <Act No. 12420, Mar. 18, 2014>
Article 1 (Enforcement date)
This Act shall enter into force one year after the date of its promulgation.
Article 2 Omitted.
Article 3 Omitted.
Article 4 Omitted.
ADDENDA <Act No. 12850, Dec. 23, 2014>
Article 1 (Enforcement date)
This Act shall enter into force on January 1, 2015; provided, the amended provisions of Article 121 (1), (5) and (7) shall enter into force on July 1, 2015 and the amended provisions of Article 76 (9) shall enter into force on January 1, 2016.
Article 2 (General applicability)
This Act shall begin to apply to the business year beginning after this Act enters into force.
Article 3 (Applicability to special cases concerning taxation on capital gains on land)
The amended provisions of Article 55-2 (1) 2, (2) 6, and (6) shall begin to apply from the first real estate, etc. to be transferred after this Act enters into force and thereafter.
Article 4 (Applicability to penalty tax)
| (1) | The amended provisions of Article 76 (7) shall begin to apply from the deadline for submission of payment statements arriving after this Act enters into force. |
| (2) | The amended provisions of Article 76 (9) shall begin to apply from goods or services to be supplied after this Act enters into force. |
Article 5 (Applicability to preparation and issuance of invoices)
The amended provisions of Article 121 (1), (5), and (7) shall begin to apply from goods or services to be supplied after this Act enters into force.
ADDENDA <Act No. 13230, Mar. 27, 2015>
Article 1 (Enforcement date)
This Act shall enter into force six months after the date of its promulgation.
Articles 2 through 7 Omitted.
ADDENDA <Act No. 13426, Jul. 24, 2015>
Article 1 (Enforcement date)
This Act shall enter into force six months after the date of its promulgation. (Proviso Omitted.)
Articles 2 through 39 Omitted.
ADDENDA <Act No. 13448, Jul. 24, 2015>
Article 1 (Enforcement date)
This Act shall enter into force three months after the date of its promulgation. (Proviso Omitted.)
Articles 2 through 20 Omitted.
ADDENDA <Act No. 13499, Aug. 28, 2015>
Article 1 (Enforcement date)
This Act shall enter into force four months after the date of its promulgation.
Articles 2 through 16 Omitted.
ADDENDA <Act No. 13550, Dec. 15, 2015>
ADDENDA <Act No. 13555, Dec. 15, 2015>
Article 1 (Enforcement date)
This Act shall enter into force on January 1, 2016.
Article 2 (General applicability)
This Act shall begin to apply to the business year beginning after this Act enters into force.
Article 3 (Applicability to special cases concerning non-inclusion of expenses incurred in passenger vehicles for business use in deductible expenses)
| (1) | The amended provisions of Article 27-2 (1) shall begin to apply from the passenger vehicles acquired in the business year that begins after this Act enters into force. |
| (2) | The amended provisions of Article 27-2 (2) and (3) shall begin to apply from expenses included in deductible expenses or expended in the business years that begins after this Act enters into force. |
| (3) | The amended provisions of Article 27-2 (4) shall begin to apply from the amount accrued in the business years that begins after this Act enters into force. |
Article 4 (Applicability to scope of inclusion of reserve funds for proper purpose business in deductible expenses)
The amended provisions of Article 29 (1) shall begin to apply from the reserve funds for proper purpose business included in deductible expenses for the business years after this Act enters into force; provided, the amended provisions shall begin to apply to the reserve funds for proper purpose business included in deductible expenses for the business years after January 1, 2017, in cases of a nonprofit domestic corporation incorporated pursuant to a Special Act to engage in a mutual aid business.
Article 5 (Applicability to special cases concerning taxation on investments in kind)
The amended provisions of Article 47-2 shall begin to apply from the first investment made in kind after this Act enters into force; provided, former provisions shall apply where an investment is made in kind by a corporation established pursuant to a Special Act, before this Act enters into force, pursuant to provisions concerning the transfer of business (restructuring) in the Act authorizing the establishment of the corporation. <Amended on Dec. 20, 2016>
Article 6 (Applicability to submission of tax settlement invoices)
The amended provisions of Articles 60 (9) and 76-17 (4) shall begin to apply from the tax returns on the tax base or consolidated tax base filed after this Act enters into force.
Article 7 (Applicability to revocation of approval for applying consolidated tax return system)
The amended provisions of Article 76-9 (2) shall begin to apply from the first case where approval for applying the consolidated tax return system is revoked after this Act enters into force.
Article 8 (Applicability to exclusion of consolidated subsidiaries)
The amended provisions of Article 76-12 (2) shall begin to apply from the first case where the consolidated tax return system ceases to be applied after this Act enters into force.
Article 9 (Applicability to income for each consolidated business year)
The amended provisions of Article 76-14 (2) shall begin to apply from the first case where an asset owned by the existing consolidated group before a merger is disposed of after this Act enters into force or where an asset acquired before the consolidated parent corporation applies the consolidated tax return system is disposed of after this Act enters into force.
Article 10 (Applicability to domestic source income)
The amended provisions of subparagraph 7 (b) of Article 93 shall begin to apply from the first asset transferred after this Act enters into force.
Article 11 (Applicability to timing for becoming cash receipt merchant)
The amended provisions of Article 117-2 shall begin to apply from the first case where a corporation meets the requirements for becoming a Cash Receipt merchant before this Act enters into force and becomes a Cash Receipt merchant after this Act enters into force.
Article 12 (Applicability to obligation to submit data on overseas subsidiaries)
The amended provisions of Article 121-2 (1) shall begin to apply from the documents specified in the aforesaid paragraph submitted by a corporation for the business year immediately before the business year in which the filing deadline by a consolidated corporation comes due after this Act enters into force.
Article 13 (Transitional measure following repeal of payment in kind)
Notwithstanding the amended provisions of Articles 62-2 (7) and 65, the former provisions shall apply the land, etc., transferred or expropriated before this Act enters into force.
ADDENDA <Act No. 14386, Dec. 20, 2016>
Article 1 (Enforcement date)
This Act shall enter into force on January 1, 2017; provided, the amended provisions of Article 76 (6), (7), and (9) shall enter into force on January 1, 2018.
Article 2 (General applicability)
This Act shall begin to apply to the business year beginning after this Act enters into force.
Article 3 (Applicability to restriction on deduction of carried-over losses upon merger)
The amended provisions of Article 45 (3) shall apply to the tax bases on the tax returns filed after this Act enters into force.
Article 4 (Applicability to restriction on deduction of carried-over losses upon division)
The amended provisions of Article 46-4 (3) shall apply to the tax bases on the tax returns filed after this Act enters into force.
Article 5 (Applicability to tax credit for correction to wrongful accounting)
The amended provisions of Article 58-3 shall apply to the corrections made after this Act enters into force.
Article 6 (Applicability to penalty tax)
The amended provisions of Article 76 (6), (7), and (9) shall apply where the deadline for submitting a detailed statement of changes in stocks, a payment statement, an aggregate invoice for each supplier or purchaser, or an aggregate tax invoice for each supplier becomes due on or after January 1, 2018.
Article 7 (Applicability to application for non-taxation or tax exemption on foreign corporations under tax treaties)
The amended provisions of Articles Article 98-4 (4). 98-5 (2), and 98-6 (4) shall apply where the period set previously for filing an application for correction has not elapsed at the time this Act enters into force.
Article 8 (Transitional measure concerning constructive dividends or distributions)
Notwithstanding the amended provisions of Article 16 (1) 6, former provisions shall apply to domestic corporations divided and merged before this Act enters into force.
Article 9 (Transitional measure concerning taxation on merged corporations upon merger)
Notwithstanding the amended provisions of Article 44 (3), former provisions shall apply to domestic corporations merged before this Act enters into force.
Article 10 (Transitional measure concerning taxation on divided corporations upon division)
Notwithstanding the amended provisions of Article 46 (2) 2, former provisions shall apply to domestic corporations divided and merged before this Act enters into force.
Article 11 (Transitional measure concerning domestic source income accrued from rendering personal services under tax treaties)
Notwithstanding the amended provisions of subparagraph 6 of Article 93 and the proviso to Article 98 (1) 2, former provisions shall apply where personal services have been rendered abroad before this Act enters into force.
ADDENDA <Act No. 15022, Oct. 31, 2017>
Article 1 (Enforcement date)
This Act shall enter into force one year after the date of its promulgation.
Articles 2 through 15 Omitted.
ADDENDA <Act No. 15222, Dec. 19, 2017>
Article 1 (Enforcement date)
This Act shall enter into force on January 1, 2018.
Article 2 (General applicability)
This Act shall begin to apply to the business year beginning after this Act enters into force.
Article 3 (Applicability to non-inclusion of donations in deductible expenses)
The amended provisions of Article 24 (2) shall apply beginning with the first donation made after this Act enters into force.
Article 4 (Applicability to special cases, including exclusion of expenses incurred in relation to passenger vehicles for business use from deductible expenses)
The amended provisions of Article 27-2 (3) shall apply beginning with the returns filed on a tax base after this Act enters into force.
Article 5 (Applicability to addition of requirements for transfer of employees upon merger or division)
The amended provisions of Articles 44 (2), 44-3 (3) 3, 46 (2), 46-3 (3) 3 and 47 (1) and (3) 3 shall apply beginning with mergers and divisions taking place after this Act enters into force.
Article 6 (Applicability to succession to tax exemption, reduction and credits upon qualifying split-off)
The amended provisions of Article 47 (4) or (5) shall apply beginning with the split-offs taking place after this Act enters into force.
Article 7 (Applicability to abolition of requirement succeed to independent business division from requirements for qualifying investments in kind)
The amended provisions of Article 47-2 (1) 5 shall apply beginning with the investments made in kind after this Act enters into force.
Article 8 (Applicability to penalty tax)
The amended provisions of Article shall apply beginning with the case where an invoice is issued for goods or services supplied after this Act enters into force.
Article 9 (Transitional measures concerning non-inclusion of donations in deductible expenses)
Notwithstanding the amended provisions of Article 24 (2) 7 and (3), the donations made to any of the institutions designated under former provisions before this Act enters into force shall be deemed statutory donations until the end of the period of designation under Article 24 (2) 7 or (3).
Article 10 Omitted.
ADDENDA <Act No. 16008, Dec. 24, 2018>
Article 1 (Enforcement date)
This Act shall enter into force on January 1, 2019; provided, the amended provisions of Article 93-2, latter part of Article 98-4 (1), Article 98-4 (2), latter part of Article 98-6 (1), Articles 98-6 (2), 121-3 (2), (3) (limited to the parts related to paragraph (2) of the same Act), and 123-2 shall enter into force on January 1, 2020.
Article 2 (General applicability)
This Act shall begin to apply to the business year beginning after this Act enters into force.
Article 3 (Applicability to special cases concerning non-inclusion of holding companies' dividend income in gross income)
The amended provisions of Article 18-3 (1) shall begin to apply from the dividend to be distributed after this Act enters into force.
Article 4 (Applicability to non-inclusion of donations in deductible expenses)
| (1) | The amended provisions of Article 24 (2) and (3) 4 (e) shall begin to apply from the tax base reported after this Act enters into force. |
| (2) | The amended provisions of Article 24 (5) shall begin to apply from the tax base reported after this Act enters into force and also apply to the donations spent for the business years initiated after January 1, 2013. |
Article 5 (Applicability to penalty tax on negligence in submitting certificate of confirmation on compliant filing)
The amended provisions of Article 75 (1) shall begin to apply from the deadlines for submitting certificates of confirmation on complaint filing after this Act enters into force.
Article 6 (Applicability to penalty tax on negligence in issuing cash receipts)
| (1) | The amended provisions of Article 75-6 (2) 1 shall begin to apply from the cases falling under Article 117-2 (1) after this Act enters into force. |
| (2) | The amended provisions of Article 75-6 (2) 2 and 3 shall begin to apply from the violation of issuing cash receipts after this Act enters into force. |
Article 7 (Applicability to penalty tax on negligence in submitting simple statements on wage or salary payment)
The amended provisions of Article 75-7 (1) 1 (b) and 2 (b) shall begin to apply from the portions on which a simple statement on wage or salary payment shall be submitted or is submitted under Article 164-3 of the Income Tax Act after this Act enters into force.
Article 8 (Applicability to penalty tax on negligence in submitting invoice)
| (1) | The amended provisions of Article 75-8 (1) 2, 4 (a), 5 and 6 shall begin to apply where goods or services are provided after this Act enters into force. |
| (2) | The amended provisions of Article 75-8 (1) 4 (b) through (e) shall begin to apply where credit card sales slips, cash receipts, or invoices are issued or received after this Act enters into force. |
Article 9 (Applicability to Deduction of losses carried forward upon merger and division of consolidated Parent Corporations)
The amended provisions of Article 76-14 (2) 2 shall begin to apply from the tax base reported after this Act enters into force.
Article 10 (Applicability to obligation to submit data on overseas subsidiaries)
| (1) | The amended provisions of Article 121-2 (1) and (4) shall begin to apply where a document on the business years initiated after January 1, 2019 is submitted. |
| (2) | The amended provisions of Article 121-4 shall begin to apply from the negligence in submitting a document on the business years initiated after January 1, 2019, where overseas real estate, etc. or stocks, of foreign corporation that has received foreign direct investment are acquired. |
| (3) | The amended provisions of Article 123 (1) and (3) shall begin to apply from the negligence in submitting a document on the business years initiated after January 1, 2019. |
| (4) | The amended provisions of Article 123 (2) shall begin to apply from the negligence in submitting a document on the business years initiated after January 1, 2020. |
Article 11 (Applicability to penalty tax on negligence in submitting documents on overseas real estate)
Notwithstanding the amended provisions (limited to where the obligation to submit documents is given to a domestic corporation whose disposition value by each property of overseas real estate, etc. exceeds 200 million won) of Article 121-2 (1), a domestic corporation that disposes of overseas real estate, etc. during the period from January 1, 2019 to December 31, 2019 shall not be subject to an administrative fine in the amended provisions of Article 121-3 (2) (referring to the part amended by Act No. 16008). <Amended on Dec. 31, 2019>
Article 12 (Transitional measures concerning corporate tax on unappropriated earnings of corporations)
When accumulating the reserve for appropriation in the next term in the previous Article 56 or calculating the unappropriated earnings or over-appropriated amount, the previous Article 56 shall apply to a domestic corporation that deduces the sum of investment in assets and disposes of the assets.
Article 13 (Transitional measures concerning penalty tax on negligence in issuing cash receipts)
Notwithstanding the amended provisions of Article 75-6 (2) 1, the previous provisions shall apply to a domestic corporation which meets the criteria under Article 117-2 (1) before this Act enters into force.
Article 14 (Transitional measures concerning obligation to submit documents on overseas real estate and penalty tax)
Notwithstanding the amended provisions of Article 121-2 (1) and 123 (2), previous Articles 121-2 (1) and 121-3 (2) shall apply to overseas real estate, etc. acquired in the business year preceding the business year (hereafter in this Article, referred to as “preceding business year”) initiated after January 1, 2019. In such cases, the documents subject to be submitted under Article 121-2 (1) shall be the documents falling under the preceding business year.
Article 15 Omitted.
ADDENDUM <Act No. 16096, Dec. 31, 2018>
ADDENDA <Act No. 16833, Dec. 31, 2019>
Article 1 (Enforcement date)
This Act shall enter into force on 1/1/2020.
Article 2 (General applicability)
This Act shall begin to apply to the business year beginning after this Act enters into force.
Article 3 (Applicability to non-inclusion of received dividends in gross income)
The amended provisions of Articles 18-2 (1) 1 and 18-3 (1) 1 shall apply from the first dividend to be distributed after this Act enters into force.
Article 4 (Applicability to non-inclusion of donations in deductible expenses)
The amended provisions of Article 24 (2), (5) and (6) shall apply from those who report the tax base after this Act enters into force, but also apply to donations that can be deducted carried forward when reporting the tax base.
Article 5 (Applicability to special cases, including exclusion of expenses incurred in relation to passenger vehicles for business use from deductible expenses)
The amended provisions of Article 27-2 (2) shall apply beginning with the returns filed on a tax base after this Act enters into force.
Article 6 (Applicability to penalty tax on negligence in submitting Invoice)
The amended provisions of Article 75-8 (1) 5 and 6 shall supply goods or services in the business year immediately preceding the business year in which this Act enters into force (hereinafter referred to as "previous business year") and shall transmit a list of issued electronic invoices to the Commissioner of the National Tax Service in accordance with Article 121 (7), and for whom 11 days have not passed as of the month immediately following the business year as at the enforcement date of this Act.
Article 7 (Applicability to calculation of amount of domestic source income)
The amended provisions of Article 92 (1) shall apply to the tax bases on the tax returns filed after this Act enters into force.
Article 8 (Applicability to domestic source income of foreign corporations)
The amended provisions of subparagraph 8 of Article 93 and subparagraphs 10 (j) and (k) of the same Article shall apply from the amount of income paid after this Act enters into force.
Article 9 (Applicability to special cases concerning withholding or collection from foreign corporation)
The amended provisions of Article 98 (1) 8 shall apply to income paid on or after this Act enters into force.
Article 10 (Applicability to request for correction by foreign corporations subject to withholding Tax)
The amended provisions of Articles 98-4 (4), 98-5 (2) and 98-6 (4) shall apply from the amount of income paid after this Act enters into force.
Article 11 (Transitional measures concerning non-inclusion of evaluation marginal profits in gross income)
Notwithstanding the amended provisions of subparagraph 6 of Article 18, the previous provisions shall apply to losses incurred in the business year commenced before January 1, 2010.
Article 12 (Transitional measures concerning penalty tax on negligence in issuance, preparation, and storage of donation receipts)
Notwithstanding the amended provisions of Article 75-4 (1) 1 (a) and (b), the previous provisions shall apply to the donation receipts issued before this Act enters into force.
Article 13 (Transitional measures concerning penalty tax for insufficient submission of invoices)
Notwithstanding the amended provisions of Article 75-8 (1) 5 and 6, the previous provisions shall apply where a list of issued electronic invoices is to be transmitted to the Commissioner of the National Tax Service under Article 121 (7) by supplying goods or services before this Act enters into force (excluding cases falling under Article 6 of the Addenda).
Article 14 (Transitional measures concerning domestic source income of foreign corporation)
Notwithstanding the amended provisions of subparagraph 8 of Article 93 and subparagraph 10 (j) and (k) of the same Article, the previous provisions shall apply to forcethe amount of income paid before this Act enters into force.
ADDENDA <Act No. 17476, Aug. 18, 2020>
Article 1 (Enforcement date)
This Act shall enter into force on Jan. 1, 2021.
Article 2 (Applicability to special taxation for capital gains on transfer of land)
The amended provisions of Article 55-2 (1) shall apply from the part transferred after this Act enters into force.
ADDENDA <Act No. 17652, Dec. 22, 2020>
Article 1 (Enforcement date)
This Act shall enter into force on January 1, 2021; provided, the amended provisions of Articles 75-4 (2) and 112-2 shall enter into force on July 1, 2021; the amended provisions of Article 92 (2), the amended provisions of subparagraph 10 (k) and (l) of Article 93 and Article 98 shall enter into force on January 1, 2027, and the amended provisions of subparagraph 1 of Article 93 and subparagraph 2 (a), (c), (d) of that Article shall enter into force on January 1, 2025. <Amended on Dec. 21, 2021; Dec. 31, 2022; Dec. 31, 2024>
Article 2 (General applicability)
This Act shall begin to apply to the business year beginning after this Act enters into force.
Article 3 (Applicability to corporate taxation on income of corporate taxable trust property)
| (1) | The amended provisions of Articles 5 (2) and (3), 18-2 (2) 5, 18-3 (2) 4, 57-2 (1), 73-2 (4), 75-10 through 75-14, 75-16 through 75-18, 109 (1), 109-2, 111 (3), (6), and (7) shall apply to trust agreements concluded after this Act enters into force. (2) The amended provisions of Article 75-15 shall apply to trusts merged or divided after this Act enters into force. |
| (2) | The amended provisions of Article 75-15 shall begin to apply to the portions that merge or divide trusts after this Act enters into force. |
Article 4 (Applicability to deduction of losses carried forward)
The amended provisions of Articles 13 (1) 1 (a) and 76-13 (1) 1 shall begin to apply to losses incurred in the business year beginning after January 1, 2020.
Article 5 (Applicability to non-inclusion of bad debts in deductible expenses)
The amended provisions of Article 19-2 (2) 2 shall apply to the lending after this Act enters into force.
Article 6 (Applicability to non-inclusion of donations in deductible expenses)
The amended provisions of Article 24 (2) 2 and (3) 2 shall begin to apply to donations expended in the business year beginning after this Act enters into force.
Article 7 (Applicability to restriction on deduction of losses carried forward upon merger or division)
The amended provisions of Articles 45 (6) through (8) and 46-4 (6) through (8) shall apply to mergers or divisions conducted after this Act enters into force.
Article 8 (Applicability to foreign tax credits)
The amended provisions of Article 57 (2) shall apply to the amount of foreign corporate tax paid or payable to a foreign government in excess of a deduction limit and therefore remaining without being deducted as of the end of the business year immediately preceding the business year beginning after this Act enters into force, for the purpose of calculating the tax base and the amount of tax for the business year beginning after this Act enters into force.
Article 9 (Applicability to obligation to prepare and keep detailed records of issuing donation receipts)
The amended provisions of Articles 75-4 (2) and 112-2 shall apply to electronic donation receipts issued after July 1, 2021.
Article 10 (Applicability to penalty tax on negligence in submitting payment statements)
| (1) | The amended provisions of Article 75-7 (1), with the exception of the subparagraphs, shall apply when the obligation to submit a payment statement arises after this Act enters into force. |
| (2) | The amended provisions of Article 75-7 (1) 1 (b) and 2 (b) shall apply to reports, determinations or corrections made after this Act enters into force. |
Article 11 (Applicability to domestic source income of foreign corporations)
| (1) | The amended provisions of Article 92 (2) 1 (b) and subparagraph 10 (k) of Article 93 shall apply to virtual assets transferred, lent, or withdrawn after January 1, 2027. <Amended on Dec. 21, 2021; Dec. 31, 2022; Dec. 31, 2024> |
| (2) | The amended provisions of subparagraphs 1 and 2 (a), (c), and (d) of Article 93 shall apply to income accruing after January 1, 2025. <Amended on Dec. 31, 2022> |
Article 12 (Applicability to special cases concerning application of tax rates to interest, dividends and royalties)
The amended provisions of the latter part of subparagraph 8, with the exception of the items, of Article 93 and Article 98 (7) (limited to the part pertaining to including the income accruing from leasing industrial, commercial, or scientific machinery, facilities, or equipment, etc., which is classified as royalty income under a tax treaty, in royalty income) shall apply to income paid after January 1, 2013.
Article 13 (Applicability to special cases concerning withholding tax on domestic source income of foreign corporations)
The amended provisions of Article 98 (1) 8 (b) and (13), (16), and (17) shall apply to virtual asset income accruing after January 1, 2027. <Amended on Dec. 21, 2021; Dec. 31, 2022; Dec. 31, 2024>
Article 14 (Applicability to obligation to submit payment statements on domestic source income of foreign corporations)
The amended provisions of Article 120-2 (1) shall apply when transfer consideration is paid after this Act enters into force.
Article 15 (Transitional measures concerning deduction of losses carried forward)
Notwithstanding the amended provisions of Articles 13 (1) 1 (a) and 76-13 (1) 1, the former provisions shall apply to losses incurred in business years beginning before January 1, 2020.
Article 16 (Transitional measures concerning non-inclusion of donations in deductible expenses)
Notwithstanding the amended provisions of Article 24 (2) 2 and (3) 2, the former provisions shall apply to donations expended in business years beginning before this Act enters into force.
Article 17 (Transitional measures concerning restriction on deduction of losses carried forward upon merger or division)
Notwithstanding the amended provisions of Articles 45 (6) through (8) and 46-4 (6) through (8), the former provisions shall apply to a merger or division conducted before this Act enters into force.
Article 18 (Transitional measures concerning deduction of income for special purpose companies)
Notwithstanding the amended provisions of Article 51-2 (1) 9, the former provisions shall apply to the business year beginning before this Act enters into force.
Article 19 (Transitional measures concerning foreign tax credits)
Notwithstanding the amended provisions (limited to the part deleting the method for inclusion in deductible expenses) of Article 57, the former provisions shall apply to business years beginning before this Act enters into force.
Article 20 (Transitional measures concerning tax credits for losses from disasters)
Notwithstanding the amended provisions of Articles 58 (1) 1 and 71 (4), the former provisions shall apply when a tax liability was established before January 1, 2020.
Article 21 (Transitional measures concerning administrative fines for non-performance of duty to submit materials concerning overseas corporations)
Notwithstanding the amended provisions of Article 123, the former provisions shall apply when applying the provisions pertaining to administrative fines for any violation of obligations committed before this Act enters into force.
ADDENDA <Act No. 17758, Dec. 29, 2020>
Article 1 (Enforcement date)
This Act shall enter into force on Jan. 1, 2021.
Articles 2 through 25 Omitted.
ADDENDA <Act No. 17799, Dec. 29, 2020>
Article 1 (Enforcement date)
This Act shall enter into force one year after the date of its promulgation. (Proviso Omitted)
Articles 2 through 26 Omitted.
ADDENDA <Act No. 17924, Mar. 16, 2021>
Article 1 (Enforcement date)
This Act shall enter into force on Jul. 1, 2021
Article 2 (Applicability to penalty taxes on negligence in submitting payment statements)
The amended provisions of Article 75-7 (1) through (3) shall apply when a payment statement or simple payment statement should be or is submitted with respect to income paid after this Act enters into force pursuant to the proviso, with the exception of the subparagraphs, of Article 164 (1) or Article 164-3 (1) 2 of the Income Tax Act.
Article 3 (Transitional measures concerning penalty taxes on negligence in submitting payment statements)
Notwithstanding the amended provisions of Article 75-7 (1), the former provisions shall apply to penalty taxes imposed or to be imposed pursuant to the former provisions of Article 75-7 (1) before this Act enters into force.
ADDENDA <Act No. 18425, Aug. 17, 2021>
Article 1 (Enforcement date)
This Act shall enter into force six months after the date of its promulgation.
Article 2 Omitted.
Article 3 Omitted.
ADDENDA <Act No. 18521, Nov. 23, 2021>
Article 1 (Enforcement date)
This Act shall enter into force on the date of its promulgation. (Proviso Omitted)
Article 2 through 4 Omitted
ADDENDA <Act No. 18584, Dec. 21, 2021>
ADDENDA <Act No. 18590, Dec. 21, 2021>
Article 1 (Enforcement date)
This Act shall enter into force on January 1, 2022; provided, the amended provisions of Articles 57 (1), 57-2, 62-2 (1) 1, and 73 (1) shall enter into force on January 1, 2025. <Amended on Dec. 31, 2022>
Article 2 (Applicability to non-inclusion of donations in deductible expenses)
The amended provisions of Article 24 (2) 1 (d) (vii) shall also apply to donations expended after May 2, 2021.
Article 3 (Applicability to requirements for qualified merger)
The amended provisions of Article 44 (2) 3 shall apply to a merger conducted after this Act enters into force.
Article 4 (Applicability to restrictions on deduction of losses carried forward upon acquisition of business)
The amended provisions of Articles 50-2 and 113 (7) shall apply to contracts for business transfer or acquisition concluded after this Act enters into force.
Article 5 (Applicability to institutional private equity funds excluded from deduction of dividend income)
| (1) | The amended provisions of Article 51-2 (1) 2 shall apply to reporting a tax base after this Act enters into force. |
| (2) | Notwithstanding the amended provisions of Article 51-2 (1) 2, the former provisions shall apply to a private equity fund that continues to exist as at the time this Act enters into force for being deemed to be an institutional private equity fund, private equity fund for corporate financial stability, or private equity fund specializing in start-up or venture business pursuant to Article 8 (1) through (4) of the Financial Investment Services and Capital Markets Act amended by Act No. 18128. |
Article 6 (Applicability to special cases concerning foreign Tax credits and refunds)
| (1) | The amended provisions of the latter part of Article 57 (1) and the latter part, with the exception of the subparagraphs, of Article 73 (1) shall apply to foreign tax credits or withholding on income accruing after January 1, 2025. <Amended on Dec. 31, 2022> |
| (2) | With respect to income accruing before January 1, 2025, notwithstanding the amended provisions of Article 57-2, the former provisions shall apply to the deduction or refund of foreign taxes when a tax base is reported for the business year in which the relevant income accrues. <Amended on Dec. 31, 2022> |
| (3) | Where the former provisions of Article 57-2 apply to the income accruing during a period from October 21, 2021 to December 31, 2022 pursuant to paragraph (2), a "private equity fund" referred to in paragraph (1) of the same Article shall be deemed to be an "institutional private equity fund or a privately placed fund that is deemed to be an institutional private equity fund, private equity fund for corporate financial stability, or private equity fund specializing in start-up or venture business pursuant to Article 8 (1) through (4) of the Financial Investment Services and Capital Markets Act amended by Act No. 18128. |
Article 7 (Applicability to submission of certificate of confirmation on compliant filing)
The amended provisions of Article 60-2 (1) 3 shall apply to the acquisition of a business conducted after this Act enters into force.
Article 8 (Applicability to penalty tax on negligence in submitting detailed statement of expenses related to passenger vehicles for business use)
The amended provisions of Article 74-2 shall begin to apply where expenses related to passenger vehicles for business use, etc. are included in deductible expenses for the business year beginning after this Act enters into force.
Article 9 (Applicability to submission of status data on foreign corporation liaison offices)
The amended provisions of Article 94-2 shall begin to apply where status data are submitted for the business year beginning after this Act enters into force.
Article 10 (Transitional measures concerning special cases of filing capital gains on transfer of assets by non-profit domestic corporations)
Notwithstanding the amended provisions of Article 62-2 (1) 1, the former provisions shall apply where stocks, etc. are transferred before January 1, 2025. <Amended on Dec. 31, 2022>
Article 11 (Transitional measures concerning penalty tax on negligence in submitting certificate of confirmation on compliant filing)
Notwithstanding the amended provisions of Article 75 (1) and (3), the former provisions shall apply to a penalty tax on negligence in submitting a certificate of confirmation on compliant filing to be paid after this Act enters into force for a business year beginning before this Act enters into force.
Article 12 (Transitional measures concerning penalty tax on negligence in issuing cash receipts)
Notwithstanding the amended provisions of Article 75-6 (2) 3, the former provisions shall apply where a domestic corporation voluntarily reports to a tax office or voluntarily issues a cash receipt before this Act enters into force.
Article 13 (Transitional measures concerning change of requirements for foreign investment scheme deemed real beneficiary)
Notwithstanding the amended provisions of Article 93-2 (1) 1 and 2, the former provisions shall apply when determining a real beneficiary of domestic source income paid before this Act enters into force.
ADDENDA <Act No. 19193, Dec. 31, 2022>
Article 1 (Enforcement date)
This Act shall enter into force on January 1, 2023; provided, the amended provisions of the following subparagraphs shall enter into force on the date specified in the relevant subparagraph. <Amended on Dec. 31, 2023>
| 1. | The amended provisions of subparagraphs 9, 10, and 10-2 of Article 2, subparagraph 6 of Article 21, Article 25 (excluding the amended part pertaining to "purchaser-issued invoice" in paragraph (2) 3 of the same Article), Article 75-5 (2) 1, and Article 75-7 (1) (excluding cases where a simplified statement of payment of income referred to in Article 164-3 (1) 1 of the Income Act), Article 75-7 (3) 2 and (4) (excluding the provisions concerning income of Article 164-3 (1) 1 of the Income Act); the part amending "income prescribed in subparagraph 3" in the amended provisions of paragraph (5) of the same Article; the amended provisions of Articles 76-8, 76-9, 76-11, 76-12, 76-14 (excluding paragraph (1) 2 (a) and 4 of the same Article), 76-18, and 76-19: January 1, 2024; |
| 2. | The amended provisions of subparagraph 2 (c) of Article 93 of the Corporate Tax Act amended by Act No. 17652; the amended provisions of the latter part of Article 57 (1) and subparagraphs 1 through 3 of the same paragraph, Article 57-2, the latter part, with the exception of the subparagraphs, of Article 73 (1), and Article 73 (2) through (10) of the Corporate Tax Act amended by Act No. 18590: Jan. 1, 2025; |
| 3. | The amended part pertaining to "purchaser-issued invoice" in the amended provisions of Article 25 (2) 3; the amended provisions of Articles 116 (3) and 121-2: July 1, 2023; |
| 4. | The amended provisions of Article 75-7 (1) (limited to cases where a simplified statement of payment of income referred to in Article 164-3 (1) 1 of the Income Tax Act is not submitted), and paragraphs (3) 1 and (4) of that Article (limited to the provisions concerning income under Article 164-3 (1) 1 of the Income Tax Act): January 1, 2026; |
Article 2 (General applicability)
This Act shall begin to apply to the business year beginning after this Act enters into force.
Article 3 (Applicability to non-inclusion of dividends on capital reserves in gross income)
The amended provisions of the main clause of subparagraph 8 of Article 18 shall apply to dividends received after this Act enters into force.
Article 4 (General applicability to dividend income of foreign subsidiaries)
The amended provisions of Article 18-4 (including cases applied mutatis mutandis pursuant to the amended provisions of Article 79), subparagraph 1 of Article 21, and Article 57 (5) and (7) shall apply to dividend income received from a foreign subsidiary after this Act enters into force.
Article 5 (Applicability to issuance of purchaser-issued invoice)
The amended provisions of Article 25 (2) 3 (limited to the part pertaining to purchaser-issued invoices) and Article 121-2 shall apply where goods or services are supplied or received after July 1, 2023.
Article 6 (Special cases concerning timing of applying insurance company taxation provisions, such as inclusion of surrender refund reserve in deductible expenses)
With respect to an insurance company that applies the international financial reporting standards for insurance contracts referred to in Article 42-3 (1) and reserves surrender value referred to in Article 32 in the business year in which December 31, 2022 falls, the amended provisions of Articles 30 (1), 32 and 42-3 shall begin to apply to the portion reported after this Act enters into force.
Article 7 (Applicability to acquisition value of assets)
The amended provisions of Article 41 (1) 1-2 shall apply where a foreign subsidiary is acquired after this Act enters into force.
Article 8 (Applicability to income deductions for special purpose companies)
The amended provisions of Article 51-2 shall apply where dividends are resolved after this Act enters into force.
Article 9 (Applicability to special cases concerning foreign tax credits for indirect investment companies)
| (1) | The amended provisions of the latter part of Article 57 (1) and subparagraphs 1 through 3 of the same paragraph; Article 57-2; the latter part, with the exception of the subparagraphs, of Article 73, and paragraphs (2) and (3) of the same Article of the Corporate Tax Act amended by Act No. 18590 shall apply to foreign tax credits or withholding on income received after January 1, 2025. |
| (2) | With respect to income accruing before January 1, 2025, the former provisions (referring to the Corporate Tax Act prior to it being amended by Act No. 18590) shall apply to the foreign tax credits and refunds where a tax base is reported for the relevant business year, notwithstanding the amended provisions of Article 57-2 of the Corporate Tax Act amended by Act No. 18590. |
Article 10 (Applicability to withholding tax rates on interest income)
The amended provisions of Article 73 (1) shall apply to interest income received through an online investment-linked financial business entity after this Act enters into force.
Article 11 (Applicability to penalty tax on negligence in submitting payment statements)
| (1) | The amended provisions of Article 75-7 (1) (excluding cases where a simplified statement of payment of income referred to in Article 164-3 (1) 1 of the Income Tax Act is not submitted), Article 75-7 (3) 2, (4) (excluding the provisions concerning income of Article 164-3 (1) 1 of the Income Tax Act), Article 75-7 (5) (limited to the part pertaining to income provided in Article 164-3 (1) 3 of the Income Tax Act) shall apply when a payment statement, etc. should be or is submitted with respect to income paid after January 1, 2024. <Amended on Dec. 31, 2023> |
| (2) | The amended provisions of Article 75-7 (1) 1 (limited to cases where a simplified statement of payment of income referred to in Article 164-3 (1) 1 of the Income Tax Act is not submitted), Article 75-7 (3) 1, and paragraph (4) of that Article (limited to provisions concerning income referred to in Article 164-3 (1) 1 of the Income Tax Act) shall begin to apply to the cases where a payment statement, etc. should be or is submitted with respect to income paid after January 1, 2026. <Added on Dec. 31, 2023> |
| (3) | The amended provisions of Article 75-7 (5) (limited to the provisions pertaining to income prescribed in Article 164-3 (1) 2 of the Income Tax Act) shall begin to apply where a payment statement, etc. should be or is submitted with respect to income paid after January 1, 2023. <Amended on Dec. 31, 2023> |
| (4) | Notwithstanding the amended provisions of Article 75-7 (1) 1 (b) and paragraph (4) of that Article, the former provisions shall apply to a penalty tax for delayed submission of a simple payment statement on income prescribed in Article 164-3 (1) 1 of the Income Tax Act, which is paid before January 1, 2026. <Amended on Dec. 31, 2023> |
Article 12 (Applicability to special cases concerning taxation on interest and capital gains on state bonds, etc. of foreign corporations)
The amended provisions of Article 93-3 shall apply where interest is paid or State bonds, etc. are transferred after this Act enters into force.
Article 13 (Applicability to submission of data on liaison offices of foreign corporations)
The amended provisions of Article 94-2 (2) and (3) shall apply where goods or services are provided after this Act enters into force.
Article 14 (Applicability to application for non-taxation or tax exemption for domestic source income of foreign corporations)
The amended provisions of Articles 98-4 and 98-6 shall apply where an application is filed for non-taxation, tax exemption, or restrictive tax rates under a tax treaty after this Act enters into force.
Article 15 (Applicability to obligation to submit virtual asset transaction details)
The amended provisions of Article 120-4 shall apply where virtual assets are transferred or lent after January 1, 2023.
Article 15-2 (Special cases concerning waiver of consolidated tax payment method)
| (1) | Where a consolidated parent corporation that has consolidated control of a domestic corporation other than a consolidated subsidiary corporation under subparagraph 10 of Article 2 pursuant to the amended provisions of subparagraph 10-2 of Article 2 as at the time of January 1, 2024 intends to stop applying the consolidated taxation method from the business year that commences after January 1, 2024, "the day on which three months have elapsed before the first day of a business year" in the main clause of Article 76-10 (1) shall be construed as "the day on which two months have elapsed after the first day of a business year that commences after January 1, 2024", and the proviso of the same paragraph shall not apply. |
| (2) | Notwithstanding the amended provisions of Article 76-11 (1) and (2), where a consolidated parent corporation under paragraph (1) fails to file a report on renunciation of application of the consolidated tax payment method within the deadline for filing a report under the same paragraph, the consolidate tax payment method shall begin to apply in the business year in which January 1, 2024 falls. In such cases, for the purpose of applying Article 76-11 (3), the "date of change" shall be construed as "the date on which two months have elapsed after the first day of the business year commencing after January 1, 2024." |
Article 16 (Transitional measures concerning non-inclusion of domestic corporations' dividend income in gross income)
| (1) | Where the business year of a domestic corporation begins before this Act enters into force and ends after this Act enters into force, notwithstanding the amended provisions of Articles 18-2 and 18-3, the former provisions shall apply to the ratio of non-inclusion in gross income of the dividend income received before this Act enters into force; the amended provisions of Article 18-2 shall apply to the ratio of non-inclusion in gross income of the dividend income received after this Act enters into force. |
| (2) | With respect to dividend income received by a domestic corporation by December 31, 2023, notwithstanding the amended provisions of Article 18-3, the ratio of non-inclusion in gross income under the former provisions may apply. |
Article 17 (Transitional measures concerning change of reference to entertainment expenses)
Entertainment expenses expended before January 1, 2024 shall be deemed to be business promotion expenses prescribed in the amended provisions of Article 25.
Article 18 (Transitional measures concerning tax rates)
Notwithstanding the amended provisions of Article 55 (1), the former provisions shall apply to the corporate tax rates on the income for business years beginning before this Act enters into force.
Article 19 (Transitional measures concerning foreign tax credits)
Notwithstanding the amended provisions of Article 57 (5) and (7), the former provisions shall apply to credits for foreign corporate tax (including an amount carried forward pursuant to Article 57 (2)) on the dividend income received from a foreign subsidiary before this Act enters into force.
Article 20 (Transitional measures concerning special cases of withholding or collection of taxes of foreign corporations)
Notwithstanding the amended provisions of Article 98 (2), the former provisions shall apply where interest is paid or State bonds, etc. are transferred before this Act enters into force.
ADDENDA <Act No. 19930, Dec. 31, 2023>
Article 1 (Enforcement date)
This Act shall enter into force on January 1, 2024.
Article 2 (Applicability to inclusion of dividends from reduced capital reserves in gross income)
The amended provisions of subparagraph 8 of Article 18 shall begin to apply to dividends received by reducing the capital reserves after this Act enters into force.
Article 3 (Applicability to inclusion of dividend income of domestic corporations in gross income)
The amended provisions of Article 18-2 (2) 6 through 8 shall begin to apply to dividend incomes received from other domestic corporations after this Act enters into force.
Article 4 (Applicability to income deduction for special purpose companies)
The amended provisions of the proviso of Article 51-2 (2) 1 and the proviso of Article 75-14 (2) shall begin to apply to the business year in which December 31, 2023 falls.
Article 5 (Applicability to special cases concerning calculation of tax base and tax amount by estimation)
The amended provisions of the main clause of Article 68 shall begin to apply to the estimation of the tax base and tax amount for the business year commencing after this Act enters into force.
Article 6 (Applicability to settlement of distribution amount by consolidated corporation)
The amended provisions of Article 76-19 (5) shall begin to apply to the business year commencing after this Act enters into force.
Article 7 (Applicability to period for requesting correction for application of non-taxation, tax exemption, or restricted tax rates under tax treaties)
The amended provisions of the main clause of Article 98-4 (5), the main clause of Articles 98-5 (2), and the main clause of Article 98-6 (4) shall also apply where the period for requesting correction under the same amended provisions has not expired as at the time this Act enters into force.
Article 8 (Applicability to special cases concerning withholding tax on foreigner consolidated accounts)
The amended provisions of Article 98-8 shall begin to apply to cases where domestic source income is paid to the holder of foreigner consolidated account after this Act enters into force.
Article 9 (Transitional measures concerning taxation of corporate tax on trust income)
Notwithstanding the amended provisions of Article 5 (2) and (3), the former provisions shall apply to income reverted to trust property before this Act enters into force.
Article 10 (Transitional measures concerning period for reporting change of consolidated subsidiary)
Notwithstanding the amended provisions of Article 76-12 (4), the previous provisions shall apply to the reporting period where a cause for change of a consolidated subsidiary corporation occurs before this Act enters into force.
ADDENDA <Act No. 20609, Dec. 31, 2004>
Article 1 (Enforcement date)
This Act shall enter into force on January 1, 2025.
Article 2 Omitted.
Article 3 Omitted.
ADDENDA <Act No. 20613, Dec. 31, 2004>
Article 1 (Enforcement date)
This Act shall enter into force on January 1, 2025; provided, the amended provisions of the following subparagraphs shall enter into force on the date specified in the relevant subparagraphs:
| 1. | The amended provisions of the former part of Article 98-4 (1), Article 120-4 (2), and subparagraph 3 of Article 124: January 1, 2026; |
| 2. | The amended provisions, with the exception of the subparagraphs, of Article 5 (2): July 1, 2025. |
Article 2 (Applicability to taxation of corporate tax on trust income)
The amended provisions of the former part, with the exception of the subparagraphs, of Article 5 (2) shall begin to apply to the incomes reverted to the trust property in the business year in which July 1, 2025 falls.
Article 3 (Applicability to non-inclusion of donations in deductible expenses)
The amended provisions of Article 24 (2) 1 (e) shall begin to apply to tax base returns after this Act enters into force.
Article 4 (Applicability to taxation on divided corporations upon division)
The amended provisions of Article 46 (2) 2 shall begin to apply where a domestic corporation is divided after this Act enters into force.
Article 5 (Applicability to tax rate)
The amended provisions of Article 55 (1) shall begin to apply to the calculation of corporate taxes on income for the business year commencing after this Act enters into force.
Article 6 (Applicability to calculation of interim tax and consolidated interim tax)
The amended provisions of the proviso, with the exception of the subparagraphs, of Article 63-2 (1), paragraph (2) of that Article, the proviso, with the exception of the subparagraphs, of Article 76-18 (1), and paragraph (2) of that Article shall begin to apply to the cases of calculation of interim tax or consolidated interim tax on the incomes for the business year or consolidated business year that commences after this Act enters into force.
Article 7 (Applicability to application of provisions on small and medium enterprises to consolidated corporations)
The amended provisions of Article 76-22 shall begin to apply to the calculation of corporate taxes on income for the consolidated business year commencing after this Act enters into force.
Article 8 (Applicability to special taxation of interest and capital gains on State bonds of foreign corporations)
| (1) | The amended provisions of Article 93-3 (3) through (5) shall begin to apply to cases where income is paid after this Act enters into force. |
| (2) | The amended provisions of Article 93-3 (6) and (7) shall begin to apply to cases where a rectification is requested after this Act enters into force. |
Article 9 (Applicability to obligation to issue electronic donation receipts)
The amended provisions of Article 112-2 (4) shall begin to apply to donations received after this Act enters into force.
Article 10 (Transitional measures concerning application for non-taxation or tax exemption under tax treaty to foreign corporations)
The previous provisions shall apply to the domestic source income accruing from rendering personal services generated before the enforcement under the amended provisions of the former part of Article 98-4 (1), notwithstanding that amended provisions.
Article 11 (Transitional measures concerning submission of virtual asset transaction records)
| (1) | Notwithstanding the amended provisions of Article 120-4 (1), the former provisions shall apply to transactions of virtual assets which occurred before this Act enters into force. |
| (2) | The amended provisions of Article 120-4 (2) shall begin to apply to cases where a virtual asset business entity fails to submit data with respect to transactions that take place after January 1, 2026. |
ADDENDA <Act No. 20775, Mar. 14, 2025>
Article 1 (Enforcement date)
This Act shall enter into force on the date of its promulgation.
Article 2 (Applicability to non-inclusion of dividend income from domestic corporations in taxable income)
The amended provisions of Article 16 (2) of Addenda to the Corporate Tax Act, partially amended by Act No. 19193, shall begin to apply to cases where a tax base return is filed after this Act enters into force.
ENFORCEMENT DECREE OF THE CORPORATE TAX ACT
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.36130 | 20260227 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.35947 | 20260102 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.35879 | 20251128 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.35811 | 20251001 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.35350 | 20250228 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.35122 | 20250101 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.34991 | 20241112 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.34728 | 20240731 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.34657 | 20240710 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.34488 | 20240517 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.34266 | 20240229 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.33621 | 20230710 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.29269 | 20190101 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.29067 | 20180731 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.29045 | 20180717 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.28640 | 20180213 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.28211 | 20170726 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.28074 | 20170530 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.27972 | 20170330 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.27828 | 20170203 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.27619 | 20161129 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.27472 | 20160831 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.27445 | 20160812 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.27444 | 20160812 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.27322 | 20160725 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.27245 | 20160623 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.27205 | 20160930 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.27115 | 20160429 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.27037 | 20160311 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.26981 | 20160212 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.26922 | 20160125 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.26763 | 20151212 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.26600 | 20151025 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.26416 | 20150721 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.26369 | 20150701 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.26302 | 20150604 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.26068 | 20150203 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.25945 | 20141231 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.25751 | 20141119 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.25640 | 20141001 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.25279 | 20140324 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.25194 | 20140221 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.24575 | 20130611 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.24441 | 20130323 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.24357 | 20130215 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.24018 | 20120805 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.24017 | 20120805 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.23724 | 20120415 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.23589 | 20120202 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.23527 | 20120126 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.23356 | 20111208 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.23220 | 20111014 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.22951 | 20110603 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.22812 | 20110331 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.22687 | 20110302 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.22626 | 20110117 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.22577 | 20101230 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.22516 | 20101207 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.22493 | 20101115 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.22467 | 20101102 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.22395 | 20100920 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.22390 | 20100920 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.22356 | 20100825 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.22282 | 20100721 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.22220 | 20100628 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.22184 | 20100608 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.22075 | 20100315 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.22073 | 20100309 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.22035 | 20100218 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.21972 | 20091231 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.21935 | 20091231 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.21881 | 20091214 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.21748 | 20090929 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.21744 | 20090921 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.21698 | 20090823 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.21566 | 20090626 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.21528 | 20090609 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.21526 | 20090608 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.21431 | 20090421 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.21302 | 20090204 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.21063 | 20081007 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.21025 | 20080922 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.20930 | 20080724 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.20849 | 20080622 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.20799 | 20080605 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.20763 | 20080407 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.20720 | 20080229 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.20619 | 20080222 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.19891 | 20070228 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.19815 | 20070101 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.19494 | 20060604 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.19422 | 20060401 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.19328 | 20060209 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.18736 | 20050308 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.18706 | 20050219 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.18324 | 20040322 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.18312 | 20040317 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.18174 | 20040101 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.18146 | 20031130 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.17826 | 20030101 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.17791 | 20021205 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.17457 | 20020101 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.17338 | 20010814 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.17033 | 20010101 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.16810 | 20000516 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.16762 | 20000328 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.16703 | 20000207 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.16658 | 20000101 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.15970 | 19990101 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.15967 | 19990101 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.15797 | 19980516 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.15686 | 19980224 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.15564 | 19980101 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.15516 | 19971129 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.15501 | 19971025 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.15192 | 19970101 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.15135 | 19960808 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.14988 | 19960427 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.14915 | 19960215 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.14861 | 19960101 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.14721 | 19950706 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.14468 | 19950101 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.14446 | 19941223 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.14169 | 19940218 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.14080 | 19940101 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.13803 | 19930101 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.13541 | 19920101 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.13195 | 19910101 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.13144 | 19901024 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.12995 | 19900901 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.12899 | 19900103 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.12878 | 19900101 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.12565 | 19890101 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.12334 | 19871231 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.11813 | 19851231 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.11776 | 19851005 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.11579 | 19841231 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.11520 | 19841005 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.11282 | 19831229 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.11157 | 19830701 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.10978 | 19830101 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.10737 | 19820218 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.10666 | 19820101 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.10413 | 19810723 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.10119 | 19810101 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.9961 | 19800711 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.9794 | 19800229 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.9699 | 19800101 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.9230 | 19781205 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.8961 | 19780424 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.8651 | 19770701 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.8537 | 19770420 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.8350 | 19770101 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.8253 | 19760927 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.8052 | 19760331 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.7956 | 19760121 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.7910 | 19751231 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.7865 | 19751113 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.7464 | 19750101 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.7209 | 19740725 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.7108 | 19740413 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.6642 | 19730424 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.6362 | 19721018 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.6312 | 19720803 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.6129 | 19720401 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.6073 | 19720101 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.5899 | 19720101 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.5683 | 19710628 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.5511 | 19710208 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.5368 | 19701022 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.5285 | 19700820 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.4489 | 19700101 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.4041 | 19690731 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.3880 | 19690415 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.3700 | 19690101 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.3495 | 19680101 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.3453 | 19680101 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.3319 | 19680101 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.3244 | 19671013 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.3098 | 19670601 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.2566 | 19660101 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.2444 | 19660311 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.2351 | 19660101 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.2341 | 19650613 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.2283 | 19651110 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.2066 | 19650304 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.1441 | 19590101 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.1344 | 19630618 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.1280 | 19630510 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.1241 | 19570101 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.1103 | 19550923 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.1100 | 19630101 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.941 | 19541001 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.901 | 19540513 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.740 | 19530122 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.696 | 19620427 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.448 | 19510101 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.322 | 19620101 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.238 | 19491216 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.167 | 19610101 |
| ENFORCEMENT DECREE OF THE CORPORATE TAX ACT | No.126 | 19610824 |
CHAPTER I GENERAL PROVISIONS
| Article 1 (Definition) |
| (1) | "Partnership corporations, etc. prescribed by Presidential Decree" in subparagraph 2 (b) of Article 1 of the Corporate Tax 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> |
| 1. | Cooperatives (including corporations that run the joint business with cooperatives) and the National Agricultural Cooperative Federation established under the Agricultural Cooperatives Act; |
| 2. | Cooperatives established pursuant to the Consumer Cooperatives Act and federations and national federations of such cooperatives; |
| 3. | Cooperatives (including fishing fraternities) 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; |
| 5. | Tobacco producers' cooperatives and the National Federation of Tobacco Producers Cooperatives established under the Tobacco Producers Cooperatives Act; |
| 6. | and 7. Deleted; <by Presidential Decree No. 16658, Dec. 31, 1999> |
| 8. | Cooperatives, their federation and the National Federation established under the Small and Medium Enterprise Cooperatives Act; |
| 9. | Credit cooperatives, their federation and National Federations established under the Credit Unions Act; |
| 10. | Community credit cooperatives and their federation established under the Community Credit Cooperatives Act; |
| 11. | The Korea Salt Manufacture's Association established under the Salt Manufacture Act. |
| (2) | "A corporation that meets the standards prescribed by Presidential Decree" in subparagraph 3 of Article 1 of the Corporate Tax Act means any of the following organizations: <Added by Presidential Decree No. 24357, Feb. 15, 2013> |
| 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. | An organization that owns an asset, becomes a party to a lawsuit, or directly holds a right or owes an obligation, independent of its members; |
| 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 any other Act of the Republic of Korea. |
| (3) | The Commissioner of the National Tax Service may publicly notify the list of foreign corporations under paragraph (2) by category. <Added 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. <Added by Presidential Decree No. 24357, Feb. 15, 2013> |
| Article 2 (Scope of Profit-Making Business) |
| (1) | "Business specified by Presidential Decree" in Article 3 (3) 1 of the Corporate Tax Act (hereinafter referred to as the "Act") mean business that generate revenue, among those classified in accordance with the Korean Standard Industrial Classification Code, published by the Commissioner of the National Statistical Office (hereinafter referred to as the "Korean Standard Industrial Classification Code"): |
| 1. | The livestock industry (including livestock-related service business), and agriculture except planting of landscape trees and the management and service business thereof; |
| 2. | Research and development business among the enterprise service business (excluding the business of rendering research and development services in return for payment through a contract, etc.); |
| 2-2. | Ship classification and survey services rendered in the Republic of Korea by a non-profit foreign corporation (limited where such non-profit foreign corporation does not have its actual business management place in the Republic of Korea), the headquarters or main office of which is located in a foreign country, if the domestic non-profit corporation provides such ship classification and survey services in the foreign country that does not impose the corporate tax on such domestic non-profit corporation; |
| 3. | Business of operating kindergartens provided for the Early Childhood Education Act, schools provided in the Elementary and Secondary Education Act and Higher Education Act, foreign educational institutions provided in the Special Act on Establishment and Management of Foreign Educational Institutions in Free Economic Zones and Jeju Free International City (excluding where a school may remit, or actually remits, its surplus fund to its main school in a foreign country pursuant to its articles of incorporation, etc.), lifelong educational facilities in the form of major colleges provided in Article 31 (4) of the Lifelong Education Act, and lifelong educational facilities in the form of distance colleges provided in Article 33 (3) of the same Act among the educational service business; |
| 4. | Social welfare services provided by any of the following social welfare facilities among health care and social welfare services: |
| (a) | A social welfare halls, a facility for vagrants and the homeless, or a facility for those suffer from tuberculosis and Hansen's disease among the social welfare facilities provided in Article 34 of the Social Welfare Services Act; |
| (b) | A Central Self-Support Center and a Regional Self-Support Center provided in Articles 15-2 (1) and 16 (1) of the National Basic Living Security Act; |
| (c) | A child welfare facility provided in Article 52 (1) of the Child Welfare Act; |
| (d) | A welfare facility for the aged (excluding medical welfare institutions for the aged) provided in Article 31 of the Welfare of Older Persons Act; |
| (e) | A long-term care institution provided in subparagraph 4 of Article 2 of the Act on Long-Term Care Insurance for Older Persons; |
| (f) | A welfare facility for persons with disabilities provided in Article 58 (1) of the Act on Welfare of Persons with Disabilities; |
| (g) | A single-parent family welfare facility provided in Article 19 (1) of the Single-Parent Family Support Act; |
| (h) | A child care center provided in Article 10 of the Infant Care Act; |
| (i) | A supporting institution and a counseling center for victims of sexual traffic provided in Articles 6 (2) and 10 (2) of the Act on the Prevention of Sexual Traffic and Protection, etc. of Victims; |
| (j) | A facility for the rehabilitation of mentally ill persons and a mental health sanatorium provided in subparagraphs 4 and 5 of Article 3 of the Mental Health Act; |
| (k) | A counseling center for victims of sexual violence and a protection facility of victims of sexual violence provided in Articles 10 (2) and 12 (2) of the Sexual Violence Prevention and Victims Protection Act; |
| (l) | An adoption institution provided in Article 20 (1) of the Act on Special Cases concerning Adoption; |
| (m) | A counseling center related to domestic violence and a protection facility for victims of domestic violence provided in Articles 5 (2) and 7 (2) of the Act on the Prevention of Domestic Violence and Protection, etc. of Victims; |
| (n) | A support center for multi-cultural families provided in Article 12 (1) of the Multicultural Families Support Act; |
| 5. | The following pension or mutual aid business: |
| (a) | The national pension services under the National Pension Act; |
| (b) | Business operated by an organization established under any special Act or upon approval or authorization of the Government (limited to fundraising and benefit services); |
| 6. | Among social security insurance services, medical insurance services under the National Health Insurance Act and industrial accident compensation insurance services under the Industrial Accident Compensation Insurance Act; |
| 7. | The business of providing services exempt from the 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. | The following service business related to finance and insurance: |
| (a) | The 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; |
| (b) | The business of operating deposit protection systems, such as deposit insurances and funding, through the Mutual Finance Depositor Protection Fund established under the Act on the Structural Improvement of Agricultural Cooperatives and the Fisheries Cooperatives Act; |
| (c) | The 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 the Act on the Efficient Disposal of Non-Performing Assets, etc. of Financial Companies and the Establishment of Korea Asset Management Corporation; |
| (e) | The 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) | The 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; |
| 9. | Blood services provided by the Korean National Red Cross established under the Organization of the Korean National Red Cross Act; |
| 10. | The 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 the business of paying reverse mortgage loan-backed old age pensions); |
| 11. | The business of lending money for business start-up, etc. to persons prescribed by Ministerial Decree of Strategy and Finance, such as persons eligible for assistance and the next needy class as defined in Article 2 of the National Basic Living Security Act, and which meet the requirements prescribed by Ministerial Decree of Strategy 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; |
| 13. | The business of promoting test of Dan, Geup and Poom by sports organizations affiliated with the Korea Sports Council established under Article 33 of the National Sports Promotion Act and by the Kukkiwon established under the Act on the Promotion of Taekwondo and Creation of Taekwondo Park; |
| 14. | Any business related to treatment of wastes which is conducted by Sudokwon Landfill Site Management Corporation established under the Act on the Establishment and Management of Sudokwon Landfill Site Management Corporation; |
| 15. | Other business similar to those referred to in subparagraphs 1, 2, 2-2, 3 through 14 and prescribed by Ministerial Decree of Strategy and Finance. |
| (2) | "Fixed assets prescribed by Presidential Decree" referred to in Article 3 (3) 5 of the Act mean fixed assets directly used for proper purpose business provided in any Act or subordinate statute or the articles of incorporation (excluding profit-making business provided in paragraph (1)) continuously for at least three years as at the date of disposition of the relevant fixed assets. In such cases, incidental profits, such as admission fees or entrance fees for maintenance and management of the relevant fixed assets accrue, such incidental profits shall be deemed the fixed assets directly used for proper purpose business. <Amended by Presidential Decree No. 21302, Feb. 4, 2009; Presidential Decree No. 22951, Jun. 3, 2011> |
| (3) | "Revenues prescribed by Presidential Decree" referred to in Article 3 (3) 7 of the Act means sales profits (referring to the amount of the balance of bond sales income and bond sales loss) from the sale of bonds, etc. (excluding where the interest income is exempt from corporate tax) referred to in Article 46 (1) of the Income Tax Act: |
| Article 3 (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> |
| 1. | For a domestic corporation, the registration date of its incorporation: |
| (a) | For an organization established under Acts and subordinate statutes, the date of establishment of which is prescribed by such Acts and subordinate statutes, the date of establishment; |
| (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 Acts and subordinate statutes, 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; |
| (d) | For an organization which has obtained approval from the head of the tax office having jurisdiction over the place of tax payment under Article 13 (2) of the Framework Act on National Taxes, the date of approval; |
| 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 reverted to 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 reverted to the relevant corporation are first generated. |
| Article 4 (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 Ministerial Decree of Strategy and Finance. <Amended by Presidential Decree No. 18312, Mar. 17, 2004; Presidential Decree No. 20720, Feb. 29, 2008>
| Article 5 (Scope of Registration Dates, etc. of Mergers) |
| (1) | "The registration date of a merger" referred to in the Act and this Decree means any of the following dates: |
| 1. | For a corporation surviving a merger, the registration date of change; |
| 2. | For a corporation established through a merger, the registration date of incorporation. |
| (2) | "The registration date of a division" referred to in the Act and this Decree means any of the following dates: |
| 1. | For a corporation surviving a division (including a division and merger; hereinafter the same shall apply), the registration date of change; |
| 2. | For a corporation established through a division, the registration date of incorporation. |
| Article 6 (Scope of Place of Tax Payment) |
| (1) | "Place prescribed by Presidential Decree" referred to in the proviso to Article 9 (1) of the Act means the location of the place of business of an organization, and for an organizations, the main income of which is real estate rental income, it means the location of the real estate. In such cases, 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 (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" referred to 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" referred to in Article 9 (3) of the Act means the location determined by applying |
| (4) | "Place prescribed by Presidential Decree" referred to 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 Ministerial Decree of Strategy 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 at least two domestic source income is generated. <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: |
| Article 7 (Place of Tax Payment for Persons Liable for Withholding) |
| (1) | "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 any of the following places: <Amended by Presidential Decree No. 16658, Dec. 31, 1999; 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. 24357, Feb. 15, 2013; Presidential Decree No. 24638, Jun. 28, 2013> |
| 1. | Where the relevant person liable for withholding is an individual, it means the location provided in Article 7 (1) 1 or 2 of the Income Tax Act; |
| 2. | Where the relevant person liable for withholding is a corporation, it means the location of its headquarters or main office, or the actual business management place where its headquarters or main office is not located in the Republic of Korea (hereinafter referred to as "headquarters, etc.") of the relevant corporation (referred to the location provided in Article 6 (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): |
| 3. | Notwithstanding the proviso to subparagraph 2, 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, the corporation may designate its headquarters as the place of tax payment for corporate tax withheld from the relevant income. In such cases, matters necessary for the procedures for filing a report on the collective payment at the headquarters of the relevant corporation shall be determined by Ministerial Decree of Strategy and Finance. |
| (2) | "The place prescribed by Presidential Decree" in the proviso to Article 9 (4) of the Act means any of the following places: <Amended by Presidential Decree No. 20619, Feb. 22, 2008; Presidential Decree No. 21302, Feb. 4, 2009; Presidential Decree No. 24357, Feb. 15, 2013> |
| 1. | Where income from the transfer of stocks, etc. under subparagraph 7 (b) of Article 93 of the Act or other income specified in any subparagraph of Article 132 (8) of this Decree accrues, it means 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, it means the place designated by the Commissioner of the National Tax Service. |
| Article 8 (Designation of and Notices on Place of Tax Payment) |
| (1) | "Circumstances prescribed by Presidential Decree" referred to in Article 10(1) of the Act means any of the following cases: <Presidential Decree No. 22951, Jun. 3, 2011> |
| 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 6 (3); |
| 4. | Where a foreign corporation with at least two property falling under the proviso to Article 9 (2) of the Act does fail to file a report under Article 6 (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 Ministerial Decree of Strategy 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) | In deducting losses under subparagraph 1 of Article 13 of the Act, such losses shall be deducted sequentially beginning with the losses first generated in the relevant business year. |
| (2) | In applying subparagraph 1 of Article 13 of the Act, any of the following losses shall be deemed to have been deducted from the tax base for each business year: <Amended by Presidential Decree No. 19328, Feb. 9, 2006; Presidential Decree No. 22812, Mar. 31, 2011> |
| 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; |
| 3. | Losses deducted under Article 72 (1) of the Act. |
| (3) | Losses referred to in subparagraph 1 of Article 13 of the Act shall include the limit of succeeded losses as defined in under Articles 81 (2) and 83 (2). <Amended by Presidential Decree No. 22184, Jun. 8, 2010> |
| (4) | 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, an amount equivalent to the amount whichever is smaller among the loss additionally allocated and the loss of the business year shall be deemed as the loss incurred in the business year in which a partnership enterprise which has generated a loss exceeding the allocation ends its business year and the paragraph (1) shall be applied, accordingly. <Added by Presidential Decree No. 21302, Feb. 4, 2009> |
Subsection 2 Calculation of Gross Income
| Article 11 (Scope of Earnings) |
Except as otherwise expressly provided in the Act and this Decree, earnings provided in Article 15 (1) of the Act shall be as prescribed in 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>
| 1. | The amount of income [including the amount of a contract, sales proceeds, and insurance premiums, but 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 the business, industries or services under the Korean Standard Industrial Classification: |
| 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); |
| 3. | Property rental fees; |
| 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. | The amount of reserve funds appropriated as deductible expenses and not treated under the disposition of profits; |
| 9. | Profits distributed from a related party through capital transactions referred to in the items of Article 88 (1) 8 and subparagraph 8-2 of the same paragraph; |
| 9-2. | 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): |
| (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 87 (1); |
| (b) | Interest accrued where the special relationship under Article 87 (1) 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. | Other earnings reverted or to be reverted to a corporation. |
| Article 12 (Scope, etc. 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: |
| 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 merger in which transfer gains or losses are deemed nil as it falls under Article 44 (2) or (3) of the Act (hereinafter referred to as "qualified merger"), the amount referred to in items (a), (c) (limited to surpluses referred to in the main sentence other than the items of Article 16 (1) 2 of the Act) and (d) (in the case of a corporation, other than a stock company, referring to the amount computed by applying this mutatis mutandis) calculated in the following sequential order until it reaches the amount computed under Article 17 (1) 5 of the Act (hereafter referred to as "marginal profit from a merger" in this Article): |
| (a) | The sum of an asset adjustment account provided in Article 44-3 (1) of the Act and Article 80-4 (1) of this Decree; |
| (b) | Where the sum of the costs of a merger referred to in Article 16 (1) 5 of the Act (in the case of stocks, it shall be the revalued amount based on the par value) falls short of the capital of a merged corporation, such shortage; |
| (c) | The amount computed sequentially from the surpluses, other than those referred to in the main sentence other than the items of Article 16 (1) 2 of the Act, from among the capital surplus prescribed by Ministerial Decree of Strategy of Finance of a merged corporation; |
| (d) | The amount equivalent to the earned surplus of a merged corporation; |
| 4. | In the case of a merger in which transfer gains or losses are deemed nil as it falls under Article 46 (2) of the Act (hereinafter referred to as "qualified division"), the amount referred to in (a), (c) (limited to surpluses referred to in the main sentence other than the items of Article 16 (1) 2 of the Act) and (d) (in the case of a corporation other than a stock company, referring the amount computed by applying this mutatis mutandis) calculated sequentially until it reaches the amount computed under Article 17(1) 6 of the Act (hereafter referred to as "marginal profit from a division" in this Article): |
| (a) | The sum of an asset adjustment account provided in Article 46-3 (1) of the Act and Article 82-4 (1) of this Decree; |
| (b) | Where the sum of the costs of a division referred to in Article 16 (1) 6 of the Act (in the case of stocks, it shall be the revalued amount based on the par value) falls short of the capital of the divided corporation or the disappearing counterpart corporation to a merger and division (hereinafter referred to as "divided corporation, etc."), such shortage; |
| (c) | The amount computed sequentially from surpluses, other than surpluses referred to in the main sentence other than the items of Article 16 (1) 2 of the Act, from among the capital surplus prescribed by Ministerial Decree of Strategy and Finance of a divided corporation, etc.; |
| (d) | The amount equivalent to the earned surplus of an divided corporation, etc. |
| (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, such marginal profits from a merger or marginal profits from a division shall be deemed to be converted according to the order of each item of the relevant subparagraph. |
| (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 any of the following dates: <Amended by Presidential Decree No. 18706, Feb. 19, 2005>
| 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 (for a resolution of the board of directors, the date determined under Article 461 (3) of the Commercial Act) or the date of retirement or withdrawal of an employee; |
| 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 of the merger of the relevant corporation; |
| 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, etc. of Value of Assets) |
| (1) | The value of assets, other than cash, which has been acquired under the subparagraphs of Article 16 (1) of the Act shall be as listed in the following subparagraphs: <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> |
| 1. | Where the acquired assets are stocks or investment shares (hereinafter referred to as "stocks, etc."), the following amounts: |
| (a) | In the case of stocks, etc. provided in Article 16 (1) 2 and 3 of the Act: the par value or the amount of investment: |
| (b) | In the case of stocks, etc. provided in Article 16 (1) 5 and 6 of the Act: Where the requirements provided in Article 44 (2) 1 and 2 (excluding the part related to the holding of stocks, etc.) or Article 46 (2) 1 and 2 (excluding the part related to the holding of stocks, etc.) are met or in cases falling under Article 44 (3) of the Act, the previous book value (referring to the market value where the stocks, etc. acquired through a merger or division evaluated at the market price is smaller than the previous book value if the costs of the merger pursuant to Article 16 (1) 5 of the Act or the costs of the division pursuant to Article 16 (1) 6 of the Act is paid in cash or with other assets): |
| (c) | Issuing costs for stock dividends provided in Article 462-2 of the Commercial Act (if an investment company, etc. is given any stock dividend, such stock dividend shall be deemed nil); |
| (d) | The market price at the time of acquisition provided in Article 52 of the Act (hereinafter referred to as "market price") in other circumstances: |
| 2. | Where the acquired assets are not stocks, etc., the market price of the assets at the time of the 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: |
|
| (3) | In applying Article 16 (1) 1 of the Act, where stocks, etc. referred to in the proviso to Article 16 (1) 2 are acquired within two years prior to the retirement of stocks, etc. (including the reduction of capital or financing; hereafter the same shall apply in this paragraph), such stocks, etc. shall be deemed retired first, and the initial acquisition value of such stocks, etc. shall be zero, notwithstanding paragraph (2). In such cases, where some stocks, etc. are disposed of during this period, such stocks, etc. are deemed disposed of in the 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 sum total book value after the retirement divided by the total number of stocks, etc. after the retirement, notwithstanding paragraph (2). |
| (4) | In cases of paragraph (1) 1 (a), the value of non-par-value stocks shall be computed 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 the capital. <Amended by Presidential Decree No. 25194, Feb. 21, 2014> |
| Article 15 (Amount in Excess of Par Value of Issued Stocks, etc.) |
| (1) | Deleted. <by Presidential Decree No. 24357, Feb. 15, 2013> |
| (2) | and (3) Deleted. <by Presidential Decree No. 22184, Jun. 8, 2010> |
| (4) | "Amounts prescribed by Presidential Decree" referred to in Article 17(2) of the Act mean any of the followings: <Added by Presidential Decree No. 19328, Feb. 9, 2006; Presidential Decree No. 22951, Jun. 3, 2011> |
| 1. | The amount of stocks issued in excess of the market price of such stocks, etc. (referring to the par value if the market price falls short of the par value) if any corporation whose rehabilitation plan to convert its liabilities to investments is authorized under the Debtor Rehabilitation and Bankruptcy Act converts its liabilities to investments; |
| 2. | An amount in excess of the market price (referring to the par value if the market price falls short of the par value) of the relevant stocks, etc. if any enterprise showing the sign of insolvency that concludes an agreement to implement the management normalization plan aimed at converting its liabilities to investments converts its liabilities to investments under the Corporate Restructuring Promotion Act; |
| 3. | An amount in excess of the market price (referring to the par value if the market price falls short of the par value) of the relevant stocks, etc. if any corporation converts its liabilities to investments after concluding an agreement to implement the management normalization program aimed at converting its liabilities to investments with any financial institution provided in subparagraph 1 of Article 2 of the Act on Real Name Financial Transactions and Confidentiality, which holds its claims on the relevant corporation. |
| (5) | Where any domestic corporation discontinues its business or is dissolved before appropriating the total amount not included in 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. <Added by Presidential Decree No. 19328, Feb. 9, 2006> |
| Article 16 (Gross Income Carried Forward) |
"Gross income carried forward" referred to in subparagraph 2 of Article 18 of the Act means the amount of income already taxed as income for each business year (including non-taxable income or tax-exempt income under the Act and other statutes) re-included in the gross income for the relevant business year.
| Article 17 Deleted. <by Presidential Decree No. 19891, Feb. 28, 2007> |
| Article 17-2 (Non-Inclusion of Holding Companies' Dividend Income in Gross Income) |
| (1) | A holding company referred to in Article 18-2 (1) of the Act shall be a domestic corporation reported as a holding company under the Monopoly Regulation and Fair Trade Act, the Financial Holding Companies Act, the Technology Transfer and Commercialization Promotion Act and the Industrial Education Enhancement and Industry-Academia-Research Cooperation Promotion Act as at the end date of each business year: |
| (2) | "Domestic corporation which meets the requirements prescribed by Presidential Decree" referred to in the part other than the subparagraphs of Article 18-2 (1) of the Act means domestic corporations meeting all of the following requirements (hereafter referred to as "subsidiary" in this Article): <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. 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> |
| 1. | A corporation, the holding company referred to in Article 18-2 (1) of the Act of which has continued to directly hold at least 40/100 [20/100 in the case of a listed stock corporation as defined in the Financial Investment Services and Capital Markets Act (hereinafter referred to as "listed corporation") or a venture business as defined in Article 2 (1) of the Act on Special Measures for the Promotion of Venture Businesses] of the total number of issued stocks or total investment amount of the domestic corporation for at least three months as at the ex-dividend date of such domestic corporation; |
| 2. | Any of the following domestic corporations: |
| (a) | A financial institution as defined in Article 2 (1) 1 of the Financial Holding Companies Act (including a corporation that falls under Article 2 (2) of the Enforcement Decree of the same Act) where the holding company of the relevant domestic corporation is a financial holding company incorporated under the same Act; |
| (b) | A domestic corporation which is not engaged in the finance business or insurance business classified under the Korea Standard Industrial Classification where the holding company of the relevant domestic corporation is a holding company, other than a financial holding company defined in the Financial Holding Companies Act. |
| (3) | In applying Article 18-2 (1) 1 and 2 of the Act, the ratio of investment made by a holding company in its subsidiary shall be calculated based on the stocks, etc. of the subsidiary that such holding company has continued to hold for at least three months as at the ex-dividend date of such subsidiary: |
| (4) | In applying Article 18-2 (1) 3 of the Act, any borrowings and interest thereon shall be deemed not to include interest on borrowings equivalent to the amount loaned by a financial holding company incorporated under the Financial Holding Companies Act to its subsidiary at the interest rate higher than that applied as at the time of borrowing and the amount not included in deductible expenses under Article 55. <Amended by Presidential Decree No. 19891, Feb. 28, 2007> |
| (5) | "amount computed, as prescribed by Presidential Decree" referred to in Article 18-2 (1) 3 of the Act means the amount computed by multiplying the interest on borrowings by the ratio of the sum of amounts computed under subparagraphs 1 and 2 to the amount computed under subparagraph 3: <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. 22577, Dec. 30, 2010; Presidential Decree No. 22951, Jun. 3, 2011> |
| 1. | The sum of the book value of stocks, etc. of a subsidiary to which Article 18-2 (1) 1 of the Act applies × 100/100; |
| 2. | The sum of the book value of stocks, etc. of a subsidiary to which Article 18-2 (1) 2 of the Act applies × 80/100; |
| 3. | The total amount of assets on the statement of financial position of the relevant holding company as at the end of the business year: |
| (6) | Where a holding company referred to in Article 18-2 (1) of the Act (hereafter referred to as "divided holding company" in this paragraph) establishes another holding company (hereinafter referred to as "newly established holding company") by means of spin-off [limited to where the transfer marginal profits are included in deductible expenses under Article 47 (1) of the Act (hereinafter referred to as "qualified spin-off")], the book value of stocks, etc. of a subsidiary succeeded to by a newly established holding company following such qualified spin-off shall be the book value of such stocks, etc. of a divided holding company prior to the registration date of the division for the purposes of calculating the book value of the stocks, etc. of a subsidiary under subparagraphs 1 and 2 of Article 5. <Added by Presidential Decree No. 23589, Feb. 2, 2012> |
| (7) | The value of stocks, etc. and the total amount of asset of a subsidiary referred to in the subparagraphs of paragraph (5) shall be calculated based on the accumulated amounts during the corresponding period. <Amended by Presidential Decree No. 21302, Feb. 4, 2009> |
| (8) | Deleted. <by Presidential Decree No. 21302, Feb. 4, 2009> |
| (9) | Any corporation that intends to applicable under Article 18-2 (1) of the Act shall submit the written statement of dividend income in the form stipulated by Ministerial Decree of Strategy and Finance to the head of the tax office having jurisdiction over the place of tax payment, along with the report provided in Article 60 of the Act. <Added by Presidential Decree No. 17033, Dec. 29, 2000; Presidential Decree No. 20720, Feb. 29, 2008> |
| (10) | In applying paragraph (3) and Article 18-2 (2) 1 of the Act, if some stocks, etc. of the same kind are transferred, the stocks, etc. first acquired shall be deemed the stocks, etc. first transferred. <Added by Presidential Decree No. 19328, Feb. 9, 2006> |
| (11) | "Corporation prescribed by Presidential Decree" referred to in Article 18-2 (2) 2 of the Act means any of the following corporations: <Added by Presidential Decree No. 19328, Feb. 9, 2006; Presidential Decree No. 21302, Feb. 4, 2009; Presidential Decree No. 22951, Jun. 3, 2011> |
| 1. | A corporation to which Article 51-2 of the Act applies; |
| 2. | A corporation (limited to the business year during which the reduction or exemption rate is 100/100) to which Articles 63-2, 121-8 and 121-9 of the Restriction of Special Taxation Act applies; |
| 3. | A corporation to which special taxation to partnership enterprises under Article 100-15 (1) of the Restriction of Special Taxation Act applies. |
[This Article Added by Presidential Decree No. 16658, Dec. 31, 1999]
| Article 17-3 (Non-Inclusion of General Corporations' Dividend Income from Gross Income) |
| (1) | In applying Article 18-3 (1) 1 and 2 of the Act, the ratio of equity investment made by a domestic corporation in another domestic corporation shall be calculated based on the latter's stocks, etc. that the invested domestic corporation has 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 by Presidential Decree No. 19328, Feb. 9, 2006> |
| (2) | In applying Article 18-3(1) 3 of the Act, the borrowings and interest thereon shall not include the amounts excluded from deductible expenses under Article 55. |
| (3) | "amount computed, as prescribed by Presidential Decree" referred to in Article 18-3 (1) 3 of the Act means the amount computed by multiplying interest on borrowings by the ratio of the sum of amounts computed under subparagraphs 1 through 3 to the amount computed under subparagraph 4: <Amended by Presidential Decree No. 19328, Feb. 9, 2006; Presidential Decree No. 22577, Dec. 30, 2010; Presidential Decree No. 22951, Jun. 3, 2011> |
| 1. | The sum of the book values of stocks, etc. of the other domestic corporation that is subject to the main sentence of Article 18-3 (1) 1 of the Act × 50/100; |
| 2. | The sum of the book value of shares, etc. of the other domestic corporation that is subject to the proviso to Article 18-3 (1) 1 of the Act × 100/100; |
| 3. | The sum of the book values of stocks, etc. of the other domestic corporation that is subject to Article 18-3 (1) 2 of the Act × 30/100; |
| 4. | The total amount of assets on the statement of financial position of the relevant domestic corporation as at the end of the business year. |
| (4) | A non-profit domestic corporation referred to in the part other than the subparagraphs of Article 18-3 (1) of the Act shall be limited to a non-profit domestic corporation that does not include reserve funds for proper purpose business in deductible expenses under Article 29 of the Act. <Amended by Presidential Decree No. 21302, Feb. 4, 2009> |
| (5) | The value of stocks, etc. and the total amount of asset of a domestic corporation referred to in paragraph (3) 1 through 4 shall be calculated based on the accumulated amounts during the corresponding period <Amended by Presidential Decree No. 21302, Feb. 4, 2009> |
| (6) | Any corporation that intends to be applicable under Article 18-3 (1) of the Act shall submit the written statement of dividend income in the form stipulated by Ministerial Decree of Strategy and Finance to the head of the tax office having jurisdiction over the place of tax payment, along with the report provided in Article 60 of the Act. <Amended by Presidential Decree No. 20720, Feb. 29, 2008> |
[This Article Added by Presidential Decree No. 17033, Dec. 29, 2000]
| Article 18 (Losses Carried Forward) |
| (1) | "Carried forward losses prescribed by Presidential Decree" referred to in subparagraph 6 of Article 18 of the Act means any of the following: <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. 19328, Feb. 9, 2006; Presidential Decree No. 22184, Jun. 8, 2010; Presidential Decree No. 22812, Mar. 31, 2011> |
| 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 subparagraph 1 of Article 13 of the Act; |
| 2. | Losses referred to in Article 14 (2) of the Act among those excluded in the tax base reported under Article 60 of the Act for each business year, but fall under any of the following: |
| (a) | Losses of a corporation whose rehabilitation plan is authorized under the Debtor Rehabilitation and Bankruptcy Act, which are determined by a court; |
| (b) | Deleted; <by Presidential Decree No. 19328, Feb. 9, 2006> |
| (c) | Losses of a corporation that has entered into an agreement to implement its management normalization plan under the Corporate Restructuring Promotion Act, which are determined by a creditor financial institution council. |
| (2) | Article 10 (1) and (2) shall apply |
Subsection 3 Calculation of Deductible Expenses
| Article 19 (Scope of Deductible Expenses) |
Deductible expenses referred to in Article 19 (1) of the Act mean the following, except as otherwise expressly 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>
| 1. | The purchase value (excluding the amount of purchase allowances and the discounted purchase amount computed according to the corporate accounting standards) of raw materials of products or goods sold and incidental expenses thereto; |
| 1-2. | Incidental expenses relating to sale, such as expenses for storage, packing or transportation, sales subsidy, and sales allowance of products or goods sold (including payment of sales subsidies and sales allowance without a prior arrangement); |
| 2. | The book value of transferred assets as at the time of transfer; |
| 3. | Labor costs; |
| 4. | Repair expenses of fixed assets; |
| 5. | Depreciation costs of fixed assets; |
| 5-2. | An amount equivalent to the depreciation costs calculated by applying |
| (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; |
| 6. | Property rental fees; |
| 7. | Interest on loans; |
| 8. | Irrecoverable amount receivables of output value-added tax (limited to the one which has not been subject to bad debts tax credits under Article 45 of the Value-Added Tax Act); |
| 9. | Marginal losses from evaluation of assets; |
| 10. | Various taxes and public charges; |
| 11. | Membership fees paid to corporations, or associations or unions registered with the competent authorities, which are organizations established by business operators; |
| 12. | Prospecting expenses in the mining industry (including expenses for developing areas for prospecting); |
| 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 of surplus food gratuitously donated by a domestic corporation engaged in the manufacturing, wholesale, or retail business of food and beverage classified under the Korean Standard Industrial Classification to a provider as defined in Article 2 of the Food Donation Encouragement Act or to a person designated by such provider (Such value shall not be included in the donations referred to in subparagraph 1 of Article 35); |
| 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; |
| (b) | Expenses incurred in operating vocational training courses, departments, etc., on condition that graduates are hired according to agreements concluded between educational institutions and the relevant corporations under Article 8 of the Industrial Education Enhancement and Industry-Academia-Research Cooperation Promotion Act; |
| (c) | Allowances paid to students participating in field training pursuant to Article 7 of the Vocational Education and Training Promotion Act; |
| (d) | Allowances paid to students participating in field training classes pursuant to Article 22 of the Higher Education Act; |
| 16. | The book value of stocks of a company that contributes to an employee stock ownership association under the Framework Act on Labor Welfare (hereinafter referred to as "employee stock ownership association") or money and goods contributed to such association; |
| 17. | The acquisition value (limited to the one not worth more than five 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 30 thousand won annually in cases of an article (excluding an article worth 10,000 won or less per piece) donated to a specific person); |
| 19. | Where executives and employees exercise any of the following stock options or receive the bonus, paid with stocks or money equivalent to the value of the stocks, which is prescribed by Ministerial Decree of Strategy 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."): |
| (a) | Stock options, etc., granted or offered from a financial holding company incorporated under the Financial Holding Companies Act (in cases of stock options granted under Article 542-3 of the Commercial Act); |
| (b) | Stock options, etc., granted or offered from an overseas parent corporation prescribed by Ministerial Decree of Strategy and Finance, which are prescribed by Ministerial Decree of Strategy and Finance; |
| 20. | Endowments made by small and medium enterprises under subparagraph 1 of Article 35-3 of the Special Act on Support for Human Resources of Small and Medium Enterprises; |
| 21. | The amount of money paid temporarily to the bereaved family of an executive (excluding the controlling stockholder, etc., defined by Article 43 (7)) or an employee for school expenses, etc., after the death of the executive or employee and that meets the criteria prescribed by Ministerial Decree of Strategy and Finance; |
| 22. | Other deductible expenses imputed or imputable to the relevant corporation. |
| Article 19-2 (Non-Inclusion of Bad Debts in Deductible Expenses) |
| (1) | "Irrecoverable claims due to grounds prescribed by Presidential Decree" in Article 19-2 (1) of the Act means the following: <Amended by Presidential Decree No. 22035, Feb. 18, 2010; Presidential Decree No. 22577, Dec. 30, 2010> |
| 1. | Accounts receivables and outstanding amounts, the extinctive prescription of which has lapsed under the Commercial Act; |
| 2. | Bills, the extinctive prescription of which has lapsed under the Bills of Exchange and Promissory Notes 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. | Claims determined as irrecoverable based on the determination to authorize a rehabilitation plan or a court-ruling of discharge under the Debtor Rehabilitation and Bankruptcy Act; |
| 6. | Seized claims for which auction on the property of a debtor is cancelled under Article 102 of the Civil Execution Act; |
| 7. | Claims accruing from export of goods or provision of services in a foreign country, which is exempt from the obligation to collect claims from the Governor of the Bank of Korea or the President of a foreign exchange bank under the Acts and subordinate statutes relating to foreign exchange transactions; |
| 8. | Irrecoverable claims because of bankruptcy of a debtor, forcible execution, execution of punishment, discontinuance of business, 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): |
| 10. | Deleted; <by Presidential Decree No. 24357, Feb. 15, 2013> |
| 11. | Claim, the value of which does not exceed 200,000 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 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): |
| (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 after consultation with the Minister of Strategy 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 the Support for Small and Medium Enterprise Establishment Act, which are recognized to meet the standards determined by the Administrator of the Small and Medium Business Administration after consultation with the Minister of Strategy 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 1,000 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> |
| (3) | Bad debts referred to in the subparagraphs of paragraph (1) shall be counted as deductible losses for the business year in which the following dates fall: |
| 1. | The date the relevant grounds have arisen in cases of paragraph (1) 1 through 7; |
| 2. | The date such bad bets 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 provided for in paragraph (1) 8 through 13 in deductible losses by the business year in which the registration date of merger or the registration date of division falls, such bad debts shall be deemed deductible losses for the business year in which the registration date of merger or the registration date of division falls. |
| (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 corporate accounting standards, it shall be counted in the deductible losses, and the amount counted in the deductible losses shall be counted in the gross income according to the method of transfer of the corporate accounting standards. |
| (6) | "Debt guarantees prescribed by Presidential Decree, such as debt guarantees referred to in any of the subparagraphs of Article 10-2 (1) 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> |
| 1. | Debt guarantees provided for in the subparagraphs of Article 10-2 (1) of the Monopoly Regulation and Fair Trade Act; |
| 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 engaged in credit guarantee business under any Act; |
| 4. | Debt guarantees provided by an entrusting enterprise provided 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. | Deleted. <by Presidential Decree No. 22282, Jul. 21, 2010> |
| (7) | Losses from the disposal of claims subject to Article 19-2 (2) of the Act shall be excluded from deductible expenses. |
| (8) | 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 grounds provided for in each subparagraph of subparagraph (1) arises. <Added by Presidential Decree No. 22577, Dec. 30, 2010> |
| (9) | A domestic corporation that seeks the benefit of 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 stipulated by Ministerial Decree of Strategy 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. |
[This Article Added by Presidential Decree No. 21302, Feb. 4, 2009]
| Article 20 (Scope of Bonuses, etc.) |
| (1) | "Bonuses prescribed by Presidential Decree" in the proviso to subparagraph 1 of Article 20 of the Act means the following: <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. 21302, Feb. 4, 2009; Presidential Decree No. 22035, Feb. 18, 2010; Presidential Decree No. 24357, Feb. 15, 2013; Presidential Decree No. 25194, Feb. 21, 2014; Presidential Decree No. 25640, Sep. 26, 2014> |
| 1. | Deleted; <by Presidential Decree No. 16658, Dec. 31, 1999> |
| 2. | Bonuses paid by treasury stocks acquired under Article 165-3 of the Financial Investment Services and Capital Markets Act through an employee stock ownership association. In such cases, it shall include the amount paid as bonuses by the relevant corporation to an employee stock ownership association which acquired the stocks of the relevant corporation in the securities market under the Financial Investment Services and Capital Markets Act and have distributed them to the members of the association; |
| 3. | The following amounts to a person granted or offered stock options, etc. (limited to granting or offering stock options, etc. within 10/100 of the total number of issued stocks of the relevant corporation) prescribed by Ministerial Decree of Strategy and Finance: |
| (a) | The relevant amount where the difference between the purchase price of stocks agreed upon at the time of purchase of stocks agreed upon and the market price is paid to a person who has been offered stock options with money or stocks of the relevant corporation; |
| (b) | In case of stock options granted, where stocks are issued at prices lower than market prices as stock options are exercised at the agreed time of purchasing stocks, the difference between the actual purchase prices of such stocks and market prices; |
| (c) | The relevant amount of money paid with the share-based payment; |
| 4. | Performance-based bonuses paid by a domestic corporation to its workers (excluding those engaged in any of the following duties (hereinafter referred to as "executive")) according to a written agreement concluded between the domestic corporation and its workers in advance with respect to the performance assessment indices and its goals, method of appraisal of performance, method of distribution, etc.: |
| (a) | All members of the board of directors, such as the chairperson, president, vice president, chief director, director representative, managing director and executive director of such domestic corporation and a liquidator; |
| (b) | A managing staff member or director of a limited partnership, joint-stock company, and limited-liability company; |
| (c) | The executive partner of a limited liability company; |
| (d) | An auditor; |
| (e) | Other persons engaged in the duties similar to those specified in items (a) through (d). |
| (2) | Deleted. <by Presidential Decree No. 23589, Feb. 2, 2012> |
| (3) | "Margins from the issuance of stocks at below par value" referred to in subparagraph 3 of Article 20 of the Act means, where the stocks are issued at below par value under Article 417 of the Commercial Act, the sum of the deficiency and the costs of issuing new stocks. <Amended by Presidential Decree No. 18706, Feb. 19, 2005> |
| (4) | The inclusion of bonuses in the deductible expenses under paragraph (1) shall be dealt in such a manner that the amount of surplus appropriation is appropriated in the tax settlement invoice of the relevant business year and is included in the deductible expenses in the tax base return of the corporate tax. <Added by Presidential Decree No. 16658, Dec. 31, 1999> |
| 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, etc. 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> |
| 1. | The amount of input tax referred to in Article 39 (1) 5 of the Value-Added Tax Act (excluding those that constitute capital expenditures defined in Article 31 (2)); |
| 2. | The amount of input tax referred to in Article 39 (1) 6 of the Value-Added Tax Act; |
| 3. | Other amounts of input tax verified as being actually borne by the relevant corporation, and stipulated by Ministerial Decree of Strategy 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> |
| Article 23 Deleted. <by Presidential Decree No. 17033, Dec. 29, 2000> |
| Article 24 (Scope of Depreciable Assets) |
| (1) | "Assets prescribed by Presidential Decree, such as buildings, machinery, equipment, and patent rights" referred to in Article 23 (3) of the Act means any of the following fixed 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> |
| 1. | Any of the following tangible fixed assets: |
| (a) | Buildings (including auxiliary facilities) and structures (hereinafter referred to as "buildings"); |
| (b) | Vehicles, transportation equipment, instruments, tools and furnishings; |
| (c) | Ships and aircraft; |
| (d) | Machinery and equipment; |
| (e) | Animals and plants; |
| (f) | Other tangible fixed 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., etc. due to a merger or division), design rights, utility model rights, and trademark rights; |
| (b) | Patent rights, fishing rights, extraction rights as 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; |
| (d) | Dam usage 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 have been appropriated for development costs by the relevant corporation (including an amount expended by members of the Industrial Technology Research Cooperatives established under the Act on the Support of the Industrial Technology Research Cooperatives for the 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) 4 through 7 of the Act or any corporation provided in Article 36 (1) 1 of this Decree, if such assets are used or profits are generated therefrom; |
| (h) | Rights to utilize frequencies under Article 14 of the Radio Waves Act, and rights to manage airport facilities under Article 105-2 of the Aviation Act; |
| (i) | Rights to manage harbor facilities under Article 16 of the Harbor Act. |
| (2) | "Intangible fixed assets with indefinite service life prescribed by Presidential Decree" referred to in the part other than the subparagraphs of Article 23 (2) of the Act means any of the following: <Added by Presidential Decree No. 22577, Dec. 30, 2010; Presidential Decree No. 23589, Feb. 2, 2012> |
| 1. | Intangible fixed assets, the service life of which cannot be determined and applied when the depreciation costs are appropriated as deductible expenses among the intangible fixed assets (hereinafter referred to as "service life for settlement of accounts") which meet all requirements prescribed by Ministerial Decree of Strategy and Finance; |
| 2. | Goodwill referred to in Article 24 (1) 2 (a) acquired prior to the business year during which the international accounting standards are first applied. |
| (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, the value of which does not decline over time. |
| (4) | Where a corporation appropriates the total value of fixed 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> |
| (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 as 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. <Added 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 under Article 23 (1) of the Act 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> |
| (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. |
| Article 26 (Calculation of Allowable Depreciation) |
| (1) | "Amount computed, as prescribed by Presidential Decree" referred to in Article 23 (1) of the Act means the amount computed by a 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> |
| 1. | Buildings and intangible fixed assets (excluding assets referred to in subparagraphs 3 and 6 through 8): The straight-line method; |
| 2. | Tangible fixed assets, other than buildings (excluding any tangible fixed assets used for mining under subparagraph 4): The declining balance method or the straight-line method; |
| 3. | Mining rights (including an extraction right granted under the Submarine Mineral Resources Development Act) or a waste landfill facility (referring to a waste landfill facility referred to in subparagraph 2 (a) of Appendix 3 of the Enforcement Decree of the Wastes Control Act): The units-of-production method or the straight-line method; |
| 4. | Tangible fixed 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; |
| 8. | Rights to utilize frequencies under Article 14 of the Radio Waves Act, rights to manage the airport facilities under Article 105-2 of the Aviation Act, and rights to manage harbor facilities under Article 16 of the Harbor Act: The method of depreciating the equal amount for the period of use within the period publicly announced by or registered to the competent authorities. |
| (2) | The depreciation methods under paragraph (1) are as follows: <Amended by Presidential Decree No. 22577, Dec. 30, 2010; Presidential Decree No. 26068, Feb. 3, 2015> |
| 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 assets (referring to the acquisition value provided in Article 72; hereafter the same shall apply in this Article) by the depreciation rate based on the service life of the relevant assets; |
| 2. | The declining balance method: Depreciation method of annually reducing the allowable depreciation for each business year, calculated by multiplying the balance (hereinafter referred to as "undepreciated balance") of the amount already deducted as depreciation costs in the calculation of deductible expenses from the acquisition value of the relevant depreciable assets by the depreciation rate based on the service life of the relevant assets; |
| 3. | The units-of-production method: Depreciation method of determining the amount of allowable depreciation for each business year by multiplying the amount specified in either of the following items by the mining output from the relevant mining area during the relevant 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 Ministerial Decree of Strategy 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> |
| 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 fixed assets further classified under each subparagraph of paragraph (1), 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 assets shall be calculated in the following depreciation methods: <Amended by Presidential Decree No. 17457, Dec. 31, 2001; Presidential Decree No. 17826 Dec. 30, 2002> |
| 1. | The straight-line method in cases of assets referred to in paragraph (1); |
| 2. | The declining balance method in cases of assets referred to in paragraph (1) 2; |
| 3. | The units-of-production method in cases of assets referred to in paragraph (1) 3 and 4; |
| 4. | 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 in cases of assets referred to in paragraph (1) 6; |
| 5. | The methods prescribed in paragraph (1) 7 and 8 in cases of assets referred to 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. |
| (6) | In calculating the allowable depreciation, the residual value of depreciable assets shall be deemed zero: |
| (7) | For depreciable assets, the depreciation of which ends, the lesser amount of 5/100 of the acquisition value or 1,000 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 computed 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, etc. 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 referred to as "currently owned assets" in this Article and Article 26-3) before the business year immediately preceding the business year (hereafter referred to as "reference year" in this Article and Article 26-3) during which the corporate accounting standards referred to in Article 13 (1) 1 of the Act on External Audit of Stock Companies (hereinafter referred to as "international accounting standards") are first applied and the same type (according to the classification of depreciable assets stipulated by Ministerial Decree of Strategy and Finance; hereafter the same shall apply in this Article and Article 26-3) 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 stipulated by Ministerial Decree of Strategy and Finance, and it shall be limited to where the relevant corporation continuously conducts the relevant business after adopting the international accounting standards; hereafter the same shall apply in this Article and Article 26-3) as the currently owned assets (hereafter referred to as "same type of assets" in this Article and Article 26-3). <Amended by Presidential Decree No. 25194, Feb. 21, 2014> |
| (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 referred to as "ceiling on inclusion in calculation of deductible expenses" in this Article): <Amended by Presidential Decree No. 25194, Feb. 21, 2014> |
| 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 international accounting 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 international accounting standards (hereafter referred to as "standard depreciation rate" in this Article and Article 26-3); |
| (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 |
| 2. | Depreciation cost ceilings of the same type of assets: The following amounts (if the amount is less than zero, it shall be deemed zero): |
| (a) | In cases falling under subparagraph 1 (a): An amount computed by the following formula (Sum total of the acquisition value of the same type of assets, the depreciation costs of which are appropriated as deductible expenses under Article 23 (1) of the Act in the relevant business year x standard depreciation rate x standard depreciation rate) - Sum total of depreciation costs included in deductible expenses under Article 23 (1) of the Act with respect to the same type of assets in the relevant business year; |
| (b) | In cases falling under subparagraph 1 (b): An amount computed by the following formula (sum total of undepreciated balance of the same type of assets, the depreciation costs of which are appropriated as deductible expenses under Article 23 (1) of the Act in the relevant business year x standard depreciation rate) - Sum total of depreciation costs included in deductible expenses under Article 23 (1) of the Act with respect to the same type of asset in 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. |
| (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 is changed 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 |
| (6) | The depreciation costs of assets falling under paragraph (1) (hereafter referred to as "assets acquired through a qualified merger, etc." in this Article), which are acquired by a qualified merger, qualified division, or qualified spin-off, or the comprehensive transfer of assets (hereinafter referred to as "comprehensive transfer of assets") with the value of the assets to be transferred as the book value as a corporation falls under Article 37 (1) of the Restriction of Special Taxation Act in the business year during which the corporation applies the international accounting standards and in the subsequent business years may be included in the deductible expenses in the following methods: <Amended by Presidential Decree No. 23589, Feb. 2, 2012> |
| 1. | Where corporations holding the same type of assets qualifiedly merge (including a division and merger falling under a qualified division; hereafter the same shall apply in this Article) or a corporation acquires the same type of assets due to a qualified merger: First recalculating the standard depreciation rate of the relevant same type of assets under paragraph (4) with the business year immediately preceding the business year in which the registration date of the merger or the date of comprehensive transfer of assets falls as the reference year, and including the depreciation costs in deductible expenses under paragraph (2) by applying the recalculated standard depreciation rate. 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 referred to as "transferor corporation" in this Article) the assets acquired through the qualified merger, etc. and a corporation that assumes the charge of such assets (hereafter referred to as "transferee corporation" in this Article), 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. | Where corporations that do not hold the same type of assets qualifiedly merge, the assets, other than the same type of assets, are acquired by the comprehensive transfer of assets, a corporation newly established through a qualified division or qualified spin-off acquires the assets due to the qualified division or qualified spin-off: 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 international accounting standards prior to the business year in which the registration date of the merger, the division or the comprehensive transfer of assets (hereafter referred to as "registration date of the merger, etc." in this Article) falls: The method of including depreciation costs in the deductible expenses under paragraph (2) by applying the standard depreciation rate already calculated by the transferor corporation with respect to the relevant assets; |
| (b) | In cases, other than item (a): The method of first re-calculating the standard depreciation rate under paragraph (4) by the type of business and type upon classifying the assets acquired through qualified merger, etc. 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, etc. falls and of 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, etc., and the acquisition value and the undepreciated balance shall be the acquisition value of the assets acquired through the qualified merger, etc. 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, etc. 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, etc. and where the transferor corporation applies the international accounting standards prior to the business year in which the registration date of the merger, etc. 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, etc. are included in the deductible expenses under paragraph (6), the acquisition value of the assets acquired through the qualified merger, etc. 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 Articles 80-4 (1), 82-4 (1), 84 (4), or Article 35 (10) of the Enforcement Decree of the Restriction of Special Taxation Act from the market value as at the time of transfer) as at the time of transfer by the transferor corporation. |
| (9) | In calculating the standard depreciation rate of the assets acquired by a qualified merger, etc. 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 international accounting 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 Ministerial Decree of Strategy and Finance. |
| (10) | Where a corporation which has included the depreciation costs of the assets acquired by a qualified merger, etc. under paragraph (6) in the deductible expenses falls under Article 44-3 (3) of the Act in the case of a qualified merger, Article 46-3 (3) in the case of a qualified division, Article 47 (2) of the Act in the case of a qualified spin-off, or Article 37 (6) of the Restriction of Special Taxation Act in the case of the comprehensive transfer of assets (hereafter referred to as "ground for violation of qualified requirements" in this Article and Article 29-2), 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: |
| 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 expressly provided 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 Ministerial Decree of Strategy and Finance. |
[This Article Added 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 referred to 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: |
| 1. | Standard depreciation costs of an individual asset: An amount calculated by applying the depreciation method for the settlement of accounts for the pertinent business year per asset and the standard service life stipulated by Ministerial Decree of Strategy 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 pertinent business year, calculated by applying the depreciation method applicable to the settlement of accounts for the pertinent business year and the standard service life ? The aggregate of depreciation costs of assets of the same type, included in deductible expenses for the pertinent 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: Either of the following amounts (if the amount is smaller than zero, it shall be deemed zero): |
| (a) | If the depreciation method for the settlement of accounts for the reference year is the straight-line method: (The aggregate of acquisition prices of assets of the same type for which depreciation costs are included in deductible expenses for the pertinent business year under Article 23 (1) of the Act × Standard depreciation rate) - The aggregate of depreciation costs of assets of the same type, included in deductible expenses for the pertinent business year under Article 23 (1) of the Act; |
| (b) | If the depreciation method for the settlement of accounts for the reference year is the declining balance method: (The aggregate of the undepreciated balance of assets of the same type for which depreciation costs are included in deductible expenses for the pertinent business year under Article 23 (1) of the Act × Standard depreciation rate) - The aggregate of depreciation costs of assets of the same type, included in deductible expenses for the pertinent business year under Article 23 (1) of the Act; provided,, even in cases where an amount smaller than the allowable depreciation for the immediately preceding business year by the declining balance method is included in deductible expenses in calculating the undepreciated balance of assets of the same type, the undepreciated balance of relevant assets shall be calculated by aggregating the amounts calculated based on the balance of assets of the same type after subtracting the full amount of the allowable depreciation by the declining balance method from the value of assets that will serve as a basis for the calculation of the allowable depreciation for each 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 |
[This Article Added 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 Ministerial Decree of Strategy 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 Strategy 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 Resources Corporation established under the Korea Resources Corporation Act, and the estimated total landfill volume means the total landfill volume approved by the Minister of Environment of the relevant Mayor/ |
| 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 as follows: <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> |
| 1. | For assets used for testing and research prescribed by Ministerial Decree of Strategy and Finance and the intangible fixed assets provided in Article 24 (1) 2 (a) through (d): |
The service life prescribed by Ministerial Decree of Strategy and Finance and the corresponding depreciation rate determined by the depreciation method prescribed by Ministerial Decree of Strategy and Finance (hereinafter referred to as "depreciation rate");
| 2. | For depreciable assets (excluding intangible fixed assets provided in Article 24 (1) 2 (f) through (h)), 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 a report is not submitted by the deadline for submission 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 based on the calendar months, and the number of days that falls short of one month shall be deemed one month: |
|
| (3) | When a corporation reports the service life under paragraph (1) 2 or (6), it shall submit the service life report (including submitting such service life report through the national tax information and communications network) in the form stipulated by Ministerial Decree of Strategy 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> |
| 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 fixed 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) | Notwithstanding the main sentence of paragraph (1) 2, if a small or medium enterprise as defined in Article 2 of the Enforcement Decree of the Restriction of Special Taxation Act (hereafter referred to as “small or medium enterprise” in this paragraph and paragraph (7)) acquires any of the following assets (hereafter referred to as “assets invested in plants” in this paragraph and paragraph (7)) during the period from October 1, 2014 to December 31, 2015, it may elect to add or subtract up to 50/100 of the standard service life (a period of less than one year shall be deemed nil) to or from the standard service life of each asset and for each type of business in reporting the service life to the head of the tax office having jurisdiction over the place of tax payment: |
| 1. | Vehicles and transports: |
| 2. | Ships and aircraft: |
| 3. | Tools, instruments, and fixtures; |
| 4. | Machines and devices. |
| (7) | A small or medium enterprise that intends to be qualified for the application of paragraph (6) shall file a request for the application of the special exception to service life for small and medium enterprises (including filing through the national tax information and communications network) with the head of the tax office having jurisdiction over the place of tax payment by the deadline set for reporting the tax base of corporate tax for the business year in which it acquires the relevant asset. <Added by Presidential Decree No. 24824, Nov. 5, 2013> |
| 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> |
| 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 Ministerial Decree of Strategy 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 international accounting 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: |
| (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 Ministerial Decree of Strategy 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, etc.) |
| (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 in Article 28 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> |
| (2) | In determining the allowable depreciation of the assets acquired by a qualified merger, qualified division, or comprehensive transfer of assets (hereafter referred to as "qualified merger, etc." in this Article), the acquisition value referred to in each subparagraph of Article 26 (2) and paragraph (6) of the same Article shall be the acquisition value of a corporation which transfers the assets through a qualified merger, etc. (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 assumes charge of such assets (hereafter referred to as "transferee corporation" in this Article) in the calculation of deductible losses as depreciation costs from the book value (referring to the amount computed by subtracting the asset adjustment account referred to in Articles 80-4 (1), 82-4 (1), 84 (4) or Article 35 (10) of the Enforcement Decree of the Restriction of Special Taxation Act from the market value as at the time of transfer) 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: <Added 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> |
| 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 according to 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 according to the depreciation method and the service life applied by the transferee corporation under the Act and this Decree. |
| (3) | Where a corporation to which paragraph (2) applies falls under the ground for violation of qualified requirements, Article 26-2 (10) shall apply |
| (4) | Paragraph (1) shall only apply where a domestic corporation files a report on the revised service life in the form stipulated by Ministerial Decree of Strategy and Finance by the following deadlines: <Amended by Presidential Decree No. 17457, Dec. 31, 2001; Presidential Decree No. 20720, Feb. 29, 2008> |
| 1. | In the case 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 the case 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 Added by Presidential Decree No. 17033, Dec. 29, 2000]
| Article 30 (Constructive Depreciation) |
Where a corporation that operates business eligible for full or partial exemption from corporate tax on income for each business year is fully or partially exempted from corporate tax, it shall include depreciation costs in deductible expenses or include them in deductible expenses up to the allowable depreciation under the main sentence of Article 23 (1) of the Act: Provided , That a corporation that applies the international accounting standards may include depreciation costs of individual assets additionally in deductible expenses pursuant to Article 23 (2) of the Act.
[This Article Wholly Amended by Presidential Decree No. 25194, Feb. 21, 2014]
| Article 31 (Constructive Instant Depreciation) |
| (1) | Where a corporation appropriates the amount paid to acquire depreciable assets and the amounts constituting capital expenditures for the depreciable assets as deductible expenses, it shall be deemed depreciation in the calculation of the allowable depreciation. |
| (2) | For purposes of paragraph (1), "capital expenditures" 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: |
| 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> |
| 1. | Where the amount expended as repair costs for each item of asset does not exceed 3,000,000 won; |
| 2. | Where the amount expended as repair costs for each item of asset does not exceed 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) | Except the following assets, where the acquisition value of any depreciable assets is 1,000,000 won or less per unit of transaction, 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: |
| 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> |
| 1. | Fishing tools used in the fisheries industry (including tools used for fishing boats); |
| 2. | Movie film, tools (including molds), 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 300,000 won; |
| 4. | Telephones (including cellular phone) and personal computers (including its peripherals). |
| (7) | Where part of the production facilities is discarded due to the replacement of facilities or outdated technology, the amount of the book value of the relevant assets minus 1,000 won may be included in deductible expenses for the business year in which the date of discard falls. |
| (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. <Added by Presidential Decree No. 22577, Dec. 30, 2010> |
| Article 32 (Disposition of Disallowed Amount of Depreciation) |
| (1) | Among the depreciation costs appropriated as deductible expenses for each business year by a corporation, the amount in excess of the allowable depreciation (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. |
| (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> |
| (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 Ministerial Decree of Strategy 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 Ministerial Decree of Strategy and Finance, along with the report provided in Article 60 of the Act. <Amended by Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 22577, Dec. 30, 2010>
| Article 34 (Detailed Regulations concerning Depreciation Costs) |
Other matters necessary for calculating the depreciation costs of depreciable assets shall be prescribed by Ministerial Decree of Strategy and Finance. <Amended by Presidential Decree No. 20720, Feb. 29, 2008>
| Article 35 (Scope of Donations) |
Donations referred to in Article 24 (1) of the Act shall be designated donations as provided in Article 36 and any of the following: <Amended by Presidential Decree No. 23589, Feb. 2, 2012>
| 1. | The value of the donation of any asset gratuitously made by a corporation to a person, other than a related party provided in Article 87, with no direct connection with the business of the corporation; |
| 2. | Where a corporation transfers any asset to a person, other than a related party provided in Article 87, at a price below the arm's length price or purchases any asset from such person at a price above the arm's length price without any reasonable grounds, the amount of the difference that is recognized as an actual donation. In such cases, the arm's length price shall be within 30/100 higher or lower than the market price. |
| Article 36 (Scope, etc. of Designated Donations) |
| (1) | "Donations prescribed by Presidential Decree" in the part, other than subparagraphs of Article 24 (1) of the Act, mean any of the following: <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. 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. 22356, Aug. 25, 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. 24018, Aug. 3, 2012; Presidential Decree No. 24357, Feb. 15, 2013; Presidential Decree No. 25194, Feb. 21, 2014> |
| 1. | For the following non-profit corporations (including organizations; hereafter referred to as "designated organizations, etc. receiving donations" in this Article), donations paid as proper purpose business expenses of the relevant designated organizations, etc. receiving donations: |
| (a) | Social welfare corporations established under the Social Welfare Services Act; |
| (b) | Kindergartens provided in the Early Childhood Education Act, schools provided in the Elementary and Secondary Education Act and the Higher Education Act, technical colleges provided in the Act on the Development of Workplace Skills of Workers, or lifelong educational facilities in the form of major colleges provided in Article 31 (4) of the Lifelong Education Act, and lifelong educational facilities in the form of distance colleges provided in Article 33 (3) of the same Act; |
| (c) | Academic research organizations, scholarship organizations, and technical promotion organizations which are permitted or approved by the Government; |
| (d) | Cultural or arts organizations (including specialized arts corporations and specialized arts organizations designated under the Culture and Arts Promotion Act) or environmental protection organizations which are permitted or approved by the Government; |
| (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 heads of local governments pursuant to Article 32 of the Civil Act; |
| (f) | Medical corporations established under the Medical Service Act; |
| (g) | Corporations designated by the Minister of Strategy and Finance with recommendation by the competent authorities, from among non-profit corporations established with permission from the competent authorities under Article 32 of the Civil Act (hereafter referred to as "non-profit corporations under the Civil Act" in this Article) or social cooperatives established under Article 85 of the Framework Act on Cooperatives (hereafter referred to as "social cooperatives" in this Article), which shall meet all of the following requirements: |
| (i) | Requirements for each type of entity: |
| a. | A non-profit corporation under the Civil Act: Its articles of incorporation shall provide that earnings be used not for members’ interest but for public interest and acknowledge that persons benefitting directly from its business are many and unspecified people; |
| b. | A social cooperative: Its articles of incorporation shall acknowledge that it engages in business activities specified in Article 93 (1) 1 or 2 of the Framework Act on Cooperatives; |
| (ii) | The articles of incorporation shall provide 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 corporation shall have a web-site in operation and its articles of incorporation shall provide that it disclose the amount of donations annually collected and the results of the use of such donations through the web-site; |
| (iv) | A corporation shall have no record confirmed by the rightful authorities that it has been involved in an election campaign, defined under Article 58 (1) of the Public Official Election Act, for a particular political party or a particular person in the name of the non-profit corporation or its representative during the year in which it was designated and the immediately preceding year; |
| (v) | Three years shall have passed since the date of revocation, if designation was revoked under paragraph (11), or three years shall have passed since the expiration of a period of designation, if a corporation failed to obtain re-designation under the same paragraph: |
| (h) | Designated organizations, etc. receiving donations similar to those provided in items (a) through (g) and are prescribed by Ministerial Decree of Strategy and Finance; |
| (i) | through (l) Deleted; <by Presidential Decree No. 17457, Dec. 31, 2001> |
| 2. | The following donations: |
| (a) | Donations paid as scholarships or education or research expenses to individuals recommended by the heads of kindergartens provided in the Early Childhood Education Act, the principals of schools provided in the Elementary and Secondary Education Act and the Higher Education Act, the deans of technical colleges established under the Act on the Development of Workplace Skills of Workers or the presidents of lifelong educational facilities in the form of major colleges provided in Article 31 (4) of the Lifelong Education Act, and lifelong educational facilities in the form of distance colleges provided in Article 33 (3) of the same Act; |
| (b) | Donations left in public trusts that meet the requirements provided in each subparagraph of Article 14 of the Enforcement Decree of the Inheritance Tax and Gift Tax Act; |
| (c) | Donations used for the public interest, such as social welfare, culture, arts, education, religion, charity and science, and prescribed by Ministerial Decree of Strategy and Finance; |
| 3. | Special membership fees and membership fees paid to associations or societies voluntarily established, other than those referred to in subparagraph 11 of Article 19, among membership fees referred to in the same subparagraph; |
| 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: |
| (a) | Child welfare facilities referred to in Article 52 (1) of the Child Welfare Act; |
| (b) | Facilities, other than the following facilities, among welfare facilities for the aged referred to in Article 31 of the Welfare of Older Persons Act: |
| (i) | Institutions for the aged, communal living home for the aged, and welfare houses for the aged 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) | Sanatoriums for the aged, medical treatment and communal living home for the aged and special hospitals for the aged among the medical welfare institutions for the aged for which the inmates pay all expenses for admission under 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 the aged at home referred to in Article 38 of the Welfare of Older Persons Act; |
| (c) | Welfare facilities for persons with disabilities referred to in Article 58 (1) of the Act on Welfare of Persons with Disabilities: |
| (i) | Communal living home for persons with disabilities operated by a person, other than non-profit corporations, (including a social welfare foundation established under Article 16 (1) of the Social Welfare Services Act); |
| (ii) | Facilities selling products manufactured by persons with disabilities under Article 36 of the Enforcement Decree of the Act on Welfare of Persons with Disabilities; |
| (iii) | Paid welfare facilities for person with disabilities; |
| (d) | Single-parent family welfare facilities referred to in Article 19 (1) of the Single-Parent Family Support Act; |
| (e) | Facilities for the rehabilitation of mentally ill persons and mental health sanatoriums as defined in subparagraphs 4 and 5 of Article 3 of the Mental Health Act; |
| (f) | Supporting institutions and counseling centers for victims of sexual traffic referred to in Articles 6 (2) and 10 (2) of the Act on the Prevention of Sexual Traffic and Protection, etc. of Victims; |
| (g) | Counseling centers related to domestic violence and protection facilities for victims of domestic violence referred to in Articles 5 (2) and 7 (2) of the Act on the Prevention of Domestic Violence and Protection, etc. of Victims; |
| (h) | Counseling centers for victims of sexual violence and protection facilities of victims of sexual violence referred to in Articles 10 (2) and 12 (2) of the Sexual Violence Prevention and Victims Protection Act; |
| (i) | Social welfare halls and facilities for vagrants and the homeless, among the social welfare facilities referred to in Article 34 of the Social Welfare Services Act; |
| (j) | Domiciliary long-term care institutions referred to in Article 32 of the Act on Long-Term Care Insurance for The Aged; |
| (k) | Support centers for multicultural families referred to in Article 12 of the Multicultural Families Support Act; |
| 5. | Donations paid during the period of designation to non-profit foreign corporations (including organizations; hereafter the same shall apply in this Article) designated by the Minister of Strategy and Finance with recommendation by the competent authorities (hereafter referred to as "designated foreign organizations receiving donations" in this Article), which shall meet all the following requirements: |
| (a) | Such corporations shall be non-profit foreign corporations, the objective of which shall be to cooperate with and support overseas Koreans as defined in Article 2 of the Act on the Immigration and Legal Status of Overseas Koreans and to conduct public relations about Korea or international exchanges or cooperation; |
| (b) | Such corporations shall meet all the requirements prescribed in paragraph (1) 1 (g) (i) through (v). In such cases, a foreign non-profit corporation shall be deemed a non-profit corporation under the Civil Act in applying the requirements to such corporation; |
| 6. | Donations paid to international organizations specified by Ministerial Decree of Strategy and Finance, which meet all 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 designated to make donations provided 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 in the main sentence of paragraph (1). <Amended by Presidential Decree No. 17457, Dec. 31, 2001; Presidential Decree No. 18174, Dec. 30, 2003; Presidential Decree No. 18706, Feb. 19, 2005> |
| (3) | "Proper purpose business expenses" referred to in the main sentence of paragraphs (1) 1, and (2) means an amount to be used for the business the relevant non-profit corporation or organization carries on to accomplish the objectives stipulated in the Acts and subordinate statutes related to the relevant corporation or organization or its articles of incorporation, other than the profit-making business provided in Article 2 (1) (excluding medical services among health and social welfare services). <Amended by Presidential Decree No. 17457, Dec. 31, 2001> |
| (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 Ministerial Decree of Strategy and Finance. <Added by Presidential Decree No. 18174, Dec. 30, 2003; Presidential Decree No. 20720, Feb. 29, 2008> |
| (5) | A corporation under paragraph (1) 1 (g) or a designated foreign organization receiving donations shall perform the following obligations during the period of designation (in cases of subparagraph 4, the year immediately preceding the year in which a corporation or organization is designated shall be included therein): <Added by Presidential Decree No. 25194, Feb. 21, 2014> |
| 1. | The corporation or organization shall meet all the requirements prescribed in paragraph (1) 1 (g) (i) through (iii). In such cases, a foreign non-profit corporation shall be deemed a non-profit corporation under the Civil Act in applying the requirements to such corporation; |
| 2. | The corporation or organization shall perform the following obligations: |
| (a) | In cases of a non-profit corporation under the Civil Act or a designated foreign organizations receiving donation: Earnings shall be used not for members’ interest but for public interest and persons benefitting directly from its business shall be many and unspecified people; |
| (b) | In cases of a social cooperative: It shall engage in the business activities specified in Article 93 (1) 1 or 2 of the Framework Act on Cooperatives; |
| 3. | The amount of donations collected each year and the results of the use of such donations shall be disclosed to the public through the web-sites of the relevant corporation or designated foreign organizations receiving donation and of the National Tax Service respectively by March 31 of the following year. In such cases, the web-site of the National Tax Service shall publish such information according to the statements stipulated by Ministerial Decree of Strategy and Finance on the amount of donations collected each year and the results of the use of such donations; |
| 4. | The corporation or organization shall have no record confirmed by the rightful authorities that it has been involved in an election campaign, defined under Article 58 (1) of the Public Official Election Act, for a particular political party or a particular person in the name of the non-profit corporation or its representative; |
| 5. | The corporation or organization shall spend at least 80/100 of its expenditure, excluding the expenditure in its profit-making business, directly for its proper purpose business. |
| (6) | A corporation under paragraph (1) 1 (g) shall report to the competent authorities on whether it has performed the obligations under paragraph (5) (hereafter referred to as "whether obligations have been performed" in this Article), as stipulated by Ministerial Decree of Strategy and Finance. In such cases, if a corporation fails to report on whether obligations have been performed, the competent authorities shall request the corporation to report thereon, as stipulated by Ministerial Decree of Strategy and Finance. <Added by Presidential Decree No. 22035, Feb. 18, 2010; Presidential Decree No. 22812, Mar. 31, 2011; Presidential Decree No. 25194, Feb. 21, 2014> |
| (7) | The competent authorities shall review the details reported under paragraph (6) and notify the Minister of Strategy and Finance of the results thereof (including the fact that a corporation fails to report on whether obligations have been performed, even after receipt of a request made under the latter part of paragraph (6)), as stipulated by Ministerial Decree of Strategy and Finance. <Added by Presidential Decree No. 22035, Feb. 18, 2010; Presidential Decree No. 22812, Mar. 31, 2011; Presidential Decree No. 25194, Feb. 21, 2014> |
| (8) | In any of the following circumstances, the Commissioner of the National Tax Service may request the Minister of Strategy and Finance to revoke the designation of a corporation under paragraph (1) 1 (g): <Added 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> |
| 1. | Where the inheritance tax or gift tax collected from the corporation pursuant to Article 48 (2) and (3) of the Inheritance Tax and Gift Tax Act, is not less than the amount stipulated by Ministerial Decree of Strategy and Finance; |
| 2. | Where the corporation 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 any subparagraph of paragraph (5), or fails to report on whether obligations have been performed, even upon receipt of a request made under the latter part of paragraph (6); |
| 3. | Where the fact that the corporation is listed as one of unconscientious donation-receiving organizations is disclosed under Article 85-5 of the Framework Act on National Taxes; |
| 4. | Where a sentence of imprisonment with prison labor or a fine, imposed upon the representative or an agent, employee, or servant of the corporation for a violation of the Act on Collection and Use of Donations under Article 16 of the aforesaid Act, becomes final and conclusive; |
| 5. | Where the corporation is dissolved. |
| (9) | If the Commissioner of the National Tax Service becomes aware, after the period of designation of a corporation under paragraph (1) 1 (g) ends, that an event specified in any subparagraph of paragraph (8) occurred to the corporation during the period of designation, he/she may elect not to re-designate the corporation or may request the Minister of Strategy and Finance to revoke re-designation, if the corporation has been already re-designated. <Added by Presidential Decree No. 22035, Feb. 18, 2010; Presidential Decree No. 25194, Feb. 21, 2014> |
| (10) | If a designated foreign organization receiving donations breaches its obligation under any subparagraph of paragraph (5), the Commissioner of the National Tax Service may request the Minister of Strategy and Finance to revoke its designation, but, if the Commissioner of the National Tax Service becomes aware, after the period of designation of a designated foreign organization receiving donations ends, that a cause of revocation of the designation arose during the period of designation, he/she may elect not to re-designate the designated foreign organization receiving donations or may request the Minister of Strategy and Finance to revoke re-designation, if it has been already re-designated. <Added by Presidential Decree No. 22577, Dec. 30, 2010; Presidential Decree No. 24357, Feb. 15, 2013; Presidential Decree No. 25194, Feb. 21, 2014> |
| (11) | Upon receipt of a request under any provision of paragraphs (8) through (10), the Minister of Strategy and Finance may revoke the designation of the relevant corporation or designated foreign organization receiving donations or may elect not to re-designate the corporation or foreign organization. <Added by Presidential Decree No. 25194, Feb. 21, 2014> |
| (12) | Matters necessary for the procedure for the designation of corporations or designated foreign organizations receiving donations under paragraph (1) 1 (g), the methods for the examination of requirements for designation, the documents to be submitted, the procedure for the revocation of designation or for the denial of re-designation, and other matters shall be stipulated by Ministerial Decree of Strategy and Finance. <Added by Presidential Decree No. 19891, Feb. 28, 2007; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 22577, Dec. 30, 2010; Presidential Decree No. 24357, Feb. 15, 2013; Presidential Decree No. 25194, Feb. 21, 2014> |
| Article 36-2 (Requirements, etc. for Organizations Receiving Statutory Donations) |
| (1) | Natural disasters referred to in Article 24 (2) 3 of the Act include any disaster based on which a certain area is declared as a special disaster area under Article 60 of the Framework Act on the Management of Disasters and Safety. |
| (2) | "Schools prescribed by Presidential Decree" referred to in Article 24 (2) 4 (h) of the Act means any of the following: <Added by Presidential Decree No. 23589, Feb. 2, 2012> |
| 1. | The international graduate school established in the Korea Development Institute under the Act on the Establishment, Operation and Fostering of Government-Funded Research Institutes; |
| 2. | Graduate schools established in the Academy of Korean Studies under the Act on the Support of the Academy of Korean Studies; |
| 3. | Graduate universities established under Article 33 of the Act on the Establishment, Operation and Fostering of Government-Funded Science and Technology Research Institutes, Etc. |
| (3) | "Schools that meet requirements prescribed by Presidential Decree" in Article 24 (2) 4 (i) of the Act mean the schools that meet all the following requirements: <Amended by Presidential Decree No. 22812, Mar. 31, 2011; Presidential Decree No. 23589, Feb. 2, 2012; Presidential Decree No. 25194, Feb. 21, 2014> |
| 1. | A school shall have the Internet web-site through which the amount of donations collected and the results of the use of the donations can be disclosed to the public; |
| 2. | If the designation of a school was revoked under paragraph (14), three years shall have passed since the date of revocation, while, if a school fails to obtain re-designation under the afore-said 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) 6 of the Act mean the corporations that meet all the following requirements: <Amended by Presidential Decree No. 22812, Mar. 31, 2011; Presidential Decree No. 23589, Feb. 2, 2012; Presidential Decree No. 25194, Feb. 21, 2014> |
| 1. | They have the Internet web-site through which the annual collection of donations and the result of utilization thereof may be disclosed to the public; |
| 2. | They shall undergo an accounting audit from an auditor under Article 3 of the Act on External Audit of Stock Companies; |
| 3. | They shall disclose the statement of accounts, etc. under Article 50-3 (excluding subparagraph 5) of the Inheritance Tax and Gift Tax Act through Internet web-site or the National Tax Service's Internet web-site; |
| 4. | They shall open and use the exclusive accounts under Article 50-2 of the Inheritance Tax and Gift Tax Act; |
| 5. | The average amount disbursed for distribution of 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 the same shall apply in subparagraph 6] 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 Ministerial Decree of Strategy and Finance; |
| 6. | The average amount disbursed for distribution of donations for five business years immediately preceding the application date per corporation (including an organization; hereafter the same shall apply in this subparagraph) shall not exceed 25/100 of the total amount disbursed for distribution and no amount disbursed for distribution of donations shall be deemed to exist with respect to a non-profit corporation falling under Article 12-2 (1) 4, 5 or 8 of the Enforcement Decree of the Inheritance Tax and Gift Tax Act as an investor under Article 38 (10) of the same Enforcement Decree and a related party with such investor referred to in Article 12-2 (1) of the same Enforcement Decree. |
| 7. | If the designation was revoked under paragraph (14), three years shall have passed since the date of revocation, while, if a corporation fails to obtain re-designation under the afore-said paragraph, three years shall have passed since the period of designation ends. |
| (5) | "Institutions that meet requirements prescribed by Presidential Decree" in Article 24 (2) 7 of the Act mean the institutions that meet all the following requirements: <Amended by Presidential Decree No. 22812, Mar. 31, 2011; Presidential Decree No. 23589, Feb. 2, 2012; Presidential Decree No. 25194, Feb. 21, 2014> |
| 1. | They have Internet web-site through which the annual collection of donations and the result of utilization thereof may be disclosed to the public; |
| 2. | The purpose of their establishment is to engage in activities for the public interest, such as social welfare, charity, culture, arts, education, research and scholarship; |
| 3. | The total of average Government subsidies and donations for five business years (where the period from the date of establishment to the end date of the business year immediately preceding the date of application is less than five years, the business year means the period from the date of establishment of the relevant corporation to the end date of the immediately preceding month in which the date of application falls) immediately preceding the date of application under paragraph (6) shall be at least 1/3 of the total amount of income. In such cases, the calculation of the Government subsidies and the total amount of income shall be prescribed by Presidential Decree; |
| 4. | If the designation was revoked under paragraph (14), three years shall have passed since the date of revocation, while, if an institution fails to obtain re-designation under the afore-said paragraph, three years shall have passed since the period of designation ends. |
| (6) | The competent authorities shall recommend schools, corporations or institutions referred to in paragraphs (3) through (5) (hereinafter referred to as "schools, etc.") upon receiving an application from the relevant schools, etc. to the Minister of Strategy and Finance with the documents stipulated by Ministerial Decree of Strategy and Finance by no later than one month after the end of each half year and the Minister of Strategy and Finance shall designate it by no later than four months after the end of each half year. <Amended by Presidential Decree No. 22812, Mar. 31, 2011; Presidential Decree No. 23589, Feb. 2, 2012; Presidential Decree No. 25194, Feb. 21, 2014> |
| (7) | Donations paid to schools, etc. prescribed by Ministerial Decree of Strategy and Finance designated under paragraph (6) shall be included in deductible expenses referred to in Article 24 (2) of the Act as statutory donations for six years from January 1 of the year in which the date prescribed by Ministerial Decree of Strategy and Finance under paragraph (6) falls (hereafter referred to as "period of designation" in this Article). <Amended by Presidential Decree No. 22812, Mar. 31, 2011; Presidential Decree No. 23589, Feb. 2, 2012> |
| (8) | Schools, etc. shall perform the following obligations during the period of designation: <Added by Presidential Decree No. 22812, Mar. 31, 2011; Presidential Decree No. 23589, Feb. 2, 2012; Presidential Decree No. 25194, Feb. 21, 2014> |
| 1. | The amount of donations collected each year and the results of the use of the donations shall be disclosed to the public through the web-site of the National Tax Service by March 31 of the following year according the statements of the amount of donations collected each year and the results of the use of the donations in the form stipulated by Ministerial Decree of Strategy and Finance; |
| 2. | Each organization shall disclose the amount of donations collected each year and the results of the use of the donations through its web-site by March 31 of the following year; |
| 3. | They shall disburse at least 80/100 of expenditures of the relevant business year directly for proper purpose business, excluding the expenditures for profit-making business; |
| (9) | A corporation referred to in paragraph (4) and an organization referred to in paragraph (5) shall report on whether it meets the requirements provided in paragraph (4) or (5) and performs the obligations provided in paragraph (8) (hereafter referred to as "whether the requirements, etc. are met" in this Article) to the competent authorities, as prescribed by Ministerial Decree of Strategy and Finance. In such cases, if the relevant corporation or organization fails to report on whether the requirements, etc. are met, the competent authorities shall request such corporation or organization to report, as prescribed by Ministerial Decree of Strategy and Finance. <Added by Presidential Decree No. 22812, Mar. 31, 2011; Presidential Decree No. 23589, Feb. 2, 2012> |
| (10) | The competent authorities shall inspect the details reported under paragraph (9) and notify the Commissioner of the National Tax Service of the results thereof (if the relevant corporation fails to report on whether the requirements, etc. are met, notwithstanding a request made under the latter part of paragraph (9), such fact shall be included), as stipulated by Ministerial Decree of Strategy and Finance. <Added by Presidential Decree No. 22812, Mar. 31, 2011; Presidential Decree No. 23589, Feb. 2, 2012; Presidential Decree No. 25194, Feb. 21, 2014> |
| (11) | In any of the following circumstances, the Commissioner of the National Tax Service may request the Minister of Strategy and Finance to revoke the designation of a school, etc., as stipulated by Ministerial Decree of Strategy and Finance. <Added by Presidential Decree No. 22812, Mar. 31, 2011; Presidential Decree No. 23589, Feb. 2, 2012; Presidential Decree No. 25194, Feb. 21, 2014> |
| 1. | Where the school, etc. has been additionally charged at least the amount determined by Ministerial Decree of Strategy and Finance for the inheritance tax or gift tax pursuant to Article 48 (2) or (3) of the Inheritance Tax and Gift Tax Act; |
| 2. | Where the school, etc. has violated the public interest by conducting business, other than its proper purpose business, or violates the conditions for permission of establishment, have violated the requirements provided in paragraphs (3) through (5) and have breached the obligations provided in paragraph (8), or have failed to report on whether the requirements, etc. are met, notwithstanding a request made under the latter part of paragraph (9); |
| 3. | Where it has been disclosed that the school, etc. is listed as an unconscientious donation receiving organization pursuant to Article 85-5 of the Framework Act on National Taxes; |
| 4. | Where the representative, agent, employee or other servant of a corporation has violated the Act on Collection and Use of Donations and is sentenced to imprisonment or a fine under Article 16 of the same Act; |
| 5. | Where the school, etc. is dissolved. |
| (12) | If 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. <Added by Presidential Decree No. 25194, Feb. 21, 2014> |
| (13) | If the Commissioner of the National Tax Service becomes aware, after the period of designation of a school, etc. ends, that an event specified in any subparagraph of paragraph (11) occurred to the school, etc. during the period of designation, he/she may elect not to re-designate the school, etc. or may request the Minister of Strategy and Finance to revoke re-designation, as stipulated by Ministerial Decree of Strategy and Finance, if the school, etc. has been already re-designated. <Added by Presidential Decree No. 22812, Mar. 31, 2011; Presidential Decree No. 23589, Feb. 2, 2012; Presidential Decree No. 25194, Feb. 21, 2014> |
| (14) | Upon receipt of a request under paragraph (11) or (13), the Minister of Strategy and Finance may revoke the designation of the school, etc. or may elect not to re-designate the school, etc. <Added by Presidential Decree No. 25194, Feb. 21, 2014> |
| (15) | Where the Minister of Strategy and Finance revokes the designation of a school, etc. under paragraph (14), he/she shall publish the name of the school, etc., relevant facts, the period during which the school, etc. is excluded from organizations receiving statutory donations (referring to the period required to elapse after the date of revocation of designation under paragraph (3) 2, (4) 7, or (5) 4)) in the Official Gazette by December 31 of the year in which the designation is revoked (referring to January 31 of the following year, if the designation is revoked in December). <Added by Presidential Decree No. 25194, Feb. 21, 2014> |
[This Article Added by Presidential Decree No. 22577, Dec. 30, 2010]
| Article 37 (Value, etc. of Donations) |
| (1) | Where a corporation offers assets, other than money, as donations referred to in Article 24 of the Act, the value of the assets shall be the market price (the book value if the market price is lower than the book value) as at the time of 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 38 (Scope, etc. of Inclusion of Donations in Deductible Expenses) |
| (1) | The value of money and other valuables gratuitously contributed to the State or a local government under Article 24 (2) 1 of the Act shall include the value of assets contributed by a corporation to an individual or another corporation, the individual or another corporation contributes it without delay to the State or a local government and the value of money and other valuables contributed under Article 2 (2) of the Act on the Measures for the Admission to International Financial Institutions by the Bank of Korea under the Bank of Korea Act. <Amended by Presidential Decree No. 18706, Feb. 19, 2005> |
| (2) | Contributions for national defense referred to in Article 24 (2) 2 of the Act shall include donations made directly to homeland reserve forces established under the Establishment of Homeland Reserve Forces Act or donations made through institutions or organization which have obtained approval from the Minister of Defense. <Amended by Presidential Decree No. 18706, Feb. 19, 2005; Presidential Decree No. 22687, Mar. 2, 2011> |
| (3) | Where any corporation has paid donations under Article 24 of the Act, the relevant donations shall be sequentially included in its deductible expenses up to the following amounts: <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. 21302, Feb. 4, 2009; Presidential Decree No. 22577, Dec. 30, 2010> |
| 1. | Deleted; <by Presidential Decree No. 22577, Dec. 30, 2010> |
| 2. | In the case of donations referred to in each subparagraph of Article 24 (2) of the Act (hereafter referred to as "statutory donations" in this paragraph), the amount computed by the following formula: |
(Amount of income for the relevant business year － Losses carried forward) × 50/100;
| 3. | In the case of designated donations referred to in Article 24 (1) of the Act, the amount computed by the following formula: |
(Amount of income for relevant business year－Losses carried forward －Statutory donations) × 10/100
| (4) | In applying Article 24 (4) of the Act, the amount in excess of the ceilings on inclusion of designated donations in deductible expenses and the amount in excess of the ceilings on inclusion of statutory donations in deductible expenses provided in paragraphs (1) and (2) of the same Article shall be included in deductible expenses up to the amount of the shortfall only if the designated donations or statutory donations referred to in paragraphs (1) and (2) of the same Article fall short of the ceilings on inclusion in deductible expenses in the relevant taxable year to which such excess is carried forward. <Amended by Presidential Decree No. 19328, Feb. 9, 2006; Presidential Decree No. 22577, Dec. 30, 2010> |
| (5) | When a corporation makes donations under Article 24 of the Act, it shall prepare the detailed statements on donations in the form stipulated by Ministerial Decree of Strategy and Finance separately for designated donations under Article 24 (1) of the Act and donations under paragraph (2) of the same Article and submit them to the head of the tax office having jurisdiction over the place of tax payment, along with the report provided in Article 60 of the Act. <Amended by Presidential Decree No. 17457, Dec. 31, 2001; Presidential Decree No. 18706, Feb. 19, 2005; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 22577, Dec. 30, 2010> |
| Article 39 (Scope, etc. of Small and Medium Enterprises) |
| (1) | "Small and medium enterprises prescribed by Presidential Decree" referred to in Article 25 (1) 1 of the Act means enterprises as defined in Article 2 of the Enforcement Decree of the Restriction of Special Taxation Act (hereinafter referred to as "small and medium enterprises"). <Amended by Presidential Decree No. 17033, Dec. 29, 2000; Presidential Decree No. 18706, Feb. 19, 2005; Presidential Decree No. 22951, Jun. 3, 2011> |
| (2) | The number of months referred to in Article 25 (1) 1 of the Act shall be calculated based on the calendar months, and any number of days that falls short of one month shall be deemed one month. |
| Article 40 (Standard, etc. for Calculating Entertainment Expenses as Amount of Income) |
| (1) | "The amount of income prescribed by Presidential Decree" in the main sentence of Article 25 (1) 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 in Article 4 (7) of the Financial Investment Services and Capital Markets Act and derivatives provided 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: |
| 1. | An investment dealer or investment broker as defined in the Financial Investment Services and Capital Markets Act: Sales + Amount equivalent to nine times the remuneration and fees related to the business specified in Article 6 (1) 2 of the Financial Investment Services and Capital Markets Act; |
| 2. | A collective investment business operator as defined in the Financial Investment Services and Capital Markets Act: Sales + Amount equivalent to nine times the remuneration and fees related to the management of collective investment assets specified in Article 9 (20) of the Financial Investment Services and Capital Markets Act; |
| 3. | The Korea Investment Corporation incorporated under the Korea Investment Corporation Act: Sales + Amount equivalent to six times the management fees specified in Article 34 (2) of the Korea Investment Corporation Act; |
| 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; |
| 4-2. | The Korea Asset Management Corporation incorporated under the Act on the Efficient Disposal of Non-Performing Assets, etc. of Financial Companies and the Establishment of Korea Asset Management Corporation: Sales + Amount equivalent to six times the fees for handling business affairs specified in Article 31 of the Act on the Efficient Disposal of Non-Performing Assets, etc. of Financial Companies and the Establishment of Korea Asset Management Corporation; |
| 5. | A corporation specified in any subparagraph of Article 63 (1): Sales ＋ Amount equivalent to six times guarantee fees received. |
| (2) | The main sentence of Article 37 (1) shall apply |
| Article 41 (Use of Credit Cards, etc. for Entertainment Expenses) |
| (1) | "Amount prescribed by Presidential Decree" referred to in the main sentence other than the subparagraphs of Article 25 (2) of the Act means an amount classified in the following: <Amended by Presidential Decree No. 19328, Feb. 9, 2006; Presidential Decree No. 19891, Feb. 28, 2007; Presidential Decree No. 21302, Feb. 4, 2009; Presidential Decree No. 22951, Jun. 3, 2011> |
| 1. | Celebration or condolence money: 200,000 won; |
| 2. | For cases other than that provided in subparagraph 1: The following amounts: |
| (a) | By no later than December 31, 2007: 50,000 won; |
| (b) | From January 1, 2008 to December 31, 2008: 30,000 won; |
| (c) | On or after January 1, 2009: 10,000 won. |
| (2) | "Expenditure of entertainment expenses in any foreign country prescribed by Presidential Decree or for farmers or fishermen" referred to in the proviso to Article 25 (2) of the Act means any of the following: <Added by Presidential Decree No. 23589, Feb. 2, 2012> |
| 1. | Expenditure made in the relevant foreign country if it is impractical to obtain evidentiary documents provided in the subparagraphs of Article 25 (2) of the Act on the grounds of the lack of a means of payment, other than cash in the place where such entertainment expenses are expended (including any place similar to the place in neighboring areas where the relevant place is located); |
| 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. as 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, 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 at the time of filing a report on tax base under Article 60 of the Act). |
| (3) | "Items prescribed by Presidential Decree" referred to in Article 25 (2) 1 (a) of the Act means a debit card issued under the Specialized Credit Finance Business Act, a credit card issued in any foreign country, a prepaid card or a cash receipt as provided in Article 126-2 (1) of the Restriction of Special Taxation Act. <Amended by Presidential Decree No. 18174, Dec. 30, 2003; Presidential Decree No. 18706, Feb. 19, 2005; Presidential Decree No. 22951, Jun. 3, 2011> |
| (4) | In applying Article 25 (3) of the Act, "sales slips, etc. issued in the name of a credit card merchant, etc. other than the one that actually supply the relevant goods or services" means those stating the trade name and business location that are different from the trade name and business location of the credit card merchant, etc. that has supplied goods or services. <Added by Presidential Decree No. 17033, Dec. 29, 2000> |
| (5) | "Withholding receipt prescribed by Presidential Decree" referred to in Article 25 (2) 2 of the Act means a withholding receipt issued under Articles 144 and 145 of the Income Tax Act after having been supplied with services from a person who has not been registered as a business operator under Article 168 of the Income Tax Act. <Added by Presidential Decree No. 21302, Feb. 4, 2009> |
| (6) | and (7) Deleted. <by Presidential Decree No. 17457, Dec. 31, 2001> |
| (8) | In applying paragraphs (1) through (4), 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. <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. 18174, Dec. 30, 2003; Presidential Decree No. 19328, Feb. 9, 2006> |
| Article 42 (Scope of Entertainment Expenses) |
| (1) | Entertainment expenses paid by a corporation that should have been borne by its stockholders or investors (hereinafter referred to as "stockholders, etc.") or executives or employees shall not be deemed entertainment expenses. <Amended by Presidential Decree No. 20619, Feb. 22, 2008> |
| (2) | Where a corporation pays welfare facilities expenses of an association or organization comprised of its employees, and the association or organization is a corporation, such expenses shall be deemed entertainment expenses, and where the association or organization is not a corporation, such expenses shall be deemed a part of the account of the corporation. |
| (3) | Deleted. <by Presidential Decree No. 20619, Feb. 22, 2008> |
| (4) | and (5) Deleted. <by Presidential Decree No. 21302, Feb. 4, 2009> |
| 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 executives or employees to dispose of profits (excluding bonuses falling under any subparagraph of Article 20 (1)) shall not be included in deductible expenses. In such cases, remuneration paid to members who invest through work and labor in unlimited partnerships or limited partnerships shall be deemed bonuses from the disposal of profits. |
| (2) | Where a corporation pays bonuses to its executives 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 employees, or the board of directors, such excess shall not be included in deductible expenses. |
| (3) | Where a corporation pays remuneration to an executive 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 executives 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> |
| (4) | The remuneration paid to a non-standing executive 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 executives or employees of a corporation due to its dissolution shall be included in deductible expenses of the final business year. |
| (6) | Deleted. <by Presidential Decree No. 21302, Feb. 4, 2009> |
| (7) | "Controlling stockholder, etc." referred to 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. <Added by Presidential Decree No. 20619, Feb. 22, 2008> |
| (8) | "Related party" referred to in paragraphs (3) and (7) means a person who has any of the following relationships with the relevant stockholder, etc.: <Added by Presidential Decree No. 20619, Feb. 22, 2008; Presidential Decree No. 21302, Feb. 4, 2009; Presidential Decree No. 23589, Feb. 2, 2012> |
| 1. | A person with any of the following relationships if the relevant stockholder, etc. is an individual: |
| (a) | A relative (refers to a person falling under Article 1-2 (1) of the Enforcement Decree of the Framework Act on National Taxes; hereinafter the same shall apply); |
| (b) | A corporation in a relationship referred to in Article 87 (1) 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 87 (1) if the relevant stockholder, etc. is a corporation. |
| Article 44 (Non-Inclusion of Severance Benefits in Deductible Expenses) |
| (1) | Severance benefits (referring to benefits defined in subparagraph 5 of Article 2 of the Act on the Guarantee of Workers' Retirement Benefits; hereinafter the same shall apply) paid by a corporation to its executives or employees shall be included in deductible expenses within the extent of the amount actually paid when an executive or employee actually retires (hereafter referred to as "actual retirement" in this Article). <Amended by Presidential Decree No. 19328, Feb. 9, 2006> |
| (2) | Actual retirement includes any of the following cases, in which a corporation actually pays severance 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> |
| 1. | Where an employee of a corporation becomes an executive of the corporation; |
| 2. | Where an employee or executive of a corporation retires due to the reorganization, merger, division, or transfer of the business of the corporation; |
| 3. | Where severance benefits are paid upon making interim settlement as prescribed in Article 8 (2) of the Act on the Guarantee of Workers' Retirement Benefits (limited to where severance benefits are newly calculated by counting the years of service from the time of interim settlement); |
| 4. | Deleted; <by Presidential Decree No. 26068, Feb. 3, 2015> |
| 5. | Where severance benefits are paid upon making interim settlement to executives for reasons prescribed by Ministerial Decree of Strategy and Finance, such as long-term medical care as prescribed in the articles of incorporation or the regulations on payment of severance benefits delegated by the articles of incorporation benefits (limited to where severance benefits are newly calculated by counting the years of service from the time of interim settlement); |
| (3) | Where a corporation pays severance benefit to an executive (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 or employee worked for the corporation and the period worked for a corporation with a special relationship provided for in Article 87, an amount equivalent to the relevant severance benefits shall be included in deductible expenses divided in proportion to the corporations, as prescribed by Ministerial Decree of Strategy and Finance. In such cases, the corporation for which the relevant executive or employee worked most recently may submit the detailed statements of withholding and payment under the Income Tax Act concerning the relevant severance benefits all together. <Added by Presidential Decree No. 21302, Feb. 4, 2009; Presidential Decree No. 23589, Feb. 2, 2012; Presidential Decree No. 24357, Feb. 15, 2013> |
| (4) | The amount of severance benefits paid to an executive 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> |
| 1. | Where the amount to be paid as severance 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 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 Ministerial Decree of Strategy and Finance. In such cases, where no severance benefits have been paid when the relevant executive became an executive 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 severance benefits for executives are stipulated by the articles of incorporation, and where the payment of severance benefits to executives are otherwise stipulated by the articles of incorporation, such severance 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 in the relationship referred to in Article 87 (1) 7 with the controlling stockholder, etc., shall not be deemed in the special relationship. <Added by Presidential Decree No. 22035, Feb. 18, 2010> |
| Article 44-2 (Non-Inclusion of Retirement Insurance Premiums, etc., in Deductible Expenses) |
| (1) | Insurance premiums, installments, or charges (hereafter referred to as "insurance premium, etc." in this Article) paid or borne by a domestic corporation to pay severance benefits to its executives and employees, other than those that may be 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> |
| (2) | The amount paid as charges by a domestic corporation for pension prescribed by Ministerial Decree of Strategy and Finance (hereafter referred to as "retirement pension, etc." in this Article) with the severance benefits to its executives and employees making the retirement of executives or employees as the condition for payment and with its executives 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> |
| (3) | Charges for the defined contribution retirement pension, etc., (referring to the defined contribution retirement pension provided for in Article 13 of the Act on the Guarantee of Workers' Retirement Benefits, an individual retirement pension system provided for in Article 25 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: |
| (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 amounts referred to in subparagraphs 1 and 1-2, whichever is larger, and with regard to at least two charges, the charges of the retirement pension, etc., for which a contract is first concluded shall be included in deductible expenses: <Added 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> |
| 1. | Charges for the pension equivalent to the estimate amount payable as severance benefits, if all executives and employees who hold offices as on the end date of the relevant business year (excluding anyone for whom the defined contribution retirement pension, etc., are reserved) retire at once (excluding the amount excluded from deductible expenses under Article 44) less the retirement benefit appropriation funds accumulated as on the end date of the relevant business year; |
| 1-2. | Charges for the pension equivalent to the amount after deducting the retirement benefit appropriation funds at the end of the pertinent business year from the aggregate of the following amounts (excluding the amount excluded from deductible expenses under Article 44): |
| (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 under subparagraph 8 of Article 2 of the Guarantee of Workers’ Retirement Benefits Act retire at once and the estimated amount of retirement benefits payable, if all persons, who are members of the defined contribution retirement pension, but whose length of membership falls short of the length of service, retire at once, among executives or employees (excluding persons who are members of the defined contribution retirement pension) currently in service at the end of the pertinent business year; |
| 2. | Charges paid by the end date 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, accompanied by an adjustment statement of retirement pension charges in the form stipulated by Ministerial Decree of Strategy and Finance. <Amended by Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 22577, Dec. 30, 2010> |
[This Article Added 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 executives or employees, other than any of 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, etc, 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> |
| 1. | Exercise expenses for employees; |
| 2. | Entertainment expenses for 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 The Aged; |
| 6. | Operational expenses of workplace child care centers established under the Infant Care Act; |
| 7. | Insurance premiums borne by an employer under the Employment Insurance Act; |
| 8. | Other condolence and congratulatory expenses paid to executives 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 executives 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>
| 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 the same organization or business with a person, other than the relevant corporation, the amount in excess of the following allotments shall not be included in deductible expenses for purposes of 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> |
| 1. | Where a specific business is jointly operated through investment, the rate of investments by the relevant corporation to the total investments; |
| 2. | The following standards for expenses expended by all corporations, etc. (hereafter referred to as "non-investing joint business operators" in this paragraph) related to the organization, business, etc. in cases other than the cases falling subparagraph 1: |
| (a) | Where non-investing joint business operators are in a relationship provided in any subparagraph of Article 87 (1): The rate of sales of the relevant corporation to the amount selected by the corporation among the total sales in the immediately preceding business year or in the relevant business year (if the corporation does not select the amount, it shall be deemed to have selected the total sales in the immediately preceding business year, and the corporation shall apply it for the consecutive five business years from the business year in which the corporation has selected): |
| (b) | In cases other than the cases falling under item (a): The rate of allotment under the contract between non-investing joint business operators: |
| 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 Ministerial Decree of Strategy and Finance. <Amended by Presidential Decree No. 20720, Feb. 29, 2008> |
| Article 49 (Scope, etc. of Non-Business Assets) |
| (1) | "Assets prescribed by Presidential Decree" referred to 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: |
| (a) | Real estate which is not directly used for the business of a corporation: |
| (b) | Real estate which is not directly used for the business of a corporation and is transferred during the grace period: |
| 2. | Any of the following moveable: |
| (a) | Paintings and curios: |
| (b) | Cars, ships, and aircraft which are not directly used for business: |
| (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 Ministerial Decree of Strategy and Finance. <Amended by Presidential Decree No. 20720, Feb. 29, 2008> |
| (3) | "Amount prescribed by Presidential Decree" referred to 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" referred to 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> |
| 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 executives, other than stockholders, etc., and executives and employees who are minority stockholders, etc.) mainly uses: |
| 2. | Maintenance expenses, management expenses, user fees and other related expenses for private residences used by stockholders, etc. (excluding minority stockholders, etc.), contributing executives 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); |
| 4. | The total amount of money, assets other than money, and other economic gains offered by the relevant corporation which fall under a bribe under the Criminal Act or the Act on Combating Bribery of Foreign Public Officials in International Business Transactions; |
| 5. | Benefits paid in violation of Article 24 (2) and (4) of the Trade Union and Labor Relations Adjustment Act. |
| (2) | "Minority stockholder, etc." referred to 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> |
[This Article Wholly Amended by Presidential Decree No. 20619, Feb. 22, 2008]
| Article 51 (Scope of Interest, etc. on Debentures for which Creditor is Unknown) |
| (1) | "Interest on debentures for which the creditor is unknown" referred to 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): |
| 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" referred to 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" referred to in Article 28 (1) 3 of the Act means interest paid on loans used for purchasing, producing or constructing fixed 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 fixed 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> |
| (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.: |
| (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" referred to in paragraphs (2) and the latter part of paragraph (5) means any of the following dates: <Amended by Presidential Decree No. 18706, Feb. 19, 2005> |
| 1. | Where land is purchased, the date the price is settled: |
| 2. | For buildings, the date of acquisition as prescribed in Article 162 of the Enforcement Decree of the Income Tax Act or the date on which it is first used for the purpose of its construction (hereafter referred to as "start date of use" in this paragraph), whichever comes earlier; |
| 3. | For other fixed assets used for business, the start date of use. |
| (7) | "Amount prescribed by Presidential Decree" referred to in Article 28 (2) of the Act means the amount whichever is smaller between the amount computed by multiplying the construction, etc. of the fixed assets for each business during the relevant business year by the amount provided in subparagraph 2 and the rate provided in subparagraph 3, and the amount provided in subparagraph 1: <Added by Presidential Decree No. 22577, Dec. 30, 2010> |
| 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: |
|
| 3. | The rate calculated by the following formula: |
|
| Article 53 (Non-Inclusion of Interest Paid on Non-Business Assets, etc. in Deductible Expenses) |
| (1) | "Provisional payments, etc. prescribed by Presidential Decree" referred to in Article 28 (1) 4 (b) of the Act mean 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 in any subparagraph of Article 61 (2), including the amount of loans for capital which cannot be recognized as the main profit-making business): |
| (2) | "Amount calculated, as prescribed by Presidential Decree" referred to 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> |
|
| (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): |
| (a) | Amounts borrowed from the Public Capital Management Fund established under the Public Capital Management Fund Act or from the Bank of Korea established under the Bank of Korea Act; |
| (b) | Amounts borrowed from the State or local governments (including associations of local governments); |
| (c) | Amounts borrowed from funds established under Acts and subordinate statutes; |
| (d) | Foreign currency loans obtained under the Foreign Investment Promotion Act or the Foreign Exchange Transactions Act; |
| (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 regulations provided 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" referred to in the main sentence other than the subparagraphs of Article 29 (1) of the Act means any of 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> |
| 1. | Organizations referred to in Article 36 (1) 1; |
| 2. | Deleted; <by Presidential Decree No. 17457, Dec. 31, 2001> |
| 3. | Any Fund established under the Acts and subordinate statutes; |
| 4. | A meeting of representatives of occupants or self-management organization of collective housing as defined in subparagraph 2 of Article 2 of the Housing Act. |
| (2) | Any of the following amounts of interest income shall be deemed the amount provided in Article 29 (1) 1 of the Act: <Amended by Presidential Decree No. 19891, Feb. 28, 2007; Presidential Decree No. 20619, Feb. 22, 2008> |
| 1. | The amount of interest income generated when a non-profit domestic corporation operating a financial insurance business temporarily deposits funds to any corporation that runs the financial insurance business listed on the Korea Standard Industrial Classification; |
| 2. | The amount of interest income generated when a person carrying on the business provided in Article 2 (1) 5 (b) manages funds; |
| 3. | The amount of interest income generated when the Housing Finance Credit Guarantee Fund established under the Korea Housing Finance Corporation Act manages the guarantee fees received under Article 43-8 (1) and (2) of the said Act. |
| (3) | "Income from profit-making business" referred to in Article 29 (1) 4 of the Act means the amount of income generated from profit-making business in the relevant business year (referring to the amount of income before the inclusion of the reserve funds for proper purpose business and donations provided in Article 24 (2) of the Act in deductible expenses) minus the amount referred to in Article 29 (1) 1 through 3 of the Act, losses referred to in subparagraph 1 of Article 13 of the Act, and donations referred to in under Article 24 (2) of the Act. <Amended by Presidential Decree No. 19328, Feb. 9, 2006; Presidential Decree No. 22577, Dec. 30, 2010> |
| (4) | Deleted. <by Presidential Decree No. 18324, Mar. 22, 2004> |
| (5) | "Proper purpose business" referred to in Article 29 (1) of the Act means the business directly operated by the relevant non-profit domestic corporation for accomplishing its purpose of establishment stipulated by the Acts and subordinate statutes or the articles of incorporation, other than the profit-making business provided in Article 2 (1). |
| (6) | In applying any provision of Article 29 (1) through (4) of the Act, the following amounts shall be deemed expended or used for the 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> |
| 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 provided in Article 31 (2)) of fixed assets and personnel expenses; |
| 2. | The amount of reserve funds for proper purpose business appropriated as deductible expenses that are accumulated as funds or reserve funds under the Acts and subordinate statues 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 2 (1) 8; |
| 3. | The amount expended by a non-profit domestic corporation providing medical services (hereafter referred to as "medical corporation" in this Article) for the acquisition of fixed assets stipulated by Ministerial Decree of Strategy and Finance, such as medical equipment, and the amount expended for research and development projects stipulated by Ministerial Decree of Strategy and Finance; |
| 4. | The amount of loans that the National Agricultural Cooperative Federation established under the Agricultural Cooperatives Act extends to its members free of charge from the reserve funds for proper purpose business, appropriated under Article 61 (1) of the Act; |
| 5. | The amount contributed by the National Agricultural Cooperative Federation established under the Agricultural Cooperatives Act to the Mutual Finance Depositor Protection Fund created under the Act on the Structural Improvement of Agricultural Cooperatives; |
| 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 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; |
| 10. | The amount expended by the |
| (7) | "Amount equivalent to the interest calculated, as prescribed by Presidential Decree" referred to in Article 29 (5) of the Act means the amount computed by multiplying the amount provided in subparagraph 1 by the rate provided in subparagraph 2: <Amended by Presidential Decree No. 17826 Dec. 30, 2002; Presidential Decree No. 22577, Dec. 30, 2010> |
| 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. | The rate of 3/10,000 per day for the period from the start date of the business year following the business year in which the balance was included in deductible expenses falls until the end date of the business year in which the balance was included in gross income falls. |
| (8) | "Circumstances prescribed by Presidential Decree" referred to in Article 29 (6) of the Act mean 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 in the Act or the Restriction of Special Taxation Act: |
| (9) | A non-profit domestic corporation that intends to be applicable under Article 29 (1) of the Act shall submit a detailed statement on the adjustment of reserve funds for proper purpose business in the form stipulated by Ministerial Decree of Strategy and Finance to the head of the tax office having jurisdiction over the place of tax payment, along with the report provided in Article 60 of the Act. <Amended by Presidential Decree No. 20720, Feb. 29, 2008> |
| (10) | A medical corporation that intends to be applicable under 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 Ministerial Decree of Strategy and Finance. <Added by Presidential Decree No. 17033, Dec. 29, 2000; Presidential Decree No. 20720, Feb. 29, 2008> |
| (11) | Where the sum total of wages and salaries provided in each subparagraph of Article 20 (1) of the Income Tax Act paid to the executives 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, Article 39 (2) shall apply |
| 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 the profit-making business under Article 29 (1) 4 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 under Article 29 (1) 4 of the Act by 50/100; |
| (12) | The competent authorities in receipt of a request to approve the payment regulations on labor costs under the proviso to paragraph (11), or (13) shall approve such regulations where it is deemed socially acceptable. <Added by Presidential Decree No. 23589, Feb. 2, 2012> |
| (13) | A person who has obtained the approval of the payment regulations on labor costs under paragraph (12) shall re-obtain approval every three years from the date of approval: |
| (14) | A corporation which has obtained approval from the competent authorities under paragraph (12) shall submit the payment regulations on labors costs 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. <Added by Presidential Decree No. 23589, Feb. 2, 2012> |
| Article 57 (Inclusion of Liability Reserve Funds, etc., 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> |
| 1. | The amount of money which would have to be refunded to policy-holders or beneficiaries under insurance terms and conditions approved by the Governor of the Financial Supervisory Service (for the mutual aid business under the Fisheries Cooperatives Act, the Minister of Oceans and Fisheries; for the trade insurance business under the Trade Insurance Act, the Minister of Trade, Industry and Energy; for the mutual aid business under the Community Credit Cooperatives Act, the Minister of the Interior; for the mutual aid business under the Framework Act on the Construction Industry, the Minister of Land, Infrastructure and Transport; and for the mutual aid business under the Small and Medium Enterprise Cooperatives Act, the Administrator of the Small and Medium Business Administration) if all insurance contracts were cancelled as on the end date of the relevant business year (including surrender charges; hereafter referred to as "surrender charges" in this Article): |
| 2. | Where an insured accident has occurred as on the end date 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 Strategy and Finance; the amount approved by the Minister of the Interior after consultation with the Minister of Strategy and Finance in cases of mutual aid business under the Community Credit Cooperatives Act) accumulated in accordance with the standard for inclusion in deductible expenses determined by the Governor of the Financial Supervisory Service after consultation with the Minister of Strategy and Finance, which is a dividend reserve fund accumulated for distribution to the policy-holders. |
| (2) | The amount referred to in paragraph (1) 1 and 2 among the amounts included in deductible expenses under paragraph (1) shall be included in the gross income when the amount of income for the following business year is calculated, and when 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 from the end of the business year in which it is included in deductible expenses, it shall be included in the gross income when the amount of income for the business year in which the third anniversary falls. <Added by Presidential Decree No. 21302, Feb. 4, 2009> |
| (3) | "Amount calculated, as prescribed by Presidential Decree" referred to in Article 30 (2) of the Act means 90/100 of the sum total of the accumulation standard amount by insurance type under paragraph (7). <Added by Presidential Decree No. 22577, Dec. 30, 2010> |
| (4) | "Grounds prescribed by Presidential Decree, such as dissolution, occur before three years pass" referred to in Article 30 (3) of the Act means any of the following: <Added by Presidential Decree No. 21302, Feb. 4, 2009; Presidential Decree No. 22184, Jun. 8, 2010; Presidential Decree No. 22577, Dec. 30, 2010> |
| 1. | Dissolution: |
| 2. | Revocation of a license to engage in insurance business. |
| (5) | The amount succeeded to by a surviving corporation, etc., under the proviso to paragraph (4) 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. <Added by Presidential Decree No. 21302, Feb. 4, 2009; Presidential Decree No. 22184, Jun. 8, 2010; Presidential Decree No. 22577, Dec. 30, 2010> |
| (6) | "Amount equivalent to interest calculated, as prescribed by Presidential Decree" referred to in Article 30 (4) of the Act means the amount computed by applying |
| (7) | Contingency reserve funds referred to in Article 30 (1) of the Act shall be included in deductible expenses up to the amount (hereafter referred to as "accumulation standard amount by insurance type" in this Article) calculated by multiplying the sum total of retention premiums for short-term non-life insurance in the relevant business year (for personal insurance, limited to mortality life or disease insurance with no surrender value or maturity repayment; hereafter the same shall apply in this Article) by the accumulation standard rates by insurance type determined by the Financial Services Commission. <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. 22577, Dec. 30, 2010> |
| (8) | The accumulated amount of contingency reserve funds included in deductible expenses under paragraph (7) shall be limited to 50/100 (40/100 in cases of the automobile insurance) of the sum total of earned insurance premiums for short-term non-life insurance in the relevant business year. <Amended by Presidential Decree No. 19328, Feb. 9, 2006; Presidential Decree No. 21302, Feb. 4, 2009; Presidential Decree No. 22577, Dec. 30, 2010> |
| (9) | Matters necessary for the disposition of contingency reserve funds appropriated as deductible expenses under paragraphs (7) and (8) and Article 32 (2) of the Act and the calculation of earned insurance premiums shall be prescribed by Ministerial Decree of Strategy and Finance. <Amended by Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 21302, Feb. 4, 2009; Presidential Decree No. 22577, Dec. 30, 2010> |
| (10) | A domestic corporation that seeks the benefit of Article 30 (1) and (2) of the Act shall submit a detailed statement on liability reserve funds in the form stipulated by Ministerial Decree of Strategy 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 by Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 22577, Dec. 30, 2010> |
| Article 58 Deleted. <by Presidential Decree No. 21302, Feb. 4, 2009> |
| Article 59 Deleted. <by Presidential Decree No. 17033, Dec. 29, 2000> |
| Article 60 (Inclusion of Retirement Benefit Appropriation Funds in Deductible Expenses) |
| (1) | "Amount calculated, as prescribed by Presidential Decree" referred to 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 executives or employees eligible to receive severance 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> |
| (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 severance benefits payable if all executives 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> |
| 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 executives 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. <Added by Presidential Decree No. 22577, Dec. 30, 2010> |
| (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 Ministerial Decree of Strategy and Finance to the head of the tax office having jurisdiction over the place of tax payment, along with the report provided in Article 60 of the Act. <Amended by Presidential Decree No. 20720, Feb. 29, 2008> |
| Article 61 (Inclusion of Appropriation for Bad Debts in Deductible Expenses) |
| (1) | Credit sales accounts, loans, and other claims equivalent thereto referred to in Article 34 (1) of the Act mean the following: |
| 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 cash consumer loan contract; |
| 3. | Other equivalent claims: Receivable claims on bills, outstanding accounts, and other claims with respect to which appropriation for bad debts are established under corporate accounting standards (excluding bonds in excess of the market price to which Article 88 (1) 1 applies). |
| (2) | "The 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 on the end date of the relevant business year (hereafter referred to as "balance of receivable claims" in this Article) or the amount computed by multiplying the balance of receivable claims by the rate of actual bad debts, whichever is larger: |
| 1. | Banks established upon approval granted under the Banking Act; |
| 2. | The Korea Development Bank established under the Korea Development Bank Act; |
| 3. | The Industrial Bank of Korea established under the Industrial Bank of Korea Act; |
| 4. | The Export-Import Bank of Korea established under the Export-Import Bank of Korea Act; |
| 5. | Deleted; <by Presidential Decree No. 25945, Dec. 30, 2014> |
| 6. | The National Agricultural Cooperative Federation established under the Agricultural Cooperatives Act (limited to business provided for in Article 134 (1) 4 of the same Act) and Nonghyup Banks; |
| 7. | The National Federation of Fisheries Cooperatives established under the Fisheries Cooperatives Act (limited to business provided for in Article 138 (1) 3 through 5 of the same Act); |
| 8. | Investment dealers and investment brokers as defined in the Financial Investment Services and Capital Markets Act; |
| 9. | Merchant banks established under the Financial Investment Services and Capital Markets 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; |
| 11. | Insurance companies established under the Insurance Business Act; |
| 12. | Trust business operators as defined in the Financial Investment Services and Capital Markets Act; |
| 13. | Specialized credit finance companies established under the Specialized Credit Finance Business Act; |
| 14. | The National Forestry Cooperatives Federation established under the Forestry Cooperatives Act (limited to business provided for in Article 108 (1) 3, 4 and 6 of the same Act); |
| 15. | The Korea Housing Finance Corporation incorporated under the Korea Housing Finance Corporation Act; |
| 16. | Fund brokerage companies established under the Financial Investment Services and Capital Markets Act; |
| 17. | Financial holding companies established under the Financial Holding Companies Act; |
| 18. | The Credit Guarantee Fund established under the Credit Guarantee Fund Act; |
| 19. | The Korea Technology Credit Guarantee Fund established under the Korea Technology Credit Guarantee Fund Act; |
| 20. | The Credit Guarantee Fund for Farmers and Fishers established under the Act on the Credit Guarantee for Farmers and Fishers; |
| 21. | The Korea Housing Finance Credit Guarantee Fund established under the Korea Housing Finance Corporation Act; |
| 22. | The Korea Trade Insurance Corporation established under the Trade Insurance Act; |
| 23. | Credit guarantee foundations established under the Regional Credit Guarantee Foundation Act; |
| 24. | The Korean Federation of Community Credit Cooperatives established under the Community Credit Cooperatives Act; |
| 25. | Small and medium enterprise start-up investment companies established under the Support for Small and Medium Enterprise Establishment Act; |
| 26. | The Korea Deposit Insurance Corporation and financial institutions for resolution established under the Depositor Protection Act; |
| 27. | Special purpose companies established under the Asset-Backed Securitization Act; |
| 28. | Corporations registered as credit business operators under the Act on Registration of Credit Business and Protection of Finance Users; |
| 29. | The Korea Workers' Compensation and Welfare Service established under the Industrial Accident Compensation Insurance Act (limited to claims for indemnity accruing from the support business of workers' credit guarantee); |
| 30. | The Korea Asset Management Corporation (including the non-performing asset management fund) incorporated under the Act on the Efficient Disposal of Non-Performing Assets, etc. of Financial Institutions and the Establishment of Korea Asset Management Corporation; |
| 31. | The Agricultural Cooperative Asset Management Corporation incorporated under the Act on the Structural Improvement of Agricultural Cooperatives; |
| 32. | through 38. Deleted. <by Presidential Decree No. 21302, Feb. 4, 2009> |
| (3) | The rate of actual bad debts referred to in paragraph (2) shall be the rate calculated by the following formula: <Amended by Presidential Decree No. 21302, Feb. 4, 2009> |
|
| (4) | In calculating the ceilings on the amount of appropriation for bad debts to be included in deductible expenses under Article 34 (1) of the Act, the funds for bad debts appropriated in relation to the bad debts provided for in Article 19-2 (5) shall be excluded. <Added by Presidential Decree No. 22035, Feb. 18, 2010> |
| (5) | Deleted. <by Presidential Decree No. 21302, Feb. 4, 2009> |
| (6) | Article 34 (6) of the Act shall apply where the receivable claims corresponding to appropriation for bad debts are transferred simultaneously. |
| (7) | A domestic corporation that seeks the benefit of Article 34 (1) of the Act shall submit a detailed statement on the settlement of appropriation for bad debts and bad debts in the form stipulated by Ministerial Decree of Strategy and Finance, accompanied by 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 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" referred to 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> |
| 1. | Corporations referred to in Article 61 (2) 18 through 23 and 29; |
| 2. | Korea Housing and Urban Guarantee Corporation established under the Housing and Urban Fund Act; |
| 3. | The Industrial Infrastructure Credit Guarantee Fund established under the Act on Public-Private Partnerships in Infrastructure; |
| 4. | The Korean Federation of Credit Guarantee Foundations established under Article 35 of the Regional Credit Guarantee Foundation Act; |
| 5. | Engineering mutual-aid cooperatives established under the Engineering Industry Promotion Act; |
| 6. | Software mutual aid associations established under the Software Industry Promotion Act; |
| 7. | Mutual aid associations established under the Act on Door-to-Door Sales, Etc.; |
| 8. | The Korea Housing Finance Corporation incorporated under the Korea Housing Finance Corporation Act; |
| 9. | Mutual aid cooperatives established under the Framework Act on the Construction Industry; |
| 10. | Electric Constructors' Financial Cooperatives established under the Electric Constructors' Financial Cooperative Act; |
| 11. | Capital goods mutual aid cooperatives established under the Industrial Development Act; |
| 12. | The Fire-Fighting Industry mutual aid cooperatives established under the Fire-Fighting Industry Promotion Act; |
| 13. | Information and communications financial cooperatives established under the Information and Communications Construction Business Act; |
| 14. | Korea Institute of Registered Architects established under the Certified Architects Act; |
| (2) | "Corporation prescribed by Presidential Decree" referred to in Article 35 (2) of the Act means a corporation referred to in paragraph (1) 2. <Added by Presidential Decree No. 22577, Dec. 30, 2010> |
| (3) | "Amount calculated, as prescribed by Presidential Decree" referred to 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 on the end date 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 on the end date 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" referred to 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 Strategy and Finance. |
| (5) | A domestic corporation that seeks the benefit of Article 35 (1) of the Act shall submit a detailed statement on the settlement of appropriation for redemption of claims for indemnity in the form stipulated by Ministerial Decree of Strategy 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. 20720, Feb. 29, 2008> |
| Article 64 (Inclusion of National Subsidies, etc., in Deductible Expenses) |
| (1) | "Business assets prescribed by Presidential Decree" referred to in Article 36 (1) of the Act means fixed business assets and petroleum. <Amended by presidential Decree No. 22951, Jun. 3, 2011> |
| (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, the Local Finance 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> |
| (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 the following methods: |
| 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): |
| 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. |
| (6) | "Acts prescribed by Presidential Decree" referred to in Article 36 (1) of the Act means any of the following Acts: <Added 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> |
| 2. | The Electric Utility Act; |
| 4. | The Korea Railroad Corporation Act; |
| (7) | "Grounds prescribed by Presidential Decree" referred to in the latter part of Article 36 (2) of the Act means any of the following: <Added 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 Ministerial Decree of Strategy 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" referred to 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> |
| 1. | A project to build the information superhighway network under the Framework Act on National Informatization; |
| 2. | A project to install waterworks under the Water Supply and Waterworks Installation Act. |
| (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 each fixed asset (referring to the amount equivalent to construction charges, if a fixed asset has been acquired with construction charges). In such cases, if construction charges are paid after acquiring or improving fixed 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> |
| (3) | Article 64 (3) through (5) and (7) shall apply |
| (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 Ministerial Decree of Strategy 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 fixed assets referred to in Article 38 (1) of the Act means fixed assets acquired to replace the destroyed fixed assets which are to be used for the same purpose as the destroyed assets. |
| (2) | The amount 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 fixed assets by respective fixed assets. In such cases, where the value of the relevant fixed assets falls shorts of the insurance money paid, the amount of the insurance money, other than insurance marginal profits, is deemed first used. |
| (3) | Article 64 (3) 1, (4) 1 and (5) shall apply |
| (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 Ministerial Decree of Strategy 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, etc. during which Gross Income and Deductible Expenses Accrue
| Article 68 (Business Year in which Gains, Losses, etc. from Sale of Assets Accrue) |
| (1) | In applying Article 40 (1) and (2) of the Act, the business year in which gross income and deductible expenses accrue from the transfer, etc. of assets shall be the business year in which the following dates fall: <Amended by Presidential Decree No. 19891, Feb. 28, 2007; Presidential Decree No. 23589, Feb. 2, 2012> |
| 1. | Sale of commodities (excluding real estate), manufactured goods, or other products (hereafter referred to as "commodities" in this Article): 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.: |
| 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]: |
| 4. | Consignment sales and purchases of assets: The date on which the consignee buys or sells the consigned assets; |
| 5. | Sale and purchase of securities in the securities exchange as defined in Article 9 (13) of the Financial Investment Services and Capital Markets Act by an ordinary transaction method in accordance with the Securities Market Business Regulation of the Exchange provided in Article 393 (1) of the same Act: The date on which a sale and purchase agreement is entered into. |
| (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 under 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 appropriated respectively as earnings and expenses, 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: |
| (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 at the end date of the business and the corresponding expenses shall be included in the gross income and deductible expenses, respectively, for the business year in which the closure date of the business falls. <Added by Presidential Decree No. 22577, Dec. 30, 2010> |
| (4) | "Long term installment plan" referred to in paragraph (2) means the sale or transfer of assets (for overseas transactions, including leases of assets under conditional contracts 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 contract 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 Ministerial Decree of Strategy and Finance. <Amended by Presidential Decree No. 20720, Feb. 29, 2008> |
| Article 69 (Business Year in which Gains and Losses from Provision of Services, etc. Accrue) |
| (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 Ministerial Decree of Strategy 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: |
| 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) | In any of the following cases when applying paragraph (1), 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 by Presidential Decree No. 22577, Dec. 30, 2010; Presidential Decree No. 24357, Feb. 15, 2013> |
| 1. | Where it is deemed impracticable to calculate the progress rate of work in circumstances prescribed by Ministerial Decree of Strategy and Finance; |
| 2. | In the case of subscription sales conducted by a corporation falling under any subparagraph of Article 51-2 (1) which applies the international accounting standards. |
| (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. <Added by Presidential Decree No. 23589, Feb. 2, 2012> |
| Article 70 (Business Year in which Interest Income, etc. 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 as listed in the following: <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> |
| 1. | Interest and discounts paid to 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 (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): |
| 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: |
| (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 in Article 46 of the Enforcement Decree of the Income Tax Act falls: |
| (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 business listed in the Korean Standard Industrial Classification shall revert to the business year in which the date of actually receiving the insurance premiums falls: |
| (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). <Added 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 operator 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. <Added by Presidential Decree No. 21302, Feb. 4, 2009; Presidential Decree No. 21972, Dec. 31, 2009> |
| Article 71 (Business Year in which other Gains and Losses, such as Rental Fees Accrue) |
| (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: |
| 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. <Added 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 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. <Added 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 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: <Added by Presidential Decree No. 23589, Feb. 2, 2012> |
| 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. <Added 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 Ministerial Decree of Strategy and Finance, except as otherwise expressly prescribed 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, etc. of Assets) |
| (1) | "Financial assets prescribed by Presidential Decree" referred to 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) according to the corporate accounting standards. <Added 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> |
| 1. | Assets purchased from a third person: The sum of the purchase price, acquisition 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]; |
| 2. | Assets acquired by directly manufacturing, producing, or constructing the assets, or 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; |
| 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: |
| 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 (1) 5 of the Act or the costs of a division provided for in Article 16 (1) 6 from the amount computed by adding the amounts provided for in Article 16 (1) 5 or 6 of the Act, and subparagraph 9 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 designated donation (limited to assets, other than money referred to in Article 37 (1)) provided for in Article 24 (1) of the Act received from a person, other than any related party falling under any subparagraph of Article 87 (1) 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 as at the acquisition of asset in cases of any asset not related to business revenue]: |
| 6. | Emission permits gratuitously allocated by the Government under Article 12 of the Act on the Allocation and Trading of Greenhouse-Gas Emission Permits: Nil; |
| 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> |
| 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 fixed 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 fixed assets according to 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 according to corporate accounting standards and appropriated as the realization balance, such realization balance; |
| 2. | For yearly paid income prescribed by Ministerial Decree of Strategy 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> |
| 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 9 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) 3, 18-3 (1) 3, 28, 73, 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> |
| Article 73 (Scope of Assets and Liabilities Subject to Evaluation) |
"Inventory assets and other assets and liabilities prescribed by Presidential Decree" referred to 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>
| 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; |
| (c) | Raw materials; |
| (d) | Stored products; |
| 2. | Any of the following securities, etc.: |
| (a) | Stocks; |
| (b) | Bonds; |
| (c) | Collective investment property as defined in Article 9 (20) of the Financial Investment Services and Capital Markets Act; |
| (d) | Assets belonging to the special account referred to in Article 108 (1) 3 of the Insurance Business Act; |
| 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 Ministerial Decree of Strategy 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 small or medium categories 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 Ministerial Decree of Strategy 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): |
| 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 |
| (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. <Added 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 Ministerial Decree of Strategy 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 75 (Evaluation of Securities, etc.) |
| (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 |
| (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: |
| (4) | Assets referred to in subparagraph 2 (d) of Article 73 held by an insurance company incorporated under the Insurance Business Act shall be evaluated by a method reported by the relevant insurance company, 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 among the methods falling under any subparagraph of paragraph (1) or the fair market value method, and such method shall continuously apply thereafter. <Added by Presidential Decree No. 21302, Feb. 4, 2009> |
| 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 Ministerial Decree of Strategy and Finance as at 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: |
| (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 at 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 at the end of the relevant business year. |
| (2) | Monetary assets and liabilities denominated in a foreign currency 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: |
| 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 at 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 at 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: |
| (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 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: |
| (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 Ministerial Decree of Strategy and Finance, along with the report provided in Article 60 of the Act for the business year to which it intends to first apply the evaluation method provided 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). <Added 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 Ministerial Decree of Strategy 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. 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 Deleted. <by Presidential Decree No. 17457, Dec. 31, 2001> |
| Article 78 (Marginal Losses from Evaluation of Inventory Assets, etc.) |
| (1) | "Grounds prescribed by Presidential Decree, such as a natural disaster and a fire" referred to in Article 42 (3) 2 of the Act means any of the following: <Amended by Presidential Decree No. 22951, Jun. 3, 2011> |
| 1. | Natural disasters, accidents, or fires; |
| 2. | Expropriation, etc. under Acts and subordinate statutes; |
| 3. | Mines abandoned due to non-fulfillment of estimated mining outputs (including where fixed assets used for mining, including land, cannot be used for their proper purposes). |
| (2) | "Stocks, etc. prescribed by Presidential Decree" referred to in Article 42 (3) 3 of the Act means any of the following stocks, etc.: <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> |
| 1. | Stocks issued by listed stock corporations; |
| 2. | Stocks issued by business founders or new technology business entities from among the stocks, etc. that are held by small and medium enterprise start-up investment companies provided in the Support for Small and Medium Enterprise Establishment Act or the new technology venture capitalist provided in the Specialized Credit Finance Business Act; |
| 3. | Stocks, etc. issued by a corporation, among the corporations, other than those referred to in subparagraph 1, which is not in any relationship listed in any subparagraph of Article 87 (1). |
| (3) | "Method prescribed by Presidential Decree" referred to in the main sentence other than the subparagraphs of Article 42 (3) of the Act means the method of reducing the book value of assets provided in each subparagraph of the same paragraph by the value evaluated under each of the following subparagraphs in the business year 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> |
| 1. | For inventory assets provided 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 at the end date of the business year; |
| 2. | For fixed assets provided in Article 42 (3) 2 of the Act, the value evaluated as the market price as at the end date of the business year; |
| 3. | For stocks, etc. provided in Article 42 (3) 3 of the Act, the value evaluated as the market price as at 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. | For stocks, etc. provided in Article 42 (3) 4 of the Act, the value evaluated as the market price as at the end date of the business year (if the value evaluated as the market price is 1,000 won or less, it shall be 1,000 won). |
| (4) | In determining whether having a special relationship with a corporation as prescribed in paragraph (2) 3, 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). <Added by Presidential Decree No. 22035, Feb. 18, 2010; Presidential Decree No. 23589, Feb. 2, 2012> |
| Article 78-2 (Non-Inclusion in Gross Income of Evaluation Marginal Profits of Inventory Assets of Domestic Corporation that Applies International Accounting Standards) |
| (1) | "Last-in first-out method prescribed by Presidential Decree" referred to in Article 42-2 (1) of the Act means the last-in first-out method as prescribed in Article 74 (1) 1 (c). |
| (2) | "Other evaluation methods of inventory assets prescribed by Presidential Decree" referred to in 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). |
| (3) | Where a domestic corporation includes the marginal profits from evaluation of inventory assets in the gross income under the latter part 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 calendar months 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: |
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 Ministerial Decree of Strategy 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 international accounting standards to the head of the tax office having jurisdiction over the place of tax payment. |
[This Article Added by Presidential Decree No. 23589, Feb. 2, 2012]
| 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>
| 1. | International accounting standards; |
| 1-2. | Accounting standards enacted by Korea Accounting Institute under Article 13 (1) 2 and (4) of the Act on External Audit of Stock Companies; |
| 2. | Accounting standards by type of business enacted by the Securities and Futures Committee; |
| 3. | Accounting regulations of public enterprises and quasi-governmental agencies enacted under the Act on the Management of Public Institutions; |
| 4. | Accounting standards enacted under other Acts and subordinate statutes and approved by the Minister of Strategy and Finance. |
Subsection 6 Special Cases concerning Mergers, Divisions, etc.
| Article 80 (Calculation of Profits 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> |
| 1. | In the case of a qualified merger: The net book value of the assets as at the registration date of the merger by the merged corporation under Article 44 (1) 2 of the Act; |
| 2. | In case other than cases falling under subparagraph 1: The amount computed by adding the following amounts: |
| (a) | Sum total of the value of the stocks, etc. (hereinafter referred to as "stocks, etc. granted due to 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 at 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: |
| (b) | Sum total of the corporate tax of the merged corporation paid by the surviving corporation, etc., the national tax imposed on the corporate tax (including the amount of tax reduced or exempted) and pro rata corporate tax portion as defined in subparagraph 4 of Article 85 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 merged corporation under 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 at the registration date of the merger of the merged corporation. |
| (3) | Any merged corporation, etc. that intends to be applicable under paragraph (1) 1 shall file an application for special cases for taxation upon merger in the form stipulated by Ministerial Decree of Strategy 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 (10) 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> |
[This Article Wholly Amended by Presidential Decree No. 22184, Jun. 8, 2010]
| Article 80-2 (Requirements, etc. for Qualified Merger) |
| (1) | "In inevitable circumstances prescribed by Presidential Decree" referred to in the proviso to Article 44 (2) of the Act means any of 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> |
| 1. | Where inevitable circumstances are deemed exist with respect to Article 44 (2) 2 of the Act: In any of the following cases: |
| (a) | Where the stockholders, etc. provided in paragraph (5) (hereafter referred to as "relevant stockholders, etc." in this Article) dispose of up to 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 dispose of stocks, etc. and where the relevant stockholders, etc. who hold the stocks, etc. granted due to a merger along with the stocks, etc. acquired by any means other than the merger, they shall be deemed to first dispose of the stocks, etc. acquired by any means other than the merger; |
| (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 (referring to an investment in kind, which meets all requirements under Article 47-2 (1) of the Act and the amount equivalent to the gain on transfer may be included in deductible expenses; hereinafter the same shall apply); |
| (d) | Where the relevant stockholders, etc. comprehensively transfer, invest in kind, exchange or transfer the stocks, etc. under Article 37, 38 or 38-2 of the Restriction of Special Taxation Act and dispose of the stocks, etc. with the tax deferred; |
| (e) | Where the relevant stockholders, etc. dispose of stocks, etc. upon obtaining the approval of the court pursuant to the rehabilitation procedure under the Debtor Rehabilitation and Bankruptcy Act; |
| (f) | Where the relevant stockholders, etc. dispose of stocks, etc. according to an agreement to implement a business turnaround plan under Article 34 (6) 1 of the Enforcement Decree of the Restriction of Special Taxation Act or a special agreement to implement a business turnaround plan under subparagraph 2 of the aforesaid paragraph; |
| (g) | Where the relevant stockholders, etc. dispose of stocks, etc. to perform the obligations under the Acts and subordinate statutes; |
| 2. | Where inevitable circumstances are deemed exist with respect to Article 44 (2) 3 of the Act: In any of the following cases: |
| (a) | Where the surviving corporation, etc. disposes of the succeeded assets due to its bankruptcy; |
| (b) | Where the surviving corporation, etc. discontinues its business due to a qualified merger, qualified division, qualified spin-off or investment in kind; |
| (c) | Where the surviving corporation, etc. discontinues its business by transferring the assets at the book value due to the comprehensive transfer of assets; |
| (d) | Where the surviving corporation, etc. disposes of the succeeded assets upon obtaining approval of the court according to the rehabilitation procedure under the Debtor Rehabilitation and Bankruptcy Act. |
| (2) | "Corporation prescribed by Presidential Decree" referred to in the proviso to Article 44 (2) 1 of the Act means a corporation that meets all requirements provided 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 defined in Article 6 (4) 14 of the same Enforcement Decree. <Added by Presidential Decree No. 22577, Dec. 30, 2010> |
| (3) | The total costs of the merger received by the stockholders, etc. of a merged corporation under 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 under Article 43 (7) as at 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 (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.); |
| 2. | Where the surviving corporation, etc. is the controlling stockholder, etc. of the merged corporation under Article 43 (7) as at 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" referred to 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> |
| 1. | Relatives by blood or marriage in the fourth or any closer degree, among relatives under 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 evaluated at the market price is less than one billion won as at 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 meeting all requirements under the items of Article 6 (4) 14 of the Enforcement Decree of the Financial Investment Services and Capital Markets Act. |
| (6) | Where a surviving corporation disposes of at least 1/2 of the value of fixed assets succeeded to from a merged corporation prior to the end date 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: |
[This Article Added by Presidential Decree No. 22184, Jun. 8, 2010]
| Article 80-3 (Disposition of Difference between Transfer Value and Net Market Price of Assets upon Disqualified 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: |
|
| (2) | "Circumstances prescribed by Presidential Decree" referred to 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 |
[This Article Added by Presidential Decree No. 22184, Jun. 8, 2010]
| Article 80-4 (Follow-Up Management based on Special Provisions concerning Taxation upon Qualified Merger) |
| (1) | Where a surviving corporation, etc. has succeeded to the assets of a merged corporation at the book value under Article 44-3 (1) of the Act, it shall appropriate the value of the assets and liabilities succeeded at the market price as at the registration date of the merger and appropriate the amount computed by subtracting the book value (where tax settlement matters provided 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 as the asset adjustment account. In such cases, where the appropriated asset adjustment account is bigger than zero, it shall be included in gross income, and where it is smaller than zero, it shall be included in deductible expenses under the following classifications: |
| 1. | An asset adjustment account set for depreciable assets: Where the asset adjustment account is bigger than zero, it shall offset the depreciation cost of the relevant assets (limited to the part equivalent to the relevant asset adjustment account; hereafter the same shall apply in this paragraph), and where it is smaller than zero, it shall be added to the depreciation cost. In such cases, where the relevant assets are disposed of, any amount that remains after offset or addition shall be all included in the gross income or deductible expenses for the business years during which the relevant assets are disposed of; |
| 2. | An asset adjustment account set for assets, other than those provided in subparagraph 1: It shall be all included in the gross income or deductible expenses for the business year during which the relevant assets are disposed of: |
| (2) | Where a surviving corporation, etc. has succeeded to the assets of a merged corporation at the book value as prescribed in paragraph (1), it may be 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 Acts, the same shall apply only where the surviving corporation, etc. meets all the requirements, etc. <Added by Presidential Decree No. 22577, Dec. 30, 2010> |
| (3) | "Period prescribed by Presidential Decree" referred to in the main sentence other than the subparagraphs of Article 44-3 (3) of the Act means two years from the commencement date 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> |
| (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 appropriated under paragraph (1) (limited to the case where the sum total is bigger than zero and where it is smaller than zero, it shall be deemed nil) and the amount deducted among the deficits 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 appropriated 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 marginal profits from merger or marginal losses from merger shall be disposed of in 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 merger is less than the net market price of assets of the merged corporation as at the registration date of the merger: The amount equivalent to the marginal profits from 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 during which any grounds referred to in any subparagraph of Article 44-3 (3) of the Act arise: The amount computed by multiplying the marginal profits from 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 end date 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 multiplying the marginal profits from 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 at the registration date of the merger: The amount equivalent to the marginal losses from 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 in accordance with the following classifications: |
| (a) | The business year during which any grounds referred to in any subparagraph of Article 44-3 (3) of the Act arise: The amount computed by multiplying the marginal losses from 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 end date 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 multiplying the marginal losses from 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 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. <Added by Presidential Decree No. 22577, Dec. 30, 2010; Presidential Decree No. 23589, Feb. 2, 2012> |
| (7) | "Where inevitable circumstances prescribed by Presidential Decree exist" referred to in the proviso to Article 44-3 (3) of the Act means any of the following cases: <Amended by Presidential Decree No. 22577, Dec. 30, 2010> |
| 1. | Where it is deemed that inevitable circumstances 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 it is deemed that inevitable circumstances exist with respect to Article 44-3 (3) 2 of the Act: Where the stockholders, etc. referred to in paragraph (9) fall under any item of Article 80-2 (1)1. |
| (8) | Where a surviving corporation, etc. disposes of at least 1/2 of the value of fixed assets 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 succeeded to from the merged corporation: |
| (9) | "Stockholders, etc. of a merged corporation prescribed by Presidential Decree" referred to in Article 44-3 (3) 2 of the Act mean stockholders, etc. provided in Article 80-2 (5). <Amended by Presidential Decree No. 22577, Dec. 30, 2010> |
| (10) | Any surviving corporation, etc. that appropriates the asset adjustment account under paragraph (1) shall submit a detailed statement on asset adjustment account in the form stipulated by Ministerial Decree of Strategy 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. |
[This Article Added by Presidential Decree No. 22184, Jun. 8, 2010]
| Article 81 (Succession of Losses, etc. Carried Forward upon Merger) |
| (1) | "Rate of value of asset prescribed by Presidential Decree" referred to in Article 45 (1) of the Act means the rate of value of fixed business asset of a surviving corporation and a merged corporation as at the registration date of the merger. In such cases, the value of fixed 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 fixed asset, limited the fixed asset that is continuously held (including where the fixed asset is replaced after disposal) and used as at the end of each business year in which succeeded losses are deducted. <Amended by Presidential Decree No. 21302, Feb. 4, 2009> |
| (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 subparagraph 1 of Article 13 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> |
| (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: <Added by Presidential Decree No. 22577, Dec. 30, 2010> |
| 1. | For reductions or exemptions provided in Article 59 (1) 1 of the Act (limited to reductions or exemptions span 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 in Article 59 (1) 3 of the Act (including foreign tax credits) which are 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; |
| (b) | Un-deducted amounts carried forward under Article 144 of the Restriction of Special Tax Act because the amount falls short of the minimum corporate tax provided in Article 132 of the same Act and it is not deducted (hereafter referred to as "minimum corporate tax" in this Article): The deduction shall be made up to the minimum corporate tax calculated by applying Article 132 of the Restriction of Special Tax Act with respect to the succeeded business category. In such cases, the amount to be deducted shall not exceed the minimum corporate tax of the surviving corporation, etc.; |
| (c) | Un-deducted amounts carried forward under Article 144 of the Restriction of Special Tax 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 (6) and 80-4 (8) shall apply |
| (5) | and (6) Deleted. <by Presidential Decree No. 21302, Feb. 4, 2009> |
| Article 82 (Calculation of Profits 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> |
| 1. | In the case of a qualified division: The net book value of assets as at the registration date of the division of a divided corporation, etc. (hereinafter referred to as "divided corporation, etc.") as prescribed in Article 46 (1) 2 of the Act; |
| 2. | In cases, other those provided in subparagraph 1: Sum total of the following amounts: |
| (a) | Sum total of the value of the stocks of a corporation established through division, etc. (hereinafter referred to as "corporation established through division, etc."), money or other property value paid by the corporation established through division, etc. as prescribed in the former part other than the subparagraphs of Article 46 (1) of the Act to the stockholders of the divided corporation due to division: |
| (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 reduced or exempted amount of tax) and the pro rata corporate tax portion as defined in subparagraph 4 of Article 85 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 at the registration date of the division of the divided corporation, etc. |
| (3) | Any divided corporation, etc. that intends to be applicable under paragraph (1) 1 shall file an application for special cases for taxation upon division in the form stipulated by Ministerial Decree of Strategy 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 (9) 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> |
[This Article Wholly Amended by Presidential Decree No. 22184, Jun. 8, 2010]
| Article 82-2 (Requirements, etc. for Qualified Divisions) |
| (1) | "In inevitable circumstances prescribed by Presidential Decree" referred to in the proviso to Article 46 (2) of the Act excluding the subparagraphs mean any of the following circumstances: |
| 1. | Where it is deemed that inevitable circumstances exist with respect to Article 46 (2) 2 of the Act: Where a stockholder referred to in paragraph (5) falls under any item of Article 80-2 (1) 1; |
| 2. | Where it is deemed that inevitable circumstances 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. |
| (2) | If any of the following applies to a divided business division (referring to the division acquired from a divided corporation by succession; hereafter the same shall apply in this Article and subparagraph 1 of Article 85), such division shall not be deemed a division separated as a business division capable of operating its business as an independent business division: <Added by Presidential Decree No. 25194, Feb. 21, 2014> |
| 1. | A business division mainly engaging in a real estate rental business stipulated by Ministerial Decree of Strategy and Finance; |
| 2. | A business division whose assets under Article 94 (1) 1 and 2 of the Income Tax Act amount to at least 80/100 of the value of fixed business assets acquired by the divided business division by succession (excluding the value of the fixed business assets stipulated by Ministerial Decree of Strategy and Finance); |
| 3. | A business division formed only with stocks, etc. and assets and liabilities related to the stocks, etc. |
| (3) | Notwithstanding paragraph (2) 3, if any of the following applies to a divided business division, such division shall be deemed a division separated as a business division capable of operating its business as an independent business division: <Added by Presidential Decree No. 25194, Feb. 21, 2014> |
| 1. | A business division formed only with 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. stipulated by Ministerial Decree of Strategy and Finance as stocks, etc. held for the purpose of control; hereafter the same shall apply in this Article) and assets and liabilities related to such stocks, etc.; |
| 2. | A business division that establishes a holding company as defined in the Monopoly Regulation and Fair Trade Act and the Financial Holding Companies Act: |
| 3. | Cases stipulated by Ministerial Decree of Strategy 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> |
| 1. | Assets: |
| (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 stipulated by Ministerial Decree of Strategy and Finance, and similar to those under items (a) through (c); |
| 2. | Liabilities: |
| (a) | Notes payable; |
| (b) | Borrowings with respect to which the change of the name of the borrower is limited according to 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) | Loans jointly borrowed, but not directly used in the divided business division; |
| (e) | Liabilities stipulated by Ministerial Decree of Strategy and Finance, and similar to those under items (a) through (d); |
| 3. | Assets and liabilities that the divided division shall acquire, which shall not exceed 20/100 of the total assets and total liabilities evaluated by the market value as at the time of division. In such cases, the value of assets and liabilities that the divided division shall acquire by succession shall be calculated, as stipulated by Ministerial Decree of Strategy and Finance, but stocks, assets under subparagraph 1, and liabilities under subparagraph 2 shall be excluded therefrom. |
| (5) | Where a divided business division acquires 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: |
| (6) | The total costs of a division referred to in Article 46 (2) 2 of the Act shall be the amount provided 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 the case 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 at 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 at 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 (5): <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. 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 (5) with respect to the divided corporation, etc.
| (8) | "Stockholders of a divided corporation, etc. prescribed by Presidential Decree" in Article 46 (2) 2 of the Act mean 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> |
| 1. | Relatives by blood or marriage in the fourth or any closer degree, among relatives under 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 evaluated at the market price is less than one billion won as at the registration date of the division. |
| (9) | Article 80-2 (6) shall apply |
[This Article Added by Presidential Decree No. 22184, Jun. 8, 2010]
| Article 82-3 (Disposition of Difference between Transfer Value and Net Market Price of Assets upon Disqualified 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 |
| (2) | "Circumstances prescribed by Presidential Decree" referred to 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 |
[This Article Added by Presidential Decree No. 22184, Jun. 8, 2010]
| 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 enter the market value on the registration date of the division as the value of the assets and liabilities so transferred but shall enter an amount calculated by subtracting the book value in the accounts of the divided corporation (but the amount not included in gross income shall be added to, and the amount not included in deductible expenses shall be subtracted from, tax settlement matters, if there are tax settlement matters defined under subparagraph 1 of Article 85) from the market value in the asset adjustment account under Article 80-4 (1) (hereinafter referred to "asset adjustment account"). In such cases, Article 80-4 (1) shall apply |
| (2) | Where a corporation established through division, etc. has succeeded to the assets of the divided corporation, etc. at the 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 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 Acts, 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 according to the following classifications: <Added by Presidential Decree No. 22577, Dec. 30, 2010> |
| 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 the case of tax reductions or exemptions or tax credits carried forward, other than the case falling under subparagraph 1: To be applied respectively by corporations, etc. established through the division by dividing proportionally at the rate of value of fixed business assets succeeded by such corporations, etc. established through the division from among the value of fixed business assets of the divided corporation, etc. |
| (3) | "Period prescribed by Presidential Decree" referred to in the main sentence other than the subparagraphs of Article 46-3 (3) of the Act means two years from the commencement date 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> |
| (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 |
| (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. <Added by Presidential Decree No. 22577, Dec. 30, 2010; Presidential Decree No. 23589, Feb. 2, 2012> |
| (6) | "In inevitable circumstances prescribed by Presidential Decree" referred to in the proviso to Article 46-3 (3) of the Act excluding the subparagraphs means any of the following circumstances: <Amended by Presidential Decree No. 22577, Dec. 30, 2010> |
| 1. | Where it is deemed that inevitable circumstances 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 it is deemed that inevitable circumstances 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. |
| (7) | Article 80-4 (8) shall apply |
| (8) | "Stockholders of a divided corporation, etc. prescribed by Presidential Decree" in Article 46-3 (3) 2 of the Act mean stockholders specified in Article 82-2 (8). <Amended by Presidential Decree No. 25194, Feb. 21, 2014> |
| (9) | 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 stipulated by Ministerial Decree of Strategy and Finance with the head of the tax office having jurisdiction over the place of tax payment, along with the report provided in Article 60 of the Act. |
[This Article Added by Presidential Decree No. 22184, Jun. 8, 2010]
| Article 83 (Succession of Losses, etc. Carried Forward upon Division) |
| (1) | "Rate of value of assets prescribed by Presidential Decree" referred to in Article 46-4 (1) of the Act means the rate of the value of the fixed 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 at the registration date of the division and merger. In such cases, the value of the fixed business assets of the divided corporation, etc. succeeded by the corporation, etc. established through the division shall be limited to the fixed assets held or used continuously (including acquisition of replacing fixed assets after disposition) as at the end date of each business year during which the succeeded losses are deducted and shall be based on the value of such fixed business assets as at the registration date of the division and merger. |
| (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 subparagraph 1 of Article 13 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. |
| (3) | Losses that belong to the succeeded business 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 fixed business assets succeeded to by corporations, etc. established through the division among the value of the fixed business assets of the divided corporation, etc. as at the registration date of the division. |
| (4) | Article 81 (3) shall apply |
| (5) | Articles 80-2 (6) and 80-4 (8) shall apply |
[This Article Wholly Amended by Presidential Decree No. 22184, Jun. 8, 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> |
| 1. | In the case of a qualified division: The net book value of assets as at 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 division; provided,, in the case of a division and merger, where a counterpart corporation to the division and merger acquired the stocks combined due to 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 division and merger shall be deemed to have been granted according to 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 reduced or exempted) and the pro rata corporate tax portion as defined in subparagraph 4 of Article 85 of the Local Tax Act. |
| (2) | Where any corporate tax is refunded under the Framework Act on National Taxes in the calculation of 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 at the registration date of the division of the divided corporation, etc. |
| (3) | Any divided corporation, etc. that intends to be applicable under paragraph (1) 1 shall file an application for special cases for taxation upon division in the form stipulated by Ministerial Decree of Strategy 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 (9) 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> |
[This Article Wholly Amended by Presidential Decree No. 22184, Jun. 8, 2010]
| Article 84 (Inclusion of Amount Equivalent to Marginal Profits 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 referred to as "stocks, etc. of a corporation established through division" in this Article), the amount that a divided corporation may include in deductible expenses under Article 47 (1) of the Act shall be the amount equivalent to marginal profits from the transfer of assets generated from 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 appropriated as the compressed accounts reserve funds 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) | "The amount prescribed by Presidential Decree" in the main sentence other than the subparagraphs of Article 47 (2) of the Act means the amount computed by multiplying the compressed accounts reserve funds of stocks, etc. of a corporation established through division as at the end date (referring to the registration date of the division for the business year in which the registration date of the division falls; hereafter the same shall apply in this Article) of the immediately preceding business year by the rate calculated by subtracting the rate calculated by multiplying the rates provided in subparagraphs 1 and 2 from the rate calculated by adding the rates provided in subparagraphs 1 and 2: <Amended by Presidential Decree No. 23589, Feb. 2, 2012; Presidential Decree No. 24357, Feb. 15, 2013> |
| 1. | The rate 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 at the end date of the immediately preceding business year; |
| 2. | The rate of transfer marginal profits of the succeeded assets disposed of in the relevant business year to the transfer marginal profits (referring to the amount computed by subtracting the book value of the succeeded assets held by a divided corporation on the date preceding the registration date of the division from the market price of the succeeded assets as at the registration date of the division) of the assets falling under paragraph (4) succeeded to from a divided corporation pursuant to Article 47 (1) of the Act (hereafter referred to as "succeeded assets" in this Article) and held by a corporation established through division as at the end date of the immediately preceding business year. |
| (4) | "Assets prescribed by Presidential Decree" referred to in Article 47 (2) 2 of the Act means depreciable assets (including assets provided in Article 24 (3) 1), land, stocks, etc. <Amended by Presidential Decree No. 23589, Feb. 2, 2012> |
| (5) | "Where a corporation newly incorporated upon division becomes subject to a qualified merger or qualified division or where such corporation is in other exceptional situation specified by Presidential Decree" referred to in the proviso to Article 47 (2) of the Act means any of the following cases: |
| 1. | Where a corporation established through division due to a spin-off is qualifiedly merged for the first time with another corporation established through division from the identical divided corporation due to a spin-off (limited to where the price for the merger is paid fully by stocks, etc.); |
| 2. | Where a corporation established through division due to a spin-off is qualifiedly divided for the first time (excluding a division and merger). |
| (6) | Where a divided corporation is subject to the proviso to Article 47 (2) of the Act on the ground specified in either subparagraph of paragraph (5), the amount specified in either of the following subparagraphs, out of the compressed accounts reserve funds of the stocks, etc. of the corporation established through division, held by the divided corporation, shall be set aside as the compressed accounts reserve funds of the stocks newly acquired as the price for the qualified merger or qualified division under paragraph (5): <Added by Presidential Decree No. 24357, Feb. 15, 2013> |
| 1. | In cases of paragraph (5) 1: The balance of the compressed accounts reserve funds of the stocks, etc. of each disappearing corporation established through division; |
| 2. | In cases of paragraph (5) 2: The amount computed by multiplying the balance of the compressed accounts reserve funds of the stocks, etc. of the corporation established through division by the rate specified in paragraph (3) 2 for the new corporation qualifiedly divided. |
| (7) | Where either of the following events occurs to a divided corporation that has newly set aside compressed accounts reserve funds pursuant to paragraph (6), the corporation shall include the amount computed by applying paragraph (3) |
| 1. | Where a divided corporation disposes of the stocks acquired as the price for the qualified merger or qualified division under each subparagraph of paragraph (5); |
| 2. | Where a corporation that has acquired assets by succession from a corporation established through division (referring to a qualified merged corporation under paragraph (5) 1 or a corporation newly established through qualified division under paragraph (5) 2; hereafter referred to as "re-incorporated corporation" in this Article) disposes of such assets acquired by succession. |
| (8) | If either of the following events occurs to a divided corporation that has set aside compressed accounts reserve funds pursuant to paragraph (6), such corporation shall include the balance of the compressed accounts reserve funds fully in gross income when it computes the amount of the income for the business year in which such event occurs: <Added by Presidential Decree No. 24357, Feb. 15, 2013; Presidential Decree No. 25194, Feb. 21, 2014> |
| 1. | Where a corporation established through division discontinues the business to which it succeeded from the divided corporation within the period specified in paragraph (10) after it succeeded to the business on the ground specified in each subparagraph of paragraph (5); |
| 2. | Where a corporation established through division comes to own at least 50/100 of the total number of issued stocks or the total amount of investment of a re-incorporated corporation. |
| (9) | "Where inevitable circumstances prescribed by Presidential Decree exist" referred to in the proviso to Article 47 (1) of the Act and the proviso to Article 47 (3) of the Act means any of the following circumstances: <Amended by Presidential Decree No. 22577, Dec. 30, 2010; Presidential Decree No. 23589, Feb. 2, 2012> |
| 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. |
| (10) | "The period prescribed by Presidential Decree" in Article 47 (3) 1 of the Act means two years from the start date 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> |
| (11) | Articles 80-2 (6) and 80-4 (8) shall apply |
| (12) | A domestic corporation which intends to be applicable under Article 47 (1) of the Act shall submit an application for special taxation on spin-off in the form stipulated by Ministerial Decree of Strategy and Finance and the detailed statement on the transfer marginal profits of assets to the head of the tax office having jurisdiction over the place of tax payment when filing a report provided in Article 60 of the Act, together with the corporation established through division. <Amended by Presidential Decree No. 23589, Feb. 2, 2012> |
[This Article Wholly Amended by Presidential Decree No. 22184, Jun. 8, 2010]
| Article 84-2 (Inclusion of Amount Equivalent to Marginal Profits from Transfer of Assets upon Investment in Kind in Deductible Expenses) |
| (1) | Of the value of stocks, etc., acquired from an invested corporation (hereafter referred to as "stocks, etc., of an invested corporation" in this Article), 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 marginal profits 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 appropriated as the compressed accounts reserve funds 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 means the amount computed by multiplying the compressed accounts reserve funds of the stocks, etc., of an invested corporation as at the end date (referring to the date of the investment in kind for the business year in which the date of the investment in kind falls; hereafter the same shall apply in this Article) 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 end date of the immediately preceding business year; |
| 2. | The ratio of the transfer marginal profits of the succeeded assets disposed of in the relevant business year to the transfer marginal profits (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) of the assets falling under paragraph (4) succeeded to from the investing corporation, etc., pursuant to Article 47-2 (1) of the Act (hereafter referred as "succeeded assets" in this Article) and held by an invested corporation as on the end date of the immediately preceding business year. |
| (4) | "Assets prescribed by Presidential Decree" referred to in Article 47-2 (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 an invested corporation becomes subject to a qualified merger or qualified division, or where such corporation is in other exceptional situation specified by Presidential Decree" in the proviso to Article 47-2 (2) of the Act means any of the following cases: <Added by Presidential Decree No. 24357, Feb. 15, 2013; Presidential Decree No. 26068, Feb. 3, 2015> |
| 1. | Where an invested corporation is qualifiedly divided (excluding a division and merger) for the first time; |
| 2. | Where an invested corporation meets all the following criteria and is qualifiedly merged with the investing corporation for the first time: |
| (a) | The invested corporation shall be a wholly controlled subsidiary established with sole investment by the investing corporation; |
| (b) | The invested corporation has been continuing the business acquired from the investing corporation by succession and shall own at least 80 percent of invested assets; |
| (c) | The investing corporation has never disposed of stocks, etc., received from the invested corporation since investment in kind; |
| (d) | Three years have not passed since the date the investing corporation made investment in kind in the invested corporation. |
| (6) | Where the proviso to Article 47-2 (2) of the Act applies to an investing corporation pursuant to paragraph (5) 1, the amount computed by multiplying the balance of compressed accounts reserve funds of the stocks, etc., of an invested corporation, among the compressed accounts reserve funds of the stocks, etc. of invested corporations, held by the investing corporation, by the rate prescribed by paragraph (3) 2 for each new corporation qualifiedly divided, shall be set aside at the price of the qualified division under paragraph (5) 1 for the compressed accounts reserve funds of the newly acquired stocks. <Added by Presidential Decree No. 24357, Feb. 15, 2013; Presidential Decree No. 26068, Feb. 3, 2015> |
| (7) | Where either of the following events occurs to an investing corporation that has newly set aside compressed accounts reserve funds pursuant to paragraph (6), the amount computed by applying paragraph (3) shall be included in gross income in computing the amount of the income for the business year in which such event occurs: <Added by Presidential Decree No. 24357, Feb. 15, 2013; Presidential Decree No. 26068, Feb. 3, 2015> |
| 1. | Where the investing corporation disposes of stocks newly acquired at the price of the qualified division under paragraph (5) 1; |
| 2. | Where the corporation that has acquired the assets of the invested corporation by succession (referring to a corporation established through qualified division under paragraph (5) 1; hereafter referred to as "re-incorporated corporation" in this Article) disposes of such succeeded assets. |
| (8) | Where either of the following events occurs to an investing corporation that has newly set aside compressed accounts reserve funds pursuant to paragraph (6), the amount computed by applying paragraph (3) shall be included in gross income for the purpose of computing the amount of the income for the business year in which such event occurs: <Added by Presidential Decree No. 24357, Feb. 15, 2013; Presidential Decree No. 26068, Feb. 3, 2015> |
| 1. | Where a re-incorporated corporation discontinues the business, within the period specified in paragraph (10), to which an invested corporation succeeded from the investing corporation after the re-incorporated corporation succeeded to the business on the ground specified in paragraph (5) 1; |
| 2. | Where the stocks, etc., of the re-incorporated corporation, held by the investing corporation, become less than 50/100 of the total number of outstanding stocks or the total investment amount of the re-incorporated corporation. |
| (9) | Where the proviso to Article 47-2 (2) of the Act applies to an investing corporation pursuant to paragraph 5 (2), the compressed accounts reserve funds for the stocks, etc., of the invested corporation, which the investing corporation has acquired in return for investment in kind within less than three years before the date of registration of the merger, shall be determined with the compressed accounts reserve funds or lump sum depreciation reserve funds (hereafter referred to as "compressed accounts reserve funds, etc." in this Article) for the relevant assets from which marginal profits accrued at the time of investment in kind, among the assets acquired by the merger according to the method prescribed by Ministerial Decree of Strategy and Finance. In such cases, the either of the following amounts shall be included in gross income of the investing corporation for the business year in which the merger is registered: <Added by Presidential Decree No. 26068, Feb. 3, 2015> |
| 1. | The amount that the investing corporation reported as marginal losses on the transfer of assets at the time of investment in kind; |
| 2. | The depreciation cost increased due to investment in kind, among the depreciation cost that the invested corporation reported on the assets acquired through investment in kind until the date of registration of the merger. |
| (10) | The compressed accounts reserve funds, etc., set aside by an investing corporation under paragraph (9) shall be included in gross income by the method specified in any subparagraph of Article 64 (4). <Added by Presidential Decree No. 26068, Feb. 3, 2015> |
| (11) | "In exceptional or inevitable circumstances prescribed by Presidential Decree" in the provisos to the main sentences of Article 47-2 (1) and (3) of the Act means any of the following cases: <Amended by Presidential Decree No. 22812, Mar. 31, 2011; Presidential Decree No. 23589, Feb. 2, 2012> |
| 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. |
| (12) | "Period prescribed by Presidential Decree" in Article 47-2 (3) 1 of the Act means two years from the start date of the business year immediately following the business year in which investment in kind is made. <Amended by Presidential Decree No. 23589, Feb. 2, 2012> |
| (13) | Articles 80-2 (6) and 80-4 (8) shall apply |
| (14) | A domestic corporation which seeks the benefit of Article 47-2 (1) of the Act, shall submit an application for special taxation on investment in kind in the form prescribed by Ministerial Decree of Strategy and Finance and the detailed statement on transfer marginal profits of assets to the head of the tax office having jurisdiction over the place of tax payment, accompanied by a report provided for in Article 60 of the Act, jointly with the invested corporation concerned. <Amended by Presidential Decree No. 23589, Feb. 2, 2012> |
[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 expressly provided in the Act or any other Act: <Amended by Presidential Decree No. 22577, Dec. 30, 2010; Presidential Decree No. 23589, Feb. 2, 2012; Presidential Decree No. 25194, Feb. 21, 2014>
| 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), (4) and 34 (6) 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 Added 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" referred to in Article 50 (1) of the Act means business, other than the business provided in Article 29 (3) of the Enforcement Decree of the Restriction of Special Taxation Act and Article 60-2 (1) 1 through 3 of the Enforcement Decree of the same 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> |
| (2) | "Assets prescribed by Presidential Decree" referred to in Article 50 (1) of the Act means land, buildings, assets provided in Article 4 (2) of the Enforcement Decree of the Restriction of Special Taxation Act, and other assets prescribed by Ministerial Decree of Strategy 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> |
| (3) | "Exchange among several corporations prescribed by Presidential Decree" referred to 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 in subparagraph 2 (if the amount is in excess of the amount computed by subtracting the book value from the market price of the fixed business assets, such excess amount shall be excluded) from the amount provided in subparagraph 1: <Amended by Presidential Decree No. 17457, Dec. 31, 2001> |
| 1. | The value of assets acquired through exchange; |
| 2. | If some payments are made in cash, such amount and the book value of fixed business assets. |
| (5) | Article 64 (3) through (5) shall apply |
| (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 Ministerial Decree of Strategy 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> |
Subsection 6-2 Income Tax Deduction
| Article 86-2 (Income Deduction for Special Purpose Companies, etc.) |
| (1) | "Distributable profits prescribed by Presidential Decree" referred to in the part other than the subparagraphs of Article 51-2 (1) of the Act means the amount calculated by deducting corporate tax expenses on the financial statements prepared in accordance with the corporate accounting standards, and adding earned surpluses carried forward to, or losses carried forward from the net profit for the current term, and then deducting earned surplus reserves accumulated under Article 458 of the Commercial Act. In such cases, profits or losses from evaluation of assets provided in subparagraph 2 (a) through (c) of Article 73 shall be excluded from the net profit for the current term, earned surpluses carried forward or losses carried, but this shall not apply to profits or losses from evaluation of assets provided in subparagraph 2 (c) of Article 73 of an investment company, etc. evaluated by the fair market value method under Article 75 (3); <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. 20619, Feb. 22, 2008; Presidential Decree No. 21302, Feb. 4, 2009; Presidential Decree No. 22812, Mar. 31, 2011> |
| (2) | "Corporation prescribed by Presidential Decree" referred to in Article 51-2 (1) 6 of the Act means a corporation incorporated upon meeting the requirements provided in Article 14 (4) 4 of the Enforcement Decree of the Rental Housing Act in order to run the housing rental business. <Added by Presidential Decree No. 19328, Feb. 9, 2006; Presidential Decree No. 20849, Jun. 20, 2008; Presidential Decree No. 22577, Dec. 30, 2010> |
| (3) | Where an investment company similar to those provided in Article 51-2 (1) 1 through 8 of the Act operates a housing construction project jointly with a housing construction project operator pursuant to the Housing Act, its assets are used for the housing construction project and the profits therefrom are distributed to its stockholders, such investment company is deemed to have met the requirements provided in Article 51-2 (1) 9 (a) of the Act. <Added by Presidential Decree No. 19891, Feb. 28, 2007; Presidential Decree No. 20619, Feb. 22, 2008; Presidential Decree No. 22577, Dec. 30, 2010> |
| (4) | "Requirements prescribed by Presidential Decree" referred to in Article 51-2 (1) 9 (e) of the Act means the following requirements: <Added by Presidential Decree No. 18324, Mar. 22, 2004; Presidential Decree No. 18945, Jul. 15, 2005; Presidential Decree No. 19328, Feb. 9, 2006; Presidential Decree No. 21302, Feb. 4, 2009; Presidential Decree No. 22035, Feb. 18, 2010; Presidential Decree No. 22577, Dec. 30, 2010> |
| 1. | At least one incorporator shall fall under either of the following: |
| (a) | A financial company, etc. falling under any of Article 61 (2) 1 through 13, and 24; |
| (b) | The National Pension Service established under the National Pension Act (limited to an investment company that implements public-private partnership projects in the manner provided in subparagraph 2 of Article 4 of the Act on Public-Private Partnerships in Infrastructure); |
| 2. | Incorporators falling under subparagraph 1 (a) or (b) shall make equity investment in at least 5/100 of the capital (if there are multiple number of incorporators falling under subparagraph 1 (a) or (b), their investments shall be added up). |
| (5) | "Requirements prescribed by Presidential Decree" referred to in Article 51-2 (1) 9 (h) of the Act means the following requirements: <Added by Presidential Decree No. 18324, Mar. 22, 2004; Presidential Decree No. 18706, Feb. 19, 2005; Presidential Decree No. 18945, Jul. 15, 2005; 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. 22577, Dec. 30, 2010> |
| 1. | The capital shall be at least five billion won: |
| 2. | The business of managing, operating and disposing of assets shall be entrusted to any of the following persons (hereafter referred to as "asset management company" in this Article): |
| (a) | A corporation that makes an equity investment in the relevant company; |
| (b) | A corporation incorporated independently or jointly by a person or persons who make an equity investment in the relevant company; |
| 3. | Fund management affairs shall be entrusted to a financial company, etc. that operates trust business under the Financial Investment Services and Capital Markets Act (hereafter referred to as "trustee company of fund management" in this Article); |
| 4. | Shareholders shall meet the requirements referred to in each subparagraph of paragraph (4). In such cases, "incorporator" shall be construed as "stockholder"; |
| 5. | A nominal company incorporation report stating the following matters, accompanied by documents prescribed by Ministerial Decree of Strategy and Finance, shall be submitted to the head of the tax office having jurisdiction over the place of tax payment within two months from the registration date of the incorporation of corporation: |
| (a) | Proper purpose business prescribed in the articles of incorporation; |
| (b) | Names and resident registration numbers of directors and auditors; |
| (c) | The name of an asset management company; |
| (d) | The name of a trustee company of fund management; |
| 6. | An asset management company and a trustee company of fund management shall not be the same entity. |
| (6) | Where a director, auditor or stockholder of a corporation falling under Article 51-2 (1) 9 of the Act fail to meet the requirements referred to in Article 51-2 (1) 9 (f) and (g) of the Act, and paragraph (5) 4 of this Article after such corporation files a report under paragraph (5) 5 of this Article, and where the corporation supplements the relevant requirement within one month from the date on which the grounds of failing to meet such requirements arise, such corporation shall be deemed to continue to the relevant requirements. <Added by Presidential Decree No. 18324, Mar. 22, 2004; Presidential Decree No. 19891, Feb. 28, 2007; Presidential Decree No. 20619, Feb. 22, 2008; Presidential Decree No. 22577, Dec. 30, 2010> |
| (7) | Where any matter falling under any item of paragraph (5) 5 are changed after a corporation referred to in Article 51-2 (1) 9 of the Act files a report under paragraph (5) 5 of this Article, the corporation shall file a nominal company change report stating the relevant changed matters, accompanied by documents prescribed by Ministerial Decree of Strategy and Finance, to the head of the tax office having jurisdiction over the place of tax payment within two weeks from the date on which such change occurs. <Added by Presidential Decree No. 18324, Mar. 22, 2004; Presidential Decree No. 19891, Feb. 28, 2007; Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 22577, Dec. 30, 2010> |
| (8) | Where an amount equivalent to the dividends deducted under Article 51-2 (1) of the Act exceeds the income of the relevant business year, such excess amount shall be deemed nil. |
| (9) | Any corporation that intends to be applicable under Article 51-2 (1) of the Act shall an application for income deduction in the form stipulated by Ministerial Decree of Strategy and Finance, along with the report on the tax base provided in Article 60 of the Act, with the head of the tax office having jurisdiction over the place of tax payment: |
| (10) | "Corporation meeting the standards prescribed by Presidential Decree" referred to in Article 51-2 (2) 2 of the Act means a corporation that meets all of the following requirements: <Added 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 referred to as "individuals, etc." in this subparagraph) shall own at least 95/100 of the total number of issued stocks or the total amount of investment: |
[This Article Added by Presidential Decree No. 16658, Dec. 31, 1999]
Subsection 7 Special Cases concerning Calculation of Amounts of Income
| Article 87 (Scope of Related Party) |
| (1) | "Related party prescribed by Presidential Decree" referred to in Article 52 (1) of the Act means a person with any of the following relationships (hereinafter referred to as "related party") with a corporation. In such cases, the principal shall be deemed the related party of the related party under the latter part other than the items of subparagraph 20 of Article 20 of the Framework Act on National Taxes: <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. 22951, Jun. 3, 2011; Presidential Decree No. 23589, Feb. 2, 2012> |
| 1. | Persons (including persons to be treated as directors under Article 401-2 (1) of the Commercial Act) recognized to be exercising actual influence over the management of the relevant corporation, such as exercising the right to appoint or dismiss executives or determining the course of business, and their relatives; |
| 2. | Stockholders (excluding minority stockholders, etc.; hereafter the same shall apply in this Sub-section) and their relatives; |
| 3. | Executives and employees of a corporation, or employees of a stockholder (referring to the executives, in the case of a profit-making corporation, and the director and the founder, in the case of a non-profit corporation) or persons, other than employees, whose livelihood depends on the cash and other assets of the corporation or stockholder, and their relatives who depend upon them for their livelihood; |
| 4. | Where the relevant corporation exercises controlling influence over a corporation's management directly or through a person in the relationship referred to in subparagraphs 1 through 3, such relevant corporation; |
| 5. | Where the relevant corporation exercises controlling influence over a corporation's management directly or through a person in the relationship referred to in subparagraphs 1 through 4, such relevant corporation; |
| 6. | A corporation or individual which invests at least 30/100 in a corporation which invests at least 30/100 in the relevant corporation; |
| 7. | Where the relevant corporation belongs to an enterprise group defined in the Monopoly Regulation and Fair Trade Act, other affiliates and executives of such affiliates in the enterprise group; |
| 8. | Deleted. <by Presidential Decree No. 23589, Feb. 2, 2012> |
| (2) | Whether a corporation is exercising controlling influence as prescribed in paragraph (1) 4 and 5 shall be determined pursuant to Article 1-2 (4) of the Enforcement Decree of the Framework Act on National Taxes. <Added by Presidential Decree No. 23589, Feb. 2, 2012> |
| (3) | and (4) Deleted. <by Presidential Decree No. 20619, Feb. 22, 2008> |
| Article 88 (Types of Wrongful Calculations) |
| (1) | "Where the head of the tax office having jurisdiction over the place of tax payment or the commissioner of the competent regional tax office deems that the tax burden of a domestic corporation has been unjustly reduced" referred to 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> |
| 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 as investments in kind gratuitously or at a price lower than the market price: |
| 3-2. | For a merger (including a division and merger) or division of corporations which are related parties, where profits or losses from transfer due to the merger or division is reduced because the merger or division is made at an unfair ratio: |
| 4. | Where defective or inferior assets are refunded or non-performing loans are transferred; |
| 5. | Where contributions are made in place of another party; |
| 6. | Where money and other assets or services is lent or provided gratuitously or at an interest rate, tariff, or rent lower than the market price: |
| (a) | Where money is provided upon the exercise or payment of stock options, etc. referred to in the part other than the items of Article 20 (1) 3; |
| (b) | Where company houses (including rental company houses prescribed by Ministerial Decree of Strategy and Finance) are provided to executives (including executives who are minority stockholders, etc.) and employees, other than stockholders, contributors, etc.; |
| 7. | Where money and other assets or services are borrowed or received at an interest rate, tariff, or rental rate higher than the market price; |
| 7-2. | Where profits are distributed in such a manner as not exercising the derivative-based rights prescribed by Ministerial Decree of Strategy and Finance or as adjusting the period of exercise; |
| 8. | Where profits are distributed by a corporation which is a stockholder 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: |
| (b) | Where the right to allot and assume control of new stocks (including convertible bonds, warrant bonds, exchangeable bonds, etc.; hereafter the same shall apply in this item) 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 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. | Other than the cases provided in subparagraph 8, where it is deemed that a corporation has distributed its profits through any transaction that increases or decreases its capital (including the amount of investments), 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: |
| 9. | Other cases in which it is deemed that activities, calculations, or other distributions of the profit of a corporation equivalent to those provided in subparagraphs 1 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: |
| (3) | paragraph (1) 1, 3, 6, 7 and 9 (limited to any activity or calculation similar to those provided 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. <Added by Presidential Decree No. 19891, Feb. 28, 2007> |
| (4) | paragraph (3) shall not apply where stocks issued by a listed stock corporation are traded on the Korea Exchange established under the Financial Investment Services and Capital Markets Act (hereinafter referred to as "Korea Exchange"). <Added by Presidential Decree No. 19891, Feb. 28, 2007; Presidential Decree No. 21302, Feb. 4, 2009> |
| Article 89 (Scope, etc. 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 (where stocks issued by a listed stock corporation have been traded on the Korea Exchange, the closing price of such stocks on the day of trading on the Korea Exchange shall be the market price thereof) shall be used. <Amended by Presidential Decree No. 19891, Feb. 28, 2007; Presidential Decree No. 21302, Feb. 4, 2009; Presidential Decree No. 23589, Feb. 2, 2012> |
| (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> |
| 1. | Where an appraisal evaluation corporation incorporated under the Act on the Public Announcement of Values and Appraisal of Real Estate has appraised a value, the value (if there are at least two appraised values, the average of the appraised values): |
| 2. | The value evaluated by applying |
| (3) | In lending or borrowing money referred to in Article 88 (1) 6 and 7, the weighted average interest rate on borrowings (hereinafter referred to as "weighted average interest rate on borrowings") stipulated by Ministerial Decree of Strategy and Finance shall be the rate prevailing in the market, notwithstanding paragraphs (1) and (2): |
| 1. | Where it is impracticable to apply the weighted average interest rate on borrowings and there exists a ground stipulated by Ordinance of Ministry of Strategy 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 stipulated by Ordinance of Ministry of Strategy 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 stipulated by Ministerial Decree of Strategy 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 be applied to assets (excluding money) or services provided in Article 88 (1) 6 and 7, the amount computed by applying the following subparagraphs 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> |
| 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 referred to as "costs" in this subparagraph) and costs multiplied by the rate of profit (referring to the rate divided by the balance of sales calculated according to corporate 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. |
| (5) | In cases falling under the wrongful calculations provided 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 the relevant corporation for each business year under Article 52 (1) of the Act: |
| (6) | Articles 38, 39, 39-2, 39-3, 40 and 42 (1) 3 of the Inheritance Tax and Gift Tax Act and Articles 28 (3) through (6), 29 (3), 29-2 (2), 29-3 (2), 30 (4) and 31-9 (2) 4 and 5 of the Enforcement Decree of the same Act shall apply |
| Article 90 (Submission of Detailed Statements on Transactions between Related Parties) |
| (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 Ministerial Decree of Strategy and Finance under Article 52 (3) of the Act, 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: |
| (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, etc.) |
Article 17 of the Enforcement Decree of the Adjustment of International Taxes Act shall apply mutatis mutandis to filing an application for the adjustment of an amount of income under Article 53 of the Act, the procedures therefor, and other matters. <Amended by Presidential Decree No. 18706, Feb. 19, 2005>
| 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 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 Ministerial Decree of Strategy and Finance to the head of the tax office having jurisdiction over the place of tax payment, along with the report provided in Article 60 of the Act for the business year during which it intends to first apply the calculation method of tax base provided in Article 53-2 (1) 2 or 3 of the Act. |
| (2) | "Circumstances prescribed by Presidential Decree" referred to 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 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 Strategy 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 Added 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 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). |
| (2) | For the purpose of applying the calculation method of tax bases provided 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 subparagraph 1 of Article 13 of the Act, non-taxable income referred to in subparagraph 2 of the same Article, and the amount of income deductions referred to in subparagraph 3 of the same Article 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. |
| (3) | A corporation which applies the calculation method of tax bases provided 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 in Article 91-2 (1) or (3), among the basic rate of exchange, etc. as at the end date of the business year or the average rate of exchange provided in paragraph (5) in any of the following cases: |
| 1. | Where the tax base denominated in the functional currency is converted into Korean won; |
| 2. | Where the limit of entertainment expenses referred to in each subparagraph of Article 25 (1) of the Act is converted into the functional currency; |
| 3. | Where the tax credits are calculated by applying Articles 57 and 57-2 of the Act, Articles 5, 10, 11, 24 through 26, 94 and 104-5 of the Restriction of Special Taxation Act and such amount is converted into Korean won. |
| (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 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 Ministerial Decree of Strategy and Finance. |
| (6) | "Items prescribed by Presidential Decree" referred to 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 Ministerial Decree of Strategy and Finance. |
| (7) | For the purpose of applying the calculation method of tax bases provided 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 severance benefits, allowances for bad debts, allowances to redeem claims for indemnity, and other similar items prescribed by Ministerial Decree of Strategy 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 |
[This Article Added 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" referred to 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 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 |
[This Article Added 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 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 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 Acts 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 |
| (3) | For the purpose of applying the calculation method of tax bases provided 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 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 in Article 53-3 (1) 2 of the Act, the donations, entertainment 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> |
| (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 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" referred to in Article 53-3 (1) 3 of the Act means the basic rate of exchange, etc. as at 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 case other 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 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 Added by Presidential Decree No. 22577, Dec. 30, 2010]
Section 2 Calculation of Amount of Tax
| Article 92 (Calculation of Number of Months) |
Article 39 (2) shall apply mutatis mutandis to the calculation of the number of months under the latter part of Article 55 (2) of the Act.
| Article 92-2 (Special Provisions concerning Taxation on Capital Gains on Transfer of Land, etc.) |
| (1) | Deleted. <by Presidential Decree No. 21526, Jun. 8, 2009> |
| (2) | "House prescribed by Presidential Decree" referred to in Article 55-2 (1) 2 of the Act means any house located in the Republic of Korea, except the following houses: <Added 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> |
| 1. | Any house meeting all of the following requirements as buy-to-rent housing defined in subparagraph 3 of Article 2 of the Rental Housing Act, which is rented by the relevant corporation: |
| (a) | Deleted; <by Presidential Decree No. 24357, Feb. 15, 2013> |
| (b) | That it shall be rented for at least five years; |
| (c) | That the total amount of the standard market price (referring to the standard market price computed under Article 99 of the Income Tax Act; hereafter the same shall apply in this paragraph) of the relevant house and the site appurtenant thereto as on the date the rent is begun upon registering the house as rental housing under Article 6 of the Rental Housing Act shall not exceed 600 million won [300 million won in cases of areas outside the Seoul Metropolitan Area defined in subparagraph 1 of Article 2 of Seoul Metropolitan Area Readjustment Planning Act (hereinafter referred to as "Seoul Metropolitan Area")]; |
| 1-2. | Built-to-rent housing defined in subparagraph 2 of Article 2 of the Rental Housing Act that is rented by the relevant corporation, which has at least two houses meeting all of the following requirements: |
| (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 be rented for at least five years; |
| (c) | That the total amount of the standard market price of the relevant housing and the site appurtenant thereto as on the date the rent is begun upon registering the housing as rental housing under Article 6 of the Rental Housing Act shall not exceed 600 million won; |
| 1-3. | buy-to-rent housing defined in subparagraph 3 of Article 2 of the Rental Housing Act that is acquired during a period from January 1, 2008 to December 31, 2008 and rented by a real estate investment company defined in subparagraph 1 of Article 2 of the Real Estate Investment Company Act or by a real estate indirect investment fund as provided in subparagraph 3 of Article 27 of the Indirect Investment Asset Management Business Act, which has at least five houses meeting all of the following requirements: |
| (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 be rented for at least ten years; |
| (c) | That it shall be located in an area outside the Seoul Metropolitan Area; |
| 1-4. | Buy-to-rent defined in subparagraph 3 of Article 2 of the Rental Housing Act [limited to an unsold housing unit (referring to housing supplied by a project operator referred to in Article 38 of the Housing Act under the same Article on a first-come first-served basis, as the sale contract of which was not concluded by June 10, 2008, in a residential district in relation to which the deadline for signing a contract had elapsed, followed by publication of the recruitment of occupants; hereafter the same shall apply in this subparagraph), the sale contract of which was concluded during the period from June 11, 2008 to June 30, 2009 and the down payment was made] meeting all of the following requirements. In such cases, a corporation that transfers the relevant housing shall submit a copy of verification of the unsold housing unit and a copy of the sales contract for purchasing the unsold housing unit, issued by the head of the relevant |
| (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 be rented for at least five years; |
| (c) | That it shall be located in an area outside the Seoul Metropolitan area; |
| (d) | That the number of buy-to-rent housing units meeting all requirements provided for in item (a) thorough (c) (hereafter referred to as "unsold housing unit" in this Article) shall be at least five in the same |
| 1-5. | An unsold housing unit (referring to housing supplied by a project operator referred to in Article 38 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 the same shall apply in this paragraph) directly acquired by February 11, 2010 (including conclusion of a sale and purchase contract and making down payment by February 11, 2011) by a corporate restructuring real estate investment company as defined in subparagraph 1 (c) of Article 2 of the Real Estate Investment Company Act or a real estate fund as provided for in subparagraph 2 of Article 229 of the Financial Investment Services and Capital Markets Act (hereafter referred to as "corporate restructuring real estate investment company, etc." in this paragraph), which meets all 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 in areas outside the Seoul Special Metropolitan City (excluding the designated area under Article 104-2 of the Income Tax Act; hereafter the same shall apply in this Article) and the ratio of the housing units located in areas 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 in accordance with the purchase agreement (in cases falling under subparagraph 1-8, limited to unsold housing units located in areas 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 operator (hereafter referred to as "trust business operator" in this subparagraph) as provided for in the Financial Investment Services and Capital Markets Act as trust property under a trust contract, which meets all of the following requirements: |
| (a) | That money financed by a housing constructor (hereafter referred to as "constructor" in this Article) by issuing bonds shall be trusted to a trust business operator 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 operator as trust property shall be unsold housing units located in areas 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 number of housing units (where many constructors trust money to the trust business operator, such housing units mean all unsold housing units acquired by the trust business operator as trust property) located in areas 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 extended period) 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 down payment by April 30, 2011) by a corporate restructuring real estate investment company, etc., by April 30, 2011, which are located in areas outside the Seoul Metropolitan Area and meets all 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 in areas outside the Seoul Special Metropolitan City and the ratio of the housing units located in areas 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 down payment by April 30, 2011) by a trust business operator (hereafter referred to as "trust business operator" in this subparagraph) as provided for in the Financial Investment Services and Capital Markets Act as trust property under a trust contract which meets all 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 operator 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 operator as trust property shall be unsold housing units as of February 11, 2010 located in areas 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 operator, such housing units shall be all unsold housing units acquired by the trust business operator as trust property) located in areas outside the Seoul Metropolitan Area shall exceed 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 down payment by December 31, 2014) by a corporate restructuring real estate investment company, etc., which meets all 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 pursuant to 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 operator (hereafter referred to as "trust business operator" in this subparagraph) as provided for in the Financial Investment Services and Capital Markets Act as trust property under a trust contract, which meets all the following requirements: |
| (a) | That money financed by a constructor by issuing bonds shall be trusted to a trust business operator and the bonds issued by the relevant constructor shall be securitized under the Asset-Backed Securitization Act under 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. |
| 2. | A company house provided to an executive (including an executive being a minority stockholder, etc.) who is neither a stockholder 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 ten 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 Ministerial Decree of Strategy and Finance. |
| (3) | "Circumstances prescribed by Presidential Decree" referred to in Article 55-2 (4) 2 of the Act means cases 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" referred to 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" referred to 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> |
| 1. | Income accruing from alteration of the land category or land number following the replotting disposition or from the appropriation of a land secured by the authorities for the development outlay in accordance with the Urban Development Act and other Acts. In such cases, the replotting disposition and an area of land secured by the authorities for the development outlay shall be as provided in Article 152 of the Enforcement Decree of the Income Tax Act; |
| 1-2. | Income accruing from exchange under Article 152 (3) 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 of a corporation that constructs new housing for sale, accruing from the transfer of such housing or land appurtenant thereto, the area of which is whichever larger between the following items (including where the corporation parcels out the built-to-rent housing or sells such housing to any housing rental business operator pursuant to the Rental Housing Act): |
| (a) | The total floor area of the housing (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, etc. of Housing Construction); |
| (b) | Five times the area on which the building is built (ten times in cases of the area outside an urban area provided for in Article 6 of the National Land Planning and Utilization Act); |
| 5. | Income accruing on the grounds prescribed by Ministerial Decree of Strategy and Finance, including the transfer for public purposes. |
| (5) | "Land, etc., prescribed by Presidential Decree" referred to 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 any Act or a court ruling; |
| 2. | Farmland provided for in Article 55-2 (4) 2 of the Act. |
| (6) | Article 68 shall apply |
| (7) | In applying Article 55-2 (1) 1 of the Act, if 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 in Article 69 (2): |
| (9) | Where a corporation transfers at least two pieces 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 from among the transferred assets, capital gains on the transfer of land, etc., shall be calculated by deducting the excess amount (hereafter referred to as "marginal losses from transfer" in this paragraph) 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 marginal losses from transfer applies; |
| 2. | Capital gains from the transfer of assets to which the tax rate different from that of assets with marginal losses from transfer applies. |
[This Article Added 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 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. | Both of the 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. | Both of the following periods, if the period of holding the relevant land is between three to 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: |
| (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 Added 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 expressly provided 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 Added by Presidential Decree No. 19225, Dec. 31, 2005]
| Article 92-5 (Scope, etc., of Farmland) |
| (1) | "Farmland" referred to 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 is 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 it 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> |
| 1. | Farmland falling under Article 6 (2) 2, 6 and 10 (a) or (c) of the Farmland Act; |
| 2. | Farmland owned by any corporation that has obtained farmland conversion permission or has filed a report on farmland conversion under Article 6 (2) 7 of the Farmland Act or farmland used for the relevant conversion purpose after completing the farmland conversion consultation under Article 6 (2) 8 of the same Act; |
| 3. | Farmland acquired under Article 6 (2) 10 (d) through (f) of the Farmland Act and used for the relevant business purposes; |
| 4. | Farmland owned by a clan (limited to farmland acquired on or before December 31, 2005); |
| 5. | Farmland used directly by any non-profit business operator referred to in Article 22 of the Enforcement Decree of the Local Tax Act for memorial services, religion, charity, academic purpose, arts and crafts, or any other public service; |
| 6. | Farmland prescribed by Ministerial Decree of Strategy and Finance that is permitted to be owned under the Farmland Act and other Acts. |
| (4) | "Area designated by Presidential Decree" referred to 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 Added by Presidential Decree No. 19225, Dec. 31, 2005]
| Article 92-6 (Scope, etc., of Forest Land) |
| (1) | "Forest land prescribed by Presidential Decree" referred to 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> |
| 1. | A seed-gathering forest and an experimental forest created under the Creation and Management of Forest Resources Act and a forest protection zone classified under the Forest Protection Act; |
| 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, Greenbelts, Etc.; |
| 5. | Forest land in a cultural property protection area classified under the Cultural Heritage Protection Act; |
| 6. | A courtyard owned by any traditional temple preserved under the Korea Traditional Temples Preservation and Support Act; |
| 7. | Forest land in a development restriction area classified under the Act on Special Measures for Designation and Management of Development Restriction Zones; |
| 8. | Forest land in a military base or a military installations protection zone provided for in the Protection of Military Bases and Installations Act; |
| 9. | Forest land in a clearance area provided for in the Road Act; |
| 10. | A forest land in a railroad protection area provided for in the Railroad Safety Act; |
| 11. | Forest land in a flood management area provided for in the River Act; |
| 12. | Forest land in a water source protection area provided in for the Water Supply and Waterworks Installation Act; |
| 13. | Other forest land, prescribed by Ministerial Decree of Strategy 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. |
| (3) | "Forest land prescribed by Presidential Decree" referred to in Article 55-2 (2) 2 (b) of the Act means any of the following forest lands in any mountain area provided for in the Mountainous Districts Management Act: |
| 1. | Forest land for which the afforestation work is being conducted upon authorization for the afforestation plan granted under the Creation and Management of Forest Resources Act; |
| 2. | Forest land in a special afforestation project zone provided for in the Creation and Management of Forest Resources Act. |
| (4) | "Forest land prescribed by Presidential Decree" referred to 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> |
| 1. | Forest land used to produce tree seeds and saplings for forests by any seed and sapling business operator registered under the Creation and Management of Forest Resources Act; |
| 2. | Forest land used for a project to create, manage, and operate any natural recreation forest pursuant to the Forestry Culture and Recreation Act; |
| 3. | Forest land used for a project to create, manage, and operate an arboretum pursuant to the Act on the Creation and Furtherance of Arboretums and Gardens; |
| 4. | Forest land directly used by any forest association or forest fraternity for its proper purpose business; |
| 5. | Forest land directly used by any non-profit business operator referred to in Article 22 of the Enforcement Decree of the Local Tax Act for memorial services, religion, charity, academic purpose, arts and crafts, or any other public services; |
| 6. | Forest land owned by a clan (limited to forest land acquired on or before December 31, 2005); |
| 7. | Forest land prescribed by Ministerial Decree of Strategy and Finance and directly related to a corporation's business, in consideration of its owner, location, utilization, holding period, area, etc. |
[This Article Added by Presidential Decree No. 19225, Dec. 31, 2005]
| Article 92-7 (Scope, etc., of Ranch Areas) |
| (1) | "Ranch area" referred to 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" referred to in the proviso to Article 55-2 (2) 3 of the Act 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); |
| 2. | A ranch area used by a school provided for in the Elementary and Secondary Education Act and the Higher Education Act, an agency in charge of overall control over the livestock improvement or livestock improvement agency to conduct experiments, research, and practical training pursuant to the Livestock Industry Act; |
| 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 Ministerial Decree of Strategy 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: |
| 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" referred to 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 Appendix 1. <Amended by Presidential Decree No. 22035, Feb. 18, 2010; Presidential Decree No. 22951, Jun. 3, 2011> |
| (5) | "Area prescribed by Presidential Decree" referred to 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. <Added by Presidential Decree No. 20619, Feb. 22, 2008; Presidential Decree No. 22951, Jun. 3, 2011> |
| (6) | "Period set by Presidential Decree" referred to 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 Added by Presidential Decree No. 19225, Dec. 31, 2005]
| Article 92-8 (Scope of Other Land Used for Business) |
| (1) | "Land prescribed by Presidential Decree" referred to 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> |
| 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 its workplace team of athletes pursuant to the National Sports Promotion Act and is not wider than the standard area prescribed by Ministerial Decree of Strategy 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 Ministerial Decree of Strategy 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 Ministerial Decree of Strategy and Finance among the lands used to install sports facilities for the welfare of employees: |
| (c) | Land used directly by any corporation that runs the business of sports facilities provided 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 the same shall apply in this item) provided for in the Parking Lot Act, which is within the standard area for parking lots pursuant to the same Act: |
| (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: |
| (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 exceeds the ratio set by Ministerial Decree of Strategy 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 Acts, both of which are prescribed by Ministerial Decree of Strategy and Finance: |
| 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: |
| 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; |
| (b) | The land shall not be located in any residential area, commercial area or industrial area in an urban area designated under National Land Planning and Utilization Act; |
| (c) | The land shall meet the facility standards set by Ministerial Decree of Strategy and Finance and be within the standard area set by Ministerial Decree of Strategy 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 Ministerial Decree of Strategy 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 Ministerial Decree of Strategy 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 as permitted upon obtaining an aggregate extraction permit from the head of a |
| 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 exceeds the ratio set by Ministerial Decree of Strategy and Finance; |
| 11. | Any of the following lands used as a fish farm, pond, or marshland (referring to a dam, a reservoir, a small pond, a naturally formed lake and marsh used to operate an inland fish farming business or fishing pond business and the site necessary to maintain them) referred to in the Act on the Establishment, Management, etc. of Spatial Data: |
| (a) | Land used to run land seawater fish farming business and fishery seedling production business pursuant to the Fisheries Act; |
| (b) | Land used by anyone who obtains a license or permission from the head of a |
| (c) | Land, other than the lands referred to in items (a) and (b), whose ratio of annual revenue to the value of the land exceeds the ratio set by Ministerial Decree of Strategy and Finance; |
| 12. | Land used to run 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 run 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 exceeds the ratio set by Ministerial Decree of Strategy and Finance; |
| 13. | Other land similar to the lands referred to in subparagraphs 1 through 12, which is prescribed by Ministerial Decree of Strategy and Finance, as being directly related to the business of a corporation, in consideration of its current utilization and its observance, etc., of relevant Acts and subordinate statutes. |
| (2) | In applying paragraph (1) 2 (c), 10, 11 (c) and 12, "ratio of annual revenue to the value of the land" (hereafter referred to as "ratio of the revenue amount" in this paragraph) 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 |
| 2. | Where the revenue amount for one business year is commonly related to in the relevant land, building, facility, etc. (hereafter referred to as "relevant land, etc." in this subparagraph) and other land, building, facility, etc. (hereafter referred to as "other land, etc." in this subparagraph), 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 does not exceed 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 Acts and subordinate statutes 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 as at the end date 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 referred to as "standard area" in this paragraph), all or part of such land shall be deemed a portion in excess of the standard area based on the order set out in each item of the following subparagraphs: |
| 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 the same shall apply in this paragraph) stands on the land and the building that is divided into the portion (including the portion of some building used for a specific business among multiple buildings; hereafter referred to as "portion for the specific use" in this paragraph), 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 attached land, etc., for the portion for the specific use among the floor area of the building and the area of the attached land (hereafter referred to as "area of the attached land, etc." in this paragraph) shall be calculated by the following formulae: |
| 1. | Where one building is used for multiple purposes: |
The area of the attached land, etc., for the portion for the specific use = the area of the attached 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 attached land for the portion for the specific use = the area of the entire land attached 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 published by the Commissioner of Statistics Korea pursuant to Article 17 of the Statistics Act, except as otherwise expressly provided for in this Decree. |
[This Article Added 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" referred to 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 Added by Presidential Decree No. 19225, Dec. 31, 2005]
| Article 92-10 (Scope of Resort Villas and Applicable Standards) |
"Residential house (including the land appurtenant thereto) at a rural village in an Eup /Myeon specified in Article 3 (3) or (4) of the Local Autonomy Act, if such residential house meets the scope and standards 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; |
| 3. | The building shall be in any area, other than the areas referred to in the items of Article 99-4 (1) 1 of the Restriction of Special Taxation Act. |
[This Article Added by Presidential Decree No. 19225, Dec. 31, 2005]
| Article 92-11 (Criteria, etc. 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 in Article 55-2 (2) of the Act: <Amended by Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 21302, Feb. 4, 2009> |
| 1. | The land, the use of which is prohibited or restricted pursuant to Acts and subordinate statutes 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 Ministerial Decree of Strategy 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 Ministerial Decree of Strategy 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> |
| 1. | Land transferred by means of auction under the Civil Execution Act: The first auction date; |
| 2. | Land transferred by means of public auction under the National Tax Collection Act: The public auction date; |
| 3. | Land that requires a certain period for its transfer and falls under the grounds of inevitability prescribed by Ministerial Decree of Strategy and Finance: The date prescribed by Ministerial Decree of Strategy 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> |
| 1. | Land to be transferred within three years from the date of acquisition due to a merger or division of a corporation; |
| 2. | Land purchased by means of consultation or expropriated under the Act on Acquisition of and Compensation for Land, etc. for Public Works and other Acts, and of which business authorization is published on or before December 31, 2006, or the acquisition date of which is two 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 Ministerial Decree of Strategy 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 Added by Presidential Decree No. 19225, Dec. 31, 2005]
| Article 93 (Corporate Tax on Unappropriated Earnings of Enterprises) |
| (1) | "Equity capital defined by Presidential Decree" in Article 56 (1) 1 of the Act means the amount calculated by subtracting total liabilities from total assets on the statement of financial position. |
| (2) | "Small or medium enterprises specified by Presidential Decree" in Article 56 (1) 1 of the Act means the enterprises specified in Article 2 of the Enforcement Decree of the Restriction of Special Taxation Act. |
| (3) | A domestic corporation that intends to file a tax return pursuant to Article 56 (2) of the Act shall submit a return on the corporate tax on unappropriated earnings in the form prescribed by Ministerial Decree of Strategy and Finance to the head of the tax office having jurisdiction over the place of tax payment at the time it files a report on tax base under Article 60 or 76-17 of the Act. |
| (4) | "Income specified by Presidential Decree" in the main sentence of Article 56 (2) 1 of the Act shall be determined by adding the aggregate referred to in subparagraph 1 to the income for each business year and then subtracting the aggregate referred to in subparagraph 2 from the former amount (if the amount is negative, it shall be deemed nil): |
| 1. | The aggregate of the following amounts: |
| (a) | Interest on the refund referred to in subparagraph 4 of Article 18 of the Act; |
| (b) | The amount of dividend income excluded from gross income under Article 18 (3) of the Act; |
| (c) | The amount carried over under Article 24 (4) of the Act and included in deductible expenses for the relevant business year; |
| (d) | The amount of depreciation cost for the assets subject to Article 56 (2) 1 (a) of the Act for the relevant business year, included in deductible expenses for the relevant business year; |
| 2. | The aggregate of the following amounts: |
| (a) | The amount of corporate tax for the relevant business year (including the amount of foreign corporate tax paid directly by a domestic corporation but excluded from deductible expenses under Article 57 of the Act and the amount of foreign corporate tax under Article 15 (2) 2 of the Act) and the amount of special tax for rural villages and the amount of local corporate income tax for the amount of exempted corporate tax; |
| (b) | The earned surplus reserve that shall be compulsorily set aside for the relevant business year under Article 458 of the Commercial Act; |
| (c) | The amount specified by Ministerial Decree of Strategy and Finance for the reserves that shall be compulsorily set aside under statutes; |
| (d) | The loss deducted for the relevant business year under subparagraph 1 of Article 13 of the Act (referring to the amount calculated in accordance with Articles 45 and 46-4 of the Act, in cases of a merged corporation, etc.); |
| (e) | The amount of bonuses and severance benefits appropriated by disposing of the retained earnings for the relevant business year but excluded from deductible expenses; |
| (f) | The amount of donations exceeding the ceiling on inclusion in deductible expenses and excluded from deductible expenses under Article 24 (1) and (2) of the Act; |
| (g) | The amount of the reserves for research and for the development of human resources under Article 9 (1) of the Restriction of Special Taxation Act and included in deductible expenses for the relevant business year under Article 9 (2) 1 of the aforesaid Act. |
| (5) | "Rate specified by Presidential Decree" in the main sentence of Article 56 (2) 1 of the Act means 80/100, and "rate specified by Presidential Decree" in Article 56 (2) 2 of the Act means 30/100. |
| (6) | "Assets specified by Presidential Decree, such as machinery" in Article 56 (2) 1 (a) of the Act means the following assets (excluding secondhand items and lease assets, except the financial lease referred to in Article 3 of the Enforcement Decree of the Restriction of Special Taxation Act) newly acquired to use them in a domestic place of business: |
| 1. | The following tangible, fixed assets for business use: |
| (a) | Machinery, devices, tools, instruments, fixtures, vehicles, transports, ships, aircraft, and other similar tangible, fixed assets for business use; |
| (b) | Buildings specified by Ministerial Decree of Strategy and Finance, newly constructed or extended for business use; |
| (c) | The land directly used for the construction or extension of a building for business use provided for in item (b) and the land that meets the criteria prescribed by Ministerial Decree of Strategy and Finance, deemed to be used for the construction or extension of a building for business use in light of the main business, the investment plan, etc.; |
| 2. | Intangible, fixed assets referred to in Article 24 (1) 2 (a) through (d) and (f): |
| (7) | Where the investments under Article 56 (2) 1 (a) of the Act are made over at least two business years, the aggregate of investments shall be calculated based on the amounts actually disbursed in each business year during the business years over which such investments are made. |
| (8) | “Persons specified by Presidential Decree, such as executives" in Article 56 (2) 1 (b) of the Act means the persons specified in the subparagraphs of Article 26-4 (2) of the Enforcement Decree of the Restriction of Special Taxation Act. |
| (9) | The increased amount of wages under Article 56 (2) 1 (b) of the Act means the increased amount, compared with the amount for the immediately preceding business year, in the aggregate of earned income under Article 20 (1) 1 and 2 of the Income Tax Act (including the book value of treasury stocks contributed to the employee ownership stock association under subparagraph 16 of Article 19 or the amount of money or goods calculated by the formula prescribed by Ministerial Decree of Strategy and Finance, but limited to the amount included by the relevant corporation in deductible expenses) for the employees with an employment contract signed under the Labor Standards Act (excluding persons provided for in paragraph (8)). |
| (10) | "Aggregate of dividends specified by Presidential Decree" in Article 56 (2) 1 (c) of the Act means the aggregate of the following: |
| 1. | The dividends distributed from the retained earnings for the relevant business year (excluding the dividends distributed by reducing the capital reserves or earned surplus funds under Article 461-2 of the Commercial Act, and limited to dividends in cash); |
| 2. | Interim or quarterly dividends distributed during the relevant business year (excluding dividends distributed by reducing the capital reserves or earned surplus funds under Article 461-2 of the Commercial Act, and limited to dividends in cash); |
| 3. | The amount of treasury stocks acquired by a listed stock corporation during the relevant business year, as prescribed by Ministerial Decree of Strategy and Finance and retired within one month. |
| (11) | "Amount specified by Presidential Decree, such as the amount expended for collaborative cooperation as defined in subparagraph 3 of Article 2 of the Act on the Promotion of Collaborative Cooperation between Large Enterprises and Small-Medium Enterprises" in Article 56 (2) 1 (d) of the Act means the contributions made under Article 8-3 (1) of the Restriction of Special Taxation Act during the relevant business year. |
| (12) | "Period specified by Presidential Decree" in Article 56 (3) of the Act means the business year in which the third anniversary falls. |
| (13) | Where a corporation that shall continuously apply the method it has chosen under Article 56 (3) of the Act merges with another corporation or acquires the business of another corporation, or in circumstances specified by Ministerial Decree of Strategy and Finance, it may change the chosen method. |
| (14) | Where a domestic corporation has not chosen any of the methods prescribed in Article 56 (2) of the Act, that domestic corporation shall be deemed to have chosen a method by which the smaller amount of unappropriated earnings or the greater over-appropriated amount is computed for the business year that falls under any subparagraph of Article 56 (1) of the Act for the first time in filing the relevant tax return. |
| (15) | Even where a domestic corporation that sets aside the reserve for appropriation in the next term during the relevant business year and deducts the reserve from unappropriated earnings pursuant to Article 56 (5) of the Act ceases to fall under any subparagraph of Article 56 (1) of the Act in the next business year due to the reduction of equity capital or any other cause, it shall pay corporate tax on unappropriated earnings in accordance with Article 56 (1) and (6) of the Act. |
| (16) | “Where a domestic corporation referred to in paragraph (1) has disposed of an asset referred to in paragraph (2) 1 (a), or in circumstances specified by Presidential Decree" in Article 56 (8) of the Act means the following cases: |
| 1. | Where the relevant asset is transferred or lent before two years have lapsed from the complement date of investment in the asset under paragraph (6) 1 (a) or the purchase date of the asset under paragraph (6) 1 (b): |
| (a) | Where an asset falls under any subparagraph of Article 137 (1) of the Enforcement Decree of the Restriction of Special Taxation Act; |
| (b) | Where an asset under paragraph (6) 1 (a) is transferred or lent, gratuitously to the commissioned enterprise defined in subparagraph 6 of Article 2 of the Act on the Promotion of Collaborative Cooperation between Large Enterprises and Small-Medium Enterprises (excluding the related parties under Article 87); |
| (c) | Other cases specified by Ministerial Decree of Strategy and Finance in consideration of the type of business and other characteristics; |
| 2. | Cases specified by Ministerial Decree of Strategy and Finance, such as where the relevant asset ceases to be classified as a building for business use under paragraph (6) 1 (b) or fails to meet the requirements under paragraph (6) 1 (c). |
| (17) | Pursuant to Article 56 (8) of the Act, a domestic corporation shall pay the amount calculated by multiplying the amount of tax not paid due to the deduction of the invested amount by the period specified in subparagraph 1 and the rate specified in subparagraph 2, as the amount equivalent to interest, when it files a return on the tax base for the business year in which the date specified by Ministerial Decree of Strategy and Finance falls (hereafter referred to as "the payment date of the amount equivalent to interest" in this paragraph), if the cause or event referred to in any subparagraph of Article 16 occurs: |
| 1. | The period between the day immediately after the filing date of the tax base report on corporate tax for the business year in which the invested amount was deducted and the payment date of the amount equivalent to interest; |
| 2. | The rate of 3/10000 per day. |
| (18) | The aggregate of earned income under paragraph (9) shall be calculated as follows: |
| 1. | Where a surviving corporation, a corporation newly established by a division, an invested corporation, or a transferred corporation (hereafter referred to as "surviving corporation, etc." in this paragraph) accepts continuous employment of the employees engaged in former business divisions as a consequence of a merger, division, investment in kind, or acquisition of business, such employees shall be deemed employed by the surviving corporation, etc., before such event; |
| 2. | Where a new corporation is established, the aggregate of earned income for the immediately preceding business year shall be deemed nil: |
| (19) | Where the merged corporation or divided corporation disappears as a consequence of a merger or division, the surviving corporation or the corporation newly established by the division may succeed to the unappropriated earnings or the over-appropriated amount under Article 56 of the Act, as prescribed by Ministerial Decree of Strategy and Finance. |
| (20) | Methods for computing the aggregate of investments, the increased amount of wages, unappropriated earnings upon a merger or division, and other necessary matters, shall be prescribed by Ministerial Decree of Strategy and Finance. |
[This Article Added by Presidential Decree No. 26068, Feb. 3, 2015]
| Article 94 (Deduction of Foreign Tax Credits) |
| (1) | "Amount of foreign corporate tax prescribed by Presidential Decree" referred to in Article 57 (1) of the Act means the following amounts of tax (excluding additional tax and surcharges) imposed by a foreign government (including a local government; hereinafter the same shall apply): |
| 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) | "Ratio specified by Presidential Decree" referred to in Article 57 (1) 1 of the Act means the following ratio: <Amended by Presidential Decree No. 22951, Feb. 29, 2008; Presidential Decree No. 22951, Jun. 3, 2011> |
|
| (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 or included in expenses incurred in the business year in which the relevant foreign source income is included in the tax base. In such cases, a domestic corporation that seek the benefit of Article 57 (1) of the Act shall submit a tax statement on foreign tax credits in the form stipulated by Ministerial Decree of Strategy 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. 21302, Feb. 4, 2009> |
| (4) | Where a domestic corporation is unable to submit a tax statement on foreign tax credits, accompanied by 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, along with supporting documents, within two 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> |
| (5) | Paragraph (4) shall apply |
| (6) | Article 96 shall apply |
| (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) 1 of the Act separately for each country. <Amended by Presidential Decree No. 26068, Feb. 3, 2015> |
| (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 lower-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 lower-tier subsidiary is located, for the dividends received from the foreign lower-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" referred to in Article 57 (5) of the Act means a domestic corporation which directly holds at least 25/100 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 by Presidential Decree No. 20619, Feb. 22, 2008; Presidential Decree No. 22577, Dec. 30, 2010; Presidential Decree No. 26068, Feb. 3, 2015> |
| (10) | "Foreign lower-tier subsidiary" referred to in paragraph (8) means a corporation that meets all of the following requirements that: <Added by Presidential Decree No. 20619, Feb. 22, 2008; Presidential Decree No. 22035, Feb. 18, 2010; Presidential Decree No. 26068, Feb. 3, 2015> |
| 1. | The relevant foreign subsidiary shall directly hold at least 25/100 (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 lower-tier subsidiary for at least six consecutive months as on the determination date of dividends of the foreign lower-tier subsidiary; |
| 2. | A domestic corporation shall indirectly hold at least 25/100 (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 lower-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 lower-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" referred to in Article 57 (6) of the Act means: <Added 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 referred to as "residential country" in this paragraph): 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 referred to as "withholding country" in this paragraph): 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" referred to in Article 57 (6) of the Act means the amount computed by the following formula: <Added by Presidential Decree No. 22577, Dec. 30, 2010> |
|
| (15) | The foreign source income subject to Article 57 (1) of the Act, which is the income accruing from abroad, shall be computed by applying the provisions regarding the calculation of income for each business year. In such cases, the foreign source income eligible for the deduction of foreign corporate tax under Article 57 (1) 1 of the Act shall be included in deductible expenses for the purpose of computing the tax base for the relevant business year, and an amount directly or indirectly corresponding to the foreign source income exists, such amount shall be subtracted therefrom, but Article 57 (2) of the Act shall not apply to the amount so subtracted. <Added by Presidential Decree No. 24357, Feb. 15, 2013> |
| (16) | Except as otherwise expressly provided for in paragraphs (8) through (10), procedures for calculating the amount of tax deductible for a foreign subsidiary or foreign lower-tier subsidiary and other necessary matters shall be prescribed by Ministerial Decree of Strategy 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 Case concerning Foreign Tax Credits for Indirect Investment Companies, etc.) |
| (1) | The amount that an indirect investment company, etc., provided for in Article 57-2 (1) of the Act may obtain a refund under Article 57-2 (2) (hereafter referred to as "amount of tax refund" in this Article) shall be computed by subtracting the amount referred to in subparagraph 2 from the amount referred to in subparagraph 1: |
| 1. | The amount computed by the following formula: |
|
| 2. | The amount of corporate tax in the relevant business year. |
| (2) | In the formula referred to in paragraph (1) 1, where the ratio (hereafter referred to as "refund ratio" in this Article) computed by dividing the amount of taxable income among the amount of income in the relevant business year by the amount of taxable foreign source income among the amount of income in the relevant business year is smaller than zero, the ratio shall be deemed zero, and where the ratio is larger than one, the ratio shall be deemed one. |
| (3) | In the formula referred to in paragraph (1) 1, the amount of taxable foreign source income means the total amount of the relevant income where the amount of foreign corporation tax provided in Article 57-2 (1) of the Act is paid on the income among the foreign source income. |
| (4) | Every indirect investment company, etc., shall calculate the amount referred to in paragraph (1) 1 each day and reflect the calculated amount when it calculates the base price prescribed in Article 238 (6) of the Financial Investment Services and Capital Markets Act. In such cases, when the refund ratio is calculated, "the relevant business year" shall be construed as "the period beginning from the start date of the relevant business year to the calculation date of the amount referred to in paragraph (1) 1." <Amended by Presidential Decree No. 21302, Feb. 4, 2009> |
| (5) | With respect to the amount of tax paid in any foreign country that accrues from the collective investment property prescribed by the Financial Investment Services and Capital Markets Act (hereafter referred to as "collective investment property" in this Article), which is kept and managed by a corporation, any of the following corporations shall prepare and submit a written confirmation of the amount of tax paid in any foreign country on the collective investment property in the form stipulated by Ministerial Decree of Strategy and Finance (hereafter referred to as "written confirmation" in this Article) to the head of the tax office having jurisdiction over the place of tax payment within one month from the end date of the business year of the indirect investment company, etc., to which the collective investment property kept and managed by the relevant corporation belongs. In such cases, the corporation referred to in subparagraph 2 shall deliver a copy of the written confirmation to the collective investment business operator that manages the relevant collective investment property: <Amended by Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 21302, Feb. 4, 2009; Presidential Decree No. 22035, Feb. 18, 2010> |
| 1. | A financial company, etc., that concurrently operates trust business provided in the Financial Investment Services and Capital Markets Act; |
| 2. | A trust business operator who keeps and manages collective investment property as prescribed by the Financial Investment Services and Capital Markets Act. |
| (6) | Paragraphs (1) through (5) shall apply |
| (7) | Each indirect investment company, etc., that intends to obtain a refund pursuant to Article 57-2 (2) of the Act may file an application for refund of tax computed under paragraph (1), accompanied by a statement on the amount of tax paid overseas by the indirect investment company, etc., in the form stipulated by Ministerial Decree of Strategy and Finance, the documents referred to in Article 239 (1) 1 and 2 of the Financial Investment Services and Capital Markets Act and annexed particulars, with the head of the tax office having jurisdiction over the place of tax payment by the filing deadline specified in Article 60 of the Act. <Amended by Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 21302, Feb. 4, 2009> |
| (8) | Any investment trust, investment limited partnership, or undisclosed investment association referred to in the Financial Investment Services and Capital Markets Act that intend to obtain a refund pursuant to Article 57-2 (3) and (4) of this Act may file an application for the refund of tax computed under paragraph (1), accompanied by an application for refund of tax paid overseas and a statement on the amount of tax paid overseas by the investment trust company, etc., in the form prescribed by Ministerial Decree of Strategy and Finance with the head of the tax office having jurisdiction over the place of tax payment within three months from the date of settlement of accounts of the relevant investment trust, investment limited partnership, or undisclosed investment association. <Amended by Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 21302, Feb. 4, 2009; Presidential Decree No. 26068, Feb. 3, 2015> |
| (9) | Upon receipt of an application for refund of tax filed under paragraphs (7) and (8), the head of the tax office having jurisdiction over the place of tax payment shall determine, without delay, the amount of tax refund and refund the determined amount of tax. |
[This Article Added by Presidential Decree No. 19328, Feb. 9, 2006]
| Article 95 (Tax Credits for Losses from Disasters) |
| (1) | "Total amount of assets prescribed by Presidential Decree" referred to in the former part other than the subparagraphs of Article 58 (1) of the Act 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 at the date of the disaster, 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 at the date of the disaster as investigated and verified by the head of the tax office having jurisdiction over the place of tax payment. |
| (3) | Additional tax referred to in Article 76 (1) of the Act and Articles 47-2 through 47-5 of the Framework Act on National Taxes shall be included in the amount of corporate tax provided in each subparagraph of Article 58 (1) of the Act. <Amended by Presidential Decree No. 19891, Feb. 28, 2007; Presidential Decree No. 20619, Feb. 22, 2008> |
| (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 Ministerial Decree of Strategy and Finance to the head of the tax office having jurisdiction over the place of tax payment within the following deadlines: <Amended by Presidential Decree No. 20720, Feb. 29, 2008> |
| 1. | For corporate tax, the filing deadline of the tax base of which has not expired, the filing deadline: |
| 2. | For corporate tax unpaid or payable as at the date of the disaster, in other cases than those falling under subparagraph 1, one month from the date of the disaster. |
| (6) | The head of the tax office having jurisdiction over the place of tax payment may defer the collection of corporate tax under the National Tax Collection Act until the tax credit is verified with respect to the corporate tax deductible under Article 58 (1) of the Act for the relevant corporation. <Amended by Presidential Decree No. 18706, Feb. 19, 2005> |
| Article 95-2 Deleted. <by Presidential Decree No. 22812, Mar. 31, 2011> |
| Article 95-3 (Method of Tax Credits Based on Correction due to Wrongful Accounting) |
In applying Article 58-3 of the Act, where there are grounds for application for correction, other than the grounds for application for correction provided in Article 66 (2) 4 of the Act within the same business year, the amount computed by the following formula shall be the deductible amount:
Amount of tax overpaid × (overestimated tax base due to wrongful accounting/ Sum total of overestimated tax bases).
[This Article Added by Presidential Decree No. 18174, Dec. 30, 2003]
| 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 (Filing Reports on Tax Bases) |
| (1) | In filing a report under Article 60 (1) and (2) 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 2 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> |
| (2) | The report referred to in paragraph (1) shall be filed in the corporate tax base and amount form prescribed by Ministerial Decree of Strategy 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 corporate 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 referred to as "financial statements" in this Article) mean the financial statements denominated in the functional currency (hereafter referred to as "functional currency-denoted financial statements" in this Article) which is prepared by applying |
| (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 Ministerial Decree of Strategy and Finance. <Amended by Presidential Decree No. 20720, Feb. 29, 2008> |
| (5) | "Other documents prescribed by Presidential Decree" referred to in Article 60 (2) 3 of the Act means any of 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 Ministerial Decree of Strategy and Finance among the accompanying documents: <Amended by Presidential Decree No. 22184, Jun. 8, 2010; Presidential Decree No. 22577, Dec. 30, 2010> |
| 1. | Accompanying documents of the tax settlement invoice prepared as prescribed by Ministerial Decree of Strategy and Finance and the cash flow chart prepared according to the corporate accounting standards (limited to corporations subject to external audit under Article 2 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 corporate accounting standards, the financial statements converted from the functional currency-denoted financial statements according to the corporate accounting standards by having Korean won as the denomination currency (hereafter referred to as "denomination currency-denoted financial statements" in this Article); |
| 1-3. | Where a corporation which adopts the currency, other than Korean won, as the functional currency according to the corporate accounting standards applies the calculation method of tax base provided 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 |
| 2. | Any of the following documents, in cases of a merger or division (limited to surviving corporations, etc.): |
| (a) | A statement of financial position of the merged corporation, etc., as at 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 along with 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) | "Other documents prescribed by Presidential Decree" referred to in Article 60 (4) 2 of the Act mean 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. <Added 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 in paragraph (2) 1 of the same Article. <Amended by Presidential Decree No. 22035, Feb. 18, 2010> |
| (9) | Where deemed necessary for the accurate adjustment of business accounts and tax accounts and conscientious tax payment by a corporation prescribed by Ministerial Decree of Strategy and Finance, a tax settlement invoice provided in Article 60 (2) 2 of the Act shall be prepared by a licensed tax accountant (including certified public accountants and lawyers registered under Article 20-2 of the Certified Tax Accountant Act; hereinafter the same shall apply). <Amended by Presidential Decree No. 18174, Dec. 30, 2003; Presidential Decree No. 18706, Feb. 19, 2005; Presidential Decree No. 20619, Feb. 22, 2008; Presidential Decree No. 21302, Feb. 4, 2009> |
| (10) | Matters necessary for the requirements for licensed tax accountants who can prepare the tax settlement invoices referred to in paragraph (9) shall be prescribed by Ministerial Decree of Strategy and Finance. <Amended by Presidential Decree No. 21302, Feb. 4, 2009; Presidential Decree No. 22035, Feb. 18, 2010; Presidential Decree No. 24357, Feb. 15, 2013> |
| (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 balance sheets, standard income statements, and standard particulars, accompanying income statements (hereafter referred to as "standard financial statements" in this Article) prescribed by Ministerial Decree of Strategy and Finance by means of national tax information and communications networks provided in subparagraph 19 of Article 2 of the Framework Act on National Taxes: |
| (12) | A domestic corporation that seeks the benefit of Article 60 (7) of the Act shall submit an application for extension of the filing deadline in the form stipulated by Ministerial Decree of Strategy and Finance to the head of the tax office having jurisdiction over the place of tax payment, by no later than two weeks prior to the expiration date of the filing deadline specified in Article 60 (1). <Added by Presidential Decree No. 22035, Feb. 18, 2010> |
| (13) | "Interest rate prescribed by Presidential Decree" in the former part of Article 60 (8) of the Act means the interest rate specified in Article 43-3 (2) of the Enforcement Decree of the Framework Act on National Taxes. <Added by Presidential Decree No. 22035, Feb. 18, 2010; Presidential Decree No. 26068, Feb. 3, 2015> |
| Article 98 (Special Cases concerning Appropriation of Reserve Funds, etc. 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. |
| (2) | Where a domestic corporation appropriates the lump sum depreciation reserve fund or compressed accounts reserve fund provided in this Decree or the Enforcement Decree of the Restriction of Special Taxation Act in the tax settlement invoice provided 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> |
| Article 99 (Special Cases concerning Filing Tax Bases 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> |
| Article 99-2 (Special Cases concerning Taxation of Capital Gains on Transfer of Assets by Non-Profit Domestic Corporations) |
| (1) | "Stocks, etc. prescribed by Presidential Decree" referred to in Article 62-2 (1) 1 of the Act means the assets provided in Article 94 (1) 4 (b) (limited to stocks, etc.) of the Income Tax Act and Article 158 (1) 1 and 5 of the Enforcement Decree of the same Act. <Amended by Presidential Decree No. 18706, Feb. 19, 2005; Presidential Decree No. 22951, Jun. 3, 2011> |
| (2) | The special provisions concerning the taxation of capital gains on transfer of assets stipulated 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 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" referred to in the proviso to Article 62-2 (4) of the Act means any asset that is transferred within three years from the date on of contribution: |
| 1. | The business prescribed by Acts and subordinate statutes; |
| 2. | The business permitted or authorized by any administrative agency; |
| 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 stipulated by Ministerial Decree of Strategy and Finance. <Amended by Presidential Decree No. 20720, Feb. 29, 2008> |
[This Article Added by Presidential Decree No. 17457, Dec. 31, 2001]
| Article 100 (Interim Prepayment) |
| (1) | Where the interim tax is paid under Article 63 (1) of the Act, the corporate tax interim prepayment invoice prescribed by Ministerial Decree of Strategy 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> |
| (2) | Where the interim tax is paid as prescribed in Article 63 (5) of the Act, the corporate tax interim prepayment invoice prescribed by Ministerial Decree of Strategy 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> |
| (3) | Article 101 (1) and (2) shall apply |
| (4) | Where the head of the tax office having jurisdiction over the place of tax payment has verified the fact that a corporation has no business revenue during the interim prepayment period due to causes, such as the suspension of business, he/she shall not collect corporate tax for the relevant interim prepayment period from the corporation. |
| Article 101 (Payment) |
| (1) | A corporation which intends to voluntarily pay corporate tax under Article 64 of the Act shall pay it along with the report provided 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 20,000,000 won or less, the amount in excess of 10,000,000 won; |
| 2. | Where the amount of tax payable is in excess of 20,000,000 won, the amount of 50/100 or less of the amount of tax. |
| Article 102 (Payment in Kind) |
| (1) | Bonds referred to in Article 65 (1) of the Act means indemnity bonds issued by the operator of the relevant public project under Article 63 (2) and (3) of the Act on Acquisition of and Compensation for Land, etc. for Public Works Projects. <Amended by Presidential Decree No. 18324, Mar. 22, 2004; Presidential Decree No. 18706, Feb. 19, 2005> |
| (2) | The payment value of bonds to be appropriated for payment in kind under Article 65 (1) of the Act shall be the value evaluated by applying |
| (3) | The payment in kind of corporate tax (excluding additional tax; hereafter the same shall apply in this Article) under Article 65 (1) of the Act shall be permitted only in cases where the amount of tax payable in the business year during the relevant land is transferred exceeds 10,000,000 won up to the limits of corporate tax on marginal profits on transfer to or expropriation by a public project operator under Article 65 (1). <Amended by Presidential Decree No. 17457, Dec. 31, 2001> |
| (4) | Where a domestic corporation intends to pay corporate tax in kind under paragraph (3), it shall file an application with the head of the tax office having jurisdiction over the place of tax payment, as prescribed by Ministerial Decree of Strategy and Finance, by no later than ten days prior to the filing deadline specified under Article 60 of the Act (including any preliminary return on the tax base of capital gains by any domestic non-profit corporation under Article 62-2 (7) and (8) of the Act; hereafter the same shall apply in this Article). <Amended by Presidential Decree No. 17457, Dec. 31, 2001; Presidential Decree No. 20720, Feb. 29, 2008> |
| (5) | Upon receipt of an application filed under paragraph (4), the head of the tax office having jurisdiction over the place of tax payment shall evaluate the payment value of bonds referred to in paragraph (2) and notify the applicant of the determination as to payment in kind by the day before the filing deadline specified under Article 60 of the Act. |
| (6) | "Cases prescribed by Presidential Decree" referred to in the proviso to Article 65 (1) of the Act means cases deemed necessary by the Minister of Strategy and Finance for the adjustment of revenues or currencies. <Amended by Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 22951, Jun. 3, 2011> |
Section 4 Determination, Correction, and Collection
Subsection 1 Determination and Correction of Tax Bases
| Article 103 (Determination and Correction) |
| (1) | Determinations and corrections of the tax bases and amounts of tax referred to in Article 66 of the Act shall be made by the head of the tax office having jurisdiction over the place of tax payment: |
| (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. |
| (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: |
| Article 103-2 (Dispositions, such as Warning or Attention due to Wrongful Accounting) |
"Dispositions, such as a warning or attention prescribed by Presidential Decree" referred to in Article 66 (2) 4 of the Act means any of the following: <Amended by Presidential Decree No. 18706, Feb. 19, 2005; Presidential Decree No. 21302, Feb. 4, 2009>
| 1. | Recommendation on dismissal of executives, and restriction on issuance of securities for a certain period under Articles 164 of the same Act and Article 175 of the Enforcement Decree of the same Act , denouncing a violation of the same Act or giving notice to an investigation agency thereof, giving notice to the related agency or investigation agency on the violation of other Acts, warning, or attention; |
| 2. | Imposition of penalty surcharges under Article 429 (3) of the Financial Investment Services and Capital Markets Act; |
| 3. | Sentence of imprisonment or fines under subparagraph 13 of Article 444 and subparagraph 28 of Article 446 of the Financial Investment Services and Capital Markets Act; |
| 4. | Revocation of registration, suggestion of suspension of business and duties, limitation of audit of a certain company of the auditor or his/her affiliated certified public accountant under Article 16 (1) of the Act on External Audit of Stock Companies; |
| 5. | Recommendation of dismissal of executives or restriction on issuance of securities to the general meeting of stockholders under Article 16 (2) of the Act on External Audit of Stock Companies; |
| 6. | Sentence of imprisonment or fines under Article 20 of the Act on External Audit of Stock Companies. |
[This Article Added by Presidential Decree No. 18174, Dec. 30, 2003]
| Article 104 (Determinations and Corrections by Estimation) |
| (1) | "Grounds prescribed by Presidential Decree" referred to in the proviso to Article 66 (3) of the Act means any of the following: <Amended by Presidential Decree No. 22951, Jun. 3, 2011> |
| 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> |
| 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 fixed business assets; hereafter the same shall apply in this Article) or rental fees for fixed business assets; |
| (b) | The amount paid or payable based on evidentiary documents as pays, wages and severance benefits of the representative, executives or employees; |
| (c) | The amount computed by multiplying the standard expense rate provided in Article 145 of the Enforcement Decree of the Income Tax Act (hereinafter referred to as "standard expense rate") by the amount of business revenue; |
| 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 or the act of God: |
| 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 Ministerial Decree of Strategy 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> |
| 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 3 (3) of the Act in the case of a non-profit corporation; hereafter referred to as "non-business earnings" in this subparagraph) provided 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: |
| 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. |
| Article 106 (Disposal of Income) |
| (1) | The amount included in the calculation of 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> |
| 1. | Where it is clear that the amount included in gross income has flowed out of the company, it shall be disposed of as a dividend, bonus by disposal of profits, other income, or other outflows from the company under the following items according to a person to whom it reverts: |
| (a) | Where a person to whom the income reverts is a stockholder, etc. (excluding stockholders, etc. who are executives or employees), dividends to the person; |
| (b) | Where a person to whom the income reverts is an executive or employee, bonuses to the person; |
| (c) | Where a person to whom the income reverts is a corporation or an individual operating a business, other outflows from the company: |
| (d) | Where a person to whom the income reverts is a person other than those provided 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 the other outflows from the company, notwithstanding subparagraph 1: |
| (a) | Deleted; <by Presidential Decree No. 19328, Feb. 9, 2006> |
| (b) | The amount included in gross income under Article 24 of the Act; |
| (c) | The amount included in gross income under Article 25 of the Act and Article 136 of the Restriction of Special Taxation 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> |
| (g) | The amount included in gross income under Article 138 of the Restriction of Special Taxation Act; |
| (h) | Where the amount included in gross income under the proviso to the part other than the items of subparagraph 1 and paragraph (2) is deemed disposed of after having been reverted 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 is reverted 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 reverted to the foreign corporation, which is an amount included in gross income. |
| (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 net profits for the current term on the balance sheet of the corporation shall be the bonus to the representative upon disposal of profits: |
| (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: |
| 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 question in advance and it is similar to cases provided 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" referred to in the proviso to Article 68 of the Act means the case of determining or correcting tax base and amount by estimation as provided 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" referred to 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 |
| (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 |
| (5) | In applying |
| 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). |
| (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, Refund, etc. of Tax
| Article 110 (Calculation of Tax Refunds by Retroactive Deduction of Losses) |
| (1) | "Amount of corporate tax prescribed by Presidential Decree" referred to in the former part of Article 72 (1) 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> |
| (2) | "Amount calculated, as prescribed by Presidential Decree" referred to in the former part of Article 72 (1) of the Act means the amount under subparagraph 1 minus the amount under subparagraph 2: <Amended by Presidential Decree No. 22951, Jun. 3, 2011> |
| 1. | The amount of tax calculated as the corporate tax for the immediately preceding business year; |
| 2. | The amount calculated by applying the tax rate of the immediately preceding business year to the balance of the tax base of the immediately preceding business year minus the amount for which retroactive deduction as losses for the relevant business year under Article 14 (2) of the Act (up to the tax base of the immediately preceding business year; hereafter referred to as "amount of retroactively deducted losses" in this Article). |
| (3) | 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 Ministerial Decree of Strategy 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> |
| (4) | 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: |
|
| (5) | "An amount equivalent to the interest calculated, as prescribed by Presidential Decree" in Article 72 (5) of the Act 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> |
| 1. | The amount of tax refunded under Article 72 (5) of the Act; |
| 2. | 3/10,000 per day beginning from the day following the notice date of the initial tax refund until the notice date of the amount of corporate tax collected under Article 72 (5) of the Act: |
| (6) | Where the amount of corporate tax or the amount of tax base for the immediately preceding business year, based on which the initial tax refund has been calculated, changes after such initial tax refund is determined, the head of the tax office having jurisdiction over the place of tax payment shall immediately re-determine the initial tax refund and either give additional refund or collect the amount equivalent to the amount of tax over-refunded. <Amended by Presidential Decree No. 24357, Feb. 15, 2013> |
| (7) | In re-determining the initial tax refund under paragraph (6), 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. |
| Article 110-2 (Calculation of Tax Refund Based on Correction due to Wrongful Accounting) |
| (1) | Refunds referred to in Article 72-2 (1) of the Act shall be the final remainder after making tax credits sequentially as prescribed by Article 58-3 of the Act. |
| (2) | Additional refunds referred to in Article 72-2 (1) of the Act shall be the amount computed by the following methods: <Amended by Presidential Decree No. 18706, Feb. 19, 2005> |
| 1. | Where there remains a refund in the business year after five years from the start date of the business year in which the correction date referred to in Article 66 (2) 4 of the Act falls: The sum total of the amounts calculated by applying Article 52 of the Framework Act on National Taxes respectively to the amount of tax credits of each business year, that is tax-credited sequentially under Article 58-3 of the Act, and the refund referred to in paragraph (1); |
| 2. | Where the overpaid tax amount has been fully deducted within five years from the start date of the business year in which the correction date under Article 66 (2) 4 of the Act falls: The sum total of the amounts calculated by applying Article 52 of the Framework Act on National Taxes respectively to the amount of tax credits of each business year, that is tax-credited sequentially under Article 58-3 of the Act. |
| (3) | In applying Article 72-2 (1) and (2) of the Act, where the relevant domestic corporation is dissolved on the grounds of a merger or division and any amount remains after tax credits are applied under Articles 58-3 and 59 of the Act, the surviving corporation or the corporation established due to the division (including the counterpart corporation to a merger or division) shall succeed to the remaining amount and make a refund or additional refund during the remaining period only where any amount remains after tax credits are applied under Articles 58-3 (1) and 59 of the Act. <Added by Presidential Decree No. 19328, Feb. 9, 2006> |
[This Article Added by Presidential Decree No. 18174, Dec. 30, 2003]
| Article 111 (Withholding) |
| (1) | "Those prescribed by Presidential Decree, such as income, etc., on which corporate tax is not imposed or exempt" referred to in Article 73 (1) of the Act 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> |
| 1. | Income on which corporate tax is not imposed or exempt; |
| 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 Acts and subordinate statutes 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 and the Registration of Bonds and Debentures Act by a corporation prescribed by Ministerial Decree of Strategy and Finance, which manages and operates funds established under the applicable Acts, (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 Ministerial Decree of Strategy and Finance: |
| (a) | Bonds or securities issued by the State or local governments; |
| (b) | Monetary stabilization bonds issued by the Bank of Korea under the Bank of Korea Monetary Stabilization Bond Act; |
| (c) | Bonds or securities prescribed by Ministerial Decree of Strategy 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 insurance business 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 Ministerial Decree of Strategy and Finance; |
| (b) | An association established for stabilizing the bond market and prescribed by Ministerial Decree of Strategy and Finance; |
| 7. | Interest revenue accruing from funds deposited in the Housing and Urban Fund under Article 6 (2) of the Housing and Urban Fund Act by the Korea Land and Housing Corporation incorporated under the Korea Land and Housing Corporation Act (limited to funds deposited by issuing debentures by the National Pension under the National Pension Act and postal deposits under the Postal Savings and Insurance Act in which the national pension and postal deposits continue to hold such debentures at the time of payment of interest income). |
| (2) | "Financial companies, etc., prescribed by Presidential Decree" referred to in Article 73 (1) of the Act means the any of the following: <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. 19214, Dec. 30, 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. 21526, Jun. 8, 2009; Presidential Decree No. 21972, Dec. 31, 2009; Presidential Decree No. 22035, Feb. 18, 2010; Presidential Decree No. 26600, Oct. 23, 2015> |
| 1. | Corporations referred to in Article 61 (2) 1 through 28; |
| 2. | The Bank of Korea established under the Bank of Korea Act; |
| 3. | Collective investment business operators under the Financial Investment Services and Capital Markets Act; |
| 4. | Investment companies, special purpose companies, investment limited liability companies, and investment limited partnerships under the Financial Investment Services and Capital Markets Act (excluding private equity funds participating in management under Article 9 (19) 1 of the same Act); |
| 5. | Cooperatives established under the Agricultural Cooperatives Act; |
| 6. | Cooperatives established under the Fisheries Cooperatives Act; |
| 7. | Cooperatives established under the Forestry Cooperatives Act; |
| 8. | Unions and the National Credit Union Federation of Korea established under the Credit Unions Act; |
| 9. | Community credit cooperatives established under the Community Credit Cooperatives Act; |
| 10. | Securities financial companies established under the Financial Investment Services and Capital Markets Act; |
| 11. | The Korea Exchange (limited to the joint compensation fund for loss incurred from contravention of contracts); |
| 12. | The Korea Securities Depository established under the Financial Investment Services and Capital Markets Act; |
| 13. | The Korea Investment Corporation incorporated under the Korea Investment Corporation Act; |
| 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 Acts (limited to those which keep accounts separately from other business); |
| 16. | Corporations with the aim of recapitalization as referred to in Article 104-3 (1) of the Restriction of Special Taxation Act; |
| 17. | Other corporations that operate financial insurance business prescribed by Ordinance of Ministry of Strategy and Finance. |
| (3) | "Those prescribed by Presidential Decree" in Article 73 (1) of the Act means any of the following incomes: <Added by Presidential Decree No. 21972, Dec. 31, 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. 24357, Feb. 15, 2013> |
| 1. | In cases of an investment company referred to in the Financial Investment Services and Capital Markets Act and corporations with the aim of recapitalization referred to in paragraph (2) 16: Interest income and profits from investment trust provided in each subparagraph of Article 73 (1) of the Act; |
| 2. | In cases of other financial companies, etc.: Interest income and profits from investment trusts provided in each subparagraph of Article 73 (1) of the Act, excluding the interest on bonds, etc. subject to withholding taxes (excluding short-term electronic bonds with one month maturity, issued pursuant to the Act on Issuance and Distribution of Short-Term Electronic Bonds, Etc.), discounts and profits from investment trusts (hereafter referred to as "interest, etc." in paragraph (4) and Articles 113 and 138-3 (1)) under Article 73 (8) of the Act. |
| (4) | Where a financial company, etc., that is commissioned to withhold tax or withholds tax as an agent under Article 73 (5) 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., referred to in paragraph (3) shall not include the interest, etc,. that reverts to the financial company, etc. |
| (5) | In applying Article 73 of the Act, interest, etc., on relevant bonds shall be deemed paid in either of the following cases: <Added by Presidential Decree No. 17033, Dec. 29, 2000; Presidential Decree No. 24357, Feb. 15, 2013> |
| 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 Article 73 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: |
| (7) | In applying Article 73 of the Act, where a trust business operator referred to in the Financial Investment Services and Capital Markets Act directly operates, keeps, or manages trust property, the trust business operator 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. <Added by Presidential Decree No. 21302, Feb. 4, 2009> |
| Article 112 Deleted. <by Presidential Decree No. 21302, Feb. 4, 2009> |
| Article 113 (Amounts, etc. Subject to Tax Withholding from Amounts Equivalent to Interest during Holding Period of Bonds, etc.) |
| (1) | In applying Article 73 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 operator 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> |
| (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.): |
| (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: |
| 2. | Applicable interest rates: |
| (a) | The interest rate computed by adding the interest rate under the calculation method in the contract 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: |
| (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): |
| (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: |
| (4) | Deleted. <by Presidential Decree No. 18706, Feb. 19, 2005> |
| (5) | In applying paragraph (1), where a corporation that acquired securities provided 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 operator 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 |
| (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 |
| 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. |
| (8) | In applying paragraphs (1) through (7), Article 102 (8) of the Enforcement Decree of the Income Tax Act shall apply |
| (9) | Deleted. <by Presidential Decree No. 18706, Feb. 19, 2005> |
| (10) | A trust business operator 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 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> |
| (11) | Where a corporation sells original issue discount bonds, etc. (limited to bonds, etc. tax on which is withheld 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. <Added by Presidential Decree No. 17457, Dec. 31, 2001; Presidential Decree No. 21302, Feb. 4, 2009; Presidential Decree No. 22035, Feb. 18, 2010> |
| (12) | In applying Article 73 of the Act, where any corporation sells its bonds, etc. to any of the following corporations and when any contract is entered between parties with respect to the withholding of the amount equivalent to the interest during the holding period referred to in paragraph (2), any act done by a person representing or commissioned by a person liable for withholding in accordance with the relevant contract shall be deemed the act of the principal or the delegating person within the scope of authority and delegation: <Added by Presidential Decree No. 18706, Feb. 19, 2005; Presidential Decree No. 19214, Dec. 30, 2005; Presidential Decree No. 21302, Feb. 4, 2009> |
| 1. | Corporations provided in each subparagraph of Article 61 (2); |
| 2. | Collective investment business operators provided in the Financial Investment Services and Capital Markets Act. |
| (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. <Added by Presidential Decree No. 18706, Feb. 19, 2005> |
| (14) | In applying Article 73 (8) of the Act, where bonds, etc. are sold during the calculation period of interest, etc. on bonds, etc. which belong to the trust property under the Financial Investment Services and Capital Markets Act, the trust business operator under the same Act shall be deemed to have an agency or commission relationship with the beneficiary of the relevant trust property. <Added by Presidential Decree No. 21302, Feb. 4, 2009> |
| Article 114 Deleted. <by Presidential Decree No. 18706, Feb. 19, 2005> |
| Article 114-2 (Tax Withheld at Source and Refund, etc. in Bond Transactions with Repurchase Agreement, etc.) |
| (1) | "Trading of repurchase bonds, etc. or other cases prescribed by Presidential Decree" referred to in the former part of Article 73 (8) of the Act means any of the following transactions: <Presidential Decree No. 22812, Mar.31, 2011> |
| 1. | Transactions under which a financial company referred to 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 (2) of this Decree sell or purchase bonds, etc. on the condition that they will repurchase or resell them at certain prices after a certain period and the fact constituting such transaction is verified by means of accounts of the Korea Securities Depository under Article 294 of the Financial Investment Services and Capital Markets Act or the transaction ledger (including the transaction ledger in electronic form) of the Korea Exchange under Article 373 of the same Act; |
| 2. | Transactions under which a financial company, etc. referred to 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 (2) of this Decree lend bonds, etc. on the condition that the same type and quantity of bonds, etc. will be returned after a certain period and the fact constituting such transaction is verified 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 provided in the Financial Investment Services and Capital Markets Act). |
| (2) | The transactions under paragraph (1) shall be governed by Article 73 of the Act by deeming that the amount equivalent to the interest income accruing from the bonds, etc. during the period beginning from the date such bonds, etc. are sold or lent to the date they are repurchased or returned reverts to the seller or lender. <Amended by Presidential Decree No. 24357, Feb. 15, 2013> |
| (3) | Where the bonds, etc. purchased or borrowed by a purchaser or borrower (hereafter referred to as "purchaser, etc." in this Article) through the transaction provided 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 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 (2)) and the purchaser, etc. may obtain refund of the tax withheld under paragraph (4). |
| (4) | Any purchaser, etc. who intends to obtain refund of the tax withheld under paragraph (3) shall file an application for refund, accompanied by the document prescribed by Ministerial Decree of Strategy 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 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 Article 73 (1) of the Act shall pay the corporate tax withheld under the same Article at the tax office, etc., having jurisdiction over the place of tax payment of the person liable for withholding in accordance with the statement of payment 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 Ministerial Decree of Strategy 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> |
| (2) | "Person liable for withholding prescribed by Presidential Decree" in Article 73 (7) of the Act means a person (excluding corporations that engage in financial 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> |
| (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 at 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 (7) of the Act and other necessary matters shall be prescribed by the Commissioner of the National Tax Service. |
| 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 Article 73 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. |
| (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 Article 73 of the Act which is not collected or collected corporate tax which is not paid by the merged corporation. |
| Article 117 (Issuance of Withholding Receipts) |
| (1) | Article 193 of the Enforcement Decree of the Income Tax Act shall apply |
| (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" referred to in Article 76 (3) 3 of the Act means any of the following: |
| 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) | "Corporation prescribed by Presidential Decree" referred to in the former part of Article 76 (5) of the Act and in the former part of Article 76 (9) of the Act means any of the following corporations: <Amended by Presidential Decree No. 17033, Dec. 29, 2000; Presidential Decree No. 22951, Jun. 3, 2011; Presidential Decree No. 23589, Feb. 2, 2012> |
| 1. | The State or a local government; |
| 2. | A non-profit corporation (excluding parts related to profit-making business provided for in Article 2 (1)). |
| (3) | "Business operator prescribed by Presidential Decree" referred to in the former part of Article 76 (5) of the Act means any business operator provided for in each subparagraph of Article 158 (1). <Amended by Presidential Decree No. 22951, Jun. 3, 2011> |
| (4) | Article 76 (5) of the Act shall not apply to entertainment expenses excluded from deductible expenses under Article 25 (2) of the Act. |
| (5) | "Unclear circumstances prescribed by Presidential Decree" referred to in the former part of Article 76 (6) of the Act means any of the following cases; provided,, 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> |
| 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. |
| (6) | "If the submitted payment statement is found unclear with regard to the descriptions specified by Presidential Decree" in Article 76 (7) 2 of the Act means any of the following cases: <Amended by Presidential Decree No. 24357, Feb. 15, 2013; Presidential Decree No. 26068, Feb. 3, 2015> |
| 1. | 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; |
| 2. | 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; |
| 3. | 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; |
| 4. | Where no or wrong information is stated, with regard to the deferred retirement income tax under Article 203-2 (1) of the Enforcement Decree of the Income Tax. |
| (7) | In applying paragraph (6), either of the following cases shall not be deemed unclear circumstances: <Added by Presidential Decree No. 24357, Feb. 15, 2013> |
| 1. | Where payment is made to a person who has a business registration certificate or an identification number as on the date of payment; |
| 2. | Where the whereabouts of a person who has received payment, except those specified in subparagraph 1, are determined unknown after the payment was made. |
| (8) | Where a corporation files a report on the tax base or determines or corrects the tax base under Article 84, 85, or 87 of the Act before the filing deadline specified under Article 120 of the Act due to its merger, division or dissolution, the amount of payment referred to in Article 76 (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 Presidential Decree No. 24357, Feb. 15, 2013> |
| (9) | "Matters to be stated, as prescribed by Presidential Decree" referred to in Article 76 (9) 1 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 referred to as "necessary stated matters" in this paragraph): |
| (10) | "Matters to be stated, as prescribed by Presidential Decree" referred to in Article 76 (9) 2 of the Act means the business registration number of, and the supply value for each customer: |
| (11) | "Where all or some matters to be stated, as prescribed by Presidential Decree, are not stated or falsely stated" referred to in Article 76 (9) 3 of the Act means where the business registration numbers of, or the supply value for each customer are not stated or are falsely stated: |
| (12) | "Type of business prescribed by Presidential Decree" referred to in Article 76 (12) 1 of the Act means the type of business serving consumers as specified in Appendix 3-2 of the Enforcement Decree of the Income Tax Act. <Added by Presidential Decree No. 21302, Feb. 4, 2009> |
| (13) | "Ratio, calculated as prescribed by Presidential Decree" referred to in Article 76 (12) 1 of the Act means the ratio taken up by 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 which falls on three months after the day it met the requirements provided in Article 117-2 (1) of the Act until the day before the day it became an affiliate merchant among the number of days in the business year in which it has failed to become an affiliate merchant. <Added by Presidential Decree No. 21302, Feb. 4, 2009> |
| (14) | "Unclear with regard to the descriptions specified by Presidential Decree" in Article 76 (13) of the Act means whole or partial omission or miscalculation of an amount that shall be included in calculating distributable retained earnings. <Added by Presidential Decree No. 25194, Feb. 21, 2014> |
CHAPTER II-2 (Articles 120-2 through 120-11) Deleted.
CHAPTER II-3 CORPORATE TAX ON INCOME OF EACH CONSOLIDATED BUSINESS YEAR
Section 1 Common Provisions
| Article 120-12 (Corporations, etc. Excluded from Application of Consolidated Tax Return System) |
| (1) | "Corporation prescribed by Presidential Decree, such as a non-profit corporation" referred to in the former part of Article 76-8 (1) of the Act means any of the following corporations: <Amended by Presidential Decree No. 22035, Feb. 18, 2010; Presidential Decree No. 23589, Feb. 2, 2012> |
| 1. | A nonprofit domestic corporation; |
| 2. | A corporation in the process of liquidation due to dissolution; |
| 3. | A corporation falling under any subparagraph of Article 51-2 (1) of the Act; |
| 4. | A corporation being wholly controlled as prescribed in Article 76-8 (5) of the Act by another domestic corporation (excluding a non-profit domestic corporation); |
| 5. | Deleted; <by Presidential Decree No. 22577, Dec. 30, 2010> |
| 6. | A corporation to which the special taxation for partnership firms under Article 100-15 (1) of the Restriction of Special Taxation Act applies; |
| 7. | A corporation to which the special case of computing tax base under Article 104-10 (2) of the Restriction of Special Taxation Act applies. |
| (2) | "Corporation prescribed by Presidential Decree, such as a corporation in the process of liquidation" referred to in the former part of Article 76-8 (1) of the Act means any corporation referred to in paragraph (1) 2, 3, 6 and 7. <Amended by Presidential Decree No. 23589, Feb. 2, 2012> |
| (3) | "Domestic corporation that meets the requirements prescribed by Presidential Decree" referred to in Article 76-8 (3) of the Act means a domestic corporation that meets all of the following requirements and the business year under subparagraph 1 does not coincide with the consolidated business year among the domestic corporations prescribed by Ministerial Decree of Strategy and Finance: <Added by Presidential Decree No. 22035, Feb. 18, 2010> |
| 1. | That it is impossible to change the business year voluntarily because it is provided in the applicable Acts, subordinate statues, 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 Acts, subordinate statues, etc. and the auditor's opinion must be obtained under Article 3 of the Act on External Audit of Stock Companies. |
| (4) | "Stocks prescribed by Presidential Decree, such as the stocks, etc. acquired by workers through an employee stock ownership association defined in subparagraph 4 of Article 2 of the Framework Act on Labor Welfare" referred to in Article 76-8 (5) of the Act means any of the following stocks: <Amended by Presidential Decree No. 22035, Feb. 18, 2010; Presidential Decree No. 22516, Dec. 7, 2010> |
| 1. | Stocks held by the employee stock ownership association; |
| 2. | Stocks (including the stocks sold to any third party by workers) acquired by workers through the employee stock ownership association; |
| 3. | Stocks (including stocks transferred to any third party by a person who has exercised stock options) issued or transferred upon exercising stock options among the stock options, etc. provided in the part other than the subparagraphs of Article 20 (1) 3. |
| (5) | Upon occurrence of the cause provided 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: <Added by Presidential Decree No. 22516, Dec. 7, 2010; Presidential Decree No. 24357, Feb. 15, 2013> |
| 1. | The period from the start date of the consolidated business year of the surviving corporation under which the registration date of the merger falls to the registration date of the merger: To apply the consolidated tax return system by 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 Article 3 of the Act on External Audit of Stock Corporations 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 from the date following the registration date of the merger to the end date of the consolidated business year of the surviving corporation, etc.: To apply the consolidated tax return system by 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 the case of a newly established corporation) of the consolidated corporation in the form stipulated by Ministerial Decree of Strategy 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 in Article 76-8 (6) 2 of the Act, any consolidated subsidiary of a consolidated parent corporation (hereafter referred to as "existing consolidated parent corporation" in this paragraph) which becomes a wholly controlled subsidiary of another corporation (hereafter referred to as "changed consolidated parent corporation" in this paragraph) through the comprehensive exchange or transfer of stocks (hereafter referred to as "exchange, etc." in this paragraph) may apply the consolidated tax return system as follows: <Added by Presidential Decree No. 22516, Dec. 7, 2010; Presidential Decree No. 24357, Feb. 15, 2013> |
| 1. | The period from the start date of the consolidated business year of the existing consolidated parent corporation under which the date on exchange, etc. falls to the date of exchange, etc.: To apply the consolidated tax return system by 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 Article 3 of the Act on External Audit of Stock Corporations 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 from the date following the date of exchange, etc. to the end date of the consolidated business year of the changed consolidated parent corporation: To apply the consolidated tax return system by deeming the relevant period to be one consolidated business year with the changed consolidated parent corporation as the consolidated parent corporation. In such cases, if 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 Ministerial Decree of Strategy 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 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: <Added by Presidential Decree No. 22516, Dec. 7, 2010; Presidential Decree No. 24357, Feb. 15, 2013> |
| 1. | The period from the start date of the consolidated business year of the divided corporation in which the registration date of the division falls to the registration date of the division: To apply the consolidated tax return system by 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 from the day immediately following the registration date of the division to the end date of the consolidated business year of the corporation established through the division: To apply the consolidated tax return system by 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 Ministerial Decree of Strategy 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 Article 3 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 Added by Presidential Decree No. 21302, Feb. 4, 2009]
| Article 120-13 (Requests, etc. 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 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 Ministerial Decree of Strategy 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> |
| (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 Added by Presidential Decree No. 21302, Feb. 4, 2009]
| Article 120-14 (Revocation, etc. 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) | "Amount prescribed by Presidential Decree" referred to in Article 76-9 (3) of the Act means losses incurred to the relevant corporation among the amount provided 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 Added 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 Ministerial Decree of Strategy 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 Added by Presidential Decree No. 21302, Feb. 4, 2009]
| Article 120-16 (Reporting on Change of Consolidated Corporations) |
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 of change of consolidated corporations in the form stipulated by Ministerial Decree of Strategy 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 Added by Presidential Decree No. 21302, Feb. 4, 2009]
Section 2 Tax Base and Computation thereof
| Article 120-17 (Tax Base) |
| (1) | When Article 76-13 (1) 1 of the Act is applied, losses first incurred for the business year shall be first deducted. |
| (2) | The 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 (2) of the Act shall be deducted from losses referred to in Article 76-13 (1) 1 of the Act. |
| (3) | "Amount of income prescribed by Presidential Decree" referred to in Article 76-13 (3) 1 of the Act means the amount (hereafter referred to as "individually reverted amount of consolidated income" in this Chapter) calculated by the following formula: |
|
| (4) | Where the amount of income computed under Article 76-14 (1) of the Act for each consolidated business year does not exceed zero, the amount allocated to each consolidated corporation from the relevant amount shall be the amount computed by the following formula: |
|
| (5) | In applying paragraph (2) and Article 120-14 (2), 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 reverted amount of consolidated income when tax base for the consolidated business year is calculated, and losses of at least two other consolidated corporations that has not incurred from the relevant corporation shall be deemed deducted respectively in proportion to the scale of the relevant losses. |
[This Article Added by Presidential Decree No. 21302, Feb. 4, 2009]
| Article 120-18 (Deferment, etc. of Profits or Losses from Transfer of Assets between Consolidated Corporations) |
| (1) | "Assets prescribed by Presidential Decree, such as fixed assets" referred to in Article 76-14 (1) 3 of the Act means the following assets (limited to cases where the book value for each transaction of an asset referred to in subparagraphs 1 through 3 is in excess of 100 million won; hereafter referred to as "transfer profit or loss deferred assets" in this Chapter), which are located in the Republic of Korea at the time of transfer: |
| 1. | Tangible fixed assets (excluding buildings) provided in Article 24 (1) 1; |
| 2. | Intangible fixed assets provided in Article 24 (1) 2; |
| 3. | Claims, such as account receivables, loans and amount receivables; |
| 4. | Financial investment instruments as defined in Article 3 (1) of the Financial Investment Services and Capital Markets Act; |
| 5. | Land and buildings. |
| (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: |
Where capital gains or losses from transfer are depreciated:
|
| 2. | Where the transfer profit or loss deferred assets are transferred (including transfer to another consolidated corporation): |
|
| 3. | Where bad debts are incurred to the transfer profit or loss deferred assets, or such transfer profit or loss deferred assets are destroyed: |
|
Transfer price of the transferor corporation - Book value of the transferor corporation.
| 4. | Where the payment of transferred claims becomes due: |
|
| (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: |
|
| (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, such as 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> |
[This Article Added 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 |
| (2) | In applying paragraph (1), the rate of investment provided in Articles 18-2 (1) 1 and 2 and 18-3 (1) 1 and 2 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 3 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> |
| (3) | In applying paragraph (1), the total assets on the balance sheet under Articles 17-2 (5) 3 and 17-3 (3) 4 shall be equal to the aggregate of the total assets on the balance sheet of each consolidated corporation (referring to the amount after removing assets specified by Ministerial Decree of Strategy 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> |
[This Article Added 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 |
| 1. | A donation expended by the relevant consolidated corporation, which is a donation other than the donations provided in Article 24 (1) and (2) of the Act; |
| 2. | The amount computed by the following formula with respect to the donations provided in Article 24 (1) and (2) of the Act. |
|
| (2) | Where the amount in excess of the ceiling on inclusion in deductible expenses of designated donations and statutory donations that is 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: <Added by Presidential Decree No. 23589, Feb. 2, 2012> |
|
| Article 120-21 (Non-Inclusion of Entertainment 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 |
| 1. | The amount calculated by the following formula, out of the amount not included in deductible expenses under Article 25 (1) of the Act: |
|
| 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 (1) 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. |
[This Article Added by Presidential Decree No. 21302, Feb. 4, 2009]
Section 3 Computation of Amount of Tax
| Article 120-22 (Calculated Tax Amount of Each Consolidated Corporation) |
| (1) | "Amount specified by Presidential Decree" in Article 76-15 (2) of the Act means unappropriated earnings calculated pursuant to Article 56 of the Act without applying the consolidated tax return system to the relevant business year. <Added by Presidential Decree No. 26068, Feb. 3, 2015> |
| (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 (1), 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). |
[This Article Added by Presidential Decree No. 21302, Feb. 4, 2009]
| Article 120-23 (Tax Reductions or Exemptions for Consolidated Corporation) |
| (1) | The amount of tax of each consolidated corporation to be reduced or exempted when Article 76-16 (1) and (2) of the Act are applied shall be the amount computed by multiplying the tax-reduced or exempted 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 exempted income shall be limited to the individually reverted amount of tax base and Article 96 shall apply |
| (2) | Articles 44-3 (2), 46-3 (2) and 59 (1) shall apply |
| (3) | In applying Article 76-16 (2) of the Act, Article 132 (1) of the Restriction of Special Taxation Act shall apply to each consolidated corporation based on the consolidated tax rate applied to calculate the amount of calculated consolidation tax amount under Article 76-15 of the Act and the allocated amount of losses (including losses incurred prior to the application of the consolidated tax return system). <Added by Presidential Decree No. 23589, Feb. 2, 2012> |
[This Article Added 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 Ministerial Decree of Strategy and Finance. |
| (2) | A consolidated parent corporation that intends to be applicable under 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 Ministerial Decree of Strategy and Finance to the head of the tax office having jurisdiction over the place of tax payment by no later than two weeks prior to the expiration of the filing deadline specified under the main sentence of Article 76-17 (1). <Added by Presidential Decree No. 22035, Feb. 18, 2010> |
| (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 Ministerial Decree of Strategy and Finance. |
| (4) | "Documents prescribed by Presidential Decree, such as the investment status and details of transactions between consolidated corporation" referred to 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 Ministerial Decree of Strategy and Finance. <Amended by residential Decree No. 22951, Jun. 3, 2011> |
[This Article Added 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 (3) 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): |
| 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 Added 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 mean any of the following: <Amended by Presidential Decree No. 26068, Feb. 3, 2015>
| 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; |
| 4. | Where a corporation, etc., is restructured to a cooperative pursuant to Article 60-2 (1) of the Framework Act on Cooperatives. |
[This Article Added 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" referred to 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" referred to in the main sentence of Article 79 (4) of the Act means the losses carried forward as provided in Article 18 (1): |
| 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 Ministerial Decree of Strategy 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 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" referred to 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" referred to 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 at the registration date of dissolution; |
| 2. | Where the residual assets as at 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 Ministerial Decree of Strategy 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" referred to in Article 85 (2) of the Act means documents stating the matters provided in Article 124 (2) 1. <Amended by Presidential Decree No. 22951, Jun. 3, 2011> |
| Article 126 (Payments, etc.) |
| (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 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 |
| (2) | "Estimated value of the residual assets prescribed by Presidential Decree" referred to 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 tax base of corporate tax on income of a foreign corporation for each business year under Article 91 (1) of the Act, Article 10 (1) and (2) shall apply mutatis mutandis to the deduction of losses under Article 91 (1) 1 of the Act.
| 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 expressly provided 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> |
| 1. | Deductible expenses provided 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 executives 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 real estate income provided in subparagraph 3 of Article 93 of the Act accrues; |
| 3. | Corporate tax, local corporate income tax, fines, minor fines, administrative fines, surcharges, expenses for disposition on default, 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 fixed assets provided in Article 24 (1) 1 and intangible fixed assets provided for in subparagraph 2 (a) through (d) of Article 24 (1) shall be limited to the fixed business assets held by the relevant foreign corporation in the Republic of Korea; |
| 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 fixed assets provided in Article 24 (1) 2 (f) and (g) shall be limited to the intangible fixed assets of the relevant foreign corporation, which belongs to the business operated by such foreign corporation in the Republic of Korea or are related to the assets held by such foreign corporation in the Republic of Korea; |
| 7. | Where a stock option, etc. prescribed by Ministerial Decree of Strategy and Finance that was granted to the executives and employees of a Korean branch of a foreign corporation prescribed by Ministerial Decree of Strategy 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 Ministerial Decree of Strategy 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" referred to in the proviso to Article 92 (2) 1 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> |
| 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): |
| 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: |
| 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). |
| Article 129-2 (Calculation of Capital Gains for Foreign Corporation, etc. with No Domestic Place of Business) |
| (1) | "Land, etc. prescribed by Presidential Decree" referred to in the proviso to Article 92 (3) 1 of the Act means the land, etc. that is transferred within three years from the date on which such land, etc, is contributed: |
| 1. | Any business prescribed by Acts and subordinate statutes; |
| 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 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: |
| (4) | For purposes of Article 92 (3) 2 of the Act, expenses directly expended to transfer the land, etc shall be an amount computed by applying |
| (5) | For purposes of Article 92 (4) of the Act, the actual transaction value of the acquisition value shall be an amount computed by applying |
| (6) | Where any foreign corporation provided in Article 91 (2) of the Act transfers assets provided 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 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 Added 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: |
| 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 balance sheet as at the end of the relevant business year; |
| 2. | An amount computed by the method prescribed by Ministerial Decree of Strategy 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 14 of the Adjustment of International Taxes Act and interest paid to deemed capital have accrued simultaneously, the following subparagraphs shall govern: |
| 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 Ministerial Decree of Strategy and Finance. |
[This Article Added 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, of the common expenses of the headquarters and the related branches, etc. with authority over the domestic place of business, an amount reasonably related to the accrual of domestic source income of the domestic place of business shall be allocated to, and included in deductible expenses of the domestic place of business. <Added by Presidential Decree No. 24357, Feb. 15, 2013> |
| (2) | The scope of expenses allocated to a domestic place of business under paragraph (1), the method of allocation, the method of allocating expenses by business type, the method of converting foreign currencies into Korean won when allocating expenses, the submission of accompanying documents, such as an expense allocation calculation, and other necessary matters shall be prescribed by Ministerial Decree of Strategy and Finance. <Amended by Presidential Decree No. 24357, Feb. 15, 2013> |
| (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) | The method for calculating the domestic source income from internal transactions, the scope of expenses allocated to the domestic place of business, the 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, the details of internal transactions, the submission of statements of allocation of expenses and other documents, and other necessary matters in applying paragraphs (1) through (3) shall be prescribed by Ministerial Decree of Strategy and Finance. <Added by Presidential Decree No. 24357, Feb. 15, 2013> |
| Article 131 (Scope, etc. of Arm's Length Price) |
| (1) | "Arm's length price prescribed by Presidential Decree" referred to in the main sentence of Article 92 (2) 2 of the Act means the amount computed by the method applied |
| (2) | "Special relationship prescribed by Presidential Decree" referred to in Article 92 (2) 2 (a) of the Act means any of the following special 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 party or other party, the relationship between one party and other party. |
| (3) | Only if it is impossible to calculate the arm's length price under paragraph (1), the value assessed by applying |
| (4) | Article 2 (2) of the Enforcement Decree of the Adjustment of International Taxes Act shall apply |
| (5) | "Circumstances prescribed by Presidential Decree" referred to in Article 92 (2) 2 (b) of the Act means where the difference between the arm's length price and the transaction price exceeds three million won or the amount equivalent to 5/100 of the arm's length price. <Added 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 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 Ministerial Decree of Strategy 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 Added by Presidential Decree No. 17033, Dec. 29, 2000]
| Article 132 (Scope of Domestic Source Income) |
| (1) | "Tools prescribed by Presidential Decree" referred to in subparagraph 4 of Article 93 of the Act means delivery equipment, tools, apparatus, and fixtures. <Added by Presidential Decree No. 18174, Dec. 30, 2003; Presidential Decree No. 22951, Jun. 3, 2011> |
| (2) | "Income prescribed by Presidential Decree" referred to 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 business provided 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> |
| 1. | Where a foreign corporation does not do any act overseas, such as manufacture, process or development, to increase the value of inventory assets it has acquired by transfer overseas (hereafter referred to as "manufacture, etc." in this Article) 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 performed 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 procures carries out 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 Ministerial Decree of Strategy 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 fixed 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 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 following income generated in any foreign country, which accrues to the domestic place of business shall be included in the income provided in subparagraph 5 of Article 93 of the Act: <Amended by Presidential Decree No. 18174, Dec. 30, 2003; Presidential Decree No. 20720, Feb. 29, 2008> |
| 1. | Income accruing from investment in foreign securities or lending money to a foreigner or other similar acts; |
| 2. | Income accruing from the lease, granting a permit to use, transfer, or exchange of assets or rights overseas; |
| 3. | Income accruing from the issuance, acquisition, transfer, or exchange of stocks, bonds, and other assets overseas; |
| 4. | Other income prescribed by Ministerial Decree of Strategy and Finance. |
| (4) | Where a foreign corporation engages in advertising, publicity, gathering and provision of information, market research, and other activities of preparatory and 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, it shall be deemed that no income is generated from such activities. |
| (5) | Where the inventory assets provided 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" referred to in the former part of subparagraph 6 of Article 93 of the Act means any the following: <Amended by Presidential Decree No. 19328, Feb. 9, 2006; Presidential Decree No. 22951, Jun. 3, 2011> |
| 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" referred to in the latter part of subparagraph 6 of Article 93 of the Act means air fares, accommodation charges or meal expenses directly paid by any person provided with personal services to air carriers, accommodation business operators or restaurant business operators in relation to the provision of such personal services. <Added by Presidential Decree No. 19328, Feb. 9, 2006; Presidential Decree No. 22951, Jun. 3, 2011> |
| (8) | "Income prescribed by Presidential Decree" referred to in the part other than the items of subparagraph 9 of Article 93 of the Act 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: |
| 3. | Income accruing from the transfer of securities, other than stocks or investment certificates by a foreign corporation with a domestic place of business: |
| 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: |
| (9) | Any income earned by a foreign corporation with no domestic place of business through exchange-traded derivatives under the Financial Investment Services and Capital Markets Act shall not be deemed domestic source income. <Amended by Presidential Decree No. 16658, Dec. 31, 1999; Presidential Decree No. 18706, Feb. 19, 2005; Presidential Decree No. 21302, Feb. 4, 2009> |
| (10) | "Income prescribed by Presidential Decree" referred to 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 per se 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) | Deleted. <by Presidential Decree No. 21302, Feb. 4, 2009> |
| (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 |
| (13) | "Related party prescribed by Presidential Decree" referred to in subparagraph 10 (i) of Article 93 of the Act means foreign corporations 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> |
| 1. | The special relationship provided in Article 2 (1) of the Enforcement Decree of the Adjustment of International Taxes Act with a resident or domestic corporation; |
| 2. | The special relationship provided in Article 131 (2) 1 or 2 with a non-resident or foreign corporation. |
| (14) | "Income accruing from increase in the value of stocks, etc. that arises from capital transactions prescribed by Presidential Decree" referred to 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 the special relationship provided in the subparagraphs of paragraph (13) due to the transaction provided 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 the 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 the same shall apply in this paragraph) 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. <Added by Presidential Decree No. 18706, Feb. 19, 2005; Presidential Decree No. 21302, Feb. 4, 2009> |
| (16) | In applying the proviso to paragraph (8) 2, where a foreign corporation acquires the stocks (hereafter referred to as "stocks, etc." in this paragraph) 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 organ (referring to case where a stockholder or 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> |
| 1. | Where the foreign corporation only makes an investment through an investment organ (hereinafter referred to as "indirect investment"): The ratio of investment by such investment organ. In such cases, if the investment is made through two or more investment organs, the ratio of investment shall be calculated by adding up the ratio of investment made respectively by such investment organs; |
| 2. | Where the foreign corporation simultaneously makes an indirect investment as well as a direct investment not through an investment organ (hereafter referred to as "direct investment" in this subparagraph), the larger of the ratios calculated by the following methods: |
| (a) | The ratio calculated by adding up 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 non-resident, shall be calculated by multiplying the ratio of investment made by the non-resident in an investment organ by the ratio of investment by the investment organ; |
| (b) | The ratio of investment made by an investment organ. In such cases, if the investment is made through two or more investment organs, the ratio of investment shall be calculated by adding up the ratio of investment made respectively by such investment organs. |
| Article 132-2 Deleted. <by Presidential Decree No. 22577, Dec. 30, 2010> |
| Article 132-3 Deleted. <by Presidential Decree No. 23589, Feb. 2, 2012> |
| Article 133 (Scope of Domestic Place of Business) |
| (1) | "Person prescribed by Presidential Decree" referred to in Article 94 (3) of the Act means any of the following persons: <Presidential Decree No. 22951, Jun. 3, 2011> |
| 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> |
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" referred to in Article 96 (2) 3 of the Act means all of the following amounts, and where the amount equivalent to capital as at 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 at 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 at the end date of the relevant business year that is in excess of the amount equivalent to capital as at 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): |
| (2) | "Amount equivalent to capital" referred to 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 balance sheet as at the end date of the relevant business year. <Amended by Presidential Decree No. 18706, Feb. 19, 2005> |
| (3) | "Untaxed accumulated reserve income" referred to 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 |
| (5) | "Amount of remittance prescribed by Presidential Decree" referred to 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 in paragraph (3) until the immediately preceding business year among such excess). <Added 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 at 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). <Added 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 as at the end date of the fictitious business year shall be deemed to be 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). <Added 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 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 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. |
| (4) | "Interest rate prescribed by Presidential Decree" referred to in Article 97 (3) of the Act means the rate of 3/10,000 per day. <Amended by Presidential Decree No. 22951, Jun. 3, 2011> |
| Article 136-2 Deleted. <by Presidential Decree No. 18706, Feb. 19, 2005> |
| Article 137 (Withholding for Foreign Corporations) |
| (1) | Article 131 (2) of the Income Tax Act and Article 191 (excluding subparagraph 4) of the Enforcement Decree of the same Act shall apply |
| (2) | Notwithstanding paragraph (1), when a domestic corporation provided in the subparagraphs of Article 51-2 of the Act fails 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. <Added by Presidential Decree No. 19891, Feb. 28, 2007> |
| (3) | Articles 115 through 117 and Article 185 of the Enforcement Decree of the Income Tax Act shall apply |
| (4) | In withholding tax under Article 98 of the Act, the timing for paying income provided 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). |
| (5) | In withholding tax under Article 98 of the Act, if the person liable for withholding has no domicile, residence, headquarters, main office, actual business management place or domestic place of business (including a domestic place of business provided 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. <Added 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" referred to in Article 98 (14) of the Act means any of the following dates: <Added by Presidential Decree No. 18174, Dec. 30, 2003; Presidential Decree No. 22577, Dec. 30, 2010> |
| 1. | In cases provided in Article 88 (1) 8 (a): Where a corporation disappears due to a merger, the registration date of the merger registration; where a corporation disappears or survives a division or divided merger, the registration date of the division or divided merger; |
| 2. | In cases provided in Article 88 (1) 8 (b) and (c): The date of determination for capital increase or capital decrease. |
| (7) | Any domestic corporation that has issued stocks or investment shares shall withhold tax on income provided in subparagraph 10 (i) of Article 93 of the Act at the time specified under paragraph (6). <Added by Presidential Decree No. 18174, Dec. 30, 2003; Presidential Decree No. 19891, Feb. 28, 2007; Presidential Decree No. 22577, Dec. 30, 2010> |
| (8) | 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) 4 of the Act, it shall be an amount computed after subtracting the amount that the relevant transferor has filed a report and paid. <Added by Presidential Decree No. 21302, Feb. 4, 2009; Presidential Decree No. 22577, Dec. 30, 2010> |
| (9) | “The amount prescribed by Presidential Decree” in the main sentence of Article 98 (1) 3 of the Act means the market price at the time of acquisition. <Added by Presidential Decree No. 24357, Feb. 15, 2013> |
| Article 138 (Withholding for Investment Brokers, etc.) |
In applying the proviso to Article 98 (1) 5 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>
| Article 138-2 (Special Cases concerning Reports on, Payment, etc. of Capital Gains, etc. 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 Ministerial Decree of Strategy and Finance. <Amended by Presidential Decree No. 20720, Feb. 29, 2008> |
| (3) | "Circumstances prescribed by Presidential Decree" referred to in the main sentence of Article 98-2 (3) of the Act means the transfer of any of the following securities: <Added by Presidential Decree No. 20619, Feb. 22, 2008; Presidential Decree No. 22951, Jun. 3, 2011> |
| 1. | Securities, such as stocks that are taxed under Article 18 (4) 1 and 2 of the Enforcement Decree of the Restriction of Special Taxation Act; |
| 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 Ministerial Decree of Strategy 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. <Added 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 Ministerial Decree of Strategy 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). <Added by Presidential Decree No. 23589, Feb. 2, 2012> |
[This Article Added by Presidential Decree No. 17033, Dec. 29, 2000]
| Article 138-3 (Special Cases concerning Withholding from Interest, etc. on Bonds, etc. 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 referred to as "foreign corporation" in this Article) or who purchases bonds, etc. subject to withholding tax from a foreign corporation before begin paid the 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 in the Act, the Restriction of Special Taxation Act, or the relevant tax treaty (hereafter referred to as "applicable tax rate" in this Article) are applied to such paid amount. In such cases, if the tax rate provided in subparagraph 1 is higher than the one provided in the part other than the subparagraphs of Article 73 (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; if the applicable tax rate provided in subparagraph 1 is lower than the one provided in Article 73 (1) 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> |
| 1. | The applicable tax rate to the relevant foreign corporation with respect to the amount equivalent to interest that accrues during the holding period by the relevant foreign corporation among the paid amount; |
| 2. | The tax rate provided in the part other than the subparagraphs of Article 73 (1) of the Act with respect to the amount paid less the amount equivalent to 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" referred to in Article 98-3 (1) of the Act means any of the following: <Amended by Presidential Decree No. 22184, Jun. 8, 2010; Presidential Decree No. 22951, Jun. 3, 2011> |
| 1. | Trading of bonds, etc. by a foreign corporation on condition of repurchasing or reselling them at certain prices after the lapse of a certain period and the fact of such trading is verified by means of accounts of the Korea Securities Depository established under Article 294 of the Financial Investment Services and Capital Markets Act; |
| 2. | Lending of bonds by a foreign corporation on condition of being returned the same types and quantity of the bonds, etc. after the lapse of a certain period and the fact of such trading is verified 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 provided in the Financial Investment Services and Capital Markets Act). |
| (3) | In cases of trading falling under paragraph (2), the amount equivalent to the interest income or the dividend income accruing from the bonds, etc. during the period from the day on which they are sold or lent to the day on which they are repurchased or returned shall be deemed revert to sellers or lenders for purposes of Article 98-3 of the Act. <Amended by Presidential Decree No. 22184, Jun. 8, 2010> |
| (4) | Where the bonds, etc. sold to a purchaser or lent to a borrower (hereafter referred to as "purchaser, etc." in this Article) through the trading provided 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 (2)) under Articles 73 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> |
| (5) | Any purchaser who intends to obtain the refund of the tax withheld under paragraph (4) shall file a refund application, accompanied by the documents prescribed by Ministerial Decree of Strategy 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 the refund 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 |
| (7) | Deleted. <by Presidential Decree No. 18706, Feb. 19, 2005> |
[This Article Added by Presidential Decree No. 17033, Dec. 29, 2000]
| Article 138-4 (Application of Non-Taxation or Tax Exemption to 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 Ministerial Decree of Strategy and Finance (hereafter referred to as "application for non-taxation or tax exemption" in this Article) to the relevant income payer, who shall, in turn, file to the head of a tax office having the jurisdiction over the place of tax payment of the income payer, by no later than the ninth day of the month immediately following the month in which the income payer pays the income. <Amended by Presidential Decree No. 21526, Jun. 8, 2009; Presidential Decree No. 22035, Feb. 18, 2010; Presidential Decree No. 22577, Dec. 30, 2010; Presidential Decree No. 25194, Feb. 21, 2014> |
| (2) | Each application for non-taxation or tax exemption shall be accompanied by a resident certificate issued by the authorities of the country of residence of the relevant foreign corporation, or documents determined and publicly announced by the Commissioner of the National Tax Service. <Amended by Presidential Decree No. 21526, Jun. 8, 2009; Presidential Decree No. 22035, Feb. 18, 2010; Presidential Decree No. 22577, Dec. 30, 2010> |
| (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, investment 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, investment broker, 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, actual business management place, 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 for non-taxation or tax exemption 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> |
| (7) | No application for non-taxation or tax exemption may be filed with respect to any of the following income which is domestic source income provided 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> |
| 1. | The domestic source income on which the corporate tax is not imposed or exempted under the Act or the Restriction of Special Taxation Act; |
| 2. | Deleted; <by Presidential Decree No. 21302, Feb. 4, 2009> |
| 3. | Other domestic source income prescribed by Ministerial Decree of Strategy and Finance. |
| (8) | “A foreign investment scheme specified by Presidential Decree” in Article 98-4 (2) of the Act means a foreign investment scheme defined under Article 138-7 (2). <Added by Presidential Decree No. 25194, Feb. 21, 2014> |
| (9) | Where domestic source income is paid through a foreign investment scheme, to which paragraph (1) shall apply, the foreign investment scheme shall receive an application for non-taxation or tax exemption 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 Ministerial Decree of Strategy and Finance (hereafter referred to as “report on the foreign investment scheme” in this Article), along with a detailed statement of the real beneficiary, and the income payer shall, in turn, file the application 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: |
| 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) | Where a foreign investment scheme (hereafter referred to as “the primary foreign investment scheme” in this Article) invests in another foreign investment scheme (hereafter referred to as “the secondary foreign investment scheme” in this Article), the primary foreign investment scheme shall receive an application for non-taxation or tax exemption 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 so received for non-taxation or tax exemption. 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. <Added by Presidential Decree No. 25194, Feb. 21, 2014> |
| (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. <Added by Presidential Decree No. 25194, Feb. 21, 2014> |
| (12) | It may be omitted to present another application for non-taxation or tax exemption or another report on a foreign investment scheme for three years from the date when such application is presented in accordance with paragraph (1) or (9); provided,, if there is any change in the contents 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. <Added by Presidential Decree No. 25194, Feb. 21, 2014> |
| (13) | “If an income payer has not received an application for non-taxation or tax exemption, 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 a foreign public-offering collective investment scheme: <Added by Presidential Decree No. 25194, Feb. 21, 2014> |
| 1. | Where an income payer has not received an application for non-taxation or tax exemption; |
| 2. | Where a person fails to comply with a request to supplement the contents of the application for non-taxation or tax exemption or the report on a foreign investment scheme, already presented; |
| 3. | Where it is impossible to identify the real beneficiary with the application for non-taxation or tax exemption or the report on a foreign investment scheme, already presented. |
| (14) | Each income payer and each foreign investment scheme shall preserve relevant documents, including applications for non-taxation or tax exemption 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. <Added by Presidential Decree No. 25194, Feb. 21, 2014> |
| (15) | A person who intends to request correction in accordance with Article 98-4 (4) of the Act shall file a request for correction for the application of non-taxation or tax exemption in the form stipulated by Ministerial Decree of Strategy 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 proving that the person is a real beneficiary of domestic source income. In such cases, evidential documents shall be accompanied by translations in Korean, but only documents in English may be submitted, if the Commissioner of the National Tax Service approves to do so: <Added by Presidential Decree No. 25194, Feb. 21, 2014> |
| 1. | An application for non-taxation or tax exemption; |
| 2. | A resident certificate issued by the rightful authorities in the domicile country of the real beneficiary. |
| (16) | Article 138-6 (2) through (4) shall apply |
[This Article Added by Presidential Decree No. 17457, Dec. 31, 2001]
| Article 138-5 (Procedures for Prior Approval to Apply Non-Taxation, Tax Exemption and 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 Ministerial Decree of Strategy and Finance with the Commissioner of the National Tax Service, along with the following documents: |
| 1. | The resident certificate issued by the counterpart country of the tax treaty (hereinafter referred to as "counterpart country of the 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 the counterpart country of the 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 the counterpart country of the 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 the counterpart country of the 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 the relevant corporation if such corporation (hereafter referred to as "corporation entitled to receive the income" in this Article) that is directly and indirectly entitled to receive the income provided in subparagraph 1, 2, 8 or 9 of Article 93 of the Act (hereafter referred to as "domestic source income" in this Article and Article 138-6) 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> |
| 1. | Where the corporation entitled to receive the income is any person who holds the right to dispose of the income bearing any legal and economic risk in connection with the relevant domestic source income and actually holds the ownership of such income (hereinafter referred to "real beneficiary") and is the corporation of the relevant counterpart country of the tax treaty; |
| 2. | Where the corporation entitled to receive the income is any government agency, etc. (hereinafter referred to as "government agency, etc.") of the counterpart country of the tax treaty, which is prescribed by Ministerial Decree of Strategy 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 referred to as "listed corporation" in this Article) recognized under Acts and subordinate statutes of the counterpart country of the tax treaty and transactions prescribed by Ministerial Decree of Strategy 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 the counterpart country of the tax treaty; |
| 5. | Where the corporation entitled to receive the income is any pension, fund or similar organization of the counterpart country of the tax treaty, at least 50/100 of persons who benefit from such pension, fund or organization are the residents of the counterpart country of the tax treaty; |
| 6. | Where the ratio of the revenue amount (in the case 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 past three years from the holding or transfer of stocks and bonds or the use or transfer of intangible assets is not more than 10/100 of the revenue amount for the past three years (in the case 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 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 computed by applying the tax rate provided 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 the matters: |
| 1. | Matters needed to be supplemented and corrected; |
| 2. | Grounds for requesting the supplement and correction; |
| 3. | The period for 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 after 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 are verified to contain any false representation. |
| (7) | Article 2 (2) of the Enforcement Decree of the Adjustment of International Taxes Act shall apply |
| (8) | In applying paragraph (1), an application for prior approval of special cases concerning withholding and accompanying documents shall be submitted along with Korean translations: |
[This Article Added 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 Ministerial Decree of Strategy and Finance, accompanied by documents provided 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, 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 by Presidential Decree No. 20720, Feb. 29, 2008> |
| (2) | Where the person who has received any domestic source income, with respect to which a request for correction is filed under paragraph (1), is the real beneficiary of such domestic source 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 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 for correction; |
| 3. | The period for correction; |
| 4. | Other necessary matters. |
[This Article Added 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 Ministerial Decree of Strategy and Finance to the relevant person liable for withholding before receiving the relevant domestic source income: |
| (2) | "Foreign investment scheme prescribed by Presidential Decree" referred to in Article 98-6 (2) of the Act means a scheme established overseas (hereinafter referred to as "foreign investment scheme") to engage in investment activities of acquiring, disposing of or managing by other means assets of property value, such as are valuable for investments with money or similar raised through solicitation for investment and distributing the yields therefrom to investors. |
| (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 in the form stipulated by Ministerial Decree of Strategy and Finance (hereafter referred to as "report on the foreign investment scheme" in this Article), along with the detailed statement on real beneficiaries, to the person liable for withholding before receiving the domestic source income: |
| 1. | A foreign investment scheme which is similar to a collective investment scheme provided in the Financial Investment Services and Capital Markets Act and is registered or approved under the laws of the counterpart country of the tax treaty; |
| 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: |
| 1. | A pension established overseas under the laws of the counterpart country of the tax treaty, which are equivalent to the National Pension Act, the Public Officials Pension Act, the Military Pension Act, the Pension for Private School Teachers and Staff Act and the Act on the Guarantee of Workers' Retirement Benefits; |
| 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. | A foreign investment scheme which is deemed a real beneficiary under the tax treaty. |
| (6) | It may be omitted to present another request for the application of restrictive tax rates or another report on a foreign investment scheme for three years from the date when request for the application of restrictive tax rates or another report on a foreign investment scheme is presented in accordance with paragraph (1) or (3); provided,, 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> |
| 1. | Where a request for application of restrictive tax rates 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 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 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 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. |
[This Article Added 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 Ministerial Decree of Strategy 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: |
| 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. |
| (2) | Articles 138-6 (2) through (4) shall apply |
[This Article Added 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 provided 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 Ministerial Decree of Strategy and Finance, along with documents proving expenses related to such income.
[This Article Added 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 Ministerial Decree of Strategy 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. | Documents specified in the table of Article 11 (3) and Article 11 (4) of the Enforcement Decree of the Value-Added Tax Act. |
| (2) | "Detailed statement on stockholders, etc. prescribed by Presidential Decree" referred to in the former part other than the subparagraphs of Article 109 (1) of the Act means the detailed statement on stockholders, etc. in the form stipulated by Ministerial Decree of Strategy 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" referred to in the former part other than the subparagraphs of Article 109 (2) of the Act 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: |
| 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. |
| (2) | Articles 11 through 16 of the Enforcement Decree of the Value-Added Tax Act shall apply |
| (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, etc. to Prepare and Keep Detailed Statements of Donation Receipts Issued) |
"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>
| 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 Ministerial Decree of Strategy 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 or liabilities and gross income or deductible expenses which must be separated by type of business or asset in the account books of the corporation, as prescribed by Ministerial Decree of Strategy and Finance. <Amended by Presidential Decree No. 20720, Feb. 29, 2008; Presidential Decree No. 21302, Feb. 4, 2009> |
| (2) | The determination as to whether an enterprise falls within the category of small and medium enterprises under the proviso to Article 113 (3) or the proviso to Article 113 (4) of the Act shall be based on the status before a merger or divided merger, while the 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 sub-class of the Korean Standard Industrial Classification, except as otherwise expressly prescribed by Ministerial Decree of Strategy and Finance. In such cases, if the surviving corporation, merged corporation, divided corporation (limited to the business to which the corporation has succeeded) or counter-party corporation to a divided merger engages in a business that falls within two or more sub-classes, it shall be deemed to engage in the same business, only if the value of fixed assets for business use for the same business exceeds 70/100 of the value of fixed assets for business use, respectively. <Added by Presidential Decree No. 21302, Feb. 4, 2009; Presidential Decree No. 26068, Feb. 3, 2015> |
| Article 157 Deleted. <by Presidential Decree No. 21302, Feb. 4, 2009> |
| Article 158 (Receipt and Keeping of Evidentiary Documents of Expenditures) |
| (1) | "A business operator prescribed by Presidential Decree" in the main sentence other than the subparagraphs of Article 116 (2) of the Act 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> |
| 1. | A corporation: |
| (a) | A non-profit corporation (excluding the parts related to profit-making business provided in Article 2 (1)); |
| (b) | The State or a local government; |
| (c) | A corporation which operates finance or insurance business (limited to such corporation that provides finance or insurance services provided in Article 208-2 (1) 3 of the Enforcement Decree of the Income Tax Act); |
| (d) | A foreign corporation with no domestic place of business; |
| 2. | A business operator provided in Article 3 of the Value-Added Tax Act: |
| 3. | A business operator defined under Article 1-2 (1) 5 of the Income Tax Act or a non-resident who earns the income specified in subparagraph 3 or 5 of Article 119 of the same Act: |
| (2) | "Cases prescribed by Presidential Decree" referred to in the proviso to Article 116 (2) of the Act means any of 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> |
| 1. | Where the transaction amount (including value-added tax) of commodities or services provided in each transaction does not exceed 30,000 won; |
| 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); |
| 3. | Where services are provided by a business income earner subject to withholding under Article 127 (1) 3 of the Income Tax Act (limited to those withheld); |
| 4. | Where services prescribed in Article 164 (7) 1 are provided; |
| 5. | Other cases prescribed by Ministerial Decree of Strategy and Finance. |
| (3) | "Things prescribed by Presidential Decree" referred to in Article 116 (2) 1 of the Act means debit cards referred to in the Specialized Credit Finance Business Act, credit cards issued overseas, and prepaid cards provided in Article 126-2 (1) of the Restriction of Special Taxation Act (hereafter referred to as "debit cards, etc." in this Article). <Amended by Presidential Decree No. 18174, Dec. 30, 2003; Presidential Decree No. 18706, Feb. 19, 2005; Presidential Decree No. 19891, Feb. 28, 2007; Presidential Decree No. 22951, Jun. 3, 2011> |
| (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: <Added by Presidential Decree No. 17826, Dec. 30, 2002; Presidential Decree No. 18174, Dec. 30, 2003; Presidential Decree No. 18706, Feb. 19, 2005> |
| 1. | A statement on monthly use of credit cards, debit cards, etc. issued by the credit card business operators under the Specialized Credit Finance Business Act; |
| 2. | Transaction information on credit cards, debit cards, etc. which are kept in the enterprise resource planning systems after having been transmitted by the credit card business operators under the Specialized Credit Finance Business Act (limited to the case of satisfying the requirements provided in Article 65-7 of the Enforcement Decree of the Framework Act on National Taxes). |
| (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: <Added by Presidential Decree No. 24357, Feb. 15, 2013; Presidential Decree No. 24638, Jun. 28, 2013> |
| 1. | A cash receipt specified in Article 126-3 (4) of the Restriction of Special Taxation Act; |
| 2. | A credit card sales slip specified in Article 116 (2) 1 of the Act; |
| 3. | An electronic tax invoice transmitted to the Commissioner of the National Tax Service in accordance with Article 32 (3) and (5) of the Value-Added Tax Act; |
| 4. | An electronic tax invoice transmitted to the Commissioner of the National Tax Service in accordance with Article 211 (8) of the Enforcement Decree of the Income Tax Act. |
| Article 159 (Becoming Credit Card Merchants) |
| (1) | "Corporation that meets the requirements prescribed by Presidential Decree" referred to in Article 117 (1) of the Act means a corporation that operates a type of business serving consumers stipulated in Appendix 3-2 of the Enforcement Decree of the Income Tax Act. <Amended by Presidential Decree No. 20619, Feb. 22, 2008> |
| (2) | "Business operator prescribed by Presidential Decree" referred to in the proviso to Article 117 (2) of the Act means a business operator who operates a superstore defined in Article 2 of the Distribution Industry Development Act or sport facilities referred to in Article 3 of the Installation and Utilization of Sports Facilities Act. <Added by Presidential Decree No. 21302, Feb. 4, 2009> |
| (3) | "The method prescribed by Presidential Decree" in the proviso to Article 117 (2) of the Act means the method of installing and operating the enterprise resource planning facilities defined under subparagraph 1 of Article 5-2 of the Restriction of Special Taxation Act or the point-of-sale information management system defined under subparagraph 12 of Article 2 of the Distribution Industry Development Act. <Added by Presidential Decree No. 21302, Feb. 4, 2009; Presidential Decree No. 22577, Dec. 30, 2010; Presidential Decree No. 25194, Feb. 21, 2014> |
| (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: |
| 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. <Added 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, etc. Cash Receipt Merchants) |
| (1) | "Corporation that meets the requirements prescribed by Presidential Decree" referred to in Article 117-2 (1) of the Act means a corporation provided in Article 159 (1): |
| (2) | "Circumstances prescribed by Presidential Decree" referred to 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. <Added by Presidential Decree No. 21302, Feb. 4, 2009; Presidential Decree No. 23589, Feb. 2, 2012> |
| (3) | "Business operator prescribed by Presidential Decree" referred to in the proviso to Article 117-2 (3) of the Act means a business operator provided in Article 159 (2). <Added by Presidential Decree No. 23589, Feb. 2, 2012> |
| (4) | "Method prescribed by Presidential Decree" referred to in the proviso to Article 117-2 (3) of the Act means the method provided in Article 159 (3). <Added by Presidential Decree No. 23589, Feb. 2, 2012> |
| (5) | "Domestic corporation that engages in the type of business prescribed by Presidential Decree" referred to in the main sentence of Article 117-2 (4) of the Act means a domestic corporation that engages in the type of business as stipulated in Appendix 3-3 of the Enforcement Decree of the Income Tax Act. <Added by Presidential Decree No. 22035, Feb. 18, 2010; Presidential Decree No. 22951, Jun. 3, 2011> |
| (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: <Added 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 Added by Presidential Decree No. 19891, Feb. 28, 2007]
| Article 160 (Preparation and Keeping of Stockholder Register, etc.) |
"Stockholder register or employee register stating the matters prescribed by Presidential Decree" referred to in Article 118 of the Act means a stockholder register provided in Article 352 of the Commercial Act or an employee register provided in Article 566 of the same Act on which the personal details of stockholders or employees are stated according to the following classifications: <Amended by Presidential Decree No. 18706, Feb. 19, 2005; Presidential Decree No. 22951, Jun. 3, 2011>
| 1. | For an individual, the name, address, and resident registration number (for an overseas Korean national, his/her passport number or registration number under the Registration of Korean Nationals Residing Abroad Act); |
| 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: |
| 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: |
| Article 161 (Submission of Detailed Statement of Changes in Stocks, etc.) |
| (1) | "Partnership corporation, etc., prescribed by Presidential Decree" referred to 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> |
| 1. | A corporation (excluding the national association and federation thereof) provided for in subparagraphs 1 through 11 of Article 1; |
| 2. | An investment company, investment limited liability company, investment limited partnership, or specialized investment company as provided for in the Financial Investment Services and Capital Markets Act (excluding private equity funds participating in management under Article 9 (19) 1 of the same Act); |
| 3. | A corporation falling under any subparagraph of Article 6 (5) of the Financial Investment Services and Capital Markets Act, such as a corporate restructuring investment company; |
| 4. | A corporation whose stockholders, etc., are comprised of public institutions or institutional investors prescribed by Ministerial Decree of Strategy and Finance, and minority stockholders of any listed corporations; |
| 5. | Other corporations prescribed by Ministerial Decree of Strategy and Finance. |
| (2) | "Corporation prescribed by Presidential Decree" referred to 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)" referred to 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" referred to 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 does not exceed 300 million won and the total market value of which (refers to the market value prescribed by Ministerial Decree of Strategy and Finance) does not exceed ten billion won; |
| 2. | In cases of a corporation listed on the KOSDAQ market, the stockholder who holds stocks, the total par value of which does not exceed 300 million won and the total market value of which (refers to the market value prescribed by Ministerial Decree of Strategy and Finance) does not exceed ten billion: |
| 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 do not exceed 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). <Added 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 Ministerial Decree of Strategy 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 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 expressly prescribed by 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>
| 1. | Income specified in Article 111 (3) 2, out of interest income paid to a financial company specified in any subparagraph of Article 111 (2); |
| 2. | Income specified in Article 16 (1) of the Act, which the Korea Securities Depository under the Financial Investment Services and Capital Markets Act shall pay to a securities company or other depositor. |
| Article 162-2 (Special Cases concerning Obligation to File Payment Statements on Domestic Source Income, etc. 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 Ministerial Decree of Strategy 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: |
| 1. | Domestic source income on which corporate tax is not imposed or exempted under the Act or the Restriction of Special Taxation Act: |
| (a) | Domestic source income under Article 21 (1) of the Restriction of Special Taxation Act; |
| (b) | Domestic source income under Article 21-2 (1) of the Restriction of Special Taxation Act; |
| (c) | Domestic source income under Article 121-2 (3) of the Restriction of Special Taxation Act (referring to the domestic source income that accrued before the Restriction of Special Taxation Act is partially amended by Act No. 12173); |
| 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 (1) or 98-3 of the Act); |
| 3. | Domestic source income provided in subparagraph 3 of Article 93 of the Act; |
| 4. | Domestic source income provided in subparagraph 5 or 6 of Article 93 of the Act (excluding any income withheld at source under Article 98 of the Act); |
| 5. | Income provided 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 the income specified in subparagraph 7 or 9 of Article 93 of the Act), the withholding tax on which is less than 1,000 won; |
| 8. | Other income that is deemed to lack the effectiveness to file the payment statement and prescribed by Ministerial Decree of Strategy 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) of the Act, the relevant person liable for withholding shall file a payment statement on the amount paid. <Added by Presidential Decree No. 17457, Dec. 31, 2001; Presidential Decree No. 20619, Feb. 22, 2008; Presidential Decree No. 22577, Dec. 30, 2010> |
| (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 Ministerial Decree of Strategy and Finance. <Added 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 |
[This Article Added by Presidential Decree No. 17033, Dec. 29, 2000]
| Article 163 (Special Cases concerning Filing of Payment Statements, etc.) |
| (1) | Deleted. <by Presidential Decree No. 17457, Dec. 31, 2001> |
| (2) | If any natural disaster occurs or other special circumstances arise, 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> |
| 1. | Where the account books and other evidentiary documents are destroyed due to any natural disaster and other |
| 2. | Where the account books and 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, etc. of Aggregate Tax Invoices for Individual Suppliers) |
| (1) | "Deadline prescribed by Presidential Decree" referred to 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> |
| (2) | Articles 97 and 98 of the Enforcement Decree of the Value-Added Tax Act shall apply |
[This Article Added by Presidential Decree No. 19891, Feb. 28, 2007]
| Article 164 (Preparation, Issuance, etc., of Invoices) |
| (1) | Articles 211 through 212-2 of the Enforcement Decree of the Income Tax Act shall apply |
| (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 (4) 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> |
| (3) | "Circumstances prescribed by Presidential Decree" referred to in Article 121 (4) of the Act means circumstances in which land or a building is supplied. <Added by Presidential Decree No. 17457, Dec. 31, 2001; Presidential Decree No. 22951, Jun. 3, 2011> |
| (4) | "Deadline prescribed by Presidential Decree" referred to 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. <Added by Presidential Decree No. 26068, Feb. 3, 2015> |
| (6) | Every corporation shall submit the aggregate invoices for individual suppliers or purchasers in the form stipulated by Ministerial Decree of Strategy 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 |
| (8) | Article 211 (2) of the Enforcement Decree of the Income Tax Act shall apply |
| 1. | Services rendered by the Port Authority provided in the Port Authority Act to collect freight rates provided in Article 13 (1) 1 (b) of the Enforcement Decree of the same Act; |
| 2. | Other goods or services prescribed by Ministerial Decree of Strategy and Finance in consideration of the amount and number of transactions. |
| Article 164-2 (Submission of Data on Overseas Subsidiaries, etc.) |
| (1) | Detailed statements, etc., on overseas subsidiaries under Article 121-2 (1) of the Act mean any of the following: <Amended by Presidential Decree No. 23589, Feb. 2, 2012; Presidential Decree No. 25194, Feb. 21, 2014; Presidential Decree No. 26068, Feb. 3, 2015> |
| 1. | A domestic corporation that has made an investment provided for in Article 3 (1) 18 (a) of the Foreign Exchange Transaction Act: A detailed statement of overseas subsidiaries in the form prescribed by Ministerial Decree of Strategy and Finance; |
| 2. | Any of the following domestic corporations, among corporations falling under subparagraph 1: A statement of overseas subsidiaries in the form stipulated by Ministerial Decree of Strategy and Finance and a statement of financial position of overseas subsidiaries: |
| (a) | A domestic corporation that holds at least 10/100 of the total number of outstanding stocks or total investment amount of a corporation, in which direct foreign investment made under Article 3 (1) 18 (a) of the Foreign Exchange Transactions Act exceeds 100 million won (hereafter referred to as “invested corporation” in this Article); |
| (b) | A domestic corporation that directly or indirectly holds at least 10/100 of the total number of outstanding stocks or total investment amount of an invested corporation and that has a special relationship defined under Article 2 (1) 8 of the Adjustment of International Taxes Act with the invested corporation; |
| 3. | A domestic corporation whose loss on a transaction under Article 121-2 (1) 3 or 4 of the Act (hereafter referred to as “loss on a transaction” in this Article) exceeds five billion won during a single business year or whose accumulated losses exceed ten billion won until the fifth business year after the business year in which a loss is initially incurred, among the corporations that fall under subparagraph 2 (b): A statement of overseas subsidiaries, a statement of financial position of overseas subsidiaries, and a statement of losses on transactions; |
| 4. | A domestic corporation that has made investment under Article 3 (1) 18 (b) of the Foreign Exchange Transactions Act: The current status of overseas branch offices in the form stipulated by Ministerial Decree of Strategy and Finance; |
| 5. | A domestic corporation that has acquired real estate in a foreign country or a right in real estate during the relevant business year through a capital transaction under Article 3 (1) 19 of the Foreign Exchange Transactions Act (including where a corporation has acquired a foreign country or a right in real estate and managed it as investment (including leasing)): A statement of acquisition and management for investment (leasing) in the form prescribed by Ministerial Decree of Strategy and Finance. |
| (2) | In applying paragraph (1) 3, a domestic corporation shall calculate a loss on a transaction according to the corporate accounting standards, if such loss is incurred in any of the following cases, while an invested corporation shall calculate such loss according to the generally accepted accounting principles when it prepares financial statements in the domicile country of the invested corporation: |
| 1. | A loss on the purchase, disposal, conveyance as gift, appraisal, or price reduction of an asset: |
| (a) | A loss on the purchase or sale of an inventory asset for business purposes; |
| (b) | The depreciation cost of a fixed asset used for business purposes; |
| (c) | A loss on the disposal, valuation, or price reduction of securities traded in securities markets (including foreign securities markets); |
| (d) | A loss on the valuation of monetary assets in foreign currency due to the fluctuation of exchange rates; |
| 2. | A loss on the recognition, appraisal, or repayment of a debt (including appropriation funds, but excluding accrued corporate tax): |
| 3. | A loss on a capital transaction, such as an increase or reduction of capital, a merger, or a division. |
[This Article Added by Presidential Decree No. 22035, Feb. 18, 2010]
| Article 164-3 (Exemption from Obligation to Submit Data on Overseas Subsidiaries, etc.) |
“Just ground specified by Presidential Decree" referred to in the proviso to Article 121-3 (1) and the proviso to Article 121-3 (2) of the Act means any of the following: <Amended by Presidential Decree No. 26068, Feb. 3, 2015>
| 1. | Where it is impracticable to submit data due to a fire, disaster, theft, etc.; |
| 2. | Where it is extremely impractical to submit data because the business is in a grave crisis; |
| 3. | Where the relevant account books or documents confiscated or kept in custody by the related agencies, such as an investigative agency; |
| 4. | Where it is impracticable to submit data within a given period because it takes substantial time to collect and prepare the data; |
| 5. | Where it is deemed impracticable to submit data within a given period on the grounds similar to those provided for in subparagraphs 1 through 4. |
[This Article Added by Presidential Decree No. 22035, Feb. 18, 2010]
| Article 164-4 (Standards for Imposition of Administrative Fines) |
| (1) | Standards for the imposition of administrative fines under Article 121-3 (1) and (2) of the Act shall be as prescribed in Appendix 2. <Amended by Presidential Decree No. 26068, Feb. 3, 2015> |
| (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 Appendix 2 by half, taking into account the degree, frequencies, motive, results of the relevant violation, and other factors. |
[This Article Added by Presidential Decree No. 22035, Feb. 18, 2010]
| 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 Ministerial Decree of Strategy 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. |
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 |
| (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 |
| (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 Additional Tax on Undelivered Account Statement)
In applying the additional tax provided in Article 76 (9) of the Act, an auction wholesaler defined under 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 under 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, 2016 and ending on December 31, 2016, if the ratio of the amount on the list of account statements issued to customers and submitted to the head of the competent tax office is not lower than the ratio specified in the following table for each year. In such cases, if the ratio of the amount for which the account statement is delivered by the auction wholesaler in each business year in the total sales falls short of the ratio that falls under each of the following subparagraphs, the difference between the amount calculated by applying the ratio falling under each of the following subparagraphs to the total sales by each business year and the amount for which the account statement is delivered shall be deemed the supply value and the additional tax shall be imposed thereon: <Amended by Presidential Decree No. 22577, Dec. 30, 2010; Presidential Decree No. 24357, Feb. 15, 2013>
| 1. | A wholesaler in a central wholesale market located in Seoul under the Act on Distribution and Price Stabilization of Agricultural and Fishery Products; |
|
| 2. | The auction wholesalers other than those referred to in subparagraph 1; |
|
[This Article Wholly Amended by Presidential Decree No. 19328, Feb. 9, 2006]
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. <Added 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)
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: |
| (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 in Article 76 (9) of the Act, if any market wholesaler provided in Article 2 of the Act on Distribution and Price Stabilization of Agricultural and Fishery Products for whom the ratio of the amount of the invoices issued by each business year in the total sales is in excess of the following ratio from the business year that ends in the period ranging from January 1, 2004 to December 31, 2004 to the business year that ends in the period ranging from January 1, 2013 to December 31, 2013, the market wholesaler shall be deemed a corporation that falls under Article 120 (2) in the relevant business year and where the ratio of the amount of the invoices issued by each business year in the total sales falls short of the following ratio, the difference between the amount calculated by applying the following ratio to the total sales by each business year and the amount that is stated on invoices shall be deemed as the supply value and the additioinal tax shall be imposed on such supply value: <Amended by Presidential Decree No. 19891, Feb. 28, 2007; Presidential Decree No. 22812, Mar. 31, 2011; Presidential Decree No. 24357, Feb. 15, 2013>
|
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 |
| (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. <Added 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: |
| (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:
|
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 Ministerial Decree 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 Ministerial Decree of Strategy and Finance by no later than July 31, 2011. |
| (2) | Donations made to the school, corporation or organization first designated by Ministerial Decree 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 Ministerial Decree 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)
|
| (2) | A donation made to the schools, etc. determined by Ministerial Decree 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 Ministerial Decree 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 Added 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 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 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 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 1 (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: |
| (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)
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.