ADJUSTMENT OF INTERNATIONAL TAXES ACT

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ADJUSTMENT OF INTERNATIONAL TAXES ACT — 법갈피

Article 3(Substance over form principle regarding international transactions) #

(1) In an international transaction, if any ownership of the taxable income, earnings, property, act, or transaction is just nominal and there is another person to whom such income, etc., belongs, the other person shall be liable to pay taxes and governed by tax treaties.

(2) In an international transaction, tax treaties shall apply to the provisions regarding the computation of tax base according to the substance of a transaction, regardless of the name or form of the taxable income, earnings, property, act, or transaction.

(3) In an international transaction, if deemed that both parties have conducted such transaction either indirectly through a third party or via at least two acts or transactions (hereafter in this Article referred to as "roundabout transaction") to benefit wrongfully from this Act and tax treaties, this Act and tax treaties shall apply according to the economic substance of the transaction, assuming that such transaction has been conducted directly by both parties or such acts or transactions are a single continuous act or transaction.

(4) Where the tax burden to be paid to the Republic of Korea is significantly reduced by more than the ratio prescribed by Presidential Decree through a roundabout transaction (excluding where the amount of the relevant roundabout transaction, the reduced amount of the tax burden to be paid to the Republic of Korea, and other relevant factor meet the requirements prescribed by Presidential Decree), paragraph (3) shall apply on the presumption that such transaction is made to benefit wrongfully from this Act and tax treaties unless it is verified that the taxpayer has no intention of avoiding taxes, such as the fact that the relevant roundabout transaction has a legitimate business objective.

(5) For the purposes of paragraph (4), the calculation of the tax burden to be paid to the Republic of Korea and other necessary matters shall be prescribed by Presidential Decree.

Article 6(Reporting and rectification claim by arm’s length price) #

(1) If the transaction price is lower or higher than the arm's length price in international transactions with a foreign related party, a resident (including a domestic corporation and a domestic place of business; hereafter the same shall apply in this Section) may pay file a return on the tax base and tax amount adjusted based on the arm's length price, or file a request for rectification, with the head of the competent tax office having jurisdiction over the place of tax payment, by the deadline specified in any of the following subparagraphs: <Amended on Dec. 21. 2021; Dec. 31, 2024>

1. The tax return deadline under Article 70, 70-2, 71, 73, or 74 of the Income Tax Act or Article 60(1) or 76-17(1) of the Corporate Tax Act;

2. The deadline for filing a revised tax return under Article 45 of the Framework Act on National Taxes;

3. The deadline for filing a request for rectification under Article 45-2(1) of the Framework Act on National Taxes;

4. The deadline for filing a return after the deadline under Article 45-3(1) of the Framework Act on National Taxes.

(2) When filing a tax return or a request for rectification in accordance with the arm's length price under paragraph (1), the following documents shall be submitted: <Added on Dec. 31, 2024; Oct. 1, 2025; Dec. 23, 2025>

1. Where a tax return is filed on the tax base and tax amount adjusted based on the arm's length price: A report on adjustment of transaction price in the form prescribed by Decree of the Ministry of Finance and Economy;

2. Where a request is filed for the rectification of tax base and tax amount adjusted based on the arm's length price: The following documents:

a. A report on the adjustment of transaction price under subparagraph 1;

b. Documents proving the method of calculating the arm's length price, prescribed by Decree of the Ministry of Finance and Economy;

c. Documents proving the adjustment of taxable income of a foreign related party as prescribed by Decree of the Ministry of Finance and Economy.

(3) Upon receipt of a request for rectification under paragraph (1), the head of the competent tax office having jurisdiction over the place for tax payment may request the applicant to supplement the documents submitted under paragraph (2)2 within a specified period not exceeding 30 days, if any omission or incompleteness is found. In such cases, the period required for supplementation shall not be included in the period under paragraph (5). <Added on Dec. 31, 2024>

(4) When the head of the competent tax office having jurisdiction over the place of tax payment requests supplementation under the former part of paragraph (3), he or she shall notify the resident of his or her intention that, if the resident upon receipt of request for supplementation fails to submit the supplementary documents within the period specified in the former part of that paragraph without good cause, he or she may not make a rectification. <Added on Dec. 31, 2024>

(5) Upon receipt of a request for rectification under paragraph (1), the head of competent tax office having jurisdiction over the place of tax payment shall rectify the tax base and tax amount, or notify the person who made the request that there is no ground to rectify the tax base and tax amount, within 6 months from the date of receipt of the request for rectification. <Added on Dec. 31, 2024>

Article 8(Arm’s length pricing method) #

(1) The arm’s length price shall be calculated by the most reasonable method among the following methods, in consideration of the terms and conditions of transaction, such as the characteristics and functions of goods or services and the economic environment, which are applied or deemed to be applied in an ordinary transaction with a person other than a foreign related party; provided, the method provided in subparagraph 6 shall apply only where the arm’s length price may not be computed by the methods provided in subparagraphs 1 through 5:

1. Comparable uncontrolled price method: A method of regarding the transfer price between the independent, unrelated parties as the arm’s length price in a transaction similar to an international transaction between a resident and a foreign related party;

2. Resale price method: In cases where a purchaser who is one party in an international transaction between a resident and a foreign related party makes resale to any unrelated person, a method of regarding the amount computed by deducting the amount viewable as arm’s length profits of the purchaser from the resale price, as the arm’s length price;

3. Cost plus method: In cases where one party in an international transaction between a resident and a foreign related party produces or sells assets or provides services, a method of regarding the price computed by adding the amount viewable as arm's length profits of the seller of assets or the service provider to the cost incurred in the course of production or sale of the assets or provision of the services, as the arm's length price;

4. Transactional net margin method: A method of regarding a transfer price calculated on the basis of an ordinary transactional net profit ratio realized in a transaction between a resident and an unrelated person among transactions similar to international transactions between a resident and a foreign related party, as the arm's length price;

5. Profit split method: A method of sharing a net trade profit created by both parties in an international transaction between a resident and a foreign related party, in proportion to each party's relative contribution which has been measured by reasonable allocation standards; and regarding the transfer price calculated on the basis of such shared profit as the arm's length price;

6. Other methods deemed reasonable as prescribed by Presidential Decree.

(2) For the purposes of applying paragraph (1), the tax authority shall clearly grasp the substantial content of the relevant international transaction, considering commercial or financial relations between the resident and the foreign related party and the important transactional terms and conditions in such international transaction, and shall decide on whether such international transaction is commercially rational in comparison with transactions between independent, unrelated parties in circumstances involving transactions similar to the aforesaid international transaction.

(3) Where a decision made pursuant to paragraph (2) finds that the international transaction between the resident and the foreign related party is not commercially rational and that it is significantly difficult to compute an arm’s length price based on such international transaction, the tax authority may, based on the economic substance of that transaction, consider such transaction as if it had not occurred, or apply paragraph (1) by re-characterizing it as a new transaction in a rational manner.

(4) Detailed matters regarding the arm’s length pricing method provided in paragraphs (1) through (3) shall be prescribed by Presidential Decree.

Article 9(Determination and rectification by arm’s length cost sharing) #

(1) Where a resident and a foreign related party conclude an agreement on the sharing of costs, expenses, and risks (hereafter in this Article referred to as "costs, etc.") in advance and thereunder jointly develop or secure an intangible asset (hereafter in this Article referred to as "joint development"), the tax authority may determine or rectify the tax base and tax amount of the resident based on the arm’s length share of costs, if the amount of the costs, etc. allotted to the resident is less or more than the arm’s length share of costs.

(2) The arm’s length share of costs under paragraph (1) is the allotted amount applied or deemed to be applied by a resident in an agreement on arm’s length cost sharing with a person other than a foreign related party and shall be calculated by allotting the costs, etc. for jointly developing an intangible asset in proportion to the benefits expected from such intangible asset (hereafter in this Article referred to as "expected benefits"); provided, where costs, etc. are deemed not shared in accordance with the initial agreement due to a natural disaster or any other force majeure cause, the amount recalculated in consideration of the relevant cause may be the arm's length share of costs. <Amended on Dec. 21, 2021>

(3) Where a resident and a foreign related party conclude an agreement to determine shares of respective participants by reasonably allotting the costs, etc. for a jointly developed intangible asset but the expected benefits from such intangible asset are subsequently changed by not less than the rate prescribed by Presidential Decree, comparing to the expected benefits initially assessed as at the time of concluding the agreement, the tax authority may determine or rectify the tax base and tax amount of the resident by adjusting the original shares of the participants based on the expected benefits as changed.

(4) For the purposes of applying paragraphs (1) through (3), the scope of intangible assets, the assessment of the arm’s length share of costs and expected benefits, the computation of the changed shares of participants, and other necessary matters shall be prescribed by Presidential Decree.

Article 16(Obligation to submit data on international transactions) #

(1) The following taxpayers shall submit a Master File, Local Files, and Country-by-Country Reports prescribed by Presidential Decree regarding their business activities, the details of transactions, etc. (hereinafter referred to as "consolidated report on international transaction information") to the head of a tax office having jurisdiction over the place for tax payment within 12 months from the end of the month in which the end date of the fiscal year under Article 6 of the Corporate Tax Act falls, as classified in the following:

1. A taxpayer who meets the requirements prescribed by Presidential Decree, in terms of the turnover and the volume of international transactions with a foreign related party: A Master File and Local Files;

2. A taxpayer who meets the requirements prescribed by Presidential Decree, in terms of turnover, etc.: Country-by-Country Reports.

(2) A taxpayer that conducts international transactions with a foreign related party shall submit the following documents to the head of a tax office having jurisdiction over the place for tax payment within the taxable period under Article 5 of the Income Tax Act or within six months from the end of the month in which the end date of the fiscal year under Article 6 of the Corporate Tax Act falls; provided, where the taxpayer meets the requirements prescribed by Presidential Decree, he or she shall be exempted from the obligation to submit the documents specified in subparagraphs 1 through 3: <Amended on Dec. 31, 2022; Dec. 31, 2023; Oct. 1, 2025>

1. A statement of international transactions in the form prescribed by Decree of the Ministry of Finance and Economy (hereinafter referred to as "statement of international transactions");

2. A summary income statement of a foreign related party in the form prescribed by Decree of the Ministry of Finance and Economy (hereafter in this Article referred to as "summary income statement");

3. A report on arm's length pricing method in the form prescribed by Decree of the Ministry of Finance and Economy (hereafter in this Article referred to as "report on arm's length pricing method").

(3) Where a taxpayer is unable to submit a consolidated report on international transaction information, a statement of international transactions, a summary income statement, or a report on arm's length pricing method by the deadline specified in paragraph (1) or (2) due to any unavoidable cause prescribed by Presidential Decree and files an application to extend such deadline, the head of a tax office having jurisdiction over the place for tax payment may extend the deadline for submission by up to one year.

(4) For the purposes of applying Articles 7 through 9, the tax authority may request a taxpayer to submit related data, such as the method of computing transfer prices, as prescribed by Presidential Decree.

(5) A taxpayer in receipt of a request to submit data pursuant to paragraph (4) shall submit the relevant data within 60 days from the date of receiving such request; provided, where a taxpayer applies for an extension of the deadline for submission for good cause prescribed by Presidential Decree, the tax authority may approve the extension of the deadline for submission only once by up to 60 days.

(6) Where a taxpayer in receipt of a request to submit data pursuant to paragraph (4) fails to submit data by the deadline without good cause prescribed by Presidential Decree and submits the data at the time of applying for appeal, or of undergoing the mutual agreement procedure, the tax authority and related agencies need not use such data for taxation.

(7) Where a taxpayer required to submit a Master File and Local Files pursuant to paragraph (1)1 or a taxpayer in receipt of a request to submit data prescribed by Presidential Decree regarding the calculation of arm's length price, among the data referred to in paragraph (4), fails to submit the data by the deadline without good cause prescribed by Presidential Decree, the tax authority may apply Articles 7 and 9 presuming the arm’s length price and the arm’s length share of costs in a rational manner, on the basis of data available to the tax authority including data acquired from business entities engaging in similar business.

(8) Matters necessary for the detailed scope, methods, procedures, etc. of the submission of a consolidated report on international transaction information or a statement of international transactions shall be prescribed by Presidential Decree.

Article 22(Exclusion of interest paid on excessive borrowings compared to amount of investment from deductible expenses) #

(1) For the purposes of this Section, the term "foreign controlling stockholder" means a person classified in the following who substantially controls either a domestic corporation or a domestic place of business of a foreign corporation, for which the specific criteria shall be prescribed by Presidential Decree:

1. In cases of a domestic corporation: Any of the following persons:

a. A foreign stockholder or investor (hereinafter referred to as "foreign stockholder");

b. A foreign corporation financed by a foreign stockholder under item a;

2. In cases of a domestic place of business of a foreign corporation: Any of the following persons:

a. The head office or a branch office of the foreign corporation;

b. A foreign stockholder of the foreign corporation;

c. Another foreign corporation financed by the foreign corporation and by a foreign stockholder under item b.

(2) Where the sum of the following amounts among the borrowings of a domestic corporation (including a domestic place of business of a foreign corporation; hereafter in this Section the same shall apply) exceeds twice the amount invested by the relevant foreign controlling stockholder, the interest and discount fees paid in relation to the excess amount (hereafter in this Section referred to as "interest, etc.") shall be excluded from deductible expenses of the domestic corporation and shall be deemed to have been disposed of as a dividend of, or an outflow from, the domestic corporation pursuant to Article 67 of the Corporate Tax Act, as prescribed by Presidential Decree. In such cases, the scope of borrowings and the methods of computing the amount of investment and the amount excluded from deductible expense shall be prescribed by Presidential Decree:

1. Funds borrowed from a foreign controlling stockholder;

2. Funds borrowed from a related person specified in subparagraph 20a or b of Article 2 of the Framework Act on National Taxes, of a foreign controlling stockholder;

3. Funds borrowed from a third party under a payment guarantee (including de facto payment guarantees, such as provision of security) by a foreign controlling stockholder.

(3) The multiplier of the borrowings against the amount of investment by a foreign controlling stockholder provided in paragraph (2) may be separately prescribed by Presidential Decree for each type of business, if necessary, in consideration of characteristics, etc. of the business type.

(4) Where a domestic corporation attests that the amount borrowed pursuant to the subparagraphs of paragraph (2) and conditions of borrowings are identical or similar to the amount and conditions of ordinary borrowings between unrelated parties, as prescribed by Presidential Decree, paragraphs (2) and (3) shall not apply to the interest, etc. paid in relation to such borrowings.

(5) Where a domestic corporation subject to paragraph (2) has withheld income tax or corporate tax on the interest, etc. that it has paid to a foreign controlling stockholder in each fiscal year, it shall offset such withheld tax amount against the income tax or corporate tax assessed on the dividend provided in paragraph (2).

(6) For the purposes of applying paragraphs (2) through (5), if there exist different interest, etc. whereto separate interest rates apply, the interest, etc. shall be excluded from deductible expenses in order of those subject to a higher interest rate.

Article 27(Specific foreign corporations’ retained earnings deemed dividends) #

(1) Where a Korean national invests in a foreign corporation which satisfies all of the following requirements (hereinafter referred to as "specific foreign corporation"), the amount attributable to the Korean national out of the specific foreign corporation's retained earnings distributable as at the end of each fiscal year shall be deemed a dividend paid to the Korean national: <Amended on Dec. 21, 2021>

1. The actual tax burden in a country or region in which the head office, principal office, or actual place of management of the foreign corporation is located shall not exceed the amount calculated in accordance with the following formula:

┌─────────────────────────────────────────┐

│ The income actually earned by a foreign corporation x 70 % of the maximum tax rate among tax rates specified in Article 55 of the Corporate Tax Act │

└─────────────────────────────────────────┘

2. The foreign corporation shall be in a special relationship (when determining whether it is in the relationship provided in Article 2(1)3a, stocks owned directly or indirectly by a person prescribed by Presidential Decree, including a relative of the Korean national, shall be included) with the Korean national who invests in the foreign corporation.

(2) Korean nationals to whom paragraph (1) is applicable shall be those who directly or indirectly hold at least 10 percent of the total outstanding stocks or the total equity investment of a specific foreign corporation as at the end of each fiscal year. In such cases, outstanding stocks or equity investment held directly by the related persons of a Korean national specified in subparagraph 20a or b of Article 2 of the Framework Act on National Taxes shall be included for the purposes of determining 10 percent of the total outstanding stocks or the total equity investment.

(3) Where a Korean national directly or indirectly owns any beneficial interest of a foreign trust (referring to a trust that is established under foreign statutes or regulations and similar to a trust prescribed in any of the subparagraphs of Article 5(2) of the Corporate Tax Act), paragraphs (1) and (2) shall apply as each trust property is deemed one foreign corporation. <Amended on Dec. 21, 2021>

(4) The actual tax burden of a specific foreign corporation under paragraph (1)1, the scope of the income actually earned by such corporation, and other matters shall be prescribed by Presidential Decree. <Amended on Dec. 21, 2021>

Article 28(Exclusion of application of specific foreign corporations’ retained earnings deemed dividends) #

‘ Article 27 shall not apply to a specific foreign corporation falling under any of the following cases: <Amended on Dec. 21, 2021; Dec. 31, 2022; Oct. 1, 2025>

1. Where the income actually earned by a specific foreign corporation as of the end of each fiscal year does not exceed the amount prescribed by Presidential Decree;

2. Where a specific foreign corporation owns a permanent establishment, such as an office, a store, or a factory, that is required for business activities in a country or region in which it is located; and engages in business activities mainly in such country or region by managing, controlling, or operating the business for itself;

3. Where a specific foreign corporation, whose primary business is to hold stocks in compliance with requirements prescribed by Presidential Decree (hereafter in this subparagraph referred to as "foreign holding company"), holds stocks issued by its affiliate (referring to a foreign corporation that meets all the requirements prescribed by Presidential Decree; hereafter in this subparagraph the same shall apply) in compliance with all of the following requirements:

a. The foreign holding company shall have held stocks issued by all of its affiliates for at least six consecutive months as of the date of record for dividends by the affiliates;

b. The rate of income calculated by the following formula, considering the interest income, dividend income, etc. received by the foreign holding company that holds stocks issued by its affiliates in compliance with the requirements specified in item a, from its affiliates, shall be equal to or exceed the rate prescribed by Presidential Decree as of the end of each fiscal year.

┌───────────────────────────────────────────┐

│ │

│ The rate of income = A │

│ ─────────── │

│ B-C-D │

│ │

│ A: The total amount of interest income, dividend income, and other income prescribed by Presidential Decree that the foreign holding company │

│ has received from any of its affiliates having its head office or principal office in the same country │

│ as the foreign holding company or the same region prescribed by Decree of the Ministry of Finance and Economy (hereafter in Article 29 referred to as "same country, etc.") │

│ among the affiliates whose stocks are held by the foreign holding company in compliance with the requirements specified in item a; │

│ B: The income amount of the foreign holding company; │

│ C: The income amount that the foreign holding company generates by actually │

│ engaging in any business other than those provided in the subparagraphs of │

│ Article 29(1) at its permanent establishment, such as an office, a store, or a factory; │

│ D: The income amount generated as the foreign holding company disposes of the stocks issued │

│ by its affiliates that it has held in compliance with the requirements specified in item a. │

└───────────────────────────────────────────┘

Article 29(Exceptional application of specific foreign corporations’ retained earnings deemed dividends) #

(1) Even in cases of a specific foreign corporation to which Article 27 is not applicable pursuant to subparagraph 2 of Article 28, where such corporation falls under any of the following, Article 27 shall apply; provided, Article 27 shall not apply where a specific foreign corporation that engages in wholesale trade referred to in subparagraph 1a makes a sale to an unrelated person in the same country, etc., and such sale satisfies the requirements prescribed by Presidential Decree: <Amended on Dec. 31, 2022; Oct. 1, 2025>

1. A specific foreign corporation satisfying the requirements prescribed by Presidential Decree that engages in the following types of business under the Korean Standard Industrial Classification prepared and publicly notified by the Minister of Data and Statistics pursuant to Article 22 of the Statistics Act:

a. Wholesale trade;

b. Financial and insurance activities;

c. Real estate activities;

d. Professional, scientific, and technical activities (excluding architectural, engineering, and related technical services);

e. Business facilities management, business support, and leasing services;

2. A corporation whose primary business is to engage in the following activities, for which the criteria for determining the primary business shall be prescribed by Presidential Decree:

a. Holding stocks or bonds;

b. Provision of intellectual property rights;

c. Lease of ships, aircraft, or equipment;

d. Investing in investment trusts or funds.

(2) Even in cases of a specific foreign corporation to which Article 27 is not applicable pursuant to subparagraph 2 of Article 28 or the proviso, with the exception of the subparagraphs, of paragraph (1) of this Article, where the following income (hereafter in this Section referred to as "passive income") meets the standards prescribed by Presidential Decree, Article 27 shall apply to the relevant income: <Amended on Dec. 31, 2022; Oct. 1, 2025>

1. Income generated from the activities specified in the items of paragraph (1)2;

2. Profits and losses from the sale of assets related to income generated from the activities specified in the items of paragraph (1)2 (where a specific foreign corporation that engages in financial and insurance activities under the Korean Standard Industrial Classification prepared and publicly notified by the Minister of Data and Statistics under Article 22 of the Statistics Act holds assets related to income generated from the activities specified in paragraph (1)2a in connection with the performance of financial and insurance activities or a specific foreign corporation directly uses assets related to income generated from the activities prescribed in paragraph (1)2c for its business, the relevant assets shall be excluded).

Article 32(Exclusion of actual dividends from taxable gains) #

(1) Where the amount deemed a dividend is included in the gains, etc. of a Korean national under Article 31 and the relevant specific foreign corporation actually distributes its retained earnings as dividends (including the amount deemed dividends or distributions pursuant to Article 16 of the Corporate Tax Act), the distributed amount shall be deemed the income not included in the gains, etc. pursuant to subparagraph 2 of Article 18 of the Corporate Tax Act or deemed not to fall within the dividend income under Article 17(1) of the Income Tax Act.

(2) Where a Korean national has transferred the stocks of the relevant specific foreign corporation after the amount deemed dividends is included in the gross income, etc. of a Korean national under Article 31, the amount calculated by the following formula within the limit of capital gains (where the amount is zero or less, it shall be deemed zero) shall be deemed as income not included in gross income under subparagraph 2 of Article 18 of the Corporate Tax Act, or shall not be deemed as capital gains under Article 94(1)3c of the Income Tax Act. <Amended on Dec. 21, 2021; Dec. 31, 2024>

┌─────────────────────────────────────────┐

│ (The amount equivalent to the sum of the amounts deemed the dividends on the transferred stocks) │

│ - (the amount of actually distributed dividends on the transferred stocks) │

└─────────────────────────────────────────┘

(3) The books of account and evidentiary documents necessary for calculating the amount pursuant to paragraphs (1) and (2) shall be preserved until the expiration of the statutory deadline for filing a return for the taxable year in which the date of dividend payment or transfer falls, notwithstanding Article 85-3(2) of the Framework Act on National Taxes.

Article 34-2(Special cases concerning imposition of tax on income attributable to foreign transparent entities) #

(1) The term "foreign transparent entity" in this Article means an entity that satisfies all of the following requirements:

1. It shall be a foreign corporation defined in subparagraph 3 of Article 2 of the Corporate Tax Act, a foreign investment scheme under Article 93-2 of that Act, or an organization that is similar to an organization other than a corporation under Article 13(1) of the Framework Act on National Taxes and that is established in a foreign country (hereafter in this paragraph referred to as "foreign corporation, etc.");

2. In a country in which a foreign corporation, etc. is established or its head office or principal office is located, a stockholder, investor, or beneficiary (hereafter in this Article referred to as "investor, etc.") of a foreign corporation, etc. other than the relevant foreign corporation, etc. shall be directly liable to pay a tax on its income in accordance with the tax laws of such country.

(2) Where a resident or domestic corporation prescribed by Presidential Decree that constitutes an investor, etc. of a foreign transparent entity files an application for applying special cases concerning the imposition of tax prescribed in this Article (hereinafter referred to as "special cases concerning the imposition of tax on a foreign transparent entity") pursuant to paragraph (3), the Income Tax Act or the Corporate Tax Act shall apply as the income attributable to a foreign transparent entity is deemed attributable to such investor, etc.

(3) An investor, etc. who intends to be subject to the application of paragraph (2) shall file an application for applying special cases concerning the imposition of tax on a foreign transparent entity with the head of a tax office having jurisdiction over the place for tax payment, as prescribed by Presidential Decree.

(4) An investor, etc. shall not renounce the application of special cases concerning the imposition of tax on a foreign transparent entity except for cases prescribed by Presidential Decree, such as where the foreign transparent entity fails to meet the requirements prescribed in the subparagraphs of paragraph (1) after the investor, etc. subject to the application of paragraph (2) files an application for applying such special cases.

(5) Paragraphs (2) through (4) shall apply to an investment trust, investment limited partnership, and undisclosed investment association under the Financial Investment Services and Capital Markets Act (hereafter in this paragraph referred to as "investment trust, etc.") as such investment trust, etc. are deemed domestic corporations.

(6) Where paragraph (2) is applicable, the income attributable to an investor, etc. shall be in accordance with the classification of the income attributable to a foreign transparent entity, and the income shall be deemed immediately attributable to the investor, etc. when it is attributable to the foreign transparent entity.

(7) The income of a foreign transparent entity that is included in the total earnings or gains of an investor, etc. and that is actually distributed by the foreign transparent entity to the investor, etc. pursuant to paragraph (2) shall be deemed the income not included in the total earnings or gains.

(8) The amount of tax imposed on an investor, etc. in a foreign country with regard to the income of a foreign transparent entity that is deemed directly attributable to the investor, etc. under paragraph (2) shall be deemed the amount of foreign income tax or the amount of foreign corporate tax entitled to the application of a tax credit under Article 57(1) of the Income Tax Act or Article 57(1) of the Corporate Tax Act, as prescribed by Presidential Decree.

(9) Where paragraph (2) is applicable, provisions of Article 27 regarding specific foreign corporations' retained earnings deemed dividends shall not apply.

(10) The calculation and allocation of the income, deficits, etc. of an investor, etc. subject to the application of paragraph (2), and other necessary matters shall be prescribed by Presidential Decree.

[This Article Added on Dec. 31, 2022]

Article 35(Special cases regarding imposition of gift tax on overseas donation) #

(1) The terms used in this Section are defined as follows:

1. The term "resident" means a resident defined in subparagraph 8 of Article 2 of the Inheritance Tax and Gift Tax Act, including a non-profit corporation that has its head office or principal office in the Republic of Korea;

2. The term "nonresident" means a nonresident defined in subparagraph 8 of Article 2 of the Inheritance Tax and Gift Tax Act, including a non-profit corporation that has no head office or principal office in the Republic of Korea.

(2) Where a resident donates his or her foreign property (excluding a donation that takes effect upon the death of a donor) to a nonresident, the donor is liable to pay gift tax pursuant to this Act.

(3) Notwithstanding paragraph (2), where all of the following requirements are met, the gift tax shall be exempted:

1. The donee shall not be a related person defined in subparagraph 20 of Article 2 of the Framework Act on National Taxes, to the donor;

2. The relevant donated property shall be subject to gift tax (including taxes of a substantially similar thereto) imposed pursuant to statutes or regulations of the relevant foreign country, which includes exemption of the tax amount.

(4) For the purposes of applying paragraph (2), the value of donated property shall be based on its assessed value reflecting the situations as at the time of such donation in the foreign country wherein the donated property is located, but the matters regarding the computation of such assessed value shall be prescribed by Presidential Decree; provided, when it is impracticable to compute the assessed value, the methods prescribed by Presidential Decree shall apply, taking account of the type, scale, and circumstances of the transaction of the relevant property.

(5) For the purposes of applying paragraph (2), where gift tax has been paid pursuant to statutes or regulations of the relevant foreign country, the amount equivalent to the gift tax paid shall be deducted from the amount of the gift tax computed, as prescribed by Presidential Decree.

(6) Articles 4-2(3), 47, 53, 54 through 58, 68, 69(2), 70 through 72, and 76 of the Inheritance Tax and Gift Tax Act shall apply mutatis mutandis to the imposition of gift tax under paragraph (2). <Amended on Dec. 31, 2023>

Article 36(Exchange of tax and financial information) #

(1) The competent authority of the Republic of Korea may obtain tax information [including information on an individual who ultimately controls or exercises power over a taxpayer (hereinafter referred to as "actual owner"); hereinafter the same shall apply)] necessary for the imposition and collection of taxes, review of tax appeals, and criminal prosecution, etc., as well as tax information generalized by international practices to the extent not in contravention of other statutes, and may exchange such information with the other Contracting State.

(2) Where it is necessary to exchange tax information under paragraph (1), the tax authority may request a taxpayer to provide information on the actual owner of the taxpayer; and the scope of information on the actual owner that the tax authority may request from the taxpayer and matters necessary for requesting and submitting information on the actual owner shall be prescribed by Presidential Decree.

(3) Where the competent authority of the other Contracting State demands financial information (referring to information or data relating to the details of financial transactions defined in subparagraph 3 of Article 2 of the Act on Real Name Financial Transactions and Confidentiality; hereafter the same shall apply) on residents and domestic corporations or nonresidents and foreign corporations under the tax treaty, the competent authority of the Republic of Korea may request a specific branch of a financial company, etc. (referring to a financial company, etc. defined in subparagraph 1 of Article 2 of the aforesaid Act; hereinafter the same shall apply) to provide any of the following financial information, notwithstanding Article 4 of the aforesaid Act; and an employee of the financial company, etc. shall provide the financial information requested: <Amended on Dec. 31, 2023>

1. Financial information that constitutes data for taxation that shall be submitted under tax-related statutes;

2. Financial information necessary to verify property acquired by inheritance or donation;

3. Financial information necessary for the competent authority of the other Contracting State to verify data sufficient to prove a suspicion of tax evasion;

4. Financial information necessary to inquiry about the property of a delinquent taxpayer of the other Contracting State;

5. Financial information required by the competent authority of the other Contracting State due to any of the causes provided in the subparagraphs of Article 9(1) of the National Tax Collection Act.

(4) Where any information requested by the competent authority of the other Contracting State pursuant to paragraph (3) falls under the following cases, the competent authority of the Republic of Korea may request the head of the relevant financial company, etc. to provide such financial information, in which case an employee of the financial company, etc. shall provide the financial information requested:

1. Where the relevant information is related to a group that is unable to specify the personal information of a title holder related to the specific financial transaction;

2. Where the relevant information can be obtained through a general inquiry about financial property under Article 83(1) of the Inheritance Tax and Gift Tax Act.

(5) Notwithstanding paragraphs (3) and (4), the competent authority of the Republic of Korea may restrict the provision of financial information to the other Contracting State on the principle of reciprocity.

(6) If it is deemed necessary for the exchange of regular financial information, etc. (referring to information or data prescribed by Presidential Decree as information or data on the details of financial transactions, etc. (referring to the following transactions; hereinafter the same shall apply)) based on reciprocity with the other contracting State in accordance with a tax treaty, notwithstanding Article 4 of the Act on Real Name Financial Transactions and Confidentiality and other Acts on the provision of information or data on financial transactions , etc., the competent authority of the Republic of Korea may request the head of a financial transaction company, etc. (referring to a person who conducts financial transactions, etc. prescribed by Presidential Decree; hereinafter the same shall apply) to provide financial information, etc. on residents, domestic corporations, or non-residents, or foreign corporations necessary for the imposition and collection of tax and the management of tax payment. In such cases, a person who is engaged in the relevant financial transaction company, etc. shall provide it, as prescribed by Presidential Decree. <Amended on Dec. 31, 2023; Dec. 31, 2024>

1. Financial transactions under subparagraph 3 of Article 2 of the Act on Real Name Financial Transactions and Confidentiality;

2. Transactions prescribed by Presidential Decree among transactions for cryptographic assets (referring to assets prescribed by Presidential Decree, the value of which is expressed in digital form, based on distributed ledgers encrypted safely for certifying and protecting transactions or similar technologies);

3. Other transactions prescribed by Presidential Decree, which are equivalent to those referred to in subparagraph 1 or 2.

(7) Although no request is made pursuant to paragraph (6), financial transaction companies, etc. may verify and maintain personal information, etc. including taxpayer identification numbers (referring to unique numbers assigned to each taxpayer by an individual country for identification purposes) of the counter-parties to financial transactions, etc. (including the counter-parties to financial transactions, etc. of countries other than the other contracting state under the tax treaty; hereinafter the same shall apply) of the financial transaction companies, etc. to the minimum extent necessary for the purpose of using such information, etc. in order to support the exchange of financial information, etc. among countries. <Amended on Dec. 31, 2023; Dec. 31, 2024>

(8) The heads of financial transaction companies, etc. who intend to provide financial information, etc. under paragraph (6) or verify financial information, etc. under paragraph (7) may request the counter-parties to financial transactions, etc. to submit data necessary to verify the personal information, etc. of the counter-parties to financial transactions, etc. <Amended on Dec. 31, 2023; Dec. 31, 2024>

(9) Where it is impracticable to provide financial information, etc. referred to in paragraph (6) to the competent authority of the Republic of Korea or it is impossible to verify the personal information, etc. as provided in paragraph (7) because the counter-parties to financial transactions, etc. upon receipt of a request to submit data pursuant to paragraph (8) fails to submit the requested data, the heads of the relevant financial transaction companies, etc. may refuse to open an account of the counter-parties to the financial transactions, etc. <Amended on Dec. 31, 2023; Dec. 31, 2024>

(10) Detailed matters regarding the exchange of tax information under paragraph (1), exchange and provision of financial information under paragraphs (3) and (4) and financial information, etc. under paragraph (6), and verification of personal information, etc. under paragraph (8) shall be prescribed by Presidential Decree. <Amended on Dec. 31, 2023>

[Title Amended on Dec. 31, 2023]

Article 42(Conditions for commencing mutual agreement procedure) #

(1) A resident or domestic corporation or a nonresident or foreign corporation may apply for commencing a mutual agreement procedure to the relevant person specified in the following, as prescribed by Presidential Decree: <Amended on Oct. 1, 2025>

1. Where it is necessary to consult with the other Contracting State on the application and interpretation of the tax treaty: The Minister of Finance and Economy;

2. Where such person or corporation has been or is likely to be subject to taxation by the tax authority of the other Contracting State, not complying with the provisions of the tax treaty: The Commissioner of the National Tax Service;

3. Where a tax adjustment is required under the tax treaty between the Republic of Korea and the other Contracting State: The Commissioner of the National Tax Service.

(2) Where the competent authority of the other Contracting State entrusts the collection of taxes payable to the other Contracting State to the Republic of Korea under the tax treaty, the Minister of Finance and Economy or the Commissioner of the National Tax Service may have the head of a tax office having jurisdiction over the place for tax payment collect such taxes in the same manner as national taxes are collected, as prescribed by Presidential Decree. <Amended on Oct. 1, 2025>

1. Where the final ruling has been made by a domestic or foreign court; provided, cases prescribed by Presidential Decree shall be excluded, such as where a response to the tax adjustment by the other Contracting State is required;

2. Where the application has been filed by a person ineligible under the tax treaty;

3. Where it is recognized that the taxpayer intends to exploit a mutual agreement procedure for tax avoidance;

4. Where the application has been filed three years after the applicant became aware of the taxation.

(3) In the case of paragraph (1)1, the Minister of Finance and Economy may ex officio request the competent authority of the other Contracting State to commence the mutual agreement procedure. <Amended on Oct. 1, 2025>

(4) In the case of paragraph (1)2 or 3, the Commissioner of the National Tax Service may ex officio request the competent authority of the other Contracting State to commence the mutual agreement procedure.

(5) Upon receiving an application under paragraph (1) or ex officio requesting the commencement of the mutual agreement procedure pursuant to paragraph (4), the Commissioner of the National Tax Service shall report thereon to the Minister of Finance and Economy; and the Minister of Finance and Economy may give an instruction as to the mutual agreement procedure, if necessary. <Amended on Oct. 1, 2025>

Article 49(Special cases on application of extension of deadline for payment) #

(1) An applicant may file an application with the head of a tax office having jurisdiction over the place for tax payment or the head of a local government, for special application of extension of the payment deadline, etc. under Article 13 of the National Tax Collection Act (including the deferment of collection under Article 25 of the Local Tax Collection Act; hereafter in this Article referred to as "extension of the payment deadline, etc.") or suspension of attachment or sale under Article 105 of the National Tax Collection Act (including the deferment of collecting delinquent local taxes under Article 105 of the Local Tax Collection Act; hereafter in this Article referred to as "suspension of attachment or sale"), as prescribed by Presidential Decree.

(2) Where the mutual agreement procedure has commenced before a notice of the amount of tax payable is given, the head of the tax office having jurisdiction over the place for tax payment or the head of the local government in receipt of an application under paragraph (1) may defer payment notice under Article 14 of the National Tax Collection Act (including the deferment of notice and the notice to make payments in installments under Article 25 of the Local Tax Collection Act; hereafter in this Article referred to as "deferment of payment notice") until the end date of the mutual agreement procedure. In such cases, the head of the tax office having jurisdiction over the place for tax payment or the head of the local government shall notify the amount of tax payable within 30 days from the date following the end date of the mutual agreement procedure.

(3) Where the mutual agreement procedure has commenced after the notice of tax payment or a demand notice was served on the taxpayer, the head of the tax office having jurisdiction over the place for tax payment or the head of the local government in receipt of application under paragraph (1) may either extend the payment deadline, etc. or defer the seizure or the sale from the start date to the end date of the mutual agreement procedure. In such cases, the head of the tax office having jurisdiction over the place for tax payment or the head of the local government shall set a new payment deadline and collect the tax amount with the extended payment deadline or the deferred tax amount, within 30 days from the date following the end date of the mutual agreement procedure.

(4) Paragraphs (2) and (3) shall apply only where the other Contracting State allows the extension of the payment deadline, etc. or the deferment of the seizure or the sale, in the course of the mutual agreement procedure.

(5) Where the head of the tax office having jurisdiction over the place for tax payment or the head of the local government allows the extension of the payment deadline, etc. or the deferment of the seizure or the sale pursuant to paragraph (3), he or she shall additionally collect the amount equivalent to the interest for the relevant period as calculated as prescribed by Presidential Decree.

(6) Where any of the deferred notice of payment, the extension of the payment deadline, etc., or the deferment of the seizure or the sale (hereafter in this paragraph referred to as "deferred notice, etc.") is applied to the amount of income tax or corporate tax under paragraph (2) or (3), the deferred notice, etc. shall also be applied, as it stands, to the amount of local tax to be added to the amount of income tax or corporate tax without undergoing any separate procedure provided in this Article. In such cases, the Commissioner of the National Tax Service shall notify the head of the relevant local government of the deferred notice, etc., as prescribed by Presidential Decree.

Article 52(Definitions) #

The terms used in this Chapter are defined as follows: <Amended on Jul. 18, 2023>

1. The term "foreign financial company, etc." means the following entities located in a foreign country and prescribed by Presidential Decree, which include a domestic corporation’s places of business in foreign countries but exclude a foreign corporation’s places of business in the Republic of Korea:

a. A financial company that engages in the finance and insurance business and similar types of business;

b. A virtual asset service provider defined in subparagraph 2 of Article 2 of the Act on the Protection of Virtual Asset Users and any similar business entity;

2. The term "foreign financial account" means any of the following accounts opened with a foreign financial company, etc. for financial transactions with a foreign financial company, etc. (including financial transactions defined in subparagraph 3 of Article 2 of the Act on Real Name Financial Transactions and Confidentiality and similar transactions) and for virtual asset transactions (including virtual asset transactions defined in subparagraph 2d of Article 2 of the Act on Reporting and Using Specified Financial Transaction Information and similar transactions):

a. An account opened in connection with banking services pursuant to Article 27 of the Banking Act;

b. An account opened for trading securities defined in Article 4 of the Financial Investment Services and Capital Markets Act and similar foreign securities;

c. An account opened for trading derivatives defined in Article 5 of the Financial Investment Services and Capital Markets Act and similar foreign derivatives;

d. An account opened with a virtual asset service provider defined in subparagraph 2 of Article 2 of the Act on the Protection of Virtual Asset Users or any other similar business entity in a foreign country for the transactions of virtual assets defined in subparagraph 1 of Article 2 of that Act and similar assets;

e. An account, other than those prescribed in items a through d, which is opened with a foreign financial company, etc. for other financial transactions or virtual asset transactions;

3. The term "foreign financial account information" means the following:

a. Information on the identity of the account holder, such as the name and address;

b. Information on the account held, such as the account number, the name of the foreign financial company, etc., and the largest balance of the account as at the end of each month;

c. Information on persons related to foreign financial accounts referred to in Article 53(2).

Article 54(Exemption from obligation to report foreign financial accounts) #

A person required to report his or her account shall be exempt from the obligation to report under Article 53 in any of the following cases: <Amended on Dec. 31, 2023; Dec. 31, 2024>

1. A person falls under any of the following:

a. A foreign resident under the proviso of Article 3(1) of the Income Tax Act;

b. A Korean national residing abroad defined in subparagraph 1 of Article 2 of the Act on the Immigration and Legal Status of Overseas Koreans, who has residence in the Republic of Korea for not more than 182 days in total, counting from one year before the end of the year for which the relevant report is to be filed. In such cases, the period of residence in the Republic of Korea shall be calculated by the method prescribed by Presidential Decree;

c. A person prescribed by Presidential Decree from among those working for an international institution prescribed by Presidential Decree:

2. Any of the following institutions:

a. The State, a local government, or a public institution provided in the Act on the Management of Public Institutions;

b. An Institution established through all types of international agreements governed by international laws, such as treaties, conventions, agreements, and memorandums concluded between the Republic of Korea and other countries;

3. A financial company, etc.;

4. A person related to a foreign financial account who meets the requirements prescribed by Presidential Decree, including where his or her foreign financial account information is verifiable through a report by another joint holder, etc. of the account;

5. An institution prescribed by Presidential Decree, which is subject to management and supervision by the State under other statutes or regulations;

6. A person who submits information on the overseas financial accounts together when submitting the details of overseas trust under Article 58(3);

7. A person recognized as a resident of the other contracting State under a tax treaty.

Article 58(Obligation to submit data on overseas subsidiaries) #

(1) A resident (excluding a foreign resident under the proviso of Article 3(1) of the Income Tax Act; hereafter in this Section, the same shall apply) or a domestic corporation that makes an overseas direct investment under Article 3(1)18 of the Foreign Exchange Transactions Act (hereafter in this paragraph referred to as "overseas direct investment") shall submit the following data (hereinafter referred to as "statement, etc. of an overseas direct investment") to the head of a tax office having jurisdiction over the place for tax payment within the taxable period under the Income Tax Act or within six months from the end of the month in which the end date of the business year under the Corporate Tax Act falls, as prescribed by Presidential Decree. This shall also apply where the stocks or investment shares of a foreign corporation which has attracted an overseas direct investment are transferred during the taxable period under the Income Tax Act or the business year under the Corporate Tax Act or where a foreign corporation which has attracted an overseas direct investment is liquidated and such investment is no longer valid: <Amended on Dec. 21, 2021; Dec. 31, 2022>

1. A statement of overseas direct investments;

2. The financial position of the foreign corporation that has attracted overseas direct investments (including the financial position of other foreign corporations in which the foreign corporation that has attracted overseas direct investments has made investments);

3. Losses on transactions of the resident or domestic corporation that has made overseas direct investments (limited to the loss on transactions with the foreign corporation that has attracted overseas direct investments);

4. Losses on transactions of the foreign corporation that has attracted overseas direct investments (excluding the loss on transactions with the domestic corporation that has made overseas direct investments);

5. Current status of establishment of overseas business offices;

6. Other data prescribed by Presidential Decree in relation to overseas direct investments;

7. Deleted. <Dec. 21, 2021>

(2) Where a resident or a domestic corporation that acquires and owns or disposes of real estate in a foreign country or any right in relation to such real estate (hereinafter referred to as "overseas real estate, etc.") through a capital transaction defined in Article 3(1)19 of the Foreign Exchange Transactions Act falls under any of the following cases, he, she, or it shall submit the following data (hereinafter referred to as "statement of overseas real estate, etc.") to the head of a tax office having jurisdiction over the place for tax payment within the taxable period under the Income Tax Act or within six months from the end of the month in which the end date of the fiscal year under the Corporate Tax Act falls, as prescribed by Presidential Decree: <Added on Dec. 21, 2021>

1. Where the acquisition value of overseas real estate, etc. is at least 200 million won: The statement of the acquisition, investment operations (including a lease), and disposal of overseas real estate, etc., and the current status of holding overseas real estate, etc. as of the taxable period or the end date of the fiscal year;

2. Where the acquisition value of overseas real estate, etc. is less than 200 million won but the disposal value thereof is at least 200 million won: The statement of the disposal of overseas real estate, etc.

(3) A resident or a domestic corporation (hereafter in this Article and Article 91 referred to as "trustee") who creates (including cases where property is transferred to an overseas trust; hereinafter the same shall apply) a trust similar to a trust provided in the Trust Act (hereinafter referred to as "overseas trust"), among trusts under foreign statutes or regulations, shall submit a detailed statement of overseas trust (referring to the details of overseas trust, the value of overseas trust property, and other details related to the creation of overseas trust; hereinafter the same shall apply) classified as follows to the head of a tax office having jurisdiction over the place for tax payment, as prescribed by Presidential Decree, within six months from the end of the taxable period under Article 5 of the Income Tax Act or the month in which the end of the fiscal year under Article 6 of the Corporate Tax Act falls. <Added on Dec. 31, 2023>

1. In cases of overseas trust that meets the requirements prescribed by Presidential Decree, such as the truster's substantial control of the overseas trust property: Details of overseas trust for the taxable period under Article 5 of the Income Tax Act or for the fiscal year under Article 6 of the Corporate Tax Act in which the period from the date of establishment of the overseas trust to the end date of the overseas trust falls;

2. In cases of overseas trust, other than the overseas trust referred to in subparagraph 1: Details of overseas trust for the taxable period under Article 5 of the Income Tax Act or for the fiscal year under Article 6 of the Corporate Tax Act, in which the date of establishment of overseas trust falls;

(4) If several trusters are required to submit the details of overseas trust pursuant to paragraph (3), each truster shall submit the details of overseas trust, respectively; provided, where the head of the competent tax office having jurisdiction over the place for tax payment confirms that some of the trusters have submitted the details of overseas trust, the other trusters shall be exempted from the obligation to submit the details of overseas trust. <Added on Dec. 31, 2023>

(5) Where a resident or domestic corporation fails to submit a statement of overseas direct investment, etc., a statement of overseas real estate, etc., or a statement of overseas trust (hereinafter referred to as "statement of overseas local corporations, etc.") or submits a false statement of overseas corporations, etc., the tax authority may request the resident or domestic corporation to submit or supplement the statement of overseas corporations, etc. <Amended on Dec. 31, 2024>

(6) A person upon receipt of a request to submit or supplement data under paragraph (5) shall submit the relevant data within 60 days from the date of receiving such request. <Amended on Dec. 21, 2021; Dec. 31, 2023; Dec. 31, 2024>

(7) For the purposes of applying paragraph (2), an acquisition value and a disposal value shall be computed as specified in the following subparagraphs; In such cases, the conversion of a foreign currency into the Korean won is calculated by applying a basic exchange rate or an arbitrage exchange rate under the Foreign Exchange Transactions Act as at the day of receiving or paying the foreign currency: <Amended on Dec. 21, 2021; Dec. 31, 2023>

1. Acquisition value: The amount classified as follows:

a. Residents: Acquisition value under Article 118-4(1)1 of the Income Tax Act;

b. Domestic corporations: An acquisition value under Article 41 of the Corporate Tax Act;

2. Disposal value: Transfer value under Article 118-3 of the Income Tax Act.

(8) In applying paragraph (3), the value of overseas trust property shall be based on the market price classified in the following subparagraphs, reflecting the current status of the country in which the overseas trust property is located, and matters concerning the calculation of such market price shall be prescribed by Presidential Decree; provided, if it is impracticable to calculate the market price, the value of overseas trust property shall be determined by the method prescribed by Presidential Decree, such as based on the acquisition value of the relevant property: <Added on Dec. 31, 2023>

1. In cases falling under paragraph (3)1: The market price classified as follows:

a. Where the overseas trust is maintained: The market price as at the end of the taxable period under Article 5 of the Income Tax Act or of the fiscal year under Article 6 of the Corporate Tax Act;

b. Where the overseas trust is terminated: The market price as at the date the overseas trust is terminated;

2. In cases falling under paragraph (3)2: The market price as at the date of establishment of an overseas trust.

Article 59(Explanation about source of funds for acquisition in cases of noncompliance with obligation to submit data on overseas subsidiaries) #

(1) If a resident or domestic corporation who has acquired the stocks or investment shares of a foreign corporation that has attracted an overseas direct investment, or who has acquired any overseas real estate, etc. or who has established overseas trust, within 10 years before the date of requesting the explanation, falls under any of the following cases, the tax authority may request such resident or domestic corporation to explain the source of the following funds (excluding the funds reported pursuant to Article 18 of the Foreign Exchange Transactions Act; hereinafter referred as "amount subject to explanation about the source of acquisition funds"): <Amended on Dec. 21, 2021; Dec. 31, 2022; Dec. 31, 2023>

1. Where a resident or domestic corporation that has made an overseas direct investment under Article 3(1)18a of the Foreign Exchange Transactions Act directly or indirectly owns at least 10 percent of the total number of issued stocks or the total amount of investment of a corporation that has attracted an overseas direct investment and such resident or domestic corporation fails to submit the data prescribed in Article 58(1)1 within the deadline specified in the former part, with the exception of the subparagraphs, of Article 58(1) or submits false data: The amount paid to acquire the stocks or investment shares of a foreign corporation that has attracted an overseas direct investment under Article 3(1)18a of the Foreign Exchange Transactions Act;

2. Where a resident or domestic corporation fails to submit data prescribed in subparagraph 1 or 2 of Article 58(2) by the deadline specified in the provisions, with the exception of the subparagraphs, of Article 58(2) or submits false data: The amount paid to acquire overseas real estate, etc.;

3. Where a person fails to submit the details of overseas trust by the deadline specified in the provisions, with the exception of the subparagraphs, of Article 58(3), or submits false data: The amount incurred in acquiring the overseas trust property.

(2) A resident or domestic corporation requested to give an explanation under paragraph (1) shall give an explanation in a manner prescribed by Presidential Decree within 90 days (hereafter in this Article referred to as "period for explanation") from the date of receiving the notice for explanation. In such cases, if the resident or domestic corporation requested to give an explanation explains the source of at least 80 percent of the amount requested to be explained, the source of the whole amount requested shall be deemed explained.

(3) Notwithstanding paragraph (2), where a resident or domestic corporation requests an extension of the period for explanation on account of unavoidable circumstances prescribed by Presidential Decree, such as where collecting and preparing data requires considerable time, the tax authority may extend the period for explanation up to 60 days only once.

Article 61(Definitions) #

(1) The terms used in this Chapter are defined as follows: <Amended on Dec. 31, 2023; Dec. 31, 2024; Dec. 23, 2025>

1. The term "entity" means the following:

a. Any legal person; provided, the State and local governments shall be excluded herefrom;

b. An arrangement that has separate financial accounts, such as a partnership or trust;

2. The term "group" means the following:

a. A collection of entities prescribed by Presidential Decree that are related through ownership or control;

b. An enterprise (excluding an enterprise that has only the permanent establishment specified in subparagraph 3d) that is not included in a group specified in item a and has one or more permanent establishments located in a country other than the countries (including a region that has fiscal autonomy, and the region shall be deemed a separate country; hereafter in this Chapter, the same shall apply) where the relevant enterprise is located;

3. The term "permanent establishment" means a fixed place of business that performs all or part of business and falls under the following:

a. An establishment which is recognized to have a fixed place of business under an applicable and effective tax treaty (including a tax treaty to which the Republic of Korea is not a Contracting Party; hereafter the same shall apply in this Chapter), and on which the country where the place of business is located imposes tax on the income attributable to the relevant place of business by the method of calculating business income under the Model Tax Convention on Income and Capital adopted by the Organization for Economic Cooperation and Development or by similar methods;

b. A place of business without any applicable and effective tax treaty, and on which the country where the place of business is located imposes taxes on the net income attributable to the relevant place of business in a manner similar to the method of taxation on residents as provided for in the tax laws of the country where the place of business is located;

c. A place of business located in a country without a corporate tax system, which is recognized as having a fixed place of business in the relevant country according to a standard tax treaty, over which the relevant country where the place of business is located may impose tax on the income attributable to the relevant place of business according to the method of calculating business income under the standard tax treaty;

d. A place of business other than the places of business prescribed in items a through c, through which an entity conducts its business through that place of business in a country other than the country where the place of business is located, and the country where the enterprise is located does not impose tax on the income attributable to the relevant place of business.

4. The term "multinational enterprise group (MNE Group)" means any group that includes at least one entity or permanent establishment that is not located in the countries of the ultimate parent entity;

5. The term "parent entity" means an ultimate parent entity, an intermediate parent entity, or a partially-owned parent entity, which is not an excluded entity under Article 62(3);

6. The term "ultimate parent entity (UPE)" means the following:

a. An entity that satisfies all of the following requirements:

1) The entity owns directly or indirectly a controlling interest in any other entity;

2) The entity that is not owned, with a controlling interest, directly or indirectly by another entity;

b. Group headquarters specified in subparagraph 2b;

7. The term "intermediate parent entity" means a constituent entity which directly or indirectly holds an ownership interest in another constituent entity of the same MNE Group, and which is a constituent entity other than a UPE, permanent establishment, partially-owned parent entity, or investment constituent entity;

8. The term "partially-owned parent entity" means a constituent entity which directly or indirectly holds an ownership interest in another constituent entity of the same MNE Group, for which more than 20/100 of profits out of its ownership interests is held directly or indirectly by persons who do not belong to the MNE Group, and which is an constituent entity other than a UPE, permanent establishment, or investment constituent entity;

9. The term "constituent entity" means an enterprise included in a MNE Group and a permanent establishment that has such enterprise as the head office (referring to an entity that includes the financial accounting net income or loss of the permanent establishment in its financial statements; hereafter in this Chapter, the same shall apply). In such cases, each permanent establishment shall be deemed separate from the head office and any other permanent establishment of that head office;

10. The term "ownership interest" means a share or equity interest that carries rights to the profits, capital, or reserves of an entity (including the profits, capital, or reserves of the head office's permanent establishments) or rights to interests similar thereto. In such cases, the head office shall be deemed to have all of the ownership interests in its permanent establishments;

11. The term "controlling interest" means an ownership interest in an entity that the interest holder (excluding government entities prescribed by Presidential Decree among government entities referred to in Article 62(3)1) is required to consolidate in accordance with the financial accounting standards, etc. as prescribed by Presidential Decree. In such case, the head office shall be deemed to have the controlling interests of its permanent establishments;

12. The term "consolidated financial statements" means financial statements that include consolidated financial statements defined in subparagraph 3 of Article 2 of the Act on External Audit of Stock Companies and financial statements similar thereto and that are prescribed by Presidential Decree, such as those where an entity and the entities in which it has a controlling interest, if any, are consolidated;

13. The term "financial accounting net income or loss" means the net income or loss determined for a constituent entity (before any consolidation adjustments eliminating intra-group transactions) in preparing consolidated financial statements of the UPE;

14. The term "filing constituent entity" means an entity that files a GloBE information return in accordance with Article 83 (where a constituent entity located in a foreign country files a GloBE information return with the tax authority of the foreign country, referring to the constituent entity);

15. The term "constituent entity-owner" means a constituent entity that directly or indirectly owns an ownership interest in another constituent entity of the same MNE Group;

16. The term "minority-owned constituent entity" means a constituent entity of the same MNE Group where the UPE has a direct or indirect ownership interest in such entity of not more than 30/100;

17. The term "low-taxed constituent entity" means a constituent entity that is located in a country where an effective tax rate determined under Article 69 or 73-5 is lower than the minimum rate (referring to 15/100; hereafter in this Chapter, the same shall apply);

18. The term "investment constituent entity" means a constituent entity prescribed by Presidential Decree, such as investment fund and real estate investment vehicle.

(2) Terms that are not otherwise defined in paragraph (1) and other provisions of this Chapter but defined in the International Financial Reporting Standards shall have the meanings prescribed in the International Financial Reporting Standards.

[This Article Added on Dec. 31, 2022]

[Previous Article 61 moved to Article 89 <Dec. 31, 2022>]

Article 62(Entities subject to application of this chapter) #

(1) This Chapter shall apply to constituent entities that are members of a MNE Group in the relevant business year, if the revenues on the consolidated financial statements of the UPE of a MNE Group in at least 2 business years out of 4 business years immediately preceding each business year (referring to the fiscal year subject to consolidated financial statements prepared by UPE of MNE Group; hereafter in this Chapter, the same shall apply), which has reflected the adjustments prescribed by Presidential Decree, such as addition of profits accrued from ordinary business activities, which are separately indicated in the consolidated financial statements of UPE (hereafter in this Chapter referred to as "consolidated revenues") are at least EUR 750 million. In such cases, if the business years is not 12 months, the consolidated revenues shall be adjusted proportionally to correspond to a 12-month business year. <Amended on Dec. 31, 2024>

(2) Where there arises any reason prescribed by Presidential Decree, including a merger or demerger, the methods of applying paragraph (1) and the exchange rate to convert a consolidated revenue or any other amount necessary for the application of this Chapter into Euro currency shall be prescribed by Presidential Decree.

(3) This Chapter shall not apply to the following institutions, etc. (hereafter in this Chapter referred to as "excluded entities") as they are not deemed constituent entities: <Amended on Dec. 31, 2023>

1. A governmental entity;

2. An international organization;

3. A non-profit organization;

4. A pension fund;

5. An Investment fund that is a UPE;

6. A real estate investment vehicle that is a UPE;

7. Any other entity prescribed by Presidential Decree, where an institution, etc. prescribed in subparagraphs 1 through 6 directly or indirectly own the value of its ownership interests (referring to the total value of all types of ownership interests issued by an entity).

(4) Notwithstanding paragraph (3), this Chapter may apply to excluded entities under paragraph (3)7, by deeming it as a constituent entity out of choice by a filing constituent entity. <Amended on Dec. 31, 2023; Dec. 31, 2024>

(5) Matters necessary for the specific scope of an excluded entity under paragraph (3) and the election of a filing constituent entity under paragraph (4), etc. shall be prescribed by Presidential Decree.

[This Article Added on Dec. 31, 2022]

[Previous Article 62 moved to Article 90 <Dec. 31, 2022>]

Article 66(Calculation of global anti-base erosion income or loss) #

(1) The GloBE income or loss of a constituent entity for each fiscal year (referring to the income or loss of a constituent entity for calculating an effective tax rate under Article 69, and if the income or loss is a positive amount, the amount shall be referred to as "GloBE income" but if it is the nil or negative amount, the amount as "GloBE loss"; hereafter in this Chapter, the same shall apply) shall be calculated by reflecting the adjustments prescribed by Presidential Decree, such as addition of net taxes expenses to, exclusion of dividends from, and addition of policy disallowed expenses including bribes to, the financial accounting net income or loss for the relevant fiscal year.

(2) Where it is impracticable to determine the financial accounting net income or loss of a constituent entity specified in paragraph (1) based on the accounting standards used in preparing the consolidated financial statements of the UPE (hereafter in this Chapter referred to as "accounting standards of the UPE") and where the requirements prescribed by Presidential Decree are satisfied, the financial accounting net income or loss of the constituent entity may be determined using the accounting standards prescribed by Presidential Decree other than that of the UPE.

(3) Any international shipping income or loss prescribed by Presidential Decree, such as the income obtained from the transportation of passengers or cargo by ships operated in international traffic that is included in the financial accounting net income or loss of a constituent entity, and any qualified ancillary international shipping income or loss prescribed by Presidential Decree that arises from the activities performed in connection with the transportation of passengers or cargo by ships in international traffic, which are included in the financial accounting net income or loss of a constituent entity, shall be excluded from the computation of the GloBE income or loss of the constituent entity.

(4) The financial accounting net income or loss of a permanent establishment that is a constituent entity shall be calculated, as prescribed by Presidential Decree, by reflecting whether the permanent establishment does not have separate financial accounts, the income and expense that are attributable to the permanent establishment, and other matters.

(5) The financial accounting net income or loss of a permanent establishment calculated under paragraph (4) shall not be included in the calculation of the GloBE income or loss of the head office of the relevant permanent establishment; provided, it shall be included in the calculation of the minimum GloBE income or loss of the head office of the relevant permanent establishment in cases prescribed by Presidential Decree, such as where the deficit of the permanent establishment is included in deductible expenses in the calculation of domestic taxable income of the head office of the permanent establishment. <Amended on Dec. 31, 2023>

(6) The financial accounting net income or loss of a flow-through entity that is a constituent entity shall be allocated to a permanent establishment through which its business is conducted, a constituent entity-owner, or any other constituent entity, as prescribed by Presidential Decree, and the financial accounting net income or loss of the flow-through entity shall be reduced by the amount allocated.

(7) Except as provided in paragraphs (1) through (6), matters necessary to calculate any GloBE income or loss and financial accounting net income or loss, and other matters shall be prescribed by Presidential Decree.

[This Article Added on Dec. 31, 2022]

Article 67(Calculation of adjusted covered taxes) #

(1) The adjusted covered taxes of a constituent entity for each fiscal year shall be calculated by reflecting the total deferred tax adjustment amount and other adjustments prescribed by Presidential Decree in the amount recorded as the current tax expense in the financial accounts of the constituent entity for the fiscal year, among the taxes imposed on the income or profits of the constituent entity for the fiscal year and other taxes prescribed by Presidential Decree (hereafter in this Chapter referred to as "covered taxes"). In such cases, the covered taxes specified in the following subparagraphs shall be allocated, as prescribed by Presidential Decree, to other constituent entities and entities prescribed by Presidential Decree (hereafter in this Chapter referred to as "other constituent entities, etc."), taking into account the allocation of the relevant income and the ownership interests held by the constituent entity for the fiscal year: <Amended on Dec. 23, 2025>

1. Covered taxes attributable to the income of a permanent establishment;

2. Covered taxes attributable to dividend income, etc. received from other constituent entities, etc.;

3. Other covered taxes prescribed by Presidential Decree that are recognized as necessary to be allocated to other constituent entities, etc.

(2) When any adjustment is reflected in covered taxes under paragraph (1), the total deferred tax adjustment amount of a constituent entity for each fiscal year shall be calculated by reflecting the adjustments prescribed by Presidential Decree, such as excluding the deferred tax expense with regard to the income or loss not included in the calculation of the GloBE income or loss from the calculation of the deferred tax expense in its financial accounts for the relevant fiscal year. In such cases, if the tax rate applicable to the calculation of the deferred tax expense in the financial accounts exceeds the minimum rate, a recalculation shall be made based on the minimum rate.

(3) For purposes of applying paragraph (2), where a constituent entity fails to pay a tax related to its deferred tax liabilities reflected in the total deferred tax adjustment amount (excluding any amount prescribed by Presidential Decree, such as the amount of deferred tax liabilities changed in relation to depreciation of tangible assets) by the last day of the business year that is five years after the date the deferred tax liability was recorded, the relevant amount shall be deducted from the covered taxes for the business year in which the date of such recording falls as prescribed by Presidential Decree, and the effective tax rate under Article 69 and the top-up tax under Articles 70 and 71 for the relevant business year shall be recalculated. <Amended on Dec. 31, 2024>

(4) Notwithstanding paragraph (1), when any adjustment is reflected in covered taxes under paragraph (1), the special cases on the handling of GloBE loss, in which the amount prescribed by Presidential Decree is deemed deferred tax assets without applying the total deferred tax adjustment amount according to the choice of a filing constituent entity (hereafter in this Chapter referred to as "special rules for loss treatment") may be applied to each country of location of a constituent entity (excluding a constituent entity subject to special cases on the eligible distribution tax system under Article 78). <Added on Dec. 31, 2024>

(5) If a filing constituent entity intends to be subject to special rules for loss treatment, it shall select a country of residence of the constituent entity subject to special rules for loss treatment when submitting a GloBE information report on the first fiscal year governed by the GloBE Rules (referring to the GloBE Rules under this Chapter or other statutes or regulations of other countries equivalent thereto) under Article 83(1) (hereafter referred to as "first applicable year" in this Chapter), and submit the report to the country of residence. <Added on Dec. 31, 2024>

(6) Where a filing constituent entity chooses whether to apply a special case on the handling of losses under paragraph (5), it shall comply with the following standards: <Added on Dec. 31, 2024>

1. The special rules for loss treatment shall continue to apply to the constituent entity of the country of location chosen by a filing constituent entity to be subject to special rules for loss treatment, in the first applicable year and the subsequent business years;

2. A filing constituent entity may revoke its selection with respect to a constituent entity in the country of location subject to the special rules for loss treatment under subparagraph 1;

3. If a filing constituent entity revokes its selection of the constituent entity in the country of location subject to the special rules for loss treatment under subparagraph 1, it shall not continue to choose the special rules for loss treatment for the business year and the following business years subject to the relevant revocation.

(7) Except as otherwise provided for in paragraphs (1) through (6), matters necessary for the calculation of adjusted covered taxes and the total deferred tax adjustment amount, and the application of special rules for loss treatment, etc. shall be prescribed by Presidential Decree. <Amended on Dec. 31, 2024>

[This Article Added on Dec. 31, 2022]

Article 68(Post-filing adjustments and tax rate changes) #

(1) Where the amount of a constituent entity's covered taxes for a previous fiscal year recorded in its financial accounts increases or decreases in each fiscal year due to any determination, rectification, etc. after a GloBE information return is filed under Article 83(1), the increased or decreased amount shall be added to the covered taxes for the fiscal year in which the date any determination, rectification, etc. is made falls (hereafter in this Article referred to as "fiscal year for rectification") or shall be added to or deducted from the adjusted covered taxes for a previous fiscal year in which any determination, rectification, etc. is to be made (hereafter in this Article referred to as "fiscal year subject to rectification") in accordance with the following classification:

1. Where the amount of covered taxes for a fiscal year subject to rectification increases: The increased amount of covered taxes shall be added to the covered taxes for the fiscal year for rectification;

2. Where the amount of covered taxes for a fiscal year subject to rectification decreases: The decreased amount of covered taxes shall be deducted from the adjusted covered taxes for a fiscal year subject to rectification, and the effective tax rate under Article 69 and the top-up tax under Articles 70 and 71 for a fiscal year subject to rectification shall be recalculated, as prescribed by Presidential Decree.

(2) Notwithstanding paragraph (1)2, where the amount of the decrease in covered taxes for a fiscal year subject to rectification is an immaterial amount prescribed by Presidential Decree, such decreased amount may be deducted from the covered taxes of a constituent entity for the fiscal year for rectification at the election of a filing constituent entity.

(3) Where any change is made to the tax rate applicable to the calculation of a constituent entity’s deferred tax expense in the country of residence, covered taxes shall be adjusted, as prescribed by Presidential Decree.

(4) Where a constituent entity fails to pay an amount exceeding EUR one million that is recorded in its financial accounts as its current tax expense and included in adjusted covered taxes for a previous fiscal year within three years from the last day of the previous fiscal year, the unpaid amount shall be deducted from adjusted covered taxes for the previous fiscal year and the effective tax rate under Article 69 and the top-up tax under Articles 70 and 71 for such year shall be recalculated. <Amended on Dec. 31, 2023>

(5) Except as provided in paragraphs (1) through (4), matters necessary for adjustment of covered taxes, adjusted covered taxes, etc. after filing of a GloBE information return for a previous year pursuant to Article 83(1) shall be prescribed by Presidential Decree.

[This Article Added on Dec. 31, 2022]

Article 69(Calculation of effective tax rates) #

(1) The effective tax rate of a MNE Group for each fiscal year shall be calculated by country.

(2) The effective tax rate of a MNE Group by country shall be calculated by dividing the amount under subparagraph 1 by the amount under subparagraph 2: <Amended on Dec. 31, 2023>

1. The sum of the adjusted covered taxes specified in Article 67(1) of each constituent entity located in the relevant country;

2. The amount computed in accordance with the following formula (hereafter in this Chapter referred to as "net GloBE income"):

┌─────────────────────────────────────────┐

│ Net global anti-base erosion income = A - B │

│ │

│ A: The sum of the global anti-base erosion income of each constituent entity located in the relevant country for the relevant business year │

│ B: The sum of the global anti-base erosion loss of each constituent entity located in the relevant country for the relevant business year with the negative sign removed │

└─────────────────────────────────────────┘

(3) Where the net GloBE income calculated under paragraph (2)1 is a negative amount, the effective tax rate calculated under the same paragraph shall be deemed zero. <Added on Dec. 31, 2023>

(4) Any amount that is not included in the calculation of the effective tax rate deeming the effective tax rate as zero pursuant to paragraph (3) shall be added to the amount specified in paragraph (2)1 in accordance with the method prescribed by the Presidential Decree, when calculating the effective tax rate for the subsequent fiscal year. <Added on Dec. 31, 2023>

(5) When the amount under paragraph (2)2 is the nil or negative amount, the effective tax rate shall not be calculated for the relevant country, deeming the net GloBE income does not exist. <Amended on Dec. 31, 2023>

(6) For the purposes of applying paragraphs (1) through (5), a constituent entity prescribed by Presidential Decree, such as a flow-through entity that is deemed to have no country of residence under Article 64(2) (hereafter in this Chapter referred to as "stateless constituent entity"), shall be deemed a constituent entity located in a country that is separately assumed by each stateless constituent entity. <Amended on Dec. 31, 2023>

(7) When the effective tax rate is calculated under paragraphs (1) through (6), the GloBE income or loss prescribed in Article 66(1) of a minority-owned constituent entity or a constituent entity that is located in the relevant country and its adjusted covered taxes under Article 67(1) shall be excluded when calculating the sum of the net GloBE incomes or the adjusted covered taxes for the relevant country. <Amended on Dec. 31, 2023>

[This Article Added on Dec. 31, 2022]

Article 70(Calculation of top-up taxes for countries of residence of constituent entities) #

(1) The top-up tax for each fiscal year for the country in which a constituent entity of the relevant MNE Group is located shall be computed in accordance with the following formula:

┌──────────────────────────────────────────┐

│ The country where the constituent entity of the MNE Group is located = (A × B) + C － D │

│ of the relevant multinational enterprise group is located │

│ │

│ A: The top-up tax percentage for the country in which a constituent entity of the relevant multinational enterprise group is located │

│ B: The excess profit for the country in which a constituent entity of the relevant multinational enterprise group is located │

│ C: The additional current top-up tax for the country in which a constituent entity of the relevant multinational enterprise group is located │

│ D: The qualified domestic minimum top-up tax for the country in which a constituent entity of the relevant multinational enterprise group is located │

└──────────────────────────────────────────┘

(2) "Top-up tax percentage for the country in which a constituent entity of the relevant MNE Group is located" in the formula specified in paragraph (1) means the percentage calculated by deducting the effective tax rate prescribed in Article 69 from the minimum rate, and if the result of such calculation is negative amount, the top-up tax percentage shall be deemed zero.

(3) "Excess profit for the country in which a constituent entity of the relevant MNE Group is located" in the formula specified in paragraph (1) means the amount calculated by deducting from the net GloBE income the sum of the excluded amounts related to payroll costs and the book value of tangible assets prescribed by Presidential Decree for constituent entities located in the relevant country (hereafter in this Chapter referred to as "substance-based income exclusion"); and if the result of such calculation is negative, the excess profit shall be deemed to be zero. <Amended on Dec. 31, 2023>

(4) "Additional current top-up tax for the country in which a constituent entity of the relevant MNE Group is located" in the formula specified in paragraph (1) means the amount that is added to the top-up tax for the relevant fiscal year as prescribed by Presidential Decree, such as the amount added to the top-up tax accrued when recalculating the effective tax rate under Article 69 for the previous fiscal year. <Amended on Dec. 31, 2023>

(5) "Qualified domestic minimum top-up tax for the country in which a constituent entity of the relevant MNE Group is located" in the formula specified in paragraph (1) means any tax that the country of residence imposes to reduce the top-up tax to zero and that has been paid or is to be paid under the qualified domestic minimum top-up tax system of the relevant country prescribed by Presidential Decree, and the top-up tax for the relevant fiscal year shall be deemed nil in any of the following cases. <Amended on Dec. 31, 2023>

1. Where the top-up tax of the relevant country is nil or negative as a result of deducting the qualified domestic minimum top-up tax for the country in which a constituent entity of the relevant MNE Group is located;

2. Where the qualified domestic minimum top-up tax system for the country in which a constituent entity of the relevant MNE Group is located satisfies the requirements prescribed by Presidential Decree, such as the accounting requirements for deeming the top-up tax for the relevant fiscal year as nil.

(6) Except as provided in paragraphs (1) through (5), matters necessary to calculate the top-up tax for each fiscal year for the country in which a constituent entity of the relevant MNE Group is located shall be prescribed by Presidential Decree.

[This Article Added on Dec. 31, 2022]

Article 73-3(Calculation of adjusted covered taxes for calculating domestic top-up tax) #

(1) Article 67 (1) through (3) shall apply mutatis mutandis to the calculation of the adjusted covered taxes for calculating the domestic top-up tax under Article 73-6. In such cases, the "effective tax rate under Article 69 and the top-up tax under Articles 70 and 71" shall be deemed to refer to the "effective tax rate under Article 73-5 and the domestic top-up tax under Article 73-6."

(2) Notwithstanding Article 67 (1) as applied mutatis mutandis pursuant to paragraph (1), when reflecting adjustments in covered taxes under that paragraph, the special rules for loss treatment may be applied at the election of the filing constituent entity.

(3) Where a filing constituent entity intends to apply the special rule for loss treatment pursuant to paragraph (2), it shall select whether to apply the special rule for loss treatment and submit such selection when submitting the GloBE information return for the first applicable year.

(4) Where a filing constituent entity selects whether to apply the special rule for loss treatment pursuant to paragraph (3), the following criteria shall apply:

1. Where a filing constituent entity elects to apply the special rule for loss treatment, such special rule shall be applied continuously to domestic constituent entities for the first applicable year and subsequent fiscal years;

2. Where a filing constituent entity elects to apply the special rule for loss treatment pursuant to subparagraph 1, it may revoke such election with respect to domestic constituent entities;

3. Where a filing constituent entity revokes the election to apply the special rule for loss treatment with respect to domestic constituent entities under subparagraph 1, it shall not elect to apply the special rule for loss treatment continuously for the fiscal year to which such revocation applies and for subsequent fiscal years.

(5) Notwithstanding the latter part of Article 67(1) as applied mutatis mutandis pursuant to the former part of paragraph (1), where adjusted covered taxes are calculated for the purpose of calculating the domestic top-up tax under Article 73-6, such calculation shall be made by reflecting matters prescribed by Presidential Decree, including the exclusion of covered taxes allocated from other constituent entities, etc. located in foreign jurisdictions.

(6) Except as provided for in paragraphs (1) through (5), matters necessary for the calculation of adjusted covered taxes and the total deferred tax adjustment amount for calculating the domestic top-up tax, and for the application of the special rule for loss treatment, shall be prescribed by Presidential Decree.

[This Article Added on Dec. 23, 2025]

Article 73-5(Calculation of effective tax rate for calculating domestic top-up tax) #

(1) The effective tax rate for calculating the domestic top-up tax under Article 73-6 shall be calculated by dividing the amount specified in subparagraph 1 by the amount specified in subparagraph 2:

1. The total amount of the adjusted covered taxes under Article 73-3 of each domestic constituent entity;

2. The net GloBE income amount of domestic constituent entities.

(2) Where the amount under paragraph (1)1 is negative, the effective tax rate calculated under that paragraph shall be deemed to be zero.

(3) Any amount that is not included in the calculation of the effective tax rate deeming the effective tax rate as zero pursuant to paragraph (2) shall be added to the amount specified in paragraph (1)1 in accordance with the method prescribed by the Presidential Decree, when calculating the effective tax rate for the subsequent fiscal year.

(4) When the amount under paragraph (1)2 is the nil or negative amount, the effective tax rate shall not be calculated for the relevant MNE Group, deeming the net GloBE income does not exist.

(5) In applying paragraphs (1) through (4), a constituent entity that is a flow-through entity deemed not to have a country of residence pursuant to Article 64(2) and that is established or registered in the Republic of Korea under the statutes and regulations of the Republic of Korea, and a permanent establishment prescribed by Presidential Decree, shall be deemed to be located in the Republic of Korea.

(6) In calculating the effective tax rate pursuant to paragraphs (1) through (5), the GloBE income or loss under Article 66 as applied mutatis mutandis pursuant to Article 73-2 and the adjusted covered taxes under Article 73-3 of a domestic minority-owned constituent entity or an investment constituent entity shall be excluded when calculating the aggregate of net GloBE incomes and adjusted covered taxes of the relevant MNE Group.

[This Article Added on Dec. 23, 2025]

Article 73-6(Calculation of domestic top-up tax) #

(1) The domestic top-up tax of MNE Group for each fiscal year shall be the amount calculated in accordance with the following formula:

┌─────────────────────────────┐

│ Domestic top-up tax of the MNE Group = (A × B) + C │

│ │

│ A: Domestic top-up tax rate of the MNE Group │

│ B: Amount of domestic excess profits of the MNE Group │

│ C: The current domestic top-up tax amount of the MNE Group │

└─────────────────────────────┘

(2) In the formula under paragraph (1), the term "domestic top-up tax rate of the relevant MNE Group" means the rate calculated by subtracting the effective tax rate under Article 73-5 from the minimum tax rate, and where the result of such calculation is negative, the domestic top-up tax rate shall be deemed to be zero.

(3) In the formula under paragraph (1), the term "domestic excess profit amount of the relevant MNE Group" means the amount obtained by subtracting the substance-based income exclusion amount of its domestic constituent entities from the net GloBE income amount; and where the result of such calculation is negative, the domestic excess profit amount shall be deemed to be zero.

(4) In the formula under paragraph (1), the term "current domestic top-up tax addition amount of the relevant MNE Group" means the amount to be added to the domestic top-up tax for the fiscal year as prescribed by Presidential Decree, including an additional amount of domestic top-up tax arising where the effective tax rate under Article 73-5 for a previous fiscal year is recalculated.

(5) A constituent entity and a permanent establishment deemed to be located in the Republic of Korea pursuant to Article 73-5(5) shall be treated as a domestic constituent entity belonging to a separate MNE Group, and the domestic top-up tax shall be calculated for each individual constituent entity and permanent establishment.

[This Article Added on Dec. 23, 2025]

Article 76(Special cases concerning reorganization) #

(1) Where an entity becomes or ceases to be a constituent entity of a MNE Group as a result of a transfer of direct or indirect ownership interests in such entity (hereafter in this paragraph referred to as "target entity"), this Chapter shall apply, as prescribed by Presidential Decree, taking into account whether the entity is included in the consolidated financial statements of the UPE of the MNE Group, the consolidated amount, and other matters; provided, in cases prescribed by Presidential Decree, such as where the country of residence of the target entity imposes taxes on a transfer of the relevant ownership interests in the same or similar manner as a transfer of assets and liabilities, paragraph (2) or (3) shall apply.

(2) The GloBE income or loss of a constituent entity that disposes of assets and liabilities (hereafter in this Article referred to as "disposing constituent entity") and of a constituent entity that acquires assets and liabilities (hereafter in this Article referred to as "acquiring constituent entity) shall be calculated in accordance with the following classification:

1. A disposing constituent entity: Any gain or loss on disposition of assets and liabilities (hereafter in this Article referred to as "gain or loss on the disposition") shall be included in the computation of its GloBE income or loss;

2. An acquiring constituent entity: Its GloBE income or loss after the acquisition shall be calculated using the values of the acquired assets and liabilities determined under the accounting standard used in preparing consolidated financial statements.

(3) Notwithstanding paragraph (2), where assets and liabilities are disposed of or acquired as part of a reorganization meeting the requirements prescribed by Presidential Decree, such as that the consideration for transferring assets and liabilities shall be shares or equity interests, the GloBE income or loss shall be calculated in accordance with the following classification. In such cases, if a disposing constituent entity recognizes part of any loss or gain arising in connection with a reorganization, as prescribed by Presidential Decree, such loss or gain shall be included in the calculation of its GloBE income or loss, as prescribed by Presidential Decree:

1. A disposing constituent entity: Any gain or loss on the disposition shall be excluded from the calculation of its global-anti-base erosion income or loss;

2. An acquiring constituent entity: Its GloBE income or loss after the acquisition shall be calculated using the disposing entity's carrying value of the acquired assets and liabilities upon disposition.

(4) Notwithstanding paragraphs (1) through (3), in cases where the tax law of the country where a constituent entity is located stipulates that the book value of assets and liabilities (excluding ordinary assets and liabilities, including inventory assets) be adjusted or may be adjusted to a fair value, the GloBE income and loss may be calculated by the method prescribed by Presidential Decree, according to the choice of the constituent entity. <Added on Dec. 31, 2023; Dec. 31, 2024>

[This Article Added on Dec. 31, 2022]

Article 77(Special cases concerning joint ventures) #

(1) With regard to an entity prescribed by Presidential Decree, in which the UPE of a MNE Group directly or indirectly owns at least 50/100 of ownership interests and for which the UPE uses the equity method to account for investments in an entity that holds at least 50/100 of the ownership interests when preparing its consolidated financial statement (hereafter in this Chapter referred to as "joint venture"), and a subsidiary of the joint venture prescribed by Presidential Decree (hereafter in this Chapter referred to as "joint venture subsidiary"), this Chapter shall apply in accordance with the following: <Amended on Dec. 31, 2024; Dec. 23, 2025>

1. Articles 66 through 71, 73-2 through 73-7, 74 through 76, paragraph (2) of this Article, Articles 77-2, and 78 through 81 shall apply as the joint venture and a joint venture subsidiary are deemed constituent entities of a separate MNE Group and the joint venture is deemed the UPE of such MNE Group;

2. Articles 72 and 73 shall apply to a parent entity that directly or indirectly holds ownership interests in the joint venture or a joint venture subsidiary, as prescribed by Presidential Decree.

(2) This Chapter shall apply to at least two groups that meet all of the following requirements and to entities of each relevant group, as prescribed by Presidential Decree, as such groups and entities are deemed a single MNE Group and constituent entities thereof, respectively:

1. Any of the following arrangements shall be entered into by ultimate parent entities of separate groups:

a. An arrangement prescribed by Presidential Decree, under which one of the ultimate parent entities prepares one consolidated financial statement in which all the entities of the separate groups are combined with each other (hereafter in this Article referred to as "stapled structure");

b. An arrangement prescribed by Presidential Decree, under which the business of the separate groups is combined by contract (hereafter in this Article referred to as "dual-listed arrangement");

2. Any entity or permanent establishment of the combined group under a stapled structure or dual-listed arrangement shall be located in a different country with respect to the location of at least one other entity of such combined group.

(3) Deleted. <Dec. 31, 2023>

(4) Deleted. <Dec. 31, 2023>

[This Article Added on Dec. 31, 2022]

Article 77-2(Special cases concerning dividend tax credit) #

(1) The GloBE income of each constituent entity specified in the following subparagraphs for each business year shall be calculated by deducting dividends prescribed by Presidential Decree that are distributed within 12 months from the end of the relevant business year, and if the amount remaining after such deduction is a negative figure, it shall be deemed zero: <Amended on Dec. 31, 2024>

1. The UPE of a MNE Group that is subject to the system prescribed by Presidential Decree that deducts dividends from the taxable income of dividend payers (hereafter referred to as "dividend deduction system" in this paragraph);

2. A constituent entity that satisfies all of the following requirements:

a. It shall be a constituent entity subject to the dividend deduction system;

b. The UPE of a MNE Group subject to the dividend deduction system shall directly hold shares of the relevant constituent entity (limited to a constituent entity located in a country where the relevant UPE is located; hereafter the same shall apply in this item) or indirectly hold shares through one or more constituent entities subject to the dividend deduction system.

(2) Where the UPE of a MNE Group is a flow-through entity, the GloBE income and loss of such flow-through entity for each fiscal year shall be calculated by deducting the following relevant amounts:

1. GloBE income for each fiscal year: The amount of GloBE income attributable to ownership interests prescribed by Presidential Decree, such as the amount of GloBE income that is attributable to each ownership interest in the flow-through entity and subject to taxation at the minimum or higher rate;

2. GloBE loss for each fiscal year: Where the holder of each ownership interest in the relevant flow-through entity to which the GloBE loss amount is attributable can deduct the GloBE loss amount in calculating the taxable income, the relevant amount.

(3) The GloBE income and loss for each business year in the fixed place of business (including a permanent establishment of a constituent entity the shares of which is directly held by the UPE of a MNE Group or indirectly held through a flow-through entity under the former part, with the exception of the calculation formula, of Article 79(1); hereafter the same shall apply in this paragraph) of the UPE of a MNE Group (limited to a flow-through entity; hereafter the same shall apply in this paragraph) shall be calculated by subtracting the following amounts: <Added on Dec. 31, 2024>

1. GloBE income for each business year: The amount of GloBE income attributable to ownership interests prescribed by Presidential Decree, such as the GloBE income amount that is attributable to each ownership interest in the relevant permanent establishment, which is subject to taxation at the minimum tax rate or above;

2. GloBE loss for each business year: Where the holder of each ownership interest in the relevant permanent establishment to which the GloBE loss amount is attributable may deduct the GloBE loss amount in calculating the taxable income, the relevant amount.

(4) Matters necessary for the covered tax adjustment, etc. of the constituent entity subject to the deduction of GloBE income under paragraphs (1) through (3) shall be prescribed by Presidential Decree. <Added on Dec. 31, 2024>

[This Article Added on Dec. 31, 2023]

Article 79(Special cases concerning investment entities) #

(1) With respect to the country of residence of a constituent entity that is not UPE (excluding a tax transparent entity (referring to an entity fulfilling the requirements prescribed by Presidential Decree, such as that the income attributable to the ownership interest in a flow-through entity is subject to taxation in the country where a person who directly or indirectly holds the ownership interest is located; hereinafter the same shall apply in this Article); hereinafter the same shall apply in this Article), the effective tax rate for investment constituent entities for each business year shall be calculated separately from the effective tax rate specified in Articles 69 and 73-5 in accordance with the following formula; In such cases, matters necessary to apply the following formula shall be prescribed by Presidential Decree: <Amended on Dec. 31, 2023; Dec. 31, 2024; Dec. 23, 2025>

┌────────────────────────────────────────┐

│ The effective tax rate for investment entities located in the relevant country = A │

│ ──────│

│ (B - C) │

│ │

│ A: The sum of the adjusted covered taxes of each investment constituent entity │

│ B: The sum of the allocable share of each investment constituent entity's global anti-base erosion income │

│ C: The sum of the allocable share of each investment constituent entity's global anti-base erosion loss with the negative sign removed │

└────────────────────────────────────────┘

(2) Where the value obtained by deducting C from B is the nil or negative amount for the relevant fiscal year in applying the formula prescribed in paragraph (1), the effective tax rate for investment entities located in the relevant country shall not be calculated.

(3) The top-up tax and domestic top-up tax of investment entities located in the relevant country for each fiscal year shall be calculated as specified in the following subparagraphs; in such cases, matters necessary to apply the formula specified in the following subparagraphs shall be prescribed by Presidential Decree: <Amended on Dec. 23, 2025>

1. Top-up tax of investment entities located in the relevant country: To be calculated in accordance with the following formula:

┌───────────────────────────────────────┐

│ The top-up tax of investment entities located in the relevant country = (A x B) + C - D │

│ │

│ A: The top-up tax percentage for investment entities located in the relevant country │

│ B: The excess profit of investment entities located in the relevant country │

│ C: The additional current top-up tax of investment entities located in the relevant country │

│ D: The qualified domestic minimum top-up tax of investment entities located in the relevant country │

└───────────────────────────────────────┘

2. Domestic top-up tax of investment entities located in the country: To be calculated in accordance with the following formula:

┌─────────────────────────────────────────────┐

│ The top-up tax of investment entities located in the the Republic of Korea = (A x B) + C │

│ │

│ A: Domestic top-up tax rate for investment entities located in the Republic of Korea │

│ B: Domestic excess profit of investment entities located in the Republic of Korea │

│ C: The current domestic top-up tax of investment entities located in the Republic of Korea │

└─────────────────────────────────────────────┘

(4) The top-up tax of the relevant investment constituent entity for each fiscal year shall be calculated in accordance with the following formula:

┌──────────────────────────────────────┐

│ The top-up tax of the relevant investment constituent entity = A × B │

│ ───── │

│ C │

│ │

│ A: The top-up tax of investment entities located in the relevant country prescribed in paragraph (3) │

│ B: The allocable share of the relevant investment constituent entity's global anti-base erosion income │

│ C: The sum of the allocable share of the global anti-base erosion income of each investment constituent entity located in the relevant country │

└──────────────────────────────────────┘

(5) Notwithstanding paragraphs (1) through (4), in cases prescribed by Presidential Decree, such as where the constituent entity-owner of an investment constituent entity is subject to taxation based on the fair value of its ownership interest in the relevant investment constituent entity, this Chapter may apply, deeming the investment constituent entity as a tax transparent entity at the election of a filing constituent entity. <Amended on Dec. 31, 2023>

(6) Notwithstanding paragraphs (1) through (4), in cases prescribed by Presidential Decree, such as where it is reasonably expected that the allocable shares of the constituent entity-owner of an investment constituent entity (excluding an investment constituent entity; hereinafter the same shall apply in this paragraph) will be taxed at the minimum tax rate or above, the following methods may apply as prescribed by Presidential Decree, according to the choice of the filing constituent entity: <Amended on Dec. 31, 2023; Dec. 31, 2024; Dec. 23, 2025>

1. An amount prescribed by Presidential Decree, such as the amount of the investment constituent entity's GloBE income that is distributed to the constituent-entity owner, shall be included in the calculation of the constituent entity-owner's GloBE income;

2. Where, as of the end of a fiscal year, there exists an amount prescribed by Presidential Decree, including any amount of the GloBE income of an investment constituent entity for the third fiscal year preceding the beginning of the relevant fiscal year that remains undistributed, such investment constituent entity shall be treated as a low-taxed constituent entity, and the amount calculated in accordance with the method prescribed by Presidential Decree, including by multiplying the minimum tax rate by the amount attributable to shareholder constituent entities among such amount, shall be deemed to be top-up tax and domestic top-up tax of such investment constituent entity, and Articles 72, 73, and 73-7 shall apply.

[This Article Added on Dec. 31, 2022]

Article 80(Exemption from application) #

(1) Notwithstanding Article 70(1) and Article 73-6, with respect to a country that satisfies the exemption requirements prescribed by Presidential Decree in a transitional fiscal year prescribed by Presidential Decree (hereafter referred to as a "transitional fiscal year"), the top-up tax and the domestic top-up tax of such country for the transitional fiscal year may, at the election of the filing constituent entity, be deemed to be zero; provided, the foregoing shall not apply where the requirements prescribed by Presidential Decree are not substantiated, and in other cases prescribed by Presidential Decree. <Amended on Dec. 31, 2023; Dec. 31, 2024; Dec. 23, 2025>

(2) Paragraph (1) shall apply to each of the following groups or entities located in the same country as the constituent entity, deeming it to be located in a country that is not the country of location of each constituent entity: <Added on Dec. 31, 2024>

1. Joint enterprise group (referring to joint enterprises and joint enterprise subsidiaries);

2. Joint enterprises not belonging to joint enterprise group.

(3) Notwithstanding Article 70(1), with respect to the country where the UPE of which nominal tax rate of covered tax is at least 20/100 is located, the top-up tax of a low-taxed constituent entity located in the relevant country may be deemed zero, according to the option of the filing constituent entity, when calculating the UTPR top-up tax under Article 73(2) for each business year prescribed by Presidential Decree. <Added on Dec. 31, 2024; Dec. 23, 2025>

(4) Notwithstanding Articles 70(1) and 73-6, a country that meets the requirements for exemption from application as prescribed by Presidential Decree, the top-up tax and domestic top-up tax for each business year may be deemed zero at the option of a filing constituent entity; provided, this shall not apply to cases prescribed by Presidential Decree, such as where any explanation of whether such requirements are satisfied is not given. <Added on Dec. 31, 2024; Dec. 23, 2025>

[This Article Added on Dec. 31, 2022]

[Title Amended on Dec. 31, 2024]

Article 83(Filing of global anti-base erosion information returns) #

(1) A local constituent entity shall file a GloBE information return for each business year with the head of the tax office having jurisdiction over the place for tax payment by the date on which 15 months (18 months for the transition year) elapse from the end date of the relevant business year or June 30, 2026, whichever is later, as prescribed by Presidential Decree. <Amended on Dec. 31, 2024>

(2) A GloBE information return to be filed by a local constituent entity under paragraph (1) may be filed by an entity prescribed by Presidential Decree that is another local constituent entity of the same MNE Group (hereafter in this Chapter referred to as "designated local entity") on its behalf.

(3) Notwithstanding paragraphs (1) and (2), a local constituent entity need not file a GloBE information return under paragraphs (1) and (2) in cases prescribed by Presidential Decree, such as where a constituent entity of the same MNE Group that is located in a foreign country files a return corresponding to a GloBE information return specified in paragraph (1) with the tax authority of the relevant country of residence.

(4) Even where a local constituent entity does not file a GloBE information return under paragraph (3), the local constituent entity or a designated local entity shall file a return with the head of the tax office having jurisdiction over the place for tax payment on matters regarding a constituent entity located in a foreign country that files a return under paragraph (3) within by the date on which 15 months (18 months for the transition year) elapse from the end date of the relevant business year or June 30, 2026, whichever is later. <Amended on Dec. 31, 2023; Dec. 31, 2024>

(5) Where GloBE information returns or other documents submitted under paragraphs (1) and (2) are incomplete or any error is found therein, the head of the tax office having jurisdiction over the place for tax payment or the commissioner of the competent regional tax office may request a correction thereof.

[This Article Added on Dec. 31, 2022]

Article 84(Filing of returns on allocable share of top-up tax and payment thereof) #

(1) A local constituent entity obligated to pay the Republic of Korea the allocable share of top-up tax and others shall file a return on the allocable share of top-up tax and others with the head of the tax office having jurisdiction over the place for tax payment by the date on which 15 months (18 months for the first applicable year) elapse from the end date of the relevant business year or June 30, 2026, whichever is later, as prescribed by Presidential Decree. In such cases, the exchange rate used to convert the allocable share of top-up tax and others into won shall be prescribed by Presidential Decree. <Amended on Dec. 31, 2024; Dec. 23, 2025>

(2) A local constituent entity obligated to pay the Republic of Korea the allocable share of top-up tax and others shall pay the relevant amount to the tax office having jurisdiction of the place for tax payment, the Bank of Korea (including its branch offices), or a postal office by the return deadline specified in paragraph (1), as prescribed by Presidential Decree. <Amended on Dec. 23, 2025>

(3) Where the allocable share of top-up tax and others to be paid by a local constituent entity exceeds 10 million won, it may pay part of the relevant amount in installments within one month (two months in the case of a small or medium enterprise prescribed in Article 6(1) of the Act on Restriction on Special Cases concerning Taxation) after the payment deadline, as prescribed by Presidential Decree. <Amended on Dec. 23, 2025>

(4) Where a return on any allocable share of top-up tax and others is filed under paragraph (1), a return on the tax base for and amount of a national tax shall be deemed filed for purposes of applying the Framework Act on National Taxes. <Amended on Dec. 23, 2025>

(5) Articles 47-2 and 47-3 of the Framework Act on National Taxes shall not apply to a local constituent entity which is obliged to report and pay the allocable share of top-up tax and others for the fiscal year in the transition period to the Republic of Korea, and the additional tax for delayed payment on the allocable share of top-up tax and others to the relevant local constituent entity shall be the amount equivalent to 50/100 of the amount under Article 47-4(1) of that Act. <Added on Dec. 31, 2023; Dec. 23, 2025>

[This Article Added on Dec. 31, 2022]

[Title Amended on Dec. 23, 2025]

Article 85(Determination, rectification, notification, and collection) #

(1) Where a local constituent entity fails to file a return under Article 84, the head of the tax office having jurisdiction over the place for tax payment or the commissioner of the competent regional tax office shall determine its allocable share of top-up tax and others for each fiscal year. <Amended on Dec. 23, 2025>

(2) Where any error or omission is found in the details of a return filed by a local constituent entity under Article 84, the head of the tax office having jurisdiction over the place for tax payment or the commissioner of the competent regional tax office shall rectify its allocable share of top-up tax and others. <Amended on Dec. 23, 2025>

(3) Where the head of the tax office having jurisdiction over the place for tax payment or the commissioner of the competent regional tax office determines or rectifies any allocable share of top-up tax and others under paragraphs (1) and (2), he or she shall do so based on books or other evidentiary documents. <Amended on Dec. 23, 2025>

(4) Where the head of the tax office having jurisdiction over the place for tax payment or the commissioner of the competent regional tax office determines or rectifies any allocable share of top-up tax and others under paragraphs (1) and (2) and then discovers any error or omission in the determination or rectification, he or she shall re-rectify the relevant allocable share of top-up tax and others immediately. <Amended on Dec. 23, 2025>

(5) Where a local constituent entity is deemed likely to evade its allocable share of top-up tax and others during the relevant fiscal year on any ground prescribed by Presidential Decree (hereafter in this Article referred to as "ground for occasional imposition"), the head of the tax office having jurisdiction over the place for tax payment or the commissioner of the competent regional tax office may impose the allocable share of top-up tax and others on the entity on an occasional basis (hereinafter referred to as "occasional imposition"). In such cases, a local constituent entity obligated to pay its allocable share of top-up tax and others to the Republic of Korea shall file a return on the allocable share of top-up tax and others for each fiscal year under Article 84 even where it has paid the tax amount imposed occasionally. <Amended on Dec. 23, 2025>

(6) For purposes of applying paragraph (5), the period from the date the relevant fiscal year commences to the date a ground for occasional imposition arises shall be the period of occasional imposition; provided, where a ground for occasional imposition arises before the deadline for filing a return on the allocable share of top-up tax and others under Article 84 for the immediately preceding fiscal year (excluding where a return on the allocable share of top-up tax and others for the immediately preceding fiscal year is filed), the period from the date the immediately preceding fiscal year commences to the date a ground for occasional imposition arises shall be the period of occasional imposition. <Amended on Dec. 23, 2025>

(7) Matters necessary for occasional imposition shall be prescribed by Presidential Decree.

(8) Where the head of the tax office having jurisdiction over the place for tax payment or the commissioner of the competent regional tax office determines or rectifies an entity's allocable share of top-up tax and others under paragraphs (1) and (2), he or she shall notify the entity of the determination or rectification, as prescribed by Presidential Decree. <Amended on Dec. 23, 2025>

(9) Where a local constituent entity fails to pay all or part of its allocable share of top-up tax and others, the head of the tax office having jurisdiction over the place for tax payment shall collect the unpaid allocable share of top-up tax and others pursuant to the National Tax Collection Act. <Amended on Dec. 23, 2025>

[This Article Added on Dec. 31, 2022]

Article 91(Administrative fines for noncompliance with obligation to submit data on overseas subsidiaries) #

(1) Where a resident or domestic corporation required to submit data, including the statement, etc. of an overseas direct investment, pursuant to Article 58(1) (requiring the submission of data under Article 58(1)1 through 4, only where a resident or domestic corporation that has made overseas direct investments under Article 3(1)18 of the Foreign Exchange Transactions Act directly or indirectly owns at least 10 percent of the total number of issued stocks or the total amount of investment of a corporation that has attracted such overseas direct investments) falls under any of the following cases, the resident or domestic corporation shall be subject to an administrative fine not exceeding 50 million won; provided, no administrative fine shall be imposed where there exists any unavoidable cause prescribed by Presidential Decree, such as where it is deemed impracticable for such resident or domestic corporation to submit data by the deadline under Article 58(1) or (6): <Amended on Dec. 21, 2021; Dec. 31, 2023>

1. Where the resident or domestic corporation fails to submit the statement, etc. of an overseas direct investment by the deadline under Article 58(1) or submits any false statement, etc. of an overseas direct investment;

2. Where a resident or domestic corporation in receipt of a request for submission or supplementation of data under Article 58(5) fails to submit such data by the deadline under Article 58(6) or submits any false data.

(2) Where a resident or domestic corporation required to submit the statement of overseas real estate, etc. under Article 58(2) falls under any of the following cases, the resident or domestic corporation shall be subject to an administrative fine not exceeding 10 percent of the acquisition value, disposal value, and income from investment operations of the overseas real estate, etc. prescribed by Presidential Decree (the maximum amount of 100 million won); provided, no administrative fine shall be imposed where there exists any unavoidable cause prescribed by Presidential Decree, such as where it is deemed impracticable for such resident or domestic corporation to submit data by the deadline under Article 58(2) or (6): <Amended on Dec. 21, 2021; Dec. 31, 2023>

1. Where the resident or domestic corporation fails to submit the statement of overseas real estate, etc. by the deadline under the provisions, with the exception of the subparagraphs, of Article 58(2) or submits any false statement of overseas real estate, etc.;

(3) If a resident or domestic corporation fails to explain the source of the amount subject to explanation about the acquisition of fund or gives a false explanation in violation of Article 59(2) and (3), the resident or domestic corporation shall be subject to an administrative fine equivalent to 20 percent of the unexplained or falsely explained amount; provided, no administrative fine shall be imposed where there exists any natural disaster or any unavoidable cause prescribed by Presidential Decree. <Amended on Dec. 21, 2021>

(4) Where a trustor who is obligated to submit the details of overseas trusts under Article 58(3) falls under any of the following subparagraphs, the trustor shall be imposed an administrative fine not exceeding 10 percent (up to 100 million won) of the value of overseas trust property under paragraph (8) of that Article; provided, where there exist unavoidable reasons prescribed by Presidential Decree, such as the case where it is deemed impossible or unnecessary to submit data by the deadline specified in Article 58(3) or (6), an administrative fine shall not be imposed: <Added on Dec. 31, 2023>

1. Where the trustor fails to submit the details of overseas trust by the deadline specified in Article 58(3) or submits any false details of overseas trust;

(5) Administrative fines under paragraphs (1) through (4) shall be imposed and collected by the tax authority, as prescribed by Presidential Decree. <Amended on Dec. 31, 2023>

[Moved from Article 63 <Dec. 31, 2022>]

ADJUSTMENT OF INTERNATIONAL TAXES ACT

Article 1(Purpose) #

Article 2(Definitions) #

Article 3(Substance over form principle regarding international transactions) #

Article 4(Relationship to other statutes) #

Article 5(Relationship between tax laws and tax treaties) #

Article 6(Reporting and rectification claim by arm’s length price) #

Article 7(Determination and rectification by arm’s length price) #

Article 8(Arm’s length pricing method) #

Article 9(Determination and rectification by arm’s length cost sharing) #

Article 10(Transaction involving third party) #

Article 11(Recognition of offset transactions) #

Article 12(Countermeasures against tax adjustment by contracting states) #

Article 13(Disposal of income and tax adjustment) #

Article 14(Application for advance pricing agreements and approval therefor) #

Article 15(Compliance with terms and conditions of advance pricing agreements) #

Article 16(Obligation to submit data on international transactions) #

Article 17(Special cases regarding application of penalty taxes) #

Article 18(Pre-adjustment of arm’s length pricing method for national taxes and method for customs valuation) #

Article 19(Requests for rectification of national taxes following rectification of customs value) #

Article 20(Adjustment of taxation on arm’s length prices for national taxes and customs value) #

Article 21(Provision of information on taxation of customs value) #

Article 22(Exclusion of interest paid on excessive borrowings compared to amount of investment from deductible expenses) #

Article 23(Borrowing transactions through third party) #

Article 24(Exclusion of interest overpaid compared to income from deductible expenses) #

Article 25(Exclusion of interest paid on hybrid financial instrument transactions from deductible expenses) #

Article 26(Order of applying exclusion of paid interest from deductible expenses) #

Article 27(Specific foreign corporations’ retained earnings deemed dividends) #

Article 28(Exclusion of application of specific foreign corporations’ retained earnings deemed dividends) #

Article 29(Exceptional application of specific foreign corporations’ retained earnings deemed dividends) #

Article 30(Computation of distributable retained earnings and amounts deemed dividends) #

Article 31(Timing of treating dividends as taxable gains) #

Article 32(Exclusion of actual dividends from taxable gains) #

Article 33(Deduction of taxes paid to foreign countries and rectification claims therefor) #

Article 34(Submission of data on specific foreign corporations) #

Article 34-2(Special cases concerning imposition of tax on income attributable to foreign transparent entities) #

Article 35(Special cases regarding imposition of gift tax on overseas donation) #

Article 36(Exchange of tax and financial information) #

Article 37(Inquiry and verification) #

Article 38(Confidentiality) #

Article 39(Cooperation in tax audit) #

Article 40(Entrustment of tax collection) #

Article 41(Issuance of resident certificates) #

Article 42(Conditions for commencing mutual agreement procedure) #

Article 43(Arbitration for mutual agreement) #

Article 44(Applicants’ obligations to cooperate) #

Article 45(Start date of mutual agreement procedure) #

Article 46(End date of mutual agreement procedure) #

Article 47(Enforcement of terms and conditions mutually agreed upon) #

Article 48(Extended application of terms and conditions mutually agreed upon) #

Article 49(Special cases on application of extension of deadline for payment) #

Article 50(Special cases on application of period of appeal and period of decision on appeal) #

Article 51(Special cases regarding statute of limitations period for tax assessment) #

Article 51-2(Consultative body for implementation of mutual agreement procedure) #

Article 52(Definitions) #

Article 53(Reporting on foreign financial accounts) #

Article 54(Exemption from obligation to report foreign financial accounts) #

Article 55(Revised and overdue reports of foreign financial accounts) #

Article 56(Explanation about source of noncompliance amounts in relation to obligation to report foreign financial accounts) #

Article 57(Confidentiality of foreign financial account information) #

Article 58(Obligation to submit data on overseas subsidiaries) #

Article 59(Explanation about source of funds for acquisition in cases of noncompliance with obligation to submit data on overseas subsidiaries) #

Article 60(Purpose of global anti-base erosion tax) #

Article 61(Definitions) #

Article 62(Entities subject to application of this chapter) #

Article 63(Taxpayers) #

Article 64(Locations of entities) #

Article 65(Places for tax payment by entities) #

Article 66(Calculation of global anti-base erosion income or loss) #

Article 67(Calculation of adjusted covered taxes) #

Article 68(Post-filing adjustments and tax rate changes) #

Article 69(Calculation of effective tax rates) #

Article 70(Calculation of top-up taxes for countries of residence of constituent entities) #

Article 71(Calculation of top-up taxes of constituent entities) #

Article 73-2(Calculation of GloBE income or loss for calculation of domestic top-up tax) #

Article 73-3(Calculation of adjusted covered taxes for calculating domestic top-up tax) #

Article 73-4(Post-filing adjustments and changes in tax rates for calculating domestic top-up tax) #

Article 73-5(Calculation of effective tax rate for calculating domestic top-up tax) #

Article 73-6(Calculation of domestic top-up tax) #

Article 74(Special cases concerning de minimis exclusion) #