CORPORATE TAX ACT

영문법령 불러오는 중…

CORPORATE TAX ACT — 법갈피

Article 4(Scope of taxable income) #

(1) Corporate tax shall be imposed on the following income of a domestic corporation; provided, it shall be limited to the income specified in subparagraphs 1 and 3 in cases of non-profit domestic corporations:

1. Income for each business year;

2. Liquidation income;

3. Capital gains from the transfer of land, etc. referred to in Article 55-2.

(2) In applying paragraph (1) 1, the income of a consolidated corporation for each business year means the income for each consolidated business year referred to in Article 76-14 (1).

(3) In applying paragraph (1) 1, the income of a non-profit domestic corporation for each business year shall be limited to the income accruing from any of the following business or revenues (hereinafter referred to as "profit-making business"):

1. Business specified by Presidential Decree among business engaging in manufacturing, construction, wholesale, retail sales, repair of consumer products, real estate, rental, or business services;

2. Interest income as prescribed in Article 16 (1) of the Income Tax Act;

3. Dividend income as prescribed in Article 17 (1) of the Income Tax Act;

4. Revenues accruing from the transfer of stocks, preemptive right to new stocks, or investment shares;

5. Revenues accruing from the disposal of tangible and intangible assets; provided, the revenues specified by Presidential Decree, among revenues accruing from the disposal of assets directly used for essential business activities, shall be excluded;

6. Revenues accruing from the transfer of assets prescribed in Article 94 (1) 2 and 4 of the Income Tax Act;

7. Revenues prescribed by Presidential Decree, which accrues from continuing activities be paid, other than those referred to in subparagraphs 1 through 6.

(4) Corporate tax shall be imposed on the following income of a foreign corporation:

1. Income accrued from domestic sources for each business year;

2. Capital gains from the transfer of land, etc. referred to in Article 95-2.

(5) In applying paragraph (4) 1, income accrued from domestic sources of a non-profit foreign corporation for each business year shall be limited to the income accruing from profit-making business.

[This Article Wholly Amended on Dec. 24, 2018]

[Moved from Article 3, Previous Article 4 is Deleted. <Dec. 24, 2018>]

Article 5(Trust income) #

(1) With regard to income that reverts to trust property, the beneficiary to receive the profits of the trust shall be deemed the owner of the trust property for the purposes of this Act. <Amended on Jan. 22, 2020>

(2) Notwithstanding paragraph (1), in the case of any of the following trusts that meets the requirements prescribed by Presidential Decree (excluding an investment trust referred to in Article 9 (18) 1 of the Financial Investment Services and Capital Markets Act and a trust for which beneficiary certificates are issued under Article 17 (1) 5-3 of the Income Tax Act), the corporate tax on the income that reverts to the trust property shall be paid by the trustee of such trust (limited to a domestic corporation or a resident defined in the Income Tax Act (hereinafter referred to as "resident")). In such cases, each trust property shall be deemed a domestic corporation: <Newly Inserted on Dec. 22, 2020; Dec. 31, 2023; Dec. 31, 2024>

1. A purpose trust referred to in the proviso, with the exception of the subparagraphs, of Article 3 (1) of the Trust Act;

2. A trust issuing beneficiary certificates referred to in Article 78 (2) of the Trust Act;

3. A limited liability trust referred to in Article 114 (1) of the Trust Act;

4. Other trusts similar to those prescribed in subparagraphs 1 through 3, which are prescribed by Presidential Decree.

(3) Notwithstanding paragraphs (1) and (2), in the case of a trust that meets the requirements prescribed by the Presidential Decree, such as the trustor having substantial control over the trust property, the trustor of the trust shall be liable to pay corporate income tax on the income attributable to the trust property. <Added on Dec. 22, 2020; Dec. 31, 2023>

(4) No revenues and expenditures from trust property of a corporation regulated by the Financial Investment Services and Capital Markets Act (excluding special accounts of an insurance company referred to in Article 251 (1) of the same Act; hereinafter the same shall apply) shall be deemed the revenues and expenditures that revert to the corporation. <Amended on Dec. 22, 2020>

[This Article Wholly Amended on Dec. 30, 2010]

Article 8(Constructive business years) #

(1) Where a domestic corporation is dissolved during a business year (excluding a dissolution due to a merger or division, and restructuring of corporation prescribed in Article 78), any of the following periods shall be deemed one business year: <Amended on Dec. 24, 2018>

1. The period from the start date of the business year until the registration date of dissolution (referring to the registration date of bankruptcy where a corporation is dissolved on the grounds of bankruptcy and the date of dissolution for any organization deemed a corporation; hereinafter the same shall apply);

2. The period from the day following the registration date of dissolution until the end date of the relevant business year.

(2) Where a domestic corporation is dissolved during a business year due to a merger or division, the period from the start date of the business year until the registration date of the merger or division shall be deemed one business year of that dissolved domestic corporation. <Amended on Dec. 24, 2018>

(3) Where a domestic corporation undergoes restructuring pursuant to any subparagraph of Article 78 during a business year, it shall be deemed that the business year before the restructuring of corporation continues. <Added on Dec. 24, 2018>

(4) The business year of a domestic corporation in the course of liquidation shall be deemed one business year by the following classifications: <Amended on Dec. 24, 2018>

1. Where the value of residual assets is determined during the business year: The period from the start date of the business year until the date the value of residual assets is determined;

2. Where the domestic corporation continues its business pursuant to Article 229, 285, 287-40, 519, or 610 of the Commercial Act: The following periods:

(a) The period from the start date of the business year until the registration date of continuation (referring to the date of actual continuation of business where continuation is not registered; hereinafter the same shall apply);

(b) The period from the day following the registration date of continuation until the end date of the business year.

(5) Where a domestic corporation is subject to a consolidated tax return system during a business year, the period from the start date of the business year to the date preceding the start date of the consolidated business year shall be deemed one business year. <Amended on Dec. 24, 2018>

(6) Where a foreign corporation with a domestic place of business ceases to have the domestic place of business during a business year, the period from the start date of the business year until the date it ceases to have the place of business shall be deemed one business year; provided, the same shall not apply where it continues to have another place of business in the Republic of Korea. <Amended on Dec. 24, 2018>

(7) Where a foreign corporation with no domestic place of business reports to the head of the tax office having jurisdiction over the place of tax payment the fact that it no longer has the domestic source income accrued from the real estate referred to in subparagraph 3 of Article 93 or the domestic source income accrued from transfer of real estate, etc. referred to in subparagraph 7 of the same Article, the period from the start date of the business year to the filing date of such report shall be deemed one business year. <Amended on Dec. 24, 2018>

[This Article Wholly Amended on Dec. 30, 2010]

Article 16(Constructive dividends or distributions) #

(1) Any of the following amounts shall be deemed the amount of profit dividends or surpluses distributed from a corporation when calculating the amount of income for the business year of a domestic corporation which is a stockholder or investor (hereinafter referred to as "stockholder, etc.") of other corporation: <Amended on Dec. 31, 2011; Dec. 20, 2016; Dec. 24, 2018>

1. The sum of money acquired by a domestic corporation which is a stockholder, etc. through the retirement of stocks, reduction of capital, retirement or withdrawal of an employee, or reduction of investment and the value of other assets in excess of the amount necessary to acquire the relevant stocks or investment shares (hereinafter referred to as "stocks, etc.");

2. The value of stocks, etc., that a domestic corporation which is a stockholder, etc. acquires by transferring all or some of corporation's surplus to capital or financing; provided, the same shall not apply where any of the following amounts is transferred to capital:

(a) An amount prescribed by Presidential Decree as the capital reserve referred to in Article 459 (1) of the Commercial Act;

(b) The revaluation reserve prescribed in the Assets Revaluation Act (excluding an amount equivalent to any difference in the revaluation of land under Article 13 (1) 1 of the same Act);

3. Where the equity ratio of any domestic corporation which is a stockholder, etc. of a corporation, other than the corporation, increases because such corporation transfers its capital, as prescribed in the items of subparagraph 2 while holding treasury stocks and equity shares, the value of stocks, etc., equivalent to the equity ratio so increased;

4. The amount of money and the value of other assets acquired by a domestic corporation which is a stockholder, etc. of a dissolved corporation (including members of an organization deemed a corporation) through distribution of residual assets of the corporation in excess of the amount necessary for the acquisition of the relevant stocks, etc.;

5. The cost of a merger acquired by a domestic corporation which is a stockholder, etc. of a merged corporation, in excess of the amount necessary for the acquisition of the stocks, etc., of the merged corporation;

6. The costs of a division acquired by a domestic corporation which is a stockholder, etc. of a corporation established through division or the disappearing counterpart corporation to a division and merger, in excess of the amount necessary for the acquisition of the stocks of the divided corporation or disappearing counterpart corporation to a division and merger (limited to stocks reduced by retirement or other means where the divided corporation survives the division).

(2) The cost of a merger and division in paragraph (1) 5, 6, Articles 44 and 46 shall be the following amounts: <Added on Dec. 24, 2018>

1. The cost of a merger: The sum of values of stocks, etc., of a merging corporation acquired through merger from the merging corporation (including a domestic corporation holding the total number of outstanding stocks or total investment amount of a merging corporation as at the registration date of the merger) and the values of money or other assets;

2. The cost of a division: The sum of values of stocks of a corporation newly established through division or the counterpart corporation to the division (including the domestic corporation that holds the total number of outstanding stocks of the counterpart corporation to the division and merger or the total amount of investment) acquired through division from a corporation newly established through division or the counterpart corporation to the division and the values of money or other assets.

(3) In applying paragraph (1), matters necessary for the timing for the distribution of profit dividends or surpluses, the evaluation of the value of stocks, etc., and other matters, shall be prescribed by Presidential Decree. <Amended on Dec. 24, 2018>

[This Article Wholly Amended on Dec. 30, 2010]

Article 17(Non-inclusion of gains from capital transactions in gross income) #

(1) None of the following amounts shall be included in the gross income for the purpose of calculating the amount of income of a domestic corporation for each business year: <Amended on Dec. 31, 2011; Jan. 1, 2013; Dec. 15, 2015; Dec. 24, 2018>

1. An amount exceeding the par value of stocks issued: Where stocks are issued in excess of the par value, the amount exceeding the par value of stocks issued (referring to the amount exceeding the amount counted as capital, out of the issue price, in cases of non-par value stocks); provided, where stocks, etc. are issued by converting debts into equity, the amount of such stocks issued in excess of the market price referred to in Article 52 (2) shall be excluded herefrom;

2. Marginal profits from an all-inclusive share swap: The amount exceeding the increased capital of a wholly-owning parent corporation, where the maximum limit of capital increase referred to in Article 360-7 of the Commercial Act exceeds the increased capital of the wholly-owning parent corporation as a result of an all-inclusive share swap referred to in Article 360-2 of the same Act;

3. Marginal profits from an all-inclusive share transfer: The amount exceeding the equity capital of a wholly-owning parent corporation newly incorporated, where the maximum limit of the equity increase referred to in Article 360-18 of the Commercial Act exceeds the equity capital of the wholly-owning parent corporation as a result of an all-inclusive share transfer referred to in Article 360-15 of the same Act;

4. Marginal profits from capital reduction: The amount exceeding the amount paid for the cancellation of stocks and the return of stock prices and the amount appropriated for compensation for losses exceeding the amount reduced;

5. Marginal profits from a merger: The amount exceeding the amount of debts to which the surviving corporation succeeds from the disappearing corporation and the increased amount of the equity capital of the surviving corporation or the equity capital of the corporation newly incorporated as a consequence of the merger, where the value of the assets to which the corporation surviving a merger pursuant to Article 174 of the Commercial Act succeeds from the disappearing corporation exceeds the amount of debts to which the surviving corporation succeeds from the disappearing corporation and the increased amount of the equity capital of the surviving corporation or the equity capital of the corporation newly incorporated as a consequence of the merger; provided, the amount identified as gross income under this Act shall be excluded, where the value of assets to which the surviving corporation succeeds from the disappearing corporation exceeds the amount of debts to which the surviving corporation succeeds from the disappearing corporation, the amount paid to stockholders of the disappearing corporation, and the value of stocks;

6. Marginal profits from a division: The amount exceeding the amount of debts to which a corporation succeeds from the investing corporation, the amount paid to stockholders of the investing corporation, and the equity capital of the corporation newly incorporated or the increased amount of the equity capital of the surviving corporation, where the value of the assets invested in a corporation newly incorporated as a consequence of a division or a division and merger referred to in Article 530-2 of the Commercial Act or in a corporation surviving such division or such division and merger exceeds the amount of debts to which such corporation succeeds from the investing corporation, the amount paid to stockholders of the investing corporation, and the equity capital of the corporation newly incorporated or the increased amount of the equity capital of the surviving corporation.

(2) Amounts prescribed by Presidential Decree which are not subject to subparagraph 6 of Article 18 among the amounts in excess referred to in the proviso to paragraph (1) 1 shall not be included in the gross income of the relevant business year and may be appropriated for covering losses incurred in each business year thereafter.

[This Article Wholly Amended on Dec. 30, 2010]

Article 18(Non-inclusion of evaluation profits in gross income) #

None of the following amounts shall be included in the gross income for the purpose of calculating the amount of income of a domestic corporation for each business year: <Amended on Dec. 31, 2011; Jan. 1, 2014; Dec. 24, 2018; Dec. 31, 2019; Dec. 31, 2022; Dec. 31, 2023>

1. Profits from the evaluation of assets; provided, profits from the evaluation referred to in each subparagraph of Article 42 (1) shall be excluded herefrom;

2. The income on which tax is already imposed for each business year (including non-taxable or exempted income under this Act or other statutes);

3. An amount refunded or refundable, out of the corporate tax or local corporate income tax not included in deductible expenses under subparagraph 1 of Article 21, but set off against other taxes;

4. Interest on the refund of overpaid or erroneously-paid national or local taxes;

5. Output tax of value-added tax;

6. An amount appropriated for covering carried forward losses prescribed by Presidential Decree among the value of assets gratuitously acquired (excluding national subsidies under Article 36), and the amount of reduced debt due to exemption from or expiration of debts;

7. An amount paid or payable by a consolidated subsidiary corporation or consolidated parent corporation under Article 76-19 (2) or (3);

8. Dividends (limited to the book value of stocks held by a domestic corporation) received by deducting the capital reserve under Article 461-2 of the Commercial Act; provided, the dividends received by reducing the capital reserves specified in any of the following items shall be excluded.

(a) Capital reserve funds not specified in Article 16 (1) 2 (a);

(b) The amount (limited to the amount prescribed by Presidential Decree) equivalent to the revaluation reserve fund under Article 16 (1) 2 (b) of the merged corporation among the gains on merger under Article 17 (1) 5 following a qualified merger under Article 44 (2) or (3).

(c) The amount (limited to the amount prescribed by Presidential Decree) equivalent to the revaluation reserve fund under Article 16 (1) 2 (b) of the divided corporation among the gains on division under Article 17 (1) 6 following an eligible division under Article 46 (2).

[This Article Wholly Amended on Dec. 30, 2010]

Article 18-2(Non-inclusion of domestic corporations' dividend income in gross income) #

(1) The amount calculated by subtracting the amount in subparagraph 2 from the amount in subparagraph 1, among profit dividends or surplus distributions or constructive dividends or distributions provided in Article 16 (hereafter in this Article and Article 76-14, referred to as "dividend income") that a domestic corporation (excluding a non-profit domestic corporation that appropriates reserve funds for proper purpose business as deductible expenses pursuant to Article 29) receives from other corporation invested by the relevant domestic corporation (hereafter in this Article, referred to as "invested corporation") shall not be included in gross income for the purpose of calculating the amount of income for each business year. In such cases, where the amount is less than zero, it shall be deemed nil: <Amended on Dec. 31, 2019; Dec. 31, 2022>

1. The sum of the amount calculated by multiplying the dividend income of each invested corporation by the ratio of non-inclusion in gross income by the classification in the following table

┌──────────────┬──────┐

│The ratio of investment in invested corporation│The ratio of non-inclusion in gross income│

├──────────────┼──────┤

│At least 50 percent│100 percent│

├──────────────┼──────┤

│At least 20 percent but less than 50 percent│80 percent │

├──────────────┼──────┤

│Less than 20 percent│30 percent│

└──────────────┴──────┘

2. The amount calculated as prescribed by Presidential Decree, considering the ratio of non-inclusion in gross income and the amount of investment in invested corporation referred to in subparagraph 1 among the interest on borrowings to the total assets of a domestic corporation, where interest on borrowings has been paid by the domestic corporation in each business year.

(2) Paragraph (1) shall not apply to any of the following dividend incomes: <Amended on Dec. 22, 2020; Dec. 31, 2023>

1. The dividend income accruing upon holding stocks, etc. acquired within three months prior to the base date of dividend distribution;

2. Deleted. <Dec. 31, 2022>

3. The dividend income paid by any corporation which is entitled to income deductions on the dividend payable under Article 51-2 or Article 104-31 of the Act on Restriction on Special Cases concerning Taxation;

4. The dividend income paid by any corporation (limited to corporation prescribed by Presidential Decree), which is entitled to the non-taxation, exemption, or reduction of corporate tax under this Act and the Act on Restriction on Special Cases concerning Taxation;

5. The amount of dividend income received from corporate taxable trust property entitled to income deduction with respect to the dividends paid pursuant to Article 75-14.

6. The dividend income paid by reducing the revaluation reserve under of Article 16 (1) 2 of this Act, in violation of Article 28 (2) of the Assets Revaluation Act.

7. The dividend income received by reducing the capital reserve falling under subparagraph 8 (b) and (c) of Article 18;

8. The dividend income prescribed by Presidential Decree, for which corporate tax is not imposed on the income of the invested corporation, such as the amount of property acquired by a domestic corporation who is a stockholder, etc. that exceeds the original acquisition value of stocks, etc. due to a decrease in capital.

(3) In applying paragraphs (1) and (2), matters necessary for the method for computing the ratio of equity investment by a domestic corporation in an invested corporation, amounts excluded from gross income, the scope of borrowings and interest on borrowings, submission of a detailed dividend income statement, etc. shall be prescribed by Presidential Decree.

[This Article Wholly Amended on Dec. 24, 2018]

[Moved from Article 18-3; previous Article 18-2 moved to Article 18-3 <Dec. 24, 2018>]

Article 18-4(Non-inclusion of dividend income of foreign subsidiaries in gross income) #

(1) Where a domestic corporation (excluding indirect investment companies, etc. referred to in Article 57-2 (1)) has a foreign subsidiary [referring to a foreign corporation in which the domestic corporation has invested by holding at least 10/100 of the total number of its outstanding voting stocks or the total amount of investment (5/100 in the case of a foreign corporation conducting an overseas resources development project under Article 22 of the Act on Restriction on Special Cases concerning Taxation), and which meets the requirements prescribed by Presidential Decree; hereafter in this Article and Article 41 the same shall apply], an amount equivalent to 95/100 of the dividend or distribution of surplus received from such foreign subsidiary or an amount deemed to be dividend or distribution pursuant to Article 16 (hereafter in this Article referred to as "dividend income") shall not be included in gross income for the purpose of calculating the amount of income for each business year.

(2) Where a domestic corporation receives dividend income from a foreign corporation (excluding foreign subsidiaries) in which the relevant domestic corporation has invested after reducing its capital reserve, which is of a nature equivalent to the dividend not included in gross income under subparagraph 8 of Article 18, the amount equivalent to 95/100 of such amount shall not be included in gross income for the purpose of calculating the amount of income for each business year.

(3) Paragraph (1) shall not apply to the amount deemed to have been distributed to a domestic corporation with respect to retained earnings of a specific foreign corporation under Articles 27 (1) and 29 (1) and (2) of the Adjustment of International Taxes Act and to the amount of dividend income when such retained earnings are actually distributed.

(4) Notwithstanding paragraph (1), the amount falling under any of the following shall be included in gross income for the purpose of calculating the amount of income for each business year:

1. Dividend income received from a specific foreign corporation that meets all the requirements prescribed in the subparagraphs of Article 27 (1) of the Adjustment of International Taxes Act, as dividend income prescribed by Presidential Decree;

2. Dividend income paid to a domestic corporation following the transaction of hybrid financial instruments (referring to financial instruments that have the characteristics of both equity and liabilities, as prescribed by Presidential Decree);

3. Dividend income, similar to those provided for in subparagraphs 1 and 2, prescribed by Presidential Decree.

(5) A domestic corporation that intends to be governed by paragraph (1) shall submit a detailed statement of dividend income received from its foreign subsidiary to the head of the tax office having jurisdiction over the place of tax payment.

(6) In applying paragraphs (1) through (5), matters necessary for the method for calculating the ratio of investment made by a domestic corporation in a foreign subsidiary, the method for calculating the amount excluded from gross income, the submission of a detailed statement of dividend income from a foreign subsidiary, etc. shall be prescribed by Presidential Decree.

[This Article Added on Dec. 31, 2022]

Article 23(Non-inclusion of depreciation costs in deductible expenses) #

(1) Where a domestic corporation counts as losses the depreciation costs of tangible and intangible assets prescribed by Presidential Decree, such as buildings, machinery, equipment and patent rights, except land (hereafter in this Article, referred to as "depreciable assets") when settlement of accounts is fixed for the relevant business year, the depreciation costs appropriated, within the limit of the amount computed as prescribed by Presidential Decree (hereafter in this Article, referred to as "allowable depreciation"), shall be included in deductible expenses for the purpose of calculating the amount of income of a domestic corporation for the relevant business year, and the amount appropriated in excess of the allowable depreciation shall not be included in such deductible expenses. <Amended on Dec. 24, 2018>

(2) Notwithstanding paragraph (1), the depreciation costs of tangible assets and intangible assets prescribed by Presidential Decree, among depreciable assets owned by a domestic corporation that applies the accounting standards (hereinafter referred to as "Korean International Financial Reporting Standards (K-IFRS)") under Article 5 (1) 1 of the Act on External Audit of Stock Companies may be additionally included in the deductible expenses within the difference where any of the following amounts for each item of asset exceeds the amount included in the deductible expenses under paragraph (1): <Amended on Oct. 31, 2017; Dec. 24, 2018>

1. Assets acquired on or before December 31, 2013: Where the depreciation costs are appropriated according to the previous method without applying the K-IFRS, the amount equivalent to the depreciation costs to be included in the deductible expenses under paragraph (1) (hereafter in this Article, referred to as "previous depreciation costs");

2. Assets acquired on or after January 1, 2014: The amount equivalent to the depreciation costs computed by applying the standard service life prescribed by Decree of the Ministry of Economy and Finance (hereafter in this Article, referred to as "standard depreciation costs").

(3) Notwithstanding paragraph (1), where the relevant domestic corporation is entitled to exemption from or reduction of corporate tax under this Act and other statutes, the depreciation costs shall be included in the deductible expenses, as prescribed by Presidential Decree, for the purpose of calculating the amount of income of such domestic corporation for the relevant business year. <Amended on Dec. 24, 2018>

(4) In applying paragraph (1), where a domestic corporation counts any of the following amounts as losses, the allowable depreciation shall be calculated, deeming that the amount is counted as depreciation costs, for the purpose of calculating the amount of income of the domestic corporation for each business year: <Added on Dec. 24, 2018>

1. The amount spent to acquire depreciable assets;

2. Capital expenditure prescribed by Presidential Decree concerning depreciable assets.

(5) The amount in excess of the allowable depreciation that is not included in deductible expenses pursuant to paragraph (1) shall be included in deductible expenses for the subsequent business years by the method prescribed by Presidential Decree. <Added on Dec. 24, 2018>

(6) Any domestic corporation which includes depreciation costs in deductible expenses pursuant to paragraphs (1) through (5) shall submit a detailed statement of depreciation costs to the head of the tax office having jurisdiction over the place of tax payment, as prescribed by Presidential Decree. <Amended on Dec. 24, 2018>

(7) In applying paragraphs (1) through (5), matters necessary for the method of appropriating depreciation costs as deductible expenses, deciding the timing for application of the K-IFRS, calculating previous depreciation costs and standard depreciation costs, changing the depreciation method, the special cases concerning and changes of service life, the special cases concerning the calculation of allowable depreciation of secondhand assets, and the scope of immediately depreciable assets, etc. shall be prescribed by Presidential Decree. <Amended on Dec. 24, 2018>

[This Article Wholly Amended on Dec. 30, 2010]

Article 24(Non-inclusion of donations in deductible expenses) #

(1) "Donation" in this Article means the expenses (including the amount deemed substantially donated through a transfer prescribed by Presidential Decree) that a domestic company gratuitously spends directly irrelevant to its business. <Amended on Dec. 24, 2018>

(2) Special donations referred to in subparagraph 1 among the donations spent by a domestic corporation for each business year and donations carried forward under paragraph (5) shall be sequentially included in deductible expenses within the ceiling on inclusion in deductible expenses calculated pursuant to subparagraph 2 , for the purpose of calculating the amount of income for each business year; and the amount in excess of the ceiling on inclusion in deductible expenses shall not be included in deductible expenses: <Amended on Dec. 22, 2020; Aug. 17, 2021; Dec. 21, 2021; Dec. 31, 2022; Dec. 31, 2024>

1. Special donation: Donation falling under any of the following:

(a) The value of money and valuables gratuitously donated to the State or a local government; provided, this shall be limited to money and valuables received under Article 5 (2) of the Act on Collection and Use of Donations, where such money and valuables are subject to said Act;

(b) The value of contributions for national defense and money and valuables contributed for the consolation and comfort of soldiers of the national armed forces;

(d) Donations given to the following institutions (excluding hospitals) for facility expenses, educational expenses, scholarships, or research funds:

(i) Private schools established under the Private School Act;

(ii) Non-profit educational foundations (limited to non-profit incorporated foundations established for the purpose of paying facility expenses, educational expenses, scholarships, or research funds for national, public or private schools);

(iii) Polytechnic colleges defined in the Act on the National Lifelong Vocational Skills Development Act;

(iv) Lifelong educational facilities that may use the name of major college under the Lifelong Education Act and lifelong educational facilities in the form of a distance college;

(v) Foreign educational institutions founded under the Special Act on Establishment and Management of Foreign Educational Institutions in Free Economic Zones and Jeju Free International City;

(vi) Industry-academic cooperation groups defined in the Industrial Education Enhancement and Industry-Academia-Research Cooperation Promotion Act;

(vii) The Korea Advanced Institute of Science and Technology established under the Korea Advanced Institute of Science and Technology Act, the Gwangju Institute of Science and Technology established under the Gwangju Institute of Science and Technology Act, the DaeguGyeongbuk Institute of Science and Technology established under the DaeguGyeongbuk Institute of Science and Technology Act, the Ulsan National Institute of Science and Technology established under the Ulsan National Institute of Science and Technology Act, and Korea Institute of Energy Technology established under the Korea Institute of Energy Technology Act;

(viii) Seoul National University established under the Act on Establishing and Administrating Seoul National University, Incheon National University established under the Act on Establishing and Administrating Incheon National University, and other similar schools prescribed by Presidential Decree;

(ix) Korean schools prescribed in the Act on the Educational Support for Korean Nationals Residing Abroad (limited to schools that meet requirements prescribed by Presidential Decree);

(x) Korea Student Aid Foundation established under the Act on the Establishment of Korea Student Aid Foundation

(e) Donations given to the following hospitals and others for facility expenses, educational expenses, or research funds:

(i) National university-affiliated hospitals established under the Act on the Establishment of National University-Affiliated Hospitals;

(ii) National university-affiliated dental hospitals established under the Act on the Establishment of National University-Affiliated Dental Hospitals;

(iii) Seoul National University Hospital established under the Establishment of Seoul National University Hospital Act;

(iv) Seoul National Dental Hospital established under the Establishment of Seoul National Dental Hospital Act;

(v) Hospitals operated by private schools as defined in the Private School Act;

(vi) National Cancer Center established under the Cancer Control Act;

(vii) Local medical centers established under the Act on the Establishment and Management of Local Medical Centers;

(viii) National Medical Center established under the Act on Establishing and Administrating the National Medical Center;

(ix) Hospitals operated by the Korean National Red Cross established under the Organization of the Korean National Red Cross Act;

(x) Hospitals operated by the Korea Veterans Welfare and Healthcare Corporation established under the Korea Veterans Health Service Act;

(xi) Korea Institute of Radiological and Medical Sciences established under the Radiation and Radioisotope Use Promotion Act;

(xii) Hospitals operated by the National Health Insurance established under the National Health Insurance Act;

(xiii) Medical institutions referred to in Article 43 (1) 1 of the Industrial Accident Compensation Insurance Act;

(xiv) The Medical Technology Cooperation Foundation established under Article 28-2 (1) of the Health and Medical Service Technology Promotion Act, which is established by hospitals referred to in subitems (i) through (xiii);

(f) Donations given to corporations that meet requirements prescribed by Presidential Decree, as non-profit organizations that mainly aim to raise and distribute funds necessary for supporting social welfare services and other social welfare activities;

2. Ceiling on amount includible in deductible expenses: the amount calculated according to the following formula: [The amount of standard income (the amount of income prior to including special donations referred to in subparagraph 1 and general donations referred to in paragraph (3) 1, excluding transfer gains or losses prescribed in Articles 44, 46 and 46-5, in deductible expenses; hereafter in this Article, the same shall apply) - losses referred to in Article 13 (1) 1 (it shall be up to 80 percent of standard income in the case of a corporation eligible for deduction of carry forward losses to the extent of 80 percent of its income for each business year pursuant to the proviso, with the exception of the subparagraphs, of Article 13 (1)] x 50 percent

(3) Out of donations made by a domestic corporation in each business year and donations carried forward under paragraph (5), general donations referred to in subparagraph 1 shall be included in deductible expenses when calculating the amount of income for the relevant business year within the maximum amount includible in deductible expenses calculated under subparagraph 2; however, the amount exceeding the maximum amount includible in deductible expenses shall not be included in deductible expenses: <Amended on Dec. 22, 2020; Dec. 31, 2022>

1. General donations: Donations prescribed by Presidential Decree in consideration of public interest, such as social welfare, culture, arts, education, religion, charity, science, etc. (excluding donations referred to in paragraph (2) 1); hereafter in this Article the same shall apply)

2. Ceiling on amount includible in deductible expenses: the amount calculated according to the following formula: [The amount of standard income - losses referred to in Article 13 (1) 1 (it shall be up to 80 percent of standard income in the case of a corporation eligible for deduction of carry forward losses to the extent of 80 percent of its income for each business year pursuant to the proviso, with the exception of the subparagraphs, of Article 13 (1)) ? amount included in deductible expenses pursuant to paragraph (2) (including an amount carried forward and included in deductible expenses pursuant to paragraph (5)] x 10 percent (it shall be 20 percent in the case of a social enterprise defined in subparagraph 1 of Article 2 of the Social Enterprise Promotion Act)

(4) Donations, other than those prescribed in paragraphs (2) 1 and (3) 1, shall not be included in deductible expenses for the purpose of calculating the amount of income for the relevant business year. <Amended on Dec. 22, 2020>

(5) The amount of contributions that a domestic corporation spends in each business year that has not been included in deductibles in excess of the deduction limit for donations pursuant to paragraphs (2) and (3) shall be carried forward and included in deductible expenses for each business year which ends within 10 years from the start date of the business year following the relevant business year, for the purpose of calculating the amount of income for the business year carried forward, it shall be included in the deductible amount within the range of the deductible limit for each donation referred to in paragraphs (2) 2 and (3) 2. <Amended on Dec. 24, 2018; Dec. 31, 2019; Dec. 22, 2022

(6) Where an amount carried forward pursuant to paragraphs (2) and (3) is included in deductible expenses, the amount carried forward pursuant to paragraph (5) shall be included in deductible expenses before the amount of donations paid in the relevant business year. In such cases, the amount carried forward shall be included in deductible expenses from the amount carried forward first. <Added on Dec. 31, 2019; Dec. 22, 2020>

[This Article Wholly Amended on Dec. 30, 2010]

Article 25(Non-inclusion of business promotion expenses in deductible expenses) #

(1) "Business promotion expense" in this Article means entertainment expense, social expense, honorarium, or other expenses of a similar nature, however named, spent by a domestic corporation for smoothly conducting business with those directly or indirectly related to its business. <Amended on Dec. 24, 2018; Dec. 31, 2022>

(2) Business promotion expenses paid by a domestic corporation in excess of the amount prescribed by Presidential Decree on one occasion, which do not fall under any of the following, shall not be included in deductible expenses for the purpose of calculating the amount of income for each business year; provided, the same shall not apply to any business promotion expenses prescribed by Presidential Decree, such as those paid in any foreign country for farmers or fishermen, which make it impractical to obtain documents evidencing that such business promotion expenses fall under any of the followings, but the expenditure of such business promotion expenses is objectively unquestionable: <Amended on Dec. 30, 2010; Dec. 31, 2011; Jun. 7, 2013; Dec. 24, 2018; Dec. 31, 2022>

1. Business promotion expenses paid upon using any of the following (hereinafter referred to as "credit card, etc."):

(a) Credit cards defined in the Specialized Credit Finance Business Act (including items prescribed by Presidential Decree and similar to credit cards; hereafter in Article 117, the same shall apply);

(b) Cash Receipts prescribed in Article 126-2 (1) 2 of the Act on Restriction on Special Cases concerning Taxation (hereinafter referred to as "Cash Receipts");

2. Business promotion expenses paid upon receiving an invoice referred to in Article 121 of this Act or Article 163 of the Income Tax Act or a tax invoice referred to in Articles 32 and 35 of the Value-Added Tax Act;

3. Business promotion expenses paid upon issuing a purchaser-issued invoice referred to in Article 121-2 or purchaser-issued tax invoice referred to in Article 34-2 (2) of the Value-Added Tax Act;

4. Business promotion expenses paid upon issuing cash receipts prescribed by Presidential Decree.

(3) Where a sales slip, etc., is issued in the name of other credit card merchant, etc., which is not the one that actually supplies the relevant goods or services, the relevant amount of spending shall not be deemed the business promotion expenses referred to in paragraph (2) 1 for the purposes of paragraph (2) 1. <Amended on Dec. 30, 2010; Dec. 24, 2018; Dec. 31, 2022>

(4) Business promotion expenses (excluding the amount which is not included in deductible expenses pursuant to paragraph (2)) paid by a domestic corporation for each business year in excess of the sum of the following amounts shall not be included in deductible expenses in calculating the amount of income for the relevant business year: <Amended on Dec. 24, 2018; Dec. 31, 2019; Dec. 31, 2022>

1. Standard ceiling: The amount calculated by the following formula: The amount of standard ceiling: A x B x 1/12A: 12 million won (36 million won for a small and medium enterprises)B: The number of months for the relevant business year (the number of months shall be calculated by calendar, and the number of days less than one month shall be deemed one month.)

2. The ceiling by the amount of income: The amount computed by multiplying the amount of income for the relevant business year (limited to the amount of income prescribed by Presidential Decree) by the rates specified in the following table; provided, with respect to the amount of income accrued from transactions with a related party, it means an amount equivalent to 10/100 of the amount computed by multiplying such amount of income by the rates specified in the following table: Amount of IncomeRate(a) Not exceeding 10,000,000,000 won0.3 percent(b) Between 10 billion won and 50 billion won30 million won＋(amount of income ? 10 billion won) x 0.2 percent(c) At least 50 billion won1.1 billion won＋(amount of income ? 50 billion won) x 0.03 percent

(5) In applying paragraph (4), where the domestic corporation mainly engages in real estate leasing business or meets the criteria prescribed by Presidential Decree, the amount in excess of 50/100 of the sum of the amounts in all subparagraphs of the same paragraph shall not be included in deductible expenses in calculating the amount of income for the relevant business year. <Added on Dec. 24, 2018>

(6) Matter necessary for the scope and calculation of business promotion expenses, keeping documents evidencing disbursement, etc. shall be prescribed by Presidential Decree. <Amended on Dec. 30, 2010; Dec. 24, 2018; Dec. 31, 2022>

[Title of This Article Amended on Dec. 31, 2022]

Article 27-2(Special cases, including exclusion of expenses incurred in relation to passenger vehicles for business use from deductible expenses) #

(1) Depreciation costs of the passenger vehicles provided for in Article 1 (2) 3 of the Individual Consumption Tax Act (excluding passenger vehicles specified by Presidential Decree and directly used for such business as transportation business or motor vehicle sales business and passenger cars used for the purpose of research and development, as prescribed by Presidential Decree; hereafter in this Article and Article 74-2, referred to as "passenger vehicles for business use") shall be included in deductible expenses for the purpose of computing the amount of income for each business year, as prescribed by Presidential Decree. <Amended on Dec. 24, 2018; Dec. 31, 2019; Dec. 21, 2021>

(2) The amount that does not fall in the scope of expenses prescribed by Presidential Decree incurred for business use (hereafter in this Article, referred to as "expenses incurred for business use"), among expenses specified by Presidential Decree, such as depreciation costs, rental charges, and fuel expenses generated during the relevant business year for passenger vehicles that a domestic corporation has acquired or rented for business use (hereafter in this Article and Article 74-2, referred to as "expenses incurred in relation to passenger vehicles for business use") shall not be included in deductible expenses for the purpose of computing the amount of income for the relevant business year. <Amended on Dec. 24, 2018; Dec. 31, 2019; Dec. 21, 2021>

(3) In applying paragraph (2), where either of the following cost or amount, out of expenses incurred for business use, exceeds eight million won during a business year (referring to the amount calculated by multiplying eight million won by the number of months during the relevant business year and then dividing the amount therefrom by 12, where the relevant business year is less than one year, or the amount calculated by multiplying eight million won by the number of months during the period of owning or renting the relevant vehicle and then dividing the amount therefrom by the number of months during the relevant business year, where the vehicle was owned or rented for a certain period during the business year), the excess amount (hereafter in this Article, referred to as "excess of the ceiling on depreciation costs") shall not be included in deductible expenses for the relevant business year but shall be carried over to the following term and shall be included in deductible expenses by the method prescribed by Presidential Decree: <Amended on Dec. 19, 2017>

1. The depreciation cost of each passenger vehicle for business use;

2. The amount specified by Presidential Decree as equivalent to depreciation costs, among rental charges for each passenger vehicle for business use.

(4) Where the loss incurred in disposing of passenger vehicles for business use exceeds eight million won for each passenger vehicle for business use (referring to the amount calculated by multiplying eight million won by the number of months during the relevant business year and then dividing the amount therefrom by 12, where the relevant business year is less than one year), the excess amount shall be included in deductible expenses by the method prescribed by Presidential Decree, which is carrying over the amount to the following term. <Amended on Dec. 24, 2018>

(5) For the purpose of applying paragraphs (3) and (4) to a domestic corporation, "eight million won" shall be construed as "four million won" respectively, where the domestic corporation engages mainly in real estate leasing business or meets the criteria prescribed by Presidential Decree. <Added on Dec. 20, 2016>

(6) Each corporation that includes expenses incurred in relation to passenger vehicles for business use pursuant to paragraphs (1) through (5) shall submit a statement on the expenses incurred in relation to passenger vehicles for business use to the head of the tax office having jurisdiction over the place of tax payment, as prescribed by Presidential Decree. <Amended on Dec. 20, 2016>

(7) The method for calculating expenses incurred for business use, the methods for calculating and carrying over the excess of the ceiling on depreciation costs, and other necessary matters, shall be prescribed by Presidential Decree. <Amended on Dec. 20, 2016>

[This Article Added on Dec. 15, 2015]

Article 28(Non-inclusion of interest expenses in deductible expenses) #

(1) Interest on the following loans shall not be included in deductible expenses for the purpose of calculating the amount of income of a domestic corporation for each business year: <Amended on Dec. 30, 2010; Dec. 31, 2011; Dec. 24, 2018>

1. Interest on debentures for which the creditor prescribed by Presidential Decree is unknown;

2. Interest on, a discount of, or gains from bonds and securities referred to in Article 16 (1) 1, 2, 5, and 8 of the Income Tax Act, which are prescribed by Presidential Decree and for which the recipient is unknown;

3. Interest on loans appropriated for construction capital prescribed by Presidential Decree;

4. Among interest on loans paid during each business year by a domestic corporation which acquires or owns any of the following assets, the amount calculated, as prescribed by Presidential Decree (the ceiling thereon shall be the interest on loans equivalent to the value of the relevant assets):

(a) Assets referred to in subparagraph 1 of Article 27;

(b) Provisional payments, etc. prescribed by Presidential Decree to a related party with no connection to the business of the relevant corporation.

(2) An amount prescribed by Presidential Decree and calculated by subtracting the interest referred to in paragraph (1) 3 from the interest on loans appropriated for construction capital, need not be included in the deductible expenses for the purpose of calculating the amount of income of a domestic corporation for each business year. <Added on Dec. 30, 2010; Dec. 24, 2018>

(3) Where the provisions governing the non-inclusion of interest expenses in deductible expenses stipulated in each subparagraph of paragraph (1) apply concurrently, such provisions shall apply in the order prescribed by Presidential Decree. <Amended on Dec. 30, 2010; Dec. 24, 2018>

(4) Matters necessary for the scope and calculation of loans and interest expenses under paragraph (1) and other matters shall be prescribed by Presidential Decree. <Amended on Dec. 30, 2010; Dec. 24, 2018>

[Title Amended on Dec. 30, 2010]

Article 29(Inclusion of reserve funds for proper purpose business in deductible expenses for non-profit domestic corporation) #

(1) Where a non-profit domestic corporation (limited to organizations prescribed by Presidential Decree in cases of an organization deemed a corporation; hereafter in this Article, the same shall apply) appropriates reserve funds for proper purpose business as the deductible expenses to expend them for its proper purpose business or general donations referred to in Article 24 (3) 1 (hereafter in this Article, referred to as "proper purpose business, etc.") when settlement of accounts is fixed for the relevant business year, such reserve funds for proper purpose business shall be included in deductible expenses for the purpose of calculating the amount of income for the relevant business year, which shall not exceed the sum of the amounts by any of the following classifications (referring to the amount computed by subtracting a loss from the sum of income referred to in each item of subparagraph 1, where a loss has been incurred from the profit-making business referred to in subparagraph 4): <Amended on Dec. 24, 2018; Dec. 22, 2020; Dec. 31, 2022>

1. The following amounts:

(a) The amount of interest income referred to in each subparagraph of Article 16 (1) of the Income Tax Act (excluding profits from non-business loans referred to in Article 16 (1) 11 of the Income Tax Act);

(b) The amount of dividend income referred to in each subparagraph of Article 17 (1) of the Income Tax Act; provided, excluded herefrom is the amount of dividend income accruing from stocks, etc., which is included in the taxable value of the inheritance tax or gift tax or is subject to gift tax pursuant to Article 16 or 48 of the Inheritance Tax and Gift Tax Act;

(c) The amount of interest incurred from loans to members or associates for welfare projects of a non-profit domestic corporation established under any special Act.

2. The amount computed by multiplying the income from other profit-making business by 50/100 (80/100 for a corporation established under the Act on the Establishment and Operation of Public Interest Corporations, which expends at least 50/100 of the expenditures for its proper purpose business, for scholarships).

(2) In applying paragraph (1), a non-profit domestic corporation subject to audit by an auditor under subparagraph 7 of Article 2 and Article 9 of the Act on External Audit of Stock Companies appropriates a reserve fund for proper purpose business in the tax settlement invoice in Article 60 (2) 2, and the relevant reserve fund is accumulated as reserve funds for proper purpose business in disposing of the profits accruing during the relevant business year, such amount shall be deemed included in deductible expenses when the settlement of account is fixed. <Added on Dec. 24, 2018>

(3) Where a non-profit domestic corporation that has appropriated the reserve funds for proper purpose business as deductible expenses pursuant to paragraph (1) has the amount expended for proper purpose business, it shall offset the amount in sequential order beginning with the reserve funds for proper purpose business appropriated for the business year. In such cases, where the amount expended for proper purpose business, etc. in the relevant business year exceeds the balance in the reserve funds for proper purpose business as at the end date of the immediately preceding business year, such excess shall be deemed expended from the reserve funds for proper purpose business to be appropriated for the relevant business year. <Amended on Dec. 24, 2018>

(4) Where a non-profit domestic corporation that has appropriated the reserve funds for proper purpose business as deductible expenses pursuant to paragraph (1) is dissolved after it comprehensively transfers all rights and duties concerning its business to other non-profit domestic corporation, the balance in the reserve funds for proper purpose business as at the registration date of the dissolution may be succeeded to by the other non-profit domestic corporation. <Amended on Dec. 24, 2018>

(5) Where any of the following events occurs in relation to a non-profit domestic corporation with a balance in the reserve funds for proper purpose business, which has been included in deductible expenses pursuant to paragraph (1), the balance (referring to an amount used for purposes other than its proper purpose business, etc. in cases of subparagraph 5; hereafter in this Article the same shall apply) shall be included in gross income for the purpose of calculating the amount of income for the business year in which the relevant event occurs: <Amended on Jan. 1, 2014; Dec. 24, 2018; Dec. 31, 2022>

1. Where the non-profit domestic corporation is dissolved (excluding where the balance in the reserve funds for proper purpose business is succeeded under paragraph (4));

2. Where the non-profit domestic corporation wholly discontinues its proper purpose business;

3. Where the approval of an organization deemed a corporation is revoked or it is changed to a resident under Article 13 (3) of the Framework Act on National Taxes;

4. Where the non-profit domestic corporation fails to use the reserve funds for proper purpose business appropriated as deductible expenses for proper purpose business, etc., by the fifth anniversary of the end date of the relevant business year (limited to a balance unused within such five years).

5. Where the reserve funds for proper purpose business are used for a purpose other than the proper purpose business, etc.;

(6) A non-profit domestic corporation with a balance in the reserve funds for proper purpose business, which has been included in deductible expenses pursuant to paragraph (1), may partially reduce the balance and include it in deductible expenses within five years from the end date of the business year in which the reserve funds for proper purpose business was appropriated as deductible expenses. In such cases, the balance first included in deductible expenses for a certain business year shall be deemed first reduced and then the remainder shall be deemed reduced successively. <Added on Dec. 24, 2018>

(7) Where the balance of reserve funds for proper purpose business is included in gross income pursuant to paragraphs (5) 4 and 5 and (6), an amount equivalent to the interest calculated as prescribed by Presidential Decree shall be added to corporate tax to be paid in the relevant business year. <Amended on Jan. 1, 2014; Dec. 24, 2018; Dec. 31, 2022>

(8) Paragraph (1) shall not apply to circumstances prescribed by Presidential Decree, where reductions, exemptions, etc. are granted under this Act or other statutes. <Amended on Dec. 24, 2018>

(9) A non-profit domestic corporation which intends to apply paragraph (1) shall keep and maintain a statement on the appropriation and expenditure of the relevant reserve funds and submit it to the head of the tax office having jurisdiction over the place of tax payment, as prescribed by Presidential Decree. <Amended on Dec. 24, 2018>

(10) The scope and succession of proper purpose business and the calculation of income accrued from profit-making business pursuant to paragraphs (1) through (5), and other necessary matters, shall be prescribed by Presidential Decree. <Amended on Dec. 24, 2018>

[This Article Wholly Amended on Dec. 30, 2010]

[Title Amended on Dec. 24, 2018]

Article 30(Inclusion of liability reserve funds in deductible expenses) #

(1) Where a domestic corporation (excluding insurance companies defined in the Insurance Business Act) operating an insurance business has appropriated the liability reserve funds (hereinafter referred to as "liability reserve funds") as deductible expenses under the Fisheries Cooperatives Act and other Acts related to the insurance business when the settlement of account is fixed, such liability reserve funds appropriated shall be included in deductible expenses for the purpose of calculating the amount of income for the relevant business year up to the amount calculated, as prescribed by Presidential Decree. <Amended on Dec. 24, 2018; Dec. 31, 2022>

(2) The liability reserve funds included in deductible expenses under paragraph (1) shall be included in gross income when the amount of income for the following business year or for the business year, to which the date three years (where grounds prescribed by Presidential Decree, such as a dissolution, occur before three years pass, the date the relevant grounds arise) from the end date of the business year in which the liability reserve funds were included in deductible expenses falls, is calculated, as prescribed by Presidential Decree. <Amended on Dec. 24, 2018>

(3) Where the liability reserve funds are included in gross income for the business year, to which the date three years from the end date of the business year in which the date the liability reserve funds were included in deductible expenses falls, as prescribed in paragraph (2), an amount equivalent to interest calculated, as prescribed by Presidential Decree, shall be added to corporate tax to be paid in the relevant business year. <Amended on Dec. 24, 2018>

(4) A domestic corporation which intends to apply paragraph (1) shall submit a detailed statement on the relevant reserve funds to the head of the tax office having jurisdiction over the place of tax payment, as prescribed by Presidential Decree. <Amended on Dec. 24, 2018>

[This Article Wholly Amended on Dec. 30, 2010]

[Title Amended on Dec. 24, 2018]

Article 33(Inclusion of retirement benefit appropriation funds in deductible expenses) #

(1) Where a domestic corporation appropriates funds for retirement benefits as deductible expenses when the settlement of account is fixed for each business year in order to pay retirement benefits to its executives or employees, such retirement benefit appropriation funds appropriated shall be included in deductible expenses for the purpose of calculating the amount of income for the relevant business year up to the amount calculated, as prescribed by Presidential Decree. <Amended on Dec. 24, 2018>

(2) Where a domestic corporation which has included retirement benefit appropriation funds in deductible expenses under paragraph (1) pays retirement benefits to any executive or employee, it shall be deemed paid from the retirement benefit appropriation funds appropriated. <Amended on Dec. 24, 2018>

(3) Where a domestic corporation which has included retirement benefit appropriation funds in deductible expenses under paragraph (1) is merged or divided, the retirement benefit appropriation funds of the corporation as at the registration date of the merger or division which is succeeded to the surviving corporation, corporation established through division, or counterpart corporation to the division and merger (hereinafter referred to as "surviving corporation, etc.") shall be deemed retirement benefit appropriation funds held by the surviving corporation as at the registration date of the merger or division. <Amended on Dec. 24, 2018>

(4) Paragraph (3) shall apply mutatis mutandis where a business operator comprehensively transfers his or her business to a domestic corporation.

(5) A domestic corporation which intends to apply paragraph (1) shall submit a detailed statement on retirement benefit appropriation funds to the head of the tax office having jurisdiction over the place of tax payment, as prescribed by Presidential Decree. <Amended on Dec. 24, 2018>

(6) Matters necessary for disposition of retirement benefit appropriation funds under paragraphs (1) through (4) shall be prescribed by Presidential Decree.

[This Article Wholly Amended on Dec. 30, 2010]

Article 34(Inclusion of allowances for bad debts in deductible expenses) #

(1) Where a domestic corporation appropriates funds for bad debts to cover bad debts from credit sales accounts, loans, and other claims equivalent thereto as deductible expenses when the settlement of account is fixed for each business year, such bad debts appropriated shall be included in deductible expenses for the purpose of calculating the amount of income for the relevant business year up to the amount calculated, as prescribed by Presidential Decree. <Amended on Dec. 30, 2010; Dec. 24, 2018>

(2) Paragraph (1) shall not apply to a claim referred to in the subparagraphs of Article 19-2 (2). <Amended on Dec. 30, 2010; Dec. 24, 2018>

(3) Where a domestic corporation that has included the appropriation for bad debts in deductible expenses under paragraph (1) has any bad debts incurred, such bad debts shall be first offset by its appropriation for bad debts and the balance of the appropriation for bad debts after offsetting such bad debts shall be subsequently included in gross income when calculating the amount of income for the following business year. <Amended on Dec. 30, 2010; Dec. 24, 2018>

(4) Where a domestic corporation which has included appropriation for bad debts in the deductible expenses under paragraph (1) is merged or divided, the appropriation for bad debts of the corporation as at the registration date of the merger or division which is succeeded to the surviving corporation, etc. (only applicable to where the claims equivalent to the relevant appropriation for bad debts are succeeded together) shall be deemed the appropriation for bad debts held by the surviving corporation, etc. as at the registration date of the merger or division. <Amended on Dec. 30, 2010; Dec. 24, 2018>

(5) A domestic corporation which intends to apply paragraph (1) shall submit a detailed statement on the appropriation for bad debts to the head of the tax office having jurisdiction over the place of tax payment, as prescribed by Presidential Decree. <Amended on Dec. 30, 2010; Dec. 24, 2018>

(6) Matters necessary for the scope of credit accounts, loans, and other claims equivalent thereto and the disposal of appropriation of bad debts under paragraph (1) and other matters shall be prescribed by Presidential Decree. <Amended on Dec. 30, 2010; Dec. 24, 2018>

[Title Amended on Dec. 30, 2010]

Article 35(Inclusion of allowances to redeem claims for indemnity in deductible expenses) #

(1) Where a corporation prescribed by Presidential Decree among domestic corporations operating a credit guarantee business under Acts appropriates funds for redemption of claims for indemnity as deductible expenses when the settlement of account is fixed for each business year, such funds for redemption of claims for indemnity appropriated shall be included in deductible expenses for the purpose of calculating the amount of income for the relevant business year up to the amount calculated, as prescribed by Presidential Decree. <Amended on Dec. 24, 2018>

(2) In applying paragraph (1), where a corporation prescribed by Presidential Decree among corporations applying the K-IFRS appropriates funds for redemption of claims for indemnity in the tax settlement invoice referred to in Article 60 (2) 2 and accumulates such appropriation as reserves for appropriation for redemption of claims for indemnity in disposing of the profits during the relevant business year, it shall be deemed to have been appropriated in deductible expenses when the settlement of account is fixed up to the amount calculated, as prescribed by Presidential Decree. <Amended on Dec. 24, 2018>

(3) Where bad debts prescribed by Presidential Decree have incurred in relation to the claims for indemnity due to credit guarantee business, a domestic corporation that has included appropriation for redemption claims for indemnity under paragraph (1) in deductible expenses shall first offset the bad debts with the appropriation for redemption of claims for indemnity and the remainder of the appropriation for redemption of claims for indemnity after the offset shall be included in gross income when calculating the amount of income for the following business year.

(4) A domestic corporation which intends to apply paragraph (1) shall submit a detailed statement on the appropriation for redemption of claims for indemnity to the head of the tax office having jurisdiction over the place of tax payment, as prescribed by Presidential Decree. <Amended on Dec. 24, 2018>

(5) Matters necessary for disposing of the appropriation for redemption of claims for indemnity under paragraph (1) shall be prescribed by Presidential Decree.

[This Article Wholly Amended on Dec. 30, 2010]

Article 36(Inclusion of value of business assets acquired with national subsidies in deductible expenses) #

(1) Where a domestic corporation receives subsidies, etc. under the Subsidy Management Act, the Local Finance Act and other statutes prescribed by Presidential Decree (hereafter in this Article, referred to as "National subsidies, etc.") and uses them to acquire or improve business assets prescribed by Presidential Decree (hereafter in this Article, referred to as "business assets"), by no later than the end date of the business year which includes the date of the receipt of the subsidies, or first acquires or improves business assets and receives the National subsidies, etc. afterwards, the amount, including the value of the National subsidies, etc. used for the acquisition or improvement of the business assets among the value of such business assets, may be included in deductible expenses for the purpose of calculating the amount of income for the relevant business year, as prescribed by Presidential Decree. <Amended on Jul. 25, 2011; Dec. 24, 2018>

(2) Where a domestic corporation which has failed to acquire or improve the business assets by the end date of the business year, during which it receives the National subsidies, etc., intends to acquire or improve any business assets within one year from the start date of the following business year, the amount of the National subsidies, etc. to be used for acquisition or improvement may be included in deductible expenses by applying mutatis mutandis paragraph (1). In such cases, where the domestic corporation fails to use National subsidies, etc. by the deadline due to grounds prescribed by Presidential Decree, such as delay of permission or authorization, the end date of the business year during which the relevant grounds cease shall be deemed the deadline.

(3) Where a domestic corporation which has included an amount equivalent to the National subsidies, etc. in the deductible expenses under paragraph (2) fails to use such amount for the acquisition or improvement of business assets by the deadline, or discontinues its business or is dissolved before using it, the amount unused shall be included in gross income for the purpose of calculating the amount of income for the business year during which such grounds arise; provided, the same shall not apply where such domestic corporation is merged or divided and the surviving corporation, etc. succeeds to the amount. In such cases, the amount shall be deemed to have been included in deductible expenses by such surviving corporation, etc. under paragraph (2).

(4) In applying paragraph (1), where any domestic corporation receives the National subsidies, etc. in any form of assets, other than money, and uses them for its business, they shall be deemed to have been used for the acquisition or improvement of business assets.

(5) A domestic corporation which intends to apply paragraphs (1) and (2) shall submit a detailed statement on the National subsidies, etc., and on the business assets acquired by the National subsidies, etc. (a plan to use the National subsidies, etc. in cases falling under paragraph (2)) to the head of the tax office having jurisdiction over the place of tax payment, as prescribed by Presidential Decree. <Amended on Dec. 24, 2018>

(6) For purposes of paragraphs (1) through (3), matters necessary for calculating the amount included in deductible expenses and the amount included in the gross income, the method of calculation, and other matters shall be prescribed by Presidential Decree.

[This Article Wholly Amended on Dec. 30, 2010]

Article 37(Inclusion of value of business assets acquired with construction charges in deductible expenses) #

(1) Where a domestic corporation engaging in any of the following types of business is provided with tangible and intangible assets (hereinafter referred to as "business assets") for facilities required for the business, such as land and other assets provided by consumers or beneficiaries of such facilities or where such domestic corporation receives money, etc. (hereafter in this Article, referred to as "construction charges") and uses it to acquire business assets by the end of the business year in which it receives the money or acquires business assets and then receives construction charges therefor later, the value of the relevant business assets (the amount equivalent to the construction charges used to acquire such business assets, where the domestic corporation receives construction charges) may be included in deductible expenses for the purpose of calculating the amount of income for the relevant business year, as prescribed by Presidential Decree: <Amended on Jan. 1, 2014; Dec. 24, 2018>

1. Electricity service business as prescribed in the Electric Utility Act;

2. Urban gas business as prescribed in the Urban Gas Business Act;

3. Liquefied petroleum gas-filling business, liquefied petroleum gas collective supply business, and liquefied petroleum gas sales business as prescribed in the Safety Control and Business of Liquefied Petroleum Gas Act;

4. Integrated energy supply business as defined in subparagraph 2 of Article 2 of the Integrated Energy Supply Act;

5. Business similar to those referred to in subparagraphs 1 through 4 and prescribed by Presidential Decree.

(2) Article 36 (2) and (3) shall apply mutatis mutandis to the inclusion of the value of business assets acquired with construction charges in the deductible expenses and other matters. <Amended on Dec. 24, 2018>

(3) A domestic corporation which intends to apply paragraphs (1) and (2) shall submit a detailed statement on the business assets and construction charges received and the business assets acquired with construction charges (a plan to use construction charges in cases falling under paragraph (2)) to the head of the tax office having jurisdiction over the place of tax payment, as prescribed by Presidential Decree. <Amended on Dec. 24, 2018>

(4) For purposes of paragraphs (1) and (2), matters necessary for calculating the amount included in deductible expenses and the amount included in the gross income, the method of calculation, and other matters shall be prescribed by Presidential Decree.

[This Article Wholly Amended on Dec. 30, 2010]

[Title Amended on Dec. 24, 2018]

Article 42(Evaluation of assets and liabilities) #

(1) Where the book value of assets and liabilities held by a domestic corporation increases or decreases (excluding depreciation; hereafter in this Article, referred to as "evaluation"), the book value of such assets and liabilities when calculating the amount of income for the business year which includes the date of evaluation and each subsequent business year shall be the value before evaluation; provided, the same shall not apply to any of the following cases: <Amended on Dec. 24, 2018>

1. Evaluation of tangible and intangible assets, etc. under the Insurance Business Act and other statutes (limited to where the book value increases);

2. Evaluation of inventory assets and other assets and liabilities prescribed by Presidential Decree.

(2) Assets and liabilities referred to in paragraph (1) 2 shall be separately evaluated by the method prescribed by Presidential Decree.

(3) Notwithstanding paragraphs (1) and (2), the book value of any of the following assets may be reduced by the method prescribed by Presidential Decree: <Amended on Dec. 24, 2018>

1. Inventory assets which cannot be sold at the arm's length price due to damage, decomposition, or on other grounds;

2. Tangible assets damaged or destroyed due to grounds prescribed by Presidential Decree, such as a natural disaster or fire;

3. Stocks, etc. prescribed by Presidential Decree where the issuing corporation of the relevant stocks, etc. falls any of the following cases:

(a) Where the stocks, etc. goes dishonored;

(b) Where the issuing corporation receives authorization for its rehabilitation plan under the Debtor Rehabilitation and Bankruptcy Act;

(d) Where it goes bankrupt.

4. Deleted. <Dec. 24, 2018>

(4) A domestic corporation which evaluates its assets and liabilities under paragraphs (2) and (3) shall submit a detailed statement on the evaluation of such assets and liabilities to the head of the tax office having jurisdiction over the place of tax payment, as prescribed by Presidential Decree. <Amended on Dec. 24, 2018>

(5) Matters necessary for disposing of marginal profits or marginal losses arising from the evaluation of assets and liabilities under paragraphs (2) and (3), and other matters shall be prescribed by Presidential Decree. <Amended on Dec. 24, 2018>

[This Article Wholly Amended on Dec. 30, 2010]

Article 42-2(Non-inclusion in gross income of evaluation marginal profits of inventory assets of domestic corporation that applies K-IFRS) #

(1) Where a domestic corporation reports to the head of the tax office having jurisdiction over the place of tax payment the change of the evaluation method of inventory assets from the last-in first-out method prescribed by Presidential Decree to other evaluation methods of inventory assets prescribed by Presidential Decree for the business year in which it first applies the K-IFRS, the amount deducting the amount referred to in subparagraph 2 from the amount referred to in subparagraph 1 (hereafter in this Article, referred to as "evaluation marginal profits of inventory assets") need not be included in the gross income for the purpose of calculating the amount of income for the relevant business year. In such cases, the evaluation marginal profits of inventory assets shall be equally divided and be included in the gross income for five years from the start date of the business year following the business year during which the K-IFRS are first applied: <Amended on Dec. 24, 2018>

1. Evaluated value of the inventory assets as at the beginning of the business year in which the K-IFRS are first applied;

2. Evaluated value of the inventory assets as at the end of the immediately preceding business year in which the K-IFRS are first applied.

(2) Where a domestic corporation that fails to include the evaluation marginal profits in the gross income pursuant to the former part of paragraph (1) excluding its subparagraphs is dissolved (excluding a dissolution due to a qualified merger in Article 44 (2) and (3) or a qualified division in Article 46 (2)), any remainder after being included in the gross income under the latter part of paragraph (1) excluding its subparagraphs shall be included in gross income when calculating the amount of income for the business year in which the registration date of the dissolution falls. <Amended on Dec. 24, 2018>

(3) Matters necessary for procedures for reporting the change of the evaluation method for inventory assets, the application for non-inclusion in gross income, the method of inclusion in gross income and the non-inclusion of the evaluation marginal profits of inventory assets in the gross income shall be prescribed by Presidential Decree. <Amended on Dec. 24, 2018>

[This Article Added on Dec. 31, 2011]

[Title Amended on Dec. 24, 2018]

Article 42-3(Special cases concerning calculation of income for insurance company applying Korean International Financial Reporting Standards) #

(1) Where an insurance company first applies such accounting standards prescribed by Presidential Decree as the Korean International Financial Reporting Standards for the insurance business (hereafter in this Article referred to as international financial reporting standards for insurance contracts"), the amount calculated by applying the formula prescribed by Presidential Decree to liability reserves (referring to liability reserves prescribed in the Insurance Business Act; hereafter in this Article the same shall apply) included in deductible expenses for the business year immediately preceding the business year for which the international financial reporting standards for insurance contracts are first applied (hereafter in this Article referred to as "business year of first application") shall be included in gross income for the purpose of calculating the amount of income for the business year of first application.

(2) An insurance company shall include an amount, which is calculated by applying the formula prescribed by Presidential Decree to liability reserves appropriated according to the accounting standards referred to in Article 120 (3) of the Insurance Business Act as of the start date of the business year of first application, in deductible expenses for the purpose of calculating the amount of income for the relevant business year.

(3) Notwithstanding paragraph (1), an insurance company may choose not to include in gross income an amount (limited to where the amount is a positive number; hereafter in this Article referred to as "converted profit") calculated by applying the formula prescribed by Presidential Decree to the amount obtained by subtracting the amount prescribed in paragraph (2) from the amount prescribed in paragraph (1) for the purpose of calculating the amount of income for the business year of first application and the subsequent three business years. In such cases, the converted profits shall be equally divided over the three years from the start date of the fourth business year following the business year of first application and shall be included in gross income.

(4) Where an insurance company is dissolved (excluding dissolution due to a qualified merger prescribed in Article 44 (2) and (3) or a qualified division prescribed in Article 46 (2)) during the period prescribed in paragraph (3), any converted profit not included in gross income shall be included in gross income for the purpose of calculating the amount of income for the business year in which the registration date of dissolution falls.

(5) Article 32 shall not apply to an insurance company to which paragraph (3) applies, irrespective of the period referred to in the same paragraph.

(6) The application for non-inclusion of converted profits in gross income and the inclusion of such profits in gross income in equal division, and other necessary matters shall be prescribed by Presidential Decree.

[This Article Added on Dec. 31, 2022]

Article 44(Taxation on merged corporation upon merger) #

(1) Where a merged corporation is dissolved in the course of a merger, the assets of the merged corporation shall be deemed transferred to a surviving corporation. In such cases, capital gains or losses accruing from the transfer (referring to the amount calculated by deducting the value referred to in subparagraph 2 from the value referred to in subparagraph 1; hereafter in this Article and Article 44-3, the same shall apply) shall be included in the gross income or deductible expenses when the merged corporation calculates the amount of income for the business year in which the registration date of the merger falls:

1. Transfer value that the merged corporation has received from the surviving corporation;

2. Value calculated by deducting the total book value of liabilities from the total book value of assets (hereafter in this Sub-section, referred to as "net book value of assets") as of the registration date of the merger of the merged corporation.

(2) In applying paragraph (1), for a merger that meets each of the following requirements (hereinafter referred to as "qualified merger"), capital gains or losses on a transfer may be deemed nil, considering the value referred to in paragraph (1) 1 as the net book value of assets as of the registration date of the merger of the merged corporation; provided, capital gains or losses on a transfer may be nil, as prescribed by Presidential Decree, deeming it as a qualified merger, although the requirements prescribed in subparagraph 2, 3 or 4 are not met, in inevitable circumstances prescribed by Presidential Decree: <Amended on Dec. 31, 2011; Dec. 19, 2017; Dec. 24, 2018; Dec. 21, 2021>

1. A merger should be conducted between domestic corporations which have continued to operate their business for at least one year as on the registration date of the merger; provided, a corporation prescribed by Presidential Decree, the sole purpose of which is to merge with other corporations shall be deemed to meet the requirements prescribed in the main clause;

2. Where the value of the stocks, etc., of a surviving corporation or the parent corporation (referring to a domestic corporation holding the total number of outstanding stocks or total investment amount of a surviving corporation as at the registration date of the merger) of the surviving corporation is at least 80/100 of the total costs of the merger received by the stockholders, etc., of a merged corporation in return for such merger; the stocks, etc., shall be distributed, as prescribed by Presidential Decree; and the stockholders, etc., of the merged corporation prescribed by Presidential Decree hold such stocks, etc., until the last day of the business year in which the registration date of the merger falls;

3. The merging corporation shall continue the business succeeded from the merged corporation until the end of the business year in which the merger is registered; provided, a merged corporation prescribed by Presidential Decree, the sole purpose of which is to merge with another corporation, shall be deemed to meet the requirements prescribed in the main clause;

4. Where the ratio of employees transferred to the surviving corporation to the employees specified by Presidential Decree, among employees of the merged corporation as at one month before the date of registration of the merger, is at least 80/100 and the ratio remains unchanged until the end of the business year in which the merger is registered.

(3) In either of the following cases, capital gains or losses on a transfer may be nil, deeming it as a qualified merger, notwithstanding paragraph (2): <Amended on Dec. 31, 2011; Dec. 20, 2016; Dec. 24, 2018>

1. Where a domestic corporation merges with or is merged into another corporation which holds the total number of outstanding stocks or the total amount of investment;

2. Where corporations whose total number of outstanding stocks or total amount of investment is held by the same domestic corporation are merged with each other.

(4) Matters necessary for calculating the transfer value, the net book value of assets, and the total costs of a merger; and criteria for determining the continuance or discontinuance of the business succeeded under paragraphs 1 through 3 shall be prescribed by Presidential Decree.

[This Article Wholly Amended on Dec. 30, 2010]

Article 44-2(Taxation on surviving corporation upon merger) #

(1) Where a surviving corporation succeeds to the assets of a merged corporation due to a merger, it shall be deemed to have succeeded to the assets from the merged corporation at a market price as at the registration date of the merger (referring to the market price provided in Article 52 (2); hereafter in this Sub-section, the same shall apply). In such cases, a surviving corporation may only succeed to the amount included in or excluded from the gross income or deductible expenses when calculating the amount of income and the tax base for each business year of the merged corporation, and other assets, liabilities, etc., prescribed by Presidential Decree.

(2) Where a surviving corporation is deemed to have succeeded to the assets of a merged corporation at a market price under paragraph (1) and the transfer value paid by the surviving corporation to the merged corporation is less than the amount calculated by deducting the total liabilities from the total assets as at the registration date of the merger of the merged corporation (hereafter in this Sub-section, referred to as "net market price of assets"), the surviving corporation shall appropriate such difference in the tax settlement invoice referred to in Article 60 (2) 2 and include it in gross income in equal installments for five years from the registration date of the merger.

(3) Where a surviving corporation is deemed to have succeeded to the assets of a merged corporation at a market price under paragraph (1) and the transfer value paid by the surviving corporation to the merged corporation exceeds the net market price of assets as at the registration date of the merger in circumstances prescribed by Presidential Decree, the surviving corporation shall appropriate the difference in the tax settlement invoice referred to in Article 60 (2) 2 and include it in deductible expenses in equal installments for five years from the registration date of the merger.

(4) Matters necessary for calculating the amounts included in gross income or deductible expenses and the method of calculation under paragraphs (1) through (3) and other matters shall be prescribed by Presidential Decree.

[This Article Wholly Amended on Dec. 30, 2010]

[Title Amended on Dec. 24, 2018]

Article 44-3(Special provisions concerning taxation on surviving corporation upon qualified merger) #

(1) A surviving corporation that qualifiedly merges shall be deemed to have succeeded to the assets of a merged corporation at the book value, notwithstanding Article 44-2. In such cases, the surviving corporation shall appropriate the difference between the book value and the market price referred to in Article 44-2 (1) per asset, as prescribed by Presidential Decree. <Amended on Dec. 24, 2018>

(2) A surviving corporation that qualifiedly merges shall succeed to the losses referred to in Article 13 (1) 1 as at the registration date of the merger of the merged corporation and the amount included in or excluded from the gross income or deductible expenses when the merged corporation calculates the amount of income and the tax base for each business year, other assets, liabilities, reductions, tax credits, etc. referred to in Article 59, as prescribed by Presidential Decree. <Amended on Dec. 24, 2018>

(3) Where any of the following occurs during the period prescribed by Presidential Decree not exceeding three years, a surviving corporation that qualifiedly merges (excluding the cases deemed as a qualified merger pursuant to Article 44 (3)) shall include, as prescribed by Presidential Decree, in gross income the difference between the book value of the succeeded assets and the market price referred to in Article 44-2 (1) (limited to only where the market price exceeds the book value; hereafter the same shall apply in paragraph (4)), the amount deducted from the succeeded losses when calculating the amount of income for the business year which includes the date the grounds arise, etc. and shall not apply reductions or tax credits starting from the relevant business year after paying the amount of reductions, tax credits, etc. deducted upon succession from the merged corporation under paragraph (2) in addition to the corporate tax for the relevant business year, as prescribed by Presidential Decree; provided, the same shall not apply where inevitable circumstances prescribed by Presidential Decree exist: <Amended on Dec. 19, 2017; Dec. 24, 2018>

1. Where a surviving corporation discontinues the business succeeded to from a merged corporation;

2. Where stockholders, etc. of a merged corporation prescribed by Presidential Decree dispose of the stocks, etc. received from a surviving corporation;

3. Where the number of the employees specified by Presidential Decree (hereafter in this subparagraph, referred to as "employees") as employees of the surviving corporation as at the end of each business falls below 80/100 of the sum of employees of the merged corporation and the surviving corporation as at one month before the date of registration of the merger.

(4) A surviving corporation which includes in gross income the difference, etc. between the book value of the transferred assets pursuant to paragraph (3) and the market price referred to in Article 44-2 (1), it shall include, as prescribed by Presidential Decree, in gross income or deductible expenses the difference between the transfer value paid by the surviving corporation to the merged corporation and the net market price of assets as at the registration date of the merger of the merged corporation until the date five years pass after the registration date of the merger from the date any of the grounds referred to in paragraph (3) arises. <Amended on Dec. 24, 2018>

(5) A surviving corporation, to which paragraph (1) applies, shall file a detailed statement on the succeeded assets due to division to the head of the tax office having jurisdiction over the place of tax payment, as prescribed by Presidential Decree. <Amended on Dec. 24, 2018>

(6) Matters necessary for criteria for determining the continuance or discontinuance of the succeeded business, for calculating the amounts included in gross income and deductible expenses, the method for inclusion referred to in paragraphs (1) through (5), and other matters shall be prescribed by Presidential Decree. <Amended on Dec. 24, 2018>

[This Article Wholly Amended on Dec. 30, 2010]

[Title Amended on Dec. 24, 2018]

Article 45(Restriction on deduction of losses carried forward upon merger) #

(1) Losses referred to in Article 13 (1) 1 as on the registration date of the merger of a surviving corporation, excluding the amount of losses that a surviving corporation succeeds to pursuant to Article 44-3 (2), shall not be deducted to the extent of income (referring to an amount calculated by proportionally dividing the amount of income by the rate of value of asset prescribed by Presidential Decree where no separate accounting has been kept as the corporation fell under the proviso to Article 113 (3); hereafter in this Article, the same shall apply) accruing from the business that has been succeeded to from the merged corporation when calculating the tax base for each business year of the surviving corporation. <Amended on Dec. 24, 2018; Dec. 22, 2020>

(2) Losses of a merged corporation succeeded to by a surviving corporation under Article 44-3 (2) shall be deducted to the extent of income accruing from the business succeeded to from the merged corporation when calculating the tax base for each business year of the surviving corporation.

(3) A surviving corporation that qualifiedly merges shall include, in deductible expenses, losses on disposition of the assets (limited to the difference only where the market value of the relevant assets under Article 52 (2) as of the registration date of the merger is lower than book value and to the losses incurred during the business years ending within five years after the registration date of the merger) held by the surviving corporation and the merged corporation prior to the merger to the extent of income (referring to the amount of income before the relevant losses on disposition are deducted) accruing from business of the relevant corporation prior to the merger in calculating the amount of income of the relevant business year. In such cases, paragraphs (1) and (2) shall apply accordingly, deeming that losses on disposition excluded from deductible expenses were incurred from the business of the relevant corporation prior to the merger at the time of disposition of the assets. <Amended on Dec. 31, 2011; Dec. 20, 2016>

(4) Reductions or tax credits of a merged corporation that a surviving corporation has succeeded to under Article 44-3 (2) shall apply to the extent of income accruing from the business that has been succeeded to from the merged corporation or the amount of corporate tax equivalent thereto, as prescribed by Presidential Decree.

(5) Notwithstanding the clues other than each subparagraph of Article 13 (1), deductions for losses as of the merger registration date of the merged corporation pursuant to paragraphs (1) and (2) and the losses of the merged corporation succeeded by the merged corporation shall be 80/100 of the income amount under each of the following subparagraphs (100/100 in the case of a corporation prescribed by Presidential Decree, such as a small and medium-sized enterprise and a company implementing a rehabilitation plan): <Added on Dec. 31, 2019; Dec. 31, 2022>

1. In cases of losses as of the registration date of the merger of the merged corporation: Amount calculated by subtracting the amount of income accruing from the business succeeded to from the merged corporation from the amount of income of the merging corporation;

2. Where losses of a merged corporation succeeded to by a surviving corporation: The amount of income accruing from the business succeeded to from the merged corporation.

(6) As of the merger registration date of a surviving corporation, out of an amount not included in deductible expenses when calculating the amount of income for each subsequent business year (hereafter in this Article referred (6) As of the merger registration date of a surviving corporation, out of an amount not included in deductible expenses when calculating the amount of income for each subsequent business year (hereafter in this Article referred to as "amount exceeding the ceiling on donations") as an amount carried forward under Article 24 (5) out of the donations referred to in paragraph (2) 1 and (3) 1 of the same Article, the amount excluding an amount exceeding the ceiling on donations that a surviving corporation succeeds to under Article 44-3 (2) 2 shall be included in deductible expenses to the extent of the respective ceilings on donations includible in deductible expenses prescribed in Article 24 (2) 2 and (3) 2 on the basis of the amount of income accruing from the merging corporation's business before the merger for the purpose of calculating the income amount for each business year of the surviving corporation. <Added on Dec. 22, 2020>

(7) An amount that a surviving corporation succeeds to under Article 44-3 (2), as an amount exceeding the ceilings on donations as of the merger registration date of the merged corporation, shall be included in deductible expenses to the extent of the respective ceilings on donations includible in deductible expenses referred to in Article 24 (2) 2 and (3) 2 on the basis of the amount of income accruing from the business succeeded from the merged corporation, for the purpose of calculating the amount of income for each business year of the surviving corporation. <Added on Dec. 22, 2020>

(8) Matters necessary for the calculation of losses to be deducted when calculating the tax base for each fiscal year, the inclusion of the losses on disposition of the succeeded assets in deductible expenses, the inclusion of the amount exceeding a ceiling on donations succeeded, the calculation of the amount of corporate tax constituting the amount of income accruing from the business that has been succeeded under paragraphs (1) through (7), and other matters, shall be prescribed by Presidential Decree. <Amended on Dec. 31, 2019; Dec. 22, 2020>

[This Article Wholly Amended on Dec. 30, 2010]

Article 46(Taxation on divided corporations upon division) #

(1) Where a domestic corporation is dissolved in the course of a division (excluding a split-off: hereafter in this Article and Articles 46-2 through 46-4, the same shall apply), the assets of the domestic corporation shall be deemed transferred to a corporation established through division or a counterpart corporation to a division and merger (hereinafter referred to as "corporation established through division, etc."). In such cases, capital gains or losses on a transfer (referring to the amount calculated by subtracting the value referred to in subparagraph 2 from the value referred to in subparagraph 1; hereafter in this Article and Article 46-3, the same shall apply) shall be included in the gross income or deductible expenses when a divided corporation or a disappearing counterpart corporation to the merger and division (hereinafter referred to as "divided corporation, etc.") calculates the amount of income for the business year in which the registration date of the division falls: <Amended on Dec. 31, 2011>

1. Transfer value received by the divided corporation, etc., from a corporation established through division, etc.;

2. Net book value of assets as on the registration date of the division of a divided corporation, etc.

(2) In applying paragraph (1), with respect to a division which meets each of the following requirements (hereinafter referred to as "qualified division), capital gains or losses on a transfer may be deemed nil, deeming the value referred to in paragraph (1) 1 to be the net book value of assets as of the registration date of the division of a divided corporation, etc.; provided, capital gains or losses on a transfer may be deemed nil, as prescribed by Presidential Decree, although the requirements prescribed in subparagraph 2, 3 or 4 are not met, deeming it as a qualified division, in inevitable circumstances prescribed by Presidential Decree: <Amended on Dec. 31, 2011; Dec. 20, 2016; Dec. 19, 2017; Dec. 24, 2018; Dec. 31, 2024>

1. Where a domestic corporation which has continuously operated business for at least five years as on the registration date of the division is divided upon meeting the following requirements (in cases of a division and merger, a disappearing counterpart corporation to a division and merger or a counterpart corporation to a division and merger shall be a domestic corporation which has continuously operated business for at least one year as on the registration date of the division):

(a) That it divides an independent business division which can be operated after division;

(b) That the assets and liabilities of a divided business division shall be comprehensively succeeded; provided, those prescribed by Presidential Decree, such as assets and liabilities that are indivisible, including the assets jointly used and the liabilities, the debtor of which cannot be changed, shall be excluded;

2. Where the total costs of a division received from a corporation established through division, etc., by the stockholders of a divided corporation, etc. (in cases of a division and merger, referring to where at least 80/100 of the costs of the division is in stocks of the corporation established through division, etc. or where at least 80/100 of the costs of the division is in stocks of the domestic corporation that holds the total number of outstanding stocks or the total amount of investment of the counterpart corporation to the division and merger) are in stocks, and such stocks are allocated in consideration of the ratio of stocks, etc. held by each stockholder of the divided corporation, etc. and the stockholders of the divided corporation, etc., prescribed by Presidential Decree hold such stocks until the last day of the business year in which the division is registered;

3. Where a corporation established through division, etc., continues to operate the business succeeded to from the divided corporation, etc., until the last day of the business year in which the registration date of the division falls;

4. Where the ratio of the employees transferred to the corporation established through division, etc. to the employees specified by Presidential Decree as employees of the divided business division as at one month before the date of registration of the division is at least 80/100 and the ratio remains unchanged until the last day of the business year in which the division is registered.

(3) Notwithstanding paragraph (2), where a business division prescribed by Presidential Decree, such as a business division mainly engaged in the real estate rental business, is divided, it shall not be deemed a qualified division. <Added on Dec. 22, 2020>

(4) Matters necessary for the calculation of the transfer value and the net book value of assets, the criteria for determining whether a business division is independent and able to operate its business separately, the calculation of the cost of a division, and the criteria for determining whether the business acquired by succession continues under paragraphs (1) or (2), and other matters, shall be prescribed by Presidential Decree. <Amended on Jan. 1, 2014; Dec. 22, 2020>

[This Article Wholly Amended on Dec. 30, 2010]

Article 46-2(Taxation on corporations established through division upon unqualified division) #

(1) Where a corporation established through division, etc. has succeeded to the assets from a divided corporation, etc. due to the division, it shall be deemed succeeded to the assets of the divided corporation, etc. at the market price as at the registration date of the division. In such cases, the corporation established through division, etc. may succeed to only the amount included in or excluded from gross income or deductible expenses when it calculates the amount of income and the tax base for each business year of the divided corporation, etc. and other assets, liabilities, etc. prescribed by Presidential Decree.

(2) A corporation and the transfer value paid by the corporation established through division, etc. to the divided corporation, etc. is less than the net market price of assets as at the registration date of the division of the divided corporation, etc., the corporation established through division, etc. shall appropriate such difference in the tax settlement invoice referred to in Article 60 (2) 2 and include it in gross income in equal installments for five years from the registration date of the division.

(3) Where a corporation established through division, etc. is deemed to succeed to the assets of a divided corporation, etc. at the market price pursuant to paragraph (1) and the transfer value paid by the corporation established through division, etc. to the divided corporation, etc. exceeds the net market price of assets as at the registration date of the division in circumstances prescribed by Presidential Decree, the corporation, etc. established through division shall appropriate such difference in the tax settlement invoice referred to in Article 60 (2) 2 and include it in deductible expenses in equal installments for five years from the registration date of the division.

[This Article Wholly Amended on Dec. 30, 2010]

[Title Amended on Dec. 24, 2018]

Article 46-3(Special provisions concerning Taxation on corporation established through division upon qualified division) #

(1) A corporation established through division, etc. that qualifiedly divides shall be deemed to have succeeded to the assets of a divided corporation, etc. at the book value, notwithstanding Article 46-2. In such cases, the corporation, etc. established through division shall appropriate the difference between the book value and the market price referred to in Article 46-2 (1) per asset, as prescribed by Presidential Decree. <Amended on Dec. 24, 2018>

(2) A corporation established through division, etc. that qualifiedly divides has succeeded to the assets of a divided corporation, etc. at the book value pursuant to paragraph (1), it shall succeed to the losses referred to in Article 13 (1) 1 as on the registration date of the division of the divided corporation, etc. and the amount included in or excluded from gross income or deductible expenses when the divided corporation, etc. calculates the amount of income and the tax base for each business year, other assets, liabilities, reductions, tax credits, etc. under Article 59, as prescribed by Presidential Decree. <Amended on Dec. 24, 2018>

(3) Where any of the following occurs during the period prescribed by Presidential Decree not exceeding three years, a corporation established through division, etc. that qualifiedly divides shall include, as prescribed by Presidential Decree, in the gross income the difference between the book value of the succeeded assets and the market price referred to in Article 46-2 (1) (limited to where the market price exceeds the book value; hereafter the same shall apply in paragraph (4)) and the amount deducted from the succeeded losses when calculating the amount of income for the business year which includes the date the relevant grounds arise, and shall not apply reductions or tax credits starting from the relevant business year after paying the amount of reductions, tax credits, etc. deducted by succession from the divided corporation, etc. under paragraph (2) in addition to the corporate tax for the relevant business year, as prescribed by Presidential Decree; provided, the same shall not apply where inevitable circumstances prescribed by Presidential Decree exist: <Amended on Dec. 19, 2017; Dec. 24, 2018>

1. Where a corporation established through division, etc. discontinues the business succeeded to from a divided corporation, etc.;

2. Where stockholders, etc. of a divided corporation, etc. prescribed by Presidential Decree dispose of the stocks, etc. received from a corporation established through division, etc.;

3. Where the number of the employees specified by Presidential Decree (hereafter in this subparagraph, referred to as "employees") as employees of the corporation established through division as on the last day of each business falls below 80/100 of the number of employees of the divided business division as at one month before the date of registration of the merger; provided, in cases of a division and merger, it means either of the following cases:

(a) Where the number of employees of the counterpart corporation to the division and merger as at the end of each business year falls below 80/100 of the sum of employees of the divided business division and the counterpart corporation to the division and merger as at one month before the date of registration of the division;

(b) Where the number of employees of the corporation established through division as at the end of each business year falls below 80/100 of the sum of employees of the divided business division and the disappearing counterpart corporation to the division and merger as at one month before the date of registration of the division.

(4) Where a corporation established through division, etc. includes in gross income the difference between the book value of the succeeded assets under paragraph (3) and the market price referred to in Article 46-2 (1), etc., it shall include, as prescribed in Presidential Decree, in gross income or deductible expenses, the difference between the transfer value paid by the corporation established through division, etc. to the divided corporation, etc. and the net market price of assets as on the registration date of the division of the divided corporation, etc. until the date five years pass after the registration date of the division from the date any of the grounds referred to in paragraph (3) arises.

(5) A corporation established through division, etc. to which paragraph (1) applies shall file a detailed statement on the succeeded assets due to division to the head of the tax office having jurisdiction over the place of tax payment, as prescribed by Presidential Decree.

(6) Matters necessary for criteria for determining the continuance or discontinuance of the succeeded businesses, calculation of the amounts included in gross income or deductible expenses, the method of the calculation under paragraphs (1) through (4), and other matters shall be prescribed by Presidential Decree.

[This Article Wholly Amended on Dec. 30, 2010]

[Title Amended on Dec. 24, 2018]

Article 46-4(Restriction on deduction of losses carried forward upon division) #

(1) Losses referred to in Article 13 (1) 1 as on the registration date of the division of a counterpart corporation in a division and merger, excluding the amount of losses that a corporation established through division, etc. succeeds to pursuant to Article 46-3 (2), shall not be deducted to the extent of income (referring to an amount calculated by proportionally dividing the amount of income by the rate of value of asset prescribed by Presidential Decree where no separate accounting has not been kept as the corporation fell under the proviso to Article 113 (4); hereafter in this Article, the same shall apply) accruing from the business that has been succeeded to from a divided corporation when calculating the tax base for each business year of the counterpart corporation in the division and merger. <Amended on Dec. 24, 2018; Dec. 22, 2020>

(2) Losses of a divided corporation, etc., succeeded to by a corporation established through division, etc., under Article 46-3 (2), shall be deducted to the extent of income accruing from the business succeeded to from a divided corporation, etc., when calculating the tax base of the corporation established through division, etc., for each business year.

(3) A corporation established through division, etc., that merges and divides with no capital gain on the transfer deemed under Article 46 (2) (hereinafter referred to as "qualified merger and division") shall include, in deductible expenses, losses on disposition of the assets (limited to the difference only where the market value of the relevant assets under Article 52 (2) as on the registration date of the merger is lower than book value and to the losses incurred during the business years ending within five years after the registration date of the merger) held by the divided corporation and the counterpart corporation to a merger and division prior to the merger and division to the extent of income (referring to the amount of income before the relevant losses on disposition are deducted) accruing from the business of the relevant corporation prior to the division and merger in calculating the amount of income of the relevant business year. In such cases, paragraphs (1) and (2) shall apply accordingly, deeming that losses on disposition excluded in deductible expenses were incurred from the business of the relevant corporation prior to the division and merger. <Amended on Dec. 31, 2011; Dec. 20, 2016>

(4) Reductions or tax credits of the divided corporation, etc., that a corporation established through division, etc., has succeeded to under Article 46-3 (2) shall apply to the extent of income accruing from the business that has been succeeded to from the divided corporation, etc., or the amount of corporate tax equivalent to such income, as prescribed by Presidential Decree.

(5) Notwithstanding the proviso to Article 13 (1), as of the registration date of division of the other corporation of the divisional merger pursuant to paragraphs (1) and (2), deductions for deficits of divisional corporations, etc. succeeded by divisional corporations, etc., shall be 80/100 of the income amount under each of the following subparagraphs (100/100 in the case of a corporation prescribed by Presidential Decree, such as a small and medium enterprise and a company implementing a rehabilitation plan): <Added on Dec. 31, 2019; Dec. 31, 2022>

1. In cases of losses as of the registration date of the division of the counterpart corporation to a division and merger: An amount calculated by subtracting the amount of income accruing from the business succeeded to from the divided corporation from the amount of income of the counterpart corporation to a division and merger;

2. In cases of losses of a divided corporation, etc., succeeded to by a corporation established through division, etc.: The amount of income accruing from the business succeeded to from a divided corporation, etc.

(6) As of the division registration date of a counterpart corporation in a division and merger, out of an amount not included in deductible expenses when calculating the amount of income for each subsequent business year (hereafter in this Article referred to as "amount exceeding the ceiling on donations") as an amount carried forward under Article 24 (5) out of the donations referred to in paragraphs (2) 1 and (3) 1 of the same Article, the amount excluding an amount excluding the ceiling on donations that a corporation established through division, etc. succeeds to under Article 46-3 (2) be included in deductible expenses to the extent of the respective ceilings on donations includible in deductible expenses prescribed in Article 24 (2) 2 and (3) 2 on the basis of the amount of income accruing from the business of a counterpart corporation in a division and merger before the division and merger for the purpose of calculating the income amount for each business year of the a corporation established through division, etc. <Added on Dec. 22, 2020>

(7) An amount that a corporation established through division, etc. succeeds to under Article 46-3 (2), as an amount exceeding a ceiling on donations as of the division registration date of a divided corporation, etc., shall be included in deductible expenses to the extent of the respective ceilings on donations includible in deductible expenses referred to in Article 24 (2) 2 and (3) 2 on the basis of the amount of income accruing from the business succeeded from the divided corporation, etc. for the purpose of calculating the amount of income for each business year of the corporation established through division, etc. <Added on Dec. 22, 2020>

[This Article Wholly Amended on Dec. 30, 2010]

Article 47(Special provisions concerning taxation on divided corporation upon split-off) #

(1) Where a divided corporation acquires stocks, etc., of a corporation established through division through a split-off and meets the requirements for a qualified division provided for in Article 46 (2) and (3) (in cases falling under sparagraph (2) 2 of the same Article, limited to where the full consideration of a division is in stocks, etc.), an amount equivalent to capital gains on the transfer of assets generated by the split-off among the value of such stocks, etc., may be included in deductible expenses when calculating the amount of income for the business year which includes the registration date of the split-off, as prescribed by Presidential Decree; provided, an amount equivalent to capital gains on the transfer of assets may be included in deductible expenses, as prescribed by Presidential Decree, although the requirements prescribed in Article 46 (2) 2, 3 or 4 are not met, in extenuating circumstances prescribed by Presidential Decree. <Amended on Dec. 31, 2011; Dec. 19, 2017; Dec. 31, 2022>

(2) An amount equivalent to capital gains on a transfer that a divided corporation has included in deductible expenses under paragraph (1), shall be included in the gross income as much as the amount prescribed by Presidential Decree in consideration of the ratio of disposition of the relevant stocks, etc., and assets in the business year in which any of the following grounds arises; provided, the foregoing shall not apply where a corporation established through division becomes subject to a qualified merger or qualified division or where such corporation is in other extenuating circumstances prescribed by Presidential Decree: <Amended on Dec. 31, 2011; Jan. 1, 2013>

1. Where a divided corporation disposes of the stocks, etc., received from the corporation established through division;

2. Where the corporation established through division disposes of the assets prescribed by Presidential Decree and succeeded to from a divided corporation. In such cases, the corporation established through division shall inform the divided corporation of the disposition of such assets within one month from the date of the disposition.

(3) Where either of the following events occurs during the period prescribed by Presidential Decree, which shall not exceed three years from the registration date of a division, the divided corporation that has included an amount equivalent to capital gains on a transfer in deductible expenses under paragraph (1) shall include, in gross income, any remainder after including an amount in gross income under paragraph (2), among the amount included in deductible losses under paragraph (1), when calculating the amount of income for the business year in which the relevant event occurs; provided, the same shall not apply in extenuating circumstances prescribed by Presidential Decree: <Amended on Dec. 31, 2011; Jan. 1, 2014; Dec. 20, 2016; Dec. 19, 2017>

1. Where a corporation established through division discontinues the business succeeded to from the divided corporation;

2. Where the divided corporation holds less than 50/100 of the total number of outstanding stocks or the total investment amount of a corporation established through division;

3. Where the number of the employees specified by Presidential Decree (hereafter in this subparagraph, referred to as "employees") as employees of the corporation established through division as at the end of each business falls below 80/100 of the sum of employees of the divided business division as at one month before the date of registration of the merger.

(4) Where a divided corporation includes an amount equivalent to capital gains on a transfer in deductible expenses under paragraph (1), the corporation established through division shall succeed to any amount included in or excluded from gross income or deductible expenses by the divided corporation in calculating the amount of income and the tax base for each business year, other assets and liabilities and tax exemptions, tax reductions and tax credits under Article 59, etc., as prescribed by Presidential Decree. <Added on Dec. 31, 2011; Dec. 19, 2017>

(5) Tax exemptions, tax reductions and tax credits to which a corporation established through division succeeds from the divided corporation shall apply within the amount of income accruing from the business transferred from the divided corporation or within the amount of corporate tax on such income, as prescribed by Presidential Decree. <Added on Dec. 19, 2017>

(6) A divided corporation that intends to apply paragraph (1) shall submit a statement on capital gains on a transfer of assets generated by the division to the head of the tax office having jurisdiction over the place of tax payment, as prescribed by Presidential Decree. <Amended on Dec. 31, 2011; Dec. 19, 2017>

(7) Matters necessary for calculating capital gains on a transfer, criteria for determining the continuation or discontinuation of the succeeded business, calculation of the amounts included in gross income or deductible expenses, the method of inclusion under paragraphs (1) and (5), and other matters, shall be prescribed by Presidential Decree. <Amended on Dec. 31, 2011; Dec. 19, 2017>

[This Article Wholly Amended on Dec. 30, 2010]

Article 47-2(Special provisions concerning taxation upon investment in kind) #

(1) Where a domestic corporation (hereafter in this Article, referred to as "investing corporation") invests in kind, satisfying the following requirements, an amount equivalent to capital gains on the transfer of asset accruing from the investment in kind among the value of stocks of the domestic corporation acquired through investment in kind (hereafter in this Article, referred to as "invested corporation") may be included in deductible expenses for the purpose of calculating the amount of income for the business year in which the date of investment in kind falls, as prescribed by Presidential Decree; provided, the domestic corporation may include an amount equivalent to capital gains on the transfer of asset in deductible expenses, as prescribed by Presidential Decree, in extenuating circumstances prescribed by Presidential Decree, although it fails to satisfy the requirements prescribed in subparagraph 2 or 4: <Amended on Dec. 31, 2011; Dec. 15, 2015; Dec. 19, 2017; Dec. 24, 2018>

1. The investing corporation that has operated business for at least five consecutive years as on the date of investment in kind;

2. The invested corporation shall continuously operate the business that the investing corporation operated with assets invested in kind, until the end of the business year in which such investment in kind is made;

3. Where a person makes a joint investment with another Korean or foreigner, the person shall not be a related party to the investing corporation;

4. The investing corporation and a person who makes a joint investment with the investing corporation as prescribed in subparagraph 3 (hereafter in this Article, referred to as "investing corporation, etc.") holds at least 80/100 of the total number of issued stocks or the total investment amount of the invested corporation as on the date following the date of investment in kind and hold such stocks, etc., until the end of the business year in which the date of investment in kind falls;

5. Deleted. <Dec. 19, 2017>

(2) An amount equivalent to capital gains on a transfer that an investing corporation has included in deductible expenses pursuant to paragraph (1) shall be included in gross income as much as the amount prescribed by Presidential Decree, in consideration of the ratio of disposition of the relevant stocks, etc., and assets for the business year in which any of the following events occurs; provided, the foregoing shall not apply where an invested corporation becomes subject to a qualified merger or qualified division, or where such corporation is in other extenuating circumstances prescribed by Presidential Decree: <Amended on Dec. 31, 2011; Jan. 1, 2013>

1. Where an investing corporation disposes of stocks, etc., received from an invested corporation;

2. Where an invested corporation disposes of assets prescribed by Presidential Decree and succeeded to from an investing corporation, etc. In such cases, the invested corporation shall inform the investing corporation of the disposition of such assets within one month from the date of the disposition.

(3) Where either of the following events occurs, the investing corporation that has included an amount equivalent to capital gains on a transfer in deductible expenses pursuant to paragraph (1) shall include any remainder after including an amount in gross income pursuant to paragraph (2), among the amount included in deductible expenses pursuant to paragraph (1), in gross income within the period prescribed by Presidential Decree, which shall not exceed three years, when calculating the amount of income for the business year in which the relevant event occurs; provided, the same shall not apply in extenuating circumstances prescribed by Presidential Decree: <Amended on Dec. 31, 2011; Dec. 20, 2016; Dec. 19, 2017>

1. Where an invested corporation discontinues the business that the investing corporation has operated with assets invested in kind;

2. Where an investing corporation, etc., holds less than 50/100 of the total number of outstanding stocks or the total investment amount of an invested corporation.

(4) The calculation of capital gains on a transfer to be included in deductible expenses, the criteria for determining the continuation or discontinuation of the business that an investing corporation has operated with assets invested in kind, the method for calculating the amount to be included in gross income and the method for including such amount and the submission of statements of investment in kind under paragraphs (1) through (3), and other necessary matters shall be prescribed by Presidential Decree. <Amended on Dec. 15, 2015; Dec. 19, 2017>

[This Article Wholly Amended on Dec. 30, 2010]

Article 51-2(Income deductions for special purpose companies) #

(1) Any of the following domestic corporations that distributes at least 90/100 of distributable profits (hereafter in this Article referred to as "distributable profits") prescribed by Presidential Decree, shall deduct the amount equivalent to such distribution (hereafter in this Article referred to as "distribution amount") from the amount of income for the business year subject to disposal of surplus from which distribution is resolved:

1. A special-purpose company established under the Asset-Backed Securitization Act;

2. An investment company, special purpose company, investment limited liability company, investment association (excluding an institutional private equity fund, as defined in Article 9 (19) 1 of the Financial Investment Services and Capital Markets Act), or investment limited liability company established under the aforesaid Act;

3. A corporate restructuring investment company established under the Corporate Restructuring Investment Companies Act;

4. A real estate investment company for corporate restructuring or real estate investment company for entrusted management, established under the Real Estate Investment Company Act;

5. A ship investment company established under the Ship Investment Company Act;

6. A special purpose corporation, etc., prescribed by Presidential Decree and established under the Special Act on Private Rental Housing or the Special Act on Public Housing;

7. A company specializing in cultural industries established under the Framework Act on the Promotion of Cultural Industries;

8. An overseas resources development company established under the Overseas Resources Development Business Act;

9. Deleted. <Dec. 22, 2020>

(2) Paragraph (1) shall not apply in any of the following cases: <Amended on Dec. 31, 2023>

1. Where no income tax or corporate tax is imposed on dividends paid to stockholders, etc., under this Act and the Act on Restriction on Special Cases concerning Taxation; provided, the same shall not apply where stockholders, etc., who received dividends are partnership firms subject to special taxation for partnership firms pursuant to Article 100-15 of the Act on Restriction on Special Cases concerning Taxation, in which cases such partners (if all or some of partners are higher partnership firms under paragraph (3) of that Article, referring to partners who have invested in the higher partnership firms) are fully imposed income tax or corporate tax on incomes corresponding to dividends allocated pursuant to Article 100-18 of that Act;

2. Where any domestic corporation that pays dividends is a corporation meeting the standards prescribed by Presidential Decree, giving due consideration to the number of its stockholders, etc.

(3) Each person who intends to seek the benefit of paragraph (1), shall file an application for income deductions, as prescribed by Presidential Decree.

(4) In applying paragraph (1), if the dividends exceed the amount calculated by subtracting the losses carried forward under Article 13 (1) 1 (hereafter referred to as "carried-forward losses" in this Article) from the incomes for the relevant business year for the first time, such excess amount may be carried forward to each business year ending within 5 years from the commencement date of the business year following the relevant business year, and deducted from the income amount of the business year to which it is carried forward; provided, in cases where a domestic corporation fails to distribute 90/100 or more of distributable profits in the business year carried forward, the amount carried forward shall not be deducted. <Added on Dec. 31, 2022; Dec. 31, 2024>

(5) If the amount of dividends for a business year following the business year to which the excess is first carried forward under the main clause of paragraph (4) exceeds the amount calculated by subtracting the carried-forward losses and the amount carried forward to the relevant business year (if the relevant amount is less than zero, referring to zero) in order from the income of the relevant business year, such excess amount may be carried forward to each business year ending within 5 years from the commencement date of the business year following the relevant business year and deducted from the amount of income for the business year carried forward: provided, if a domestic corporation fails to distribute at least 90/100 of distributable profits in the business year to which it is carried forward, the carried forward amount shall not be deducted. <Added on Dec. 31, 2024>

(6) If the amount carried forward pursuant to the main clauses of paragraphs (4) and (5) (hereafter referred to as "carried-forward deductible dividends" in this Article) is deducted from the income amount for the relevant business year, it shall be deducted by the methods specified as follows: <Added on Dec. 31, 2022; Dec. 31, 2024>

1. The carried-forward deductible dividends shall be deducted prior to the amount of dividends in the relevant business year;

2. If there are two or more carried-forward deductible dividends, the deduction shall be made starting from the carried-forward deductible dividends that accrues first.

[This Article Wholly Amended on Dec. 30, 2010]

Article 53-2(Special cases concerning calculation of tax bases for corporations adopting functional currencies) #

(1) The tax base for a domestic corporation that prepares the financial statements by adopting a currency, other than Korean Won, as a functional currency according to the corporate accounting standards shall be calculated in the method reported to the head of the tax office having jurisdiction over the place of tax payment, among the following methods (hereafter in this Article, referred to as "calculation method of tax bases"); provided, the tax base of income for the business year before the calculation method of tax bases prescribed in subparagraph 2 or 3 is first reported and applied shall be calculated upon applying the calculation method of tax bases prescribed in subparagraph 1, and consolidated corporations that belong to the same consolidated group shall report and apply the same calculation method of tax bases:

1. Method of calculating tax bases based on the financial statements to be otherwise prepared, when no currency, other than Korean Won, is adopted as a functional currency;

2. Method of calculating tax bases based on the financial statements denominated in a functional currency and subsequently converting it into Korean Won;

3. Method of calculating tax bases based on the financial statements converted into Korean Won by applying the exchange rates as at the end date of the business year in the case of the items on the statement of financial position, and the exchange rates as at the relevant trading day (referring to the average exchange rate for the relevant business year in the case of the items prescribed by Presidential Decree) in the case of the items on the consolidated income statement (referring to a profit and loss statement where no consolidated income statement is available; hereinafter the same shall apply).

(2) A corporation that has reported and applies the calculation method of tax bases prescribed in paragraph (1) 2 or 3 may not change the calculation method of tax bases unless there arise circumstances prescribed by Presidential Decree, such as change of the reported functional currency and a merger between corporations using a different calculation method of tax bases.

(3) Where a corporation that applies the calculation method of tax bases prescribed in paragraph (1) 2 or 3 changes its functional currency, it shall include, in gross income, the amount calculated by subtracting the amount under subparagraph 2 from the amount under subparagraph 1 per asset or liability when calculating the amount of income for the business year during which it changes its functional currency and includes an amount equivalent thereto in deductible expenses by appropriating it as lump-sum depreciation reserve funds or compressed accounts reserve funds, as prescribed by Presidential Decree:

1. The book value of the relevant asset or liability as at the commencement date of the relevant business year denominated in the functional currency after change;

2. The amount denominated in the functional currency after changing the currency by applying the exchange rate as at the date on which the relevant asset is acquired or liability arises to the book value of the asset or liability as at the end date of the immediately preceding the business year in which the amount is denominated in the functional currency before change.

(4) Paragraph (3) shall apply mutatis mutandis where a corporation first applies the calculation method of tax bases prescribed in paragraph (1) 2 or 3. In such cases, the functional currency before change shall be deemed Korean Won.

(5) For purposes of paragraphs (1) through (4), matters necessary for the application of exchange rates, the report and change of the calculation method of tax bases, the disposition of amounts included in deductible expenses, the report of tax bases of a corporation that selects each calculation method of tax bases, the application of calculation method of tax bases, and other matters shall be prescribed by Presidential Decree.

[This Article Added on Dec. 30, 2010]

Article 53-3(Special cases concerning calculation of tax dases for overseas place of business) #

(1) The tax base for an overseas place of business of a domestic corporation shall be calculated in accordance with the method reported to the head of the tax office having jurisdiction over the place of tax payment, among the following methods (hereafter referred to as "calculation method of tax bases" in this Article); provided, the tax base of the income for the business year before the calculation method of tax bases prescribed in subparagraph 2 or 3 is first reported and applied shall be calculated by applying the calculation method of tax bases prescribed in subparagraph 1:

1. Method of re-preparing the financial statements where the financial statements of an overseas place of business are not prepared in any functional currency, other than Korean Won, combining them with the financial statements of the headquarters and calculating the tax base based on such combined financial statements;

2. Method of calculating the tax base based on the financial statements of an overseas place of business denominated in the functional currency of the overseas place of business, converting such tax base into Korean Won and aggregating it with the tax base of the headquarters;

3. Method of converting, into Korean Won, the items on the statement of financial position at the exchange rate as at the end date of the business year and the items on the consolidated income statement at the exchange rate prescribed by Presidential Decree in the case of the financial statements of an overseas place of business, combining them with the financial statements of the headquarters and calculating the tax base based on the combined financial statements.

(2) A corporation that has reported and applies the calculation method of tax bases prescribed in paragraph (1) 2 or 3 shall not change the calculation method of tax bases unless there arise circumstances prescribed by Presidential Decree, such as a merger between corporations using a different calculation method of tax bases.

(3) For purposes of paragraphs (1) and (2), matters necessary for the application of exchange rates, the report and change of the calculation method of tax bases, the report of tax bases of a corporation that selects each calculation method of tax bases, the application of calculation method of tax bases, and other matters shall be prescribed by Presidential Decree.

[This Article Added on Dec. 30, 2010]

Article 55(Tax rate) #

(1) The amount of corporate tax on the income of a domestic corporation for each business year shall be determined with the amount calculated by applying the relevant tax rate classified in each of the following subparagraphs to the tax base referred to in Article 13 (where there is an amount of corporate tax on capital gains on the transfer of land, etc., under Article 55-2 and an amount of corporate tax computed by applying special tax provisions for promoting investment and collaborative cooperation under Article 100-32 of the Act on Restriction on Special Cases concerning Taxation, such amounts shall be aggregated; hereinafter referred to as "calculated tax amount"): <Amended on Dec. 31, 2024>

1. In case of a domestic corporation (excluding a domestic corporation specified in Article 60-2 (1) 1);

┌───────┬───────────────────────────┐

│ Tax Base │ Tax Rate │

├───────┼───────────────────────────┤

│Not exceeding 200 million won│9/100 of tax base│

├───────┼───────────────────────────┤

│Exceeding 200 million won │18 million won ＋ (19/100 of the amount exceeding 200 million won)│

│but not exceeding 20 billion won│ │

├───────┼───────────────────────────┤

│Exceeding 20 billion won│3.78 billion won ＋ (21/100 of the amount exceeding 20 billion won)│

│but not exceeding 300 billion won│ │

├───────┼───────────────────────────┤

│Exceeding 300 billion won│62.58 billion won ＋ (24/100 of the amount exceeding 300 billion won)│

└───────┴───────────────────────────┘

2. In case of a domestic corporation falling under Article 60-2 (1) 1;

┌───────┬────────────────────────┐

│ Tax Base │ Tax Rate │

├───────┼────────────────────────┤

│ 20 billion won or less │ 19/100 of tax base │

├───────┼────────────────────────┤

│ More than 20 billion won │ 3.8 billion won ＋ (21/100 of the amount exceeding 20 billion won) │

│ but not exceeding 300 billion won │ │

├───────┼────────────────────────┤

│ More than 300 billion won │ 62.6 billion won ＋ (24/100 of the amount exceeding 300 billion won) │

└───────┴────────────────────────┘

(2) With regard to corporate tax on income for each business year of a domestic corporation with a business year of less than 12 months, an amount computed by dividing the amount computed for the business year by applying Article 13 by the number of months of the business year and multiplying the resulting amount by 12 shall be the tax base for the business year, and the amount of tax computed by multiplying the amount of tax computed under paragraph (1) by the number of months of the business year divided by 12 shall be the amount of tax. In such cases, the number of months shall be calculated by the method prescribed by Presidential Decree.

[This Article Wholly Amended on Dec. 30, 2010]

Article 55-2(Special provisions concerning taxation on capital gains on transfer of land) #

(1) Where a domestic corporation transfers any of the following parcels of land or buildings (including facilities and structures appurtenant to such buildings), association members' right to residency under subparagraph 9 of Article 88 of the Income Tax Act, and purchase rights under subparagraph 10 of the same Article as a right to acquire houses (hereafter in this Article and Article 95-2 referred to as "land, etc."), it shall pay the amount of tax calculated pursuant to the relevant subparagraph as corporate tax on capital gains on the transfer of land, etc., in addition to the corporate tax calculated by applying the tax rate prescribed in Article 55 to the tax base prescribed in Article 13. In such cases, the greatest tax amount shall apply to an asset where at least two of the following subparagraphs are applicable to that asset: <Amended on Jan. 1, 2014; Dec. 23, 2014; Aug. 18, 2020>

1. Where the domestic corporation transfers any of the following real estate by no later than December 31, 2012, the amount of tax calculated by multiplying the capital gains by 10/100:

(a) A house referred to in subparagraph 2 (including the land appurtenant thereto; hereafter in this paragraph, the same shall apply), which is real estate located within any designated area under Article 104-2 (2) of the Income Tax Act;

(b) Idle land referred to in subparagraph 3, which is real estate located within the designated area under Article 104-2 (2) of the Income Tax Act;

(c) Other real estate prescribed by Presidential Decree as necessary for stabilizing the prices of real estate, because the prices of such real estate has risen or are likely to rise sharply;

2. Where a residential house specified by Presidential Decree (including the land appurtenant thereto) or a residential building, which is not used at ordinary times for residence but used only for recreation, summer vacations, entertainment, or any similar purpose (hereafter in this Article, referred to as "vacation house") is transferred, the amount of tax calculated by multiplying capital gains on the transfer of land, etc., by 20/100 (or 40/100 in cases of capital gains on the transfer of unregistered land, etc.); provided, the foregoing shall not apply to any residential house (including the land appurtenant thereto) at a rural village in an Eup/Myeon specified in Article 3 (3) or (4) of the Local Autonomy Act, where such residential house meets the scope and criteria prescribed by Presidential Decree;

3. Where any idle land is transferred, the amount of tax calculated by multiplying capital gains on transfer of land, etc., by 10/100 (40/100 for gains from the transfer of unregistered land, etc.).

4. Where association members' right to residency under subparagraph 9 of Article 88 of the Income Tax Act, and purchase rights under subparagraph 10 of the same Article as a right to acquire houses is transferred, the amount of tax calculated by multiplying capital gains on land, etc. by 20/100.

(2) "Idle land" referred to in paragraph (1) 3 means the land used for any of the following purposes during the period specified by Presidential Decree while a person owns the land: <Amended on Jan. 1, 2013; Dec. 23, 2014; Jul. 24, 2015>

1. A dry field, paddy field, or an orchard (hereafter in this Article, referred to as "farmland"), which is either of:

(a) Land owned by a corporation that does not run farming as its main business; provided, excluded herefrom is any farmland prescribed by Presidential Decree permitted to be owned by a corporation under the Farmland Act and other statutes;

(b) Farmland in an urban area (excluding an area designated by Presidential Decree; hereafter in this item, the same shall apply) as defined in subparagraph 1 of Article 6 of the National Land Planning and Utilization Act, among areas in the Special Metropolitan City, a Metropolitan City (excluding a Gun area in a Metropolitan City; hereafter in this paragraph, the same shall apply), a Metropolitan Autonomous City (excluding an Eup/Myeon area in a Metropolitan Autonomous; hereafter in this paragraph, the same shall apply), a Special Self-Governing Province (excluding an Eup/Myeon area in an administrative city established under Article 10 (2) of the Special Act on the Establishment of Jeju Special Self-Governing Province and the Development of Free International City; the same shall apply hereafter in this paragraph), or a Si (excluding an Eup/Myeon area in a Si in the combined form of urban and rural communities prescribed in Article 3 (4) of the Local Autonomy Act; the same shall apply hereafter in this paragraph); provided, excluded herefrom is any farmland for which the period set by Presidential Decree has not lapsed from the date such farmland is included in any urban area in the Special Metropolitan City, a Metropolitan City, a Metropolitan Autonomous City, a Special Self-Governing Province, or a Si;

2. Forest land; provided, excluded herefrom are:

(a) A seed-gathering forest or an experimental forest designated under the Creation and Management of Forest Resources Act, a forest protection zone designated under Article 7 of the Forest Protection Act, and other forest land prescribed by Presidential Decree as necessary for protecting and nurturing forests or for the public interest;

(b) A forest land prescribed by Presidential Decree, which is owned by any corporation that runs the forestry as its main business or by a corporate forest manager as provided for in the Creation and Management of Forest Resources Act;

(c) A forest land prescribed by Presidential Decree, which has reasonable grounds to believe that such forest land is directly related to the business of any corporation, in consideration of its owner, location, utilization status, holding period, area, and other factors;

3. Any of the following ranch areas; provided, excluded herefrom is a ranch area prescribed by Presidential Decree, which has reasonable grounds to believe that such ranch area is directly related to the business of any corporation, in consideration of its owner, location, utilization status, holding period, area and other factors:

(a) A ranch area owned by any corporation that runs the livestock business as its main business, the scale of which exceeds the standard size of the livestock area prescribed by Presidential Decree, or which is located in an urban area (excluding any urban area prescribed by Presidential Decree; the same shall apply hereafter in this item) of the Special Metropolitan City, a Metropolitan City, a Metropolitan Autonomous City, a Special Self-Governing Province, or a Si (excluding where the period set by Presidential Decree has not lapsed from the date the ranch area is included in the urban area);

(b) A ranch area owned by any corporation that does not run the livestock business as its main business;

4. Land, other than farmland, forest land, or ranch areas, except for any of the following land:

(a) Land exempt from property tax under the Local Tax Act or any relevant Act;

(b) Land subject to the aggregate taxation of property tax or the separate taxation under Article 106 (1) 2 and 3 of the Local Tax Act;

(c) Land prescribed by Presidential Decree which has reasonable grounds to believe that such land is directly related to the business of a corporation, in consideration of its utilization status, fulfillment of duties imposed by any relevant Act, the revenue amount, and other factors;

5. Land, the area of which exceeds an area computed by multiplying the multiple rate set by Presidential Decree by the area of land on which a house is built, among land appurtenant to such house as referred to in Article 106 (2) of the Local Tax Act;

6. Land appurtenant to a vacation house; provided, where the boundary of the land appurtenant to a vacation house are not definite, the area of land equivalent to 10 times the floor area of the building shall be deemed the land appurtenant thereto;

7. Land similar to the land provided for in subparagraphs 1 through 6, prescribed by Presidential Decree, which has reasonable grounds to believe that such land is not directly related to the business of a corporation.

(3) In applying paragraph (1) 3, where any parcel of land becomes idle as its use is prohibited under any statute or due to exceptional circumstances prescribed by Presidential Decree after its acquisition, such land may not be deemed idle, as prescribed by Presidential Decree.

(4) Paragraph (1) shall not apply to any capital gains on transfer of any of the following land, etc.; provided, the same shall not apply to any capital gains on transfer of unregistered land, etc.:

1. Income accruing from the disposal of land, etc. made by the adjudication of bankruptcy;

2. Income accruing from the exchange, sub-division, or consolidation of farmland directly cultivated by a corporation in circumstances prescribed by Presidential Decree;

3. Income accruing on the grounds prescribed by Presidential Decree, including a disposition of replotting under the Act on the Improvement of Urban Areas and Residential Environments or other statutes.

(5) "Unregistered land, etc." referred to in paragraphs (1) and (4) means the land, etc., transferred by a corporation without registering the acquisition thereof; provided, excluded herefrom is any parcel of land, etc., acquired on a long-term installment plan, the contract terms of which make it impossible to register its acquisition as at the time it is acquired, and other land, etc., prescribed by Presidential Decree.

(6) Capital gains on the transfer of land, etc., shall be an amount computed by subtracting the book value thereof as at the time of transfer from the transfer value of land, etc.; provided, the capital gain on the transfer of land, etc., that a nonprofit domestic corporation acquired on or before December 31, 1990 may be determined by subtracting the greatest amount, among the book value and the values appraised under Articles 60 and 61 (1) of the Inheritance Tax and Gift Tax Act as at January 1, 1991 from the transfer amount. <Amended on Dec. 23, 2014>

(7) In applying paragraphs (1) through (6), the scope of farmland, forest land, or ranch areas, the criteria for determining the main business, the method for calculating capital gains on transfer of land, etc., where any loss incurred from the transfer of such land, etc., during the relevant business year, the business year in which any profit or loss generated from the transfer of land, etc., falls, and other necessary matters shall be prescribed by Presidential Decree.

(8) Paragraph (1) 2 and 3 shall not apply to any gain accruing from the transfer of land, etc., by no later than December 31, 2012.

[This Article Wholly Amended on Dec. 30, 2010]

Article 57(Foreign tax credits) #

(1) Where the tax base on the income of a domestic corporation for each business year includes any foreign source income, and the amount of foreign corporate tax prescribed by Presidential Decree on such foreign source income (hereafter in this Article and Article 73, referred to as "amount of foreign corporate tax") has been paid or is payable, the amount of foreign corporate tax may be deducted by up to the amount (hereafter in this Article, referred to as "deduction limit amount") computed by the following formula from the amount of corporate tax for the relevant business year: <Amended on Dec. 22, 2020; Dec. 21, 2021; Dec. 31, 2022>Deduction limit amount = A ? B/CA: Calculated tax amount for the relevant business year (excluding corporate tax on capital gains on the transfer of land, etc. under Article 55-2 and corporate tax calculated by applying special tax provisions for promoting investment and collaborative cooperation under Article 100-32 of the Restriction of Special Taxation ActB: Foreign source income (excluding the amount calculated by multiplying the ratio of tax exemption or reduction on tax-exempted foreign source income, where a tax exemption or reduction is granted under the Restriction of Special Taxation Act or any other statute.C: Tax base on income for the relevant business year.

1. Deleted; <Dec. 31, 2022>

2. Deleted; <Dec. 31, 2022>

3. Deleted. <Dec. 31, 2022>

(2) In applying paragraph (1), where the amount of foreign corporate tax exceeds the deduction limit paid or payable to a foreign government for the relevant business year, such excess may be carried forward to each business year ending within 10 years from the start date of the business year following the relevant business year (hereafter in this Article referred to as "carry-over deduction period"), and may be deducted up to the deduction limit amount for each business year in which it is carried forward; provided, where a foreign corporate tax paid or payable to a foreign government is not deducted within a carry-over deduction period, the amount of the foreign corporate tax that has not been deducted may be included in deductible expenses for the purpose of calculating the amount of income for the business year in which the day following the end of the carry-over deduction period of falls, notwithstanding subparagraph 1 of Article 21. <Amended on Dec. 24, 2018; Dec. 31, 2019; Dec. 22, 2020>

(3) An amount equivalent to the amount of the corporate tax reduction or exemption granted to a domestic corporation having foreign source income in a country which is a party to a tax treaty shall be deemed the amount of foreign corporate tax for which the domestic corporation is entitled to a tax credit under paragraph (1), within the limits stipulated by the relevant tax treaty. <Amended on Dec. 22, 2020>

(4) Where the amount of income of a domestic corporation for each business year includes dividends or distribution of surpluses from a foreign subsidiary (hereafter in this Article, referred to as "dividend income"), the amount of foreign corporate tax imposed on the amount, computed as prescribed by Presidential Decree, that is equivalent to the dividend income, among the amount of foreign corporate tax on the foreign subsidiary's income, shall be deemed the amount of foreign corporate tax for which the domestic corporation is entitled to a tax credit under paragraph (1). <Amended on Dec. 31, 2011; Dec. 22, 2020>

(5) "Foreign subsidiary" referred to in paragraph (4) means a foreign corporation that meets the requirements prescribed by Presidential Decree, in which a domestic corporation invests at least 10/100 (or 5/100 in cases of a foreign corporation that engages in the business of developing overseas resources under Article 22 of the Act on Restriction on Special Cases concerning Taxation) of its total number of outstanding voting stocks or total amount of investment. <Amended on Dec. 23, 2014; Dec. 31, 2022>

(6) Where the amount of income of a domestic corporation for each business year includes the dividend income from a foreign corporation and the investor domestic corporation, not the relevant foreign corporation, has a direct tax liability for the income of the foreign corporation or otherwise meets the requirements prescribed by Presidential Decree, the amount computed, as prescribed by Presidential Decree, which is equivalent to the dividend income out of the amount of foreign corporate tax imposed on the investor domestic corporation shall be deemed the amount of foreign corporate tax for which the domestic corporation is entitled to a tax credit under paragraph (1). <Amended on Dec. 22, 2020>

(7) Paragraphs (1) through (6) shall not apply to income dividend subject to exclusion from gross income pursuant to Article 18-4. <Added on Dec. 22, 2022>

(8) The method for calculating foreign source income, tax credits, or inclusion of foreign source income in deductible expenses under paragraphs (1) through (6) and other necessary matters shall be prescribed by Presidential Decree. <Amended on Jan. 1, 2013; Dec. 31, 2022>

[This Article Wholly Amended on Dec. 30, 2010]

Article 57-2(Special cases concerning refund of foreign tax credits for income received from indirect investment companies) #

(1) Where income meeting the following requirements is added to the tax base of a domestic corporation for each business year, the amount prescribed in paragraph (2) 2 may be deducted from the tax amount calculated for the relevant business year:

1. Income received from any of the following items (hereafter in this Article referred to as "indirect investment company, etc."):

(a) Any investment company, special purpose company, investment limited liability company, investment association (excluding an institutional private equity fund, as defined in Article 9 (19) 1 of the Financial Investment Services and Capital Markets Act), investment limited liability company, investment trust, investment limited partnership, and undisclosed investment association defined in the aforesaid Act;

(b) Any corporate restructuring real estate investment company and real estate investment company for entrusted management as defined in the Real Estate Investment Company Act;

2. An amount to be deducted from the tax amount calculated: The amount of a foreign corporate tax payable by an indirect investment company calculated as prescribed by Presidential Decree, taking into account the after-tax base price.

(2) For the purposes of paragraph (1), the income received by a domestic corporation from an indirect investment company, etc. and the amount to be deducted from the tax amount calculated for the relevant business year shall be as follows:

1. Income received from an indirect investment company, etc.: An amount calculated on the basis of the base price referred to in Article 238 (6) of the Financial Investment Services and Capital Markets Act (referring to the price after the foreign corporate tax payable by an indirect investment company is deducted; hereafter in this Article and Article 73 referred to as "after-tax base price"); provided, in the case of the income paid by an indirect investment company, etc. by reason of the sale of securities of an indirect investment company, etc. listed on the securities market, it shall be the amount calculated as prescribed by Presidential Decree;

(3) An amount deductible from the calculated tax amount pursuant to paragraph (1) shall be limited to an amount calculated according to the following formula (hereafter referred to as "credit limit" in this paragraph). In such cases, if an amount referred to in paragraph (2) 2 exceeds the credit limit for the relevant business year, such excess may be carried forward to each business year ending within ten years from the start date of the business year following the relevant business year, and deducted to the extent of the credit limit for the business year to which such excess is carried forward. Deduction limit amount = A ? B/CA: Calculated tax amount for the relevant business year (excluding corporate tax on capital gains on the transfer of land, etc. under Article 55-2 and corporate tax calculated by applying special tax provisions for promoting investment and collaborative cooperation under Article 100-32 of the Restriction of Special Taxation ActB: Total amount of income paid by an indirect investment company, etc. (limited to where indirect investment foreign corporate tax has been paid on the relevant income)C: Tax base on income for the relevant business year.

(4) The method for calculating income received from an indirect investment company, etc. under paragraphs (1) through (3), and other matters necessary for tax credits shall be prescribed by Presidential Decree.

[This Article Added on Dec. 31, 2022]

Article 58-3(Tax credits upon correction of wrongful accounting) #

(1) Where a domestic corporation has its tax base or tax amount corrected upon filing an application pursuant to Article 45-2 of the Framework Act on National Taxes on the ground that the tax base and tax amount were overstated because of its wrongful accounting, which meet each of the following criteria, the overpaid tax shall not be refunded but shall be deducted from the corporate tax for the business year in which the tax amount is corrected and subsequent business years. In such cases, the deductible amount for each business year shall not exceed 20/100 of the overpaid tax, and the overpaid tax that remains after deduction shall be carried over to subsequent business years for deduction: <Amended on Dec. 20, 2016; Oct. 31, 2017>

1. Profits or assets were overstated or deductible expenses or liabilities were understated on a business report submitted pursuant to Article 159 of the Financial Investment Services and Capital Markets Act or an audit report submitted pursuant to Article 23 of the Act on External Audit of Stock Companies;

2. The domestic corporation, its auditor or certified public accountant has been subject to any of the sanctions prescribed by Presidential Decree, such as a warning or caution.

(2) In applying paragraph (1), where a domestic corporation has any tax payable according to a revised return filed pursuant to Article 45 of the Framework Act on National Taxes during any business year before the business year in which a correction is made, in connection with wrongful accounting, the overpaid tax under paragraph (1) shall be first deducted from the tax payable by up to 20/100 of the overpaid tax. <Amended on Dec. 20, 2016>

(3) Where a domestic corporation that has an overpaid tax deducted under paragraphs (1) and (2) has any remainder of the overpaid tax, such remainder shall be disposed of as follows: <Added on Dec. 20, 2016>

1. Where the domestic corporation is dissolved after a merger or division: The surviving corporation or the corporation established through the division (including the counterpart corporation to a division and merger) shall succeed to the remainder of the overpaid tax and shall have the tax deducted in accordance with paragraph (1);

2. Where the domestic corporation is dissolved by any method other than those referred to in subparagraph 1: The head of the tax office having jurisdiction over its place of tax payment or the commissioner of the competent regional tax office shall immediately refund the remainder after deducting the corporate tax payable on liquidation income under Article 77 from the overpaid tax to such domestic corporation.

(4) Detailed methods and procedures relating to tax credits under paragraphs (1) and (3), methods for carryover and deduction of any remainder of an overpaid tax after deduction, and other related matters, shall be prescribed by Presidential Decree. <Amended on Dec. 20, 2016>

[This Article Wholly Amended on Dec. 30, 2010]

Article 59(Calculation of amount of tax reductions/exemptions or tax credits) #

(1) Where provisions regarding corporate tax reductions or exemptions and provisions regarding tax credits are concurrently applicable where this Act or any other statute applies, the priority of applicability is as follows, except as otherwise provided for in this Act. In such cases, where the aggregate of the amounts referred to in subparagraphs 1 and 2 exceeds the amount of corporate tax payable by a corporation (excluding corporate tax on capital gains on the transfer of land, etc. under Article 55-2, corporate tax computed by applying special tax provisions for promoting investment and collaborative cooperation under Article 100-32 of the Act on Restriction on Special Cases concerning Taxation, and penalty tax), the excess shall be deemed nil: <Amended on Dec. 23, 2014; Dec. 19, 2017; Dec. 24, 2018>

1. Tax reductions and exemptions (including exemptions) of the amount of tax on income for each business year;

2. Tax credits which are not entitled to be carried forward;

3. Tax credits which are entitled to be carried forward. In such cases, where both a tax credit granted during the relevant business year and a tax credit carried forward exist, the tax credit carried forward shall be deducted first;

4. Tax credits referred to in Article 58-3. In such cases, when both a tax credit and a tax credit carried forward exist, the tax credit carried forward shall be deducted first.

(2) The amount of a tax reduction or exemption referred to in paragraph (1) 1 shall be the amount computed by multiplying the calculated amount (in cases of a tax reduction, the amount computed by multiplying the calculated amount by the relevant reduction rate) of tax (excluding the amount of corporate tax on capital gains on the transfer of land, etc., under Article 55-2, the amount of corporate tax on unappropriated earnings under Article 56 and the amount of corporate tax computed by applying special tax provisions for promoting investment and collaborative cooperation under Article 100-32 of the Act on Restriction on Special Cases concerning Taxation) by the ratio (100/100, where the ratio exceeds 100/100) of the amount of income partially or fully exempted to the tax base, except as otherwise provided in this Act. <Amended on Dec. 23, 2014; Dec. 19, 2017; Dec. 24, 2018>

[This Article Wholly Amended on Dec. 30, 2010]

Article 60(Filing reports on tax bases) #

(1) A domestic corporation liable to pay tax shall file a report on the corporate tax base and the tax payable on income for the relevant business year within three months (four months where a domestic corporation submits a certificate of confirmation of compliant filing pursuant to the main clause of Article 60-2 (1)) from the end date of the month in which the end date of each business year falls, to the head of the tax office having jurisdiction over the place of tax payment, as prescribed by Presidential Decree. <Amended on Dec. 24, 2018>

(2) A report filed under paragraph (1) shall be accompanied by the following documents:

1. A statement of financial position, statement of comprehensive income, statement of appropriation of retained earnings (or statement of disposition of deficit) of an individual Korean corporation prepared by applying financial accounting standards mutatis mutandis;

2. A tax settlement invoice prepared, as prescribed by Presidential Decree (hereinafter referred to as "tax settlement invoice");

3. Other documents specified by Presidential Decree.

(3) Paragraph (1) shall also apply to a domestic corporation with no income or with losses incurred for each business year.

(4) Where a domestic corporation is dissolved due to a merger or division and files a report pursuant to paragraph (1), the report shall be accompanied by the following documents:

1. A statement of financial position of a merged corporation, divided corporation, or a disappearing counterpart corporation to a merger and division as at the registration date of the merger or the registration date of the division, and a detailed statement on the assets and liabilities succeeded to by a surviving corporation, etc., due to the merger or division;

2. Other documents specified by Presidential Decree.

(5) Where the documents referred to in paragraph (2) 1 and 2 are not submitted along with a report filed under paragraph (1), the report shall not be construed as a report filed under this Act; provided, the same shall not apply to a non-profit domestic corporation which does not run profit-making business referred to in Article 4 (3) 1 or 7. <Amended on Dec. 24, 2018>

(6) Where any error or omission is found in the report and other documents filed under paragraph (1) or (2), the head of the tax office having jurisdiction over the place of tax payment and the commissioner of the competent regional tax office may request the correction of such error or omission.

(7) Notwithstanding paragraph (1), where a domestic corporation subject to audit by an auditor pursuant to Article 4 of the Act on External Audit of Stock Companies applies for an extension of the filing deadline, as prescribed by Presidential Decree, on the grounds that the settlement of accounts is not finalized because the audit of the relevant business year is not complete, the filing deadline may be extended by up to one month. <Amended on Oct. 31, 2017>

(8) Each domestic corporation granted an extension of its filing deadline under paragraph (7) must pay the tax and the amount calculated by applying the interest rate prescribed by Presidential Decree, in consideration of the interest rates charged by a financial company, etc., to the number of days of the extension. In such cases, the number of days of the extension means the number of days from the following day of the filing deadline prescribed in paragraph (1) to the day a report is filed and payment is made (limited to where such report is filed and payment is made by the extended deadline) or to the extended day.

(9) In cases of a domestic corporation specified by Presidential Decree as deemed necessary to ensure correct settlement between corporate accounting and tax accounting or honest tax payment, a tax settlement invoice shall be prepared by any of the following persons who belong to the settlement team prescribed by Presidential Decree: <Added on Dec. 15, 2015; Nov. 23, 2021>

1. A certified tax accountant registered in the register of certified tax accountants under the Certified Tax Accountant Act;

2. A certified public accountant registered in the register of certified tax accountants or the register of tax agent services for certified public accountants under the Certified Tax Accountant Act;

3. An attorney-at-law registered in the register of certified tax accountants or the register of tax agent services for attorney-at-laws under the Certified Tax Accountant Act.

[This Article Wholly Amended on Dec. 30, 2010]

[Amending paragraph (9) 3 of this Article determined to be inconsistent with the Constitution by the Constitutional Court on April 26, 2018 by Act No. 18521; Nov. 23, 2021]

Article 60-2(Submission of certificate of confirmation of compliant filing) #

(1) When either of the following domestic corporations files a return on the tax base and amount of corporate tax in accordance with Article 60 for compliant tax payment, such corporation shall submit a certificate of confirmation issued by any of the persons specified by Presidential Decree, such as a certified public tax accountant, to the effect that the person confirms the reasonableness of the tax base amount computed according to the books of accounts and evidentiary documents kept and recorded in accordance with Articles 112 and 116 (hereinafter referred to as "certificate of confirmation of compliant filing"), as prescribed by Presidential Decree, in addition to the documents specified in Article 60 (2); provided, a domestic corporation audited by an auditor in accordance with Article 4 of the Act on External Audit of Stock Companies need not submit such certificate of confirmation: <Amended on Dec. 24, 2018; Dec. 21, 2021>

1. A domestic corporation whose main business is real estate lease business and who meets the criteria prescribed by Presidential Decree;

2. A domestic corporation, where a business operator subject to confirmation of compliant filing under Article 70-2 (1) of the Income Tax Act has converted his or her business into a domestic corporation by any of the methods prescribed by Presidential Decree, such as in-kind investment of business assets (limited to a domestic corporation in which case three years have not passed yet since it was converted into a corporation as at the end of the pertinent business year);

3. A domestic corporation that has acquired the business operated by another domestic corporation converted pursuant to subparagraph 2 in the manner prescribed in the same subparagraph (limited to cases where it is within three years from the date of conversion prescribed in the same subparagraph, and the domestic corporation is still operating the acquired business as of the end of its business year).

(2) Where the head of the tax office having jurisdiction over the place of tax payment finds any defect or error in a certificate of confirmation of compliant filing submitted in accordance with paragraph (1), he or she may request to amend such certificate. <Amended on Dec. 24, 2018>

(3) Except as otherwise provided in paragraphs (1) and (2), matters necessary for the submission of a certificate of confirmation of compliant filing, etc. shall be prescribed by Presidential Decree. <Amended on Dec. 24, 2018>

[This Article Added on Dec. 19, 2017]

Article 62-2(Special provisions concerning filing capital gains on transfer of assets by non-profit domestic corporations) #

(1) Where a non-profit domestic corporation (excluding any non-profit domestic corporation that runs profit-making business referred to in Article 4 (3) 1; hereafter in this Article, the same shall apply) earns income accruing from the transfer of any of the following assets (hereafter in this Article, referred to as "capital gains on transfer of assets"), being the revenue provided for in Article 4 (3) 4 through 6, it may choose not to file a tax base, notwithstanding Article 60 (1); in such cases, capital gains on transfer of assets, the tax base of which is not filed, shall be disregarded for the purpose of calculating the amount of income for each business year: <Amended on Dec. 24, 2018; Dec. 21, 2021; Dec. 31, 2024>

1. Stocks, etc. under Article 94 (1) 3 of the Income Tax Act and stocks, etc. prescribed by Presidential Decree;

2. Land or buildings (including facilities or structures appurtenant to such buildings);

3. Assets referred to in Article 94 (1) 2 or 4 of the Income Tax Act.

(2) An amount calculated by applying rates prescribed in each subparagraph of Article 104 (1) of the Income Tax Act to the tax base calculated by applying mutatis mutandisArticle 92 of the same Act shall be paid as corporate tax on capital gains on transfer of assets, the tax base of which is not filed under paragraph (1). In such cases, Article 55-2 shall not apply where tax rates weighted under Article 104 (4) of the Income Tax Act apply.

(3) In applying paragraph (2), the tax base calculated by applying mutatis mutandisArticle 92 of the Income Tax Act shall be the amount calculated by first deducting incurred expenses from the total income accruing from the transfer of assets (hereafter in this Article, referred to as "transfer value") and re-deducting the amounts provided for in Articles 95 (2) and 103 of the Income Tax Act from the amount deducted (hereinafter referred to as "transfer marginal profits").

(4) Articles 96 through 98 and 100 of the Income Tax Act shall apply mutatis mutandis to the calculation of the transfer value, expenses incurred and transfer marginal profits referred to in paragraph (3); provided, where any non-profit corporation that has received the contribution of any asset which is not included in the taxable value of the inheritance tax or the taxable value of the gift tax under the Inheritance Tax and Gift Tax Act, transfers any asset prescribed by Presidential Decree, the acquisition value of the relevant assets by the contributor thereof shall be the acquisition value of the relevant corporation, and in the case of an organization deemed a corporation under Article 13 (2) of the Framework Act on National Taxes, the acquisition value prior to obtaining approval therefor under the same paragraph shall be deemed the acquisition value.

(5) Articles 101 and 102 of the Income Tax Act shall apply mutatis mutandis to the calculation of the tax base on capital gains on transfer of assets, and Article 92 of the same Act shall apply mutatis mutandis to the calculation of the amount of tax on income accruing from the transfer of assets. <Amended on Dec. 31, 2023>

(6) The provisions governing the filing of a tax base, payment, determination, correction, and collection of corporate tax on income for each business year, in which the date of transfer of assets falls, shall apply mutatis mutandis to the filing of a tax base, payment, determination, correction, and collection of corporate tax referred to in paragraph (2), and such corporate tax shall be filed, paid, determined, corrected, and collected being added to other corporate tax. In such cases, Article 75-3 shall apply mutatis mutandis. <Amended on Dec. 24, 2018>

(7) Corporate tax calculated under paragraph (2) shall be voluntarily paid upon filing a preliminary return on the tax base of capital gains by applying mutatis mutandisArticles 105 through 107 of the Income Tax Act. Article 112 of the Income Tax Act shall apply mutatis mutandis to such cases. <Amended on Dec. 15, 2015>

(8) Where any non-profit domestic corporation files a preliminary return on the tax base of capital gains under paragraph (7), it shall be deemed to have filed a tax base pursuant to paragraph (6); provided, where any non-profit domestic corporation falls under the proviso to Article 110 (4) of the Income Tax Act, it shall file a tax base pursuant to paragraph (6).

(9) The methods for applying special cases concerning capital gains on transfer of assets pursuant to paragraphs (1) through (8), and other necessary matters, shall be prescribed by Presidential Decree.

[This Article Wholly Amended on Dec. 30, 2010]

[Title Amended on Dec. 24, 2018]

Article 63(Obligation of interim prepayment) #

(1) A domestic corporation whose business years exceed six months is liable to pay corporate tax (hereinafter referred to as "interim tax") on an interim prepayment period among each business year (excluding the first business year after the incorporation of a corporation, where newly incorporated without a merger or division); provided, any of the following corporations are not liable to pay interim tax: <Amended on Dec. 22, 2020; Dec. 31, 2022>

1. Any of the following corporations:

(a) An educational foundation that operates a private school defined in Article 3 of the Higher Education Act;

(b) Seoul National University established under the Act on Establishing and Administrating Seoul National University;

(d) An industry-academia cooperation group under the Industrial Education Enhancement and Industry-Academia-Research Cooperation Promotion Act;

(e) School foundations operating private schools referred to in subparagraph 3 of Article 3 of the Elementary and Secondary Education Act;

2. A domestic corporation, which is a small and medium enterprise in the business year immediately preceding the relevant business year, with the amount calculated by formula in Article 63-2 (1) 1 is less than 500,000 won.

(2) The interim prepayment period in paragraph (1) shall be the period from the beginning of the relevant business year to the day six months pass.

(3) A domestic corporation shall pay interim tax, within two months after the expiration of the interim prepayment period, to the tax office having jurisdiction over the place of tax payment, the Bank of Korea (including any of its agents), or a post office (hereinafter referred to as "tax office, etc. having jurisdiction over the place of tax payment") as prescribed by Presidential Decree.

(4) Where the amount of tax payable by a domestic corporation exceeds ten million won, it may be paid in installments by applying mutatis mutandisArticle 64 (2).

[This Article Wholly Amended on Dec. 24, 2018]

Article 63-2(Calculation of interim tax) #

(1) The interim tax shall be calculated by any of the following methods; provided, a domestic corporation (excluding a corporation prescribed by Presidential Decree in consideration of the sales, etc. by business type) belonging to the business group subject to disclosure under Article 31 (1) of the Monopoly Regulation and Fair Trade Act as of the end date of the immediately preceding business year shall calculate the interim tax by the method specified in subparagraph 2: <Amended on Dec. 31, 2019; Dec. 31, 2024>

1. Method based on the calculated tax amount of the immediately preceding business year; Deduction limit amount = A ? B/CA: Calculated tax amount for the relevant business year (excluding corporate tax on capital gains on the transfer of land, etc. under Article 55-2 and corporate tax calculated by applying special tax provisions for promoting investment and collaborative cooperation under Article 100-32 of the Restriction of Special Taxation ActB: Total amount of income paid by an indirect investment company, etc. (limited to where indirect investment foreign corporate tax has been paid on the relevant income)C: Tax base on income for the relevant business year.D: The amount of occasionally imposed corporate tax paid in the business year immediately preceding the relevant business year.E: The number of months for the relevant business year. In such cases, the number of months shall be calculated by calendar, and the number of days less than one month shall be deemed one month.

2. Method based on the corporate tax amount for the relevant interim prepayment period. Interim tax = (A ? B ? C ? D)A: Regard the relevant interim prepayment period as one business year, and the amount of corporate tax calculated by applying Article 55 to the tax base calculated under Chapter II Section 1B: The amount of tax reductions or exemptions corresponding to the relevant interim prepayment period (excluding the amount deducted from income);C: The amount of withholding tax paid as corporate tax during the relevant interim prepayment period;D: The amount of occasionally imposed corporate tax during the relevant interim prepayment period.

(2) Notwithstanding the main clause of paragraph (1), the amount of interim tax shall be calculated by the methods classified in the relevant following subparagtraphs, in any of the following cases: <Amended on Dec. 31, 2019; Dec. 22, 2020; Dec. 31, 2024>

1. Where the amount of interim tax is not paid by the deadline for interim prepayment under Article 63 (3) (excluding cases specified in the proviso, with the exception of the subparagraphs, of paragraph (1), or any item of subparagraph 2 of this paragraph): The method in paragraph (1) 1;

2. In any of the following cases: The method in paragraph (1) 2:

(a) Where a corporation has no calculated amount of tax finally assessed as corporate tax for the immediately preceding business year (excluding a corporation in any subparagraph of Article 51-2 (1) or Article 104-31 (1) of the Act on Restriction on Special Cases concerning Taxation);

(b) Where the amount of corporate tax for the immediately preceding business year has not been finally assessed by the end of the relevant interim prepayment period;

(c) Where the relevant business year is the first business year after the relevant corporation is newly incorporated through a division or its counter-party corporation to a division is merged through a division;

(d) Where a merging corporation or a merged corporation qualifies as a domestic corporation under the proviso, with the exception of the subparagraphs, of paragraph (1) at the time of merger, and it is the first business year following the merger of the relevant merging corporation.

(3) Where a corporation surviving a merger pays interim tax computed under paragraph (1) for the first business year after the merger, any of the following business years shall be all construed as the immediately preceding business year in paragraph (1) 1:

1. The immediately preceding business year of a corporation surviving a merger;

2. The business year immediately preceding the business year which includes the registration date of the merger of each merged corporation.

(4) Where a corporation which becomes ineligible for the consolidated tax return system under Articles 76-9, 76-10 and 76-12 pays interim tax computed under paragraph (1) in the first business year in which it becomes ineligible for the consolidated tax return system, the computed tax for the immediately preceding consolidated business year by consolidated corporation as prescribed in Article 76-15 (4) shall be construed as the computed amount of tax which has been determined as corporate tax for the immediately preceding business year referred to in paragraph (1).

(5) The head of the tax office having jurisdiction over the place of tax payment shall not collect corporate tax on the relevant interim prepayment period from a corporation which does not have any amount of income due to the suspension of its business during the interim prepayment period, where such fact is verified.

[This Article Added on Dec. 24, 2018]

Article 66(Determination and correction) #

(1) Where a domestic corporation fails to file a report under Article 60, the head of the tax office having jurisdiction over the place of tax payment or the commissioner of the competent regional tax office shall determine the tax base and amount of corporate tax on the income of the domestic corporation for each business year.

(2) Where a domestic corporation that has filed a report under Article 60 falls under any of the following cases, the head of the tax office having jurisdiction over the place of tax payment or the commissioner of the competent regional tax office shall correct the tax base and amount of corporate tax on the income of the relevant corporation for each business year: <Amended on Jun. 7, 2013>

1. Where it makes any error or omission in the details of the report;

2. Where it fails to submit all or some payment statements referred to in Article 120 or 120-2, or aggregate invoices for each supplier or purchaser referred to in Article 121;

3. Where it is determined that the details of the report are unconscientious, taking into account the scope of facilities or the business conditions in any of the followings cases:

(a) Where a corporation meeting the membership eligibility for a credit card merchant referred to in Article 117 (1) fails to become a credit card merchant defined in the Specialized Credit Finance Business Act (limited to a corporation; hereinafter referred to as "credit card merchant"), without good cause;

(b) Where a credit card merchant refuses a transaction by credit card or issues a false credit card sales slip without good cause, in violation of Article 117 (2);

(c) Where a corporation obligated to become a Cash Receipt merchant under Article 117-2 (1) or a corporation designated to become a Cash Receipt merchant under Article 46 (4) of the Value-Added Tax Act fails to become a Cash Receipt merchant under Article 126-3 of the Act on Restriction on Special Cases concerning Taxation (hereinafter referred to as "Cash Receipt merchant"), without good cause;

(d) Where a Cash Receipt merchant refuses to issue a Cash Receipt without good cause or issues a false Cash Receipt;

4. Deleted. <Dec. 20, 2016>

(3) The head of the tax office having jurisdiction over the place of tax payment or the commissioner of the competent regional tax office shall determine or correct the tax base and amount of corporate tax under paragraphs (1) and (2) based on the account books or other evidentiary documents; provided, he or she may estimate such base and amount of corporate tax, as prescribed by Presidential Decree, where the amount of income cannot be calculated based on the account books or other evidentiary documents on the grounds prescribed by Presidential Decree.

(4) Where any error or omission is found after the head of the tax office having jurisdiction over the place of tax payment or the commissioner of the competent regional tax office has determined or corrected the tax base and amount of corporate tax, he or she shall re-correct them immediately.

[This Article Wholly Amended on Dec. 30, 2010]

Article 71(Collection and refund) #

(1) Where a domestic corporation fails to pay all or part of tax payable as corporate tax on income for each business year under Article 64, the head of the tax office having jurisdiction over the place of tax payment shall collect the unpaid corporate tax in accordance with the National Tax Collection Act. <Amended on Jan. 1, 2013>

(2) Where a domestic corporation fails to pay all or part of interim tax payable under Articles 63 and 63-2, the head of the tax office having jurisdiction over the place of tax payment shall collect the unpaid interim tax in accordance with the National Tax Collection Act; provided, where the corporation which fails to pay interim tax falls under Article 63-2 (2) 2, the head of the tax office shall determine and collect the interim tax in accordance with the National Tax Collection Act. <Amended on Jan. 1, 2013; Dec. 24, 2018>

(3) Where a person liable for withholding referred to in Articles 73 and 73-2 fails to withhold tax or to pay withheld tax by the payment deadline, the head of the tax office having jurisdiction over the place of tax payment shall, without delay, collect the sum of the amount of tax to be withheld and paid by a person liable for withholding and additional tax added under Article 47-5 (1) of the Framework Act on National Taxes from the person liable for withholding as corporate tax; provided, where the person liable for withholding has failed to withhold tax and the relevant tax obligor has paid corporate tax, the head of such tax office shall only collect additional tax from the person liable for withholding. <Amended on Dec. 31, 2011; Dec. 24, 2018>

(4) Where the amount of corporate tax collected as interim payment, occasionally imposed, or withheld under Article 63, 63-2, 69, 73, or 73-2 exceeds the amount of corporate tax on income for each business year (including additional tax), the head of the tax office having jurisdiction over the place of tax payment shall refund the excess or appropriate it for national taxes and forced collection charge under Article 51 of the Framework Act on National Taxes. <Amended on Dec. 24, 2018; Dec. 22, 2020>

[This Article Wholly Amended on Dec. 30, 2010]

Article 72(Refund by retroactive deduction of losses for small and medium enterprises) #

(1) Where a small and medium enterprise under Article 25 (1) 1 has losses incurred for each business year as prescribed in Article 14 (2), it may apply for a refund of the amount calculated, as prescribed by Presidential Decree, up to the limit of corporate tax (referring to the amount of corporate tax prescribed by Presidential Decree) imposed on income during the business year immediately preceding the business year in which such losses incurred. In such cases, such losses shall be construed as the deducted amount in applying subparagraph 1 of Article 13: <Amended on Dec. 24, 2018>

1. The computed amount of corporate tax for the immediately preceding business year (excluding corporate tax on capital gains on the transfer of land, etc. under Article 55-2);

2. The amount calculated by applying the relevant tax rate in Article 55 (1) for the immediately preceding business year to the amount computed by subtracting a loss for the relevant business year that intends to be deducted retroactively from the tax base for the immediately preceding business year.

(2) A domestic corporation which intends to obtain a refund of corporate tax under paragraph (1) shall file an application to the head of the tax office having jurisdiction over the place of tax payment until the filing deadline specified in Article 60, as prescribed by Presidential Decree.

(3) Upon receipt of an application under paragraph (2), the head of the tax office having jurisdiction over the place of tax payment shall determine the amount of tax to be refunded and refund it under Articles 51 and 52 of the Framework Act on National Taxes, without delay.

(4) Paragraphs (1) through (3) shall apply only when a domestic corporation files a report on the tax base and amount of the corporate tax on income for the business year in which the losses incur and for the immediately preceding business year by the filing deadline specified in Article 60.

(5) In any of the following cases, the head of the tax office having jurisdiction over the place of tax payment shall collect an amount computed by adding an amount equivalent to the interest calculated, as prescribed by Presidential Decree, to the amount of tax to be refunded (the amount equivalent to the tax amount over-refunded in cases of subparagraphs 1 and 2) as corporate tax for the business year in which the relevant losses have been incurred: <Amended on Jan. 1, 2013; Dec. 24, 2018>

1. Where losses have decreased after correcting the tax base and the amount of corporate tax pursuant to Article 66 for the business year in which the losses incurred after corporate tax was refunded, as prescribed in paragraph (3);

2. Where the amount of tax to be refunded has decreased as a result of the rectification of the tax base and tax amount for corporate tax pursuant to Article 66 for the business year immediately before the business year in which the losses were incurred;

3. Where a domestic corporation, other than small and medium enterprises has received a refund of corporate tax.

(6) Where there is any change to the amount of corporate tax or tax base for the immediately preceding business year which becomes a basis for calculating the original amount of tax to be refunded (hereafter in this paragraph, referred to as "original amount of tax to be refunded"), after the head of the tax office having jurisdiction over the place of tax payment determines the amount of tax to be refunded pursuant to paragraph (3), he or she shall immediately correct the original amount of tax to be refunded and then refund it additionally or collect the amount equivalent to the tax amount over-refunded. <Added on Dec. 24, 2018>

(7) In applying paragraphs (1) through (6), matters concerning the calculation of the amount of tax to be refunded by retroactive deduction of losses shall be prescribed by Presidential Decree. <Amended on Dec. 24, 2018>

[This Article Wholly Amended on Dec. 30, 2010]

[Title Amended on Dec. 24, 2018]

Article 73(Withholding on the amount of interest income of domestic corporations) #

(1) When a person (hereafter in this Article, referred to as "person liable for withholding") who pays any of the following amounts to a domestic corporation (excluding income prescribed by Presidential Decree, such as a financial company prescribed by Presidential Decree), he or she shall withhold corporate tax (only applicable to the amount exceeding 1,000 won) equivalent to the amount calculated by applying the tax rate of 14/100 to the amount payable and shall pay it at the tax office having jurisdiction over the place of tax payment, etc. by no later than the tenth day of the month following the month in which the date of collection falls; provided, the tax rate of 25/100 shall apply to the profits made from non-business loans referred to in Article 16 (1) 11 of the Income Tax Act; and the tax rate of 14/100 shall apply to the interest income paid through an online investment-linked financial business entity registered with the Financial Services Commission pursuant to the Act on Online Investment-Linked Financial Business and Protection of Users: <Amended on Dec. 24, 2018; Dec. 31, 2019; Dec. 21, 2021; Dec. 31, 2022>

1. The amount of interest income referred to in Article 16 (1) of the Income Tax Act (including revenues of a corporation that operates the financial insurance business);

2. The amount of investment trust proceeds (hereinafter referred to as "investment trust proceeds") of the Financial Investment Services and Capital Markets Act among the profits from collective investment schemes referred to in Article 17 (1) 5 of the Income Tax Act.

(2) For the purpose of paragraph (1), where a foreign corporate tax payable by an indirect investment company is paid on investment trust profits, the amount calculated by subtracting the amount prescribed in subparagraph 2 from the amount prescribed in subparagraph 1 shall be withheld to the extent of the amount prescribed in subparagraph 1: <Added on Dec. 31, 2022>

1. Withholding tax on profits of an investment trust (referring to the amount calculated on the basis of an after-tax base price);

2. An amount calculated as prescribed by Presidential Decree, taking into account the after-tax base price of the foreign corporate tax payable by an indirect investment company.

(3) For the purpose of paragraph (2), where an amount prescribed in paragraph (2) 2 exceeds an amount prescribed in subparagraph 1 of the same paragraph, a deduction may be allowed to the extent of the withholding tax on profits of an investment trust when the investment trust profits are received during the period from the date on which the relevant foreign corporate tax of the indirect investment company is paid to December 31 of the year in which the date that is ten years after such tax payment date falls. <Added on Dec. 31, 2022>

(4) Notwithstanding paragraph (1) or (2), corporate tax on the income prescribed by Presidential Decree, such as the income on which corporate tax is not imposed or exempt, shall not be withheld. <Added on Dec. 24, 2018; Dec. 31, 2022>

(5) The amount of income referred to in the subparagraphs of paragraph (1) shall not be withheld, deeming that the relevant amount of income is not paid at the time such amount of income reverts to any piece of investment trust property under the Financial Investment Services and Capital Markets Act in applying paragraph (1) or (2). <Amended on Dec. 30, 2010; Dec. 24, 2018; Dec. 31, 2022>

(6) In applying paragraph (1) or (2), any acts done by a person representing, or commissioned by, a person liable for withholding shall be deemed the acts done by the principal or a commissioning person within the scope of the delegation or commission. <Amended on Dec. 30, 2010; Dec. 24, 2018; Dec. 31, 2022>

(7) In applying paragraph (1) or (2), where a financial company, etc. prescribed by Presidential Decree assumes or trades bills or debt certificates issued by a domestic corporation (including a resident; hereafter in this paragraph, the same shall apply) or brokers or makes such transactions on behalf of the corporation pursuant to paragraph (1), the financial company, etc. shall be deemed to have the agency or commission relationship with the domestic corporation. <Amended on Dec. 30, 2010; Dec. 24, 2018; Dec. 31, 2022>

(8) In applying paragraph (1) or (2), where a foreign corporation pays a domestic corporation income specified in each subparagraph of paragraph (1) from bonds or securities issued by the foreign corporation, a person who acts as an agent of the foreign corporation for such payment or a person to whom the authority for such payment is delegated or entrusted in the Republic of Korea shall withhold the corporate tax on the income. <Added on Jan. 1, 2013; Dec. 24, 2018; Dec. 31, 2022>

(9) Any person liable for withholding prescribed by Presidential Decree, in consideration of the number of regular employees and categories of business, may pay the withheld corporate tax by the tenth day of the month following the last month of the semiannual period which includes the withholding date, as prescribed by Presidential Decree, notwithstanding paragraphs (1) and (2). <Amended on Dec. 30, 2010; Dec. 31, 2022>

(10) In applying paragraphs (1) through (9), the timing for payment of interest income, scope and calculation of the amount of income subject to withholding corporate tax, calculation and payment of withholding tax, scope of persons liable for withholding, etc. shall be prescribed by Presidential Decree. <Amended on Dec. 30, 2010; Jan. 1, 2013; Dec. 24, 2018; Dec. 31, 2022>

[Title Amended on Dec. 24, 2018]

Article 73-2(Withholding on the amount of interest on interest accruing during the holding period of the bonds) #

(1) Where a domestic corporation sells (including brokering, arranging, or other cases prescribed by Presidential Decree, but excluding trading of repurchase bonds, etc. or other cases prescribed by Presidential Decree; hereafter in this Article and Articles 74 and 75-18, the same shall apply) bonds, etc. under Article 46 (1) of the Income Tax Act or beneficiary certificates of an investment trust (hereinafter referred to as "bonds, etc. subject to withholding tax") to a third party, the domestic corporation shall withhold corporate tax (only applicable to the amount exceeding 1,000 won) equivalent to the amount calculated by applying the tax rate of 14/100 to the amount of interest and discounts accrued or generated from such bonds, etc. and the investment trust proceeds (hereafter in this Article and Article 98-3, referred to as "interest, etc.") accruing during the period holding the bonds, etc. subject to withholding tax, as prescribed by Presidential Decree, and shall pay it to the tax office having jurisdiction over the place of tax payment, etc. by no later than the tenth day of the month following the month in which the date of collection falls. In such cases, this Act shall apply to such domestic corporation, deeming it a person liable for withholding. <Amended on Dec 22, 2020; Dec. 21, 2021>

(2) Notwithstanding paragraph (1), corporate tax shall not be collected from the income prescribed by Presidential Decree, such as the income on which corporate tax is not imposed or exempt.

(3) In applying paragraph (1), where a domestic corporation sells bonds, etc. subject to withholding tax to any of the following corporations, any acts done by a person representing, or commissioned by, a person liable for withholding shall be deemed the acts done by the principal or a commissioning person within the scope of the delegation or commission, where there is an agreement between the relevant parties:

1. Financial companies, etc. prescribed by Presidential Decree;

2. Collective investment business entities under the Financial Investment Services and Capital Markets Act.

(4) In applying paragraph (1), where a domestic corporation sells bonds, etc. subject to withholding tax belonging to the investment trust property under the Financial Investment Services and Capital Markets Act, it shall be deemed to have the agency or commission relationship between a trust company under the same Act and a person according to the following classification: <Amended on Dec. 22, 2020>

1. Trust property referred to in Article 5 (1): Beneficiary of the relevant trust property;

2. Trust property referred to in Article 5 (3): Trustor of the relevant trust property.

(5) Article 73 (4) through (7) shall apply mutatis mutandis to commission, representation, and payment of obligation of withholding.

(6) In applying paragraphs (1) through (4), matters necessary for calculating the period holding bonds, etc., subject to withholding tax shall be prescribed by Presidential Decree.

[This Article Added on Dec. 24, 2018]

Article 75-4(Penalty tax on negligence in issuing, preparing and keeping donation receipts) #

(1) Where a domestic corporation that issues a donation receipt falls under any of the following circumstances, it shall pay any of the following penalty taxes, in addition to the corporate tax for the relevant business year: <Amended on Dec. 31, 2019>

1. Where the donated amount stated on a receipt is false (including where a receipt is issued without any essential description, such as the donated amount or the donor’s personal information):

(a) Where the donated amount stated on a receipt is false: 5/100 of the difference [referring to the difference between the amount actually stated on the receipt (the amount of donation that the person to whom such donation receipt was issued includes as a deductible expense or a necessary expense or receives a tax credit on the donation, where the receipt has no amount) and the amount that should have been stated on the receipt];

(b) In cases other than those falling under item (a), such as where personal information, etc. of the donor is stated falsely on receipt: 5/100 of the amount stated in the receipt;

2. Where a detailed statement of donation receipts by donator is not prepared and kept in Article 112-2 (1): 2/1,000 of the amount not prepared and kept in a statement.

(2) A "donation receipt" in paragraph (1) and Article 112-2 means any of the following receipts, including donation receipts issued electronically as prescribed by Presidential Decree (hereinafter referred to as "electronic donation receipts"): <Amended on Dec. 22, 2020>

1. A receipt necessary for including a donation in deductible expenses pursuant to Article 24;

2. A receipt necessary for including a donation in an incurred expense or receiving a tax credit on the donation pursuant to Articles 34 and 59-4 (4) of the Income Tax Act.

(3) A penalty tax in subparagraph 2 of paragraph (1) shall not apply where the penalty tax is imposed on the ground that a person fails to fulfill its obligation to submit a report under Article 78 (3) of the Inheritance Tax and Gift Tax Act or fails to fulfill its obligation to prepare and keep the books of accounting about donated assets under paragraph (5) of the same Article.

(4) The penalty tax in paragraph (1) shall be collected although the calculated amount of tax is nil.

[This Article Added on Dec. 24, 2018]

Article 75-6(Penalty tax on negligence in issuing credit cards and cash receipts) #

(1) Where a domestic corporation which has become a credit card merchant pursuant to Article 117 refuses a transaction by credit card or issues a false credit card sales slip, and then notified by the head of the competent tax office pursuant to Article 117 (4), it shall pay a penalty tax equivalent to 5/100 of the amount (it shall be five thousands won where the amount is less than five thousand won), the payment of which by credit card is refused for each transaction, or of the amount (referring to the difference between the issued amount and the actually transacted amount) with relation to which a false credit card sales slip is issued, in addition to the corporate tax.

(2) Where a domestic corporation falls under any of the following cases, it shall pay a penalty tax equivalent to any of the following amounts, in addition to the corporate tax: <Amended on Dec. 21, 2021>

1. Where it fails to become a cash receipt merchant, in violation of Article 117-2 (1) or becomes a cash receipt merchant after the period for filing to become a cash receipt merchant passes: An amount calculated by multiplying an amount equivalent to 1/100 of the revenue generated in the business year, for which it has failed to become such merchant (only limited to the revenue generated from the type of business prescribed by Presidential Decree where the corporation runs at least two types of business, and excluding the revenue prescribed by Presidential Decree such as the amount on which tax invoice is issued) by the ratio calculated, as prescribed by Presidential Decree, in consideration of the period in which it was not such a merchant;

2. Where it is notified by the head of the competent tax office pursuant to the latter part of Article 117-2 (6) as it refuses to issue a cash receipt or issues a false cash receipt, in violation of Article 117-2 (3) (only applicable to cases where the amount subject to issuance of a cash receipt exceeds 5,000 won per case and excluding the cases falling under subparagraph 3): 5/100 (it shall be five thousand won where the amount is less than five thousand won) of each amount for which the issuance of the cash receipt is refused, or of each amount for which a false cash receipt is issued (referring to the difference between the issued amount and the actually transacted amount);

3. Where it fails to issue a cash receipt, in violation of Article 117-2 (4) (excluding cases prescribed by Presidential Decree, such as those subject to insurance benefits under the National Health Insurance Act): 20/100 of the amount for which a cash receipt is not issued (10/100 where it voluntarily reports to the tax office having jurisdiction over the place of tax payment or voluntarily issues a cash receipt within 10 days from the date it receives the transaction costs by mistake or due to omission).

(3) The penalty tax in paragraphs (1) and (2) shall be collected although the calculated amount of tax is nil.

[This Article Added on Dec. 24, 2018]

Article 75-7(Penalty tax on negligence in submitting payment statements) #

(1) Where a person obliged to submit a payment statement referred to in Article 120, 120-2 of this Act and Article 164, 164-2 of the Income Tax Act (hereafter in this Article referred to as "payment statement"), or a simple payment statement (hereafter in this Article referred to as "simple payment statement") referred to in Article 164-3 of the same Act falls under any of the following cases, it shall pay a penalty tax equivalent to any of the following amounts, in addition to corporate tax: <Amended on Dec. 22, 2020; Mar. 16, 2021; Dec. 31, 2022>

1. Where it fails to submit a payment statement or simple payment statement (hereafter in this Article referred to as "payment statement, etc.") by deadline: An amount according to the following classification:

(a) In cases of payment statements: 1/100 of the payment for which the statement has not been submitted (or 5/1,000 of the payment, where the statement is submitted within three month after the deadline); provided, in cases of a payment statement on wage and salary income of a daily employed worker referred to in the proviso, with the exception of the subparagraphs, of Article 164 (1) of the Income Tax Act (hereafter in this Article referred to as "daily wage or salary income"), 25/10,000 of the payment for which the statement has not been submitted (or 125/100,000 of the payment, where the statement is submitted within one month after the deadline);

(b) In cases of simple payment statements: 25/10,000 of the payment for which the statement has not been submitted (125/100,000 of the payment where the statement is submitted within one month after the deadline);

2. Where the payment statement, etc. submitted is found unclear with regard to the descriptions prescribed by Presidential Decree or where the amount stated on the payment statement, etc. submitted is untrue: An amount according to the following classification:

(a) In cases of payment statements: 1/100 of the payment stated on the unclear or untrue statement; provided, in cases of a payment statement on daily wage or salary income, it shall be 25/10,000 of the payment stated on the unclear or false statement;

(b) In cases of simple payment statements: 25/10,000 of the payment stated on the unclear or false statement.

(2) Notwithstanding paragraph (1) 1, where a withholding agent who pays withholding taxes semiannually pursuant to Article 128 (2) of the Income Tax Act falls under any of the following as the agent pays daily wage or salary income or income referred to in Article 164-3 (1) 2 of the same Act between July 1, 2021 and June 30, 2022, a penalty tax prescribed in paragraph (1) 1 shall not be imposed: <Added on Mar. 16, 2021>

1. Where the withholding agent submits a payment statement on daily wage or salary income by the end of the month following the last month of the quarter in which the payment date (in cases of income governed by Article 135 of the Income Tax Act, referring to the end of the taxable period for the relevant income) falls (when a business is suspended, closed, or dissolved, referring to the end of the month following the last month of the quarter in which the date of the suspension, closure or dissolution of the business falls);

2. Where the withholding agent submits a simple payment statement on income referred to in Article 164-3 (1) 2 of the Income Tax Act by the end of the month following the last month of the half year in which the payment date of such income (in cases of income governed by Article 144-5 of the Income Tax Act, referring to the end of the taxable period for the relevant income) falls (when a business is suspended, closed, or dissolved, referring to the end of the month following the last month of the quarter in which the date of the suspension, closure or dissolution of the business falls).

(3) Notwithstanding paragraph (1) 1 (b), a penalty tax prescribed in paragraph (1) 1 (b) shall not be imposed in any of the following cases: <Added on Dec. 31, 2022; Dec. 31, 2023>

1. In cases of a withholding agent who pays income referred to in Article 164-3 (1) 1 of the Income Tax Act between January 1, 2026 and December 31, 2026 (it shall be by December 31 2027 in cases of a withholding agent who pays withholding taxes semi-annually pursuant to Article 128 (2) of the Income Tax Act), where the agent submits a simple payment statement on such income by the end of the month following the last month of the half year in which the payment date of such income (in cases of income governed by Article 135 of the Income Tax Act, referring to the end of the taxable period for the relevant income) falls (when a business is suspended, closed, or dissolved, referring to the end of the month following the last month of the half year in which the date of the suspension, closure or dissolution of the business falls);

2. In cases of a withholding agent who pays income referred to in Article 164-3 (1) 3 of the Income Tax Act between January 1, 2024 and December 31, 2024, where the withholding agent submits a payment statement on such income by the end of February of the year following the tax year in which the payment date of such income falls (when a business is suspended, closed, or dissolved, referring to the end of the month that is two months after the month in which the date of the suspension, closure or dissolution of the business falls).

(4) Notwithstanding paragraph (1) 2, where a payment statement, etc. submitted for daily wage or salary income or income prescribed in any subparagraph of Article 164-3 (1) of the Income Tax Act falls under the part other than the items of paragraph (1) 2, if the ratio of the payment amount under the part other than the items of paragraph (1) 2 to the respective total amount of payment stated in the payment statement, etc. does not exceed the ratio prescribed by Presidential Decree, the penalty tax prescribed in paragraph (1) 2 shall not be imposed. <Added on Mar. 16, 2021; Dec. 31, 2022>

(5) For the purpose of paragraph (1), with respect to a person obligated to submit a payment statement, etc. for income prescribed in Article 164-3 (1) 2 of the Income Tax Act (excluding business income prescribed by Presidential Decree pursuant to Article 73 (1) 4 of the same Act) or income prescribed in subparagraph 3 of the same paragraph, the penalty tax prescribed in paragraph (1) 1 (b) shall not be imposed on the amount subject to the penalty tax under item (a) of the same subparagraph; the penalty tax prescribed in paragraph (1) 2 (b) shall not be imposed on the amount subject to the penalty tax under item (a) of the same subparagraph. <Added on Dec. 31, 2022>

(6) The penalty tax prescribed in paragraph (1) shall be collected even when the calculated amount of tax is nil. <Amended on Mar. 16, 2021; Dec. 31, 2022>

(7) In applying paragraph (1), where a corporation is merged, divided, or dissolved, matters necessary for the amount of payment shall be prescribed by Presidential decree. <Amended on Mar. 16, 2021; Dec. 31, 2022>

[This Article Added on Dec. 24, 2018]

[Title Amended on Mar. 16, 2021]

[Enforcement Date: Jan. 1, 2025]

Article 75-8(Penalty tax on negligence in submitting invoice) #

(1) Where a domestic corporation (excluding a corporation prescribed by Presidential Decree) falls under any of the following cases, it shall pay a penalty tax equivalent to any of the following amounts, in addition to corporate tax: <Amended on Dec. 31, 2019>

1. Where it fails to submit aggregate invoices for each supplier or purchaser in Article 120-3 (1) by the deadline in the same Article or all or some matters to be stated, as prescribed by Presidential Decree, on the aggregate invoices for each supplier or purchaser issued under Article 121 (1) or (2) are not stated thereon, or are falsely stated (excluding the portions to which subparagraph 4 shall apply): 5/1,000 of the supply value;

2. Where all or some matters to be stated, as prescribed by Presidential Decree, on the invoice issued under Article 121 (1) or (2) are not stated thereon, or are falsely stated (excluding the portions to which subparagraph 3 shall apply): 1/100 of the supply value;

3. Where an aggregate tax invoice for each supplier referred to in Article 121 (5) is not submitted by the deadline specified by the same Article or where all or some matters to be stated, as prescribed by Presidential Decree, are not stated or are falsely stated on such aggregate tax invoice for each supplier (excluding the purchase price for the portion to which subparagraph 4 shall apply): 5/1,000 of the supply value;

4. In any of the following cases: 2/100 of the supply value (applicable rate shall be 1/100, where any invoice other than an electronic invoice has been issued, although no electronic invoice was issued pursuant to the latter part of Article 121 (1), and where an invoice has been issued pursuant to Article 121 (1) or (2) by the 25th day of the month immediately following the end of the business year in which the relevant goods or services were supplied, after the deadline for issuing an invoice under Article 121 (8)):

(a) Where a person who has supplied goods or services fails to issue an invoice under 121 (1) or (2) by the deadline for issuing the invoice under Article 121 (8);

(b) Where a person who has supplied goods or services fails to issue a credit card sales slip in Article 116 (2) 1, cash receipt in Article 116 (2) 2 and invoice in 121 (1) or (2) (hereafter in this subparagraph, referred to as "invoice, etc.");

(c) Where a person receives an invoice or other similar document issued for goods or services that have not been supplied;

(d) Where a corporation that has actually provided goods or services issues an invoice, etc., under the name of a corporation that has not provided goods or services;

(e) Where an invoice or other similar document is issued for goods or services received in the name of a person, other than the supplier of goods or services;

5. Where a detailed statement of electronic invoices issued is transmitted to the Commissioner of the National Tax Service by the 25 day of the month immediately after the end of the business year in which goods or services were supplied after the deadline specified in Article 121 (7) (excluding the portion to which subparagraph 4 shall apply): 3/1000 of the supply value (1/1000 shall apply to the goods or services supplied on or before December 31, 2016);

6. Where a detailed statement of electronic invoices issued is not transmitted to the Commissioner of the National Tax Service by the 25th day of the month immediately after the end of the business year in which goods or services were supplied after the lapse of the deadline specified in Article 121 (7) (excluding the portion to which subparagraph 4 shall apply): 5/100 of the supply value (Provided, 3/1000 shall apply to the goods or services supplied on or before December 31, 2016).

(2) The penalty tax in any subparagraph of paragraph (1) shall not apply to the portion to which a penalty tax in Article 75-5 or Article 60 (2), (3), and (5) through (7) of the Value-Added Tax Act applies.

(3) The penalty tax in paragraph (1) shall be collected although the calculated amount of tax is nil.

[This Article Added on Dec. 24, 2018]

Article 76-8(Application of consolidated tax return system) #

(1) A domestic corporation that consolidates and controls another domestic corporation (excluding a corporation prescribed by Presidential Decree, such as a non-profit corporation; hereafter in this paragraph, referred to as "wholly-owning parent corporation") and the other domestic corporation (excluding a corporation prescribed by Presidential Decree, such as a corporation in the process of liquidation; hereafter in this Chapter, referred to as "wholly controlled subsidiary") may apply the consolidated tax return system with approval of the commissioner of the competent regional tax office having jurisdiction over the place of tax payment of the wholly-owning parent corporation, as prescribed by Presidential Decree. In such cases, where wholly-controlled subsidiaries are two or more, all relevant corporations shall apply the consolidated tax return system. <Amended on Jan. 1, 2013; Dec. 31, 2022>

(2) The business year of each consolidated corporation to which the consolidated tax return system applies under paragraph (1) shall coincide with the consolidated business year. In such cases, the period of a consolidated business year shall not exceed one year, and Article 7 shall apply mutatis mutandis to changes of a consolidated business year.

(3) In applying paragraph (2), where a domestic corporation that meets the requirements prescribed by Presidential Decree as a wholly controlled subsidiary that cannot make its business year coincide with the consolidated business year because the business year (hereafter referred to as "original business year" in Articles 76-9 and 76-10) is prescribed in statutes, etc, it may apply the consolidated tax return system, deeming the consolidated business year to be the business year of such domestic corporation. <Amended on Dec. 31, 2022>

(4) Notwithstanding Article 9 (1), the place of tax payment of a consolidated corporation shall be the place of tax payment of the consolidated parent corporation.

(5) Deleted. <Dec. 31, 2022>

(6) Where any of the following mergers, divisions, or comprehensive exchanges or transfers of stocks occurs, the consolidated tax payment system may be applied only to the consolidated business year in which the date of merger, division, or exchange or transfer falls, notwithstanding paragraph (2), Articles 76-11 (1) and 76-12 (1): <Amended on Dec. 31, 2011>

1. A qualified merger between consolidated parent corporations to which the consolidated tax payment system applies under paragraph (1);

2. Comprehensive exchange or transfer of stocks between consolidated parent corporations to which the consolidated tax payment system applies under paragraph (1) (limited to where the tax deferment is granted under Article 38 of the Act on Restriction on Special Cases concerning Taxation);

3. A qualified division of a consolidated parent corporation to which the consolidated tax payment system applies under paragraph (1).

[This Article Wholly Amended on Dec. 30, 2010]

Article 76-9(Revocation of approval for applying consolidated tax return system) #

(1) In any of the following cases, the commissioner of the competent regional tax office having jurisdiction over the place of tax payment of a consolidated parent corporation may revoke approval for applying the consolidated tax return system, as prescribed by Presidential Decree: <Amended on Jan. 1, 2013; Dec. 15, 2015; Dec. 31, 2022>

1. Where the business year of a consolidated corporation does not coincide with the consolidated business year;

2. Where the consolidated parent corporation applies the consolidated tax return system to a domestic corporation which it does not consolidate and control;

3. Where the consolidated tax return system is not applied to a wholly controlled subsidiary of the consolidated parent corporation;

4. Where it is impracticable to calculate the amount of income of a consolidated corporation based on accounting records or other evidentiary documents on the grounds referred to in the proviso to Article 66 (3);

5. Where there are grounds to occasionally impose corporate tax on a consolidated corporation as prescribed in Article 69 (1);

6. Where the consolidated parent corporation is consolidated and controlled by another domestic corporation (excluding nonprofit domestic corporations).

(2) Where approval for applying the consolidated tax return system is revoked under paragraph (1) during the period between the consolidated business year for which the application of the consolidated tax return system was approved and the consolidated business year that ends within four years from the start date of the following consolidated business year, each consolidated corporation for which the application of the consolidated tax return system was approved shall include the amount of income or losses in the gross income or deductible expenses for the business year in which the approval for applying the consolidated tax return system is revoked as follows; provided, the foregoing shall not apply in extenuating circumstances specified by Presidential Decree: <Added on Dec. 15, 2015>

1. The amount of income of the relevant corporation, which has been aggregated with losses of other consolidated corporations during the consolidated business years pursuant to Article 76-14 (1): To be included in gross income;

2. The amount of losses of the relevant corporation, which has been aggregated with income of other consolidated corporations during the consolidated business years under pursuant to Article 76-14 (1): To be included in deductible expenses.

(3) The consolidated tax return system shall not apply to any consolidated corporation for which approval for applying the consolidated tax return system is revoked under paragraph (1) in the business year in which the date of revocation falls and to the business year that ends within four years from the start date of the following business year, deeming the same corporation as at the time of application of the consolidated tax return system to be the consolidated parent corporation. <Amended on Dec. 15, 2015>

(4) Where approval for applying the consolidated tax return system is revoked under paragraph (1), an amount prescribed by Presidential Decree that reverts to each consolidated corporation among the amounts referred to in Article 76-13 (1) 1 shall be deemed losses in Article 13 (1) 1 of the relevant consolidated corporation. <Amended on Dec. 15, 2015; Dec. 24, 2018>

(5) Where approval for applying the consolidated tax return system is revoked under paragraph (1), the interim tax for each consolidated corporation referred to in Article 76-18 (4) among the consolidated interim tax paid under the same Article shall be deemed the interim tax referred to in Article 64 (1) 2 for purposes of Article 61 (1). <Amended on Dec. 15, 2015>

(6) Where approval for a consolidated corporation to which consolidated tax return system applies under Article 76-8 (3) to apply the consolidated tax return system is revoked under paragraph (1), the period from the start date of the consolidated business year in which the date of revocation falls to the end date of the consolidated business year, and the period from the day following the end date of the consolidated business year in which the date of revocation falls, to date preceding the start date of the original business year shall be deemed one business year, respectively. <Amended on Dec. 15, 2015>

[This Article Wholly Amended on Dec. 30, 2010]

Article 76-12(Exclusion of consolidated subsidiary corporations) #

(1) A consolidated subsidiary corporation which ceases to be consolidated and controlled by a consolidated parent corporation or is dissolved shall not apply the consolidated tax return system from the start date of the consolidated business year in which the relevant cause occurs; provided, where a consolidated subsidiary corporation is dissolved upon being merged by absorption into another consolidated corporation, it may apply the consolidated tax return system for the business year in which the registration date of the dissolution falls. <Amended on Dec. 31, 2011; Dec. 31, 2022>

(2) Where the application of the consolidated tax return system ceases to be applied under the main clause of paragraph (1) during the period between the consolidated business year for which the application of the consolidated tax return system was approved and the consolidated business year that ends within four years from the start date of the following consolidated business year, the amount of income or loss shall be included in gross income or deductible expenses for the business year in which the relevant cause occurs as follows; provided, the foregoing shall not apply in extenuating circumstances specified by Presidential Decree: <Amended on Dec. 15, 2015>

1. The amount of income of a corporation excluded from consolidation (referring to an individual corporation that ceases to apply the consolidated tax return system under the main clause of paragraph (1); the same shall apply hereafter in this Article), which has been aggregated with the losses of other consolidated corporations under Article 76-14 (1) during consolidated business years: To be included in gross income of the corporation excluded from consolidation;

2. The amount of losses of a corporation excluded from consolidation, which has been aggregated with the income of other consolidated corporations under Article 76-14 (1) during consolidated business years: To be included in deductible expenses of the corporation excluded from consolidation;

3. The amount of income of a corporation, which has been aggregated with the losses of a corporation excluded from consolidation under Article 76-14 (1) during consolidated business years: To be included in gross income of the relevant corporation;

4. The amount of losses of a corporation, which has been aggregated with the income of a corporation excluded from consolidation under Article 76-14 (1) during consolidated business years: To be included in deductible expenses of the relevant corporation.

(3) Articles 76-9 (3) through (6) shall apply mutatis mutandis where the consolidated tax return system is not applied under the main clause of paragraph (1). <Added on Dec. 15, 2015>

(4) Where a consolidated subsidiary corporation is changed pursuant to paragraph (1), it shall file a report thereon with the commissioner of the competent regional tax office having jurisdiction over the place for tax payment, as prescribed by Presidential Decree, within one month from the date on which the grounds for such change occur. <Added on Dec. 31, 2011; Dec. 15, 2015; Dec. 31, 2023>

[This Article Wholly Amended on Dec. 30, 2010]

Article 76-13(Consolidated tax base) #

(1) The tax base of income for each consolidated business year shall be an amount computed by subtracting the following amounts in sequential order from the income for each consolidated business year; provided, the amount deductible from the amount referred to in subparagraph 1 shall not exceed 80/100 (100/100 in cases of small and medium enterprises and consolidated corporations specified by Presidential Decree, such as corporations that implement a rehabilitation plan) of the individually reverted amount of consolidated income under paragraph (3) 1: <Amended on Dec. 30, 2010; Dec. 15, 2015; Dec. 24, 2018; Dec. 22, 2020; Dec. 31, 2022>

1. Losses (including losses incurred before the application of the consolidated tax return system by a consolidated corporation) incurred in a consolidated business year that began within 15 years prior to the start date of each consolidated business year, which was not deducted when the tax base for each consolidated business year (including a business year) was calculated thereafter;

2. The sum of all non-taxable income of each consolidated corporation under this Act and the Act on Restriction on Special Cases concerning Taxation;

3. The sum of income deductions of each consolidated corporation under this Act and the Act on Restriction on Special Cases concerning Taxation.

(2) "Losses incurred in a consolidated business year" referred to in paragraph (1) 1 means the relevant amount where the income for each consolidated business year under Article 76-14 (1) is less than zero, which are losses included in the tax base reported under Article 60, determined and corrected under Article 66 or reported for revision under Article 45 of the Framework Act on National Taxes, and losses on disposition excluded in deductible expenses when calculating the amount of income of the relevant consolidated business year under the latter part of Article 76-14 (2). <Amended on Dec. 30, 2010>

(3) Where losses are deducted under paragraph (1) 1, the following losses shall be deducted up to the amount specified in the relevant subparagraph: <Amended on Dec. 30, 2010; Dec. 31, 2011; Dec. 24, 2018>

1. Losses incurred before the application of the consolidated tax return system by a consolidated corporation: The amount of income prescribed by Presidential Decree (hereafter in this Article, referred to as "individually reverted amount of consolidated income") that reverts to the consolidated corporation among income for each consolidated business year;

2. Where a consolidated parent corporation acquires assets of a merged corporation following a qualified merger, losses referred to in Article 13 (1) 1 of the merged corporation (limited to a corporation, other than a consolidated corporation as at the registration date of the merger) as at the registration date of the merger: Income accruing from the business succeeded to from the merged corporation among the individually reverted amount of consolidated income of the consolidated parent corporation;

3. Where a consolidated parent corporation acquires assets of a disappearing divided corporation following a qualified division and merger, the amount that reverts to the business succeeded to by the consolidated parent corporation among the losses referred to in Article 13 (1) 1 of the disappearing divided corporation as at the registration date of the division: Income accruing from the business succeeded to from the disappearing divided corporation among the individually reverted amount of consolidated income of the consolidated parent corporation.

(4) Matters necessary in relation to losses, non-taxable income, and deduction of income deductions referred to in paragraph (1), and other matters, shall be prescribed by Presidential Decree. <Amended on Dec. 30, 2010; Dec. 24, 2018>

[This Article Added on Dec. 26, 2008]

[Title Amended on Dec. 24, 2018]

Article 76-14(Income for each consolidated business year) #

(1) The income of each consolidated corporation for each consolidated business year shall be the aggregate of income or losses calculated in the following order: <Amended on Dec. 31, 2011; Dec. 24, 2018; Dec. 13, 2022>

1. Calculation of income for each business year by consolidated corporation: Calculation of income or losses for each business year of each consolidated corporation pursuant to Article 14;

2. Exclusion of consolidation adjustment items by any of the following consolidated corporations:

(a) Adjustment of non-inclusion of received dividends in gross income: An amount equivalent to the dividend income of each consolidated corporation that has been excluded from gross income pursuant to Article 18-2 shall be included in gross income;

(b) Adjustment of non-inclusion of donations and business promotion expenses in deductible expenses: An amount equivalent to the donations and business promotion expenses that have been excluded from deductible expenses pursuant to Articles 24 and 25 shall be included in deductible expenses;

3. Adjustment of profits and losses from transactions between any of the following consolidated corporations:

(a) Adjustment of received dividends in gross income: An amount equivalent to the dividend amount received from another consolidated corporation shall not be included in gross income;

(b) Adjustment of business promotion expenses: An amount equivalent to business promotion expenses paid to another consolidated corporation shall not be included in deductible expenses;

(c) Adjustment of appropriation for bad debts: An amount equivalent to appropriation for bad debts pursuant to Article 34 established in relation to claims to another consolidated corporation shall not be included in deductible expenses;

(d) Adjustment of transfer marginal profits or losses of assets: Profits or losses from the transfer of assets prescribed by Presidential Decree, such as tangible or intangible assets, shall be excluded from gross income or deductible expenses, as prescribed by Presidential Decree;

4. Allocation of consolidation adjustment items to each consolidated corporation: An amount excluded from gross income or deductible expenses shall be first calculated by applying mutatis mutandisArticles 18-2, 24, and 25, deeming a consolidated group to be one domestic corporation and the amount calculated, as prescribed by Presidential Decree, among the calculated amount shall be excluded from gross income or deductible expenses by consolidated corporation.

(2) Any of the following losses on the disposal of assets shall be included in deductible expenses up to the amounts in the relevant subparagraphs when the amount of income of the relevant consolidated business year is calculated. In such cases, losses on disposal excluded from deductible expenses, exceeding the limit, shall be construed as losses referred to in Article 76-13 (1) 1 and shall be deducted from the tax base for the following consolidated business year up to the amounts in the relevant subparagraphs: <Amended on Dec. 31, 2011; Dec. 15, 2015; Dec. 24, 2018; Dec. 31, 2022>

1. Where the consolidated tax return system is applied to a domestic corporation after it has become a wholly controlled subsidiary of another domestic corporation (excluding where it became a wholly controlled subsidiary on the registration date of establishment), the loss from the disposal of the assets (limited to assets acquired before the consolidated tax return system is applied) accrued during the period between the business year in which the consolidated tax return system is applied and the consolidated business year that ends within four years from the start date of the business year following the business year in which the consolidated tax return system is applied: The amount specified in either of the following items (referring to the individually reverted amount prior to the deduction of the relevant loss from disposal, but the foregoing shall not apply to the cases to which the latter part of paragraph (2) applies):

(a) The individually reverted amount of consolidated income of the consolidated parent corporation, in cases of the loss of the consolidated parent corporation from the disposal of assets;

(b) The individually reverted amount of consolidated income of the consolidated subsidiary, in cases of the loss of the consolidated subsidiary from the disposal of assets;

2. Where a consolidated parent corporation qualifiedly merges (including a qualified division and merger of a consolidated parent corporation as a counterpart corporation to the division and merger) with another domestic corporation (limited to a corporation, other than a consolidated corporation as at the registration date of the merger), losses (limited to the difference only where the market value of the relevant assets as of the registration date of the merger is lower than book value) incurred in the consolidated business year that ends within five years from the registration date of the merger from the disposal of the assets owned by the consolidated parent corporation, the consolidated subsidiary (hereafter in this paragraph, referred to as "existing consolidated corporation"), and the merged corporation (including the divided corporation; hereafter in this Article, the same shall apply) before the merger: The amount specified in either of the following items (referring to the amount of income prior to the deduction of the relevant loss on disposal, but the foregoing shall not apply to cases to which the latter part of paragraph (2) applies):

(a) The amount of income of the existing consolidated corporation, in cases of the loss of the existing consolidated corporation from the disposal of assets (referring to the amount of income accrued from the business of the consolidated parent corporation and the individually reverted amount of consolidated income of the consolidated subsidiary before the merger among the individually reverted amount of consolidated income of a consolidated parent corporation);

(b) The amount of income accrued from business transferred by the merged corporation, among the individually reverted amount of consolidated income of the consolidated parent corporation, in cases of the loss incurred from the disposal of assets owned by the merged corporation before the merger.

(3) Matters necessary for calculating the amount allocated to each consolidated corporation among losses for each consolidated business year pursuant to paragraph (1), the amount excluded from gross income or deductible expenses by applying mutatis mutandisArticles 18-2 and 25, deeming a consolidated group to be one domestic corporation, and for including losses on disposal in deductible expenses under paragraph (2) shall be prescribed by Presidential Decree. <Amended on Dec. 24, 2018>

[This Article Wholly Amended on Dec. 30, 2010]

Article 76-17(Filing reports on consolidated tax base) #

(1) A consolidated parent corporation shall report the tax base and amount of corporate tax on the income for the relevant consolidated business year to the head of the tax office having jurisdiction over the place of tax payment, as prescribed by Presidential Decree, within four months from the last day of the month in which the end date of each consolidated business year falls; provided, where a consolidated parent corporation or consolidated subsidiary corporation subject to audit by an auditor pursuant to Article 4 of the Act on External Audit of Stock Companies applies for an extension of the filing deadline, as prescribed by Presidential Decree, on the grounds that the settlement of accounts are not finalized because the audit of the relevant business year has not been completed, the filing deadline may be extended by up to one month. <Amended on Oct. 31, 2017>

(2) A report filed under paragraph (1) shall be accompanied by the following documents:

1. An adjustment statement on the amount of consolidated income prepared, as prescribed by Presidential Decree;

2. Documents referred to in Article 60 (2) 1 through 3 of each consolidated corporation;

3. Documents prescribed by Presidential Decree, such as the investment and details of transactions between consolidated corporations.

(3) No report filed under paragraph (1) without the accompanying documents referred to in paragraph (2) 1 and 2 shall be deemed a report filed under this Act.

(4) Article 60 (3), (6), (8), and (9) shall apply mutatis mutandis to the filing of a report on the tax base, etc., of a consolidated parent corporation. <Amended on Dec. 15, 2015>

(5) Notwithstanding Article 119 (1), a consolidated parent corporation may submit the detailed statement of changes in stocks, etc., (including changes in stocks, etc., of a consolidated subsidiary corporation) referred to in Article 119 (1) by the filing deadline specified in paragraph (1).

[This Article Wholly Amended on Dec. 30, 2010]

Article 76-18(Consolidated interim prepayment) #

(1) A consolidated parent corporation whose consolidated fiscal year exceeds 6 months shall pay the amount calculated by selecting one of the following methods (hereinafter referred to as "consolidated interim tax amount" in this Chapter) from the start date of each consolidated fiscal year to the day 6 months elapse after the start date of each consolidated fiscal year to the tax office, etc. having jurisdiction over the place of tax payment, within 2 months from the date of the interim tax payment period: Provided, That if a consolidated parent corporation or consolidated subsidiary corporation is a domestic corporation belonging to a public disclosure target enterprise group under Article 31, Paragraph 1 of the "Act on Monopoly Regulation and Fair Trade" as of the end date of the previous consolidated fiscal year (excluding corporations prescribed by Presidential Decree in consideration of sales by industry, etc.), the consolidated interim tax amount calculated by the method in Paragraph 2 shall be paid to the tax office, etc. having jurisdiction over the place of tax payment: <Amended on December 24, 2018, December 31, 2024>

1. By the standard of the calculated tax for the immediately preceding consolidated business year: Consolidated interim tax = (A ? B ? C) ? 6/DA: The amount of calculated consolidation tax determined as corporate tax (including penalty tax, but excluding corporate tax on capital gains on the transfer of land, etc. under Article 55-2 and corporate tax computed by applying special tax provisions for promoting investment and collaborative cooperation under Article 100-32 of the Restriction of Special Taxation Act) for the consolidated business year immediately preceding the relevant consolidated business year.B: The amount of corporate tax reductions or exemptions (excluding the amount deducted from income) granted in the consolidated business year immediately preceding the relevant consolidated business year.C: The total amount of withholding tax paid as corporate tax by each consolidated corporation in the consolidated business year immediately preceding the relevant consolidated business year.D: The number of months for the relevant business year (the number of months shall be calculated by calendar, and the number of days less than one month shall be deemed one month.)

2. Method based on the corporate tax amount for the relevant interim prepayment period. Consolidated interim tax = (A ? B ? C)A: The amount of corporate tax calculated by applying Article 76-15, deeming the relevant interim prepayment period to be one business year.B: The amount of tax reduced or exempted during the relevant interim tax prepayment period (excluding the amount deducted from income).C: The total amount of withholding tax paid by each consolidated corporation as corporate tax during the interim prepayment period

(2) Notwithstanding the main clause of paragraph (1), the consolidated interim tax amount shall be calculated by the methods classified in the relevant subparagraphs, in any of the following cases: <Amended on Dec. 31, 2024>

1. Where the consolidated interim tax amount is not paid by the deadline for interim tax payment under the main clause, with the exception of the subparagraphs, of paragraph (1) (excluding cases falling under the proviso, with the exception of the subparagraphs, of paragraph (1) or under any item of subparagraph 2 of this paragraph): The method provided in paragraph (1) 1;

2. In any of the following cases: The method in paragraph (1) 2:

(a) Where there is no consolidated calculated tax amount (excluding penalty tax) fixed as corporate tax for the immediately preceding consolidated business year;

(b) Where the calculated consolidated tax amount for the immediately preceding consolidated business year is not finalized by the expiration date of the relevant interim prepayment period.

(3) In applying paragraphs (1) and (2), where the consolidated tax return system is first applied, the total amount of interim tax calculated under Article 63-2 of each consolidated corporation shall be the consolidated interim tax, and where a consolidated corporation is added under Article 76-11 (1), the total amount of the consolidated interim tax calculated under paragraphs (1) and (2) and the interim tax calculated under Article 63-2 of the added consolidated corporation shall be the consolidated interim tax. <Amended on Dec. 24, 2018>

(4) In applying paragraphs (1) and (2), where a consolidated corporation ceases to be a wholly controlled subsidiary or is dissolved (excluding where the consolidated tax payment system is applied under the proviso to Article 76-12 (1)) before the interim prepayment period expires, the relevant consolidated parent corporation may pay tax after subtracting an amount prescribed by Presidential Decree (hereafter in this Chapter, referred to as "interim tax by consolidated corporation"), which reverts to the interim tax of the consolidated corporation. <Amended on Dec. 31, 2011; Dec. 24, 2018 Dec. 31, 2022>

(5) Articles 63-2 (5) and 64 (2) shall apply mutatis mutandis to the payment of consolidated interim tax. <Amended on Dec. 24, 2018>

[This Article Wholly Amended on Dec. 30, 2010]

Article 76-19(Payment and settlement of consolidated corporate Tax) #

(1) A consolidated parent corporation shall pay an amount computed by subtracting the following amounts of corporate tax (excluding penalty tax) from the amount of calculated consolidation tax, as corporate tax on income for each consolidated business year, to the tax office having jurisdiction over the place of tax payment, etc., by the filing deadline specified in Article 76-17 (1): <Amended on Dec. 24, 2018>

1. The amount of tax reductions or exemptions and the amount of tax credits granted for the relevant consolidated business year;

2. The consolidated interim tax for the relevant consolidated business year computed under Article 76-18;

3. The total amount of tax withheld from each consolidated corporation for the relevant consolidated business year pursuant to Articles 73 and 73-2.

(2) A consolidated subsidiary corporation shall pay to its consolidated parent corporation an amount computed by adding an amount computed by applying mutatis mutandisArticles 75 and 75-2 through 75-9 to the amount computed by subtracting the following amounts from the calculated amount of tax of each consolidated corporation, by the filing deadline referred to in paragraph (1): <Amended on Dec. 24, 2018>

1. The amount of tax reductions or exemptions granted to the relevant corporation for the relevant consolidated business year;

2. The interim tax by consolidated corporation for the relevant consolidated business year;

3. The amount of tax withheld from the relevant corporation for the relevant consolidated business year pursuant to Articles 73 and 73-2.

(3) Where the amount calculated pursuant to paragraph (2) is a negative figure, the consolidated parent corporation shall pay the amount without a negative sign to its consolidated subsidiary corporation by the deadline prescribed in paragraph (1). <Added on Dec. 31, 2022>

(4) Article 64 (2) shall apply mutatis mutandis where paragraph (1) shall apply. <Amended on Dec. 15, 2015; Dec. 31, 2022>

(5) In the case where there is no calculated consolidation tax and which falls under any of the following subparagraphs, the amount of the settlement of the profit or loss resulting from the transfer of deficits (hereinafter referred to as the "settlement amount" in this paragraph) shall be distributed to each consolidated corporation as prescribed in the relevant subparagraph: <Added on Dec. 31, 2023>

1. If there is a consolidated subsidiary corporation that falls under any of the following items: the relevant consolidated subsidiary corporation pays the settlement amount calculated as prescribed by Presidential Decree to the consolidated parent corporation by the deadline specified in paragraph (1):

(a) The deficit amount of another consolidated corporation is added to the income of a consolidated subsidiary corporation for the relevant consolidated business year pursuant to Article 76-14 (1);

(b) Where the deficits under Article 76-13 (1) 1 of another consolidated corporation is deducted from the individual attributable amount of consolidated income of the consolidated corporation;

2. if there is a consolidated subsidiary corporation that falls under any of the following items: the consolidated parent corporation pays the settlement amount calculated as prescribed by Presidential Decree to the consolidated subsidiary corporation by the deadline specified in paragraph (1):

(a) Where the deficits of a consolidated subsidiary corporation for the relevant consolidated business year are added to the income of another consolidated corporation pursuant to Article 76-14 (1);

(b) Where the deficits referred to in Article 76-13 (1) 1 of a consolidated subsidiary corporation are deducted from the individual attributable amount of consolidated income of another consolidated corporation.

[This Article Wholly Amended on Dec. 30, 2010]

[Title Amended on Dec. 31, 2023]

Article 76-22(Application of regulations related to small and medium enterprises to consolidated corporations) #

(1) In calculating the corporate tax on income for each consolidated business year, if a consolidated group is regarded as a domestic corporation and the consolidated group constitutes a small or medium enterprise or a middle-standing enterprise under this Act or the Act on Restriction on Special Cases concerning Taxation, the provisions regarding small and medium enterprises or medium-sized enterprises under this Act or the Act on Restriction on Special Cases concerning Taxation shall apply, in accordance with the classification of the following subparagraphs:

1. Where a consolidated group constitutes a small or medium enterprise: The following provisions shall apply:

(a) A consolidated corporation that constitutes a small and medium enterprise: The regulations on small and medium enterprises shall apply;

(b) A consolidated corporation that constitutes a middle-standing enterprise: The provisions on middle-standing enterprises shall apply;

2. Where a consolidated group constitutes a middle-standing enterprise: The provisions on middle-standing enterprises shall apply to a consolidated corporation that constitutes a small and medium enterprise and a consolidated corporation that constitutes a middle-standing enterprise, respectively.

(2) Where a corporation corresponding to a small and medium enterprise as at the time of the business year immediately preceding the first consolidated business year in which the consolidated tax return system is applied becomes no longer subject to the application of the provisions concerning small and medium enterprises due to the application of the consolidated tax return system, the provisions on small and medium enterprises shall apply until the consolidated business year that ends within 5 years from the commencement date of the first consolidated business year in which the consolidated tax return system is applied and the following consolidated business year, notwithstanding paragraph (1).

[This Article Wholly Amended on Dec. 31, 2024]

Article 79(Calculation of liquidation income accruing from dissolution) #

(1) Where a domestic corporation is dissolved (excluding a dissolution by a merger or division), the liquidation income (hereinafter referred to as "liquidation income from dissolution") shall be calculated by deducting the sum of the paid-in capital or investment funds and the surplus funds (hereinafter referred to as "total amount of equity capital") as at the registration date of the dissolution from the value of the residual assets upon dissolution of the corporation.

(2) Where a domestic corporation in the process of liquidation due to a dissolution continues to conduct its business pursuant to Article 229, 285, 287-40, 519, or 610 of the Commercial Act after having distributed some residual assets upon dissolution to stockholders, etc., the liquidation income from dissolution of the domestic corporation shall be calculated by deducting the total amount of its equity capital as at the registration date of the dissolution from the total amount of the residual assets distributed during the period between the registration date of the dissolution and the registration date of the continuation. <Amended on Dec. 15, 2015>

(3) In calculating liquidation income from dissolution of a domestic corporation, the amount of corporate tax to be refunded under the Framework Act on National Taxes during the period of liquidation shall be added to the total amount of equity capital of the domestic corporation as at the registration date of the dissolution.

(4) Where a domestic corporation has losses carried forward prescribed by Presidential Decree as at the registration date of the dissolution for purposes of calculating the liquidation income from dissolution of the domestic corporation, an amount equivalent to the losses carried forward shall be offset from the total amount of its equity capital as at the registration date of the dissolution; provided, the amount of losses carried forward to be offset shall not exceed the amount of surplus funds among the total amount of equity capital, and where the losses carried forward exceed the surplus funds, such excess losses may be deemed nil.

(5) Where any surplus funds have been transferred into the paid-in capital or investment funds within two years prior to the registration date of the dissolution in calculating the liquidation income pursuant to paragraph (4), the relevant amount shall be deemed not have been transferred into the paid-in capital or investment funds for purposes of the same paragraph. <Added on Dec. 31, 2011>

(6) In calculating the liquidation income from dissolution of a domestic corporation, the income for each business year accrued during the period of liquidation shall be included in the amount of income for each relevant business year of the corporation.

(7) Articles 14 through 18, 18-2, 18-3, 19, 19-2, 20 through 31, 33 through 38, 40 through 42, 42-2, 43, 44, 44-2, 44-3, 45, 46, 46-2 through 46-5, 47, 47-2, 50, 51, 51-2, 52, 53, 53-2, 53-3, 54, and Article 104-31 of the Act on Restriction on Special Cases concerning Taxation shall apply mutatis mutandis to the calculation of the liquidation income referred to in paragraph (1) and the amount of income for each business year during the period of liquidation referred to in paragraph (6), except as provided in paragraphs (1) through (6). <Amended on Dec. 31, 2011; Dec. 22, 2020; Dec. 31, 2022>

(8) The calculation of the value of residual assets for the purposes of paragraphs (1) through (7) and other necessary matters shall be prescribed by Presidential Decree. <Amended on Dec. 31, 2011>

[This Article Wholly Amended on Dec. 30, 2010]

Article 91(Tax base) #

(1) The corporate tax base on the income of a foreign corporation with a domestic place of business or a foreign corporation that has domestic source income accrued from transfer of real estate referred to in subparagraph 3 of Article 93 for each business year shall be calculated by deducting, in sequential order, the following amount from the total amount of domestic source income (excluding the amount of domestic source income withheld under Article 98 (1), 98-3, 98-5, or 98-6); provided, the deduction from the amount referred to in subparagraph 1 shall be 80/100 of the income for each business year: <Amended on Dec. 31, 2011; Dec. 20, 2016; Dec. 24, 2018; Dec. 31, 2019; Dec. 31, 2022>

1. Losses (limited to losses incurred in the Republic of Korea) in Article 13 (1) 1;

2. Non-taxable income provided for in this Act and other statutes;

3. Income accrued from the international services of ships or aircraft; provided, this shall only apply where the country in which the headquarters or main office of the foreign corporation is located accords the same exemption to ships and aircraft of Korean corporations.

(2) For a foreign corporation which does not fall under paragraph (1), the tax base of corporate tax on its income for each business year shall be the amount of domestic source income classified under each subparagraph of Article 93.

(3) The tax base of corporate tax on domestic source income of a foreign corporation falling under paragraph (1), which is withheld under Article 98 (1), 98-3, 98-5, or 98-6, shall be the amount of domestic source income classified under each subparagraph of Article 93. <Amended on Dec. 31, 2011>

(4) Paragraph (1) 3 shall also apply to any foreign corporation which has no domestic place of business.

(5) In calculating the tax base in paragraph (1), losses carried forward in paragraph (1) 1 shall be deducted in sequential order of business years, and non-taxable income that is not deducted in the relevant business year shall not be carried over for deduction to business years subsequent the relevant business year. <Added on Dec. 24, 2018>

[This Article Wholly Amended on Dec. 30, 2010]

Article 92(Calculation of amount of domestic source income) #

(1) The total amount of domestic source income of a foreign corporation under Article 91 (1) for each business year shall be the amount calculated by subtracting the total amount of deductible expenses during the relevant business year from the total amount of gross income during the relevant business year, and with regards to the calculation of the amount of income for each business year shall apply mutatis mutandisArticles 14 through 18, 18-2, 19, 19-2, 20 through 31, 33 through 38, 40 through 42, 42-2, 43, 44, 44-2, 44-3, 45, 46, 46-2 through 46-5, 47, 47-2, 50, 51, 52, 53, 53-2, and 54 of this Act and Article 138 of the Act on Restriction on Special Cases concerning Taxation, as prescribed by Presidential Decree; provided, it shall be deemed that a merging corporation or a corporation newly incorporated upon division does not succeed to losses of the merged corporation or divided corporation for the purpose of applying mutatis mutandisArticle 44-3, 45, 46-3, or 46-4. <Amended on Dec. 31, 2011; Jan. 1, 2013; Dec. 24, 2018; Dec. 31, 2019>

(2) The amount of domestic source income (excluding domestic source income accrued from transfer of real estate, etc. in subparagraph 7 of Article 93) of a foreign corporation falling under Article 91 (2) and (3) for each business year shall be the amount under the following subparagraphs: <Amended on Dec. 31, 2011; Dec. 24, 2018; Dec. 22, 2020>

1. Domestic source income provided in subparagraphs 1 through 6 and 8 through 10 of Article 93 shall be the revenue amount by income provided in each subparagraph (excluding subparagraph 7) of the same Article; provided, the domestic source income according to the following classification may be calculated pursuant to the following:

(a) Income from transfer of domestic source securities prescribed in subparagraph 9 of Article 93: An amount computed by deducting the acquisition value and transfer expenses of the relevant securities verified, as prescribed by Presidential Decree, from the revenue;

(b) Virtual asset income referred to in subparagraph 10 (k) of Article 93: An amount calculated by deducting the acquisition price, etc. prescribed by Presidential Decree from the amount of income (where a foreign corporation withdraws virtual assets defined in subparagraph 3 of Article 2 of the Act on Reporting and Using Specified Financial Transaction Information (hereinafter referred to as "virtual assets") kept and managed by a virtual asset service provider or similar service provider prescribed in subparagraph 1 of Article 2 of the same Act (hereinafter referred to as "virtual asset service provider, etc."), referring to the amount prescribed by Presidential Decree as the market price of the virtual assets at the time of withdrawal);

2. Where the domestic source income accrued from transfer of securities referred to in subparagraph 9 of Article 93 of a foreign corporation with no domestic place of business meets each of the following conditions, the arm's length price prescribed by Presidential Decree (hereafter in this subparagraph, referred to as "arm's length price") shall be the revenue of the foreign corporation, notwithstanding subparagraph 1 (a):

(a) Income accruing from transactions between a foreign corporation with no domestic place of business and a foreign corporation (including non-residents) having a special relationship prescribed by Presidential Decree with the former foreign corporation;

(b) Prices of transactions provided in item (a) fall short of the arm's length price in circumstances prescribed by Presidential Decree.

(3) The amount of domestic source income accrued from transfer of real estate, etc. referred to in subparagraph 7 of Article 93 that are the domestic source income of a foreign corporation falling under Article 91 (2) for each business year shall be the amount calculated by subtracting the following amounts from the transfer value of income-generating assets (hereafter in this Article, referred to as "land, etc."): <Amended on Dec. 24, 2018>

1. The acquisition value; provided, where a foreign corporation, to which assets not included in the taxable value of the inheritance tax or gift tax under the Inheritance Tax and Gift Tax Act are contributed, transfers the land, etc. prescribed by Presidential Decree, the acquisition value of such land, etc. by the donator shall be deemed the acquisition value of the foreign corporation;

2. Expenses directly expended to transfer the land, etc.

(4) In applying paragraph (3), the acquisition value and the transfer value shall be based on the actual transaction value, and where the actual transaction value is unclear, such value shall be computed by applying mutatis mutandisArticles 99, 100, and 114 (7) of the Income Tax Act. <Amended on Dec. 24, 2018>

(5) In applying paragraph (3), Article 98 of the Income Tax Act shall apply mutatis mutandis to the timing for transfer or acquisition of the relevant assets.

(6) Article 101 of the Income Tax Act shall apply mutatis mutandis to any unfair calculation of domestic source income accrued from transfer of real estate, etc. specified in paragraph (3). In such cases, "a related party" shall be construed as "a related party provided in subparagraph 12 of Article 2 of the Corporate Tax Act." <Amended on Dec. 31, 2011; Dec. 24, 2018>

(7) In calculating the income of amount related to the domestic place of business of a foreign corporation for each business year, matter necessary for distributing deductible expenses to the headquarters or other branch offices in foreign countries shall be prescribed by Presidential Decree. <Added on Dec. 24, 2018>

[This Article Wholly Amended on Dec. 30, 2010]

Article 93(Domestic source income of foreign corporations) #

Domestic source income of a nonresident shall be classified as follows: <Amended on Dec. 31, 2011; Dec. 15, 2015; Dec. 20, 2016; Dec. 24, 2018; Dec. 31, 2019; Dec. 22, 2020; Dec. 31, 2022; Dec. 31, 2024>

1. Domestic source interest income: Income falling under any of the following items, which includes interest income referred to in Article 16 (1) of the Income Tax Act (excluding income provided for in subparagraph 7 of that paragraph), and other interest on loans and profits from trusts; provided, the same shall not apply to interest on any loan directly obtained by an overseas place of business for the overseas place of business of a resident or domestic corporation:

(a) Income received as a payment from the State, a local government, a domestic place of business of a resident, domestic corporation or foreign corporation, or a domestic place of business of a non-resident referred to in Article 120 of the Income Tax Act;

(b) Income received as a payment from a foreign corporation or non-resident, which is substantially related to the domestic place of business of the foreign corporation or non-resident and is included in deductible expenses or incurred expenses for the purpose of calculating the amount of income of such domestic place of business;

2. Domestic source dividend income: Income prescribed in each of the following paid by a domestic corporation, an organization deemed a corporation, or any other person located in the Republic of Korea:

(a) Deleted; <Dec. 31, 2024>

(b) Dividend income provided for in Article 17 (1) of the Income Tax Act (excluding the income provided for in subparagraph 6 of the same paragraph);

(d) Deleted; <Dec. 31, 2024>

(e) The amount disposed of as a dividend under Articles 13 or 22 of the Adjustment of International Taxes Act;

3. Income accrued from real estate in the Republic of Korea or real estate rights and mining rights, mining concessions or rights to quarry earth, sand, and rocks, each of which is acquired in the Republic of Korea, or the transfer or lease of rights to use or develop underground water or other management of underground water; provided, excluded herefrom shall be capital gains referred to in subparagraph 7;

4. Income accrued from the rental of a ship, aircraft, registered motor vehicles, construction machinery, industrial, commercial or scientific machinery, facilities and equipment, and other tools prescribed by Presidential Decree to a domestic place of business of a resident, domestic corporation or foreign corporation, or a domestic place of business of a non-resident referred to in Article 120 of the Income Tax Act;

5. Income prescribed by Presidential Decree and accrued from any business operated by a foreign corporation (including income taxable as domestic source business income under any tax treaty); provided, excluded herefrom shall be income referred to in subparagraph 6;

6. Income accrued by rendering personal services prescribed by Presidential Decree in the Republic of Korea (including the income deemed to have accrued in the Republic of Korea according to a tax treaty by rendering personal services prescribed by Presidential Decree, among personal services rendered abroad). In such cases, where the person provided with the personal services bears expenses prescribed by Presidential Decree, including airfares, in connection with the provision of such personal services, such income means an amount excluding such expenses;

7. Domestic source capital gains on real estate, etc.: Income generated by transferring any assets or rights falling under any of the following subparagraphs, which are located in the Republic of Korea; provided, this shall only apply where assets or rights that generate such income are located in the Republic of Korea:

(a) Assets or rights referred to in Article 94 (1) 1, 2, and 4 (a) and (b) of the Income Tax Act;

(b) Stocks, etc. (hereafter in this Article, referred to as "real estate, stocks, etc.") of a domestic corporation, where the aggregate of the following values is at least 50/100 of total assets of that domestic corporation as at the start date of the business year in which the relevant assets are transferred, among stocks, etc. (including depository receipts or preemptive rights issued on the basis of stocks, etc.; hereafter in this Chapter, the same shall apply) of such domestic corporation, which have not been listed on any securities market under the Financial Investment Services and Capital Markets Act; In such cases, real estate stocks, etc. that are recognized as having taxation rights in Korea according to mutual agreement with the counterpart of the tax treaty in relation to the interpretation and application of the tax treaty shall also be included in the real estate stocks, etc. in the preceding section:

(i) The value of assets referred to in Article 94 (1) 1 and 2 of the Income Tax Act;

(ii) The value computed by multiplying the value of stocks owned by another corporation excessively owning real estate which is held by the domestic corporation, by the ratio of real estate owned by the other corporation. In such cases, the methods for determining whether the other corporation excessively owns real estate and for computing the ratio of real estate owned shall be prescribed by Presidential Decree;

8. Domestic source royalty income: Income generated from the transfer of the price and relevant rights, etc. where any of the following rights, assets or information (hereafter referred to as "rights, etc." in this subparagraph) is used in the Republic of Korea or the price thereof is paid in the Republic of Korea. In such cases, where income accruing from leasing industrial, commercial, or scientific machinery, facilities, or equipment, etc. prescribed in subparagraph 4 is classified as royalty income under a tax treaty, the usage fee shall be included:

(a) Copyrights, patent rights, trademark rights, designs, forms, and sketches of academic or artistic works (including movie films) or secret formulae or processes, film and tapes for radio and television broadcasts, and other similar assets or rights;

(b) Information or know-how related to industrial, commercial, or scientific knowledge and experience;

(c) Other similar property or rights included in the definition of royalties in a tax treaty that stipulates whether domestic source income is applicable based on the place of use (hereinafter referred to as the "tax treaty based on the place of use" in this Article) [Patent rights, utility model rights, trademark rights, design rights, etc. that require registration for the exercise (hereinafter referred to as "patent rights" in this Article) have not been registered in Korea, but the manufacturing method, technology, information, etc. included therein It refers to what is actually implemented or used in Korea, such as related to the manufacture and production of the product];

9. Income prescribed by Presidential Decree and accrued from the transfer of any of the following stocks, etc. (including real estate stocks, etc., listed on any securities market under the Financial Investment Services and Capital Markets Act), or other securities (including securities defined in Article 4 of the Financial Investment Services and Capital Markets Act; hereinafter the same shall apply):

(a) Stocks, etc., and other securities issued by a domestic corporation;

(b) Stocks, etc., issued by a foreign corporation (limited to stocks, etc., listed on any securities market under the Financial Investment Services and Capital Markets Act), and other securities issued by a domestic place of business of a foreign corporation;

10. Other domestic source income: Any of the following, other than those provided for in subparagraphs 1 through 9:

(a) Insurance money, indemnification, or compensation paid in connection with any real property or other assets situated in the Republic of Korea, or business run in the Republic of Korea;

(b) Income prescribed by Presidential Decree as penalties for breach of any contract or compensation for damage paid in the Republic of Korea;

(d) Prize money, monetary rewards, compensation, and other similar income paid in the Republic of Korea;

(e) Income accrued from buried property discovered in the Republic of Korea;

(f) Income accrued from the transfer of licenses, approval, or rights established by other similar administrative dispositions under laws of the Republic of Korea, and from the transfer of domestic assets, other than real estate;

(g) Prize received based on lottery, gift tickets, or other drawing tickets, and refunds paid to the purchasers of horse-race tickets, winner-betting tickets, bullfighting tickets, or sports promotion tickets, all issued in the Republic of Korea;

(h) Amounts disposed of as other income pursuant to Article 67;

(i) Income accruing from an increase in the value of the stocks, etc., of a domestic corporation that are held by any related party prescribed by Presidential Decree (referred to as "foreign related party" hereafter in Article 98) that arises from capital transactions prescribed by Presidential Decree;

(j) Compensation for damage, compensation, settlement money, daily gains, or other similar income paid in the Republic of Korea for damage accrued by infringement of patent rights, etc. registered in the Republic of Korea without being registered in the Republic of Korea and registered in a foreign country, which are owned by a corporation of a member country of a prearranged tax treaty on the site. In such cases, the income paid in connection with the methods of manufacturing, technologies, information, etc. included in the relevant patent rights, etc., virtually conducted or used in the Republic of Korea, including those related to manufacture or production in the Republic of Korea, shall be limited to the income paid;

(k) Virtual asset income referred to in Article 21 (1) 27 of the Income Tax Act (where a foreign corporation withdraws virtual assets kept and managed by a virtual asset service provider, etc., including an amount calculated as prescribed by Presidential Decree, considering the time of withdrawal to be the time of transfer);

(l) Income from any business operated in the Republic of Korea, from personal services rendered in the Republic of Korea, or from economic benefits received in relation to assets located in the Republic of Korea (excluding the difference, if any, between the amount received for redemption of foreign currency-denominated bonds issued by the State or financial companies, etc., established under any special Act and the issue prices of such bonds) or other similar income prescribed by Presidential Decree, other than those referred to in any of items (a) through (k).

[This Article Wholly Amended on Dec. 30, 2010]

[Title Amended on Dec. 15, 2015]

Article 93-2(Special case concerning real beneficiary for foreign investment scheme) #

(1) Where a foreign corporation is paid with the domestic source income in Article 93 through a foreign investment scheme (referring to a scheme established in a foreign country, which conducts the activities of investments that acquire, dispose of, or operate by other means the assets subject to investment which have property values by attracting money, etc. for investment and distribute and revert the return to investors; hereinafter the same shall apply), the a foreign corporation shall be construed as a real beneficiary (referring to a person who actually holds ownership over the income, such as the right to dispose of the domestic source income by taking legal or financial risks; hereinafter the same shall apply); provided, where a foreign investment scheme falls under any of the following cases (limited to cases falling under subparagraphs 2 and 3 of this paragraph for a foreign investment scheme that is an organization which is not a corporation, other than an organization deemed a corporation in Article (2) 3 of the Income Tax Act), the foreign investment scheme shall be construed as a real beneficiary of the domestic source income: <Amended on Dec. 21, 2021>

1. Where the foreign investment vehicle meets all of the following requirements:

(a) It shall be liable for tax payment in the country in which it was established under a tax treaty;

(b) With respect to domestic source income, it shall be eligible for non-taxation, tax exemption or restrictive tax rates prescribed by a tax treaty (referring to the highest tax rate that can be applied to residents or corporations of a contracting party pursuant to a tax treaty; hereinafter the same shall apply);

2. Where a foreign investment scheme not falling under subparagraph 1 is treated under a tax treaty as the beneficial owner of domestic source income and meets the requirements for non-taxation, tax exemption, or restrictive tax rates prescribed in a tax treaty with respect to domestic income source;

3. Where the foreign investment scheme not falling under paragraphs (1) and (2) fails to verify an investor who has invested in the foreign investment scheme (where there are at least two investors, where it verifies a part of the investors, it shall be limited to the part unverified).

(2) Where a foreign investment scheme is deemed as a real beneficiary of the domestic source income as it falls under paragraph (1) 3, the non-taxation, tax exemption, and restrictive tax rates under the applicable tax treaty shall not apply to the foreign investment scheme. <Amended on Dec. 22, 2020; Dec. 21, 2021>

[This Article Added on Dec. 24, 2018]

Article 93-3(Special cases concerning taxation on interest and capital gains on state bonds of foreign corporations) #

(1) Notwithstanding Article 3 (1) 2, no corporate tax shall be imposed on the income falling under any of the following, out of the income of a foreign corporation subject to withholding tax under Article 98 (1):

1. Income accruing from State bonds issued pursuant to Article 5 (1) of the State Bond Act, monetary stabilization bonds referred to in the Bank of Korea Monetary Stabilization Bond Act, or bonds prescribed by Presidential Decree (hereafter in this Article referred to as "State bonds, etc."), out of interest income accruing from domestic sources prescribed in subparagraph 1 of Article 93;

2. Income accruing from the transfer of State bonds, etc. out of capital gains from the transfer of domestic source securities referred to in subparagraphs 9 of Article 93.

(2) State bonds, etc. not subject to corporate tax under paragraph (1) include State bonds, etc. acquired, held, or transferred through a foreign financial company, etc. (hereinafter referred to as "qualified foreign financial company, etc.") approved by the Commissioner of the National Tax Service by meeting the requirements prescribed by Presidential Decree. In such cases, necessary matters for compliance matters applicable to qualified foreign financial companies, etc., and the standards, procedures, etc. for approval and revocation of approval shall be prescribed by Presidential Decree.

(3) Where a foreign corporation receives income under any subparagraph of paragraph (1) through an overseas investment scheme, the relevant overseas investment scheme shall be deemed to be the real beneficiary of the income referred to in each subparagraph of paragraph (1), notwithstanding Article 93-2 (1). <Added on Dec. 31, 2024>

(4) A foreign corporation (including a foreign investment scheme deemed a real beneficiary under paragraph (3); hereafter the same shall apply in this Article) or qualified foreign financial company, etc. that intend to be subject to non-taxation under paragraph (1) shall file an application for non-taxation with the head of the competent tax office having jurisdiction over the place of tax payment, as prescribed by Presidential Decree. <Amended on Dec. 31, 2024>

(5) Articles 73 and 73-2 shall not apply to the income referred to in the subparagraphs of paragraph (1), which a domestic corporation receives through an overseas investment scheme, and the relevant domestic corporation shall report and pay the income directly, as prescribed by Presidential Decree: <Amended on Dec. 31, 2024>

1. Deleted; <Dec. 31, 2024>

2. Deleted. <Dec. 31, 2024>

(6) If a foreign corporation or a qualified foreign financial company, etc. which is not subject to non-taxation under paragraph (1) intends to be applied non-taxation, the foreign corporation, qualified foreign financial company, etc. or the person who pays income under the subparagraphs of paragraph (1) may file a request for rectification with the head of the competent tax office having jurisdiction over the place of tax payment. <Added on Dec. 31, 2024>

(7) Article 98-4 (5) through (7) shall apply mutatis mutandis to the deadline, methods, procedures, etc. of a request for rectification under paragraph (6). In such cases, in the main clause of Article 98-4 (5), "non-taxation or tax exemption has not been applied under paragraph (3)" shall be construed as "non-taxation has not been applied under Article 93-3 (1)"; "a real beneficiary ... intends to be eligible for non-taxation or tax exemption" as "a foreign corporation or qualified financial company, etc. ... intends to be eligible for non-taxation"; and "the real beneficiary or income payer ... under paragraph (3)" as "the foreign corporation, qualified foreign financial company, etc., or a person who pays income under each subparagraph of paragraph (1) ... under Article 98 (1)". <Added on Dec. 31, 2024>

[This Article Added on Dec. 31, 2022]

Article 94(Domestic place of business of foreign corporation) #

(1) Where a foreign corporation has a fixed place for the operation of all or part of its domestic business, the foreign corporation shall be deemed to have a domestic place of business.

(2) A domestic place of business referred to in paragraph (1) includes any of the following places:

1. Branches, offices, or business offices;

2. Shops and other fixed sales places;

3. Workshops, factories, or storages;

4. Places used for building, sites for construction, assembly or installation works, or places used for performing supervisory activities related thereto, for more than six months;

5. Any of the following places where employees provide services:

(a) A place where services are provided for at least six months in total during a 12-month period in which such services continue to be provided;

(b) A place where services are provided for not more than six months in total during a 12-month period in which such services continue to be provided, and similar services are continuously and repeatedly provided for at least two years;

6. Mines, quarries, or places for exploiting and gathering marine natural resources and other natural resources (including what are in the sea floor or under soil on the tidelands adjacent to the coast of the Republic of Korea outside its territorial waters where the Republic of Korea exercises sovereignty under international laws).

(3) Where a foreign corporation without any fixed places referred to in paragraph (1) operates the business in the Republic of Korea through any of the following persons or an equivalent person prescribed by Presidential Decree, the location of the person's place of business (where he or she does not have any place of business, it shall be his or her address, and where he or she does not have any address, it shall be the location of his or her residence) shall be deemed the domestic place of business of the foreign corporation: <Amended on Dec. 24, 2018>

1. A person who is authorized to conclude any of the following contracts on behalf of the relevant foreign corporation and repeatedly exercises such authority in the Republic of Korea:

(a) A contract concluded under the name of a foreign corporation;

(b) A contract to transfer ownership of assets owned by a foreign corporation to grant permission to use the assets that the foreign corporation has ownership or right to use;

2. A person who repeatedly plays an important role (limited to cases where the foreign corporation concludes a contract without changing any important matters of the contract) in the process of concluding a contract, although the person has not the right to conclude a contract, etc. under the name of the foreign corporation for such foreign corporation in the Republic of Korea.

(4) Where any of the following places (hereafter in this Article, referred to as "specific place of activities") is used for performing preparatory and supporting business activities of the foreign corporation, it shall not be included in the domestic place of business in paragraph (1): <Amended on Dec. 24, 2018>

1. Fixed places used by a foreign corporation only for purchasing assets;

2. Fixed places used by a foreign corporation only for storing or keeping assets not for sale;

3. Fixed places used by a foreign corporation for advertisement, publicity, gathering and providing information, market research, or similar activities;

4. Fixed places used by other persons only for processing a foreign corporation's own assets.

(5) Notwithstanding paragraph (4), where a place for specific activities falls under any of the following, such place shall be included in the domestic places of business under paragraph (1): <Added on Dec. 31, 2018; Dec. 31, 2019>

1. Where a foreign corporation or a foreign corporation (including non-residents; hereafter in this paragraph, referred to as "person having a special relationship") having a special relationship prescribed by Presidential Decree does business in a place same as the specific place of activities or other domestic place and satisfies each of the following items:

(a) The foreign corporation or a person having a special relationship shall have its domestic place of business in a place same as the specific place of activities or other domestic place;

(b) The activities conducted in the place for specific activities and those conducted at the domestic place of business under item (a) shall be mutually complementary;

2. Where a foreign corporation or a person having a special relationship conducts complementary activities in a place same as the specific place of activities or other domestic place and the comprehensive activities comprised of all activities are not preparatory and supporting business activities in light of the business activities of the foreign corporation or the person having a special relationship.

[This Article Wholly Amended on Dec. 30, 2010]

Article 96(Special provisions on taxation on domestic place of business of foreign corporation) #

(1) Any domestic place of business of a foreign corporation (excluding non-profit foreign corporations) shall add the amount calculated by applying the tax rate provided in paragraph (3) to the taxable income provided in paragraph (2) (where a remittance of profits are taxable under the tax treaty concluded between the Republic of Korea and the foreign country where the foreign corporation is located, the taxable income shall be the amount of remittance prescribed by Presidential Decree) to the corporate tax calculated under Article 95 and pay it under the tax treaty concluded between the Republic of Korea and the country where the headquarters or main office of such foreign business corporation is located (hereafter in this Article, referred to as "country of residence"); provided, the same shall not apply where the country of residence of such foreign corporation does not impose the tax on the overseas place of business of a corporation of the Republic of Korea located in such country of residence.

(2) The amount of taxable income referred to in paragraph (1) shall be the amount computed by subtracting each of the following amounts from the amount of income from the relevant domestic place of business for each business year: <Amended on Dec. 31, 2011; Jan. 1, 2014; Dec. 24, 2018; Dec. 22, 2020>

1. The amount of corporate tax calculated under Article 95 less the amount referred to in item (a) but plus the amount referred to in item (b):

(a) Tax credits on tax paid overseas under Article 57 (1), tax credits for losses from disasters granted under Article 58 that are applied mutatis mutandis under Article 97 (1), and the amount of tax reductions or exemptions and the amount of tax credits under other statutes;

(b) Additional tax provided in Articles 75, 75-2 through 75-9 and Articles 47-2 through 47-5 of the Framework Act on National Taxes or tax paid additionally under this Act or the Act on Restriction on Special Cases concerning Taxation;

2. Local corporate income tax;

3. The amount prescribed by Presidential Decree, such as an amount deemed reinvested in business by the relevant domestic place of business;

4. The amount not included in deductible expenses under Article 22 of the Adjustment of International Taxes Act.

(3) The tax rate applied under paragraph (1) shall be the tax rate provided in Article 98 (1) 2, and where tax rates are separately stipulated by the tax treaty concluded between the Republic of Korea and the country of residence of the relevant foreign corporation, the treaty shall be complied with. <Amended on Dec. 24, 2018>

[This Article Wholly Amended on Dec. 30, 2010]

Article 97(Report, payment, determination, correction, and collection) #

(1) Except as otherwise provided in this SECTION, any of the following provisions shall apply mutatis mutandis to filing a report, payment, determination, correction, and collection of corporate tax for each business year of a foreign corporation referred to in Article 91 (1) and a foreign corporation referred to in subparagraphs (2) and (3) of the same Article that have domestic source income accrued from transfer of real estate, etc. in subparagraph 7 of Article 93 (hereafter in this paragraph referred to as "foreign corporation, etc."). In such cases, where the corporate tax base on the income of a foreign corporation for each business year includes the income withheld under Article 98 (1) 5 or (8) in applying mutatis mutandisArticle 64, the relevant amount of withheld tax shall be deemed the amount of tax deducted under Article 64 (1) 4: <Amended on Jan. 1, 2013; Dec. 20, 2016; Dec. 24, 2018; Dec. 22, 2020>

1. In cases of tax reductions or exemptions: Articles 57 (1) and (2), 58, 58-3, and 59;

2. In cases of report and payment: Articles 60 (excluding any earned surplus settlement statement or deficits settlement statement referred to in paragraph (2) 1 of the same Article), 62, and 64;

3. In cases of interim prepayment: Articles 63 and 63-2;

4. In cases of determination or correction of tax base: Articles 66 through 70;

5. In cases of collection and refund of tax: Article 71;

6. In cases of withholding: Articles 73, 73-2 and 74;

7. In cases of penalty tax: Articles 75 and 75-2 through 75-9.

(2) Where a foreign corporation obligated to file a report on the tax base of corporate tax on the income for each business year under paragraph (1) cannot file the report by the filing deadline on the grounds prescribed by Presidential Decree, it may extend the filing deadline after obtaining approval from the head of the tax office having jurisdiction over the place of tax payment or the commissioner of the competent regional tax office, as prescribed by Presidential Decree, notwithstanding paragraph (1).

(3) Where a foreign corporation that has obtained approval for extending a deadline for filing a tax return pursuant to paragraph (2) pays the tax amount it has reported, it shall pay the tax amount including the amount calculated by applying an interest rate prescribed by Presidential Decree considering the interest rates of financial companies, etc. to the number of days so extended.

(4) In calculating the amount to be added under paragraph (3), the number of extended days shall be the number of days from the day following the filing deadline specified under Article 60 until the approval day of extension; provided, where a report is filed and payment is made by the extended deadline, it shall be from the day following the filing deadline specified under Article 60 until the day of such report and payment.

(5) Where the amount of the tax withheld under Article 98, 98-3, 98-5, or 98-6 is less than 1,000 won, such tax shall not be collected. <Added on Jan. 1, 2013>

[This Article Wholly Amended on Dec. 30, 2010]

Article 98(Special cases concerning withholding or collection from foreign corporations) #

(1) Where any person pays a foreign corporation the amount of domestic source income provided for in subparagraphs 1, 2, and 4 through 10 of Article 93 (excluding any resident or non-resident who pays the amount of domestic source income accrued from transfer of real estate, etc. provided for in subparagraph 7 of Article 93) which is not substantially related to the domestic place of business of the foreign corporation or does not revert to the domestic place of business of the foreign corporation (including an amount paid to a foreign corporation with no domestic place of business), he or she shall withhold, as the corporate tax, the following amounts from the income of the relevant foreign corporation for each business year, and pay it at the tax office having jurisdiction over the place of tax payment, etc., as prescribed by Presidential Decree, by the tenth day of the month following the month in which the date of withholding falls, notwithstanding Article 97; provided, the same shall not apply to income provided for in subparagraph 5 of Article 93, which is taxable as domestic source business income under the applicable tax treaty: <Amended on Jan. 1, 2013; Dec. 20, 2016; Dec. 24, 2018; Dec. 31, 2019; Dec. 22, 2020>

1. Domestic source interest income in subparagraph 1 of Article 93: Any of the following amounts:

(a) Interest income accrued from the bonds issued by the State, a local government, or a domestic corporation: 14/100 of the amount paid;

(b) Interest income other than those in item (a): 20/100 of the amount paid;

2. Domestic source dividend income in subparagraph 2 of Article 93: 20/100 of the amount paid;

3. Domestic source income accrued from the rental of ships, etc. in subparagraph 4 of Article 93 and domestic source business income in subparagraph 5 of Article 93 (excluding income taxable as domestic source business income under any tax treaty): 2/100 of the amount paid;

4. Domestic source income accrued by rendering personal services in subparagraph 6 of Article 93: 20/100 of the amount paid; provided, 3/100 of the amount paid for the income deemed to have accrued in the Republic of Korea according to a tax treaty by rendering personal services prescribed by Presidential Decree, among personal services rendered abroad;

5. Domestic source income accrued from transfer of real estate, etc. in subparagraph 7 of Article 93: 10/100 of the amount paid; provided, where the acquisition value and transfer expenses of the amount paid are verified, an amount equivalent to 10/100 of the amount paid or an amount equivalent to 20/100 of capital gains on a transfer of such assets, whichever is smaller;

6. Domestic source income accrued from usage in subparagraph 8 of Article 93: 20/100 of the amount paid;

7. Domestic source income accrued from transfer of securities in subparagraph 9 of Article 93: 10/100 of the amount paid (where it falls under Article 92 (2) 2, referring to "arm's length price" in the same subparagraph; hereinafter the same shall apply); provided, where the acquisition value and transfer expenses of the relevant securities are verified under Article 92 (2) 1 (a), an amount equivalent to 10/100 of the amount paid, etc., or an amount equivalent to 20/100 of the amount calculated under the proviso to the same subparagraph, whichever is smaller;

8. Other domestic source income in subparagraph 10 of Article 93: An amount according to the following classification:

(a) Income prescribed in subparagraph 10 (j) of Article 93: 15/100 of the amount paid;

(b) Income prescribed in subparagraph 10 (k) of Article 93: Amount according to the following classification; provided, when exchanging or withdrawing virtual assets, it shall be an amount prescribed by Presidential Decree and expressed in units of virtual assets, equivalent to the following:

(i) Where the acquisition value, etc. of virtual assets is verified under Article 92 (2) 1 (b): the lesser of the amount equivalent to 10/100 of the paid amount and the amount equivalent to 20/100 of the amount calculated under the same item;

(ii) Where the acquisition value, etc. of virtual assets is not verified under Article 92 (2) 1 (b): 10/100 of the paid amount;

(c) Income other than the income prescribed in items (a) and (b): 20/100 of the paid amount (the amount prescribed by Presidential Decree, in the case of income prescribed in subparagraph 10 (c) of Article 93).

(2) Deleted <Dec. 31, 2022>

(3) Deleted. <Dec. 31, 2011>

(4) Where a person liable for withholding fails to withhold corporate tax from the income of a foreign corporation for each business year under paragraphs (1) and (5) through (12) or fails to pay the withheld corporate tax by the payment deadline specified under paragraph (1), the head of the tax office having jurisdiction over the place of tax payment shall additionally collect, as corporate tax, the amount referred to in Article 47-5 (1) of the Framework Act on National Taxes from the person liable for withholding in the same manner as national taxes are collected. <Amended on Dec. 31, 2011>

(5) Any person who pays domestic source income referred to in subparagraph 1, 5, 6, or 8 of Article 93 with foreign loan funds to a foreign corporation with no domestic place of business shall withhold tax from the relevant income pursuant to paragraph (1) each time he or she pays the relevant income to the foreign corporation in accordance with the terms of payment stipulated in the contract, although he or she does not directly pay the income in accordance with the terms of payment stipulated in such contract.

(6) The local agency of a foreign corporation operating a ship or aircraft providing international service which does not fall under Article 94 (3) shall withhold tax from the amount of domestic source income of the foreign corporation under paragraph (1) when it pays the foreign corporation the income accruing from the ship or aircraft providing international service.

(7) Where securities referred to in subparagraph 9 of Article 93 are transferred through an investment trader or investment broker registered under the Financial Investment Services and Capital Markets Act, the investment trader or investment broker shall withhold tax, as prescribed in paragraph (1); provided, where outstanding stocks are transferred when stocks are listed as prescribed in the Financial Investment Services and Capital Markets Act, the corporation which has issued such stocks shall withhold the tax.

(8) Any person who pays a foreign corporation an amount of domestic source income accruing from architectural works, construction, the installation or assembly of machines, etc., other works, or the provision of any service for supervision, control, etc. of such works, or any amount of domestic source income earned by providing personal services as referred to in subparagraph 6 of Article 93 (including where such income is classified as business income under a tax treaty) shall withhold the tax, as prescribed in paragraph (1), although the relevant income reverts to the domestic place of business; provided, the same shall not apply where the relevant domestic place of business has registered as a business operator under Article 111. <Amended on Jan. 1, 2014>

(9) Where domestic source income referred to in paragraph (1) is paid in a foreign country and a person who pays the income has an address, residence, headquarters, main office, or place of business (including the domestic place of business referred to in Article 120 of the Income Tax Act) in the Republic of Korea, paragraph (1) shall apply, deeming that the income payer has paid the relevant domestic source income in the Republic of Korea.

(10) Where domestic source income referred to in Article 93 is paid to a foreign corporation as a result of an auction under the Civil Execution Act or a public sale under the National Tax Collection Act, the person who distributes proceeds from such auction or public sale shall withhold the tax in accordance with paragraph (1) from the amount actually paid to the foreign corporation. <Amended on Jan. 1, 2014>

(11) The acts of a person representing or commissioned by a person liable for withholding provided in paragraphs (1) and (5) through (10) shall be deemed the acts of the principal or his or her delegate within the scope of the delegation or commission, to which paragraphs (1) and (5) through (10) shall apply.

(12) Where a financial company, etc., acquires, trades or brokers bills or debt certificates issued by a domestic corporation or makes such transactions on behalf of the financial company, etc., paragraph (11) shall apply, deeming that the financial company, etc., has the agency or commission relationship with the relevant resident.

(13) When any person liable for withholding withholds corporate tax under paragraphs (1), (5) through (12) and (16), he or she shall issue a withholding receipt stating the amount of payment and other necessary matters to the person who receives the income, as prescribed by Presidential Decree. <Amended on Dec. 22, 2020>

(14) A domestic corporation which has issued stocks, etc., shall collect the withholding tax on the domestic source income referred to in subparagraph 10 (i) of Article 93 from the foreign-related party who holds such stocks, etc., at the time prescribed by Presidential Decree. <Amended on Dec. 31, 2011>

(15) Detailed methods for withholding under paragraph (14) shall be prescribed by Presidential Decree.

(16) Notwithstanding paragraph (1), domestically sourced other income of a foreign corporation referred to in subparagraph 10 (k) of Article 93 that is generated through a virtual asset service provider, etc. shall be withheld by the virtual asset service provider, etc. in the amount pursuant to paragraph (1) 8 (b), and the payment shall be made to the tax office having jurisdiction over the place of tax payment, as prescribed by Presidential Decree, by the 10th of the month following the month in which virtual assets or cash is withdrawn (if not withdrawn from January 1 to December 31 of each year, it shall be by January 10 of the following year). <Added on Dec. 22, 2020>

(17) In applying paragraph (16), the method by which a virtual asset service provider, etc. verifies whether a person who transfers, lends, or withdraws virtual assets is subject to withholding tax under paragraph (1) 8 (b) shall be prescribed by Presidential Decree. <Added on Dec. 22, 2020>

[This Article Wholly Amended on Dec. 30, 2010]

Article 98-2(Special cases concerning reports on, payment of capital gains on transfer of securities by foreign corporation) #

(1) Where a foreign corporation with no domestic place of business satisfies the taxation standards stipulated in the relevant tax treaty by transferring stocks or investment certificates of the same domestic corporation on at least two occasions within the same business year (referring to the business year of the domestic corporation which issues the stocks or investment certificates; hereafter in this Article, the same shall apply), such foreign corporation shall report and pay an amount equivalent to the withholding tax on gains accruing from the transfer (hereafter in this Article, referred to as "gains") that was not withheld at the time of such transfers, to the head of the tax office having jurisdiction over the place of tax payment, as prescribed by Presidential Decree, within three months from the end date of the business year in which such transfers are made.

(2) Paragraph (1) shall apply mutatis mutandis to the gains of a foreign corporation with a domestic place of business that is not substantially related to or does not revert to the domestic place of business.

(3) Where a foreign corporation with no domestic place of business transfers stocks, investment certificates, or other securities (hereafter in this Article, referred to as "stocks, etc.") to a non-resident or foreign corporation with no domestic place of business in circumstances prescribed by Presidential Decree, it shall report and pay an amount computed by multiplying gains accrued from the transfer by the rate provided in Article 98 (1) 7 to the head of the tax office having jurisdiction over the place of tax payment by no later than the tenth day of the month that is two months after the month in which such gains are paid, as prescribed by Presidential Decree; provided, the foregoing shall not apply where the person who pays the amount of gains accrued from the transfer of stocks, etc. withholds and pays the corporate tax on the domestic source income from the transfer of the relevant stocks, etc. under Article 98. <Amended on Dec. 24, 2018>

(4) Where a foreign corporation with no domestic place of business earns any income referred to in subparagraph 10 (c) of Article 93 upon being donated with domestic assets from a non-resident or foreign corporation with no domestic place of business, it shall report and pay the amount computed under Article 98 (1) 8 to the head of the tax office having jurisdiction over the place of tax payment within three months from the last day of the month in which the date it has been donated with the amount referred to in Article 98 (1) 8 falls; provided, the foregoing shall not apply where the person who has donated domestic assets withholds and pays the corporate tax on the amount of domestic source income under Article 98. <Added on Dec. 31, 2011; Dec. 24, 2018>

(5) Where a foreign corporation fails to report and pay, as prescribed in paragraphs (1) through (4), or underreports the tax base, or underpays tax, the head of the tax office having jurisdiction over the place of tax payment shall collect the payable amount by applying mutatis mutandisArticle 66. <Amended on Dec. 31, 2011>

[This Article Wholly Amended on Dec. 30, 2010]

[Title Amended on Dec. 31, 2011]

Article 98-3(Special cases concerning withholding from bonds, etc. subject to withholding tax of foreign corporations) #

(1) Any person who pays interest, etc. on bonds, etc. subject to withholding tax to a foreign corporation (referring to a foreign corporation subject to Article 98 (1); hereafter the same shall apply in this Article), or purchases (including brokering, arranging, or other cases prescribed by Presidential Decree, but excluding trading of repurchase bonds, etc. or other cases prescribed by Presidential Decree; hereafter the same shall apply in this Article) bonds, etc. from a foreign corporation before receiving the interest, etc. on such bonds, etc. shall withhold the tax in consideration of the holding period of such bonds, etc., as prescribed by Presidential Decree. <Amended on Dec. 30, 2010>

(2) Deleted. <Dec. 31, 2004>

(3) Any act of the person who acts for a person liable for withholding under paragraph (1) or is commissioned to act for the person liable for withholding shall be deemed an act of the principal or his or her delegate within the scope of the delegation or commission, and is subject to paragraph (1). <Amended on Dec. 30, 2010>

(4) Where a financial company, etc. assumes charge of, trades or brokers bonds, etc. subject to withholding tax issued by a resident or foreign corporation or makes such transactions as an agent, the financial company, etc. shall be deemed to have the agency or commission relationship with the person liable for withholding provided in paragraph (1) and a foreign corporation that sells bonds, etc., subject to withholding tax for purposes of paragraph (3). <Amended on Dec. 30, 2010>

(5) In applying paragraphs (1) through (4), Article 98 (1) through (3) shall apply mutatis mutandis to the deadline for the payment of the withholding tax and the payment and collection of the additional tax. <Amended on Dec. 30, 2010>

(6) In applying paragraph (1), matters necessary for the timing for payment of interest income, calculation of the holding period of bonds, etc., subject to withholding tax, calculation and payment of withholding tax, scope of persons liable for withholding, issuance of withholding receipts, and other matters shall be prescribed by Presidential Decree. <Amended on Dec. 30, 2010>

[This Article Added on Dec. 29, 2000]

[Title Amended on Dec. 30, 2010]

Article 98-4(Applying for non-taxation or tax exemption for foreign corporations under tax treaties) #

(1) Where a foreign corporation who is a real beneficiary of the domestic source income referred to in Article 93 (excluding the domestic source business income in subparagraph 5 of the same Article) intends to have such income untaxed or exempted from taxes in accordance with the applicable tax treaty, it shall present an application for non-taxation or tax exemption and a document proving to be a real beneficiary of the domestic source income (hereafter in this Article referred to as "application, etc.") to the person who pays the domestic source income (hereafter in this Article, referred to as "income payer"), and the income payer shall file the application, etc. with the head of the tax office having jurisdiction over the place of tax payment, as prescribed by Presidential Decree. In such cases, where a foreign investment scheme deemed a real beneficiary of the domestic source income as it falls under Article 93-2 (1) 1, it shall submit a report on the foreign investment scheme, including the status of investors by country which have invested in the foreign investment scheme. <Amended on Dec. 24, 2018; Dec. 31, 2022; Dec. 31, 2024>

(2) Where the domestic source income is paid through a foreign investment scheme for purposes of paragraph (1), the foreign investment scheme shall receive an application, etc. from the real beneficiary and present to the income payer the report prepared by the foreign investment scheme, including a statement thereof, and the application, etc., and income payer shall file the report and application, etc. with the head of the tax office having jurisdiction over the place of tax payment, as prescribed by Presidential Decree. <Amended on Dec. 24, 2018; Dec. 31, 2022>

(3) An income payer who has received an application, etc. from a real beneficiary or foreign investment scheme pursuant to paragraph (1) or (2) may request supplementation if there are omissions or deficiencies in the submitted application, etc.; if the income payer fails to receive an application, etc. from a real beneficiary or foreign investment scheme or a report on a foreign investment scheme or is unable to identify a real beneficiary with the documents received, or where an income payer has any other ground specified by Presidential Decree, the income payer shall withhold the amount specified in any subparagraph of Article 98 (1) without applying for non-taxation or tax exemption. <Amended on Dec. 31, 2022>

(4) The head of the tax office having jurisdiction over the place of tax payment in receipt of an application, etc. pursuant to paragraph (1) or (2) shall examine whether the requirements for non- taxation or tax exemption are met, and as a result of such examination, if it is found that the requirements for non-taxation or tax exemption are not satisfied or details of the application are different from the facts, he or she shall collect the amount of tax according to the same paragraph from the person paying the income pursuant to Article 98 (4). In such cases, where it is not possible to determine whether the requirements for non-taxation or tax exemption are met based solely on the contents stated on the application, etc., the income payer may be requested to supplement the relevant documents within a reasonable time limit. <Added on Dec. 31, 2022>

(5) Where a real beneficiary to whom non-taxation or tax exemption has not been applied under paragraph (3) intends to be eligible for non-taxation or tax exemption, the real beneficiary or income payer may request the head of the tax office having jurisdiction over the place of tax payment of the income payer to make a correction within five years from the 11th of the month immediately following the month during which the tax is withheld under paragraph (3); provided, if any ground falling under any subparagraph of Article 45-2 (2) of the Framework Act on National Taxes arises, a request for rectification may be filed within three months from the date on which the relevant ground occurs, notwithstanding the main clause. <Amended on Dec. 20, 2016; Dec. 31, 2019; Dec. 31, 2022; Dec. 31, 2023>

(6) Upon receipt of an application for correction under paragraph (5), the head of a tax office shall correct the tax base and the tax amount or shall notify the applicant that no ground exists for such correction, within six months from the filing date of the application. <Amended on Dec. 31, 2022>

(7) Except as otherwise provided in paragraphs (1) through (6), the methods and procedures for the submission of relevant documents, such as an application, etc. and a report by a foreign investment scheme, the duty to preserve the documents presented, the methods and procedures for filing a request for correction, and other matters necessary for non-taxation or tax exemption shall be prescribed by Presidential Decree. <Amended on Dec. 31, 2022>

[This Article Wholly Amended on Jan. 1, 2014]

Article 98-5(Special case concerning withholding procedures for foreign corporations in specific places) #

(1) Where a person liable for withholding referred to in Articles 98, 98-2 through 98-4, and 98-6 withholds corporate tax from income referred to in subparagraph 1, 2, 7 (b), 8, or 9 of Article 93 for each business year among the domestic source income of a foreign corporation located in any country and region publicly announced by the Minister of Strategy and Finance, the person liable for withholding shall withhold corporate tax from income by preferentially applying the tax rate referred to in each subparagraph of Article 98 (1), notwithstanding the provisions on non-taxation, tax exemption and restrictive tax rates stipulated in Article 98-4 and the applicable tax treaty; provided, the same shall not apply where the Commissioner of the National Tax Service grants prior approval to apply non-taxation, tax exemption and restrictive tax rates under the applicable tax treaty, as prescribed by Presidential Decree. <Amended on Dec. 31, 2011>

(2) Where a corporation (including its agent or a tax manager pursuant to Article 82 of the Framework Act on National Taxes) that is substantially attributable to domestic source income pursuant to paragraph (1) intends to receive the non-taxation, exemption or limited tax rate pursuant to a tax treaty on its income, it may apply a request for rectification to the head of the tax office having jurisdiction over the place of tax payment of the withholding agent within five years from the 11th of the month immediately following the month in which the tax withheld under paragraph (1) belongs, as prescribed by Presidential Decree; provided, if any ground falling under any subparagraph of Article 45-2 (2) of the Framework Act on National Taxes arises, a request for rectification may be filed within three months from the date on which the relevant ground occurs, notwithstanding the main clause. <Amended on Dec. 20, 2016; Dec. 31, 2019; Dec. 31, 2023>

(3) Upon receipt of a request for correction under paragraph (2), the head of the tax office shall correct the tax base and amount, or notify the relevant requester of the purport that no reasonable grounds exist to correct the tax base and amount, within six months of the receipt of the request.

[This Article Wholly Amended on Dec. 30, 2010]

[Title Amended on Dec. 24, 2018]

Article 98-6(Special cases concerning withholding procedures to apply restrictive tax rates under tax treaties to foreign corporations) #

(1) Where a foreign corporation who is a real beneficiary of the domestic source income referred to in Article 93 intends to apply for the restrictive tax rates stipulated under the tax treaties, it shall submit an application of restrictive tax rates and a document proving to be a real beneficiary of domestic source income (hereafter in this Article referred to as "application, etc.") to a person liable for withholding referred to in Article 98 (1) (hereafter in this Article, referred to as "person liable for withholding"), as prescribed by Presidential Decree. In such cases, where a foreign investment scheme deemed a real beneficiary of the domestic source income as it falls under Article 93-2 (1) 1, it shall submit a report on the foreign investment scheme, including the status of investors by country which have invested in the foreign investment scheme. <Amended on Dec. 24, 2018; Dec. 22, 2020; Dec. 31, 2022>

(2) Upon applying paragraph (1), where the relevant domestic source income is paid through an foreign investment vehicles, the relevant foreign investment vehicle shall, as prescribed by Presidential Decree, receive an application, etc. from the substantive owner and submit it to the withholding agent along with a report on the foreign investment vehicle including details of the application for reduced tax rate. <Amended on Dec. 24, 2018; Dec. 31, 2022>

(3) A withholding agent who has received an application, etc. from a real beneficiary or foreign investment scheme pursuant to paragraph (1) or (2) may request supplementation if there are omissions or deficiencies in the submitted application, etc.; if the withholding agent fails to receive an application, etc. from a real beneficiary or foreign investment scheme or a report on a foreign investment scheme or is unable to identify a real beneficiary with the document received, or in cases of any other ground specified by Presidential Decree, the withholding agent shall withhold the amount referred to in the subparagraphs of Article 98 (1) without applying the restrictive tax rates. <Amended on Dec. 31, 2022>

(4) Where there is an error in the limited tax rate applied pursuant to paragraphs (1) and (2), or a real beneficiary who has not been applied with the limited tax rate pursuant to paragraph (3) intends to apply the limited tax rate, within five years from the 11th of the month immediately following the month in which the date on which the tax amount was withheld falls under paragraph (3), the real beneficiary or the person liable for withholding tax may request correction from the head of the tax office having jurisdiction over the place of tax payment of the withholding person, as prescribed by Presidential Decree; provided, if any ground falling under any subparagraph of Article 45-2 (2) of the Framework Act on National Taxes arises, a request for rectification may be filed within three months from the date on which the relevant ground occurs, notwithstanding the main clause. <Amended on Jan. 1, 2014; Dec. 20, 2016; Dec. 31, 2019; Dec. 31, 2023>

(5) Upon receipt of an application for correction under paragraph (4), the head of a tax office shall correct the tax base and the tax amount or shall notify the applicant that no ground exists for such correction, within six months from the filing date of the application.

(6) Except as otherwise provided in paragraphs (1) through (5), the methods and procedures for the submission of relevant documents, such as an application, etc. and a report on foreign investment schemes, the duty to preserve the documents presented, the methods and procedures for filing a request for correction, and other matters necessary for application of restrictive tax rates shall be prescribed by Presidential Decree. <Amended on Dec. 31, 2022>

[This Article Added on Dec. 31, 2011]

Article 109(Reports on incorporation or establishment of corporation) #

(1) A domestic corporation shall submit a report on incorporation stating the following matters, along with the detailed statement on shareholders, etc. and documents regarding business registration, etc. prescribed by Presidential Decree, to the head of the tax office having jurisdiction over the place of tax payment within two months from the date of registration for incorporation (where the actual business management place is established, the date of establishment; and in the case of corporate taxable trust property, the date of its establishment). In such cases, when the domestic corporation has registered its business under Article 111, it shall be deemed to have completed the registration for incorporation: <Amended on Dec. 31, 2011; Jan. 1, 2013; Dec. 22, 2020>

1. The name of the corporation and its representative [in the case of corporate taxable trust property, referring to the name of the trustee subject to corporate tax (where there are two or more trustees, referring to the representative trustee and all other trustees) and its representative];

2. The location of the head office, main office or the actual management place of the business (in the case of corporate taxable trust property, referring to the location of the head office or main office of the trustee subject to corporate tax or the actual management place of the business);

3. The purpose of business;

4. The date of incorporation.

(2) When a foreign corporation has established a domestic place of business, it shall submit a report on establishment of a domestic place of business, stating the following matters within two months from the date of establishment, along with the statement of financial position as at the date of establishment of the domestic place and other documents prescribed by Presidential Decree, to the head of the tax office having jurisdiction over the place of tax payment. In such cases, a foreign corporation which has established a place of business referred to in Article 94 (3), it may elect to submit a report on establishment of a domestic place of business:

1. The name of the corporation and its representative;

2. The location of its headquarters or main office;

3. The name of a person responsible for operation or management of business run in the Republic of Korea or domestic assets;

4. The purpose and type of domestic business, and types and locations of domestic assets;

5. The start date of domestic business or acquisition date of domestic assets.

(3) Where any details of a report and other documents submitted by a domestic corporation or foreign corporation under paragraphs (1) and (2) are revised, the domestic corporation or foreign corporation shall report such revision to the head of the tax office having jurisdiction over the place of tax payment within 15 days from the date of such revision.

(4) Paragraph (2) shall apply mutatis mutandis to a report filed by a foreign corporation with domestic source income accrued from transfer of real estate, etc. in subparagraph 3 of Article 93. <Amended on Dec. 24, 2018>

[This Article Wholly Amended on Dec. 30, 2010]

Article 109-2(Report on change of trustee of corporate taxable trust property) #

(1) Where a new trustee is appointed to any corporate taxable trust property (hereinafter referred to as "new trustee"), the new trustee shall file a report stating each of the following matters with the head of the tax office having jurisdiction over the place of tax payment, along with a document, etc. evidencing his or her appointment as a new trustee, within two months after the date of appointment:

1. The name of the new trustee and the name of the representative;

2. The name of the corporate taxable trust property;

3. The location of the head office or main office of the new trustee or the actual management place of the business;

4. The name of the trustee (hereinafter referred to as "former trustee") before the appointment of the new trustee who succeeds to trust affairs;

5. The date of appointing the new trustee;

6. The reasons for appointing the new trustee.

(2) Where the duties of the former trustee with respect to corporate taxable trust property are terminated, the new trustee who has succeeded to trust affairs upon the termination of such duties shall file a report stating each of the following matters with the head of the tax office having jurisdiction over the place of tax payment, along with a document, etc. evidencing the termination of the duties of the former trustee, within two months after the date of succession:

1. The name of the former trustee and the name of the representative;

2. The name of the corporate taxable trust property;

3. The location of the head office or main office of the former trustee or the actual management place of the business;

4. The name of the new trustee who has succeeded to trust affairs;

5. The date of succeeding to trust affairs;

6. The reasons for termination of the duties of the former trustee.

(3) Where the representative trustee of any corporate taxable trust property with at least two trustees is changed, the representative trustee before the change and the representative trustee after the change shall each file a report stating each of the following matters, accompanied by a document, etc. evidencing such change, with the head of the tax office having jurisdiction over the place of tax payment within two months after such change:

1. The name of the representative trustee before or after the change, and the name of the representative;

2. The name of the corporate taxable trust property;

3. The location of the head office or main office of the representative trustee before or after the change, or the actual management place of the business;

4. The date of changing the representative trustee;

5. The reasons for changing the representative trustee.

[This Article Added on Dec. 22, 2020]

Article 112-2(Obligation to prepare and keep detailed statements of donation receipts issued) #

(1) A corporation that issues donation receipts shall prepare a detailed statement of donation receipts issued to each donor in the form prescribed by Presidential Decree and shall keep it for five years from the date on which each donation receipt is issued; provided, this shall not apply where an electronic donation receipt is issued. <Amended on Jan. 1, 2014; Dec. 22, 2020>

(2) A corporation that issues donation receipts shall submit a detailed statement of donation receipts for each donor, which it keeps in accordance with paragraph (1), to the Commissioner of the National Tax Service, the commissioner of a regional tax office, or the head of the tax office having jurisdiction over the place of tax payment, upon receipt of a request therefor; provided, this shall not apply where an electronic donation receipt is issued. <Amended on Jan. 1, 2014; Dec. 22, 2020>

(3) A corporation that issues donation receipts shall submit an aggregate table of donation receipts, which states the total number of donation receipts issued, the amount of each donation, etc. during the pertinent business year, in the form stipulated by Decree of the Ministry of Economy and Finance to the head of the relevant tax office within six months from the end of the month in which the relevant business year ends; provided, this shall not apply where an electronic donation receipt is issued. <Amended on Jan. 1, 2014; Dec. 22, 2020; Dec. 21, 2021>

(4) If the total sum of the amounts on the donation receipts issued for donations received in the business year immediately preceding the relevant business year exceeds the amount prescribed by Presidential Decree, which shall be at least 300 million won, a corporation that issues the donation receipts shall issue electronic donation receipts for the donations received in the relevant business year, by January 10 of the year following the year in which the date of receipt of such donations falls. <Added on Dec. 31, 2024>

[This Article Wholly Amended on Dec. 30, 2010]

Article 113(Separate accounting) #

(1) A non-profit corporation that operates any profit-making business shall keep separate accounting of assets, liabilities, and profits and losses related to such profit-making business from the accounting of those related to business, other than such profit-making business.

(2) A corporation subject to the application of the Financial Investment Services and Capital Markets Act shall keep separate accounting of the income accruing from the trust estates and other income for the purpose of calculating the amount of income for each business year.

(3) A corporation which merges with another domestic corporation shall keep separate accounting of the assets, liabilities, and profits and losses related to the business succeeded to from a merged corporation from those related to other business for any of the following periods; provided, as for a merger made between small and medium enterprises or between corporations engaged in the same business, separate accounting need not be kept: <Amended on Dec. 31, 2011; Jan. 1, 2013; Dec. 24, 2018>

1. Where a corporation has losses in Article 13 (1) 1 as at the registration date of merger, or a corporation intends to deduct losses carried forward of the merged corporation under Article 45 (2): The period during which such losses or losses carried forward are deducted;

2. In other cases: Five years after the merger.

(4) In the case of a division and merger of a domestic corporation, a corporation established through the division, etc. shall keep separate accounting of the assets, liabilities, and profits and losses related to the business succeeded to from the divided corporation, etc. and those related to other business for any of the following periods; provided, as for a division and merger made between small and medium enterprises or between corporations engaged in the same business, separate accounting need not be kept: <Amended on Dec. 31, 2011; Jan. 1, 2013; Dec. 24, 2018>

1. Where a corporation intends to deduct losses carried forward of a divided corporation, etc. under Article 46-4 (2): The period during which such losses carried forward are deducted;

2. In other cases: Five years after division.

(5) Where a consolidated parent corporation merges (including a division and merger in which the consolidated parent corporation is a counterpart corporation to the division and merger) with another domestic corporation (limited to a domestic corporation that is not a consolidated corporation as at the registration date of a merger), it shall keep the accounting of the assets, liabilities, and profits and losses related to the business succeeded to from the merged corporation (including the divided corporation) separately from those related to other business for either of the following periods; provided, in the case of a merger between small and medium-sized enterprises or between corporations engaged in the same business, accounting may not be separate:. <Amended on Dec. 31, 2011; Jan. 1, 2013; Dec. 31, 2023>

1. Where a corporation has losses referred to in Article 76-13 (1) 1 as at the registration date of the merger, or intends to deduct losses carried forward of a merged corporation under Article 76-13 (3) 2: The period eligible for the deduction of such losses or carried-forward losses;

2. In other cases: Five years after the merger.

(6) The trustee subject to corporate tax shall record the income that reverts to trust property in separate accounting for each corporate taxable trust property. <Added on Dec. 22, 2020>

(7) A domestic corporation that acquires a business of another domestic corporation falling under Article 50-2 shall, if it has losses prescribed in Article 13 (1) 1 as at the date of acquisition of the business, record the assets, liabilities, and profits and losses that belong to the business acquired from the transferor corporation and those that belong to other businesses in separate accounting during the period for which such losses are deducted; provided, where the acquisition of a business is made between small and medium enterprises or between corporations engaged in the same business, separate accounting may not be required. <Added on Dec. 21, 2021>

(8) Matters necessary for the method of keeping separate accounting, and for determining as to whether corporations are engaged in the same business under paragraphs (1) through (7), and other matters shall be prescribed by Presidential Decree. <Amended on Dec. 22, 2020; Dec. 21, 2021>

[This Article Wholly Amended on Dec. 30, 2010]

Article 116(Receipt and keeping of evidentiary documents of expenditures) #

(1) A corporation shall prepare or receive evidentiary documents for all business-related transactions for each business year and keep them for five years from the filing deadline specified under Article 60 expires; provided, a corporation that intends to deduct losses incurred in the business year that began before the fifth anniversary of the commencement date of each business year from the income for each business year as prescribed in Article 13 (1) 1 shall keep the evidentiary documents for the business year in which the relevant losses incurred until one year lapses from the filing deadline specified under Article 60 for the business year to which the deducted income reverts. <Amended on Dec. 24, 2018>

(2) In cases falling under paragraph (1), where a corporation is supplied with goods or services by a business operator prescribed by Presidential Decree and pays for them, it shall receive and keep any of the following evidentiary documents; provided, the same shall not apply to cases prescribed by Presidential Decree: <Amended on Jun. 7, 2013>

1. Credit card sales slips issued under the Specialized Credit Finance Business Act (in the case of transactions using things prescribed by Presidential Decree similar to a credit card, it shall include the relevant evidentiary documents; hereafter the same shall apply in Article 117);

2. Cash Receipts;

3. Tax invoices issued under Article 32 of the Value-Added Tax Act;

4. Invoices issued under Article 121 of this Act and Article 163 of the Income Tax Act.

(3) In applying paragraph (2), where a corporation falls under any of the following, the corporation shall be deemed to fulfill its obligation to receive and keep evidentiary documents under paragraph (2): <Amended on Dec. 31, 2022>

1. Where a corporation issues and keeps a purchaser-issued tax invoice under Article 34-2 (2) of the Value-Added Tax Act as it has failed to have a tax invoice of paragraph (2) 3 issued;

2. Where a corporation issues and keeps a purchaser-issued invoice under Article 121-2 as it has failed to have a tax invoice of paragraph (2) 3 issued;

(4) In applying paragraphs (1) through (3), matters necessary for the receipt and keeping of evidentiary documents shall be prescribed by Presidential Decree.

[This Article Wholly Amended on Dec. 30, 2010]

Article 117(Obligation to become credit card merchants and to issue credit card sales slips) #

(1) Where the Commissioner of the National Tax Service deems it necessary for tax management of a corporation that meets the requirements prescribed by Presidential Decree in consideration of business types, etc., which supplies goods or services mainly to consumers, other than business operators, he or she may guide it to become a credit card merchant.

(2) No credit card merchant (referring to a merchant who has become such merchant upon meeting the requirements referred to in paragraph (1); hereafter in this Article, Articles 66 (2) 3 and 76-6, the same shall apply) shall issue any false credit card sales slip after supplying goods and services in relation to the business, on grounds that transactions are made by credit card; provided, a business operator prescribed by Presidential Decree, such as a superstore, issues a credit card sales slip after aggregating the sales of other business operators by the method prescribed by Presidential Decree, such as installing and operating the point-of-sale information system, it shall not be deemed to have issued false credit card sales slips. <Amended on Dec. 24, 2018>

(3) Where a credit card merchant refuses a transaction by credit card or issues a false credit card sales slip, the relevant consumer may report the details of the relevant transaction to the Commissioner of the National Tax Service, the Commissioner of the competent Regional Tax Office or the head of the competent tax office.

(4) Any entity in receipt of a report filed under paragraph (3) shall give a notice thereon to the head of the tax office having jurisdiction over the credit card merchant's place of tax payment. In such cases, the head of the tax office having jurisdiction over the place of tax payment shall notify the relevant credit card merchant of the amount reported for the relevant business year.

(5) The Commissioner of the National Tax Service may order to any credit card merchant who has refused a transaction by credit card or has issued a false credit card sales slip with respect to matters necessary to correct it. <Amended on Dec. 24, 2018>

(6) The administrative guidance for becoming credit card merchants, the method of reporting and giving notices on a refusal of transactions by credit card and issuance of a false credit card sales slip, and other necessary matters shall be prescribed by Presidential Decree.

[This Article Wholly Amended on Dec. 30, 2010]

Article 117-2(Obligation to become cash receipt merchants and to issue cash receipts) #

(1) Every corporation that meets the requirements prescribed by Presidential Decree giving due consideration to the type of business, etc., among corporations that supply goods or services mainly to consumers, not to business operators, shall become a Cash Receipt merchant within three months from the end of the month in which the corporation meets the requirements. <Amended on Dec. 15, 2015>

(2) Every corporation which has become a Cash Receipt merchant pursuant to paragraph (1) shall display a mark indicating that it is a Cash Receipt merchant, as prescribed by the Commissioner of the National Tax Service.

(3) No Cash Receipt merchant shall refuse to issue a Cash Receipt or issue a false Cash Receipt upon receipt of a request by a consumer to issue a Cash Receipt for payment in cash after supplying any goods or services; provided, it need not to issue a Cash Receipt where it is impractical to issue it in circumstances prescribed by Presidential Decree, and where a business operator prescribed by Presidential Decree, such as a superstore, issues a Cash Receipt after aggregating the sales of other business operators by the method prescribed by Presidential Decree, such as installing and operating the point-of-sale information system, it shall not be deemed to have issued a false Cash Receipt. <Amended on Dec. 31, 2011>

(4) Where a domestic corporation that engages in the type of business prescribed by Presidential Decree supplies goods or services for the amount of at least 100,000 won for each transaction (including the value-added tax thereon) and is paid in cash, notwithstanding paragraph (3), it shall issue the cash receipt, as prescribed by Presidential Decree, although a consumer does not request the issuance of a cash receipt; provided, the domestic corporation may choose not to issue a cash receipt where it issues an invoice or tax invoice under Article 121 of this Act, Article 163 of the Income Tax Act, or Article 32 of the Value-Added Tax Act after having supplied goods or services to a person who has registered his or her business pursuant to Article 111 of this Act, Article 168 of the Income Tax Act, or Article 8 of the Value-Added Tax Act. <Amended on Jun. 7, 2013; Jan. 1, 2014>

(5) Where a cash receipt merchant or a domestic corporation obliged to issue a cash receipt fails to issue a cash receipt, in violation of paragraph (3) or (4), or issue a false cash receipt, the other party may report the details of the relevant cash transaction to the Commissioner of the National Tax Service, the commissioner of a regional tax office, or the head of a tax office. <Amended on Dec. 24, 2018>

(6) Any person in receipt of a report filed under paragraph (5) shall give a notice thereof to the head of the tax office having jurisdiction over the place of tax payment of the relevant Cash Receipt merchant. In such cases, the head of the tax office having jurisdiction over the place of tax payment shall notify the relevant Cash Receipt merchant of the amount reported for the relevant business year.

(7) A corporation that has become a Cash Receipt merchant may issue a Cash Receipt, as prescribed by Presidential Decree, although a consumer supplied with goods or services from it does not request the issuance of a Cash receipt. <Added on Dec. 31, 2011>

(8) The Commissioner of the National Tax Service may issue a necessary order to a corporation that has become a Cash Receipt merchant, in relation to matters to be observed by such corporation, such as how to issue Cash Receipts and display a mark indicating that it is a Cash Receipt merchant. <Amended on Dec. 31, 2011>

(9) Becoming and withdrawing from a Cash Receipt merchant, the amount subject to issuance of a Cash Receipt, the methods of reporting or giving notice of refusal to issue a Cash Receipt or issuance of a false Cash Receipt, and other necessary matters, shall be prescribed by Presidential Decree. <Amended on Dec. 31, 2011>

[This Article Wholly Amended on Dec. 30, 2010]

Article 121(Preparation and issuance of invoices) #

(1) Every corporation that supplies goods or services, shall issue an invoice or receipt (hereinafter referred to as "invoice, etc."), as prescribed by Presidential Decree, to a person to whom the goods or services are supplied. In such cases, any invoice issued shall be an invoice prepared in an electronic format prescribed by Presidential Decree (hereinafter referred to as "electronic invoice"). <Amended on Dec. 23, 2014>

(2) Where agricultural products, livestock products, fishery products, and forest products exempt from the value-added tax pursuant to Article 26 (1) 1 of the Value-Added Tax Act are sold on consignment or through an agent, the consignee or agent shall be deemed to have supplied goods and shall issue an invoice, etc., to a person supplied with the relevant goods; provided, the same shall not apply where such invoice, etc., is issued, as prescribed by Presidential Decree, pursuant to paragraph (1). <Amended on Jun. 7, 2013>

(3) For imported goods, the head of a customhouse shall issue an invoice to a corporation that imports the relevant goods, as prescribed by Presidential Decree.

(4) Paragraphs (1) through (3) shall not apply to cases prescribed by Presidential Decree where it is deemed inappropriate to issue an invoice, etc., such as sale of real estate, etc.

(5) Every corporation shall submit a statement of invoices issued to, or received from, each purchaser or supplier pursuant to paragraphs (1) through (3) (hereinafter referred to as "an aggregate invoice for each supplier or purchaser") to the head of the tax office having jurisdiction over the place of tax payment by the deadline specified by Presidential Decree; provided, a corporation does not need to submit an aggregate invoice in either of the following cases: <Amended on Dec. 23, 2014>

1. An aggregate invoice for the invoices that the corporation received from a supplier pursuant to paragraph (3);

2. Aggregate invoices for each purchaser and each supplier, where the corporation has transmitted aggregate invoices to the Commissioner of the National Tax Service pursuant to paragraph (7) for the electronic invoices issued or received under the latter part of paragraph (1).

(6) Any portion in relation to which tax invoices or receipts are issued under the Value-Added Tax Ac or aggregate tax invoices for individual suppliers or purchasers are submitted shall be deemed a portion in relation to which invoices, etc., issued or aggregate invoices for individual suppliers or purchasers are submitted under paragraphs (1) through (3), and (5).

(7) Every corporation that issues electronic invoices pursuant to the latter part of paragraph (1), shall transmit a detailed statement of such electronic invoices in the form prescribed by Presidential Decree by the deadline specified by Presidential Decree. <Added on Dec. 23, 2014>

(8) Matters necessary for preparing and issuing invoices, etc., and submitting aggregate invoices for each supplier or purchaser shall be prescribed by Presidential Decree.

[This Article Wholly Amended on Dec. 30, 2010]

Article 1(Purpose) #

Article 2(Definition) #

Article 3(Taxpayer) #

Article 4(Scope of taxable income) #

Article 5(Trust income) #

Article 6(Business year) #

Article 7(Change of business year) #

Article 8(Constructive business years) #

Article 9(Place of tax payment) #

Article 10(Designation of place for tax payment) #

Article 11(Alteration of place of tax payment) #

Article 12(Jurisdiction of taxation) #

Article 13(Tax base) #

Article 14(Income for each business year) #

Article 15(Scope of gross income) #

Article 16(Constructive dividends or distributions) #

Article 17(Non-inclusion of gains from capital transactions in gross income) #

Article 18(Non-inclusion of evaluation profits in gross income) #

Article 18-2(Non-inclusion of domestic corporations' dividend income in gross income) #

Article 18-3 #

Article 18-4(Non-inclusion of dividend income of foreign subsidiaries in gross income) #

Article 19(Scope of deductible expenses) #

Article 19-2(Non-inclusion of bad debts in deductible expenses) #

Article 20(Non-inclusion of losses from capital transactions in deductible expenses) #

Article 21(Non-inclusion of taxes and public charges in deductible expenses) #

Article 21-2(Non-inclusion of punitive damages in deductible expenses) #

Article 22(Non-inclusion of losses from evaluation of assets in deductible expenses) #

Article 23(Non-inclusion of depreciation costs in deductible expenses) #

Article 24(Non-inclusion of donations in deductible expenses) #

Article 25(Non-inclusion of business promotion expenses in deductible expenses) #

Article 26(Non-inclusion of excessive expenses in deductible expenses) #

Article 27(Non-inclusion of non-business expenses in deductible expenses) #

Article 27-2(Special cases, including exclusion of expenses incurred in relation to passenger vehicles for business use from deductible expenses) #

Article 28(Non-inclusion of interest expenses in deductible expenses) #

Article 29(Inclusion of reserve funds for proper purpose business in deductible expenses for non-profit domestic corporation) #

Article 30(Inclusion of liability reserve funds in deductible expenses) #

Article 31(Inclusion of contingency reserve funds in deductible expenses) #

Article 32(Inclusion of surrender value reserve fund in deductible expenses) #

Article 33(Inclusion of retirement benefit appropriation funds in deductible expenses) #

Article 34(Inclusion of allowances for bad debts in deductible expenses) #

Article 35(Inclusion of allowances to redeem claims for indemnity in deductible expenses) #

Article 36(Inclusion of value of business assets acquired with national subsidies in deductible expenses) #

Article 37(Inclusion of value of business assets acquired with construction charges in deductible expenses) #

Article 38(Inclusion of value of assets acquired with insurance marginal profits in deductible expenses) #

Article 39 #

Article 40(Business year in which gross income and deductible expenses accrue) #

Article 41(Acquisition value of assets) #

Article 42(Evaluation of assets and liabilities) #

Article 42-2(Non-inclusion in gross income of evaluation marginal profits of inventory assets of domestic corporation that applies K-IFRS) #

Article 42-3(Special cases concerning calculation of income for insurance company applying Korean International Financial Reporting Standards) #

Article 43(Application of corporate accounting standards and practices) #

Article 44(Taxation on merged corporation upon merger) #

Article 44-2(Taxation on surviving corporation upon merger) #

Article 44-3(Special provisions concerning taxation on surviving corporation upon qualified merger) #

Article 45(Restriction on deduction of losses carried forward upon merger) #

Article 46(Taxation on divided corporations upon division) #

Article 46-2(Taxation on corporations established through division upon unqualified division) #

Article 46-3(Special provisions concerning Taxation on corporation established through division upon qualified division) #

Article 46-4(Restriction on deduction of losses carried forward upon division) #

Article 46-5(Special provisions concerning taxation on divided corporations surviving division) #

Article 47(Special provisions concerning taxation on divided corporation upon split-off) #

Article 47-2(Special provisions concerning taxation upon investment in kind) #

Article 48 #

Article 48-2 #

Article 49 #

Article 50(Inclusion of amount equivalent to transfer marginal profits of assets due to exchange in deductible expenses) #

Article 50-2(Restriction on deduction of losses carried over in case of business acquisition) #

Article 51(Non-taxable income) #

Article 51-2(Income deductions for special purpose companies) #

Article 52(Disaffirmation of calculation by wrongful acts) #

Article 53(Special cases concerning calculation of amount of income from transactions with foreign corporations) #

Article 53-2(Special cases concerning calculation of tax bases for corporations adopting functional currencies) #

Article 53-3(Special cases concerning calculation of tax dases for overseas place of business) #

Article 54(Detailed regulations for calculation of amount of income) #

Article 55(Tax rate) #

Article 55-2(Special provisions concerning taxation on capital gains on transfer of land) #

Article 56 #

Article 57(Foreign tax credits) #

Article 57-2(Special cases concerning refund of foreign tax credits for income received from indirect investment companies) #