Article 1(Tax obligors) #
"Foreign insurance company prescribed by Presidential Decree" in subparagraph 6 of Appendix of the Education Tax Act (hereinafter referred to as the "Act") means a foreign insurance company under the Insurance Business Act, that engages in the business of providing insurance services for Korean nationals and foreigners in the Republic of Korea. Such foreign insurance company does not include an insurance company that engages in the business of providing insurance services only for foreigners in the Republic of Korea.
[This Article Wholly Amended on Feb. 7, 2017]
Article 2(Calculation of tax bases) #
(1) No education tax assessed on the amount of individual consumption tax, traffic, energy and environment tax or liquor tax shall be included in the tax base provided in the Individual Consumption Tax Act, the Traffic, Energy and Environment Tax Act or the Liquor Tax Act. <Amended on May 4, 1996; Feb. 9, 2006; Feb. 28, 2007; Dec. 31, 2007>
(2) If a person liable to pay education tax fails to pay such tax based on which the education tax is assessed, and thus a penalty tax is added to such tax, the penalty tax shall not be included in the education tax base.
(3) For the purposes of calculating the tax bases provided in Article 5 (1) 2 through 4 of the Act, the tax base of goods manufactured with, or processed from, raw materials subject to education tax, shall be calculated by deducting the amount of the individual consumption tax, traffic, energy and environment tax, or the liquor tax paid in relation to the raw materials, from the amount of tax assessed as individual consumption tax, traffic, energy and environment tax, or liquor tax on the manufactured or processed goods. <Amended on May 4, 1996; Feb. 28, 2007; Dec. 31, 2007>
Article 3(Maximum amount of education tax on swap transactions) #
The maximum amount of education tax on the revenue arising in relation to a swap transaction defined in the proviso of Article 5 (1) of the Act, shall be the amount deducting the amount prescribed in subparagraph 2 from the amount prescribed in subparagraph 1:
1. The aggregate amount of revenue arising from the management of KRW-denominated funds, acquired through the sale of foreign currency funds and the various revenues arising from the redemption of foreign currency funds;
2. The aggregate amount of the total interest and various fees paid upon the acquisition of foreign currency loans and margins arising from the difference between domestic and foreign interest rates and from exchange rate fluctuations to be collected by the Bank of Korea in the redemption of foreign currency funds.
Article 3-2(Scope of reserve funds for payment under insurance contract) #
"Amount prescribed by Presidential Decree including contingency reserve fund" in Article 5 (3) of the Act means the following amount:
1. An amount specified in any of the following items, which is similar to liability reserves referred to in Article 120 of the Insurance Business Act:
(a) Where all of the insurance contracts of the relevant financial or insurance business entity specified in subparagraph 6 of the Appendix of the Act are terminated as at the end of the relevant taxable period, the amount of refund to be paid to the policyholder or the beneficiary (including the cash surrender charges; hereinafter referred to as "policyholder reserves") under the insurance clauses prepared pursuant to Article 127 (1) of the Insurance Business Act;
(b) Where the grounds for payment of insurance proceeds payable under an insurance contract have arisen as of the end of the relevant taxable period but such insurance proceeds are not determined, an amount equivalent to insurance proceeds that are estimated in consideration of the amount of damages and refunds (including the amount expected to be used for damage adjustment, subrogation of insurance, and exercise of the right to indemnity, as well as dividends to be paid in the future to policyholders; hereinafter referred to as "elements affecting incurred claims");
2. Contingency reserve fund under Article 31 (1) of the Corporate Tax Act (hereinafter referred to as "contingency reserve fund").
[This Article Added on Feb. 28, 2023]
Article 4(Amount of revenue of finance or insurance business) #
(1) "Amount prescribed by Presidential Decree" in Article 5 (3) of the Act means each of the following: <Amended on Dec. 29, 2000; Dec. 31, 2004; Feb. 28, 2007; Feb. 4, 2009; Feb. 18, 2010; Dec. 30, 2010; Jul. 14, 2011; Feb. 21, 2014; Feb. 3, 2015; Feb. 17, 2021; Feb. 28, 2023>
1. Discount charges received;
2. Trustor fees and distributions;
3. Trust fees;
4. Lending fees;
5. Net profit after the following aggregate amounts:
(a) Net profit or loss (including the profit or loss on valuation of forward exchange contracts, etc. provided in Article 76 (1) of the Enforcement Decree of the Corporate Tax Act and the profit or loss on valuation of forward exchange contracts, etc. for hedging exchange risk provided in paragraph (2) of the same Article) aggregating the profit or loss arising from the trading of derivatives-linked securities provided in Article 4 (7) of the Financial Investment Services and Capital Markets Act, securities provided in subparagraph 1 of the same paragraph and derivatives provided in Article 5 (1) of the same Act (hereafter referred to as "derivatives, etc." in this subparagraph);
(b) Profit or loss arising from foreign exchange transactions (excluding derivatives, etc.) (including the profit or loss on the valuation of monetary assets and liabilities denominated in a foreign currency under Article 76 (1) and (2) of the Enforcement Decree of the Corporate Tax Act);
5-2. Deleted; <Jul. 14, 2011>
5-3. Deleted; <Jul. 14, 2011>
6. Rental income;
7. Gains on disposal of fixed assets;
7-2. Income generated from the evaluation of assets under Article 75 (4) of the Enforcement Decree of the Corporate Tax Act;
8. Other operating revenues and non-operating revenues.
(2) None of the following shall be added to the revenue that forms the tax base provided in Article 5 (1) 1 of the Act: <Amended on Feb. 9, 2006; Feb. 4, 2009; Feb. 18, 2010; Dec. 30, 2010; Feb. 3, 2015; Sep. 22, 2016>
1. Revenue arising from overseas places of business;
2. Revenue arising from the valuation of assets and liabilities, or from differences in the time in which revenue and expenses are recognized, being any of the following:
Article 5(Calculation of amount of revenue from insurance premiums) #
Insurance premiums referred to in Article 5 (3) of the Act (deducting the amount reserved as policyholder reserves and contingency reserve funds and for elements affecting incurred claims, as well as re-insurance premiums) shall be the amount obtained by deducting the amount specified in subparagraph 2 from the amount specified in subparagraph 1: <Amended on Dec. 31, 1998; Dec. 29, 2000; Feb. 9, 2006; Feb. 4, 2009; Feb. 18, 2010; Feb. 12, 2019; Feb. 28, 2023; Feb. 28, 2025>
1. The aggregate amount of insurance premiums, assumed re-insurance premiums, and policyholder reserves as at the end of the preceding fiscal year, elements affecting incurred claims, and contingency reserve fund, and cash surrender value received from a re-insurance company (referring to an amount equivalent to unearned premiums out of the amount paid upon termination of the contract before maturity);
2. The aggregate amount of policyholder reserves as at the current fiscal year, elements affecting incurred claims, and contingency reserve funds, cash surrender value (referring to an amount equivalent to unearned premiums out of the amount paid upon termination of the contract before maturity), ceded re-insurance premiums (excluding ceded re-insurance premiums in relation to insurance premiums provided in Article 4 (2) 5); provided, where any of the following amounts are incurred in the current fiscal year, the relevant amount shall be added to policyholder reserves limited in the current fiscal year:
(a) The policyholder reserve and the corresponding amount of elements affecting incurred claims that are extinguished upon maturity, death, surrender, or the like (excluding any amount of the incurred-claims element extinguished due to the occurrence of an insured event);
(b) Claims paid upon the occurrence of an insured incident, etc., under an insurance policy in which interest rates are used as basis for calculating the insurance premium and whose net premium consists of only risk premium;
(c) An amount equivalent to policyholder reserves diminished due to losses incurred in appraisal of assets under Article 75 (4) of the Enforcement Decree of the Corporate Tax Act.
Article 6(Location where place of business of financial or insurance business entity is situated) #
(1) The location of each place of business that can be determined as the place for paying the education tax under the proviso to Article 6 (1) of the Act, shall be the location where the headquarters or branch office of a financial or insurance business entity provided in subparagraph 1 of Article 3 of the Act (hereinafter referred to as "financial or insurance business entity") is situated, if that financial or insurance business entity operates a branch office, other than the headquarters, under the independent financing system. <Amended on Jul. 14, 2011; Mar. 31, 2016>
(2) Where a financial or insurance business entity intends to change the place for tax payment from the seat of its headquarters or main office to the location of each place of business, or from the location of each place of business to the location of its headquarters or main office, it shall submit a report on change of place for tax payment, stating its personal details, the places for tax payment prior to and after the change and the grounds for the change, to the head of the competent tax office by the end of the pertinent taxable period. <Added on Dec. 31, 1993>
(3) The head of a tax office in receipt of a report submitted under paragraph (2) shall immediately notify the head of the competent tax office of the fact that he or she has received the report. <Added on Dec. 31, 1993>
Article 6-2(Interim prepayment) #
(1) Where a financial or insurance business entity intends to pay interim tax calculated under Article 8-2 (1) of the Act (hereinafter referred to as "interim tax"), it shall submit a Statement of Calculation for Interim Prepayment of Education Tax in attached Form 1, to the head of the competent tax office.
(2) Notwithstanding paragraph (1), a financial or insurance business entity shall submit the Education Tax Base Return in attached Form 2 to the head of the competent tax office in cases falling under subparagraph 3 of Article 6-3.
(3) A financial or insurance business entity that has no revenue in a period of interim prepayment due to temporary closure or other reasons need not pay education tax for that period of interim prepayment.
[This Article Added on Feb. 5, 2016]
Article 6-3(Interim prepayment in case of mergers) #
Where a corporation intends to pay interim tax, it shall pay interim tax calculated as follows:
1. Where a corporation surviving a merger pays interim tax in the first business year after the merger, it shall pay the interim tax calculated, deeming both the immediately preceding business year of the surviving corporation and the business year immediately preceding the business year, in which the date the dissolution of the merged corporation (referring to a corporation dissolved in the course of a merger; hereafter the same shall apply in this Article) is registered falls, to be the immediately preceding business year referred to in Article 8-2 (1) of the Act;
2. Where a corporation incorporated through a merger pays interim tax in the first business year after the establishment, it shall pay the interim tax calculated, deeming the business year immediately preceding the business year, in which the date the dissolution of the merged corporation is registered falls, to be the immediately preceding business year referred to in Article 8-2 (1) of the Act;
3. Where any of the following corporations intends to pay interim tax in the first business year after a spin-off, it shall make a payment by calculating the interim tax on the revenue in that business year as provided in Articles 4, 5, 7 and 8 of the Act:
(a) A corporation incorporated in the course of a spin-off;
(b) A corporation surviving a merger with a unit of a spin-off corporation.
[This Article Added on Feb. 5, 2016]
Article 7(Filing tax returns and paying taxes) #
(1) Where a financial or insurance business entity intends to file an education tax return and pay the education tax, as referred to in Article 9 (1) of the Act, it shall make a payment to the head of the competent tax office using the Education Tax Base Return in attached Form 2, or to the Bank of Korea (including its agencies; hereinafter the same shall apply) or a postal service agency with a statement of payment issued under the National Tax Collection Act, which shall be accompanied by an Education Tax Base Return. <Amended on Feb. 9, 2006; Feb. 5, 2016>
(2) Where a taxpayer intends to file an education tax return and pay the education tax pursuant to Article 9 (2) of the Act, he or she shall state the relevant amount of tax and the amount of education tax respectively and the aggregate amount of such taxes in a tax return and a statement of payment of the relevant tax in accordance with the relevant tax law. <Amended on Jan. 5, 2021>
Article 8(Assessment and collection) #
(1) Where the head of a competent tax office intends to simultaneously collect education tax and the amount of such tax, based on which education tax is assessed, pursuant to Article 10 of the Act, he or she shall issue a tax payment notice stating the relevant amount of tax and the amount of education tax respectively and the aggregate amount of such taxes. <Amended on Jan. 5, 2021>
(2) Where the head of a tax office only intends to issue an education tax payment notice, he or she shall issue such notice stating, therein, that the amount of such tax shall be based on which such education tax is assessed. <Amended on Dec. 29, 2000>
Article 9 #
Deleted. <Dec. 29, 2000>
Article 10 #
Deleted. <Dec. 29, 2000>
Article 11 #
Deleted. <Dec. 29, 2000>
Article 12 #
Deleted. <Dec. 29, 2000>